CITIZENS FINANCIAL GROUP INC/RI

Citizens Financial Group, Inc. operates as a financial holding company and bank holding company, offering a broad range of retail and commercial banking products and services to individuals, small businesses, middle-market companies, large corporations, and institutions. The company's products and services are offered through more than 1,000 branches in 14 states and the District of Columbia and 75 retail and commercial non-branch offices, though certain lines of business serve national markets. The financial services industry is highly competitive, with the company facing competition from community banks, super-regional and national financial institutions, credit unions, savings and loan associations, mortgage banking firms, consumer finance companies, securities brokerage firms, insurance companies, money market funds, hedge funds, and private equity firms. Competition among providers of financial products and services continues to increase, with consumers and businesses having the opportunity to select from a growing variety of traditional and nontraditional alternatives, such as Private Credit/Direct lenders. The ability of non-banking financial institutions, including FinTech companies, to provide services previously limited to commercial banks has also intensified competition. In Consumer Banking, the industry has become increasingly dependent on and oriented toward technology-driven delivery systems, permitting transactions to be conducted through online and mobile channels, and technology has lowered barriers to entry and made it possible for non-bank institutions to attract funds and provide lending and other financial products and services. The emergence of digital-only banking models has increased and the company expects this trend to continue.

The company's primary competitors are not individually named in the filing, but it states that it faces competition within its markets from community banks, super-regional and national financial institutions, credit unions, savings and loan associations, mortgage banking firms, consumer finance companies, securities brokerage firms, insurance companies, money market funds, hedge funds, and private equity firms. Some of its larger competitors may offer a broader array of products, pricing, and structure alternatives to their customers, while some smaller competitors may have more liberal lending policies and processes. In addition, some of its competitors are not subject to the same regulatory requirements as the company and, therefore, may have lower costs they can pass on to customers. The company's competitive advantages are described through its business strategy, which is grounded in a 'three-legged stool' model consisting of a transformed Consumer Bank, best-positioned Commercial Bank, and premier Private Bank. The company aims to deepen engagement across key customer segments by offering a comprehensive suite of products through frictionless digital and omni-channel experiences, and to strengthen its competitive position by expanding in growth markets, deepening its presence in priority industry verticals, and investing in businesses with attractive and sustainable long-term potential.

The company generates revenue through net interest income, which is the difference between the interest earned on interest-earning assets (generally loans and investment securities) and the interest expense incurred in connection with interest-bearing liabilities (generally deposits and borrowed funds), and noninterest income, which includes service charges and fees, capital markets fees, wealth fees, card fees, mortgage banking fees, foreign exchange and derivative products, letter of credit and loan fees, securities gains, and other income. The company's primary customer segments are consumer customers and small businesses, served through the Consumer Banking segment, and companies and institutions, served through the Commercial Banking segment. The company operates a multi-channel distribution network with a workforce of approximately 5,100 branch colleagues, 1,000 branches, including 117 in-store locations, and 3,100 ATMs. The company serves customers on a national basis through telephone service centers and its online and mobile platforms.

Consumer Banking serves consumer customers and small businesses, with products and services that include deposits, mortgage and home equity lending, credit cards, small business loans, and wealth management solutions largely across the company's 14-state traditional banking footprint. The segment also offers education and point-of-sale finance loans in addition to select digital deposit products nationwide. Citizens Private Bank and Private Wealth integrate banking services and wealth management solutions to serve high- and ultra-high-net-worth individuals and families, as well as investors, entrepreneurs, and businesses. For the year ended December 31, 2025, Consumer Banking reported net interest income of $4,972 million ¹, noninterest income of $1,252 million ², total revenue of $6,224 million ³, noninterest expense of $3,880 million ⁴, profit before credit losses of $2,344 million ⁵, net charge-offs of $328 million ⁶, income before income tax expense of $2,016 million ⁷, income tax expense of $510 million ⁸, and net income of $1,506 million ⁹. Average total assets for the segment were $79,925 million ¹⁰, average total loans and leases were $73,443 million ¹¹, average deposits were $128,275 million ¹², and average interest-earning assets were $74,035 million ¹³.

Commercial Banking primarily serves companies and institutions and offers a broad complement of financial products and solutions, including lending and leasing, deposit and treasury management services, foreign exchange, interest rate and commodity risk management solutions, as well as loan syndication, corporate finance, merger and acquisition, and debt and equity capital markets capabilities. The segment is organized around client segments and their banking needs, including Middle Market & Midcorporate - Commercial & Industrial, Commercial Real Estate, Capital Markets and Advisory, and Treasury & Wholesale Payments. For the year ended December 31, 2025, Commercial Banking reported net interest income of $1,778 million ¹⁴, noninterest income of $995 million ¹⁵, total revenue of $2,773 million ¹⁶, noninterest expense of $1,334 million ¹⁷, profit before credit losses of $1,439 million ¹⁸, net charge-offs of $309 million ¹⁹, income before income tax expense of $1,130 million ²⁰, income tax expense of $265 million ²¹, and net income of $865 million ²². Average total assets for the segment were $66,137 million ²³, average total loans and leases were $62,941 million ²⁴, average deposits were $43,657 million ²⁵, and average interest-earning assets were $63,677 million ²⁶.

During the first quarter of 2025, the company entered into an agreement to sell $1.9 billion ²⁷ of education loans and subsequently reclassified these loans to loans held for sale. Upon reclassification to loans held for sale, a charge-off of $25 million ²⁸ was recognized, which was covered by existing reserves. This transaction settled ratably each quarter throughout 2025. On June 13, 2025, the company announced that its Board of Directors increased the capacity of its common share repurchase program to $1.5 billion ²⁹, an increase of $1.2 billion ³⁰ above the $300 million ³¹ of capacity remaining under the prior June 2024 authorization. During 2025, the Parent Company repurchased $600 million ³² of its outstanding common stock, with remaining capacity of $1.3 billion ³³ as of December 31, 2025. On July 31, 2025, the company issued $400 million ³⁴, or 400,000 shares ³⁵, of 6.500% ³⁶ fixed-rate reset non-cumulative perpetual Series I Preferred Stock, par value of $25 per share ³⁷ with a liquidation preference of $1,000 per share ³⁸. The net proceeds from the issuance of the Series I Preferred Stock were used to redeem all of the outstanding shares of the company's 5.650% ³⁹ fixed-rate reset non-cumulative perpetual Series F Preferred Stock on October 6, 2025. On October 15, 2025, the company announced that its Board of Directors declared a quarterly common stock dividend of $0.46 per share ⁴⁰, a $0.04 ⁴¹, or 9.5% ⁴², increase compared to the prior quarter. On July 4, 2025, H.R. 1, entitled the One Big Beautiful Bill Act, was signed into law, and the company has completed its evaluation of the bill and does not expect it to have a material impact on its Consolidated Financial Statements.

Net income for the year ended December 31, 2025 was $1.8 billion ⁴³, an increase of $322 million ⁴⁴ compared to 2024. Earnings per diluted common share were $3.86 ⁴⁵, up $0.83 ⁴⁶ from 2024. Net interest income of $5.9 billion ⁴⁷ increased $220 million ⁴⁸ and net interest margin of 2.97% ⁴⁹ increased 13 basis points ⁵⁰ compared to 2024. Noninterest income of $2.4 billion ⁵¹ increased $218 million ⁵² compared to 2024. Noninterest expense of $5.3 billion ⁵³ increased $77 million ⁵⁴ compared to 2024. Provision expense of $608 million ⁵⁵ decreased $79 million ⁵⁶ compared to 2024. The efficiency ratio was 64.40% ⁵⁷ compared to 67.03% ⁵⁸ in 2024. Return on average tangible common equity was 11.20% ⁵⁹ compared to 9.81% ⁶⁰ in 2024. Tangible book value per common share of $38.07 ⁶¹ increased 18% ⁶² from 2024, driven by a decrease in common shares outstanding of eleven million ⁶³ and a net increase in tangible common equity of $2.1 billion ⁶⁴. The increase in tangible common equity is primarily attributable to increases in accumulated other comprehensive income of $1.6 billion ⁶⁵ and retained earnings of $933 million ⁶⁶, including net income of $1.8 billion ⁶⁷ for the year ended December 31, 2025.

The company's strategy emphasizes driving scale in growth markets, key industries, and high-opportunity businesses. The company aims to strengthen its competitive position by expanding in growth markets, deepening its presence in priority industry verticals, and investing in businesses with attractive and sustainable long-term potential. The company is focused on the continued expansion of Private Bank and Private Wealth, and its aim to position itself as a more innovative, modern, and customer-centric bank. The company is enhancing its product suites, investing in digital and data capabilities, and equipping its teams to deliver seamless, omni-channel experiences. As customer expectations evolve, the company continues to modernize its platforms, strengthen treasury and payment capabilities, and advance advisory-led engagement across Consumer, Commercial, and Private Bank and Private Wealth.

The company's strategy includes delivering high-quality solutions and advice, and continuing to optimize its balance sheet and business mix. The company manages its balance sheet with discipline and a clear focus on generating attractive, risk-adjusted returns. Its strategy emphasizes thoughtful capital allocation, proactive portfolio management, and deliberate shifts toward relationship-oriented, higher-quality businesses. The company remains committed to strengthening the durability of its earnings by increasing the mix of attractive deposits, expanding recurring fee-income streams, and reducing exposure to lower-return activities. The company is also focused on growing high-quality deposits and deepening customer relationships by delivering a customer-centric experience grounded in advice, tailored solutions, and expanded capabilities.

The company's efficiency ratio improved to 64.40% ⁶⁸ for the year ended December 31, 2025, compared to 67.03% ⁶⁹ in 2024. Noninterest expense increased $77 million ⁷⁰ compared to 2024, driven by salaries and employee benefits reflecting hiring related to the Private Bank and Private Wealth build-out, strong capital markets fee performance, and increased medical benefit costs, partially offset by a decline in other operating expense primarily driven by lower FDIC deposit insurance costs. The company's net interest margin increased 13 basis points ⁷¹ to 2.97% ⁷² compared to 2024, reflecting lower funding costs, including the reduction of higher-cost funding given the auto loan portfolio runoff and education loan sale, lower terminated swap impacts, and fixed-rate asset repricing benefits, partially offset by lower asset yields.

The company operates a multi-channel distribution network with a workforce of approximately 5,100 branch colleagues ⁷³, 1,000 branches ⁷⁴, including 117 in-store locations ⁷⁵, and 3,100 ATMs ⁷⁶. The company's network includes approximately 1,500 specialists ⁷⁷ covering lending, savings, and wealth management needs as well as a broad range of small business products and services. The company serves customers on a national basis through telephone service centers and its online and mobile platforms. The company continues to evolve its hiring processes and explore ways that technology and automation can further improve candidate experience. The company launched a new leadership development program for frontline managers across the enterprise and is implementing a new leadership framework. In 2025, the company launched a new learning operating model that creates a more streamlined learner experience and expands learning solutions across the enterprise.

During 2025, the Parent Company repurchased $600 million ⁷⁸ of its outstanding common stock, with remaining capacity of $1.3 billion ⁷⁹ as of December 31, 2025. On June 13, 2025, the company announced that its Board of Directors increased the capacity of its common share repurchase program to $1.5 billion ⁸⁰, an increase of $1.2 billion ⁸¹ above the $300 million ⁸² of capacity remaining under the prior June 2024 authorization. On October 15, 2025, the company announced that its Board of Directors declared a quarterly common stock dividend of $0.46 per share ⁸³, a $0.04 ⁸⁴, or 9.5% ⁸⁵, increase compared to the prior quarter. On July 31, 2025, the company issued $400 million ⁸⁶, or 400,000 shares ⁸⁷, of 6.500% ⁸⁸ fixed-rate reset non-cumulative perpetual Series I Preferred Stock. The company's ability to make any capital distributions, including dividends and share repurchases, is subject to the prior approval of the FRB if the company is required to resubmit its capital plan.

The company faces headwinds from inflationary pressures, which could negatively impact its funding costs and expenses, including increasing funding costs and expenses related to talent acquisition and retention. Inflation may also negatively impact consumer demand and client purchasing power for the company's products and services, as well as the ability of its borrowers to repay their obligations. Changes in interest rates can have a material impact on the value of the company's securities portfolio, net interest income, net interest margin, fee income, and credit costs. An increase in interest rates could weaken demand for loans by customers, reducing net interest income due to lower loan balances and origination-related fee income due to lower production volume, and could also have an adverse impact on credit costs. A decrease in interest rates could reduce net interest income, net interest margin, and fee income. Changes in the spread between short-term and long-term interest rates (i.e., the yield curve) can also have a material impact on net interest income and net interest margin.

The company is subject to a variety of cybersecurity risks that, if realized, could adversely affect how it conducts its business. Evolving technologies, including the introduction of Generative Artificial Intelligence and Large Language Models, and the increased sophistication and activities of organized crime, hackers, terrorists, nation-states, activists, and other external parties present a significant information security risk. The company relies on third parties for the performance of a significant portion of its information technology, and the success of its business depends in part on the continuing ability of third parties to perform these functions and services in a timely and satisfactory manner. The company is also exposed to risks associated with the transition to a lower-carbon economy in response to concerns around climate change, which could result from changes in policies, laws and regulations, technologies, or market preferences that are intended to address climate change.

The company may not be able to successfully execute its business strategy, including the continued expansion of Private Bank and Private Wealth, and its aim to position itself as a more innovative, modern, and customer-centric bank. Changes in interest rates can have a material impact on net interest income, net interest margin, fee income, and credit costs, and the company's asset yields and funding costs may not rise or fall in parallel. A deterioration in borrower credit quality, particularly given the concentration of loans in commercial real estate, which had criticized balances of $3.7 billion ⁸⁹ as of December 31, 2025, could result in higher credit losses and increased loan loss provision expense. The company is subject to a variety of cybersecurity risks, and a successful cyberattack could result in the unauthorized release of confidential information, damage its reputation, and subject it to regulatory scrutiny and financial liability. The company is subject to capital adequacy and liquidity standards, and if it fails to meet these standards, its ability to make distributions of capital will be limited and it may be subject to additional supervisory actions.

Management's message emphasizes the company's vision to be a top-performing regional bank distinguished by customer centricity, a mindset of continuous improvement, and excellent capabilities. The strategy is grounded in a 'three-legged stool' model consisting of a transformed Consumer Bank, best-positioned Commercial Bank, and premier Private Bank. Management highlights five strategic objectives: grow high-quality deposits and deepen customer relationships, drive scale in growth markets, key industries, and high-opportunity businesses, deliver high-quality solutions and advice, continue to optimize balance sheet and business mix, and invest in people and communities. The forward-looking statements in the filing include the company's aim to position itself as a more innovative, modern, and customer-centric bank, and the expectation that the company will continue to monitor developments related to various regulatory proposals.