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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended
March 31, 2023
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From
(Not Applicable)
Commission File Number 001-36636
image1-logoa03.jpg
(Exact name of the registrant as specified in its charter)
Delaware05-0412693
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification Number)
One Citizens Plaza, Providence, RI 02903
(Address of principal executive offices, including zip code)
(203) 900-6715
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, $0.01 par value per share
CFGNew York Stock Exchange
Depositary Shares, each representing a 1/40th interest in a share of 6.350% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D
CFG PrDNew York Stock Exchange
Depositary Shares, each representing a 1/40th interest in a share of 5.000% Fixed-Rate Non-Cumulative Perpetual Preferred Stock, Series E
CFG PrENew York Stock Exchange
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.
Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
There were 483,988,282 shares of the registrant’s common stock ($0.01 par value) outstanding on April 28, 2023.



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Table of Contents
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Citizens Financial Group, Inc. | 2


GLOSSARY OF ACRONYMS AND TERMS
    The following is a list of common acronyms and terms used regularly in our financial reporting:
2022 Form 10-K
Annual Report on Form 10-K for the year ended December 31, 2022
AACLAdjusted Allowance for Credit Losses
ACLAllowance for Credit Losses: Allowance for Loan and Lease Losses plus Allowance for Unfunded Lending Commitments
AFSAvailable for Sale
ALLLAllowance for Loan and Lease Losses
ALMAsset and Liability Management
AOCIAccumulated Other Comprehensive Income (Loss)
ASUAccounting Standards Update
ATMAutomated Teller Machine
Board or Board of DirectorsThe Board of Directors of Citizens Financial Group, Inc.
bpsBasis Points
CBNACitizens Bank, National Association
CCARComprehensive Capital Analysis and Review
CCBCapital Conservation Buffer
CCMICitizens Capital Markets, Inc.
CECLCurrent Expected Credit Losses (ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments)
CET1Common Equity Tier 1
CET1 capital ratioCommon Equity Tier 1 capital divided by total risk-weighted assets as defined under the U.S. Basel III Standardized approach
Citizens, CFG, the Company, we, us, or ourCitizens Financial Group, Inc. and its Subsidiaries
CLTVCombined Loan-to-Value
COVIDCoronavirus Disease
CRECommercial Real Estate
Dodd-Frank ActThe Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
EPSEarnings Per Share
EVEEconomic Value of Equity
Exchange ActThe Securities Exchange Act of 1934, as amended
Fannie Mae (FNMA)Federal National Mortgage Association
FDICFederal Deposit Insurance Corporation
FDMFinancially Distressed Modification
FHAFederal Housing Administration
FHLBFederal Home Loan Bank
FICOFair Isaac Corporation (credit rating)
FRB or Federal ReserveBoard of Governors of the Federal Reserve System and, as applicable, Federal Reserve Bank(s)
Freddie Mac (FHLMC)Federal Home Loan Mortgage Corporation
FTEFully Taxable Equivalent
GAAPAccounting Principles Generally Accepted in the United States of America
GDPGross Domestic Product
Ginnie Mae (GNMA)Government National Mortgage Association
GSEGovernment Sponsored Entity
HSBCHSBC Bank U.S.A., N.A.
HSBC transactionAcquisition of HSBC East Coast branches and national online deposit business
HTMHeld To Maturity
InvestorsInvestors Bancorp, Inc. and its subsidiaries
Citizens Financial Group, Inc. | 3


JMPJMP Group LLC
LHFSLoans Held for Sale
LIBORLondon Interbank Offered Rate
LIHTCLow Income Housing Tax Credit
MD&AManagement’s Discussion and Analysis of Financial Condition and Results of Operations
Mid-AtlanticDistrict of Columbia, Delaware, Maryland, New Jersey, New York, Pennsylvania, Virginia, and West Virginia
MidwestIllinois, Indiana, Michigan, and Ohio
Modified AACL TransitionThe Day-1 CECL adoption entry booked to ACL plus 25% of subsequent CECL ACL reserve build
Modified CECL TransitionThe Day-1 CECL adoption entry booked to retained earnings plus 25% of subsequent CECL ACL reserve build
MSRsMortgage Servicing Rights
NCOsNet charge-offs
New EnglandConnecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont
NMTCNew Markets Tax Credit
OCCOffice of the Comptroller of the Currency
OCIOther Comprehensive Income (Loss)
Operating Leverage
Period-over-period percent change in total revenue, less the period-over-period percent change in noninterest expense
Parent CompanyCitizens Financial Group, Inc. (the Parent Company of Citizens Bank, National Association and other subsidiaries)
PCDPurchased Credit Deteriorated
PPPThe U.S. Small Business Administration’s Paycheck Protection Program
ROTCEReturn on Average Tangible Common Equity
RPARisk Participation Agreement
RWARisk-Weighted Assets
SBAUnited States Small Business Administration
SCBStress Capital Buffer
SECUnited States Securities and Exchange Commission
SOFRSecured Overnight Financing Rate
SVaRStressed Value at Risk
Tailoring RulesRules establishing risk-based categories for determining prudential standards for large U.S. and foreign banking organizations, consistent with the Dodd-Frank Act, as amended by the Economic Growth, Regulatory Relief and Consumer Protection Act
TBAsTo-Be-Announced Mortgage Securities
TDRTroubled Debt Restructuring
Tier 1 capital ratioTier 1 capital, which includes Common Equity Tier 1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital, divided by total risk-weighted assets as defined under the U.S. Basel III Standardized approach
Tier 1 leverage ratioTier 1 capital, which includes Common Equity Tier 1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital, divided by quarterly adjusted average assets as defined under the U.S. Basel III Standardized approach
TOPTapping Our Potential
Total capital ratioTotal capital, which includes Common Equity Tier 1 capital, tier 1 capital, and allowance for credit losses and qualifying subordinated debt that qualifies as tier 2 capital, divided by total risk-weighted assets as defined under the U.S. Basel III Standardized approach
USDAUnited States Department of Agriculture
VAUnited States Department of Veterans Affairs
VaRValue at Risk
VIEVariable Interest Entities
Citizens Financial Group, Inc. | 4


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


Citizens Financial Group, Inc. | 5


FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statement that does not describe historical or current facts is a forward-looking statement. These statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “goals,” “targets,” “initiatives,” “potentially,” “probably,” “projects,” “outlook,” “guidance” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would,” and “could.”
Forward-looking statements are based upon the current beliefs and expectations of management, and on information currently available to management. Our statements speak as of the date hereof, and we do not assume any obligation to update these statements or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events. We caution you, therefore, against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. While there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation:
Negative economic, business and political conditions, including as a result of the interest rate environment, supply chain disruptions, inflationary pressures and labor shortages, that adversely affect the general economy, housing prices, the job market, consumer confidence and spending habits;
The general state of the economy and employment, as well as general business and economic conditions, and changes in the competitive environment;
Our capital and liquidity requirements under regulatory standards and our ability to generate capital and liquidity on favorable terms;
The effect of changes in the level of commercial and consumer deposits on our funding costs and net interest margin;
Our ability to implement our business strategy, including the cost savings and efficiency components, and achieve our financial performance goals, including the anticipated benefits of the Investors acquisition and HSBC transaction;
The effects of geopolitical instability, including as a result of Russia’s invasion of Ukraine and the imposition of sanctions on Russia and other actions in response, 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;
The effect of changes in interest rates on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgages held for sale;
Changes in interest rates and market liquidity, as well as the magnitude of such changes, which may reduce interest margins, impact funding sources and affect the ability to originate and distribute financial products in the primary and secondary markets;
Financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses;
Environmental risks, such as physical or transitional risks associated with climate change, and social and governance risks, that could adversely affect our reputation, operations, business, and customers;
A failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of cyber-attacks; and
Management’s ability to identify and manage these and other risks.
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,
Citizens Financial Group, Inc. | 6


financial performance, capital impacts of strategic initiatives, market conditions, receipt of required regulatory approvals and other regulatory considerations, as well as any other factors that our Board of Directors deems relevant in making such a determination. Therefore, there can be no assurance that we will repurchase shares from or pay any dividends to holders of our common stock, or as to the amount of any such repurchases or dividends.
More information about factors that could cause actual results to differ materially from those described in the forward-looking statements can be found in the “Risk Factors” section in Part I, Item 1A of our 2022 Form 10-K.
INTRODUCTION
Citizens Financial Group, Inc. is one of the nation’s oldest and largest financial institutions, with $222.3 billion in assets as of March 31, 2023. Headquartered in Providence, Rhode Island, we offer a broad range of retail and commercial banking products and services to individuals, small businesses, middle-market companies, large corporations and institutions. We help our customers reach their potential by listening to them and by understanding their needs in order to offer tailored advice, ideas and solutions. In Consumer Banking, we provide an integrated experience that includes mobile and online banking, a full-service customer contact center and the convenience of approximately 3,400 ATMs and more than 1,100 branches in 14 states and the District of Columbia. Consumer Banking products and services include a full range of banking, lending, savings, wealth management and small business offerings. In Commercial Banking, we offer a broad complement of financial products and solutions, including lending and leasing, deposit and treasury management services, foreign exchange, interest rate and commodity risk management solutions, as well as loan syndication, corporate finance, merger and acquisition, and debt and equity capital markets capabilities. More information is available at www.citizensbank.com.
The following MD&A is intended to assist readers in their analysis of the accompanying 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 2022 Form 10-K.
Non-GAAP Financial Measures
This document contains non-GAAP financial measures denoted as “Underlying” results and “including AOCI impact”. Underlying results for any given reporting period exclude certain items that may occur in that period which management does not consider indicative of our on-going financial performance. We believe these non-GAAP financial measures provide useful information to investors because they are used by management to evaluate our operating performance and make day-to-day operating decisions. In addition, we believe our Underlying results in any given reporting period reflect our on-going financial performance in that period and, accordingly, are useful to consider in addition to our GAAP financial results. We further believe the presentation of Underlying results increases comparability of period-to-period results.
Other companies may use similarly titled non-GAAP financial measures that 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.”
Citizens Financial Group, Inc. | 7


FINANCIAL PERFORMANCE
Key Highlights
Net income increased $91 million for the three months ended March 31, 2023, with earnings per diluted common share up $0.07 to $1.00 compared to the same period in 2022.
Results reflect notable items of $49 million or $0.10 per diluted common share, net of tax benefit, for the three months ended March 31, 2023, compared to $56 million or $0.14 per diluted common share, net of tax benefit, for the same period in 2022.
Table 1: Notable ItemsThree Months Ended March 31, 2023
Less: notable items
(dollars in millions)Reported results (GAAP)
Integration related costs(1)
TOP and other(2)
ProvisionUnderlying results (non-GAAP)
Provision (benefit) for credit losses$168 $— $— $— $168 
Noninterest expense1,296 52 14 — 1,230 
Income tax expense153 (13)(4)— 170 
Three Months Ended March 31, 2022
Less: notable items
(dollars in millions)Reported results (GAAP)
Integration related costs(1)
TOP and other(2)
Provision(3)
Underlying results (non-GAAP)
Provision (benefit) for credit losses$3 $— $— $24 ($21)
Noninterest expense1,106 37 11 — 1,058 
Income tax expense116 (10)— (6)132 
(1) Includes integration related costs associated with acquisitions.
(2) Includes our TOP transformational and revenue and efficiency initiatives for the three months ended March 31, 2023 and 2022, and income tax impacts related to legacy tax matters for the three months ended March 31, 2022.
(3) Includes the initial provision for credit losses of $24 million tied to 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 increased $92 million to $488 million for the three months ended March 31, 2023, compared to the same period in 2022.
On an Underlying basis, which excludes notable items, net income available to common stockholders of $537 million for the three months ended March 31, 2023, compared with $452 million for the same period in 2022.
On an Underlying basis, earnings per diluted common share of $1.10 for the three months ended March 31, 2023, compared to $1.07 for the same period in 2022.
Total revenue increased $483 million to $2.1 billion for the three months ended March 31, 2023, compared to the same period in 2022, driven by an increase of 43% in net interest income, including the impacts of the HSBC transaction and Investors acquisition.
The efficiency ratio of 60.9% for the three months ended March 31, 2023, compared to 67.2% for the same period in 2022.
On an Underlying basis, the efficiency ratio of 57.8% for the three months ended March 31, 2023, compared to 64.3% for the same period in 2022.
ROTCE of 14.4% for the three months ended March 31, 2023, compared to 11.4% for the same period in 2022.
On an Underlying basis, ROTCE of 15.8% for the three months ended March 31, 2023, compared to 13.0% for the same period in 2022.
Tangible book value per common share of $29.44 increased 6% from December 31, 2022.
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 the “Market Risk” and “Risk Governance” sections of our 2022 Form 10-K.
Table 2: Major Components of Net Interest Income
Three Months Ended March 31,
20232022
Change
(dollars in millions)
Average
Balances
Income/
Expense
Yields/
Rates
Average
Balances
Income/
Expense
Yields/
Rates
Average
Balances
Yields/
Rates (bps)
Assets
Interest-bearing cash and due from banks and deposits in banks$5,899 $69 4.65 %$8,055 $4 0.21 %($2,156)444 bps
Taxable investment securities38,953 266 2.74 29,245 138 1.88 9,708 86 
Non-taxable investment securities— 2.68 — 2.60 — 
Total investment securities38,955 266 2.74 29,247 138 1.88 9,708 86 
Commercial and industrial51,993 735 5.66 44,947 328 2.91 7,046 275 
Commercial real estate28,892 416 5.75 14,066 90 2.57 14,826 318 
Leases1,436 12 3.33 1,560 11 2.81 (124)52 
Total commercial82,321 1,163 5.65 60,573 429 2.83 21,748 282 
Residential mortgages30,075 250 3.33 23,461 169 2.88 6,614 45 
Home equity14,073 240 6.92 12,124 90 3.02 1,949 390 
Automobile11,937 119 4.04 14,534 127 3.55 (2,597)49 
Education12,796 154 4.88 13,034 131 4.07 (238)81 
Other retail5,290 121 9.25 5,428 102 7.63 (138)162 
Total retail74,171 884 4.81 68,581 619 3.65 5,590 116 
Total loans and leases156,492 2,047 5.25 129,154 1,048 3.26 27,338 199 
Loans held for sale, at fair value1,009 15 5.87 2,366 16 2.70 (1,357)317 
Other loans held for sale197 9.98 454 5.89 (257)409 
Interest-earning assets202,552 2,402 4.76 169,276 1,213 2.88 33,276 188 
Noninterest-earning assets20,159 19,041 1,118 
Total assets$222,711 $188,317 $34,394 
Liabilities and Stockholders’ Equity
Checking with interest$35,974 $97 1.09 %$30,417 $5 0.07 %$5,557 102 
Money market49,942 287 2.33 47,220 12 0.10 2,722 223 
Savings29,460 79 1.09 23,835 0.08 5,625 101 
Term12,839 87 2.72 4,970 0.29 7,869 243 
Total interest-bearing deposits128,215 550 1.74 106,442 25 0.10 21,773 164 
Short-term borrowed funds542 4.97 29 — 3.50 513 147 
Long-term borrowed funds17,780 203 4.55 6,066 41 2.66 11,714 189 
Total borrowed funds18,322 209 4.57 6,095 41 2.66 12,227 191 
Total interest-bearing liabilities146,537 759 2.09 112,537 66 0.23 34,000 186 
Demand deposits46,135 48,641 (2,506)
Other noninterest-bearing liabilities6,323 4,144 2,179 
Total liabilities198,995 165,322 33,673 
Stockholders’ equity23,716 22,995 721 
Total liabilities and stockholders’ equity$222,711 $188,317 $34,394 
Interest rate spread2.67 %2.65 %
Net interest income and net interest margin$1,643 3.29 %$1,147 2.75 %54 
Net interest income and net interest margin, FTE(1)
$1,647 3.30 %$1,149 2.75 %55 
Memo: Total deposits (interest-bearing and demand)$174,350 $550 1.28 %$155,083 $25 0.07 %$19,267 121  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.
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Net interest income increased $496 million, or 43%, for the three months ended March 31, 2023, compared to the same period in 2022, reflecting higher net interest margin and growth of 20% in average interest-earning assets, including the impacts of the HSBC transaction and Investors acquisition.
Net interest margin on a FTE basis increased 55 basis points to 3.30% for the three months ended March 31, 2023, compared to the same period in 2022, reflecting higher interest-earning asset yields given higher market interest rates and interest-earning asset growth, partially offset by increased funding costs. Average interest-earning asset yields increased 188 basis points to 4.76%, while average interest-bearing liability costs increased 186 basis points to 2.09%, compared to the same period.
Average interest-earning assets increased $33.3 billion, or 20%, for the three months ended March 31, 2023, compared to the same period in 2022, reflecting the impacts of the HSBC transaction and Investors acquisition. Growth of $27.3 billion in loans and leases and $9.7 billion in investments was partially offset by a decline of $2.2 billion in cash held in interest-bearing deposits and $1.6 billion in LHFS.
Average deposits increased $19.3 billion, or 12%, for the three months ended March 31, 2023, compared to the same period in 2022, primarily attributable to the HSBC transaction and Investors acquisition.
Average total borrowed funds increased $12.2 billion for the three months ended March 31, 2023, compared to the same period in 2022, driven by the Investors acquisition, an increase in FHLB advances and the issuance of senior debt.
Noninterest Income
Table 3: Noninterest Income
Three Months Ended March 31,
(dollars in millions)20232022ChangePercent
Service charges and fees$100 $98 $2 %
Capital markets fees83 93 (10)(11)
Card fees72 60 12 20 
Mortgage banking fees57 69 (12)(17)
Trust and investment services fees63 61 
Foreign exchange and derivative products48 51 (3)(6)
Letter of credit and loan fees40 38 
Securities gains, net25 
Other income(1)
17 24 (7)(29)
Noninterest income$485 $498 ($13)(3 %)
(1) Includes bank-owned life insurance income and other income for all periods presented.
Noninterest income decreased for the three months ended March 31, 2023, compared to the same period in 2022, highlighted by the following significant changes.
Mortgage banking fees declined driven by lower production volumes, partially offset by improved gain-on-sale margins and higher servicing revenue.
Card fees increased given higher transaction volumes.
Capital markets fees decreased reflecting lower syndication fees, partially offset by higher merger and acquisition advisory, and underwriting fees.
Other income decreased reflecting higher derivative expense associated with hedging customer risk given wider spreads.
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Noninterest Expense
Table 4: Noninterest Expense
Three Months Ended March 31,
(dollars in millions)20232022ChangePercent
Salaries and employee benefits$658 $594 $64 11 %
Outside services176 169 
Equipment and software169 150 19 13 
Occupancy124 83 41 49 
Other operating expense169 110 59 54 
Noninterest expense$1,296 $1,106 $190 17 %
Noninterest expense increased for the three months ended March 31, 2023, compared to the same period in 2022, driven primarily by acquisition and integration-related costs, and higher other operating expense associated with FDIC insurance and fraud losses, 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 $168 million for the three months ended March 31, 2023, compared to $3 million for the same period in 2022. The provision expense for the three months ended March 31, 2023 reflects an increased net charge-off level and a focus on the CRE general office portfolio given return to office dynamics and rising interest rates. For the three months ended March 31, 2022, the provision expense reflects low charge-off levels and reduced reserve requirements as COVID concerns subsided.
Income Tax Expense
Income tax expense of $153 million increased $37 million for the three months ended March 31, 2023, compared to the same period in 2022. The effective income tax rate of 23.0% for the same period increased from 21.7%, compared to the same period in 2022, primarily driven by the adoption of the proportional amortization method for qualified investments in tax credit structures and increased non-deductible FDIC premium expense. Provision for income taxes is calculated by applying the estimated annual effective tax rate to year-to-date pre-tax income, adjusting for discrete items that occurred during the period.
Business Operating Segments
We have two business operating segments: Consumer Banking and Commercial Banking. Segment results are determined based on our management reporting system, which assigns balance sheet and statement of operations items to each of the business segments. The process is designed around our organizational and management structure. The results derived are not necessarily comparable with similar information published by other financial institutions.
Developing and applying methodologies used to allocate items among the business operating segments is a dynamic process. Accordingly, financial results may be revised periodically as management systems are enhanced, methods of evaluating performance or product lines are updated, or our organizational structure changes.
There have been no significant changes in our methodologies used to allocate items to our business operating segments as described in Note 26 in our 2022 Form 10-K.
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The following table presents certain financial data of our business operating segments. Total business operating segment financial results differ from total consolidated financial results. These differences are reflected in Other non-segment operations. See Note 16 for additional information.
Table 5: Selected Financial Data for Business Operating Segments
Consumer BankingCommercial Banking
Three Months Ended March 31,Three Months Ended March 31,
(dollars in millions)2023202220232022
Net interest income$1,096 $857 $597 $416 
Noninterest income256 257 201 213 
Total revenue1,352 1,114 798 629 
Noninterest expense889 784 331 272 
Profit before credit losses463 330 467 357 
Net charge-offs83 49 47 12 
Income before income tax expense380 281 420 345 
Income tax expense99 72 101 74 
Net income$281 $209 $319 $271 
Average Balances:
Total assets$87,558 $77,551 $78,891 $61,118 
Total loans and leases(1)
81,190 73,233 75,734 58,007 
Deposits115,578 104,663 48,966 44,520 
Interest-earning assets81,871 74,052 76,130 58,312 
(1) Includes LHFS.
Consumer Banking
Net interest income increased $239 million, or 28%, for the three months ended March 31, 2023, compared to the same period in 2022, driven by higher net interest margin and growth in average interest-earning assets, including the impacts of the HSBC transaction and Investors acquisition, partially offset by higher funding costs. Average loans increased $8.0 billion, or 11%, for the same period, reflecting the impacts of the HSBC transaction and Investors acquisition, as well as growth in home equity and mortgage, partially offset by planned runoff in auto. Average deposits increased $10.9 billion, or 10%, for the same period, reflecting the impacts of the HSBC transaction and Investors acquisition.
Noninterest income decreased $1 million for the three months ended March 31, 2023, compared to the same period in 2022, driven by a decline in mortgage banking fees reflecting lower production volumes, partially offset by improved gain-on-sale margins and higher servicing revenue, and service charges and fees given the elimination of non-sufficient funds fees. These decreases were partially offset by higher card fees given higher transactions volumes and higher trust and investment services fees reflecting increased investment sales, partially offset by lower fees on assets under management.
Noninterest expense increased $105 million, or 13%, for the three months ended March 31, 2023, compared to the same period in 2022, driven primarily by acquisition and integration-related costs, and higher other operating expense associated with FDIC insurance and fraud losses, partially offset by the benefit of efficiency initiatives.
Net charge-offs increased $34 million, or 69%, for the three months ended March 31, 2023, compared to the same period in 2022, driven by other retail, auto and home equity as credit losses continue to gradually normalize off pandemic-era lows.
Commercial Banking
Net interest income increased $181 million, or 44%, for the three months ended March 31, 2023, compared to the same period in 2022, reflecting higher net interest margin and growth in average interest-earning assets, including the impact of the Investors acquisition. The increase in net interest margin reflects higher interest-earning asset yields given higher market interest rates and interest-earning asset growth, partially offset by higher funding costs.
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Noninterest income decreased $12 million, or 6%, for the three months ended March 31, 2023, compared to the same period in 2022, driven by a decline in capital markets fees reflecting lower syndication fees, partially offset by higher mergers and acquisitions advisory, and underwriting fees, and other income reflecting higher derivative expense associated with hedging customer risk given wider spreads. These decreases were partially offset by higher service charges and fees reflecting the benefit of acquisitions and improvement in Treasury Solutions fees and higher card fees given higher transaction volumes.
Noninterest expense increased $59 million, or 22%, for the three months ended March 31, 2023, compared to the same period in 2022, driven primarily by acquisition and integration-related costs, and higher other operating expense associated with FDIC insurance, partially offset by the benefit of efficiency initiatives.
Net charge-offs increased $35 million for the three months ended March 31, 2023, compared to the same period in 2022, as credit losses continue to gradually normalize off pandemic-era lows.
ANALYSIS OF FINANCIAL CONDITION
Securities
Table 6: Amortized Cost and Fair Value of AFS and HTM Securities
March 31, 2023December 31, 2022
(dollars in millions)Amortized
Cost
Fair Value Amortized
Cost
Fair Value
U.S. Treasury and other$3,378 $3,252 $3,678 $3,486 
State and political subdivisions
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities20,957 19,125 21,250 19,062 
Other/non-agency280 251 280 251 
Total mortgage-backed securities21,237 19,376 21,530 19,313 
Collateralized loan obligations1,248 1,215 1,248 1,206 
   Total debt securities available for sale$25,865 $23,845 $26,458 $24,007 
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities$9,125 $8,540 $9,253 $8,506 
Total mortgage-backed securities9,125 8,540 9,253 8,506 
Asset-backed securities552 524 581 536 
   Total debt securities held to maturity$9,677 $9,064 $9,834 $9,042 
   Total debt securities available for sale and held to maturity
$35,542 $32,909 $36,292 $33,049 
Equity securities (at cost)$1,228 $1,228 $1,058 $1,058 
Equity securities (at fair value)143 143 153 153 
The primary objective of the securities portfolio is to provide a ready source of liquidity and is an effective mitigant of interest rate risk. The portfolio primarily includes high-quality, highly-liquid investments reflecting our ongoing commitment to maintain strong contingent liquidity levels and pledging capacity. The amount by which amortized cost exceeded fair value improved by approximately $600 million from $3.2 billion at December 31, 2022, to $2.6 billion at March 31, 2023.
As of March 31, 2023, U.S. Treasury, GNMA and GSE-issued mortgage-backed securities represent 94% of the fair value of our debt securities portfolio holdings, with approximately $27.3 billion in fair value of unencumbered high-quality liquid securities serving as potential collateral for borrowings from the FHLB, FRB discount window, the Fixed Income Clearing Corporation bilateral repurchase agreement market, and the Bank Term Funding Program. Under the Bank Term Funding Program, securities are pledged at par value instead of fair value.
For further discussion of the use of our securities as liquidity collateral see the “Liquidity Risk Management and Governance” section in this document. For further discussion of liquidity requirements, see “Regulation and Supervision — Liquidity Requirements” in our 2022 Form 10-K.
We manage our securities portfolio duration and convexity risk through asset selection and securities structure, and maintain duration levels within our risk appetite in the context of the broader interest rate risk
Citizens Financial Group, Inc. | 13


framework and limits. As of March 31, 2023 and December 31, 2022, the portfolio’s average effective duration remained stable at 5.8 years.
Loans and Leases    
Table 7: Composition of Loans and Leases, Excluding LHFS
(dollars in millions)March 31, 2023December 31, 2022Change Percent
Commercial and industrial$50,450 $51,836 ($1,386)(3)%
Commercial real estate28,999 28,865 134 — 
Leases1,417 1,479 (62)(4)
Total commercial80,866 82,180 (1,314)(2)
Residential mortgages30,362 29,921 441 
Home equity14,135 14,043 92 
Automobile11,535 12,292 (757)(6)
Education12,634 12,808 (174)(1)
Other retail5,156 5,418 (262)(5)
Total retail73,822 74,482 (660)(1)
Total loans and leases$154,688 $156,662 ($1,974)(1)%
Total loans and leases as of March 31, 2023 decreased compared to December 31, 2022, reflecting a $1.3 billion decrease in commercial given loan sales as part of balance sheet optimization actions and reduced line utilization by companies in anticipation of a softer economic environment, and a $660 million decrease in retail, given planned runoff in auto, partially offset by growth in mortgage and home equity.
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 4 of this report, and “Critical Accounting Estimates — Allowance for Credit Losses” and Note 6 in our 2022 Form 10-K.
The ACL of $2.3 billion at March 31, 2023 compared with an ACL of $2.2 billion as of December 31, 2022, reflecting a reserve increase of $35 million. For further information see Note 4.
Table 8: ACL and Related Coverage Ratios by Portfolio
March 31, 2023December 31, 2022
(dollars in millions)Loans and LeasesAllowanceCoverageLoans and LeasesAllowanceCoverage
Allowance for Loan and Lease Losses
Commercial and industrial$50,450 $601 1.19 %$51,836 $581 1.12 %
Commercial real estate28,999 486 1.67 28,865 456 1.58 
Leases1,417 24 1.72 1,479 23 1.59 
Total commercial80,866 1,111 1.37 82,180 1,060 1.29 
Residential mortgages30,362 207 0.68 29,921 207 0.69 
Home equity14,135 95 0.67 14,043 89 0.63 
Automobile11,535 121 1.05 12,292 131 1.07 
Education12,634 266 2.11 12,808 268 2.09 
Other retail5,156 217 4.22 5,418 228 4.21 
Total retail73,822 906 1.23 74,482 923 1.24 
Total loans and leases$154,688 $2,017 1.30 %$156,662 $1,983 1.27 %
Allowance for Unfunded Lending Commitments
Commercial(1)
$215 1.64 %$207 1.54 %
Retail(2)
43 1.29 50 1.31 
     Total allowance for unfunded lending commitments258 257 
Allowance for credit losses$154,688 $2,275 1.47 %$156,662 $2,240 1.43 %
(1) Coverage ratio includes total commercial allowance for unfunded lending commitments and total commercial allowance for loan and lease losses in the numerator and total commercial loans and leases in the denominator.
(2) Coverage ratio includes total retail allowance for unfunded lending commitments and total retail allowance for loan losses in the numerator and total retail loans in the denominator.

Citizens Financial Group, Inc. | 14


Table 9: Nonaccrual Loans and Leases
(dollars in millions)March 31, 2023December 31, 2022Change Percent
Commercial and industrial$297 $249 $48 19 %
Commercial real estate140 103 37 36 
Leases— — — — 
Total commercial437 352 85 24 
Residential mortgages216 234 (18)(8)
Home equity240 241 (1)— 
Automobile50 56 (6)(11)
Education23 33 (10)(30)
Other retail30 28 
Total retail559 592 (33)(6)
Nonaccrual loans and leases$996 $944 $52 %
Nonaccrual loans and leases to total loans and leases0.64 %0.60 % bps
Allowance for loan and lease losses to nonaccrual loans and leases203 %210 %(7 %)
Allowance for credit losses to nonaccrual loans and leases229 %237 %(8 %)
Table 10: Ratio of Net Charge-Offs to Average Loans and Leases
Three Months Ended March 31,
20232022
(dollars in millions)Net Charge-OffsAverage BalanceRatioNet Charge-OffsAverage BalanceRatio
Commercial and industrial$52 $51,993 0.40 %$11 $44,947 0.10 %
Commercial real estate28,892 0.05 — 14,066 — 
Leases(3)1,436 (0.85)— 1,560 0.10 
Total commercial 52 82,321 0.26 11 60,573 0.08 
Residential mortgages30,075 0.01 — 23,461 — 
Home equity(3)14,073 (0.07)(9)12,124 (0.32)
Automobile15 11,937 0.51 14,534 0.18 
Education18 12,796 0.57 16 13,034 0.49 
Other retail50 5,290 3.81 35 5,428 2.61 
Total retail81 74,171 0.44 48 68,581 0.28 
Total loans and leases$133 $156,492 0.34 %$59 $129,154 0.19 %
For the three months ended March 31, 2023, the NCO ratio increased 15 basis points and net charge-offs of $133 million increased $74 million compared to the same period in 2022. The increase in net charge-offs reflects a $33 million increase in retail, primarily other retail, auto and home equity, and a $41 million increase in commercial as credit losses continue to gradually normalize off pandemic-era lows.
Commercial Loan Asset Quality
Our commercial portfolio consists of traditional commercial and industrial loans, commercial leases and commercial real estate loans. As discussed in our 2022 Form 10-K, we utilize regulatory classification ratings to monitor credit quality for commercial loans and leases.
Total commercial criticized balances of $7.4 billion at March 31, 2023 increased $1.9 billion compared with December 31, 2022.
Commercial and industrial criticized balances of $3.6 billion at March 31, 2023, increased from $3.1 billion at December 31, 2022, primarily driven by the impact of increasing interest rates and certain sector-specific employment and reimbursement challenges in Healthcare and Social Assistance.
Commercial real estate criticized balances of $3.7 billion increased from $2.4 billion at December 31, 2022, primarily driven by the combined impacts of interest rates and return-to-office dynamics on the Office sector and the impacts of interest rates on the Multi-family sector. In the general office commercial real estate sector, approximately 24% of the $4.1 billion in balances are criticized at March 31, 2023.
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Table 11: Commercial Loans and Leases
March 31, 2023December 31, 2022
(dollars in millions)Balance% of
Total Loans and Leases
Balance% of
Total Loans and Leases
Sector
Finance and insurance
Capital call facilities$6,507 %$6,753 %
Other5,815 5,310 
Other manufacturing4,325 4,474 
Technology4,211 4,367 
Accommodation and food services3,440 3,572 
Health, pharma, and social assistance3,061 3,056 
Professional, scientific, and technical services2,839 3,067 
Wholesale trade2,817 2,955 
Retail trade2,345 2,391 
Other services2,516 2,713 
Energy and related2,076 2,299 
Real estate and rental and leasing1,586 1,542 
Consumer products manufacturing1,428 1,511 
Administrative and waste management services1,733 1,710 
Arts, entertainment, and recreation1,550 1,587 
Automotive1,260 1,316 
All other(1)
2,941 3,091 
Total commercial and industrial50,450 33 51,715 33 
Property type
Multi-family8,612 8,696 
Office6,282 6,253 
Retail3,476 3,208 
Industrial3,554 3,344 
Co-op1,859 1,824 
Data centers808 870 
Hospitality656 — 638 — 
All other(1)
3,752 4,032 
Total commercial real estate28,999 18 28,865 18 
Total leases1,417 1,479 
Total commercial(2)
$80,866 52 %$82,059 52 %
(1) Includes deferred fees and costs.
(2) Excludes PPP loans of $121 million as of December 31, 2022.
Retail Loan Asset Quality
We utilize credit scores provided by FICO, which are generally refreshed on a quarterly basis, and payment and delinquency status, among other data points, to monitor credit quality for retail loans. 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.
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Table 12: Retail Loan Portfolio Analysis
March 31, 2023December 31, 2022
Days Past Due and AccruingDays Past Due and Accruing
Current30-5960-8990+NonaccrualCurrent30-5960-8990+Nonaccrual
Residential mortgages(1)
97.35 %0.67 %0.24 %1.03 %0.71 %97.68 %0.32 %0.15 %1.07 %0.78 %
Home equity97.66 0.48 0.16 — 1.70 97.68 0.46 0.14 — 1.72 
Automobile98.17 1.11 0.29 — 0.43 97.93 1.24 0.37 — 0.46 
Education99.43 0.26 0.11 0.02 0.18 99.30 0.28 0.13 0.03 0.26 
Other retail97.64 0.81 0.52 0.45 0.58 97.71 0.81 0.55 0.41 0.52 
Total retail97.91 %0.64 %0.23 %0.46 %0.76 %98.02 %0.52 %0.21 %0.46 %0.79 %
(1) 90+ days past due and accruing includes $309 million and $316 million of loans fully or partially guaranteed by the FHA, VA, and USDA at March 31, 2023 and December 31, 2022, respectively.
Table 13: Retail Asset Quality Metrics
March 31, 2023December 31, 2022
Average refreshed FICO for total portfolio771 770 
CLTV ratio for secured real estate(1)
51 %50 %
(1) The real estate secured portfolio CLTV is calculated as the mortgage and second lien loan balance divided by the most recently available value of the property.
For more information on the aging of accruing and nonaccrual retail loans, and the distribution of retail loans by vintage date and FICO score, see Note 4.
Deposits
Table 14: Composition of Deposits
(dollars in millions)March 31, 2023% of Total DepositsDecember 31, 2022% of Total Deposits
Demand$44,326 26 %$49,283 27 %
Money market48,905 28 49,905 28 
Checking with interest34,496 20 39,721 22 
Savings29,789 17 29,805 16 
Term14,678 12,010 
Total deposits$172,194 100 %$180,724 100 %
Total deposits as of March 31, 2023 decreased compared to December 31, 2022, driven by seasonal and rate-related outflows.
Table 15: Insured/Secured Deposits
(dollars in millions)March 31, 2023
Total deposits$172,194 
Estimated uninsured deposits(1)
78,395 
Less: Uninsured affiliate deposits eliminated in consolidation15,406 
Less: Secured deposits(1)
8,344 
CFG adjusted uninsured, excluding secured deposits54,645 
Total estimated insured/secured deposits$117,549 
Insured/secured deposits to total deposits68 %
(1) As reported on CBNA’s 3/31/23 Call Report.
Estimated CFG insured/secured deposits totaled $117.5 billion, comprised of $109.2 billion of insured deposits and $8.3 billion of collateralized preferred deposits from states and municipalities, making up 68% of our consolidated deposit base of $172.2 billion as of March 31, 2023.
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Table 16: Term Deposits in Excess of the FDIC Insurance Limit by Remaining Maturity
(dollars in millions)March 31, 2023
Three months or less$793 
After three months through six months39 
After six months through twelve months422 
After twelve months 25 
Total term deposits(1)
$1,279 
(1) Includes term deposits per account in excess of $250,000.
Borrowed Funds
Total borrowed funds of $19.9 billion as of March 31, 2023 increased $4.0 billion compared to December 31, 2022, primarily driven by an increase in FHLB advances. For more information regarding our borrowed funds, see “Liquidity” and Note 7.
CAPITAL AND REGULATORY MATTERS
As a bank holding company and financial holding company, we are subject to regulation and supervision by the FRB. Our banking subsidiary, CBNA, is a national banking association primarily regulated by the OCC. Our regulation and supervision continues to evolve as the legal and regulatory frameworks governing our operations continue to change.
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 2022 Form 10-K.
The FRB regularly supervises and evaluates our capital adequacy and capital planning processes, including the submission of an annual capital plan approved by our Board of Directors or one of its committees. Under the FRB’s Tailoring Rules, Category IV firms, such as us, are subject to biennial supervisory stress testing in even-numbered years. To incorporate the effects of the Investors acquisition on our capital requirements, the FRB is requiring that we participate in the 2023 CCAR supervisory stress test.
Under the SCB framework, firms must maintain capital ratios above the sum of its minimum and SCB requirements to avoid restrictions on capital distributions and discretionary bonus payments. Our SCB will be re-calibrated with each biennial supervisory stress test and updated annually to reflect our planned common stock dividends. Our SCB associated with the 2022 supervisory stress test is 3.4%, effective until September 30, 2023. We submitted our 2023 Capital Plan to the FRB on April 4, 2023 and expect the FRB to provide us with our preliminary SCB requirement in June and our final SCB requirement by August 31, 2023. The final SCB requirement will become effective on October 1, 2023 and will remain in effect until September 30, 2024.
Regulations relating to capital planning, regulatory reporting, stress testing and capital buffer requirements applicable to firms like us are presently subject to rule-making and potential further guidance and interpretation by the applicable federal regulators. We will continue to evaluate the impact of these and any other prudential regulatory changes, including their potential resultant changes in our regulatory and compliance costs and expenses.
For more information on our capital adequacy process, see the “Regulation and Supervision”, “Capital and Regulatory Matters” and “Tailoring of Prudential Requirements” sections in our 2022 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 CBNA.
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For additional discussion of the U.S. Basel III capital framework and its related application, see “Regulation and Supervision” in our 2022 Form 10-K. The table below presents our regulatory capital ratios under the U.S. Basel III Standardized rules:
Table 17: Regulatory Capital Ratios Under the U.S. Basel III Standardized Rules
March 31, 2023December 31, 2022
Required Minimum Capital Ratios(1)
(dollars in millions)AmountRatioAmountRatio
CET1 capital$18,370 10.0 %$18,574 10.0 %7.9 %
Tier 1 capital20,384 11.1 20,588 11.1 9.4 
Total capital23,720 12.9 23,755 12.8 11.4 
Tier 1 leverage20,384 9.4 20,588 9.3 4.0 
Risk-weighted assets183,246 185,224 
Quarterly adjusted average assets(2)
217,998 220,779 
(1) Represents minimum requirement under the current capital framework plus the SCB of 3.4%. The SCB is not applicable to the Tier 1 leverage ratio.
(2) Represents total average assets less certain amounts deducted from Tier 1 capital.
At March 31, 2023, our CET1 and tier 1 capital ratios were flat compared to December 31, 2022. Net income and a $2.0 billion decrease in RWA driven by a decline in commercial and auto loans, was offset by dividends, common share repurchases and a decrease in the modified CECL transition amount as we entered the second year of the CECL three-year transition period. A slight increase in the total capital ratio was driven by an increase in the modified AACL transition amount. At March 31, 2023, our CET1, tier 1 and total capital ratios were approximately 210, 170 and 150 bps, respectively, above their required minimums.
At March 31, 2023, our tier 1 leverage ratio increased slightly compared to December 31, 2022, driven by a decline in quarterly adjusted average assets of $2.8 billion, partially offset by lower tier 1 capital.
Table 18: Capital Composition Under the U.S. Basel III Capital Framework
(dollars in millions)March 31, 2023December 31, 2022
Total common stockholders' equity$22,187 $21,676 
Exclusions:
Modified CECL transitional amount192 288 
Net unrealized (gains)/losses recorded in accumulated other comprehensive income (loss), net of tax:
Debt securities2,424 2,771 
Derivatives1,149 1,416 
Unamortized net periodic benefit costs370 373 
Deductions:
Goodwill, net of deferred tax liability(7,783)(7,780)
Other intangible assets, net of deferred tax liability(159)(170)
Deferred tax assets that arise from tax loss and credit carryforwards(10)— 
Total common equity tier 1 capital18,370 18,574 
Qualifying preferred stock 2,014 2,014 
Total tier 1 capital20,384 20,588 
Qualifying subordinated debt(1)
1,429 1,427 
Allowance for credit losses2,275 2,240 
Exclusions from tier 2 capital:
Modified AACL transitional amount(249)(374)
Allowance on PCD assets(119)(126)
Adjusted allowance for credit losses1,907 1,740 
    Total capital$23,720 $23,755 
(1) As of March 31, 2023 and December 31, 2022, the amount of non-qualifying subordinated debt excluded from regulatory capital was $367 million. See Note 7 for more details on our outstanding subordinated debt.
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Capital Transactions
We completed the following capital transactions during the first quarter of 2023:
Repurchased $400 million of our outstanding common stock;
Declared and paid quarterly common stock dividends of $0.42 per share, aggregating to $205 million; and
Declared and paid preferred stock dividends aggregating to $23 million and $33 million, respectively.
For additional detail regarding our common and preferred stock dividends see Note 10.
In February 2023, our Board of Directors increased our common share repurchase authorization to $2.0 billion, which was an increase of $1.15 billion above the $850 million of capacity remaining as of December 31, 2022 under the prior June 2022 authorization. All future capital distributions are subject to consideration and approval by our Board of Directors prior to execution. The timing and amount of future dividends and share repurchases will depend on various factors, including our capital position, financial performance, capital impacts of strategic initiatives, market conditions, receipt of required regulatory approvals and other regulatory considerations.
Banking Subsidiary’s Capital
Table 19: CBNA's Capital Ratios Under the U.S. Basel III Standardized Rules
March 31, 2023December 31, 2022
Required Minimum Capital Ratios(1)
(dollars in millions)AmountRatioAmountRatio
CET1 capital$20,233 11.1 %$20,669 11.2 %7.0 %
Tier 1 capital20,233 11.1 20,669 11.2 8.5 
Total capital23,265 12.7 23,534 12.7 10.5 
Tier 1 leverage20,233 9.3 20,669 9.4 4.0 
Risk-weighted assets182,794 184,781 
Quarterly adjusted average assets(2)
217,371 220,182 
(1) Represents minimum requirement under the current capital framework plus the CCB of 2.5%. The CCB is not applicable to the Tier 1 leverage ratio.
(2) Represents total average assets less certain amounts deducted from Tier 1 capital.
At March 31, 2023, CBNA’s CET1 and tier 1 capital ratios decreased slightly compared to December 31, 2022, driven by a dividend payment to the Parent Company and a decrease in the modified CECL transition amount as we entered the second year of the CECL three-year transition period, partially offset by net income and a $2.0 billion decrease in RWA, primarily driven by a decline in commercial and auto loans. CBNA’s total capital ratio was flat compared to December 31, 2022. At March 31, 2023, CBNA’s CET1, tier 1 and total capital ratios were approximately 410, 260 and 220 bps, respectively, above their required minimums.
At March 31, 2023, CBNA’s tier 1 leverage ratio decreased slightly compared to December 31, 2022, driven by lower tier 1 capital, partially offset by a decline in quarterly adjusted average assets of $2.8 billion.
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Potential Regulatory Agency Action Considerations
Given recent U.S. bank failures, regulatory agencies are considering a range of potential changes to capital, liquidity, and other prudential standard-related requirements.
AOCI from Securities Impact on Regulatory Capital
Under the applicable regulatory capital rules we have made the AOCI opt-out election, which enables us to exclude all components of AOCI from regulatory capital. The following table presents the impact of AOCI from securities on our regulatory capital ratios, which we believe provides useful information.
Table 20: AOCI from Securities Impact on Regulatory Capital
March 31, 2023
CFGCBNA
(dollars in millions)CET1Tier 1TotalCET1Tier 1Total
Regulatory capital, including AOCI impact from securities:
Regulatory capital (as reported)$18,370 $20,384 $23,720 $20,233 $20,233 $23,265 
Unrealized gains (losses) on securities(2,424)(2,424)(2,424)(2,424)(2,424)(2,424)
Deferred tax assets - securities AOCI(18)(18)(18)(18)(18)(18)
Regulatory capital, including AOCI impact from securities (non-GAAP)$15,928 $17,942 $21,278 $17,791 $17,791 $20,823 
Risk-weighted assets, including AOCI impact from securities:
Risk-weighted assets (as reported)$183,246 $183,246 $183,246 $182,794 $182,794 $182,794 
Unrealized gains (losses) on securities(428)(428)(428)(428)(428)(428)
Deferred tax assets - securities AOCI1,969 1,969 1,969 1,969 1,969 1,969 
Risk-weighted assets, including AOCI impact from securities (non-GAAP)$184,787 $184,787 $184,787 $184,335 $184,335 $184,335 
Ratio:
Regulatory capital ratio (as reported)10.0 %11.1 %12.9 %11.1 %11.1 %12.7 %
Regulatory capital ratio, including AOCI impact from securities (non-GAAP)8.6 %9.7 %11.5 %9.7 %9.7 %11.3 %
FDIC Special Assessment
In connection with recent bank failures, the FDIC was appointed as receiver of the failed institutions and announced that, as required by the Federal Deposit Insurance Act, any losses to the Deposit Insurance Fund to support uninsured depositors would be recovered by a special assessment. Proposed FDIC rulemaking for the special assessment is expected in the near term, with the FDIC having discretion over its design and timeframe. As a result, the timing, amount and allocation of the special assessment that will ultimately be imposed on banking organizations is uncertain and its impact on our noninterest expense and results of operations may be material.
LIQUIDITY
We define liquidity as our ability to meet our cash-flow and collateral obligations in a timely manner, at a reasonable cost. As a financial institution, we must maintain operating liquidity to meet expected daily and forecasted cash-flow requirements, as well as contingent liquidity to meet unexpected (stress scenario) funding requirements. Reflecting the importance of meeting all unexpected and stress-scenario funding requirements, we identify and manage contingent liquidity, consisting of cash balances at the FRB, unencumbered high-quality liquid securities and unused FHLB borrowing capacity. Separately, we also identify and manage asset liquidity as a subset of contingent liquidity, consisting of cash balances at the FRB and unencumbered high-quality liquid securities. We consider the effective and prudent management of liquidity fundamental to our health and strength. We manage liquidity at the consolidated enterprise level and at each material legal entity.
Parent Company Liquidity
Our Parent Company’s primary sources of cash are dividends and interest received from CBNA resulting from investing in bank equity and subordinated debt as well as externally issued preferred stock, senior debt and subordinated debt. Uses of cash include the routine cash flow requirements as a bank holding company, including periodic share repurchases and payments of dividends, interest and expenses; the needs of subsidiaries, including CBNA for additional equity and, as required, its need for debt financing; and the support for extraordinary funding requirements when necessary. To the extent the Parent Company has relied on wholesale borrowings, uses also include payments of related principal and interest.
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During the three months ended March 31, 2023 and 2022, the Parent Company declared dividends on common stock of $205 million and $165 million, respectively, and declared dividends on preferred stock of $23 million and $24 million, respectively.
During the three months ended March 31, 2023, the Parent Company repurchased $400 million of its outstanding common stock.
Our Parent Company’s cash and cash equivalents represent a source of liquidity that can be used to meet various needs and totaled $2.0 billion and $1.6 billion as of March 31, 2023 and December 31, 2022, respectively. The Parent Company’s double-leverage ratio (the combined equity investment in Parent Company subsidiaries divided by Parent Company equity) is a measure of reliance on equity cash flows from subsidiaries to fund Parent Company obligations. The Parent Company’s double-leverage ratio was 100.2% and 101.2% as of March 31, 2023 and December 31, 2022, respectively.
CBNA Liquidity
As CBNA’s primary business involves taking deposits and making loans, a key role of liquidity management is to ensure that customers have timely access to funds from deposits and for loans. Liquidity management also involves maintaining sufficient liquidity to repay wholesale borrowings, pay operating expenses and support extraordinary funding requirements when necessary. In the ordinary course of business the liquidity of CBNA is managed by matching sources and uses of cash. The primary sources of bank liquidity include deposits from our consumer and commercial customers; payments of principal and interest on loans and debt securities; and wholesale borrowings, as needed, and as described under “Liquidity Risk Management and Governance.” The primary uses of bank liquidity include withdrawals and maturities of deposits; payment of interest on deposits; funding of loans and related commitments; and funding of securities purchases. To the extent that CBNA has relied on wholesale borrowings, uses also include payments of related principal and interest. For further information on CBNA’s outstanding debt, see Note 7.
During the three months ended March 31, 2023, CBNA completed the following transactions:
Issued $450 million of 5.284% fixed-to-floating rate senior notes; and
Redeemed $750 million of senior notes due March 2023.
Liquidity Risk
We define liquidity risk as the risk that an entity will be unable to meet its payment obligations in a timely manner, at a reasonable cost. Liquidity risk can arise due to contingent liquidity risk and/or funding liquidity risk.
Contingent liquidity risk is the risk that market conditions may reduce an entity’s ability to liquidate, pledge and/or finance certain assets and thereby substantially reduce the liquidity value of such assets. Drivers of contingent liquidity risk include general market disruptions as well as specific issues regarding the credit quality and/or valuation of a security or loan, issuer or borrower and/or asset class.
Funding liquidity risk is the risk that market conditions and/or entity-specific events may reduce an entity’s ability to raise funds from depositors and/or wholesale market counterparties. Drivers of funding liquidity risk may be idiosyncratic or systemic, reflecting impediments to operations and/or damaged market confidence.
Factors Affecting Liquidity
Given the composition of assets and borrowing sources, contingent liquidity risk at CBNA would be materially affected by events such as deterioration of financing markets for high-quality securities (e.g., mortgage-backed securities and other instruments issued by GNMA, FNMA and FHLMC), by any inability of the FHLBs to provide collateralized advances and/or by a refusal of the FRB to act as a lender of last resort in systemic stress.
Similarly, the funding liquidity risk of CBNA could be materially affected by an adverse idiosyncratic event (e.g., a major loss, causing a perceived or actual deterioration in its financial condition), an adverse systemic event (e.g., default or bankruptcy of a significant capital markets participant), or a combination of both. Consequently, and despite ongoing exposure to a variety of idiosyncratic and systemic events, we view our contingent liquidity risk and our funding liquidity risk to be relatively low.
Citizens Financial Group, Inc. | 22


An additional variable affecting our access to unsecured wholesale market funds and to large denomination (i.e., uninsured) customer deposits is the credit ratings assigned by such agencies as Moody’s, Standard and Poor’s, and Fitch. Moody’s initiated coverage of CFG during the first quarter of 2023.
Table 21: Credit Ratings
 March 31, 2023
 
Moody’s  
Standard and
Poor’s
Fitch  
Citizens Financial Group, Inc.:   
Long-term issuerBaa1BBB+BBB+
Short-term issuerNRA-2F1
Subordinated debtBaa1BBBBBB
Preferred StockBaa3BB+BB
Citizens Bank, National Association:
Long-term issuerBaa1A-BBB+
Short-term issuerNRA-2F1
Long-term depositsA1NRA-
Short-term depositsP-1NRF1
 NR = Not rated
Changes in our public credit ratings could affect both the cost and availability of our wholesale funding. As a result, and in order to maintain a conservative funding profile, CBNA continues to minimize reliance on unsecured wholesale funding. At March 31, 2023, our wholesale funding consisted primarily of term debt issued by the Parent Company and CBNA, and collateralized advances from the FHLB.
Existing and evolving regulatory liquidity requirements represent another key driver of systemic liquidity conditions and liquidity management practices. The FRB, OCC, and FDIC regularly evaluate our liquidity as part of the overall supervisory process. In addition, we are subject to existing and evolving regulatory liquidity requirements, some of which are subject to further rulemaking, guidance and interpretation by the applicable federal regulators. For further discussion, see “Regulation and Supervision — Tailoring of Prudential Requirements” and “—Liquidity Requirements” in our 2022 Form 10-K.
Liquidity Risk Management and Governance
Liquidity risk is measured and managed by the Funding and Liquidity unit within our Treasury group in accordance with policy guidelines promulgated by our Board and the Asset Liability Committee. The Funding and Liquidity unit maintains a robust liquidity management framework designed to effectively manage liquidity risk. Processes within this framework include, but are not limited to, regular and comprehensive reporting, including current levels versus threshold limits for a broad set of liquidity metrics and early warning indicators, explanatory commentary relating to emerging risk trends and, as appropriate, recommended remedial strategies, liquidity stress testing, contingency funding plans, and collateral management.
Citizens Financial Group, Inc. | 23


Our Funding and Liquidity unit’s primary goals are to deliver and maintain prudent levels of operating liquidity to support expected and projected funding requirements, contingent liquidity to support unexpected funding requirements resulting from idiosyncratic, systemic, and combination stress events, and regulatory liquidity requirements in a timely manner from stable and cost-efficient funding sources. We seek to accomplish these goals by funding loans with stable deposits, by prudently controlling dependence on wholesale funding, particularly short-term unsecured funding, and by maintaining ample available liquidity, including a contingent liquidity buffer of unencumbered high-quality loans and securities.
In response to the recent U.S. bank failures, the FRB established the Bank Term Funding Program to make additional funding available to eligible depository institutions to ensure the ability to meet the needs of all depositors. This program was designed to provide another source of liquidity against the par value of high-quality securities, eliminating the need to sell these securities during times of stress. Citizens is eligible to borrow under this program based on its existing eligibility for primary credit under the Federal Reserve discount window.
As of March 31, 2023:
Organically generated deposits continue to be our primary source of funding, resulting in a consolidated period-end loans-to-deposits ratio, excluding LHFS, of 89.8%;
Estimated insured/secured deposits comprise 68% of our consolidated deposit base of $172.2 billion.
Our total available liquidity, comprised of contingent liquidity and available discount window capacity, was approximately $66.0 billion;
Contingent liquidity was $40.7 billion, consisting of unencumbered high-quality liquid securities of $27.3 billion, unused FHLB capacity of $6.8 billion, and our cash balances at the FRB of $6.6 billion; and
Available discount window capacity was $25.3 billion, defined as available total borrowing capacity from the FRB based on identified collateral, which is primarily secured by non-mortgage commercial and retail loans.
For a summary of our sources and uses of cash by type of activity for the three months ended March 31, 2023 and 2022, see the Consolidated Statements of Cash Flows in Item 1.
The Funding and Liquidity unit monitors a variety of liquidity and funding metrics and early warning indicators and metrics, including specific risk thresholds limits. These monitoring tools are broadly classified as follows:
Current liquidity sources and capacities, including cash balances at the FRB, free and liquid securities, and secured FHLB borrowing capacity;
Liquidity stress sources, including idiosyncratic, systemic and combined stresses, in addition to evolving regulatory requirements; and
Current and prospective exposures, including secured and unsecured wholesale funding, and spot and cumulative cash-flow gaps across a variety of horizons.
Further, certain of these metrics are monitored individually for CBNA and for our consolidated enterprise on a daily basis, including cash position, unencumbered securities, asset liquidity and available FHLB borrowing capacity. In order to identify emerging trends and risks and inform funding decisions, specific metrics are also forecasted over a one-year horizon.
Off-Balance Sheet Arrangements
We engage in a variety of activities that are not reflected in our Consolidated Balance Sheets that are generally referred to as “off-balance sheet arrangements.” For more information on these types of activities, see Note 11.
CRITICAL ACCOUNTING ESTIMATES
Our unaudited interim Consolidated Financial Statements included in this Report are prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires us to establish accounting policies and make estimates that affect amounts reported in our audited Consolidated Financial Statements.
Citizens Financial Group, Inc. | 24


An accounting estimate requires assumptions and judgments about uncertain matters that could have a material effect on our unaudited interim Consolidated Financial Statements. Estimates are made using facts and circumstances known at a point in time. Changes in those facts and circumstances could produce results substantially different from those estimates. Our most significant accounting policies and estimates and their related application are discussed below. For additional information regarding fair value measurements, see “Critical Accounting Estimates” in our 2022 Form 10-K.
Allowance for Credit Losses
The ACL increased from $2.2 billion at December 31, 2022 to $2.3 billion at March 31, 2023.
Our ACL as of March 31, 2023 accounts for an economic forecast over our two-year reasonable and supportable period with peak unemployment of approximately 6% and peak-to-trough GDP decline of approximately 1%. This forecast reflects a moderate recession over the two-year reasonable and supportable period. This compares to our December 31, 2022 forecast which reflected the same unemployment rate with a slightly more adverse peak-to-trough GDP decline of approximately 1.4%.
Our determination of the ACL is sensitive to changes in forecasted macroeconomic conditions during the reasonable and supportable forecast period. To illustrate the sensitivity, we applied a more pessimistic scenario than that described above which assumes that monetary tightening triggers a deeper real GDP contraction across our two-year reasonable and supportable forecast period, resulting in a 1.7% peak-to-trough decline in real GDP. Excluding consideration of qualitative adjustments, this scenario would result in a quantitative lifetime loss estimate of approximately 1.15x our modeled period-end ACL, or an increase of approximately $275 million. This analysis relates only to the modeled credit loss estimate and not to the overall period-end ACL, which includes qualitative adjustments.
Because several quantitative and qualitative factors are considered in determining the ACL, this sensitivity analysis does not necessarily reflect the nature and extent of future changes in the ACL or even what the ACL would be under these economic circumstances. The sensitivity is intended to provide insights into the impact of adverse changes in the macroeconomic environment and the corresponding impact to modeled loss estimates. The hypothetical determination does not incorporate the impact of management judgment or other qualitative factors that could be applied in the actual estimation of the ACL and does not imply any expectation of future deterioration in our loss rates.
It remains difficult to estimate how changes in economic forecasts might affect our ACL because such forecasts consider a wide variety of variables and inputs, and changes in the variables and inputs may not occur at the same time or in the same direction, and such changes may have differing impacts by product type. The variables and inputs may be idiosyncratically affected by risks to the economy, including changing monetary and fiscal policies, impacts from the recent stress on the banking industry, and their impact on inflationary trends. Changes in one or multiple of the key macroeconomic variables may have a material impact to our estimation of expected credit losses.
For additional information regarding the ACL, see Note 4 of this report, and “Critical Accounting Estimates - Allowance for Credit Losses” and Note 6 in our 2022 Form 10-K.
RISK GOVERNANCE
We are committed to maintaining a strong, integrated, and proactive approach to the management of all risks to which we are exposed in pursuit of our business objectives. A key aspect of our Board’s responsibility as the main decision making body is setting our risk appetite to ensure that the levels of risk that we are willing to accept in the attainment of our strategic business and financial objectives are clearly understood.
To enable our Board to carry out its objectives, it has delegated authority for risk management activities, as well as governance and oversight of those activities, to a number of Board and executive management level risk committees. The Executive Risk Committee, chaired by the Chief Risk Officer, is responsible for oversight of risk across the enterprise and actively considers our inherent material risks, analyzes our overall risk profile and seeks confirmation that the risks are being appropriately identified, assessed and mitigated. Reporting to the Executive Risk Committee are the following committees covering specific areas of risk: Compliance and Operational Risk, Model Risk, Credit Policy, Asset Liability, Business Initiatives Review, and Conduct and Ethics.
There have been no significant changes in our risk governance practices, risk framework, risk appetite, or credit risk as described in “Risk Governance” in our 2022 Form 10-K.
Citizens Financial Group, Inc. | 25


MARKET RISK
Market risk refers to potential losses arising from changes in interest rates, foreign exchange rates, equity prices, commodity prices and/or other relevant market rates or prices. Modest market risk arises from trading activities that serve customer needs, including the hedging of interest rate and foreign exchange risk. As described below, more material market risk arises from our non-trading banking activities, such as the origination of loans and deposit-gathering. We have established enterprise-wide policies and methodologies to identify, measure, monitor and report market risk. We actively manage market risk for both non-trading and trading activities.
Non-Trading Risk
Our non-trading banking activities expose us to market risk. This market risk is composed of interest rate risk, as we have no commodity risk and de minimis direct currency and equity risk. We also have market risk related to capital markets loan originations, as well as the valuation of our MSRs. There have been no significant changes in our sources of interest rate risk, interest rate risk practices, risk framework, metrics or assumptions as described in “Market Risk — Non-Trading Risk” in our 2022 Form 10-K.
The table below reports net interest income exposures against a variety of interest rate scenarios. Our policies involve measuring exposures as a percentage change in net interest income over the next year due to either instantaneous or gradual parallel changes in rates relative to the market implied forward yield curve. As the following table illustrates, our balance sheet is asset-sensitive; net interest income would benefit from an increase in interest rates, while exposure to a decline in interest rates is within limits established and monitored by senior management. While an instantaneous and severe shift in interest rates is included in this analysis, we believe that any actual shift in interest rates would be more gradual and, therefore, have a more modest impact.
The table below presents the sensitivity of net interest income to various parallel yield curve shifts from the market implied forward yield curve:
Table 22: Sensitivity of Net Interest Income
Estimated % Change in Net Interest Income over 12 Months
Basis pointsMarch 31, 2023December 31, 2022
Instantaneous Change in Interest Rates  
+2002.5 %4.8 %
+1001.0 2.4 
-100(2.1)(2.5)
-200(4.8)(5.6)
Gradual Change in Interest Rates
+2001.1 %2.7 %
+1000.3 1.4 
-100(1.2)(1.4)
-200(2.6)(3.0)
We continue to manage asset sensitivity within the scope of our policy, changing market conditions and changes in our balance sheet. Asset sensitivity against a 200-basis point gradual increase in rates was 1.1% on March 31, 2023, compared with 2.7% on December 31, 2022. This decrease reflects the effects of our ongoing hedge activity combined with changes in our current and projected balance sheet mix due to the higher interest rate environment. Current and projected levels of asset sensitivity minimize the effects of changes in short-term policy rates from the FRB and mitigate the impact on the Company’s net interest income and margin. Changes in interest rates can also affect risk management activities, which impact the repricing sensitivity or beta of the deposit base as well as the cash flows on assets that allow for early payoff without a penalty. The risk position is managed within our risk limits, and long-term view of interest rates through occasional adjustments to securities investments, interest rate swaps and mix of funding.
Citizens Financial Group, Inc. | 26


We use a valuation measure of exposure to structural interest rate risk, EVE, as a supplement to net interest income simulations. EVE complements net interest income simulation analysis as it estimates risk exposure over a long-term horizon. EVE measures the extent to which the economic value of assets, liabilities and off-balance sheet instruments may change in response to fluctuations in interest rates. This analysis is highly dependent upon assumptions applied to assets and liabilities with non-contractual maturities, and we employ sophisticated models for prepayments and deposit pricing and attrition, which provide a granular view of cash flows based on the unique characteristics of the underlying products and customer segments. The change in value is expressed as a percentage of regulatory capital.
We use interest rate contracts to manage the interest rate exposure to the variability in the interest cash flows on our floating-rate assets and wholesale funding, and to hedge market risk on fixed-rate capital markets debt issuances.
The following table presents interest rate derivative contracts that we have entered into as of March 31, 2023 and December 31, 2022.
Table 23: Interest Rate Derivative Contracts Used to Manage Non-Trading Interest Rate Exposure
March 31, 2023December 31, 2022
Weighted AverageWeighted Average
(dollars in millions)Notional AmountMaturity (Years)Receive RatePay Rate Notional AmountMaturity (Years)Receive RatePay Rate
Swaps - conventional ALM(1)
Cash flow - receive fixed/pay variable
Active$9,750 0.5 1.1 %1.3 %$15,750 3.9 1.9 %4.4 %
Forward-starting(2)
36,500 2.7 3.5 4.3 15,500 3.5 3.0 4.5 
Fair value - receive fixed/pay variable500 2.6 2.6 4.9 1,000 1.6 2.7 4.7 
Total46,750 32,250 
Forward-starting cash flow - basis swaps(3)(4)
7,000 3.1 4.3 4.37,000 3.3 4.4 4.4 
Total swaps$53,750 $39,250 
Options
Interest rate collars(5)(6)
$1,500 2.6 2.6 3.9 $1,500 2.8 2.6 3.9 
Floor spread(5)(6)
500 2.9 4.1 3.0 — — — — 
(1) We use interest rate contracts as part of our ALM strategy to manage exposure to the variability in the interest cash flows on our floating-rate commercial loans and wholesale funding, as well as the variability in the fair value of AFS securities.
(2) As of March 31, 2023, start dates range from the second quarter of 2023 to the fourth quarter of 2024.
(3) As of March 31, 2023, start dates range from the third quarter of 2023 to the third quarter of 2024.
(4) Receive and pay rates represent SOFR and 1-month term SOFR, respectively.
(5) Represents forward-starting interest rate options with effective dates ranging from the fourth quarter of 2023 to the second quarter of 2024.
(6) Receive and pay rates represent the minimum interest rate received for interest rate floors and the maximum interest rate paid for interest rate caps, respectively.
The following table presents the average active notional amounts for our interest rate derivatives, based on contract effective date, during the remainder of 2023 and for the next five years:
Table 24: Schedule of Average Active Notional for Interest Rate Derivative Contracts
Year Ended
(dollars in millions)202320242025202620272028
Swaps
Cash flow - receive fixed/pay variable$20,941 $26,477 $27,172 $16,112 $5,375 $501 
Fair value - receive fixed/pay variable500 500 441 — — — 
Forward-starting cash flow - basis swaps715 6,277 5,634 2,810 785 — 
Options
Interest rate collars109 1,261 1,001 240 — — 
Floor spread— 407 500 93 — — 
Total$22,265 $34,922 $34,748 $19,255 $6,160 $501 
Weighted average receive rate(1)
4.2 %3.2 %3.1 %3.2 %3.2 %2.8 %
Weighted average pay rate(1)
— — — — — — 
(1) Represents the weighted average rate relative to the fixed leg of the interest rate derivative contracts.
Citizens Financial Group, Inc. | 27


Table 25: Pre-Tax Gains (Losses) Recorded in the Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Income on Cash Flow Hedges
Three Months Ended March 31,
(dollars in millions)20232022
Amount of pre-tax net gains (losses) recognized in OCI$233 ($661)
Amount of pre-tax net gains (losses) reclassified from AOCI into interest income(127)37 
Amount of pre-tax net gains (losses) reclassified from AOCI into interest expense— (5)
Using the interest rate curve at March 31, 2023 with respect to cash flow hedge strategies, we estimate that approximately $514 million in pre-tax net losses will be reclassified from AOCI to net interest income over the next 12 months, including $452 million related to terminated swaps. This amount could differ from amounts recognized due to changes in interest rates, hedge de-designations and the addition of other hedges after March 31, 2023.
LIBOR Transition
For details regarding our LIBOR Transition Program and associated efforts to plan for the discontinuation of LIBOR, see “Market Risk — LIBOR Transition” in our 2022 Form 10-K. There were no significant changes relative to the program during the three months ended March 31, 2023.
Capital Markets
A key component of our capital markets activities is the underwriting and distribution of corporate credit facilities to partially finance merger and acquisition transactions for our clients. We have a rigorous risk management process around these activities, including a limit structure capping our underwriting risk, potential loss, and sub-limits for specific asset classes. Further, the ability to approve underwriting exposure is delegated only to senior level individuals in the credit risk management and capital markets organizations with each transaction adjudicated in the Loan Underwriting Approval Committee.
Mortgage Servicing Rights    
We have market risk associated with the value of residential MSRs, which are impacted by various types of inherent risks, including duration, basis, convexity, volatility and yield curve.
As part of our overall risk management strategy relative to the fair market value of the MSRs we enter into various free-standing derivatives, such as interest rate swaps, interest rate swaptions, interest rate futures and forward contracts to purchase mortgage-backed securities to economically hedge the changes in fair value. As of March 31, 2023 and December 31, 2022, the fair value of our MSRs was $1.5 billion, and the total notional amount of related derivative contracts was $19.7 billion and $12.9 billion, respectively. Gains and losses on MSRs and the related derivatives used for hedging are included in mortgage banking fees in the Consolidated Statements of Operations.
As with our traded market risk-based activities, earnings at risk excludes the impact of MSRs. MSRs are captured under our single price risk management framework that is used for calculating a management value at risk that is consistent with the definition used by banking regulators.
Trading Risk
We are exposed to market risk primarily through client facilitation activities including derivatives and foreign exchange products as well as underwriting and market making activities. Exposure is created as a result of changes in interest rates and related basis spreads and volatility, foreign exchange rates, equity prices, and credit spreads on a select range of interest rates, foreign exchange, commodities, equity securities, corporate bonds and secondary loan instruments. These securities underwriting and trading activities are conducted through CBNA, CCMI and JMP. There have been no significant changes in our market risk governance, market risk measurement, or market risk practices including VaR, stressed VaR, sensitivity analysis, stress testing, or VaR model review and validation as described in “Market Risk — Trading Risk” in our 2022 Form 10-K.
Market Risk Regulatory Capital
The U.S. banking regulators’ “Market Risk Rule” covers the calculation of market risk capital. Under this rule all our client facing trades and associated hedges maintain a net low risk and qualify as “covered positions.” The internal management VaR measure is calculated based on the same population of trades that is utilized for regulatory VaR.
Citizens Financial Group, Inc. | 28


Table 26: Results of Modeled and Non-Modeled Measures for Regulatory Capital Calculations
(dollars in millions)For the Three Months Ended March 31, 2023For the Three Months Ended March 31, 2022
Market Risk Category 
Period End
Average
HighLowPeriod EndAverageHighLow
Interest Rate$2 $3 $4 $2 $1 $2 $6 $— 
Foreign Exchange Currency Rate— — — — — — — 
Credit Spread14 
Commodity— — — — — — — — 
General VaR10 17 
Specific Risk VaR— — — — — — — — 
Total VaR$2 $3 $5 $2 $3 $10 $17 $3 
Stressed General VaR$5 $8 $13 $4 $15 $13 $19 $4 
Stressed Specific Risk VaR— — — — — — — — 
Total Stressed VaR$5 $8 $13 $4 $15 $13 $19 $4 
Market Risk Regulatory Capital$32 $67 
Specific Risk Not Modeled Add-on20 25 
de Minimis Exposure Add-on— — 
Total Market Risk Regulatory Capital$52 $92 
Market Risk-Weighted Assets$654 $1,154 
VaR Backtesting
Backtesting is one form of validation of the VaR model and is run daily. The Market Risk Rule requires a comparison of our internal VaR measure to the actual net trading revenue (excluding fees, commissions, reserves, intra-day trading and net interest income) for each day over the preceding year (the most recent 250 business days). Any observed loss in excess of the VaR number is taken as an exception. The level of exceptions determines the multiplication factor used to derive the VaR and SVaR-based capital requirement for regulatory reporting purposes, when applicable. We perform sub-portfolio backtesting as required under the Market Risk Rule, using models approved by our banking regulators for interest rate, credit spread and foreign exchange positions.
The following graph shows our daily net trading revenue and total internal, modeled VaR for the twelve months ended March 31, 2023.
Daily VaR Backtesting
Q1 2023 Backtesting Graph 10Q 2.gif
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NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
For more information on the computation of our non-GAAP financial measures, see “Introduction — Non-GAAP Financial Measures,” included in this Report. The following table presents computations of non-GAAP financial measures representing our “Underlying” results used in the MD&A:
Table 27: Reconciliations of Non-GAAP Measures
  As of and for the Three Months Ended March 31,
(dollars in millions, except per share data)Ref.20232022
Total revenue, Underlying:
Total revenue (GAAP)C$2,128 $1,645 
Less: Notable items— — 
Total revenue, Underlying (non-GAAP)D$2,128 $1,645 
Noninterest expense, Underlying:
Noninterest expense (GAAP)E$1,296 $1,106 
Less: Notable items66 48 
Noninterest expense, Underlying (non-GAAP)F$1,230 $1,058 
Pre-provision profit:
Total revenue (GAAP)C$2,128 $1,645 
Less: Noninterest expense (GAAP)E1,296 1,106 
Pre-provision profit (GAAP)$832 $539 
Pre-provision profit, Underlying
Total revenue, Underlying (non-GAAP)D$2,128 $1,645 
Less: Noninterest expense, Underlying (non-GAAP)F1,230 1,058 
Pre-provision profit, Underlying (non-GAAP)$898 $587 
Provision (benefit) for credit losses, Underlying:
Provision (benefit) for credit losses (GAAP)$168 $3 
Less: Notable items— 24 
Provision (benefit) for credit losses, Underlying (non-GAAP)$168 ($21)
Income before income tax expense, Underlying:
Income before income tax expense (GAAP)G$664 $536 
Less: Income (loss) before income tax expense (benefit) related to notable items(66)(72)
Income before income tax expense, Underlying (non-GAAP)H$730 $608 
Income tax expense and effective income tax rate, Underlying:
Income tax expense (GAAP)I$153 $116 
Less: Income tax expense (benefit) related to notable items(17)(16)
Income tax expense, Underlying (non-GAAP)J$170 $132 
Effective income tax rate (GAAP)I/G22.97 %21.70 %
Effective income tax rate, Underlying (non-GAAP)J/H23.25 21.70 
Net income, Underlying:
Net income (GAAP)K$511 $420 
Add: Notable items, net of income tax benefit49 56 
Net income, Underlying (non-GAAP)L$560 $476 
Net income available to common stockholders, Underlying:
Net income available to common stockholders (GAAP)M$488 $396 
Add: Notable items, net of income tax benefit49 56 
Net income available to common stockholders, Underlying (non-GAAP)N$537 $452 
Return on average common equity and return on average common equity, Underlying:
Average common equity (GAAP)O$21,702 $20,981 
Return on average common equityM/O9.11 %7.65 %
Return on average common equity, Underlying (non-GAAP)
N/O10.01 8.75 

Citizens Financial Group, Inc. | 30


  As of and for the Three Months Ended March 31,
(dollars in millions, except per share data)Ref.20232022
Return on average tangible common equity and return on average tangible common equity, Underlying: 
Average common equity (GAAP)O$21,702 $20,981 
Less: Average goodwill (GAAP)8,177 7,156 
Less: Average other intangibles (GAAP)192 80 
Add: Average deferred tax liabilities related to goodwill and other intangible assets (GAAP)422 383 
Average tangible common equity P$13,755 $14,128 
Return on average tangible common equity M/P14.38 %11.36 %
Return on average tangible common equity, Underlying (non-GAAP)N/P15.80 12.99 
Return on average total assets and return on average total assets, Underlying:
Average total assets (GAAP)Q$222,711 $188,317 
Return on average total assetsK/Q0.93 %0.90 %
Return on average total assets, Underlying (non-GAAP)L/Q1.02 1.03 
Return on average total tangible assets and return on average total tangible assets, Underlying: 
Average total assets (GAAP)Q$222,711 $188,317 
Less: Average goodwill (GAAP)8,177 7,156 
Less: Average other intangibles (GAAP)192 80 
Add: Average deferred tax liabilities related to goodwill and other intangible assets (GAAP)422 383 
Average tangible assets R$214,764 $181,464 
Return on average total tangible assets K/R0.97 %0.94 %
Return on average total tangible assets, Underlying (non-GAAP)L/R1.06 1.06 
Efficiency ratio and efficiency ratio, Underlying: 
Efficiency ratio E/C60.90 %67.23 %
Efficiency ratio, Underlying (non-GAAP)F/D57.84 64.28 
Operating leverage and operating leverage, Underlying:
Increase in total revenue29.39 %(0.85)%
Increase in noninterest expense17.22 8.65 
Operating leverage12.17 %(9.50)%
Increase in total revenue, Underlying (non-GAAP)29.39 %(0.85)%
Increase in noninterest expense, Underlying (non-GAAP)16.43 5.89 
Operating leverage, Underlying (non-GAAP)12.96 %(6.74)%
Tangible book value per common share:
Common shares - at period end (GAAP)S483,982,264 423,031,985 
Common stockholders' equity (GAAP)$22,187 $20,060 
Less: Goodwill (GAAP)8,177 7,232 
Less: Other intangible assets (GAAP)185 115 
Add: Deferred tax liabilities related to goodwill and other intangible assets (GAAP)422 387 
Tangible common equityT$14,247 $13,100 
Tangible book value per common shareT/S$29.44 $30.97 
Net income per average common share - basic and diluted and net income per average common share - basic and diluted, Underlying:
Average common shares outstanding - basic (GAAP)U485,444,313 422,401,747 
Average common shares outstanding - diluted (GAAP)V487,712,146 424,670,871 
Net income per average common share - basic (GAAP)M/U$1.00 $0.94 
Net income per average common share - diluted (GAAP)M/V1.00 0.93 
Net income per average common share - basic, Underlying (non-GAAP)N/U1.10 1.07 
Net income per average common share - diluted, Underlying (non-GAAP)N/V1.10 1.07 
Dividend payout ratio and dividend payout ratio, Underlying:
Cash dividends declared and paid per common shareW$0.42 $0.39 
Dividend payout ratioW/(M/U)42 %41 %
Dividend payout ratio, Underlying (non-GAAP)W/(N/U)38 36 
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ITEM 1. FINANCIAL STATEMENTS

Page

Citizens Financial Group, Inc. | 32


CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(dollars in millions, except par value)March 31, 2023December 31, 2022
ASSETS:
Cash and due from banks$1,283 $1,489 
Interest-bearing cash and due from banks6,691 9,058 
Interest-bearing deposits in banks320 303 
Debt securities available for sale, at fair value (including $1,335 and $270 pledged to creditors, respectively)(1)
23,845 24,007 
Debt securities held to maturity (fair value of $9,064 and $9,042 respectively, and including $163 and $110 pledged to creditors, respectively)(1)
9,677 9,834 
Loans held for sale, at fair value855 774 
Other loans held for sale1,000 208 
Loans and leases 154,688 156,662 
Less: Allowance for loan and lease losses(2,017)(1,983)
Net loans and leases152,671 154,679 
Derivative assets569 842 
Premises and equipment, net866 844 
Bank-owned life insurance3,244 3,236 
Goodwill8,177 8,173 
Other intangible assets(2)
185 197 
Other assets12,873 13,089 
TOTAL ASSETS$222,256 $226,733 
LIABILITIES AND STOCKHOLDERS’ EQUITY:
LIABILITIES:
Deposits:
Noninterest-bearing$44,326 $49,283 
Interest-bearing127,868 131,441 
          Total deposits172,194 180,724 
Short-term borrowed funds1,018 
Derivative liabilities1,704 1,909 
Long-term borrowed funds18,855 15,887 
Other liabilities4,284 4,520 
TOTAL LIABILITIES198,055 203,043 
Commitments and Contingencies (refer to Note 11)
STOCKHOLDERS’ EQUITY:
Preferred stock:
$25.00 par value,100,000,000 shares authorized; 2,050,000 shares issued and outstanding at March 31, 2023 and December 31, 2022
2,014 2,014 
Common stock:
$0.01 par value, 1,000,000,000 shares authorized; 647,009,415 shares issued and 483,982,264 shares outstanding at March 31, 2023 and 645,220,018 shares issued and 492,282,158 shares outstanding at December 31, 2022
Additional paid-in capital22,183 22,142 
Retained earnings9,416 9,159 
Treasury stock, at cost, 163,027,151 and 152,937,860 shares at March 31, 2023 and December 31, 2022, respectively
(5,475)(5,071)
Accumulated other comprehensive income (loss)(3,943)(4,560)
TOTAL STOCKHOLDERS’ EQUITY24,201 23,690 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$222,256 $226,733 
(1) Includes only collateral pledged by the Company where counterparties have the right to sell or pledge the collateral.
(2) Excludes MSRs, which are reported in Other assets.
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

Citizens Financial Group, Inc. | 33


CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended March 31,
 (dollars in millions, except per share data)20232022
INTEREST INCOME:
Interest and fees on loans and leases$2,047 $1,048 
Interest and fees on loans held for sale15 16 
Interest and fees on other loans held for sale
Investment securities 266 138 
Interest-bearing deposits in banks 69 
Total interest income2,402 1,213 
INTEREST EXPENSE:
Deposits 550 25 
Short-term borrowed funds— 
Long-term borrowed funds203 41 
Total interest expense759 66 
Net interest income1,643 1,147 
Provision (benefit) for credit losses168 
Net interest income after provision (benefit) for credit losses1,475 1,144 
NONINTEREST INCOME:
Service charges and fees100 98 
Capital markets fees83 93 
Card fees72 60 
Mortgage banking fees57 69 
Trust and investment services fees63 61 
Foreign exchange and derivative products48 51 
Letter of credit and loan fees40 38 
Securities gains, net
Other income17 24 
Total noninterest income485 498 
NONINTEREST EXPENSE:
Salaries and employee benefits658 594 
Outside services176 169 
Equipment and software169 150 
Occupancy124 83 
Other operating expense169 110 
Total noninterest expense1,296 1,106 
Income before income tax expense 664 536 
Income tax expense153 116 
NET INCOME$511 $420 
Net income available to common stockholders$488 $396 
Weighted-average common shares outstanding:
Basic485,444,313 422,401,747 
Diluted487,712,146 424,670,871 
Per common share information:
Basic earnings $1.00 $0.94 
Diluted earnings 1.00 0.93 
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
Citizens Financial Group, Inc. | 34


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
Three Months Ended March 31,
(dollars in millions)20232022
Net income$511 $420 
Other comprehensive income (loss):
Net unrealized derivative instruments gains (losses) arising during the periods, net of income taxes of $60 and ($170), respectively
173 (491)
Reclassification adjustment for net derivative (gains) losses included in net income, net of income taxes of $33 and ($8), respectively
94 (24)
Net unrealized debt securities gains (losses) arising during the periods, net of income taxes of $109 and ($357), respectively
327 (1,077)
Reclassification of net debt securities (gains) losses to net income, net of income taxes of $7 and ($1), respectively
20 (3)
Reclassification of actuarial (gain) loss to net income, net of income taxes of $1 and $1, respectively
Total other comprehensive income (loss), net of income taxes617 (1,593)
Total comprehensive income (loss)$1,128 ($1,173)
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
Citizens Financial Group, Inc. | 35


CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
Preferred
 Stock
Common
 Stock
Additional Paid-in CapitalRetained EarningsTreasury Stock, at CostAccumulated Other Comprehensive Income (Loss)Total
(dollars and shares in millions)SharesAmountSharesAmount
Balance at January 1, 2022$2,014 422 $6 $19,005 $7,978 ($4,918)($665)$23,420 
Dividends to common stockholders— — — — — (165)— — (165)
Dividends to preferred stockholders— — — — — (24)— — (24)
Share-based compensation plans— — — 10 — — — 10 
Employee stock purchase plan— — — — — — — 
Total comprehensive income (loss):
Net income— — — — — 420 — — 420 
Other comprehensive income (loss)— — — — — — — (1,593)(1,593)
Total comprehensive income (loss)— — — — — 420 — (1,593)(1,173)
Balance at March 31, 2022$2,014 423 $6 $19,021 $8,209 ($4,918)($2,258)$22,074 
Balance at January 1, 2023$2,014 492 $6 $22,142 $9,159 ($5,071)($4,560)$23,690 
Dividends to common stockholders— — — — — (205)— — (205)
Dividends to preferred stockholders— — — — — (23)— — (23)
Treasury stock purchased— — (10)— — — (400)— (400)
Share repurchase excise tax— — — — — — (4)— (4)
Share-based compensation plans— — — 33 — — — 33 
Employee stock purchase plan — — — — — — — 
Cumulative effect of change in accounting principle— — — — — (26)— — (26)
Total comprehensive income (loss):
Net income— — — — — 511 — — 511 
Other comprehensive income (loss)— — — — — — — 617 617 
Total comprehensive income (loss)— — — — — 511 — 617 1,128 
Balance at March 31, 2023$2,014 484 $6 $22,183 $9,416 ($5,475)($3,943)$24,201 
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

Citizens Financial Group, Inc. | 36


CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended March 31,
(dollars in millions)20232022
OPERATING ACTIVITIES
Net income$511 $420 
Adjustments to reconcile net income to net change in cash due to operating activities:
Provision (benefit) for credit losses168 
Net change in loans held for sale(81)898 
Depreciation, amortization and accretion118 67 
Deferred income taxes(63)(47)
Share-based compensation33 33 
Net gain on sales of assets(5)(4)
Net (increase) decrease in other assets(372)(1,216)
Net increase (decrease) in other liabilities849 1,400 
Net change due to operating activities1,158 1,554 
INVESTING ACTIVITIES
Investment securities:
Purchases of debt securities available for sale(1,223)(2,656)
Proceeds from maturities and paydowns of debt securities available for sale423 1,203 
Proceeds from sales of debt securities available for sale1,395 704 
Proceeds from maturities and paydowns of debt securities held to maturity182 190 
Net (increase) decrease in interest-bearing deposits in banks(17)(369)
Acquisitions, net of cash acquired(1)
— (143)
Purchases of loans— (718)
Sales of loans315 305 
Net (increase) decrease in loans and leases696 (2,196)
Capital expenditures, net(52)(51)
Purchase of bank-owned life insurance— (100)
Other(227)(83)
Net change due to investing activities1,492 (3,914)
FINANCING ACTIVITIES
Net increase (decrease) in deposits(8,530)4,415 
Net increase (decrease) in short-term borrowed funds1,015 (52)
Proceeds from issuance of long-term borrowed funds5,710 — 
Repayments of long-term borrowed funds(2,752)(1,004)
Treasury stock purchased, including excise tax(404)— 
Dividends paid to common stockholders(205)(165)
Dividends paid to preferred stockholders(33)(33)
Payments of employee tax withholding for share-based compensation(24)(23)
Net change due to financing activities(5,223)3,138 
Net change in cash and cash equivalents(2)
(2,573)778 
Cash and cash equivalents at beginning of period(2)
10,547 9,158 
Cash and cash equivalents at end of period(2)
$7,974 $9,936 
(1) Includes cash paid of $143 million for the HSBC transaction for the three months ended March 31, 2022.
(2) Cash and cash equivalents include cash and due from banks and interest-bearing cash and due from banks as reflected on the Consolidated Balance Sheets.

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
Citizens Financial Group, Inc. | 37


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
Basis of Presentation
The unaudited interim Consolidated Financial Statements, including the Notes presented in this document, have been prepared in accordance with GAAP interim reporting requirements and, therefore, do not include all information and Notes included in the audited Consolidated Financial Statements in conformity with GAAP. The unaudited interim Consolidated Financial Statements and Notes presented in this document should be read in conjunction with the Company’s audited Consolidated Financial Statements and accompanying Notes included in the Company’s 2022 Form 10-K. The Company’s principal business activity is banking, conducted through its subsidiary CBNA.
The unaudited interim Consolidated Financial Statements include the accounts of Citizens and subsidiaries in which Citizens has a controlling financial interest. All intercompany transactions and balances have been eliminated. The Company has evaluated its unconsolidated entities and does not believe that any entity in which it has an interest, but does not currently consolidate, meets the requirements to be consolidated as a variable interest entity. The unaudited interim Consolidated Financial Statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods. The results for interim periods are not necessarily indicative of results for a full year.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the ACL.
Significant Accounting Policies
For further information regarding the Company’s significant accounting policies, see Note 1 in the Company’s 2022 Form 10-K.
Citizens Financial Group, Inc. | 38


Accounting Pronouncements Adopted in 2023
PronouncementSummary of GuidanceEffects on Financial Statements
Troubled Debt Restructurings and Vintage Disclosures

Issued March 2022
Effective date: January 1, 2023.

Eliminates the separate recognition and measurement guidance for TDRs.

Requires evaluation of all modifications to borrowers experiencing financial difficulty (or FDMs) to determine whether the modification results in a new loan or continuation of an existing loan.

Requires expected credit losses measured under a discounted cash flow method to be determined using an effective interest rate based on the modified (not original) contractual terms of the loan.

Enhances disclosures by creditors for modifications of receivables from borrowers experiencing financial difficulty in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay or a term extension.

Requires disclosure of current period gross charge-offs by vintage year for loans and net investments in leases.

Transition is prospective, with an option to adopt the recognition and measurement guidance for TDRs on a modified retrospective basis, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption.
The Company adopted the new standard on January 1, 2023, and elected to apply the new measurement and recognition guidance for TDRs under the modified retrospective transition method.

Adoption did not have a material impact on the Company’s Consolidated Financial Statements. Required disclosures and discussion of significant accounting policies for modifications to borrowers experiencing financial difficulty are included in Note 4.

Disclosure of gross charge-offs by vintage year did not have a material impact on the Company’s Consolidated Financial Statements.

Fair Value Hedging - Portfolio Layer Method

Issued March 2022
Effective date: January 1, 2023.

Replaces the ‘last-of-layer’ method.

Allows the designation of multiple layers in a closed portfolio of financial assets.

Permits hedging of non-prepayable and prepayable assets.

Prohibits the consideration of basis adjustments when measuring expected credit losses of assets in the closed portfolio or determining whether an AFS security is impaired.

The guidance on hedging multiple layers in a closed portfolio is applied prospectively. The guidance on the accounting for fair value basis adjustments is applied on a modified retrospective basis.
The Company adopted the new standard on January 1, 2023.

Adoption did not have a material impact on the Company’s Consolidated Financial Statements.
Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method

Issued March 2023
Effective date: January 1, 2024.

Permits use of the proportional amortization method of accounting for all tax equity investments provided that certain conditions are met.

Proportional amortization method is elected on a tax-credit-program-by-tax-credit-program basis.

Permits adoption under the modified retrospective method or retrospective method through a cumulative-effect adjustment to retained earnings as of the beginning of the current period or first period presented, respectively. Early adoption is permitted.
The Company adopted the new standard on January 1, 2023 for renewable energy wind and new markets tax credit investments, under the modified retrospective approach.

Adoption resulted in a cumulative-effect reduction of $26 million, net of taxes, to retained earnings and a corresponding reduction to other assets of $101 million and other liabilities of $75 million, reflecting the elimination of deferred tax liabilities associated with renewable energy wind investments that qualify for the proportional amortization method of accounting.

Refer to Note 6 for additional information.
Citizens Financial Group, Inc. | 39


NOTE 2 - SECURITIES
The following table presents the major components of securities at amortized cost and fair value:
March 31, 2023December 31, 2022
(dollars in millions)Amortized CostGross Unrealized GainsGross Unrealized LossesFair ValueAmortized CostGross Unrealized GainsGross Unrealized LossesFair Value
U.S. Treasury and other$3,378 $— ($126)$3,252 $3,678 $1 ($193)$3,486 
State and political subdivisions— — — — 
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities20,957 20 (1,852)19,125 21,250 10 (2,198)19,062 
Other/non-agency280 — (29)251 280 — (29)251 
Total mortgage-backed securities21,237 20 (1,881)19,376 21,530 10 (2,227)19,313 
Collateralized loan obligations1,248 — (33)1,215 1,248 — (42)1,206 
Total debt securities available for sale, at fair value$25,865 $20 ($2,040)$23,845 $26,458 $11 ($2,462)$24,007 
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities$9,125 $14 ($599)$8,540 $9,253 $4 ($751)$8,506 
Total mortgage-backed securities9,125 14 (599)8,540 9,253 (751)8,506 
Asset-backed securities552 (30)524 581 — (45)536 
Total debt securities held to maturity$9,677 $16 ($629)$9,064 $9,834 $4 ($796)$9,042 
Equity securities, at cost$1,228 $— $— $1,228 $1,058 $— $— $1,058 
Equity securities, at fair value143 — — 143 153 — — 153 
Accrued interest receivable on debt securities totaled $96 million and $107 million as of March 31, 2023 and December 31, 2022, respectively, and is included in other assets in the Consolidated Balance Sheets.
Citizens Financial Group, Inc. | 40


The following table presents the amortized cost and fair value of debt securities by contractual maturity as of March 31, 2023. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without incurring penalties.
Distribution of Maturities
(dollars in millions)1 Year or LessAfter 1 Year through 5 YearsAfter 5 Years through 10 YearsAfter 10 YearsTotal
Amortized cost:
U.S. Treasury and other$— $2,137 $1,241 $— $3,378 
State and political subdivisions— — 
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities— 1,145 2,670 17,142 20,957 
Other/non-agency— — — 280 280 
Collateralized loan obligations— — 24 1,224 1,248 
Total debt securities available for sale— 3,282 3,935 18,648 25,865 
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities— — — 9,125 9,125 
Asset-backed securities— 552 — — 552 
Total debt securities held to maturity— 552 — 9,125 9,677 
Total amortized cost of debt securities$— $3,834 $3,935 $27,773 $35,542 
Fair value:
U.S. Treasury and other$— $2,059 $1,193 $— $3,252 
State and political subdivisions— — — 
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities— 1,102 2,532 15,491 19,125 
Other/non-agency— — — 251 251 
Collateralized loan obligations— — 24 1,191 1,215 
Total debt securities available for sale— 3,161 3,749 16,935 23,845 
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities— — — 8,540 8,540 
Asset-backed securities— 524 — — 524 
Total debt securities held to maturity— 524 — 8,540 9,064 
Total fair value of debt securities$— $3,685 $3,749 $25,475 $32,909 
Taxable interest income from investment securities as presented in the Consolidated Statements of Operations was $266 million and $138 million for the three months ended March 31, 2023 and 2022, respectively.
The following table presents realized gains and losses on sale of securities:
Three Months Ended March 31,
(dollars in millions)20232022
Gains$9 $7 
Losses(4)(3)
Securities gains, net$5 $4 
The following table presents the amortized cost and fair value of debt securities pledged:
March 31, 2023December 31, 2022
(dollars in millions)Amortized CostFair ValueAmortized CostFair Value
Pledged against derivatives, to qualify for fiduciary powers, or to secure public and other deposits as required by law$4,079 $3,701 $3,966 $3,527 
Pledged as collateral for FHLB borrowing capacity243 217 244 217 
Pledged against repurchase agreements1,162 1,132 — — 
Citizens Financial Group, Inc. | 41


The Company regularly enters into security repurchase agreements with unrelated counterparties, which involve the transfer of a security from one party to another, and a subsequent transfer of substantially the same security back to the original party. These repurchase agreements are typically short-term in nature and are accounted for as secured borrowed funds in the Company’s Consolidated Balance Sheets. The Company recognized no offsetting of short-term receivables or payables as of March 31, 2023 or December 31, 2022. The Company offsets certain derivative assets and liabilities in the Consolidated Balance Sheets. For further information see Note 8.
There were no securitizations of mortgage loans retained in the investment portfolio for the three months ended March 31, 2023 and 2022.
Impairment
The Company evaluated its existing HTM portfolio as of March 31, 2023 and concluded that 94% of HTM securities met the zero expected credit loss criteria and, therefore, no ACL was recognized. Lifetime expected credit losses on the remainder of the HTM portfolio were determined to be insignificant based on the modeling of the Company’s credit loss position in the securities. The Company monitors the credit exposure through the use of credit quality indicators. For these securities, the Company uses external credit ratings or an internally derived credit rating when an external rating is not available. All securities were determined to be investment grade at March 31, 2023.
The following tables present AFS debt securities with fair values below their respective carrying values, separated by the duration the securities have been in a continuous unrealized loss position:
March 31, 2023
Less than 12 Months12 Months or LongerTotal
(dollars in millions)Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
U.S. Treasury and other$3,114 ($116)$138 ($10)$3,252 ($126)
State and political subdivisions— — — — 
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities7,101 (302)11,185 (1,550)18,286 (1,852)
Other/non-agency34 (3)217 (26)251 (29)
Total mortgage-backed securities7,135 (305)11,402 (1,576)18,537 (1,881)
Collateralized loan obligations39 — 1,176 (33)1,215 (33)
Total$10,289 ($421)$12,716 ($1,619)$23,005 ($2,040)
December 31, 2022
Less than 12 Months12 Months or LongerTotal
(dollars in millions)Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
U.S. Treasury and other$3,356 ($193)$— $— $3,356 ($193)
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities13,353 (1,136)5,042 (1,062)18,395 (2,198)
Other/non-agency80 (8)171 (21)251 (29)
Total mortgage-backed securities13,433 (1,144)5,213 (1,083)18,646 (2,227)
Collateralized loan obligations785 (26)421 (16)1,206 (42)
Total$17,574 ($1,363)$5,634 ($1,099)$23,208 ($2,462)
Citizens does not currently have the intent to sell these debt securities, and it is not more likely than not that the Company will be required to sell these debt securities prior to recovery of their amortized cost bases. Citizens has determined that credit losses are not expected to be incurred on the AFS debt securities identified with unrealized losses as of March 31, 2023. The unrealized losses on these debt securities reflect non-credit-related factors driven by changes in interest rates. Therefore, the Company has determined that these debt securities are not impaired.
Citizens Financial Group, Inc. | 42


NOTE 3 - LOANS AND LEASES
Loans held for investment are reported at the amount of their outstanding principal, net of charge-offs, unearned income, deferred loan origination fees and costs, and unamortized premiums or discounts on purchased loans.
The following table presents loans and leases, excluding LHFS:
(dollars in millions)March 31, 2023December 31, 2022
Commercial and industrial$50,450 $51,836 
Commercial real estate28,999 28,865 
Leases1,417 1,479 
Total commercial80,866 82,180 
Residential mortgages30,362 29,921 
Home equity14,135 14,043 
Automobile11,535 12,292 
Education12,634 12,808 
Other retail5,156 5,418 
Total retail73,822 74,482 
Total loans and leases$154,688 $156,662 
Accrued interest receivable on loans and leases held for investment totaled $841 million and $820 million as of March 31, 2023 and December 31, 2022, respectively, and is included in other assets in the Consolidated Balance Sheets.
Loans pledged as collateral for FHLB borrowing capacity, primarily residential mortgages and home equity products, totaled $36.7 billion and $38.4 billion at March 31, 2023 and December 31, 2022, respectively. Loans pledged as collateral to support the contingent ability to borrow at the FRB discount window, if necessary, were primarily comprised of education, automobile, commercial and industrial, and commercial real estate loans, and totaled $36.2 billion and $34.8 billion at March 31, 2023 and December 31, 2022, respectively.
Interest income on direct financing and sales-type leases for the three months ended March 31, 2023 and 2022 was $12 million and $11 million, respectively, and is reported within interest and fees on loans and leases in the Consolidated Statements of Operations.
The following table presents the composition of LHFS:
March 31, 2023December 31, 2022
(dollars in millions)
Residential Mortgages(1)
Commercial(2)
Total
Residential Mortgages(1)
Commercial(2)
Total
Loans held for sale at fair value$767 $88 $855 $666 $108 $774 
Other loans held for sale— 1,000 1,000 — 208 208 
(1) Residential mortgage LHFS are originated for sale.
(2) Commercial LHFS at fair value consist of loans managed by the Company’s commercial secondary loan desk. Other commercial LHFS primarily consist of loans associated with the Company’s syndication business and, at March 31, 2023, also includes loans transferred to LHFS as part of the Company’s balance sheet optimization actions during the first quarter of 2023.
NOTE 4 - ALLOWANCE FOR CREDIT LOSSES, NONACCRUAL LOANS AND LEASES, AND CONCENTRATIONS OF CREDIT RISK
Allowance for Credit Losses    
Management’s estimate of expected credit losses in the Company’s loan and lease portfolios is recorded in the ALLL and the allowance for unfunded lending commitments (collectively the ACL). The Company’s estimate of expected credit losses considers extensive historical loss experience, including the impact of loss mitigation and restructuring programs that the Company offers to borrowers experiencing financial difficulty, as well as projected loss severity as a result of loan default.
Effective January 1, 2023, the Company adopted new accounting guidance that eliminates the separate recognition and measurement of TDRs. Upon adoption of this guidance, the ACL for loans previously identified as TDRs is measured at the product level based on post-modification credit attributes and use of an econometric model.
Citizens Financial Group, Inc. | 43


For a detailed discussion of the ACL reserve methodology and estimation techniques as of December 31, 2022, see Note 6 in the Company’s 2022 Form 10-K. There were no significant changes to the ACL reserve methodology during the three months ended March 31, 2023.
The following table presents a summary of changes in the ACL for the three months ended March 31, 2023:
Three Months Ended March 31, 2023
(dollars in millions)CommercialRetailTotal
Allowance for loan and lease losses, beginning of period$1,060 $923 $1,983 
Charge-offs(59)(112)(171)
Recoveries31 38 
Net charge-offs(52)(81)(133)
Provision expense (benefit) for loans and leases103 64 167 
Allowance for loan and lease losses, end of period1,111 906 2,017 
Allowance for unfunded lending commitments, beginning of period207 50 257 
Provision expense (benefit) for unfunded lending commitments(7)
Allowance for unfunded lending commitments, end of period215 43 258 
Total allowance for credit losses, end of period$1,326 $949 $2,275 
During the three months ended March 31, 2023, net charge-offs of $133 million and a credit provision of $168 million resulted in an increase of $35 million to the ACL.
Our ACL as of March 31, 2023 accounts for an economic forecast over our two-year reasonable and supportable period with peak unemployment of approximately 6% and peak-to-trough GDP decline of approximately 1%. This forecast reflects a moderate recession over the two-year reasonable and supportable period.
The following table presents a summary of changes in the ACL for the three months ended March 31, 2022:
Three Months Ended March 31, 2022
(dollars in millions)CommercialRetailTotal
Allowance for loan and lease losses, beginning of period$821 $937 $1,758 
Charge-offs(14)(87)(101)
Recoveries39 42 
Net charge-offs(11)(48)(59)
Provision expense (benefit) for loans and leases(1)
(32)53 21 
Allowance for loan and lease losses, end of period778 942 1,720 
Allowance for unfunded lending commitments, beginning of period153 23 176 
Provision expense (benefit) for unfunded lending commitments(6)(12)(18)
Allowance for unfunded lending commitments, end of period147 11 158 
Total allowance for credit losses, end of period$925 $953 $1,878 
(1) Includes $24 million of initial provision expense related to non-PCD loans and leases acquired from HSBC for the three months ended March 31, 2022.
Credit Quality Indicators
The Company presents loan and lease portfolio segments and classes by credit quality indicator and vintage year. Citizens defines the vintage date for the purpose of this disclosure as the date of the most recent credit decision. In general, renewals are categorized as new credit decisions and reflect the renewal date as the vintage date.
Citizens utilizes regulatory classification ratings to monitor credit quality for commercial loans and leases. For more information on regulatory classification ratings see Note 6 in the Company’s 2022 Form 10-K.
Citizens Financial Group, Inc. | 44


The following table presents the amortized cost basis of commercial loans and leases by vintage date and regulatory classification rating as of March 31, 2023, and gross charge-offs by vintage date for the three months ended March 31, 2023:
Term Loans by Origination YearRevolving Loans
(dollars in millions)20232022202120202019Prior to 2019Within the Revolving PeriodConverted to TermTotal
Commercial and industrial
Pass$1,357 $7,665 $7,610 $1,832 $1,766 $2,791 $23,680 $129 $46,830 
Special Mention— 192 242 127 15 196 382 — 1,154 
Substandard36 286 279 216 178 397 811 12 2,215 
Doubtful18 34 23 88 74 251 
Total commercial and industrial1,411 8,177 8,154 2,178 1,966 3,472 24,947 145 50,450 
Gross charge-offs— — 27 — — 24 — 55 
Commercial real estate
Pass603 5,375 6,486 3,284 2,827 5,124 1,585 25,288 
Special Mention— 489 95 309 274 279 11 — 1,457 
Substandard— 154 82 160 574 1,119 25 — 2,114 
Doubtful— 88 37 — — 140 
Total commercial real estate603 6,026 6,664 3,759 3,763 6,559 1,621 28,999 
Gross charge-offs— — — — — — 
Leases
Pass59 240 331 230 85 421 — — 1,366 
Special Mention— — — 17 
Substandard— 11 — — 34 
Doubtful— — — — — — — — — 
Total leases62 251 348 237 95 424 — — 1,417 
Gross charge-offs— — — — — — — — — 
Total commercial
Pass2,019 13,280 14,427 5,346 4,678 8,336 25,265 133 73,484 
Special Mention683 343 440 291 475 393 — 2,628 
Substandard36 449 372 379 760 1,519 836 12 4,363 
Doubtful18 42 24 95 125 74 391 
Total commercial$2,076 $14,454 $15,166 $6,174 $5,824 $10,455 $26,568 $149 $80,866 
Gross charge-offs$— $— $27 $4 $1 $3 $24 $— $59 

Citizens Financial Group, Inc. | 45


The following table presents the amortized cost basis of commercial loans and leases by vintage date and regulatory classification rating as of December 31, 2022:
Term Loans by Origination YearRevolving Loans
(dollars in millions)20222021202020192018Prior to 2018Within the Revolving PeriodConverted to TermTotal
Commercial and industrial
Pass$8,304 $8,469 $2,224 $2,074 $1,334 $1,952 $24,211 $148 $48,716 
Special Mention124 189 120 74 48 153 364 — 1,072 
Substandard150 218 203 255 99 349 597 14 1,885 
Doubtful10 14 41 14 76 163 
Total commercial and industrial8,588 8,890 2,548 2,408 1,522 2,468 25,248 164 51,836 
Commercial real estate
Pass5,767 6,442 3,639 3,066 2,145 3,536 1,888 26,486 
Special Mention119 103 390 99 113 62 — 887 
Substandard92 18 79 253 350 610 23 — 1,425 
Doubtful— 55 — — — 67 
Total commercial real estate5,860 6,581 3,830 3,764 2,594 4,260 1,973 28,865 
Leases
Pass263 363 250 99 128 345 — — 1,448 
Special Mention— — 21 
Substandard— — — — — 10 
Doubtful— — — — — — — — — 
Total leases267 372 255 108 129 348 — — 1,479 
Total commercial
Pass14,334 15,274 6,113 5,239 3,607 5,833 26,099 151 76,650 
Special Mention129 313 225 470 148 269 426 — 1,980 
Substandard242 240 285 511 449 959 620 14 3,320 
Doubtful10 16 10 60 41 15 76 230 
Total commercial$14,715 $15,843 $6,633 $6,280 $4,245 $7,076 $27,221 $167 $82,180 
For retail loans, Citizens utilizes FICO credit scores and the loan’s payment and delinquency status to monitor credit quality. Management believes FICO scores are the strongest indicator of credit losses over the contractual life of the loan and assist management in predicting the borrower’s future payment performance. Scores are based on current and historical national industry-wide consumer level credit performance data.
Citizens Financial Group, Inc. | 46


The following table presents the amortized cost basis of retail loans by vintage date and current FICO score as of March 31, 2023, and gross charge-offs by vintage date for the three months ended March 31, 2023:
Term Loans by Origination YearRevolving Loans
(dollars in millions)20232022202120202019Prior to 2019Within the Revolving PeriodConverted to TermTotal
Residential mortgages
800+$133 $2,528 $5,105 $3,202 $1,167 $3,289 $— $— $15,424 
740-799344 2,225 2,850 1,566 628 1,747 — — 9,360 
680-73987 671 863 493 293 955 — — 3,362 
620-67918 139 158 99 139 492 — — 1,045 
<620— 25 81 92 167 588 — — 953 
No FICO available(1)
— 210 — — 218 
Total residential mortgages583 5,588 9,059 5,454 2,397 7,281 — — 30,362 
Gross charge-offs— — — — — — — 
Home equity
800+— 108 4,957 257 5,338 
740-799— 98 4,306 263 4,675 
680-739— 115 2,386 229 2,739 
620-679— — 10 98 628 144 883 
<620— — — 10 100 219 169 500 
Total home equity— 35 519 12,496 1,062 14,135 
Gross charge-offs— — — — — — 
Automobile
800+95 625 1,362 524 276 130 — — 3,012 
740-799141 877 1,434 567 290 141 — — 3,450 
680-739154 820 1,054 400 214 110 — — 2,752 
620-67994 502 519 183 114 69 — — 1,481 
<62014 217 316 125 97 69 — — 838 
No FICO available(1)
— — — — — — — 
Total automobile500 3,041 4,685 1,799 991 519 — — 11,535 
Gross charge-offs— 11 — — 30 
Education
800+74 652 1,710 1,522 668 1,391 — — 6,017 
740-799106 771 1,248 1,042 442 808 — — 4,417 
680-73953 361 396 331 159 362 — — 1,662 
620-67969 74 61 38 125 — — 374 
<620— 12 18 21 12 57 — — 120 
No FICO available(1)
— — — 40 — — 44 
Total education243 1,866 3,446 2,977 1,319 2,783 — — 12,634 
Gross charge-offs— 11 — — 23 
Other retail
800+16 163 82 74 37 40 475 — 887 
740-79922 195 101 94 51 44 966 1,474 
680-73918 149 85 82 40 27 1,000 1,404 
620-67913 92 50 42 14 435 659 
<62042 27 22 210 319 
No FICO available(1)
— — 402 413 
Total other retail73 646 346 316 149 124 3,488 14 5,156 
Gross charge-offs15 23 — 56 
Total retail
800+318 3,972 8,264 5,324 2,153 4,958 5,432 257 30,678 
740-799613 4,069 5,635 3,270 1,415 2,838 5,272 264 23,376 
680-739312 2,002 2,399 1,307 712 1,569 3,386 232 11,919 
620-679132 802 802 387 315 793 1,063 148 4,442 
<62016 296 442 262 293 818 429 174 2,730 
No FICO available(1)
250 402 677 
Total retail$1,399 $11,147 $17,545 $10,554 $4,891 $11,226 $15,984 $1,076 $73,822 
Gross charge-offs$5 $24 $18 $11 $10 $20 $24 $— $112 
(1) Represents loans for which an updated FICO score was unavailable (e.g., due to recent profile changes).
Citizens Financial Group, Inc. | 47


The following table presents the amortized cost basis of retail loans by vintage date and current FICO score as of December 31, 2022:
Term Loans by Origination YearRevolving Loans
(dollars in millions)20222021202020192018Prior to 2018Within the Revolving PeriodConverted to TermTotal
Residential mortgages
800+$2,132 $4,943 $3,143 $1,180 $363 $3,081 $— $— $14,842 
740-7992,376 2,991 1,660 638 257 1,635 — — 9,557 
680-739769 899 502 308 149 851 — — 3,478 
620-679125 168 135 138 99 422 — — 1,087 
<62017 68 77 165 147 455 — — 929 
No FICO available(1)
17 — — 28 
Total residential mortgages5,421 9,071 5,519 2,432 1,017 6,461 — — 29,921 
Home equity
800+110 4,958 267 5,357 
740-79997 4,350 274 4,736 
680-73911 114 2,296 234 2,664 
620-679— 16 93 558 143 822 
<620— — 12 18 82 178 172 464 
Total home equity36 57 496 12,340 1,090 14,043 
Automobile
800+650 1,453 584 324 120 54 — — 3,185 
740-799962 1,606 649 343 134 56 — — 3,750 
680-739920 1,187 460 254 102 44 — — 2,967 
620-679554 586 205 133 62 28 — — 1,568 
<620188 309 130 106 56 31 — — 820 
No FICO available(1)
— — — — — — — 
Total automobile3,276 5,141 2,028 1,160 474 213 — — 12,292 
Education
800+548 1,720 1,567 694 410 1,068 — — 6,007 
740-799735 1,351 1,126 486 267 609 — — 4,574 
680-739363 423 356 170 103 288 — — 1,703 
620-67954 76 62 38 29 102 — — 361 
<62016 20 12 11 50 — — 115 
No FICO available(1)
— — — — 42 — — 48 
Total education1,712 3,586 3,131 1,400 820 2,159 — — 12,808 
Other retail
800+182 105 93 48 25 27 491 — 971 
740-799230 134 121 68 31 25 974 1,584 
680-739175 109 103 52 21 14 993 1,471 
620-679108 65 52 18 435 694 
<62035 30 25 190 301 
No FICO available(1)
12 — — — 380 397 
Total other retail742 444 397 195 89 72 3,463 16 5,418 
Total retail
800+3,516 8,226 5,389 2,251 924 4,340 5,449 267 30,362 
740-7994,305 6,084 3,557 1,539 695 2,422 5,324 275 24,201 
680-7392,228 2,619 1,422 790 386 1,311 3,289 238 12,283 
620-679841 896 456 336 214 649 993 147 4,532 
<620246 423 254 304 236 620 368 178 2,629 
No FICO available(1)
22 59 380 475 
Total retail$11,158 $18,251 $11,083 $5,223 $2,457 $9,401 $15,803 $1,106 $74,482 
(1) Represents loans for which an updated FICO score was unavailable (e.g., due to recent profile changes).
Citizens Financial Group, Inc. | 48



Nonaccrual and Past Due Assets
The following tables present an aging analysis of accruing loans and leases, and nonaccrual loans and leases as of March 31, 2023 and December 31, 2022:
March 31, 2023
Days Past Due and Accruing
(dollars in millions)Current30-5960-89 90+Nonaccrual TotalNonaccrual with no related ACL
Commercial and industrial$50,007 $119 $6 $21 $297 $50,450 $63 
Commercial real estate28,558 231 63 140 28,999 
Leases1,416 — — — 1,417 — 
Total commercial79,981 351 13 84 437 80,866 64 
Residential mortgages(1)
29,556 202 74 314 216 30,362 162 
Home equity13,804 68 23 — 240 14,135 180 
Automobile11,323 128 34 — 50 11,535 
Education12,561 33 14 23 12,634 
Other retail5,034 42 27 23 30 5,156 
Total retail72,278 473 172 340 559 73,822 354 
Total$152,259 $824 $185 $424 $996 $154,688 $418 
December 31, 2022
Days Past Due and Accruing
(dollars in millions)Current30-5960-8990+Nonaccrual TotalNonaccrual with no related ACL
Commercial and industrial$51,389 $152 $25 $21 $249 $51,836 $64 
Commercial real estate28,665 51 45 103 28,865 
Leases1,475 — — — 1,479 — 
Total commercial81,529 207 70 22 352 82,180 71 
Residential mortgages(1)
29,228 95 45 319 234 29,921 187 
Home equity13,719 64 19 — 241 14,043 185 
Automobile12,039 152 45 — 56 12,292 
Education12,718 36 17 33 12,808 
Other retail5,294 44 30 22 28 5,418 
Total retail72,998 391 156 345 592 74,482 385 
Total$154,527 $598 $226 $367 $944 $156,662 $456 
(1) 90+ days past due and accruing includes $309 million and $316 million of loans fully or partially guaranteed by the FHA, VA, and USDA at March 31, 2023 and December 31, 2022, respectively.
Interest income is generally not recognized for loans and leases that are on nonaccrual status. The Company reverses accrued interest receivable with a charge to interest income upon classifying a loan or lease as nonaccrual.
At March 31, 2023 and December 31, 2022, the Company had collateral-dependent residential mortgage and home equity loans totaling $556 million and $561 million, respectively. At March 31, 2023 and December 31, 2022, the Company had collateral-dependent commercial loans totaling $115 million and $21 million, respectively.
The amortized cost basis of mortgage loans collateralized by residential real estate for which formal foreclosure proceedings were in-process was $293 million and $250 million as of March 31, 2023 and December 31, 2022, respectively.
Citizens Financial Group, Inc. | 49


Loan Modifications to Borrowers Experiencing Financial Difficulty
Effective January 1, 2023, the Company adopted accounting guidance that eliminates the recognition and measurement of TDRs. Upon adoption of this guidance, all loan modifications to borrowers experiencing financial difficulty, or FDMs, are evaluated to determine whether the modification should be accounted for as a new loan or a continuation of the existing loan. The existing loan is derecognized and the restructured loan is accounted for as a new loan if the effective yield on the restructured loan is at least equal to the effective yield for comparable loans with similar collection risk and the modification to the original loan is more than minor. Any unamortized fees and costs from the original loan are recognized in interest income when the new loan is granted. If a loan restructuring does not meet these conditions, the existing loan’s amortized cost basis is carried forward and the modified loan is accounted for as a continuation of the existing loan. FDMs are generally accounted for as a continuation of the existing loan given the terms are typically not at market rates.
The Company offers loan modifications to retail and commercial borrowers that may result in a payment delay, interest rate reduction, term extension, principal forgiveness, or combination thereof. Commercial loan modifications are offered on a case-by-case basis and are generally payment delay, term extension and/or interest rate reduction modification types. Principal forgiveness is offered in rare circumstances. Retail loan modifications are offered through structured loan modification programs. Forbearance (due to hardship) programs result in modification types including payment delay and/or term extension. Other retail loan modification programs target interest rate reduction or a combination of interest rate reduction and term extension. Credit card settlement programs result in principal forgiveness. In addition, certain reorganization bankruptcy judgments result in interest rate reduction, term extension or principal forgiveness modification types.
The following table presents the period-end amortized cost of loans to borrowers experiencing financial difficulty that were modified during the three months ended March 31, 2023, disaggregated by class of financing receivable and modification type. The modification type reflects the cumulative effect of all FDMs received during the indicated period.
Three Months Ended March 31, 2023
(dollars in millions)Interest Rate ReductionTerm ExtensionPayment DelayPrincipal ForgivenessInterest Rate Reduction and Term ExtensionTerm Extension and Payment DelayTotal
Total as a % of Loan Class(1)
Commercial and industrial$— $44 $32 $— $— $21 $97 0.19 %
Commercial real estate— 55 — — — — 55 0.19 
Leases— — — — — — — — 
Total commercial— 99 32 — — 21 152 0.19 
Residential mortgages19 — — — 24 0.08 
Home equity— — — — 0.02 
Automobile— — — — — — — — 
Education— — — — 0.02 
Other retail— — — — — 0.06 
Total retail20 — — 32 0.04 
Total(2)
$6 $119 $33 $— $5 $21 $184 0.12 %
(1) Represents the total amortized cost as of period-end divided by the period-end amortized cost of the corresponding loan class. Accrued interest receivable is excluded from amortized cost and is immaterial.
(2) Excludes the period-end amortized cost of $7 million relative to borrowers that had their debt discharged by means of a Chapter 7 bankruptcy filing during the three months ended March 31, 2023.
Citizens Financial Group, Inc. | 50


The following table presents the financial effect of loans to borrowers experiencing financial difficulty that were modified during the three months ended March 31, 2023, disaggregated by class of financing receivable.
Three Months Ended March 31, 2023
(amounts in whole dollars)
Weighted-Average Interest Rate Reduction(1)(5)
Weighted-Average Term Extension (in Months)(2)(5)
Weighted-Average Payment Deferral(3)(5)
Amount of Principal Forgiven(4)
Commercial and industrial4.05 %9$658,467 $— 
Commercial real estate— 14— — 
Leases— — — — 
Residential mortgages1.47 44— — 
Home equity2.02 1393,863 — 
Automobile2.76 231,005 2,702 
Education5.77 — 3,037 — 
Other retail17.79 22— 1,156,256 
(1) Represents the weighted-average reduction of the loan’s interest rate.
(2) Represents the weighted-average extension of a loan’s maturity date.
(3) Represents the weighted-average amount of payments delayed as a result of the loan modification.
(4) Amounts are recorded as charge-offs.
(5) Weighted based on period-end amortized cost.
The following table presents an aging analysis of the period-end amortized cost of loans to borrowers experiencing financial difficulty that were modified during the three months ended March 31, 2023, disaggregated by class of financing receivable. A loan in a forbearance or repayment plan is reported as past due according to its contractual terms until contractually modified. Subsequent to modification, it is reported as past due based on its restructured terms.
March 31, 2023
Days Past Due and Accruing
(dollars in millions)Current30-5960-89 90+Nonaccrual Total
Commercial and industrial$76 $— $— $— $21 $97 
Commercial real estate55 — — — — 55 
Leases— — — — — — 
Total commercial131 — — — 21 152 
Residential mortgages16 — 24 
Home equity— — — 
Automobile— — — — — — 
Education— — — — 
Other retail— — — — 
Total retail22 — 32 
Total$153 $4 $— $2 $25 $184 
The period-end amortized cost of loans modified during the three months ended March 31, 2023 that subsequently defaulted is immaterial and not presented as a result. A loan is considered to be in default if, subsequent to modification, it becomes 90 or more days past due or is placed on nonaccrual status.
Unfunded commitments related to loans modified during the three months ended March 31, 2023 were $12 million at March 31, 2023.
Citizens Financial Group, Inc. | 51


Troubled Debt Restructuring Disclosures Prior to the Adoption of ASU 2022-02
The following tables summarize loans modified during the three months ended March 31, 2022. The balances represent the post-modification outstanding amortized cost basis and may include loans that became TDRs during the period and were subsequently paid off in full, charged off, or sold prior to period end. Pre-modification balances for modified loans approximate the post-modification balances shown.
Three Months Ended March 31, 2022
Amortized Cost Basis
(dollars in millions)Number of Contracts
Interest Rate Reduction(1)
Maturity Extension(2)
Other(3)
Total
Commercial and industrial10 $— $24 $7 $31 
Total commercial10 — 24 31 
Residential mortgages1,181 22 14 214 250 
Home equity178 — 11 
Automobile165 — 
Education143 — — 
Other retail521 — — 
Total retail2,188 27 14 230 271 
Total2,198 $27 $38 $237 $302 
(1) Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.
(2) Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).
(3) Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forgiveness, and capitalizing arrearages. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post-modification balances being higher than pre-modification.
Modified TDRs resulted in charge-offs of $1 million for the three months ended March 31, 2022. Unfunded commitments related to TDRs were $81 million at December 31, 2022.
The following table provides a summary of TDRs that defaulted (became 90 days or more past due) within 12 months of their modification date:
 Three Months Ended March 31,
(dollars in millions)2022
Commercial TDRs$— 
Retail TDRs(1)
15 
Total$15 
(1) Includes $10 million of loans fully or partially government guaranteed by the FHA, VA, and USDA for the three months ended March 31, 2022.
Concentrations of Credit Risk
The Company’s lending activity is geographically well diversified with an emphasis in our core markets located in the New England, Mid-Atlantic and Midwest regions. Generally, loans are collateralized by assets including real estate, inventory, accounts receivable, other personal property and investment securities. As of March 31, 2023 and December 31, 2022, Citizens had a significant amount of loans collateralized by residential and commercial real estate. There were no significant concentration risks within the commercial or retail loan portfolios. Exposure to credit losses arising from lending transactions may fluctuate with fair values of collateral supporting loans, which may not perform according to contractual agreements. The Company’s policy is to collateralize loans to the extent necessary; however, unsecured loans are also granted on the basis of the financial strength of the applicant and the facts surrounding the transaction.
NOTE 5 - MORTGAGE BANKING AND OTHER SERVICED LOANS
The Company sells residential mortgages into the secondary market. The Company retains no beneficial interests in these sales, but may retain the servicing rights for the loans sold. The Company may exercise its option to repurchase eligible government guaranteed residential mortgages or may be obligated to subsequently repurchase a loan if the purchaser discovers a representation or warranty violation such as noncompliance with eligibility or servicing requirements, or customer fraud that should have been identified in a loan file review.
Citizens Financial Group, Inc. | 52


The following table summarizes activity related to residential mortgage loans sold with servicing rights retained:
Three Months Ended March 31,
(dollars in millions)20232022
Cash proceeds from residential mortgage loans sold with servicing retained$1,575 $6,582 
Repurchased residential mortgages(1)
— 87 
Gain on sales(2)
19 30 
Contractually specified servicing, late and other ancillary fees(2)
77 67 
(1) Includes government insured or guaranteed loans repurchased through the exercise of the Company’s removal of account provision option.
(2) Reported in mortgage banking fees in the Consolidated Statements of Operations.
The unpaid principal balance of residential mortgage loans related to our MSRs was $96.3 billion and $96.7 billion at March 31, 2023 and December 31, 2022, respectively. The Company manages the risk associated with changes in the value of the MSRs with an active hedging strategy, which includes the purchase of freestanding derivatives.
The following table summarizes changes in MSRs recorded using the fair value method:
As of and for the Three Months Ended March 31,
(dollars in millions)20232022
Fair value as of beginning of the period$1,530 $1,029 
Amounts capitalized21 95 
Changes in unpaid principal balance during the period(1)
(41)(39)
Changes in fair value during the period(2)
(14)156 
Fair value at end of the period$1,496 $1,241 
(1) Represents changes in value of the MSRs due to i) passage of time including the impact from both regularly scheduled loan principal payments and partial
paydowns, and ii) loans that paid off during the period.
(2) Represents changes in value primarily driven by market conditions. These changes are recorded in mortgage banking fees in the Consolidated Statements of Operations.

The fair value of MSRs is estimated by using the present value of estimated future net servicing cash flows, taking into consideration actual and expected mortgage loan prepayment rates, discount rates, contractual servicing fee income, servicing costs, default rates, ancillary income, and other economic factors, which are determined based on current market interest rates. The valuation does not attempt to forecast or predict the future direction of interest rates.
The sensitivity analysis below presents the impact of an immediate 10% and 20% adverse change in key economic assumptions to the current fair value of MSRs. These sensitivities are hypothetical, with the effect of a variation in a particular assumption on the fair value of the MSRs calculated independently without changing any other assumption. In reality, changes in one factor may result in changes in another (e.g., changes in interest rates, which drive changes in prepayment rates, could result in changes in the discount rates), which may amplify or counteract the sensitivities. The primary risk inherent in the Company’s MSRs is an increase in prepayments of the underlying mortgage loans serviced, which is largely dependent upon movements in market interest rates.
(dollars in millions)March 31, 2023December 31, 2022
Fair value$1,496$1,530
Weighted average life (years)8.89.1
Weighted average constant prepayment rate7.3%6.8%
Decline in fair value from 10% adverse change
$36$34
Decline in fair value from 20% adverse change
$69$66
Weighted average option adjusted spread628 bps629 bps
Decline in fair value from 10% adverse change
$41$43
Decline in fair value from 20% adverse change
$83$86
The Company’s mortgage banking derivatives include commitments to originate mortgages held for sale, certain loan sale agreements, and other financial instruments that meet the definition of a derivative. Refer to Note 8 for additional information.
Citizens Financial Group, Inc. | 53


Other Serviced Loans
From time to time, Citizens engages in other servicing relationships. The following table presents the unpaid principal balance of other serviced loans:
(dollars in millions)March 31, 2023December 31, 2022
Education$567 $602 
Commercial and industrial(1)
95 91 
(1) Represents the government guaranteed portion of SBA loans sold to outside investors
NOTE 6 - VARIABLE INTEREST ENTITIES
    Citizens is involved in various entities that are considered VIEs, including investments in entities that sponsor affordable housing, renewable energy and economic development projects, and asset-backed securities. In addition, Citizens provides lending facilities to special purpose entities. Citizens’ maximum exposure to loss as a result of its involvement with these entities is limited to the balance sheet carrying amount of its investments, unfunded commitments, and the outstanding principal balance of loans to special purpose entities. The Company does not consolidate any of its investments in these entities. For more details see Note 11 in the Company’s 2022 Form 10-K.
A summary of these investments is presented below:
(dollars in millions)March 31, 2023December 31, 2022
Lending to special purpose entities included in loans and leases$4,915 $4,578 
LIHTC investments included in other assets2,228 2,230 
LIHTC unfunded commitments included in other liabilities1,006 1,046 
Asset-backed investments included in HTM securities 552 581 
Renewable energy wind investments included in other assets264 374 
NMTC investments included in other assets
Lending to Special Purpose Entities
Citizens provides lending facilities to third-party sponsored special purpose entities. As of March 31, 2023 and December 31, 2022, the lending facilities had undrawn commitments to extend credit of $2.3 billion and $2.4 billion, respectively. For more information on commitments to extend credit see Note 11.
Low Income Housing Tax Credit Partnerships
The purpose of the Company’s LIHTC investments is to assist in achieving the goals of the Community Reinvestment Act and to earn an adequate return of capital.
Renewable Energy Entities
The Company’s investments in certain renewable energy entities provide benefits from a return generated by government incentives plus other tax attributes that are associated with tax ownership (e.g., tax depreciation).
Effective January 1, 2023, the Company made an election to account for its renewable energy wind investments using the proportional amortization method under newly adopted accounting guidance. Under the proportional amortization method, the Company amortizes the initial cost of its qualifying renewable energy wind investments in proportion to the income tax credits and other income tax benefits received in the current period as compared to the total income tax credits and other income tax benefits expected to be received over the life of the investment. The net amortization and income tax credits and other income tax benefits received are included as a component of income tax expense (benefit).
Contingent commitments related to the Company’s renewable energy wind investments were $7 million at March 31, 2023, and are expected to be paid in varying amounts through 2026. These payments are contingent upon the level of electricity production attained by the wind farm relative to its targeted threshold and changes in the production tax credit rates set by the Internal Revenue Service.
Citizens Financial Group, Inc. | 54


New Markets Tax Credit Program
The Company participates in the NMTC program which provides a tax incentive for private sector investment into economic development projects and businesses located in low-income communities. The United States Department of the Treasury oversees the program and it is directly administered by the Community Development Financial Institutions Fund.
The Company’s investments in entities that sponsor economic development projects provide income tax credits to offset federal taxable income over a specified period of time. Independent third parties manage these entities and have the power to direct the activities which most significantly affect their performance. Therefore, Citizens is not the primary beneficiary of these entities and does not consolidate these VIEs as a result.
Effective January 1, 2023, the Company made an election to account for its NMTC investments using the proportional amortization method under newly adopted accounting guidance. Under the proportional amortization method, the Company applies a practical expedient and amortizes the initial cost of its qualifying NMTC investments in proportion to the income tax credits received in the current period as compared to the total income tax credits expected to be received over the life of the investment. The net amortization and income tax credits and other income tax benefits received are included as a component of income tax expense (benefit).
The following table summarizes the impact to the Consolidated Statements of Operations relative to the Company’s tax credit programs for which it has elected to apply the proportional amortization method of accounting:
Three Months Ended March 31,
(dollars in millions)20232022
Tax credits recognized$87 $61 
Other tax benefits recognized18 15 
Amortization(81)(64)
Net benefit included in income tax expense24 12 
Other income— 
Allocated income (loss) on investments(3)— 
Net benefit included in noninterest income(2)— 
Net benefit included in the Consolidated Statements of Operations(1)
$22 $12 
(1) Includes the impact of tax credit investments when the election to apply the proportional amortization method was in effect during the periods presented. For 2023, this includes LIHTC, renewable energy wind and NMTC investments, and for 2022, includes LIHTC investments.
The Company did not recognize impairment losses resulting from the forfeiture or ineligibility of income tax credits or other circumstances during the three months ended March 31, 2023 and 2022.
NOTE 7 - BORROWED FUNDS
Short-term borrowed funds
Short-term borrowed funds were $1.0 billion and $3 million as of March 31, 2023 and December 31, 2022, respectively.
Citizens Financial Group, Inc. | 55


Long-term borrowed funds
The following table presents a summary of the Company’s long-term borrowed funds:
(dollars in millions)March 31, 2023December 31, 2022
Parent Company:
3.750% fixed-rate subordinated debt, due July 2024
$90 $90 
4.023% fixed-rate subordinated debt, due October 2024
17 17 
4.350% fixed-rate subordinated debt, due August 2025
133 133 
4.300% fixed-rate subordinated debt, due December 2025
336 336 
2.850% fixed-rate senior unsecured notes, due July 2026
498 498 
2.500% fixed-rate senior unsecured notes, due February 2030
298 298 
3.250% fixed-rate senior unsecured notes, due April 2030
746 746 
3.750% fixed-rate reset subordinated debt, due February 2031
69 69 
4.300% fixed-rate reset subordinated debt, due February 2031
135 135 
4.350% fixed-rate reset subordinated debt, due February 2031
60 61 
2.638% fixed-rate subordinated debt, due September 2032
558 556 
5.641% fixed-rate reset subordinated debt, due May 2037
398 397 
CBNA’s Global Note Program:
3.700% senior unsecured notes, due March 2023(1)
— 497 
5.676% floating-rate senior unsecured notes, due March 2023(1)(2)
— 250 
2.250% senior unsecured notes, due April 2025
748 748 
4.119% fixed/floating-rate senior unsecured notes, due May 2025
648 648 
6.064% fixed/floating-rate senior unsecured notes, due October 2025
598 598 
5.284% fixed/floating-rate senior unsecured notes, due January 2026
449 — 
3.750% senior unsecured notes, due February 2026
481 475 
4.575% fixed/floating-rate senior unsecured notes, due August 2028
797 797 
Additional Borrowings by CBNA and Other Subsidiaries:
Federal Home Loan Bank advances, 4.873% weighted average rate, due through 2041(3)
11,779 8,519 
Other17 19 
Total long-term borrowed funds$18,855 $15,887 
(1) Notes were redeemed on February 27, 2023.
(2) Rate disclosed reflects the floating rate as of March 31, 2023, or final floating rate as applicable.
(3) Rate disclosed reflects the weighted average rate as of March 31, 2023.
The Parent Company’s long-term borrowed funds as of March 31, 2023 and December 31, 2022 include principal balances of $3.4 billion, and unamortized deferred issuance costs and/or discounts of $73 million and $75 million, respectively. CBNA and other subsidiaries’ long-term borrowed funds as of March 31, 2023 and December 31, 2022 include principal balances of $15.5 billion and $12.6 billion, respectively, with unamortized deferred issuance costs and/or discounts of $11 million and $10 million, respectively, and hedging basis adjustments of ($18) million and ($27) million, respectively. See Note 8 for further information about the Company’s hedging of certain long-term borrowed funds.
Advances, lines of credit and letters of credit from the FHLB are collateralized primarily by residential mortgages and home equity products at least sufficient to satisfy the collateral maintenance level established by the FHLB. The utilized FHLB borrowing capacity, primarily for advances and letters of credit, was $18.7 billion and $15.7 billion at March 31, 2023 and December 31, 2022, respectively. The Company’s available FHLB borrowing capacity was $6.8 billion and $11.5 billion at March 31, 2023 and December 31, 2022, respectively. Citizens can also borrow from the FRB discount window to meet short-term liquidity requirements. Collateral, including certain loans, is pledged to support this borrowing capacity. At March 31, 2023, the Company’s unused secured borrowing capacity was approximately $59.4 billion, which includes unencumbered securities, FHLB borrowing capacity, and FRB discount window capacity.
Citizens Financial Group, Inc. | 56


The following table presents a summary of maturities for the Company’s long-term borrowed funds at March 31, 2023:
(dollars in millions)Parent CompanyCBNA and Other SubsidiariesConsolidated
Year
2023$— $2 $2 
2024107 11,751 11,858 
2025469 2,019 2,488 
2026498 930 1,428 
2027— 
2028 and thereafter2,264 814 3,078 
Total$3,338 $15,517 $18,855 
NOTE 8 - DERIVATIVES
In the normal course of business Citizens enters into a variety of derivative transactions to meet the financing and hedging needs of its customers and to reduce its own exposure to fluctuations in interest rates and foreign currency exchange rates. These transactions include interest rate swap contracts, interest rate options, foreign exchange contracts, residential loan commitment rate locks, interest rate future contracts, swaptions, certain commodities, forward commitments to sell TBAs, forward sale contracts and purchase options. The Company does not use derivatives for speculative purposes. Information regarding the valuation methodology and inputs used to estimate the fair value of the Company’s derivative instruments is described in Note 20 in the Company’s 2022 Form 10-K.
The following table presents derivative instruments included in the Consolidated Balance Sheets:
March 31, 2023December 31, 2022
(dollars in millions)Notional AmountDerivative AssetsDerivative LiabilitiesNotional AmountDerivative AssetsDerivative Liabilities
Derivatives designated as hedging instruments:
Interest rate contracts$58,750 $99 $18 $42,250 $16 $53 
Derivatives not designated as hedging instruments:
Interest rate contracts195,041 278 1,276 174,384 331 1,579 
Foreign exchange contracts30,187 456 407 29,475 527 519 
Commodities contracts998 819 789 1,103 953 942 
TBA contracts3,406 14 14 2,370 14 
Other contracts1,261 13 — 913 
Total derivatives not designated as hedging instruments1,580 2,486 1,823 3,058 
Gross derivative fair values1,679 2,504 1,839 3,111 
Less: Gross amounts offset in the Consolidated Balance Sheets(1)
(613)(613)(623)(623)
Less: Cash collateral applied(1)
(497)(187)(374)(579)
Total net derivative fair values presented in the Consolidated Balance Sheets$569 $1,704 $842 $1,909 
(1) Amounts represent the impact of enforceable master netting agreements that allow the Company to net settle positive and negative positions, as well as collateral paid and received.

Citizens Financial Group, Inc. | 57


The Company’s derivative transactions are internally divided into three sub-groups: institutional, customer and residential loan. Certain derivative transactions within these sub-groups are designated as fair value or cash flow hedges, as described below:
Derivatives Designated As Hedging Instruments
The Company’s institutional derivatives qualify for hedge accounting treatment. The net interest accruals on interest rate swaps designated in a fair value or cash flow hedge relationship are treated as an adjustment to interest income or interest expense of the item being hedged. The Company formally documents all hedging relationships at inception, as well as risk management objectives and strategies for undertaking various accounting hedges. Additionally, the Company monitors the effectiveness of its hedge relationships during the duration of the hedge period. The methods utilized to assess hedge effectiveness vary based on the hedge relationship and the Company monitors each relationship to ensure that management’s initial intent continues to be satisfied. The Company discontinues hedge accounting treatment when it is determined that a derivative is not expected to be, or has ceased to be, effective as a hedge and subsequently reflects changes in the fair value of the derivative in earnings after termination of the hedge relationship.
Fair Value Hedges
In a fair value hedge, changes in the fair value of both the derivative instrument and the hedged asset or liability attributable to the risk being hedged are recognized in the same income statement line item in the Consolidated Statements of Operations when the changes in fair value occur.
The following table presents the change in fair value of interest rate contracts designated as fair value hedges, as well as the change in fair value of the related hedged items attributable to the risk being hedged, included in the Consolidated Statements of Operations:
Three Months Ended March 31,
(dollars in millions)20232022Affected Line Item in the Consolidated Statements of Operations
Interest rate swaps hedging borrowed funds$8 ($37)Interest expense - long-term borrowed funds
Hedged long-term borrowed funds attributable to the risk being hedged(8)37 Interest expense - long-term borrowed funds
Interest rate swaps hedging debt securities available for sale— 29 Interest income - investment securities
Hedged debt securities available for sale attributable to the risk being hedged— (29)Interest income - investment securities
The following table reflects amounts recorded in the Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges on long-term borrowed funds:    
(dollars in millions)March 31, 2023December 31, 2022
Carrying amount of hedged liabilities$481 $972 
Cumulative amount of fair value hedging adjustments included in the carrying amount of the hedged items(18)(27)
Cash Flow Hedges
In a cash flow hedge the entire change in the fair value of the interest rate swap included in the assessment of hedge effectiveness is initially recorded in OCI and is subsequently reclassified from AOCI to current period earnings (net interest income) in the same period that the hedged item affects earnings.
Citizens has entered into interest rate swap agreements designed to hedge a portion of the Company’s floating-rate assets and liabilities. All of these swaps have been deemed highly effective cash flow hedges. The Company has also entered into certain interest rate option agreements that utilize interest rate floors and caps, or some combination thereof, providing the ability to hedge the variability in cash flows within different interest rate bands. Option premiums paid and received are excluded from the assessment of hedge effectiveness and are amortized over the life of the instruments.
Citizens Financial Group, Inc. | 58


The following table presents the pre-tax net gains (losses) recorded in the Consolidated Statements of Operations and in the Consolidated Statements of Comprehensive Income related to derivative instruments designated as cash flow hedges:
Three Months Ended March 31,
(dollars in millions)20232022
Amount of pre-tax net gains (losses) recognized in OCI$233 ($661)
Amount of pre-tax net gains (losses) reclassified from AOCI into interest income(127)37 
Amount of pre-tax net gains (losses) reclassified from AOCI into interest expense— (5)
Using the interest rate curve at March 31, 2023 with respect to cash flow hedge strategies, the Company estimates that approximately $514 million in pre-tax net losses will be reclassified from AOCI to net interest income over the next 12 months, including $452 million related to terminated swaps. This amount could differ from amounts actually recognized due to changes in interest rates, hedge de-designations and the addition of other hedges subsequent to March 31, 2023.
Derivatives Not Designated As Hedging Instruments
Economic Hedges
The Company’s economic hedges include those related to offsetting customer derivatives, residential mortgage loan derivatives (including interest rate lock commitments and forward sales commitments) and derivatives to hedge its residential MSRs. Customer derivatives include interest rate, foreign exchange and commodity derivative contracts designed to meet the hedging and financing needs of the Company’s customers, and are economically hedged by the Company to offset its market exposure. Interest rate lock commitments on residential mortgage loans that will be held for sale are considered derivative instruments, and are economically hedged by entering into forward sale commitments to manage changes in fair value due to interest rate risk. Residential MSR derivatives are entered to hedge the risk of changes in the fair value of the Company’s MSRs.
The following table presents the effect of economic hedges on noninterest income:
Amounts Recognized in
Noninterest Income for the
Three Months Ended March 31,Affected Line Item in the Consolidated Statements of Operations
(dollars in millions)20232022
Economic hedge type:
Customer interest rate contracts$34 ($767)Foreign exchange and derivative products
Derivatives hedging interest rate risk(19)793 Foreign exchange and derivative products
Customer foreign exchange contracts(4)26 Foreign exchange and derivative products
Derivatives hedging foreign exchange risk(2)Foreign exchange and derivative products
Customer commodity contracts(475)1,152 Foreign exchange and derivative products
Derivatives hedging commodity price risk486 (1,148)Foreign exchange and derivative products
Residential loan commitments(161)Mortgage banking fees
Derivatives hedging residential loan commitments and mortgage loans held for sale, at fair value(11)271 Mortgage banking fees
Derivative contracts used to hedge residential MSRs16 (146)Mortgage banking fees
Total$27 $23 
Citizens Financial Group, Inc. | 59


NOTE 9 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following tables present the changes in the balances, net of income taxes, of each component of AOCI:
As of and for the Three Months Ended March 31,
(dollars in millions)Net Unrealized Gains (Losses) on DerivativesNet Unrealized Gains (Losses) on Debt SecuritiesEmployee Benefit PlansTotal AOCI
Balance at January 1, 2022($161)($156)($348)($665)
Other comprehensive income (loss) before reclassifications(491)(1,077)— (1,568)
Amounts reclassified to the Consolidated Statements of Operations(24)(3)(25)
Net other comprehensive income (loss)(515)(1,080)(1,593)
Balance at March 31, 2022($676)($1,236)($346)($2,258)
Balance at January 1, 2023($1,416)($2,771)($373)($4,560)
Other comprehensive income (loss) before reclassifications173 327 — 500 
Amounts reclassified to the Consolidated Statements of Operations94 20 117 
Net other comprehensive income (loss)267 347 617 
Balance at March 31, 2023($1,149)($2,424)($370)($3,943)
Primary location in the Consolidated Statements of Operations of amounts reclassified from AOCINet interest incomeSecurities gains, netOther operating expense
The Company’s accumulated other comprehensive loss at March 31, 2023 decreased $617 million compared to December 31, 2022, driven by the impact of lower interest rates and the reclassification of $117 million of losses to the Consolidated Statements of Operations.
NOTE 10 - STOCKHOLDERS’ EQUITY
Preferred Stock
The following table summarizes the Company’s preferred stock:
March 31, 2023December 31, 2022
(dollars in millions, except per share data)Liquidation value per sharePreferred SharesCarrying AmountPreferred SharesCarrying Amount
Authorized ($25 par value per share)
100,000,000 100,000,000 
Issued and outstanding:
Series B$1,000 300,000 $296 300,000 $296 
Series C1,000 300,000 297 300,000 297 
Series D1,000 
(1)
300,000 
(2)
293 300,000 293 
Series E1,000 
(1)
450,000 
(3)
437 450,000 437 
Series F1,000 400,000 395 400,000 395 
Series G1,000 300,000 296 300,000 296 
Total2,050,000 $2,014 2,050,000 $2,014 
(1) Equivalent to $25 per depositary share.
(2) Represented by 12,000,000 depositary shares each representing a 1/40th interest in the Series D Preferred Stock.
(3) Represented by 18,000,000 depositary shares each representing a 1/40th interest in the Series E Preferred Stock.
For further detail regarding the terms and conditions of the Company’s preferred stock, see Note 17 in the Company’s 2022 Form 10-K.
Citizens Financial Group, Inc. | 60


Dividends
Three Months Ended March 31, 2023Three Months Ended March 31, 2022
(dollars in millions, except per share data)Dividends Declared per ShareDividends DeclaredDividends PaidDividends Declared per ShareDividends DeclaredDividends Paid
Common stock$0.42 $205 $205 $0.39 $165 $165 
Preferred stock
Series B$— $— $9 $— $— $9 
Series C15.94 15.94 
Series D15.88 15.88 
Series E12.50 12.50 
Series F14.13 14.13 
Series G10.00 10.00 
Total preferred stock$23 $33 $24 $33 
Treasury Stock
During the three months ended March 31, 2023, the Company repurchased $400 million, or 10,089,291 shares, of its outstanding common stock, which are held in treasury stock.
NOTE 11 - COMMITMENTS AND CONTINGENCIES
A summary of outstanding off-balance sheet arrangements is presented below. For more information on these arrangements, see Note 19 in the Company’s 2022 Form 10-K.
(dollars in millions)March 31, 2023December 31, 2022
Commitments to extend credit$95,965 $96,076 
Letters of credit2,079 2,119 
Risk participation agreements
Loans sold with recourse97 92 
Marketing rights23 23 
Total$98,168 $98,314 
Commitments to Extend Credit
Commitments to extend credit are agreements to lend to customers in accordance with conditions contractually agreed upon in advance. Generally, the commitments have fixed expiration dates or termination clauses and may require payment of a fee. Since many of these commitments are expected to expire without being drawn upon, the contract amounts are not necessarily indicative of future cash requirements.
Letters of Credit
Letters of credit in the table above reflect commercial, standby financial and standby performance letters of credit. Financial and performance standby letters of credit are issued by the Company for the benefit of its customers. They are used as conditional guarantees of payment to a third party in the event the customer either fails to make specific payments (financial) or fails to complete a specific project (performance). The Company’s exposure to credit loss in the event of counterparty nonperformance in connection with the above instruments is represented by the contractual amount of those instruments. Generally, letters of credit are collateralized by cash, accounts receivable, inventory or investment securities. Credit risk associated with letters of credit is considered in determining the appropriate amounts of allowances for unfunded commitments. Standby letters of credit and commercial letters of credit are issued for terms of up to ten years and one year, respectively.
Other Commitments
Citizens has additional off-balance sheet arrangements that are summarized below:
Marketing Rights - During 2003, Citizens entered into a 25-year agreement to acquire the naming and marketing rights of a baseball stadium in Pennsylvania.
Citizens Financial Group, Inc. | 61


Loans sold with recourse - Citizens is an originator and servicer of residential mortgages and routinely sells such mortgage loans in the secondary market and to GSEs. In the context of such sales, the Company makes certain representations and warranties regarding the characteristics of the underlying loans and, as a result, may be contractually required to repurchase such loans or indemnify certain parties against losses for certain breaches of those representations and warranties. The Company also sells the government guaranteed portion of certain SBA loans to outside investors, for which it retains the servicing rights.
Risk Participation Agreements - RPAs are guarantees issued by the Company to other parties for a fee, whereby the Company agrees to participate in the credit risk of a derivative customer of the other party. The current amount of credit exposure is spread out over multiple counterparties. At March 31, 2023, the remaining terms on these RPAs ranged from less than one year to eight years.
Contingencies
The Company operates in a legal and regulatory environment that exposes it to potentially significant risks. A certain amount of litigation ordinarily results from the nature of the Company’s banking and other businesses. The Company is a party to legal proceedings, including class actions. The Company is also the subject of investigations, reviews, subpoenas, and regulatory matters arising out of its normal business operations which, in some instances, relate to concerns about fair lending, unfair and/or deceptive practices, and mortgage-related issues. In addition, the Company engages in discussions with relevant governmental and regulatory authorities on a regular and ongoing basis regarding various issues, and any issues discussed or identified may result in investigatory or other action being taken. Litigation and regulatory matters may result in settlements, damages, fines, penalties, public or private censure, increased costs, required remediation, restrictions on business activities, or other impacts on the Company.
In these disputes and proceedings, the Company contests liability and the amount of damages as appropriate. Given their complex nature, and based on the Company's experience, it may be years before some of these matters are finally resolved. Moreover, before liability can be reasonably estimated for a claim, numerous legal and factual issues may need to be examined, including through potentially lengthy discovery and determination of important factual matters, and by addressing novel or unsettled legal issues relevant to the proceedings in question. The Company cannot predict with certainty if, how, or when such claims will be resolved or what the eventual settlement, fine, penalty or other relief, if any, may be, particularly for claims that are at an early stage in their development or where claimants seek substantial or indeterminate damages. The Company recognizes a provision for a claim when, in the opinion of management after seeking legal advice, it is probable that a liability exists and the amount of loss can be reasonably estimated. In many proceedings, however, it is not possible to determine whether any loss is probable or to estimate the amount of any loss.
Based on information currently available, the advice of legal counsel and other advisers, and established reserves, management believes that the aggregate liabilities, if any, potentially arising from these proceedings will not have a materially adverse effect on the Company’s unaudited interim Consolidated Financial Statements.
NOTE 12 - FAIR VALUE MEASUREMENTS
Citizens measures or monitors many of its assets and liabilities on a fair value basis. Fair value is used on a recurring basis for assets and liabilities for which fair value is the required or elected measurement basis of accounting. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or for disclosure purposes. Nonrecurring fair value adjustments typically involve the application of lower of cost or market accounting or write-downs of individual assets. Citizens also applies the fair value measurement guidance to determine amounts reported for certain disclosures in this Note for assets and liabilities that are not required to be reported at fair value in the financial statements.
Citizens Financial Group, Inc. | 62


Fair Value Option
Citizens elected to account for residential mortgage LHFS and certain commercial and industrial, and commercial real estate LHFS at fair value. The following table presents the difference between the aggregate fair value and the aggregate unpaid principal balance of LHFS measured at fair value:
March 31, 2023December 31, 2022
(dollars in millions)Aggregate Fair ValueAggregate Unpaid PrincipalAggregate Fair Value Greater (Less) Than Aggregate Unpaid PrincipalAggregate Fair ValueAggregate Unpaid PrincipalAggregate Fair Value Greater (Less) Than Aggregate Unpaid Principal
Residential mortgage loans held for sale, at fair value$767 $753 $14 $666 $656 $10 
Commercial and industrial, and commercial real estate loans held for sale, at fair value88 99 (11)108 127 (19)
For more information on the election of the fair value option for these assets see Note 20 in the Company’s 2022 Form 10-K.
Recurring Fair Value Measurements
Citizens utilizes a variety of valuation techniques to measure its assets and liabilities at fair value on a recurring basis. For more information on the valuation techniques utilized to measure recurring fair value see Note 20 in the Company’s 2022 Form 10-K.
Citizens Financial Group, Inc. | 63


The following table presents assets and liabilities measured at fair value, including gross derivative assets and liabilities, on a recurring basis at March 31, 2023:
(dollars in millions)TotalLevel 1Level 2Level 3
Debt securities available for sale:
Mortgage-backed securities$19,376 $— $19,376 $— 
Collateralized loan obligations1,215 — 1,215 — 
State and political subdivisions— — 
U.S. Treasury and other3,252 3,252 — — 
Total debt securities available for sale23,845 3,252 20,593 — 
Loans held for sale, at fair value:
Residential loans held for sale767 — 767 — 
Commercial loans held for sale88 — 88 — 
Total loans held for sale, at fair value855 — 855 — 
Mortgage servicing rights1,496 — — 1,496 
Derivative assets:
Interest rate contracts377 — 377 — 
Foreign exchange contracts456 — 456 — 
Commodities contracts819 — 819 — 
TBA contracts14 — 14 — 
Other contracts13 — — 13 
Total derivative assets1,679 — 1,666 13 
Equity securities, at fair value(1)
101 101 — — 
Total assets$27,976 $3,353 $23,114 $1,509 
Derivative liabilities:
Interest rate contracts$1,294 $— $1,294 $— 
Foreign exchange contracts407 — 407 — 
Commodities contracts789 — 789 — 
TBA contracts14 — 14 — 
Other contracts— — — — 
Total derivative liabilities2,504 — 2,504 — 
Total liabilities$2,504 $— $2,504 $— 
(1) Excludes investments of $42 million included in other assets in the Consolidated Balance Sheets that are measured at fair value using the net asset value per share (or its equivalent) practical expedient. These investments include capital contributions to private investment funds and have unfunded capital commitments of $41 million at March 31, 2023, which may be called at any time during prescribed time periods. The credit exposure is generally limited to the carrying amount of investments made and unfunded capital commitments.
Citizens Financial Group, Inc. | 64


The following table presents assets and liabilities measured at fair value, including gross derivative assets and liabilities, on a recurring basis at December 31, 2022:
(dollars in millions)TotalLevel 1Level 2Level 3
Debt securities available for sale:
Mortgage-backed securities$19,313 $— $19,313 $— 
Collateralized loan obligations1,206 — 1,206 — 
State and political subdivisions— — 
U.S. Treasury and other3,486 3,486 — — 
Total debt securities available for sale24,007 3,486 20,521 — 
Loans held for sale, at fair value:
Residential loans held for sale666 — 666 — 
Commercial loans held for sale108 — 108 — 
Total loans held for sale, at fair value774 — 774 — 
Mortgage servicing rights1,530 — — 1,530 
Derivative assets:
Interest rate contracts347 — 347 — 
Foreign exchange contracts527 — 527 — 
Commodities contracts953 — 953 — 
TBA contracts— — 
Other contracts— — 
Total derivative assets1,839 — 1,834 
Equity securities, at fair value(1)
110 110 — — 
Total assets28,260 $3,596 $23,129 $1,535 
Derivative liabilities:
Interest rate contracts$1,632 $— $1,632 $— 
Foreign exchange contracts519 — 519 — 
Commodities contracts942 — 942 — 
TBA contracts14 — 14 — 
Other contracts— — 
Total derivative liabilities3,111 — 3,107 
Total liabilities$3,111 $— $3,107 $4 
(1) Excludes investments of $43 million included in other assets in the Consolidated Balance Sheets that are measured at fair value using the net asset value per share (or its equivalent) practical expedient. These investments include capital contributions to private investment funds and have unfunded capital commitments of $42 million at December 31, 2022, which may be called at any time during prescribed time periods. The credit exposure is generally limited to the carrying amount of investments made and unfunded capital commitments.
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The following tables present a roll forward of the balance sheet amounts for assets measured at fair value on a recurring basis and classified as Level 3:
Three Months Ended March 31, 2023
(dollars in millions)Mortgage Servicing RightsOther Derivative Contracts
Beginning balance$1,530 $1 
Issuances21 15 
Settlements(1)
(41)(5)
Changes in fair value during the period recognized in earnings(2)
(14)
Ending balance$1,496 $13 
Three Months Ended March 31, 2022
(dollars in millions)Mortgage Servicing RightsOther Derivative Contracts
Beginning balance$1,029 $38 
Issuances95 41 
Settlements(1)
(39)61 
Changes in fair value during the period recognized in earnings(2)
156 (161)
Ending balance$1,241 ($21)
(1) For MSRs, represents changes in value of the MSRs due to i) passage of time including the impact from both regularly scheduled loan principal payments and partial paydowns, and ii) loans that paid off during the period. For other derivative contracts, represents the closeout of interest rate lock commitments.
(2) Represents changes in value primarily driven by market conditions. These changes are recorded in mortgage banking fees in the Consolidated Statements of Operations.
The following table presents quantitative information about the Company’s Level 3 assets, including the range and weighted-average of the significant unobservable inputs used to fair value these assets, as well as valuation techniques used.
As of March 31, 2023
Valuation TechniqueUnobservable InputRange (Weighted Average)
Mortgage servicing rightsDiscounted Cash FlowConstant prepayment rate
6.20-17.80% CPR (7.30% CPR)
Option adjusted spread
398-1,058 bps (628 bps)
Other derivative contractsInternal ModelPull through rate
8.67-99.70% (77.85%)
MSR value
(14.11)-141.45 bps (75.73 bps)
Nonrecurring Fair Value Measurements
Fair value is also used on a nonrecurring basis to evaluate certain assets for impairment or for disclosure purposes. For more information on the valuation techniques utilized to measure nonrecurring fair value see Note 20 in the Company’s 2022 Form 10-K.
The following table presents losses on assets measured at fair value on a nonrecurring basis and recorded in earnings:
Three Months Ended March 31,
(dollars in millions)20232022
Collateral-dependent loans ($4)($2)

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The following table presents assets measured at fair value on a nonrecurring basis:
March 31, 2023December 31, 2022
(dollars in millions)TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3
Collateral-dependent loans $671 $— $671 $— $582 $— $582 $— 
Fair Value of Financial Instruments
The following tables present the estimated fair value for financial instruments not recorded at fair value in the unaudited interim Consolidated Financial Statements. The carrying amounts are recorded in the Consolidated Balance Sheets under the indicated captions:
March 31, 2023
TotalLevel 1Level 2Level 3
(dollars in millions)Carrying ValueEstimated Fair ValueCarrying ValueEstimated Fair ValueCarrying ValueEstimated Fair ValueCarrying ValueEstimated Fair Value
Financial assets:
Debt securities held to maturity$9,677 $9,064 $— $— $9,125 $8,540 $552 $524 
Other loans held for sale1,000 1,000 — — — — 1,000 1,000 
Loans and leases154,688 149,332 — — 671 671 154,017 148,661 
Other assets1,228 1,228 — — 1,208 1,208 20 20 
Financial liabilities:
Deposits172,194 172,096 — — 172,194 172,096 — — 
Short-term borrowed funds1,018 1,018 — — 1,018 1,018 — — 
Long-term borrowed funds18,855 18,155 — — 18,855 18,155 — — 
December 31, 2022
TotalLevel 1Level 2Level 3
(dollars in millions)Carrying ValueEstimated Fair ValueCarrying ValueEstimated Fair ValueCarrying ValueEstimated Fair ValueCarrying ValueEstimated Fair Value
Financial assets:
Debt securities held to maturity $9,834 $9,042 $— $— $9,253 $8,506 $581 $536 
Other loans held for sale208 208 — — — — 208 208 
Loans and leases156,662 151,601 — — 582 582 156,080 151,019 
Other assets1,058 1,058 — — 1,038 1,038 20 20 
Financial liabilities:
Deposits180,724 180,566 — — 180,724 180,566 — — 
Short-term borrowed funds— — — — 
Long-term borrowed funds15,887 15,469 — — 15,887 15,469 — — 
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NOTE 13 - NONINTEREST INCOME
Revenues from Contracts with Customers
The following table presents the components of revenue from contracts with customers disaggregated by revenue stream and business operating segment:
Three Months Ended March 31, 2023Three Months Ended March 31, 2022
(dollars in millions)Consumer BankingCommercial BankingOtherConsolidatedConsumer BankingCommercial BankingOtherConsolidated
Service charges and fees$67 $32 $— $99 $69 $27 $1 $97 
Card fees59 12 — 71 50 10 — 60 
Capital markets fees— 71 — 71 — 78 — 78 
Trust and investment services fees63 — — 63 61 — — 61 
Other banking fees— 
Total revenue from contracts with customers$190 $119 $— $309 $181 $117 $2 $300 
Total revenue from other sources(1)
66 82 28 176 76 96 26 198 
Total noninterest income$256 $201 $28 $485 $257 $213 $28 $498 
(1) Includes bank-owned life insurance income of $23 million and $21 million for the three months ended March 31, 2023 and 2022, respectively.
The Company recognized trailing commissions of $4 million for the three months ended March 31, 2023 and 2022 related to ongoing commissions from previous investment sales.
NOTE 14 - OTHER OPERATING EXPENSE
The following table presents the details of other operating expense:
Three Months Ended March 31,
(dollars in millions)20232022
Marketing$38 $26 
Deposit insurance36 20 
Other95 64 
Other operating expense$169 $110 
NOTE 15 - EARNINGS PER SHARE
Three Months Ended March 31,
(dollars in millions, except per share data)20232022
Numerator (basic and diluted):
Net income$511 $420 
Less: Preferred stock dividends23 24 
Net income available to common stockholders$488 $396 
Denominator:
Weighted-average common shares outstanding - basic485,444,313 422,401,747 
Dilutive common shares: share-based awards2,267,833 2,269,124 
Weighted-average common shares outstanding - diluted487,712,146 424,670,871 
Earnings per common share:
Basic$1.00 $0.94 
Diluted(1)
1.00 0.93 
(1) Potential dilutive common shares are excluded from the computation of diluted EPS in the periods where the effect would be antidilutive. Excluded from the computation of diluted EPS were weighted average antidilutive shares totaling 1,278,383 and 2,222 for the three months ended March 31, 2023 and 2022, respectively.
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NOTE 16 - BUSINESS OPERATING SEGMENTS
Citizens is managed by its Chief Executive Officer on a segment basis. The Company’s two business operating segments are Consumer Banking and Commercial Banking. The business segments are determined based on the products and services provided, or the type of customer served. Each segment has a segment head who reports directly to the Chief Executive Officer. The Chief Executive Officer has final authority over resource allocation decisions and performance assessment. The business segments reflect this management structure and the manner in which financial information is currently evaluated by the Chief Executive Officer. For more information on the Company’s business operating segments, as well as Other non-segment operations, see Note 26 in the Company’s 2022 Form 10-K.
As of and for the Three Months Ended March 31, 2023
(dollars in millions)Consumer BankingCommercial BankingOtherConsolidated
Net interest income$1,096 $597 ($50)$1,643 
Noninterest income256 201 28 485 
Total revenue1,352 798 (22)2,128 
Noninterest expense889 331 76 1,296 
Profit (loss) before provision (benefit) for credit losses463 467 (98)832 
Provision (benefit) for credit losses83 47 38 168 
Income (loss) before income tax expense (benefit)380 420 (136)664 
Income tax expense (benefit)99 101 (47)153 
Net income (loss)$281 $319 ($89)$511 
Total average assets$87,558 $78,891 $56,262 $222,711 
As of and for the Three Months Ended March 31, 2022
(dollars in millions)Consumer BankingCommercial BankingOtherConsolidated
Net interest income$857 $416 ($126)$1,147 
Noninterest income257 213 28 498 
Total revenue 1,114 629 (98)1,645 
Noninterest expense784 272 50 1,106 
Profit (loss) before provision (benefit) for credit losses330 357 (148)539 
Provision (benefit) for credit losses49 12 (58)
Income (loss) before income tax expense (benefit)281 345 (90)536 
Income tax expense (benefit)72 74 (30)116 
Net income (loss)$209 $271 ($60)$420 
Total average assets $77,551 $61,118 $49,648 $188,317 
There have been no significant changes in the management accounting practices utilized by the Company regarding the basis of presentation for segment results as discussed in Note 26 in the Company’s 2022 Form 10-K.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative and qualitative disclosures about market risk are presented in the “Market Risk” section of Part I, Item 2 and is incorporated herein by reference.
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ITEM 4. CONTROLS AND PROCEDURES
The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. The design of any disclosure controls and procedures is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. In accordance with Rule 13a-15(b) of the Exchange Act, as of the end of the period covered by this quarterly report on Form 10-Q, an evaluation was carried out under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this quarterly report on Form 10-Q, were effective to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
There were no changes in our internal control over financial reporting identified in management's evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this quarterly report on Form 10-Q that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Information required by this item is presented in Note 11 and is incorporated herein by reference.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this Report, you should consider the risks described under the caption “Risk Factors” in the Company’s 2022 Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Details of the repurchases of the Company’s common stock during the three months ended March 31, 2023 are included below:
Period
Total Number of Shares Repurchased(1)
Average Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)
Maximum Dollar Amount of Shares That May Yet Be Purchased as Part of Publicly Announced Plans or Programs(2)
January 1, 2023 - January 31, 20238,482,536$39.688,482,157$513,449,776
February 1, 2023 - February 28, 20233,449$33.74$1,663,449,776
March 1, 2023 - March 31, 20231,603,306$39.651,599,160$1,600,000,000
(1) Includes shares repurchased to satisfy applicable tax withholding obligations in connection with an employee share-based compensation plan and the forfeiture of unvested restricted stock awards.
(2) On February 17, 2023, the Company announced that its Board of Directors increased the capacity under its common share repurchase program by an additional $1.15 billion, which was incremental to the $850 million of capacity remaining as of December 31, 2022 under the prior June 2022 authorization. Common stock share repurchases may be executed in the open market or in privately negotiated transactions, including under Rule 10b5-1 plans and accelerated share repurchase and other structured transactions. The timing and exact amount of future share repurchases will be subject to various factors, including the Company’s capital position, financial performance, capital impacts of strategic initiatives, market conditions, receipt of required regulatory approvals and other regulatory considerations.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
Citizens Financial Group, Inc. | 70


ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS






101    The following materials from the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2023, formatted in inline XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements*

104    Cover page interactive data file in inline XBRL format, included in Exhibit 101 to this report*

* Filed herewith.
Citizens Financial Group, Inc. | 71


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized on May 10, 2023.

CITIZENS FINANCIAL GROUP, INC.
(Registrant)
By:/s/ C. Jack Read
Name: C. Jack Read
Title: Executive Vice President, Chief Accounting Officer and Controller
(Principal Accounting Officer and Authorized Officer)

Citizens Financial Group, Inc. | 72
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