Citizens Financial Group, Inc. (NYSE: CFG or “Citizens") today reports
third quarter net income of $189 million, or $0.34 per diluted common
share, compared with $313 million, or $0.56 per diluted common share,
for second quarter 2014, and $144 million, or $0.26 per diluted common
share, for third quarter 2013. Third quarter 2014 results were reduced
by $0.02 per diluted common share related to net restructuring charges
and special items versus a $0.19 per diluted common share benefit in
second quarter 2014 as detailed in the discussion of results portion of
this release. Adjusted EPS of $0.36 in third quarter of 2014 compares
with $0.37 in second quarter 2014, and $0.26 in third quarter 2013.
Citizens also announced that its board of directors has declared a
quarterly cash dividend of $0.10 per common share. The dividend is
payable on November 20, 2014 to shareholders of record at the close of
business on November 6, 2014.
"Citizens delivered solid bottom line results this quarter, with
positive momentum in our business performance and good execution across
our growth and efficiency initiatives,” said Bruce Van Saun, Chairman
and Chief Executive Officer. “We continue to make solid progress in key
growth areas like auto and student lending, and in capital markets where
we moved to a top five ranking in middle market loan syndications.”
Van Saun continued, “The initial public offering was a significant
milestone for us as we work towards our aspiration of becoming a
top-performing regional bank. We remain focused on delivering enhanced
value for our customers, the communities we serve and for our
shareholders.”
The Return on Average Tangible Common Equity* (“ROTCE”) was 5.81% in
third quarter 2014 compared to 9.59% in second quarter 2014. The
Adjusted ROTCE* for third quarter 2014 was 6.22% compared to 6.28% for
second quarter 2014, as improvement in underlying pre-provision profit
was offset by an increase in provision for credit losses from relatively
low second quarter 2014 levels.
*These are non-GAAP financial measures. Please see Non-GAAP
Reconciliation Tables at the end of this release for an explanation of
our use of non-GAAP financial measures and their reconciliation to GAAP.
All references to “Adjusted” results exclude restructuring charges and
special items.
Third quarter 2014 net income was reduced by $13 million after-tax, or
$0.02 per share, of restructuring charges and special items, largely
related to efforts to improve processes and enhance efficiencies, as
well as rebranding and separation from The Royal Bank of Scotland Group
plc (“RBS”). Second quarter 2014 results included a net $108 million
after-tax benefit, or $0.19 per share, of restructuring charges and
special items including a $180 million after-tax gain on the sale of the
Chicago-area Charter One branches, small business and select middle
market relationships (the “Chicago Divestiture”).
In addition to the restructuring charges and special items associated
with the Chicago Divestiture that have been excluded from Adjusted
Results*, the Chicago Divestiture also reduced quarterly results by the
following estimated amounts: $13 million in net interest income, $12
million in noninterest income and $21 million in noninterest expense.
Key Highlights – Third Quarter 2014 vs. Second
Quarter 2014
-
Third quarter highlights include 6% year over year growth in loan
assets, continued overall strong credit quality and good expense
discipline.
Results
-
Adjusted total revenue*of $1.16 billion was essentially flat with
second quarter 2014, excluding the impact of the Chicago Divestiture.
-
Net interest income of $820 million decreased $13 million, reflecting
an estimated $13 million reduction from the Chicago Divestiture.
-
Adjusted noninterest income* decreased $11 million, reflecting an
estimated $12 million reduction from the Chicago Divestiture.
-
Adjusted noninterest expense* decreased $44 million, driven by the
estimated $21 million impact of the Chicago Divestiture, lower
regulatory costs and the benefit of our efficiency initiatives.
-
Adjusted efficiency ratio* of 68% improved over 200 basis points from
second quarter 2014.
-
Pre-provision profit was $351 million. Adjusted pre-provision profit*
was up $20 million, driven by the decline in expenses.
-
Provision for credit losses of $77 million increased $28 million,
reflecting a return to a more normalized level from an unusually low
second quarter.
Balance Sheet
-
Average interest-earning assets increased $1.2 billion, or 1%, despite
a $1.0 billion decrease in loans held for sale associated with the
Chicago Divestiture. Adjusted for the Chicago Divestiture, growth was
1.9%.
-
Average deposits and deposits held for sale decreased $490 million, or
1%, as a $4.5 billion decrease tied to the Chicago Divestiture was
largely offset by underlying average deposit growth of $4 billion.
-
Period-end deposits increased $1.8 billion driven by growth in
Commercial.
-
Nonperforming loans and leases decreased to 1.19% of total loans and
leases from 1.35% as credit quality continues to improve. Allowance
coverage of NPL’s increased to 111% in third quarter 2014 from 101% in
second quarter 2014.
-
Capital strength remained robust with a Tier 1 common equity ratio of
12.9%.
-
Two capital exchange transactions were recently completed with RBS.
The first was a $333 million capital exchange transaction in August
with associated sub-debt issuance. The second was a $334 million
capital exchange transaction with RBS that included a 14.3 million
share repurchase on October 8th along with associated
sub-debt issuance.
Initiatives
-
Good progress continued on initiatives intended to drive growth and
enhance efficiency:
-
Efficiency program drove $14 million in savings during the quarter.
-
Consumer household growth of approximately 46,000 since year end
2013.
-
Commercial momentum remains strong, with Citizens ranked 5th
in the most recent U.S. middle-market book runner loan syndication
league tables** by number of deals.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings highlights
|
|
|
|
|
|
|
|
|
|
|
3Q14 change from
|
($s in millions, except per share data)
|
|
3Q14
|
|
|
2Q14
|
|
|
3Q13
|
|
|
2Q14
|
|
|
3Q13
|
Earnings
|
|
|
|
|
|
|
|
|
|
|
$
|
|
%
|
|
|
$
|
|
%
|
Net interest income
|
|
$
|
820
|
|
|
$
|
833
|
|
|
$
|
770
|
|
|
$
|
(13
|
)
|
|
|
|
(2
|
)%
|
|
|
$
|
50
|
|
|
|
|
6
|
%
|
Noninterest income
|
|
|
341
|
|
|
|
640
|
|
|
|
383
|
|
|
|
(299
|
)
|
|
|
|
(47
|
)
|
|
|
|
(42
|
)
|
|
|
|
(11
|
)
|
Total revenue
|
|
|
1,161
|
|
|
|
1,473
|
|
|
|
1,153
|
|
|
|
(312
|
)
|
|
|
|
(21
|
)
|
|
|
|
8
|
|
|
|
|
1
|
|
Noninterest expense
|
|
|
810
|
|
|
|
948
|
|
|
|
788
|
|
|
|
(138
|
)
|
|
|
|
(15
|
)
|
|
|
|
22
|
|
|
|
|
3
|
|
Profit before provision for credit losses
|
|
|
351
|
|
|
|
525
|
|
|
|
365
|
|
|
|
(174
|
)
|
|
|
|
(33
|
)
|
|
|
|
(14
|
)
|
|
|
|
(4
|
)
|
Provision for credit losses
|
|
|
77
|
|
|
|
49
|
|
|
|
145
|
|
|
|
28
|
|
|
|
|
57
|
|
|
|
|
(68
|
)
|
|
|
|
(47
|
)
|
Net income
|
|
$
|
189
|
|
|
$
|
313
|
|
|
$
|
144
|
|
|
$
|
(124
|
)
|
|
|
|
(40
|
)%
|
|
|
$
|
45
|
|
|
|
|
31
|
%
|
After-tax restructuring charges and special items
|
|
|
(13
|
)
|
|
|
108
|
|
|
|
—
|
|
|
|
(121
|
)
|
|
|
|
(112
|
)
|
|
|
|
(13
|
)
|
|
|
|
NM
|
|
Net income, excluding restructuring charges and special items*
|
|
$
|
202
|
|
|
$
|
205
|
|
|
$
|
144
|
|
|
$
|
(3
|
)
|
|
|
|
(1
|
)%
|
|
|
$
|
58
|
|
|
|
|
40
|
%
|
Average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
559,998,324
|
|
|
559,998,324
|
|
|
559,998,324
|
|
|
|
—
|
|
|
|
|
—
|
%
|
|
|
|
—
|
|
|
|
|
—
|
%
|
Diluted
|
|
560,243,747
|
|
|
559,998,324
|
|
|
559,998,324
|
|
|
|
245,423
|
|
|
|
|
0
|
%
|
|
|
|
245,423
|
|
|
|
|
0
|
%
|
Diluted earnings per share
|
|
$
|
0.34
|
|
|
$
|
0.56
|
|
|
$
|
0.26
|
|
|
$
|
(0.22
|
)
|
|
|
|
(39
|
)%
|
|
|
$
|
0.08
|
|
|
|
|
31
|
%
|
Diluted earnings per share, excluding restructuring charges and
special items*
|
|
$
|
0.36
|
|
|
$
|
0.37
|
|
|
$
|
0.26
|
|
|
$
|
(0.01
|
)
|
|
|
|
(3
|
)%
|
|
|
$
|
0.10
|
|
|
|
|
38
|
%
|
Financial ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin
|
|
|
2.77
|
%
|
|
|
2.87
|
%
|
|
|
2.88
|
%
|
|
|
(10
|
)
|
|
bps
|
|
|
|
|
|
(11
|
)
|
|
bps
|
|
|
Noninterest income as a % of total revenue
|
|
|
29.4
|
|
|
|
43.4
|
|
|
|
33.2
|
|
|
|
(1,408
|
)
|
|
bps
|
|
|
|
|
|
(385
|
)
|
|
bps
|
|
|
Effective income tax rate
|
|
|
30.8
|
|
|
|
34.3
|
|
|
|
34.6
|
|
|
|
(346
|
)
|
|
bps
|
|
|
|
|
|
(376
|
)
|
|
bps
|
|
|
Efficiency ratio
|
|
|
70
|
|
|
|
64
|
|
|
|
68
|
|
|
|
551
|
|
|
bps
|
|
|
|
|
|
135
|
|
|
bps
|
|
|
Efficiency ratio, excluding restructuring charges and special items*
|
|
|
68
|
|
|
|
70
|
|
|
|
68
|
|
|
|
(221
|
)
|
|
bps
|
|
|
|
|
|
(47
|
)
|
|
bps
|
|
|
Return on average tangible common equity*
|
|
|
5.81
|
|
|
|
9.59
|
|
|
|
4.34
|
|
|
|
(378
|
)
|
|
bps
|
|
|
|
|
|
147
|
|
|
bps
|
|
|
Return on average tangible common equity excluding restructuring
charges and special items*
|
|
|
6.22
|
|
|
|
6.28
|
|
|
|
4.34
|
|
|
|
(6
|
)
|
|
bps
|
|
|
|
|
|
188
|
|
|
bps
|
|
|
Return on average common equity
|
|
|
3.87
|
|
|
|
6.41
|
|
|
|
2.91
|
|
|
|
(254
|
)
|
|
bps
|
|
|
|
|
|
96
|
|
|
bps
|
|
|
Return on average total assets
|
|
|
0.58
|
|
|
|
0.99
|
|
|
|
0.49
|
|
|
|
(41
|
)
|
|
bps
|
|
|
|
|
|
9
|
|
|
bps
|
|
|
Return on average total tangible assets*
|
|
|
0.61
|
%
|
|
|
1.04
|
%
|
|
|
0.52
|
%
|
|
|
(43
|
)
|
|
bps
|
|
|
|
|
|
9
|
|
|
bps
|
|
|
Capital adequacy1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 common equity ratio
|
|
|
12.9
|
%
|
|
|
13.3
|
%
|
|
|
13.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital ratio
|
|
|
16.1
|
|
|
|
16.2
|
|
|
|
16.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leverage ratio
|
|
|
10.9
|
%
|
|
|
11.1
|
%
|
|
|
12.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset quality
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total nonperforming loans and leases as a % of total loans and leases
|
|
|
1.19
|
%
|
|
|
1.35
|
%
|
|
|
1.98
|
%
|
|
|
(16
|
)
|
|
bps
|
|
|
|
|
|
(79
|
)
|
|
bps
|
|
|
Net charge-offs as a % of average loans and leases
|
|
|
0.38
|
|
|
|
0.31
|
|
|
|
0.61
|
|
|
|
7
|
|
|
bps
|
|
|
|
|
|
(23
|
)
|
|
bps
|
|
|
Allowance for loan and lease losses as a % of loans and leases
|
|
|
1.32
|
|
|
|
1.36
|
|
|
|
1.43
|
|
|
|
(4
|
)
|
|
bps
|
|
|
|
|
|
(11
|
)
|
|
bps
|
|
|
Allowance for loan and lease losses as a % of nonperforming loans
and leases
|
|
|
111.30
|
%
|
|
|
100.84
|
%
|
|
|
72.06
|
%
|
|
|
1,046
|
|
|
bps
|
|
|
|
|
|
3,924
|
|
|
bps
|
|
|
* These are non-GAAP financial measures. Please see Non-GAAP
Reconciliation Tables at the end of this release for an
explanation of our use of non-GAAP financial measures and
reconciliation of those non-GAAP financial measures to GAAP. All
references to Adjusted results exclude restructuring charges and
special items.
1 Regulatory capital ratios are preliminary.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
** Thomson Reuters
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discussion of Results:
Net income of $189 million in third quarter 2014 decreased $124 million,
or 40%, from second quarter 2014, and increased $45 million from third
quarter 2013. Results included the following restructuring charges and
special items which largely related to our separation from RBS and
efforts to improve processes and enhance efficiency.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of and for the three months ended
|
|
|
|
|
|
|
|
|
Restructuring charges and special items
|
|
|
|
September 30, 2014
|
|
|
|
June 30, 2014
|
|
|
|
increase/decrease
|
($s in millions, except per share data)
|
|
|
|
pre-tax
|
|
|
|
after-tax
|
|
|
|
pre-tax
|
|
|
|
after-tax
|
|
|
|
pre-tax
|
|
|
|
after-tax
|
Noninterest income special items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Gain on Chicago Divestiture
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
288
|
|
|
|
$
|
180
|
|
|
|
$
|
(288
|
)
|
|
|
|
$
|
(180
|
)
|
Total noninterest income special items
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
288
|
|
|
|
$
|
180
|
|
|
|
$
|
(288
|
)
|
|
|
|
$
|
(180
|
)
|
Noninterest expense restructuring charges and special items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chicago Divestiture
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
3
|
|
|
|
$
|
2
|
|
|
|
$
|
(3
|
)
|
|
|
|
$
|
(2
|
)
|
Efficiency initiatives
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
40
|
|
|
|
|
25
|
|
|
|
|
(40
|
)
|
|
|
|
|
(25
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-compensation expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chicago Divestiture
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
14
|
|
|
|
|
9
|
|
|
|
|
(14
|
)
|
|
|
|
|
(9
|
)
|
Efficiency initiatives
|
|
|
|
|
4
|
|
|
|
|
|
3
|
|
|
|
|
|
46
|
|
|
|
|
28
|
|
|
|
|
(42
|
)
|
|
|
|
|
(25
|
)
|
Separation / IPO related
|
|
|
|
|
2
|
|
|
|
|
|
1
|
|
|
|
|
|
6
|
|
|
|
|
4
|
|
|
|
|
(4
|
)
|
|
|
|
|
(3
|
)
|
Other
|
|
|
|
|
15
|
|
|
|
|
|
9
|
|
|
|
|
|
6
|
|
|
|
|
4
|
|
|
|
|
9
|
|
|
|
|
|
5
|
|
Total noninterest expense restructuring charges and special items
|
|
|
|
$
|
21
|
|
|
|
|
$
|
13
|
|
|
|
|
$
|
115
|
|
|
|
$
|
72
|
|
|
|
$
|
(94
|
)
|
|
|
|
$
|
(59
|
)
|
Net restructuring charges and special items
|
|
|
|
$
|
(21
|
)
|
|
|
|
$
|
(13
|
)
|
|
|
|
$
|
173
|
|
|
|
$
|
108
|
|
|
|
$
|
(194
|
)
|
|
|
|
$
|
(121
|
)
|
EPS impact
|
|
|
|
|
|
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
$
|
0.19
|
|
|
|
|
|
|
|
$
|
(0.21
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted results*
|
|
|
|
|
|
|
|
|
|
|
|
3Q14 change from
|
|
$s in millions
|
|
3Q14
|
|
|
2Q14
|
|
|
3Q13
|
|
|
2Q14
|
|
|
|
3Q13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
%
|
|
|
|
|
|
$
|
|
|
%
|
|
|
Net interest income
|
|
$
|
820
|
|
|
|
$
|
833
|
|
|
|
$
|
770
|
|
|
|
$
|
(13
|
)
|
|
(2
|
)%
|
|
|
|
$
|
50
|
|
|
6
|
%
|
|
Adjusted noninterest income*
|
|
|
341
|
|
|
|
|
352
|
|
|
|
|
383
|
|
|
|
|
(11
|
)
|
|
(3
|
)
|
|
|
|
|
(42
|
)
|
|
(11
|
)
|
|
Adjusted total revenue*
|
|
|
1,161
|
|
|
|
|
1,185
|
|
|
|
|
1,153
|
|
|
|
|
(24
|
)
|
|
(2
|
)
|
|
|
|
|
8
|
|
|
1
|
|
|
Adjusted noninterest expense*
|
|
|
789
|
|
|
|
|
833
|
|
|
|
|
788
|
|
|
|
|
(44
|
)
|
|
(5
|
)
|
|
|
|
|
1
|
|
|
—
|
|
|
Adjusted pre-provision profit*
|
|
|
372
|
|
|
|
|
352
|
|
|
|
|
365
|
|
|
|
|
20
|
|
|
6
|
|
|
|
|
|
7
|
|
|
2
|
|
|
Provision for credit losses
|
|
|
77
|
|
|
|
|
49
|
|
|
|
|
145
|
|
|
|
|
28
|
|
|
57
|
|
|
|
|
|
(68
|
)
|
|
(47
|
)
|
|
Adjusted pretax income*
|
|
|
295
|
|
|
|
|
303
|
|
|
|
|
220
|
|
|
|
|
(8
|
)
|
|
(3
|
)
|
|
|
|
|
75
|
|
|
34
|
|
|
Adjusted income tax expense*
|
|
|
93
|
|
|
|
|
98
|
|
|
|
|
76
|
|
|
|
|
(5
|
)
|
|
(5
|
)
|
|
|
|
|
17
|
|
|
22
|
|
|
Adjusted net income*
|
|
$
|
202
|
|
|
|
$
|
205
|
|
|
|
$
|
144
|
|
|
|
$
|
(3
|
)
|
|
(1
|
)%
|
|
|
|
$
|
58
|
|
|
40
|
%
|
|
|
Adjusted net income* of $202 million in third quarter 2014 decreased $3
million, or 1%, from second quarter 2014 as a $24 million decrease in
revenue driven by the Chicago Divestiture and a $28 million increase in
provision for credit losses were largely offset by $44 million decline
in expenses, $21 million of which relates to the Chicago Divestiture.
Adjusted pre-provision profit* increased $20 million from second quarter
2014 driven by lower noninterest expense, largely related to lower
regulatory costs and incentives.
Third quarter 2014 Adjusted net income* increased $58 million, or 40%,
from $144 million in third quarter 2013, reflecting lower provision
expense related to continued improvement in credit quality. Adjusted
pre-provision profit* increased $7 million from third quarter 2013 as
growth in net interest income and capital markets fees was largely
offset by lower securities gains and service charges.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
|
|
|
|
|
|
|
|
|
3Q14 change from
|
($s in millions)
|
|
|
3Q14
|
|
|
2Q14
|
|
|
3Q13
|
|
|
2Q14
|
|
|
|
3Q13
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
%
|
|
|
|
$
|
|
|
%
|
Interest income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and fees on loans and leases and loans held for sale
|
|
|
$
|
756
|
|
|
$
|
762
|
|
|
$
|
751
|
|
|
$
|
(6
|
)
|
|
|
|
(1
|
)%
|
|
|
|
$
|
5
|
|
|
|
|
1
|
%
|
Investment securities
|
|
|
|
155
|
|
|
|
154
|
|
|
|
120
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
|
35
|
|
|
|
|
29
|
|
Interest-bearing deposits in banks
|
|
|
|
2
|
|
|
|
1
|
|
|
|
2
|
|
|
|
1
|
|
|
|
|
100
|
|
|
|
|
|
—
|
|
|
|
|
—
|
|
Total interest income
|
|
|
$
|
913
|
|
|
$
|
917
|
|
|
$
|
873
|
|
|
$
|
(4
|
)
|
|
|
|
(0
|
)%
|
|
|
|
$
|
40
|
|
|
|
|
5
|
%
|
Interest expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits and deposits held for sale
|
|
|
$
|
41
|
|
|
$
|
36
|
|
|
$
|
58
|
|
|
$
|
5
|
|
|
|
|
14
|
%
|
|
|
|
$
|
(17
|
)
|
|
|
|
(29
|
)%
|
Federal funds purchased and securities sold under agreement to
repurchase
|
|
|
|
9
|
|
|
|
1
|
|
|
|
35
|
|
|
|
8
|
|
|
|
|
800
|
|
|
|
|
|
(26
|
)
|
|
|
|
(74
|
)
|
Other short-term borrowed funds
|
|
|
|
21
|
|
|
|
30
|
|
|
|
2
|
|
|
|
(9
|
)
|
|
|
|
(30
|
)
|
|
|
|
|
19
|
|
|
|
|
950
|
|
Long-term borrowed funds
|
|
|
|
22
|
|
|
|
17
|
|
|
|
8
|
|
|
|
5
|
|
|
|
|
29
|
|
|
|
|
|
14
|
|
|
|
|
175
|
|
Total interest expense
|
|
|
$
|
93
|
|
|
$
|
84
|
|
|
$
|
103
|
|
|
$
|
9
|
|
|
|
|
11
|
%
|
|
|
|
$
|
(10
|
)
|
|
|
|
(10
|
)%
|
Net interest income
|
|
|
$
|
820
|
|
|
$
|
833
|
|
|
$
|
770
|
|
|
$
|
(13
|
)
|
|
|
|
(2
|
)%
|
|
|
|
$
|
50
|
|
|
|
|
6
|
%
|
Net interest margin
|
|
|
|
2.77
|
%
|
|
|
2.87
|
%
|
|
|
2.88
|
%
|
|
|
(10
|
)
|
bps
|
|
|
|
|
(11
|
)
|
bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income of $820 million in third quarter 2014 decreased $13
million, or 2%, compared with second quarter 2014 which included an
estimated $20 million benefit related to loans and deposits associated
with the Chicago Divestiture ($13 million) and higher commercial loan
interest recoveries on prior period charge offs ($7 million). Net
interest income excluding these items was up by $7 million, reflecting
the benefit of higher earning assets, one additional business day in the
quarter, deposit growth, and a reduction in pay-fixed swap costs,
partially offset by increased borrowing costs on subordinated debt and
lower deposit spreads.
Third quarter net interest income increased $50 million, or 6%, from
third quarter 2013, as the benefit of growth in earning assets and a
reduction in pay-fixed swap costs was partially offset by continued
pressure from the relatively persistent low-rate environment, higher
borrowing costs and the effect of the Chicago Divestiture.
Net interest margin declined ten basis points to 2.77% in third quarter
2014 from 2.87% in second quarter 2014. Second quarter 2014 results
included an estimated four basis point benefit related to loans and
deposits associated with the Chicago Divestiture and commercial loan
recoveries. Excluding this four basis point impact, the decline in
margin largely reflects lower loan yields given spread pressure in
commercial, increased deposit costs related to growth in money market
and term deposits, and higher borrowing costs related to the issuance of
subordinated debt.
Compared to third quarter 2013, net interest margin decreased 11 basis
points as the benefit of a reduction in pay-fixed swap costs and lower
deposits costs was more than offset by a reduction in loan and
investment portfolio spreads reflecting the impact of the relatively
persistent low-rate environment on loan yields and higher borrowing
costs related to the issuance of subordinated debt.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3Q14 change from
|
($s in millions)
|
|
|
3Q14
|
|
|
|
2Q14
|
|
|
|
3Q13
|
|
|
|
2Q14
|
|
|
|
3Q13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
%
|
|
|
|
|
|
$
|
|
|
|
|
%
|
|
Service charges and fees
|
|
|
$
|
144
|
|
|
|
$
|
147
|
|
|
|
$
|
163
|
|
|
|
$
|
(3
|
)
|
|
|
|
(2
|
) %
|
|
|
|
$
|
(19
|
)
|
|
|
|
(12
|
)%
|
Card fees
|
|
|
|
58
|
|
|
|
|
61
|
|
|
|
|
63
|
|
|
|
|
(3
|
)
|
|
|
|
(5
|
)
|
|
|
|
|
(5
|
)
|
|
|
|
(8
|
)
|
Trust and investment services fees
|
|
|
|
39
|
|
|
|
|
42
|
|
|
|
|
39
|
|
|
|
|
(3
|
)
|
|
|
|
(7
|
)
|
|
|
|
|
—
|
|
|
|
|
—
|
|
Foreign exchange and trade finance fees
|
|
|
|
26
|
|
|
|
|
22
|
|
|
|
|
25
|
|
|
|
|
4
|
|
|
|
|
18
|
|
|
|
|
|
1
|
|
|
|
|
4
|
|
Mortgage banking fees
|
|
|
|
21
|
|
|
|
|
14
|
|
|
|
|
20
|
|
|
|
|
7
|
|
|
|
|
50
|
|
|
|
|
|
1
|
|
|
|
|
5
|
|
Capital markets fees
|
|
|
|
22
|
|
|
|
|
26
|
|
|
|
|
11
|
|
|
|
|
(4
|
)
|
|
|
|
(15
|
)
|
|
|
|
|
11
|
|
|
|
|
100
|
|
Securities gains, net
|
|
|
|
2
|
|
|
|
|
—
|
|
|
|
|
25
|
|
|
|
|
2
|
|
|
|
|
NM
|
|
|
|
|
|
(23
|
)
|
|
|
|
(92
|
)
|
Other income
|
|
|
|
29
|
|
|
|
|
328
|
|
|
|
|
37
|
|
|
|
|
(299
|
)
|
|
|
|
(91
|
)
|
|
|
|
|
(8
|
)
|
|
|
|
(22
|
)
|
Noninterest income
|
|
|
$
|
341
|
|
|
|
$
|
640
|
|
|
|
$
|
383
|
|
|
|
$
|
(299
|
)
|
|
|
|
(47
|
)%
|
|
|
|
$
|
(42
|
)
|
|
|
|
(11
|
)%
|
Special items
|
|
|
|
—
|
|
|
|
|
288
|
|
|
|
|
—
|
|
|
|
|
(288
|
)
|
|
|
|
(100
|
)
|
|
|
|
|
—
|
|
|
|
|
NM
|
|
Noninterest income, excluding special items*
|
|
|
$
|
341
|
|
|
|
$
|
352
|
|
|
|
$
|
383
|
|
|
|
$
|
(11
|
)
|
|
|
|
(3
|
) %
|
|
|
|
$
|
(42
|
)
|
|
|
|
(11
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest income of $341 million in third quarter 2014 decreased $299
million from second quarter 2014 which included a net $288 million gain
and an estimated $12 million of fee income associated with the Chicago
Divestiture, as well as a $9 million gain on the sale of a student loan
portfolio. Excluding these items, noninterest income increased
approximately $10 million driven by growth in mortgage banking, service
charges and fees and foreign exchange and trade finance fees. Results
also reflected declines in leasing and capital markets fees from
relatively high levels in second quarter 2014.
Noninterest income decreased $42 million from third quarter 2013 as an
$11 million increase in capital markets fees was more than offset by a
$23 million reduction in securities gains, and a net $24 million
decrease in service charges and fees and card fees, which included the
effect of a change in check posting order and the impact of the Chicago
Divestiture.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3Q14 change from
|
($s in millions)
|
|
|
|
|
3Q14
|
|
|
|
2Q14
|
|
|
|
3Q13
|
|
|
|
2Q14
|
|
|
|
3Q13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
%
|
|
|
|
|
|
$
|
|
|
%
|
|
Salaries and employee benefits
|
|
|
|
|
$
|
409
|
|
|
|
$
|
467
|
|
|
|
$
|
403
|
|
|
|
$
|
(58
|
)
|
|
(12
|
)%
|
|
|
|
$
|
6
|
|
|
1
|
%
|
Outside services
|
|
|
|
|
|
106
|
|
|
|
|
125
|
|
|
|
|
87
|
|
|
|
|
(19
|
)
|
|
(15
|
)
|
|
|
|
|
19
|
|
|
22
|
|
Occupancy
|
|
|
|
|
|
77
|
|
|
|
|
87
|
|
|
|
|
80
|
|
|
|
|
(10
|
)
|
|
(11
|
)
|
|
|
|
|
(3
|
)
|
|
(4
|
)
|
Equipment expense
|
|
|
|
|
|
58
|
|
|
|
|
65
|
|
|
|
|
69
|
|
|
|
|
(7
|
)
|
|
(11
|
)
|
|
|
|
|
(11
|
)
|
|
(16
|
)
|
Amortization of software
|
|
|
|
|
|
38
|
|
|
|
|
33
|
|
|
|
|
26
|
|
|
|
|
5
|
|
|
15
|
|
|
|
|
|
12
|
|
|
46
|
|
Other expense
|
|
|
|
|
|
122
|
|
|
|
|
171
|
|
|
|
|
123
|
|
|
|
|
(49
|
)
|
|
(29
|
)
|
|
|
|
|
(1
|
)
|
|
(1
|
)
|
Total noninterest expense
|
|
|
|
|
$
|
810
|
|
|
|
$
|
948
|
|
|
|
$
|
788
|
|
|
|
$
|
(138
|
)
|
|
(15
|
)%
|
|
|
|
$
|
22
|
|
|
3
|
%
|
Restructuring charges and special items
|
|
|
|
|
|
21
|
|
|
|
|
115
|
|
|
|
|
—
|
|
|
|
|
(94
|
)
|
|
(82
|
)
|
|
|
|
|
21
|
|
|
NM
|
|
Total noninterest expense, excluding restructuring charges and
special items*
|
|
|
|
|
$
|
789
|
|
|
|
$
|
833
|
|
|
|
$
|
788
|
|
|
|
$
|
(44
|
)
|
|
(5
|
)
|
|
|
|
$
|
1
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense of $810 million in third quarter 2014 decreased $138
million from second quarter 2014 driven by a $94 million reduction in
restructuring charges and special items. Adjusted noninterest expense*
decreased $44 million, largely driven by an estimated $21 million
decrease related to the impact of the Chicago Divestiture, as well as
lower regulatory costs, benefits from our efficiency initiatives, and a
reduction in incentive expense.
Noninterest expense in third quarter 2014 increased $22 million from
third quarter 2013 driven by a $21 million increase in restructuring
charges and special items as well as higher incentive costs, partially
offset by the Chicago Divestiture. Adjusted noninterest expense* was
in-line with third quarter 2013.
The company’s effective tax rate was 30.8% in the third quarter of 2014
compared to 34.3% in the second quarter of 2014, which included a higher
marginal tax rate on the Chicago Divestiture gain, and 34.6% in the
third quarter of 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Banking Segment
|
|
|
|
|
|
|
|
|
|
|
|
3Q14 change from
|
($s in millions)
|
|
|
3Q14
|
|
|
2Q14
|
|
|
3Q13
|
|
|
2Q14
|
|
3Q13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
%
|
|
|
|
$
|
|
|
%
|
|
Net interest income
|
|
|
$
|
532
|
|
|
$
|
546
|
|
|
$
|
543
|
|
|
$
|
(14
|
)
|
|
(3
|
)%
|
|
$
|
(11
|
)
|
|
(2
|
)%
|
Noninterest income
|
|
|
|
226
|
|
|
|
236
|
|
|
|
246
|
|
|
|
(10
|
)
|
|
(4
|
)
|
|
|
(20
|
)
|
|
(8
|
)
|
Total revenue
|
|
|
|
758
|
|
|
|
782
|
|
|
|
789
|
|
|
|
(24
|
)
|
|
(3
|
)
|
|
|
(31
|
)
|
|
(4
|
)
|
Noninterest expense
|
|
|
|
609
|
|
|
|
655
|
|
|
|
622
|
|
|
|
(46
|
)
|
|
(7
|
)
|
|
|
(13
|
)
|
|
(2
|
)
|
Profit before provision for credit losses
|
|
|
|
149
|
|
|
|
127
|
|
|
|
167
|
|
|
|
22
|
|
|
17
|
|
|
|
(18
|
)
|
|
(11
|
)
|
Provision for credit losses
|
|
|
|
66
|
|
|
|
59
|
|
|
|
87
|
|
|
|
7
|
|
|
12
|
|
|
|
(21
|
)
|
|
(24
|
)
|
Income before income tax expense
|
|
|
|
83
|
|
|
|
68
|
|
|
|
80
|
|
|
|
15
|
|
|
22
|
|
|
|
3
|
|
|
4
|
|
Income tax expense
|
|
|
|
29
|
|
|
|
24
|
|
|
|
28
|
|
|
|
5
|
|
|
21
|
|
|
|
1
|
|
|
4
|
|
Net income
|
|
|
$
|
54
|
|
|
$
|
44
|
|
|
$
|
52
|
|
|
$
|
10
|
|
|
23
|
%
|
|
$
|
2
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average balances
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and leases (1)
|
|
|
$
|
47,848
|
|
|
$
|
47,368
|
|
|
$
|
44,766
|
|
|
$
|
480
|
|
|
1
|
%
|
|
$
|
3,082
|
|
|
7
|
%
|
Total deposits (1)
|
|
|
|
65,609
|
|
|
|
70,181
|
|
|
|
72,220
|
|
|
|
(4,572
|
)
|
|
(7
|
)%
|
|
|
(6,611
|
)
|
|
(9
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ROTCE (2)*
|
|
|
|
4.57
|
%
|
|
|
3.87
|
%
|
|
|
4.69
|
%
|
|
|
70
|
|
bps
|
|
|
(12
|
)
|
bps
|
Efficiency ratio*
|
|
|
|
80
|
%
|
|
|
84
|
%
|
|
|
79
|
%
|
|
|
(319
|
)
|
bps
|
|
|
159
|
|
bps
|
1 Includes held for sale.
|
2 Operating segments are allocated capital on a
risk-adjusted basis considering economic and regulatory capital
requirements. We approximate that regulatory capital is equivalent
to a sustainable target level of common equity Tier 1 and then
allocate that approximation to the segments based on economic
capital.
|
|
Consumer Banking net income of $54 million for third quarter 2014
increased $10 million, or 23%, compared to second quarter 2014, driven
by a $46 million decrease in noninterest expense, partially offset by a
$24 million decline in total revenue. Net interest income declined $14
million, or 3%, from second quarter 2014 driven by an estimated $21
million decrease related to the Chicago Divestiture which more than
offset the benefit of increased mortgage and auto balances and one
additional business day in the quarter. Noninterest income decreased $10
million, or 4%, from the second quarter of 2014 which included a $9
million gain on the sale of a student loan portfolio as well as an
estimated $11 million related to the Chicago Divestiture. Excluding
these items, third quarter 2014 noninterest income growth of $10 million
reflects the benefit of higher mortgage banking fee income and service
charges and other fees. Noninterest expense of $609 million declined $46
million, or 7%, from second quarter 2014 driven by the impact of the
Chicago Divestiture which reduced expenses by an estimated $20 million
as well as lower regulatory costs and our efforts to improve efficiency.
Provision for credit losses of $66 million increased $7 million, or 12%,
from relatively low second quarter 2014 levels.
Net income of $54 million for third quarter 2014 increased $2 million,
or 4%, from third quarter 2013 driven by the benefit of expense
discipline and a decrease in provision expense reflecting continued
improvement in credit quality. Consumer Banking revenue decreased $31
million from third quarter 2013, largely reflecting the impact of the
Chicago Divestiture, a change in check posting order which lowered
service charges by an estimated $13 million, and the effect of the
relatively persistent low-rate environment which also lowered net
interest income. Noninterest expense decreased $13 million, reflecting
the impact of the Chicago Divestiture, partially offset by investment in
the business. Provision for credit losses of $66 million decreased $21
million, or 24%, from third quarter 2013 largely reflecting the benefit
of continued improvement in credit quality.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking Segment
|
|
|
|
|
|
|
|
|
|
|
3Q14 change from
|
($s in millions)
|
|
|
3Q14
|
|
|
2Q14
|
|
3Q13
|
|
|
2Q14
|
|
|
|
3Q13
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
%
|
|
|
|
|
|
$
|
|
|
%
|
|
Net interest income
|
|
|
$
|
270
|
|
|
$
|
264
|
|
|
$
|
263
|
|
|
$
|
6
|
|
|
2
|
%
|
|
|
|
$
|
7
|
|
|
3
|
%
|
Noninterest income
|
|
|
|
104
|
|
|
|
107
|
|
|
|
93
|
|
|
|
(3
|
)
|
|
(3
|
)
|
|
|
|
|
11
|
|
|
12
|
|
Total revenue
|
|
|
|
374
|
|
|
|
371
|
|
|
|
356
|
|
|
|
3
|
|
|
1
|
|
|
|
|
|
18
|
|
|
5
|
|
Noninterest expense
|
|
|
|
162
|
|
|
|
157
|
|
|
|
156
|
|
|
|
5
|
|
|
3
|
|
|
|
|
|
6
|
|
|
4
|
|
Profit before provision for credit losses
|
|
|
|
212
|
|
|
|
214
|
|
|
|
200
|
|
|
|
(2
|
)
|
|
(1
|
)
|
|
|
|
|
12
|
|
|
6
|
|
Provision for credit losses
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
3
|
|
|
|
2
|
|
|
NM
|
|
|
|
|
|
(3
|
)
|
|
NM
|
|
Income before income tax expense
|
|
|
|
212
|
|
|
|
216
|
|
|
|
197
|
|
|
|
(4
|
)
|
|
(2
|
)
|
|
|
|
|
15
|
|
|
8
|
|
Income tax expense
|
|
|
|
73
|
|
|
|
75
|
|
|
|
70
|
|
|
|
(2
|
)
|
|
(3
|
)
|
|
|
|
|
3
|
|
|
4
|
|
Net income
|
|
|
$
|
139
|
|
|
$
|
141
|
|
|
$
|
127
|
|
|
$
|
(2
|
)
|
|
(1
|
)%
|
|
|
|
$
|
12
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average balances
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and leases (1)
|
|
|
$
|
37,787
|
|
|
$
|
37,389
|
|
|
$
|
34,510
|
|
|
$
|
398
|
|
|
1
|
%
|
|
|
|
$
|
3,277
|
|
|
9
|
%
|
Total deposits (1)
|
|
|
|
20,985
|
|
|
|
18,358
|
|
|
|
17,774
|
|
|
|
2,627
|
|
|
14
|
%
|
|
|
|
|
3,211
|
|
|
18
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ROTCE (2)*
|
|
|
|
13.10
|
%
|
|
|
13.78
|
%
|
|
|
13.24
|
%
|
|
|
(68
|
)
|
bps
|
|
|
|
|
(14
|
)
|
bps
|
Efficiency ratio*
|
|
|
|
43
|
%
|
|
|
42
|
%
|
|
|
44
|
%
|
|
|
99
|
|
bps
|
|
|
|
|
(34
|
)
|
bps
|
1 Includes held for sale.
|
2 Operating segments are allocated capital on a
risk-adjusted basis considering economic and regulatory capital
requirements. We approximate that regulatory capital is equivalent
to a sustainable target level for common equity Tier 1 and then
allocate that approximation to the segments based on economic
capital.
|
|
Commercial Banking net income of $139 million in third quarter 2014
decreased $2 million from second quarter 2014 as the benefit of revenue
growth was more than offset by higher other noninterest expense and
provision for loan losses from unusually low second quarter levels. Net
interest income grew $6 million, or 2%, driven by average loan growth in
Asset Finance, Mid-Corporate, Commercial Real Estate, and Franchise
Finance lines of businesses as well as the benefit of robust deposit
growth and one additional business day in the quarter. Noninterest
income decreased $3 million as growth in interest rate products, foreign
exchange and trade finance fee income was more than offset by a decline
in leasing income and capital markets fees from relatively high second
quarter levels. Noninterest expense increased $5 million, or 3%, from
second quarter 2014 largely reflecting a reversal of prior-period loss
reserves in second quarter 2014 as well as continued investments in
technology and hiring to drive future growth. The provision for credit
losses was zero for third quarter 2014 as compared to a net recovery on
charge-offs of $2 million in the prior quarter.
Third quarter 2014 net income increased $12 million, or 9%, compared to
third quarter 2013 driven by an $18 million increase in total revenue.
Net interest income increased $7 million, or 3%, from third quarter 2013
reflecting a $3.3 billion increase in loans and leases driven by
strength in Mid-Corporate, Asset Finance, Commercial Real Estate, and
Franchise Finance. Noninterest income increased $11 million, or 12%,
reflecting strong growth in capital markets particularly in loan
syndications. Noninterest expense increased $6 million, or 4%, from
third quarter 2013 driven by continued investments to enhance revenue
growth including hiring and technology investments. Provision for credit
losses decreased $3 million from third quarter 2013 reflecting
improvement in credit quality.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3Q14 change from
|
($s in millions)
|
|
|
3Q14
|
|
|
|
2Q14
|
|
|
|
3Q13
|
|
|
|
2Q14
|
|
|
|
3Q13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
%
|
|
|
|
|
|
$
|
|
|
%
|
|
Net interest income (expense)
|
|
|
$
|
18
|
|
|
|
|
$
|
23
|
|
|
|
|
$
|
(36
|
)
|
|
|
|
$
|
(5
|
)
|
|
(22
|
)%
|
|
|
|
$
|
54
|
|
|
150
|
%
|
Noninterest income
|
|
|
|
11
|
|
|
|
|
|
297
|
|
|
|
|
|
44
|
|
|
|
|
|
(286
|
)
|
|
(96
|
)
|
|
|
|
|
(33
|
)
|
|
(75
|
)
|
Total revenue
|
|
|
|
29
|
|
|
|
|
|
320
|
|
|
|
|
|
8
|
|
|
|
|
|
(291
|
)
|
|
(91
|
)
|
|
|
|
|
21
|
|
|
263
|
|
Noninterest expense
|
|
|
|
39
|
|
|
|
|
|
136
|
|
|
|
|
|
10
|
|
|
|
|
|
(97
|
)
|
|
(71
|
)
|
|
|
|
|
29
|
|
|
290
|
|
Profit (loss) before provision for credit losses
|
|
|
|
(10
|
)
|
|
|
|
|
184
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
(194
|
)
|
|
(105
|
)
|
|
|
|
|
(8
|
)
|
|
(400
|
)
|
Provision for credit losses
|
|
|
|
11
|
|
|
|
|
|
(8
|
)
|
|
|
|
|
55
|
|
|
|
|
|
19
|
|
|
238
|
|
|
|
|
|
(44
|
)
|
|
(80
|
)
|
Income (loss) before income tax expense (benefit)
|
|
|
|
(21
|
)
|
|
|
|
|
192
|
|
|
|
|
|
(57
|
)
|
|
|
|
|
(213
|
)
|
|
(111
|
)
|
|
|
|
|
36
|
|
|
63
|
|
Income tax expense (benefit)
|
|
|
|
(17
|
)
|
|
|
|
|
64
|
|
|
|
|
|
(22
|
)
|
|
|
|
|
(81
|
)
|
|
(127
|
)
|
|
|
|
|
5
|
|
|
23
|
|
Net income (loss)
|
|
|
$
|
(4
|
)
|
|
|
|
$
|
128
|
|
|
|
|
$
|
(35
|
)
|
|
|
|
$
|
(132
|
)
|
|
(103
|
)%
|
|
|
|
$
|
31
|
|
|
89
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average balances
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and leases (1)
|
|
|
$
|
4,218
|
|
|
|
|
$
|
4,434
|
|
|
|
|
$
|
5,593
|
|
|
|
|
$
|
(216
|
)
|
|
(5
|
) %
|
|
|
|
$
|
(1,375
|
)
|
|
(25
|
)%
|
Total deposits (1)
|
|
|
|
5,082
|
|
|
|
|
|
3,627
|
|
|
|
|
|
3,149
|
|
|
|
|
|
1,455
|
|
|
40
|
%
|
|
|
|
|
1,933
|
|
|
61
|
%
|
1 Includes held for sale.
|
|
Other recorded a net loss of $4 million in third quarter 2014 compared
to net income of $128 million in second quarter 2014. Net interest
income for third quarter 2014 of $18 million decreased $5 million from
the prior quarter driven by continued runoff of the non-core loan
portfolio, despite the benefit of one additional business day in the
quarter. Noninterest expense of $39 million decreased $97 million from
second quarter 2014 driven by a $94 million reduction in restructuring
charges and special items. Noninterest income of $11 million decreased
$286 million from second quarter 2014, reflecting the impact of the $288
million net gain on sale related to the Chicago Divestiture. Provision
for credit losses in Other was $11 million in third quarter 2014 and
included an $11 million reserve release. Third quarter provision for
credit losses increased from a net benefit of $8 million in second
quarter 2014, which included net recoveries on prior period charge-offs
and a $19 million reserve release. Provision for credit losses within
Other mainly represents the residual change in the consolidated
allowance for credit losses after attributing the respective net
charge-offs to the Consumer Banking and Commercial Banking segments,
while also factoring in net charge-offs related to the non-core
portfolio.
Other net loss of $4 million in the third quarter improved from a net
loss of $35 million in the third quarter of 2013 driven by a $54 million
increase in net interest income and $44 million decrease in provision,
partially offset by lower security gains of $23 million. Excluding the
restructuring charges and special items, Other net income of $9 million
in third quarter 2014 increased $44 million from third quarter 2013.
This was driven by higher net interest income and lower provision for
credit losses, partially offset by lower noninterest income.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated balance sheet review(1)
|
|
|
|
|
|
|
|
|
|
|
3Q14 change from
|
($s in millions)
|
|
|
3Q14
|
|
|
2Q14
|
|
|
3Q13
|
|
2Q14
|
|
|
|
3Q13
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
%
|
|
|
|
$
|
|
%
|
Total assets
|
|
|
$
|
131,341
|
|
|
|
$
|
130,279
|
|
|
|
$
|
120,074
|
|
|
$
|
1,062
|
|
|
|
1
|
%
|
|
|
|
$
|
11,267
|
|
|
|
9
|
%
|
Loans and leases and loans held for sale
|
|
|
|
90,957
|
|
|
|
|
89,091
|
|
|
|
|
85,800
|
|
|
|
1,866
|
|
|
|
2
|
|
|
|
|
|
5,157
|
|
|
|
6
|
|
Deposits
|
|
|
|
93,463
|
|
|
|
|
91,656
|
|
|
|
|
93,930
|
|
|
|
1,807
|
|
|
|
2
|
|
|
|
|
|
(467
|
)
|
|
|
(0
|
)
|
Average interest-earning assets (quarterly)
|
|
|
|
117,196
|
|
|
|
|
115,992
|
|
|
|
|
105,857
|
|
|
|
1,204
|
|
|
|
1
|
|
|
|
|
|
11,339
|
|
|
|
11
|
|
Tangible common equity*
|
|
|
$
|
12,900
|
|
|
|
$
|
13,098
|
|
|
|
$
|
12,861
|
|
|
|
(198
|
)
|
|
|
(2
|
)
|
|
|
|
|
39
|
|
|
|
0
|
|
Loan-to-deposit ratio (period-end)2
|
|
|
|
97.3
|
%
|
|
|
|
97.2
|
%
|
|
|
|
91.3
|
%
|
|
|
12
|
|
bps
|
|
|
|
|
|
|
598
|
|
bps
|
|
|
Tier 1 common equity ratio(3)
|
|
|
|
12.9
|
|
|
|
|
13.3
|
|
|
|
|
13.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital ratio(3)
|
|
|
|
16.1
|
%
|
|
|
|
16.2
|
%
|
|
|
|
16.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Represents period-end unless otherwise noted.
|
2 Includes loans held for sale and deposits held for sale.
|
3 Regulatory capital ratios are preliminary.
|
|
Total assets of $131.3 billion increased $1.1 billion, or 1%, from June
30, 2014, driven by a $1.9 billion increase in loans and leases. Total
assets increased $11.3 billion, or 9%, from September 30, 2013,
reflecting growth in the securities portfolio and loans and leases.
Average interest-earning assets of $117.2 billion in third quarter 2014
increased $1.2 billion, or 1%, from the prior quarter, largely
reflecting higher auto, residential mortgage and commercial real estate
balances. Adjusted for the Chicago Divestiture, growth was 1.9%. Average
interest-earning assets increased $11.3 billion, or 11%, from September
30, 2013, as higher investment securities, commercial loans and leases,
automobile and mortgage balances were partially offset by the effect of
higher refinancing payoffs on the home equity portfolios.
Interest-earning assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3Q14 change from
|
($s in millions)
|
|
|
3Q14
|
|
|
|
2Q14
|
|
|
|
3Q13
|
|
|
|
2Q14
|
|
|
|
3Q13
|
Period-end interest-earning assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
%
|
|
|
|
|
|
$
|
|
|
%
|
|
Investments and interest-bearing deposits
|
|
|
$
|
27,036
|
|
|
|
$
|
29,450
|
|
|
|
$
|
22,832
|
|
|
|
$
|
(2,414
|
)
|
|
(8
|
) %
|
|
|
|
$
|
4,204
|
|
|
18
|
%
|
Loans and leases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans and leases
|
|
|
|
41,470
|
|
|
|
|
40,974
|
|
|
|
|
39,084
|
|
|
|
|
496
|
|
|
1
|
|
|
|
|
|
2,386
|
|
|
6
|
|
Retail loans
|
|
|
|
49,279
|
|
|
|
|
47,855
|
|
|
|
|
46,409
|
|
|
|
|
1,424
|
|
|
3
|
|
|
|
|
|
2,870
|
|
|
6
|
|
Total loans and leases
|
|
|
|
90,749
|
|
|
|
|
88,829
|
|
|
|
|
85,493
|
|
|
|
|
1,920
|
|
|
2
|
|
|
|
|
|
5,256
|
|
|
6
|
|
Loans held for sale
|
|
|
|
205
|
|
|
|
|
173
|
|
|
|
|
307
|
|
|
|
|
32
|
|
|
18
|
|
|
|
|
|
(102
|
)
|
|
(33
|
)
|
Other loans held for sale
|
|
|
|
3
|
|
|
|
|
89
|
|
|
|
|
—
|
|
|
|
|
(86
|
)
|
|
(97
|
)
|
|
|
|
|
3
|
|
|
NM
|
|
Total loans and leases and loans held for sale
|
|
|
|
90,957
|
|
|
|
|
89,091
|
|
|
|
|
85,800
|
|
|
|
|
1,866
|
|
|
2
|
|
|
|
|
|
5,157
|
|
|
6
|
|
Total period-end interest-earning assets
|
|
|
$
|
117,993
|
|
|
|
$
|
118,541
|
|
|
|
$
|
108,632
|
|
|
|
$
|
(548
|
)
|
|
(0
|
) %
|
|
|
|
$
|
9,361
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average interest-earning assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments and interest-bearing deposits
|
|
|
$
|
27,343
|
|
|
|
$
|
26,801
|
|
|
|
$
|
20,988
|
|
|
|
|
542
|
|
|
2
|
|
|
|
|
|
6,355
|
|
|
30
|
|
Loans and leases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans and leases
|
|
|
|
41,191
|
|
|
|
|
40,472
|
|
|
|
|
38,462
|
|
|
|
|
719
|
|
|
2
|
|
|
|
|
|
2,729
|
|
|
7
|
|
Retail loans
|
|
|
|
48,459
|
|
|
|
|
47,547
|
|
|
|
|
46,028
|
|
|
|
|
912
|
|
|
2
|
|
|
|
|
|
2,431
|
|
|
5
|
|
Total loans and leases
|
|
|
|
89,650
|
|
|
|
|
88,019
|
|
|
|
|
84,490
|
|
|
|
|
1,631
|
|
|
2
|
|
|
|
|
|
5,160
|
|
|
6
|
|
Loans held for sale
|
|
|
|
176
|
|
|
|
|
138
|
|
|
|
|
379
|
|
|
|
|
38
|
|
|
28
|
|
|
|
|
|
(203
|
)
|
|
(54
|
)
|
Other loans held for sale
|
|
|
|
27
|
|
|
|
|
1,034
|
|
|
|
|
—
|
|
|
|
|
(1,007
|
)
|
|
(97
|
)
|
|
|
|
|
27
|
|
|
NM
|
|
Total loans and leases and loans held for sale
|
|
|
|
89,853
|
|
|
|
|
89,191
|
|
|
|
|
84,869
|
|
|
|
|
662
|
|
|
1
|
|
|
|
|
|
4,984
|
|
|
6
|
|
Total average interest-earning assets
|
|
|
$
|
117,196
|
|
|
|
$
|
115,992
|
|
|
|
$
|
105,857
|
|
|
|
$
|
1,204
|
|
|
1
|
%
|
|
|
|
$
|
11,339
|
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments and interest-bearing deposits totaled $27.0 billion as of
September 30, 2014, down $2.4 billion from June 30, 2014, driven by a
$2.4 billion reduction in interest-bearing deposits related to liquidity
management strategies tied to the Chicago Divestiture. During third
quarter 2014, we repositioned a portion of our agency mortgage-backed
securities portfolio and recorded $2 million of securities gains.
Investments and interest-bearing deposits increased $4.2 billion, or
18%, from September 30, 2013, largely related to the addition of
high-quality, fixed-rate securities. At the end of third quarter 2014
the average duration of the securities portfolio was 4.0 years, which
remained relatively stable with the end of the second quarter 2014, and
decreased from 4.1 years at the end of third quarter 2013.
Period-end loans and leases were $90.7 billion at September 30, 2014, up
$1.9 billion from $88.8 billion at June 30, 2014 and up $5.3 billion
from $85.5 billion at September 30, 2013. The linked quarter increase
was driven by $1.1 billion growth in auto, including $503 million in
flow purchases, the purchase of $572 million in residential mortgages
and commercial loan growth of $496 million. Year on year growth reflects
higher commercial loans of $2.4 billion, as well as increased
residential mortgage and auto loans.
Average loans and leases of $89.7 billion increased $1.6 billion from
second quarter 2014 driven by increases in commercial loans, residential
mortgages and auto loans. Results also reflected a $183 million decrease
in the non-core portfolio. Average loans and leases were up $5.2 billion
from third quarter 2013 reflecting commercial loan growth and an
increase in residential mortgage and auto loans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3Q14 change from
|
($s in millions)
|
|
|
3Q14
|
|
|
|
2Q14
|
|
|
|
3Q13
|
|
|
|
2Q14
|
|
|
|
3Q13
|
Period-end deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
%
|
|
|
|
|
|
$
|
|
|
%
|
|
Demand deposits
|
|
|
$
|
25,877
|
|
|
|
$
|
26,670
|
|
|
|
$
|
25,919
|
|
|
|
$
|
(793
|
)
|
|
(3
|
)%
|
|
|
|
$
|
(42
|
)
|
|
(0
|
)%
|
Checking with interest
|
|
|
|
15,449
|
|
|
|
|
15,171
|
|
|
|
|
14,034
|
|
|
|
|
278
|
|
|
2
|
|
|
|
|
|
1,415
|
|
|
10
|
|
Savings
|
|
|
|
7,655
|
|
|
|
|
7,829
|
|
|
|
|
8,008
|
|
|
|
|
(174
|
)
|
|
(2
|
)
|
|
|
|
|
(353
|
)
|
|
(4
|
)
|
Money market accounts
|
|
|
|
32,870
|
|
|
|
|
31,687
|
|
|
|
|
34,034
|
|
|
|
|
1,183
|
|
|
4
|
|
|
|
|
|
(1,164
|
)
|
|
(3
|
)
|
Term deposits
|
|
|
|
11,612
|
|
|
|
|
10,299
|
|
|
|
|
11,935
|
|
|
|
|
1,313
|
|
|
13
|
|
|
|
|
|
(323
|
)
|
|
(3
|
)
|
Total deposits
|
|
|
|
93,463
|
|
|
|
|
91,656
|
|
|
|
|
93,930
|
|
|
|
|
1,807
|
|
|
2
|
|
|
|
|
|
(467
|
)
|
|
(0
|
)
|
Deposits held for sale
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
NM
|
|
|
|
|
|
—
|
|
|
NM
|
|
Total deposits and deposits held for sale
|
|
|
$
|
93,463
|
|
|
|
$
|
91,656
|
|
|
|
$
|
93,930
|
|
|
|
$
|
1,807
|
|
|
2
|
%
|
|
|
|
$
|
(467
|
)
|
|
(0
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average deposits
|
|
|
$
|
91,676
|
|
|
|
$
|
87,623
|
|
|
|
$
|
93,143
|
|
|
|
$
|
4,053
|
|
|
5
|
%
|
|
|
|
$
|
(1,467
|
)
|
|
(2
|
)%
|
Deposits held for sale
|
|
|
|
—
|
|
|
|
|
4,543
|
|
|
|
|
—
|
|
|
|
|
(4,543
|
)
|
|
(100
|
)
|
|
|
|
|
—
|
|
|
NM
|
|
Total average deposits and deposits held for sale
|
|
|
$
|
91,676
|
|
|
|
$
|
92,166
|
|
|
|
$
|
93,143
|
|
|
|
$
|
(490
|
)
|
|
(1
|
)%
|
|
|
|
$
|
(1,467
|
)
|
|
(2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deposits and deposits held for sale at September 30, 2014
increased $1.8 billion from June 30, 2014, reflecting growth in money
market and term deposits. Third quarter 2014 period-end deposits
decreased $467 million compared with third quarter 2013, driven by a
$4.8 billion decrease related to the Chicago Divestiture. Third quarter
2014 average deposit balances decreased $1.5 billion from third quarter
2013, reflecting the Chicago Divestiture, partially offset by organic
growth.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowed funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3Q14 change from
|
($s in millions)
|
|
|
3Q14
|
|
|
|
2Q14
|
|
|
|
3Q13
|
|
|
2Q14
|
|
|
|
3Q13
|
Period-end borrowed funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
%
|
|
|
|
|
|
$
|
|
%
|
|
Federal funds purchased and securities sold under agreement to
repurchase
|
|
|
$
|
5,184
|
|
|
|
$
|
6,807
|
|
|
|
$
|
3,424
|
|
|
$
|
(1,623
|
)
|
|
(24
|
)%
|
|
|
|
$
|
1,760
|
|
51
|
%
|
Other short-term borrowed funds
|
|
|
|
6,702
|
|
|
|
|
7,702
|
|
|
|
|
2
|
|
|
|
(1,000
|
)
|
|
(13
|
)
|
|
|
|
|
6,700
|
|
NM
|
|
Long-term borrowed funds
|
|
|
|
2,075
|
|
|
|
|
1,732
|
|
|
|
|
1,064
|
|
|
|
343
|
|
|
20
|
|
|
|
|
|
1,011
|
|
95
|
|
Total borrowed funds
|
|
|
$
|
13,961
|
|
|
|
$
|
16,241
|
|
|
|
$
|
4,490
|
|
|
$
|
(2,280
|
)
|
|
(14
|
)
|
|
|
|
$
|
9,471
|
|
211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average borrowed funds
|
|
|
$
|
14,996
|
|
|
|
$
|
13,155
|
|
|
|
$
|
2,371
|
|
|
$
|
1,841
|
|
|
14
|
%
|
|
|
|
$
|
12,625
|
|
532
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total borrowed funds at September 30, 2014 decreased $2.3 billion from
June 30, 2014, as we grew deposits and replaced repurchase agreement
funding and other short-term borrowings. Borrowed funds increased $9.5
billion from the end of the third quarter of 2013, as we utilized
borrowing capacity to fund balance sheet growth. Average borrowed funds
increased $1.8 billion compared with second quarter 2014, and $12.6
billion from third quarter 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3Q14 change from
|
($s in millions)
|
|
|
3Q14
|
|
|
|
2Q14
|
|
|
|
3Q13
|
|
|
|
2Q14
|
|
3Q13
|
Period-end capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
%
|
|
|
|
$
|
|
|
%
|
|
Common stockholder's equity
|
|
|
$
|
19,383
|
|
|
|
$
|
19,597
|
|
|
|
$
|
19,413
|
|
|
|
$
|
(214
|
)
|
|
(1
|
)%
|
|
$
|
(30
|
)
|
|
(0
|
)%
|
Tangible common equity*
|
|
|
$
|
12,900
|
|
|
|
$
|
13,098
|
|
|
|
$
|
12,861
|
|
|
|
$
|
(198
|
)
|
|
(2
|
)%
|
|
$
|
39
|
|
|
0
|
%
|
Tier 1 capital ratio
|
|
|
|
12.9
|
%
|
|
|
|
13.3
|
%
|
|
|
|
14.0
|
%
|
|
|
|
|
|
|
|
|
|
Total equity ratio
|
|
|
|
16.1
|
|
|
|
|
16.2
|
|
|
|
|
16.3
|
|
|
|
|
|
|
|
|
|
|
Leverage ratio
|
|
|
|
10.9
|
|
|
|
|
11.1
|
|
|
|
|
12.1
|
|
|
|
|
|
|
|
|
|
|
Tier 1 common equity ratio
|
|
|
|
12.9
|
|
|
|
|
13.3
|
|
|
|
|
13.9
|
|
|
|
|
|
|
|
|
|
|
Memo: pro forma Basel III common equity tier 1 capital ratio*
|
|
|
|
12.5
|
%
|
|
|
|
13.0
|
%
|
|
|
|
13.6
|
%
|
|
|
|
|
|
|
|
|
|
1 Regulatory capital ratios are preliminary.
|
|
Capital ratios at September 30, 2014 remained well in excess of
applicable regulatory requirements with a total risk-based capital ratio
of 16.1% and a Tier 1 common equity ratio of 12.9%. The Tier 1 common
equity ratio decreased from 13.3% at the end of the second quarter of
2014 and from 13.9% at the end of third quarter 2013. The change in this
ratio reflects our objective to migrate our capital mix towards one
comparable to that of our peer regional banks, while maintaining a
strong capital base to support our growth aspirations, strategy and risk
appetite.
During third quarter 2014, the company paid a $50 million common
dividend to our majority shareholder, RBS, and issued $333 million of
subordinated debt at a rate of 4.023% to RBS, in exchange for common
equity which resulted in a 37 basis point decrease in our Tier 1 common
equity ratio.
Subsequent to the close of the quarter, on October 8, 2014 we executed a
capital exchange transaction with RBS which involved the issuance of
$334 million of 10-year subordinated notes at a rate of 4.082% and the
simultaneous repurchase of 14,297,761 shares of common stock owned by
RBS at an average price per share of $23.36.
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit quality review
|
|
|
|
|
|
|
|
|
|
|
|
3Q14 change from
|
($s in millions)
|
|
|
3Q14
|
|
|
2Q14
|
|
|
3Q13
|
|
|
2Q14
|
|
|
|
3Q13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
%
|
|
|
|
|
|
$
|
|
|
%
|
|
Nonperforming loans and leases
|
|
|
$
|
1,079
|
|
|
$
|
1,200
|
|
|
$
|
1,691
|
|
|
$
|
(121
|
)
|
|
(10
|
)%
|
|
|
|
$
|
(612
|
)
|
|
(36
|
)%
|
Accruing loans past due 90 days or more
|
|
|
|
8
|
|
|
|
12
|
|
|
|
44
|
|
|
|
(4
|
)
|
|
(33
|
)
|
|
|
|
|
(36
|
)
|
|
(82
|
)
|
Net charge-offs
|
|
|
|
88
|
|
|
|
68
|
|
|
|
131
|
|
|
|
20
|
|
|
29
|
|
|
|
|
|
(43
|
)
|
|
(33
|
)
|
Provision for credit losses
|
|
|
|
77
|
|
|
|
49
|
|
|
|
145
|
|
|
|
28
|
|
|
57
|
|
|
|
|
|
(68
|
)
|
|
(47
|
)
|
Allowance for loan and lease losses
|
|
|
$
|
1,201
|
|
|
$
|
1,210
|
|
|
$
|
1,219
|
|
|
$
|
(9
|
)
|
|
(1
|
)%
|
|
|
|
$
|
(18
|
)
|
|
(1
|
)%
|
Total nonperforming loans and leases as a % of total loans and leases
|
|
|
|
1.19
|
%
|
|
|
1.35
|
%
|
|
|
1.98
|
%
|
|
|
(16
|
)
|
bps
|
|
|
|
|
(79
|
)
|
bps
|
Net charge-offs as % of total loans and leases
|
|
|
|
0.38
|
|
|
|
0.31
|
|
|
|
0.61
|
|
|
|
7
|
|
bps
|
|
|
|
|
(23
|
)
|
bps
|
Allowance for loan and lease losses as a % of nonperforming loans
and leases
|
|
|
|
111.30
|
%
|
|
|
100.84
|
%
|
|
|
72.06
|
%
|
|
|
1,046
|
|
bps
|
|
|
|
|
3,924
|
|
bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit quality during the quarter remained strong with relatively low
levels of charge-offs and nonperforming loans and leases. At September
30, 2014 nonperforming loans of $1.1 billion declined $121 million, or
10%, from June 30, 2014 driven by a $102 million decrease in retail and
a $19 million decrease in commercial. Nonperforming loans and leases to
total loans and leases improved to 1.19% at September 30, 2014 from
1.35% at June 30, 2014, and 1.98% at September 30, 2013.
Nonperforming non-core loans totaled $191 million in the third quarter
of 2014 compared with $197 million in the second quarter of 2014 and
$314 million in the third quarter of 2013. Nonperforming non-core loans
to total non-core loans of 5.96% at September 30, 2014 compared with
5.84% at June 30, 2014 and 7.72% at September 30, 2013. Troubled debt
restructured loans included $402 million of retail loans and $29 million
of commercial loans, and represented 40% of total nonperforming loans
and leases, compared to 41% for June 30, 2014 and 44% for September 30,
2013. Nonperforming assets decreased $620 million, or 36%, from third
quarter 2013 driven by improvement in commercial real estate and
residential mortgage.
Net charge-offs of $88 million in third quarter 2014 increased $20
million from second quarters levels, which were the lowest since second
quarter 2006. Retail product net charge-offs of $84 million remained
relatively stable compared to $81 million in the second quarter.
Commercial product net charge-offs of $4 million in third quarter 2014
increased $17 million from a $13 million net recovery on prior period
charge-offs in second quarter 2014. Non-core net charge offs, which are
included in the product net charge-offs above, totaled $21 million in
third quarter 2014 compared to $10 million in the second quarter of 2014
and $40 million in the third quarter of 2013. Annualized net charge-offs
to total average loans and leases for third quarter 2014 of 38 basis
points compared with relatively low 31 basis points in second quarter
2014 and 61 basis points in third quarter 2013. Annualized non-core net
charge-offs to total average non-core loans and leases of 2.52% in third
quarter 2014 compared with 1.13% in second quarter 2014 and 3.66% in
third quarter 2013.
Provision for credit losses of $77 million in third quarter 2014
increased $28 million from second quarter 2014 moving back to more
normalized levels and driving further improvement in all key coverage
ratios. Third quarter 2014 results included an $11 million reserve
release compared with a $19 million reserve release in second quarter
2014. Provision for credit losses decreased $68 million, or 47%, from
third quarter 2013 reflecting improved credit quality. The total
provision for credit losses includes the provision for loan and lease
losses as well as the provision for unfunded commitments.
The allowance for loan and lease losses of $1.2 billion decreased $9
million, or 1%, from second quarter 2014, and remained relatively stable
compared with third quarter 2013 reflecting continued improvement in
overall credit quality, including a $34 million reduction in allowance
for non-core loans from second quarter 2014. Allowance for loan and
lease losses to non-performing loans and leases ratio was 111% as of
September 30, 2014, up from 101% as of June 30, 2014, and 72% as of
September 30, 2013. Excluding non-performing loans and leases that had
been written down to a net realizable value, the allowance to
nonperforming loans ratio was 262% at September 30, 2014, compared with
211% at June 30, 2014 and 113% for September 30, 2013.
Corresponding Financial Tables and Information
Investors are encouraged to review the foregoing summary and discussion
of Citizens' earnings and financial condition in conjunction with the
detailed financial tables and other information available on the
Investor Relations portion of the company’s website at www.citizensbank.com/about-us.
Media: Jim Hughes - 781.751.5404
Investors: Ellen A. Taylor - 203.897.4240
Conference Call
CFG management will host a live conference call today with details as
follows:
Time: 8:30 am EDT
Dial-in: Individuals may call in by dialing 844-216-1659, conference ID
1646016
Webcast/Presentation: The live webcast will be available at http://www.citizensbank.com/investor-relations,
under Events
Replay Information: A replay of the conference call will be available
beginning at 12 pm EDT on October 27 through November 26. Please dial
888-266-2081 and enter access code # 1646016. The webcast replay will be
available at http://www.citizensbank.com/investor-relations.
About Citizens Financial Group, Inc.
Citizens Financial Group, Inc. is one of the nation’s oldest and largest
financial institutions, with $131.3 billion in assets as of September
30, 2014. Headquartered in Providence, Rhode Island, Citizens offers a
broad range of retail and commercial banking products and services to
individuals, small businesses, middle-market companies, large
corporations and institutions. In Consumer Banking, Citizens helps its
retail customers “bank better” with mobile and online banking, a 24/7
customer contact center and the convenience of approximately 3,200 ATMs
and approximately 1,200 Citizens Bank and Charter One branches in 11
states in the New England, Mid-Atlantic and Midwest regions. Citizens
also provides mortgage lending, auto lending, student lending and
commercial banking services in select markets nationwide. In Commercial
Banking, Citizens offers corporate, institutional and not-for-profit
clients a full range of wholesale banking products and services
including lending and deposits, capital markets, treasury services,
foreign exchange and interest hedging, leasing and asset finance,
specialty finance and trade finance.
Citizens operates through its subsidiaries Citizens Bank, N.A., and
Citizens Bank of Pennsylvania. Additional information about Citizens and
its full line of products and services can be found at www.citizensbank.com.
Non-GAAP Financial Measures
This document contains non-GAAP financial measures. The table below
presents reconciliations of certain non-GAAP measures. These
reconciliations exclude goodwill impairment, restructuring charges
and/or special items, which are usually included, where applicable, in
the financial results presented in accordance with GAAP. Special items
include regulatory expenses and expenses related to our initial public
offering.
The non-GAAP measures set forth below include “total revenue”,
“noninterest income”, “ noninterest expense”, “income tax expense
(benefit)”, “net income (loss)”, “salaries and employee benefits”,
“outside services”, “occupancy”, “equipment expense”, “other operating
expense”, “return of average common equity” and “return on average total
assets”. In addition, we present computations for “return on average
tangible common equity”, “return on average total tangible assets” and
“efficiency ratio” as part of our non-GAAP measures.
We believe these non-GAAP measures provide useful information to
investors because these are among the measures used by our management
team to evaluate our operating performance and make day-to-day operating
decisions. In addition, we believe goodwill impairment, restructuring
charges and special items in any period do not reflect the operational
performance of the business in that period and, accordingly, it is
useful to consider these line items with and without goodwill
impairment, restructuring charges and special items. We believe this
presentation also increases comparability of period-to-period results.
We also consider pro forma capital ratios defined by banking regulators
but not effective at each period end to be non-GAAP financial measures.
Since analysts and banking regulators may assess our capital adequacy
using these pro forma ratios, we believe they are useful to provide
investors the ability to assess our capital adequacy on the same basis.
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 other companies. We caution investors not to
place undue reliance on such non-GAAP measures, but instead to consider
them with the most directly comparable GAAP measure. Non-GAAP financial
measures have limitations as analytical tools, and should not be
considered in isolation, or as a substitute for our results as reported
under GAAP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Excluding restructuring charges and special items)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$s in millions, except per share data
|
|
|
|
QUARTERLY TRENDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3Q14
|
|
|
|
2Q14
|
|
|
|
1Q14
|
|
|
|
4Q13
|
|
|
|
3Q13
|
|
|
Noninterest income, excluding special items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest income (GAAP)
|
|
|
A
|
$
|
341
|
|
|
|
|
$
|
640
|
|
|
|
|
$
|
358
|
|
|
|
|
$
|
379
|
|
|
|
|
$
|
383
|
|
|
|
Less: Special items - Chicago gain
|
|
|
|
|
—
|
|
|
|
|
|
288
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Noninterest income, excluding special items (non-GAAP)
|
|
|
B
|
$
|
341
|
|
|
|
|
$
|
352
|
|
|
|
|
$
|
358
|
|
|
|
|
$
|
379
|
|
|
|
|
$
|
383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue, excluding special items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue (GAAP)
|
|
|
C
|
$
|
1,161
|
|
|
|
|
$
|
1,473
|
|
|
|
|
$
|
1,166
|
|
|
|
|
$
|
1,158
|
|
|
|
|
$
|
1,153
|
|
|
|
Less: Special items - Chicago gain
|
|
|
|
|
—
|
|
|
|
|
|
288
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
Total revenue, excluding special items (non-GAAP)
|
|
|
D
|
$
|
1,161
|
|
|
|
|
$
|
1,185
|
|
|
|
|
$
|
1,166
|
|
|
|
|
$
|
1,158
|
|
|
|
|
$
|
1,153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense, excluding restructuring charges and special
items:
|
|
|
|
|
|
|
|
|
Noninterest expense (GAAP)
|
|
|
E
|
$
|
810
|
|
|
|
|
$
|
948
|
|
|
|
|
$
|
810
|
|
|
|
|
$
|
818
|
|
|
|
|
$
|
788
|
|
|
|
Less: Restructuring charges and special expense items
|
|
|
HH
|
|
21
|
|
|
|
|
|
115
|
|
|
|
|
|
—
|
|
|
|
|
|
26
|
|
|
|
|
|
—
|
|
|
|
Noninterest expense, excluding restructuring charges and special
items (non-GAAP)
|
|
|
F
|
$
|
789
|
|
|
|
|
$
|
833
|
|
|
|
|
$
|
810
|
|
|
|
|
$
|
792
|
|
|
|
|
$
|
788
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss), excluding restructuring charges and special
items:
|
|
|
|
|
|
|
|
|
Net income (loss) (GAAP)
|
|
|
G
|
$
|
189
|
|
|
|
|
$
|
313
|
|
|
|
|
$
|
166
|
|
|
|
|
$
|
152
|
|
|
|
|
$
|
144
|
|
|
|
Add: Restructuring charges and special items, net of income tax
expense (benefit)
|
|
|
|
|
13
|
|
|
|
|
|
(108
|
)
|
|
|
|
|
—
|
|
|
|
|
|
17
|
|
|
|
|
|
—
|
|
|
|
Net income (loss), excluding restructuring charges and special
items (non-GAAP)
|
|
|
H
|
$
|
202
|
|
|
|
|
$
|
205
|
|
|
|
|
$
|
166
|
|
|
|
|
$
|
169
|
|
|
|
|
$
|
144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average common equity, excluding restructuring charges
and special items:
|
|
|
Average common equity (GAAP)
|
|
|
I
|
$
|
19,411
|
|
|
|
|
$
|
19,607
|
|
|
|
|
$
|
19,370
|
|
|
|
|
$
|
19,364
|
|
|
|
|
$
|
19,627
|
|
|
|
Return on average common equity, excluding restructuring charges
and special items (non-GAAP)
|
|
|
H/I
|
|
4.14
|
%
|
|
|
|
|
4.19
|
%
|
|
|
|
|
3.48
|
%
|
|
|
|
|
3.47
|
%
|
|
|
|
|
2.91
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average tangible common equity and return on average
tangible common equity, excluding restructuring charges and special
items:
|
|
|
Average common equity (GAAP)
|
|
|
I
|
$
|
19,411
|
|
|
|
|
$
|
19,607
|
|
|
|
|
$
|
19,370
|
|
|
|
|
$
|
19,364
|
|
|
|
|
$
|
19,627
|
|
|
|
Less: Average goodwill (GAAP)
|
|
|
|
|
6,876
|
|
|
|
|
|
6,876
|
|
|
|
|
|
6,876
|
|
|
|
|
|
6,876
|
|
|
|
|
|
6,876
|
|
|
|
Less: Average other intangibles (GAAP)
|
|
|
|
|
6
|
|
|
|
|
|
7
|
|
|
|
|
|
7
|
|
|
|
|
|
8
|
|
|
|
|
|
9
|
|
|
|
Add: Average deferred tax liabilities related to goodwill (GAAP)
|
|
|
|
|
384
|
|
|
|
|
|
369
|
|
|
|
|
|
351
|
|
|
|
|
|
342
|
|
|
|
|
|
325
|
|
|
|
Average tangible common equity (non-GAAP)
|
|
|
J
|
$
|
12,913
|
|
|
|
|
$
|
13,093
|
|
|
|
|
$
|
12,838
|
|
|
|
|
$
|
12,822
|
|
|
|
|
$
|
13,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average tangible common equity (non-GAAP)
|
|
|
G/J
|
|
5.81
|
%
|
|
|
|
|
9.59
|
%
|
|
|
|
|
5.24
|
%
|
|
|
|
|
4.71
|
%
|
|
|
|
|
4.34
|
%
|
|
|
Return on average tangible common equity, excluding restructuring
charges and special items (non-GAAP)
|
|
|
H/J
|
|
6.22
|
%
|
|
|
|
|
6.28
|
%
|
|
|
|
|
5.24
|
%
|
|
|
|
|
5.24
|
%
|
|
|
|
|
4.34
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average total assets, excluding restructuring charges
and special items:
|
|
|
|
|
Average total assets (GAAP)
|
|
|
K
|
$
|
128,691
|
|
|
|
|
$
|
127,148
|
|
|
|
|
$
|
123,904
|
|
|
|
|
$
|
120,393
|
|
|
|
|
$
|
117,386
|
|
|
|
Return on average total assets, excluding restructuring charges
and special items (non-GAAP)
|
|
|
H/K
|
|
0.62
|
%
|
|
|
|
|
0.65
|
%
|
|
|
|
|
0.54
|
%
|
|
|
|
|
0.56
|
%
|
|
|
|
|
0.49
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average total tangible assets and return on average
total tangible assets, excluding restructuring charges and special
items:
|
|
|
Average total assets (GAAP)
|
|
|
K
|
$
|
128,691
|
|
|
|
|
$
|
127,148
|
|
|
|
|
$
|
123,904
|
|
|
|
|
$
|
120,393
|
|
|
|
|
$
|
117,386
|
|
|
|
Less: Average goodwill (GAAP)
|
|
|
|
|
6,876
|
|
|
|
|
|
6,876
|
|
|
|
|
|
6,876
|
|
|
|
|
|
6,876
|
|
|
|
|
|
6,876
|
|
|
|
Less: Average other intangibles (GAAP)
|
|
|
|
|
6
|
|
|
|
|
|
7
|
|
|
|
|
|
7
|
|
|
|
|
|
8
|
|
|
|
|
|
9
|
|
|
|
Add: Average deferred tax liabilities related to goodwill (GAAP)
|
|
|
|
|
384
|
|
|
|
|
|
369
|
|
|
|
|
|
351
|
|
|
|
|
|
342
|
|
|
|
|
|
325
|
|
|
|
Average tangible assets (non-GAAP)
|
|
|
L
|
$
|
122,193
|
|
|
|
|
$
|
120,634
|
|
|
|
|
$
|
117,372
|
|
|
|
|
$
|
113,851
|
|
|
|
|
$
|
110,826
|
|
|
|
Return on average total tangible assets (non-GAAP)
|
|
|
G/L
|
|
0.61
|
%
|
|
|
|
|
1.04
|
%
|
|
|
|
|
0.57
|
%
|
|
|
|
|
0.53
|
%
|
|
|
|
|
0.52
|
%
|
|
|
Return on average total tangible assets, excluding restructuring
charges and special items (non-GAAP)
|
|
|
H/L
|
|
0.66
|
%
|
|
|
|
|
0.68
|
%
|
|
|
|
|
0.57
|
%
|
|
|
|
|
0.59
|
%
|
|
|
|
|
0.52
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
QUARTERLY TRENDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3Q14
|
|
|
2Q14
|
|
|
1Q14
|
|
|
4Q13
|
|
|
3Q13
|
|
Efficiency ratio and efficiency ratio, excluding restructuring
charges and special items:
|
|
|
|
Net interest income (GAAP)
|
|
|
|
|
|
$
|
820
|
|
|
|
$
|
833
|
|
|
|
$
|
808
|
|
|
|
$
|
779
|
|
|
|
$
|
770
|
|
|
Add: Noninterest income (GAAP)
|
|
|
|
|
|
|
341
|
|
|
|
|
640
|
|
|
|
|
358
|
|
|
|
|
379
|
|
|
|
|
383
|
|
|
Total revenue (GAAP)
|
|
|
C
|
|
|
$
|
1,161
|
|
|
|
$
|
1,473
|
|
|
|
$
|
1,166
|
|
|
|
$
|
1,158
|
|
|
|
$
|
1,153
|
|
|
Efficiency ratio (non-GAAP)
|
|
|
E/C
|
|
|
|
69.84
|
%
|
|
|
|
64.33
|
%
|
|
|
|
69.43
|
%
|
|
|
|
70.62
|
%
|
|
|
|
68.49
|
%
|
|
Efficiency ratio, excluding restructuring charges and special
items (non-GAAP)
|
|
|
F/D
|
|
|
|
68.02
|
%
|
|
|
|
70.23
|
%
|
|
|
|
69.43
|
%
|
|
|
|
68.35
|
%
|
|
|
|
68.49
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per average common share - basic and diluted,
excluding restructuring charges and special items:
|
|
|
Average common shares outstanding - basic (GAAP)
|
|
|
M
|
|
|
|
559,998,324
|
|
|
|
|
559,998,324
|
|
|
|
|
559,998,324
|
|
|
|
|
559,998,324
|
|
|
|
|
559,998,324
|
|
|
Average common shares outstanding - diluted (GAAP)
|
|
|
N
|
|
|
|
560,243,747
|
|
|
|
|
559,998,324
|
|
|
|
|
559,998,324
|
|
|
|
|
559,998,324
|
|
|
|
|
559,998,324
|
|
|
Net income (loss) applicable to common stockholders (GAAP)
|
|
|
O
|
|
|
|
189
|
|
|
|
|
313
|
|
|
|
|
166
|
|
|
|
|
152
|
|
|
|
|
144
|
|
|
Net income (loss) per average common share - basic (GAAP)
|
|
|
O/M
|
|
|
|
0.34
|
|
|
|
|
0.56
|
|
|
|
|
0.30
|
|
|
|
|
0.27
|
|
|
|
|
0.26
|
|
|
Net income (loss) per average common share - diluted (GAAP)
|
|
|
O/N
|
|
|
|
0.34
|
|
|
|
|
0.56
|
|
|
|
|
0.30
|
|
|
|
|
0.27
|
|
|
|
|
0.26
|
|
|
Net income (loss) applicable to common stockholders, excluding
restructuring charges and special items (non-GAAP)
|
|
|
P
|
|
|
|
202
|
|
|
|
|
205
|
|
|
|
|
166
|
|
|
|
|
169
|
|
|
|
|
144
|
|
|
Net income per average common share - basic, excluding
restructuring charges and special items (non-GAAP)
|
|
|
P/M
|
|
|
|
0.36
|
|
|
|
|
0.37
|
|
|
|
|
0.30
|
|
|
|
|
0.30
|
|
|
|
|
0.26
|
|
|
Net income per average common share - diluted, excluding
restructuring charges and special items (non-GAAP)
|
|
|
P/N
|
|
|
|
0.36
|
|
|
|
|
0.37
|
|
|
|
|
0.30
|
|
|
|
|
0.30
|
|
|
|
|
0.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma Basel III common equity Tier 1 capital ratio:
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 common capital (regulatory)
|
|
|
|
|
|
$
|
13,330
|
|
|
|
$
|
13,448
|
|
|
|
$
|
13,460
|
|
|
|
$
|
13,301
|
|
|
|
$
|
13,489
|
|
|
Add: Change in DTA and other threshold deductions (GAAP)
|
|
|
|
|
(5
|
)
|
|
|
|
(7
|
)
|
|
|
|
(7
|
)
|
|
|
|
6
|
|
|
|
|
—
|
|
|
Basel III common equity Tier 1 (non-GAAP)
|
|
|
Q
|
|
|
$
|
13,335
|
|
|
|
$
|
13,455
|
|
|
|
$
|
13,467
|
|
|
|
$
|
13,295
|
|
|
|
$
|
13,489
|
|
|
Risk-weighted assets (regulatory general risk weight approach)
|
|
|
|
|
103,207
|
|
|
|
|
101,397
|
|
|
|
|
100,368
|
|
|
|
|
98,634
|
|
|
|
|
96,735
|
|
|
Net change in credit and other risk-weighted assets (GAAP)
|
|
|
|
|
3,207
|
|
|
|
|
2,383
|
|
|
|
|
2,450
|
|
|
|
|
2,687
|
|
|
|
|
2,768
|
|
|
Basel III standardized approach risk-weighted assets (non-GAAP)
|
|
|
R
|
|
|
$
|
106,414
|
|
|
|
$
|
103,780
|
|
|
|
$
|
102,818
|
|
|
|
$
|
101,321
|
|
|
|
$
|
99,503
|
|
|
Pro forma Basel III common equity Tier 1 capital ratio (non-GAAP)
|
|
|
Q/R
|
|
|
|
12.5
|
%
|
|
|
|
13.0
|
%
|
|
|
|
13.1
|
%
|
|
|
|
13.1
|
%
|
|
|
|
13.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits, excluding restructuring charges
and special items:
|
|
|
|
Salaries and employee benefits (GAAP)
|
|
|
S
|
|
|
$
|
409
|
|
|
|
$
|
467
|
|
|
|
$
|
405
|
|
|
|
$
|
391
|
|
|
|
$
|
403
|
|
|
Less: Restructuring charges and special items
|
|
|
|
|
—
|
|
|
|
|
43
|
|
|
|
|
—
|
|
|
|
|
5
|
|
|
|
|
—
|
|
|
Salaries and employee benefits, excluding restructuring charges
and special items (non-GAAP)
|
|
|
T
|
|
|
$
|
409
|
|
|
|
$
|
424
|
|
|
|
$
|
405
|
|
|
|
$
|
386
|
|
|
|
$
|
403
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outside services, excluding restructuring charges and special
items:
|
|
|
|
|
|
|
Outside services (GAAP)
|
|
|
U
|
|
|
$
|
106
|
|
|
|
$
|
125
|
|
|
|
$
|
83
|
|
|
|
$
|
101
|
|
|
|
$
|
87
|
|
|
Less: Restructuring charges and special items
|
|
|
|
|
19
|
|
|
|
|
41
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
Outside services, excluding restructuring charges and special
items (non-GAAP)
|
|
|
V
|
|
|
$
|
87
|
|
|
|
$
|
84
|
|
|
|
$
|
83
|
|
|
|
$
|
101
|
|
|
|
$
|
87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy, excluding restructuring charges and special items:
|
|
|
|
|
|
|
|
|
|
Occupancy (GAAP)
|
|
|
W
|
|
|
$
|
77
|
|
|
|
$
|
87
|
|
|
|
$
|
81
|
|
|
|
$
|
83
|
|
|
|
$
|
80
|
|
|
Less: Restructuring charges and special items
|
|
|
|
|
2
|
|
|
|
|
9
|
|
|
|
|
—
|
|
|
|
|
11
|
|
|
|
|
—
|
|
|
Occupancy, excluding restructuring charges and special items
(non-GAAP)
|
|
|
X
|
|
|
$
|
75
|
|
|
|
$
|
78
|
|
|
|
$
|
81
|
|
|
|
$
|
72
|
|
|
|
$
|
80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment expense, excluding restructuring charges and special
items:
|
|
|
|
|
|
|
Equipment expense (GAAP)
|
|
|
Y
|
|
|
$
|
58
|
|
|
|
$
|
65
|
|
|
|
$
|
64
|
|
|
|
$
|
68
|
|
|
|
$
|
69
|
|
|
Less: Restructuring charges and special items
|
|
|
|
|
—
|
|
|
|
|
3
|
|
|
|
|
—
|
|
|
|
|
7
|
|
|
|
|
—
|
|
|
Equipment expense, excluding restructuring charges and special
items (non-GAAP)
|
|
|
Z
|
|
|
$
|
58
|
|
|
|
$
|
62
|
|
|
|
$
|
64
|
|
|
|
$
|
61
|
|
|
|
$
|
69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
QUARTERLY TRENDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3Q14
|
|
|
|
2Q14
|
|
|
|
1Q14
|
|
|
|
4Q13
|
|
|
|
3Q13
|
|
|
|
Other operating expense, excluding restructuring charges and
special items:
|
|
|
|
|
|
|
|
|
|
Other operating expense (GAAP)
|
|
|
AA
|
|
|
$
|
122
|
|
|
|
|
$
|
171
|
|
|
|
|
$
|
146
|
|
|
|
|
$
|
143
|
|
|
|
|
$
|
123
|
|
|
|
|
Less: Restructuring charges and special items
|
|
|
|
|
|
|
—
|
|
|
|
|
|
19
|
|
|
|
|
|
—
|
|
|
|
|
|
3
|
|
|
|
|
|
—
|
|
|
|
|
Other operating expense, excluding restructuring charges and
special items (non-GAAP)
|
|
|
BB
|
|
|
$
|
122
|
|
|
|
|
$
|
152
|
|
|
|
|
$
|
146
|
|
|
|
|
$
|
140
|
|
|
|
|
$
|
123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-provision profit, excluding restructuring charges and special
items:
|
|
|
|
|
|
|
|
|
|
Total revenue, excluding restructuring charges and special items
(non-GAAP)
|
|
|
D
|
|
|
$
|
1,161
|
|
|
|
|
$
|
1,185
|
|
|
|
|
$
|
1,166
|
|
|
|
|
$
|
1,158
|
|
|
|
|
$
|
1,153
|
|
|
|
|
Less: Noninterest expense, excluding restructuring charges and
special items (non-GAAP)
|
|
|
F
|
|
|
|
789
|
|
|
|
|
|
833
|
|
|
|
|
|
810
|
|
|
|
|
|
792
|
|
|
|
|
|
788
|
|
|
|
|
Pre-provision profit, excluding restructuring charges and special
items (non-GAAP)
|
|
|
CC
|
|
|
$
|
372
|
|
|
|
|
$
|
352
|
|
|
|
|
$
|
356
|
|
|
|
|
$
|
366
|
|
|
|
|
$
|
365
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income tax expense (benefit), excluding
restructuring charges and special items
|
|
|
|
|
|
Income before income tax expense (benefit) (GAAP)
|
|
|
DD
|
|
|
$
|
274
|
|
|
|
|
$
|
476
|
|
|
|
|
$
|
235
|
|
|
|
|
$
|
208
|
|
|
|
|
$
|
220
|
|
|
|
|
Less: Income before income tax expense (benefit) related to
restructuring charges and special items (GAAP)
|
|
|
|
|
|
|
(21
|
)
|
|
|
|
|
173
|
|
|
|
|
|
—
|
|
|
|
|
|
(26
|
)
|
|
|
|
|
—
|
|
|
|
|
Income before income tax expense (benefit), excluding
restructuring charges and special items (non-GAAP)
|
|
|
EE
|
|
|
$
|
295
|
|
|
|
|
$
|
303
|
|
|
|
|
$
|
235
|
|
|
|
|
$
|
234
|
|
|
|
|
$
|
220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit), excluding restructuring charges and
special items:
|
|
|
|
|
|
Income tax expense (benefit) (GAAP)
|
|
|
FF
|
|
|
$
|
85
|
|
|
|
|
$
|
163
|
|
|
|
|
$
|
69
|
|
|
|
|
$
|
56
|
|
|
|
|
$
|
76
|
|
|
|
|
Less: Income tax (benefit) related to restructuring charges and
special items (GAAP)
|
|
|
|
|
|
|
(8
|
)
|
|
|
|
|
65
|
|
|
|
|
|
—
|
|
|
|
|
|
(9
|
)
|
|
|
|
|
—
|
|
|
|
|
Income tax expense (benefit), excluding restructuring charges and
special items (non-GAAP)
|
|
|
GG
|
|
|
$
|
93
|
|
|
|
|
$
|
98
|
|
|
|
|
$
|
69
|
|
|
|
|
$
|
65
|
|
|
|
|
$
|
76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges and special expense items include:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill impairment
|
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
Restructuring charges
|
|
|
|
|
|
|
1
|
|
|
|
|
|
103
|
|
|
|
|
|
—
|
|
|
|
|
|
26
|
|
|
|
|
|
—
|
|
|
|
|
Special items
|
|
|
|
|
|
|
20
|
|
|
|
|
|
12
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
|
Restructuring charges and special expense items
|
|
|
HH
|
|
|
$
|
21
|
|
|
|
|
$
|
115
|
|
|
|
|
|
-
|
|
|
|
|
$
|
26
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible Common Equity (period-end):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
|
|
$
|
19,383
|
|
|
|
|
$
|
19,597
|
|
|
|
|
$
|
19,442
|
|
|
|
|
$
|
19,196
|
|
|
|
|
$
|
19,413
|
|
|
|
|
Less: Goodwill
|
|
|
|
|
|
|
(6,876
|
)
|
|
|
|
|
(6,876
|
)
|
|
|
|
|
(6,876
|
)
|
|
|
|
|
(6,876
|
)
|
|
|
|
|
(6,876
|
)
|
|
|
|
Less: Other intangible assets
|
|
|
|
|
|
|
(6
|
)
|
|
|
|
|
(7
|
)
|
|
|
|
|
(7
|
)
|
|
|
|
|
(8
|
)
|
|
|
|
|
(9
|
)
|
|
|
|
Add: Deferred tax liabilities
|
|
|
|
|
|
|
399
|
|
|
|
|
|
384
|
|
|
|
|
|
366
|
|
|
|
|
|
350
|
|
|
|
|
|
333
|
|
|
|
|
Total tangible common equity
|
|
|
II
|
|
|
$
|
12,900
|
|
|
|
|
$
|
13,098
|
|
|
|
|
$
|
12,925
|
|
|
|
|
$
|
12,662
|
|
|
|
|
$
|
12,861
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Measures by Segments
|
|
$s in millions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2014
|
|
Three Months Ended June 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
Banking
|
|
Commercial
Banking
|
|
Other
|
|
Consolidated
|
|
Consumer
Banking
|
|
Commercial
Banking
|
|
Other
|
|
Consolidated
|
|
Net income (loss) (GAAP)
|
|
A
|
|
$54
|
|
|
$139
|
|
|
($4
|
)
|
|
$189
|
|
|
$44
|
|
|
$141
|
|
|
$128
|
|
|
$313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average tangible common equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common equity (GAAP)
|
|
B
|
|
$4,685
|
|
|
$4,205
|
|
|
$10,521
|
|
|
$19,411
|
|
|
$4,640
|
|
|
$4,129
|
|
|
$10,838
|
|
|
$19,607
|
|
|
Less: Average goodwill (GAAP)
|
|
|
|
—
|
|
|
—
|
|
|
6,876
|
|
|
6,876
|
|
|
—
|
|
|
—
|
|
|
6,876
|
|
|
6,876
|
|
|
Average other intangibles (GAAP)
|
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
7
|
|
|
Add: Average deferred tax liabilities related to goodwill (GAAP)
|
|
|
|
—
|
|
|
—
|
|
|
384
|
|
|
384
|
|
|
—
|
|
|
—
|
|
|
369
|
|
|
369
|
|
|
Average tangible common equity (non-GAAP)
|
|
C
|
|
$4,685
|
|
|
$4,205
|
|
|
$4,023
|
|
|
$12,913
|
|
|
$4,640
|
|
|
$4,129
|
|
|
$4,324
|
|
|
$13,093
|
|
|
Return on average tangible common equity (non-GAAP)
|
|
A/C
|
|
4.57
|
%
|
|
13.10
|
%
|
|
NM
|
|
|
5.81
|
%
|
|
3.87
|
%
|
|
13.78
|
%
|
|
NM
|
|
|
9.59
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense (GAAP)
|
|
D
|
|
$609
|
|
|
$162
|
|
|
$39
|
|
|
$810
|
|
|
$655
|
|
|
$157
|
|
|
$136
|
|
|
$948
|
|
|
Net interest income (GAAP)
|
|
|
|
532
|
|
|
270
|
|
|
18
|
|
|
820
|
|
|
546
|
|
|
264
|
|
|
23
|
|
|
833
|
|
|
Noninterest income (GAAP)
|
|
|
|
226
|
|
|
104
|
|
|
11
|
|
|
341
|
|
|
236
|
|
|
107
|
|
|
297
|
|
|
640
|
|
|
Total revenue
|
|
E
|
|
$758
|
|
|
$374
|
|
|
$29
|
|
|
$1,161
|
|
|
$782
|
|
|
$371
|
|
|
$320
|
|
|
$1,473
|
|
|
Efficiency ratio (non-GAAP)
|
|
D/E
|
|
80.42
|
%
|
|
43.35
|
%
|
|
NM
|
|
|
69.84
|
%
|
|
83.61
|
%
|
|
42.36
|
%
|
|
NM
|
|
|
64.33
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2014
|
|
Three Months Ended December 31,2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
Banking
|
|
Commercial
Banking
|
|
Other
|
|
Consolidated
|
|
Consumer
Banking
|
|
Commercial
Banking
|
|
Other
|
|
Consolidated
|
|
Net income (loss) (GAAP)
|
|
A
|
|
$32
|
|
|
$141
|
|
|
($7
|
)
|
|
$166
|
|
|
$50
|
|
|
$123
|
|
|
($21
|
)
|
|
$152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average tangible common equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common equity (GAAP)
|
|
B
|
|
$4,568
|
|
|
$4,023
|
|
|
$10,779
|
|
|
$19,370
|
|
|
$4,448
|
|
|
$3,978
|
|
|
$10,938
|
|
|
$19,364
|
|
|
Less: Average goodwill (GAAP)
|
|
|
|
—
|
|
|
—
|
|
|
6,876
|
|
|
6,876
|
|
|
—
|
|
|
—
|
|
|
6,876
|
|
|
6,876
|
|
|
Average other intangibles (GAAP)
|
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
8
|
|
|
Add: Average deferred tax liabilities related to goodwill (GAAP)
|
|
|
|
—
|
|
|
—
|
|
|
351
|
|
|
351
|
|
|
—
|
|
|
—
|
|
|
342
|
|
|
342
|
|
|
Average tangible common equity (non-GAAP)
|
|
C
|
|
$4,568
|
|
|
$4,023
|
|
|
$4,247
|
|
|
$12,838
|
|
|
$4,448
|
|
|
$3,978
|
|
|
$4,396
|
|
|
$12,822
|
|
|
Return on average tangible common equity (non-GAAP)
|
|
A/C
|
|
2.81
|
%
|
|
14.17
|
%
|
|
NM
|
|
|
5.24
|
%
|
|
4.40
|
%
|
|
12.10
|
%
|
|
NM
|
|
|
4.71
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense (GAAP)
|
|
D
|
|
$638
|
|
|
$153
|
|
|
$19
|
|
|
$810
|
|
|
$638
|
|
|
$164
|
|
|
$16
|
|
|
$818
|
|
|
Net interest income (GAAP)
|
|
|
|
537
|
|
|
256
|
|
|
15
|
|
|
808
|
|
|
543
|
|
|
260
|
|
|
(24
|
)
|
|
779
|
|
|
Noninterest income (GAAP)
|
|
|
|
219
|
|
|
107
|
|
|
32
|
|
|
358
|
|
|
235
|
|
|
105
|
|
|
39
|
|
|
379
|
|
|
Total revenue
|
|
E
|
|
$756
|
|
|
$363
|
|
|
$47
|
|
|
$1,166
|
|
|
$778
|
|
|
$365
|
|
|
$15
|
|
|
$1,158
|
|
|
Efficiency ratio (non-GAAP)
|
|
D/E
|
|
84.39
|
%
|
|
42.13
|
%
|
|
NM
|
|
|
69.43
|
%
|
|
81.84
|
%
|
|
44.73
|
%
|
|
NM
|
|
|
70.62
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
Banking
|
|
Commercial
Banking
|
|
Other
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
Net income (loss) (GAAP)
|
|
A
|
|
$52
|
|
|
$127
|
|
|
($35
|
)
|
|
$144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average tangible common equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common equity (GAAP)
|
|
B
|
|
$4,403
|
|
|
$3,855
|
|
|
$11,369
|
|
|
$19,627
|
|
|
|
|
|
|
|
|
|
|
Less: Average goodwill (GAAP)
|
|
|
|
—
|
|
|
—
|
|
|
6,876
|
|
|
6,876
|
|
|
|
|
|
|
|
|
|
|
Average other intangibles (GAAP)
|
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
Add: Average deferred tax liabilities related to goodwill (GAAP)
|
|
|
|
—
|
|
|
—
|
|
|
325
|
|
|
325
|
|
|
|
|
|
|
|
|
|
|
Average tangible common equity (non-GAAP)
|
|
C
|
|
$4,403
|
|
|
$3,855
|
|
|
$4,809
|
|
|
$13,067
|
|
|
|
|
|
|
|
|
|
|
Return on average tangible common equity (non-GAAP)
|
|
A/C
|
|
4.69
|
%
|
|
13.24
|
%
|
|
NM
|
|
|
4.34
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense (GAAP)
|
|
D
|
|
$622
|
|
|
$156
|
|
|
$10
|
|
|
$788
|
|
|
|
|
|
|
|
|
|
|
Net interest income (GAAP)
|
|
|
|
543
|
|
|
263
|
|
|
(36
|
)
|
|
770
|
|
|
|
|
|
|
|
|
|
|
Noninterest income (GAAP)
|
|
|
|
246
|
|
|
93
|
|
|
44
|
|
|
383
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
E
|
|
$789
|
|
|
$356
|
|
|
$8
|
|
|
$1,153
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio (non-GAAP)
|
|
D/E
|
|
78.83
|
%
|
|
43.69
|
%
|
|
NM
|
|
|
68.49
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward-Looking Statements
This document contains forward-looking statements within the Private
Securities Litigation Reform Act of 1995. Statements regarding potential
future share repurchases and future dividends are forward-looking
statements. Also, any statement that does not describe historical or
current facts is a forward-looking statement. These statements often
include the words “believes,” “expects,” “anticipates,” “estimates,”
“intends,” “plans,” “goals,” “targets,” “initiatives,” “potentially,”
“probably,” “projects,” “outlook” 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 conditions that adversely affect the general
economy, housing prices, the job market, consumer confidence and
spending habits which may affect, among other things, the level of
nonperforming assets, charge-offs and provision expense;
-
the rate of growth in the economy and employment levels, as well as
general business and economic conditions;
-
our ability to implement our strategic plan, including the cost
savings and efficiency components, and achieve our indicative
performance targets;
-
our ability to remedy regulatory deficiencies and meet supervisory
requirements and expectations;
-
liabilities resulting from litigation and regulatory investigations;
-
our capital and liquidity requirements (including under regulatory
capital standards, such as the Basel III capital standards) and our
ability to generate capital internally or raise capital on favorable
terms;
-
the effect of the current low interest rate environment or changes in
interest rates on our net interest income, net interest margin and our
mortgage originations, mortgage servicing rights and mortgages held
for sale;
-
changes in interest rates and market liquidity, as well as the
magnitude of such changes, which may reduce interest margins, impact
funding sources and affect the ability to originate and distribute
financial products in the primary and secondary markets;
-
the effect of changes in the level of checking or savings account
deposits on our funding costs and net interest margin;
-
financial services reform and other current, pending or future
legislation or regulation that could have a negative effect on our
revenue and businesses, including the Dodd-Frank Act and other
legislation and regulation relating to bank products and services;
-
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;
-
management’s ability to identify and manage these and other risks; and
-
any failure by us to successfully replicate or replace certain
functions, systems and infrastructure provided by RBS.
In addition to the above factors, we also caution that the amount and
timing of any future common stock dividends will depend on our financial
condition, earnings, cash needs, regulatory constraints, capital
requirements (including requirements of our subsidiaries), and any other
factors that our Board of Directors deems relevant in making such a
determination. Therefore, there can be no assurance that we will pay any
dividends to holders of our common stock, or as to the amount of any
such dividends. In addition, the timing and manner of the sale of RBS's
remaining ownership of our common stock remains uncertain, and we have
no control over the manner in which RBS may seek to divest such
remaining shares. Any such sale would impact the price of our shares of
common stock.
More information about factors that could cause actual results to differ
materially from those described in the forward-looking statements can be
found under “Risk Factors” in our Registration Statement on Form S-1
filed with the United States Securities and Exchange Commission and
declared effective on September 23, 2014.
Note: Percentage changes, per share amounts, and ratios presented in
this document are calculated using whole dollars.
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