~~0000759944 us-gaap:FederalHomeLoanBankAdvancesMember 2019-12-31~~0000759944us-gaap:SeriesFPreferredStockMember2020-04-012020-06-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended

~~September~~June 30, ~~2020~~2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From

(Not Applicable)

Commission File Number 001-36636

(Exact name of the registrant as specified in its charter)



Delaware						05-0412693
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification Number)

One Citizens Plaza,, Providence,, RI02903

(Address of principal executive offices, including zip code)

(~~401~~) (401) 456-7000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value per share	CFG	New York Stock Exchange
Depositary Shares, each representing a 1/40th interest in a share of 6.350% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D	CFG PrD	New York Stock Exchange
Depositary Shares, each representing a 1/40th interest in a share of 5.000% Fixed-Rate Non-Cumulative Perpetual Preferred Stock, Series E	CFG PrE	New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.

☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:



Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

There were ~~427,073,084~~426,083,147 shares of Registrant’s common stock ($0.01 par value) outstanding on ~~October 30, 2020.~~July 23, 2021.





	Table of Contents


Glossary of Acronyms and Terms		3

Part I. Financial Information		56

Item 1. Financial Statements		50	49

Consolidated Balance Sheets ~~as of September 30, 2020~~ (unaudited) ~~and December 31, 2019 (unaudited)~~		5051
Consolidated Statements of Operations (unaudited) ~~for the Three and Nine Months Ended September 30, 2020 and 2019~~		5152
Consolidated Statements of Comprehensive Income (unaudited) ~~for the Three and Nine Months Ended September 30, 2020 and 2019~~		5253
Consolidated Statements of Changes in Stockholders’ Equity (unaudited) ~~for the Three and Nine Months Ended September 30, 2020 and 2019~~		5354
Consolidated Statements of Cash Flows (unaudited) ~~for the Nine Months Ended September 30, 2020 and 2019~~		5556
Notes to the Consolidated Financial Statements (unaudited)		57	56

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		56

Item 3. Quantitative and Qualitative Disclosures about Market Risk		89	93

Item 4. Controls and Procedures		89	93


Part II. Other Information		89	94

Item 1. Legal Proceedings		89	94
Item 1A. Risk Factors		89	94
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		91	94

Item 6. Exhibits		91	94


Signature		~~Signature~~93	95

Citizens Financial Group, Inc. | 2

GLOSSARY OF ACRONYMS AND TERMS

The following is a list of common acronyms and terms we regularly use in our financial reporting:



~~AACL~~2020 Form 10-K						Annual Report on Form 10-K for the year ended December 31, 2020
AACL						Adjusted Allowance for Credit Losses
ACL						Allowance for Credit Losses: Allowance for Loan and Lease Losses plus ~~Reserve~~Allowance for Unfunded Lending Commitments
AFS						Available for Sale
ALLL						Allowance for Loan and Lease Losses
ALM						Asset and Liability Management
AOCI						Accumulated Other Comprehensive Income (Loss)
~~ATM~~ARRC						Alternative Reference Rate Committee
ASU						Accounting Standards Update
ATM						Automated Teller Machine

Board or Board of Directors						The Board of Directors of Citizens Financial Group, Inc.
bps						Basis Points

Capital Plan Rule						Federal Reserve’s Regulation Y Capital Plan Rule
CARES Act						Coronavirus Aid, Relief, and Economic Security Act
CBNA						Citizens Bank, National Association
CCAR						Comprehensive Capital Analysis and Review
CCB						Capital Conservation Buffer
CCMI						Citizens Capital Markets, Inc.
CECL						Current Expected Credit Losses (ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments)
CET1						Common Equity Tier 1


CET1 capital ratio						Common Equity Tier 1 capital divided by total risk-weighted assets as defined under the U.S. Basel III Standardized approach
~~CFPB~~						~~Consumer Financial Protection Bureau~~

Citizens, CFG, the Company, we, us, or our						Citizens Financial Group, Inc. and its Subsidiaries
~~CLTV~~CLO						~~Combined Loan-to-Value~~Collateralized Loan Obligation
~~CRE~~CLTV						Combined Loan-to-Value

COVID-19 pandemic						Coronavirus Disease 2019 Pandemic

CRE						Commercial Real Estate



Dodd-Frank Act						The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
~~EAD~~						~~Exposure at Default~~
~~EGRRCPA~~						~~Economic Growth, Regulatory Relief and Consumer Protection Act~~
~~EPS~~
Elevated cash						Cash above targeted operating levels
EPS						Earnings Per Share


EVE						Economic Value of Equity
Exchange Act						The Securities Exchange Act of 1934


Fannie Mae (FNMA)						Federal National Mortgage Association
~~FDIC~~
FCA						Financial Conduct Authority
FDIC						Federal Deposit Insurance Corporation
~~FHLB~~FHA						Federal Housing Administration
FHLB						Federal Home Loan Bank
FICO						Fair Isaac Corporation (credit rating)

FRB or Federal Reserve						Board of Governors of the Federal Reserve System and, as applicable, Federal Reserve Bank(s)
Freddie Mac (FHLMC)						Federal Home Loan Mortgage Corporation
~~FTE~~
FTE						Fully Taxable Equivalent
~~GAAP~~
GAAP						Accounting Principles Generally Accepted in the United States of America
GDP						Gross Domestic Product

Ginnie Mae (GNMA)						Government National Mortgage Association

Citizens Financial Group, Inc. | 3


GSE		Government Sponsored Entity
~~HTM~~		~~Held To Maturity~~
~~LCR~~	~~Liquidity Coverage Ratio~~
~~LDR~~	~~Loans-to-Deposits Ratio~~
~~LGD~~	~~Loss Given Default~~
~~LHFS~~	~~Loans Held for Sale~~
~~LIBOR~~	~~London Interbank Offered Rate~~



~~LIHTC~~HSBC						HSBC Bank U.S.A., N.A.
HTM						Held To Maturity


ICE						Intercontinental Exchange
Investors						Investors Bancorp, Inc.
Last-of-Layer						Last-of-layer is a fair value hedge of the interest rate risk of a portfolio of similar prepayable assets whereby the last dollar amount within the portfolio of assets is identified as the hedged item



LHFS						Loans Held for Sale
LIBOR						London Interbank Offered Rate
LIHTC						Low Income Housing Tax Credit
LTV						Loan to Value
MBS						Mortgage-Backed Securities
~~Mid-Atlantic~~MD&A						Management’s Discussion and Analysis of Financial Condition and Results of Operations
Mid-Atlantic						District of Columbia, Delaware, Maryland, New Jersey, New York, Pennsylvania, Virginia, and West Virginia
Midwest						Illinois, Indiana, Michigan, and Ohio
~~MD&A~~						~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~
Modified CECL Transition						The Day-1 CECL adoption entry booked to retained earnings plus 25% of subsequent CECL ACL reserve build
Modified AACL Transition						The Day-1 CECL adoption entry booked to ACL plus 25% of subsequent CECL ACL reserve build
MSRs						Mortgage Servicing Rights
~~NCO~~NCOs						Net charge-offs
New England						Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont
NM						~~Not meaningful~~
~~NPLs~~

NPLs						Nonaccrual loans and leases
OCC						Office of the Comptroller of the Currency
OCI						Other Comprehensive Income (Loss)

Operating Leverage						Period-over-period percent change in total revenue, less the period-over-period percent change in noninterest expense

Parent Company						Citizens Financial Group, Inc. (the Parent Company of Citizens Bank, National Association and other subsidiaries)
PD						~~Probability of Default~~
~~PPP~~
PPP						Paycheck Protection Program
~~REIT~~						~~Real estate investment trust~~
ROTCE						Return on Average Tangible Common Equity
RPA						Risk Participation Agreement
~~SBA~~RWA						Risk-Weighted Assets
SBA						United States Small Business Administration
~~SCB~~

SCB						Stress Capital Buffer
SEC						United States Securities and Exchange Commission
~~SVaR~~SOFR						Secured Overnight Financing Rate
SVaR						Stressed Value at Risk
~~TBAs~~Tailoring Rules						Rules establishing risk-based categories for determining prudential standards for large U.S. and foreign banking organizations, consistent with the Dodd-Frank Act, as amended by the Economic Growth, Regulatory Relief and Consumer Protection Act
TBAs						To-Be-Announced Mortgage Securities
TDR						Troubled Debt Restructuring
Tier 1 capital ratio						Tier 1 capital, which includes Common Equity Tier 1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital, divided by total risk-weighted assets as defined under the U.S. Basel III Standardized approach
Tier 1 leverage ratio						Tier 1 capital, which includes Common Equity Tier 1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital, divided by quarterly adjusted average assets as defined under the U.S. Basel III Standardized approach

Citizens Financial Group, Inc. | 4


Total capital ratio						Total capital, which includes Common Equity Tier 1 capital, tier 1 capital and allowance for credit losses and qualifying subordinated debt that qualifies as tier 2 capital, divided by total risk-weighted assets as defined under the U.S. Basel III Standardized approach
~~VaR~~USDA						United States Department of Agriculture
VA						United States Department of Veterans Affairs
VaR						Value at Risk
VIE						Variable Interest Entities

Citizens Financial Group, Inc. | 5

PART I. FINANCIAL INFORMATION

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


			Page
Forward-Looking Statements			7
Introduction			8

Financial Performance			~~Page~~
~~Forward-Looking Statements~~	69
~~Introduction~~	7
~~Financial Performance~~	8
Selected Consolidated Financial Data			1113
Results of Operations			1315



Net Interest Income			15
~~Net Interest~~Noninterest Income			1319
Noninterest ~~Income~~Expense			1720
~~Noninterest Expense~~		18
Provision for Credit Losses		1921
Income Tax Expense			2022
Business Operating Segments			2122
Analysis of Financial Condition			2325
Securities			2325
Loans and Leases			2426
Allowance for Credit Losses and Nonaccruing Loans and Leases			2426
Deposits			2932
Borrowed Funds			3033
Capital and Regulatory Matters			3133
Liquidity			3437
Off-Balance Sheet Arrangements			3740
Critical Accounting Estimates			3741

Risk Governance			42
Market Risk ~~Governance~~			4142
~~Market Risk~~		41
Non-GAAP Financial Measures and Reconciliations		4647

Citizens Financial Group, Inc. | 6

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements regarding potential future share repurchases and future dividends as well as the potential effects of the COVID-19 pandemic and associated lockdowns on our business, operations, financial performance and prospects, are forward-looking statements. Also, any statement that does not describe historical or current facts is a forward-looking statement. These statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “goals,” “targets,” “initiatives,” “potentially,” “probably,” “projects,” ~~“outlook”~~“outlook,” “guidance” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would,” and “could.”

Forward-looking statements are based upon the current beliefs and expectations of management, and on information currently available to management. Our statements speak as of the date hereof, and we do not assume any obligation to update these statements or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events. We caution you, therefore, against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. While there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation:

•Negative economic and political conditions that adversely affect the general economy, housing prices, the job market, consumer confidence and spending habits which may affect, among other things, the level of nonperforming assets, charge-offs and provision expense;


•	Negative economic and political conditions that adversely affect the general economy, housing prices, the job market, consumer confidence and spending habits which may affect, among other things, the level of 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, and changes in the competitive environment;~~


•	~~Our ability to implement our business strategy, including the cost savings and efficiency components, and achieve our financial performance goals;~~


•	~~The COVID-19 pandemic and associated lockdowns and their effects on the economic and business environments in which we operate;~~


•	~~Our ability to meet heightened supervisory requirements and expectations;~~


•	~~Liabilities and business restrictions resulting from litigation and regulatory investigations;~~


•	~~Our capital and liquidity requirements under regulatory capital standards and our ability to generate capital internally or raise capital on favorable terms;~~


•	~~The effect of changes in interest rates on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgages held for sale;~~


•	Changes in interest rates and market liquidity, as well as the magnitude of such changes, which may reduce interest margins, impact funding sources and affect the ability to originate and distribute financial products in the primary and secondary markets;


•	~~The effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin;~~


•	~~Financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses;~~


•	~~A failure in or breach of our operational or security systems or infrastructure, or those of our third party vendors or other service providers, including as a result of cyber-attacks; and~~


•	~~Management’s ability to identify and manage these and other risks.~~

•The rate of growth in the economy and employment levels, as well as general business and economic conditions, and changes in the competitive environment;

•Our ability to implement our business strategy, including the cost savings and efficiency components, and achieve our financial performance goals, including through the integration of Investors and the HSBC branches;

•The COVID-19 pandemic and associated lockdowns and their effects on the economic and business environments in which we operate;

•Our ability to meet heightened supervisory requirements and expectations;

•Liabilities and business restrictions resulting from litigation and regulatory investigations;

•Our capital and liquidity requirements under regulatory capital standards and our ability to generate capital internally or raise capital on favorable terms;

•The effect of changes in interest rates on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgages held for sale;

•Changes in interest rates and market liquidity, as well as the magnitude of such changes, which may reduce interest margins, impact funding sources and affect the ability to originate and distribute financial products in the primary and secondary markets;

•The effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin;

•Financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses;

•A failure in or breach of our operational or security systems or infrastructure, or those of our third party vendors or other service providers, including as a result of cyber-attacks;

•An inability to complete the acquisitions of Investors or the HSBC branches, or changes in the current anticipated timeframe, terms or manner of such acquisitions;

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

•The inability to retain existing Investors or HSBC clients and employees following the closings of the Investors and HSBC branch acquisitions;

Citizens Financial Group, Inc. | 7

•The occurrence of any event change or other circumstance that could give rise to the right of one or both parties to terminate (i) the agreement to acquire Investors or (ii) the agreement to acquire branches from HSBC; and

•Management’s ability to identify and manage these and other risks.

In addition to the above factors, we also caution that the actual amounts and timing of any future common stock dividends or share repurchases will be subject to various factors, including our capital position, financial performance, risk-weighted assets, capital impacts of strategic initiatives, market conditions and regulatory and accounting considerations, as well as any other factors that our Board of Directors deems relevant in making such a determination. Therefore, there can be no assurance that we will repurchase shares from or pay any dividends to holders of our common stock, or as to the amount of any such repurchases or dividends. Further, statements about the effects of the COVID-19 pandemic and associated lockdowns on our business, operations, financial performance and prospects may constitute forward-looking statements and are subject to the risk that the actual impacts may differ, possibly

materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our customers, third parties and us. In addition, statements about our net charge-off guidance constitute forward-looking statements and are subject to the risk that the actual charge-offs may differ, possibly materially, from what is reflected in those statements due to, among other potential factors, the impact of the COVID-19 pandemic and the effectiveness of stimulus and forbearance programs in response, changes in economic conditions, and idiosyncratic events affecting our commercial loans. Statements about Citizens’ agreement and plan of merger, dated July 28, 2021 (the “Investors acquisition agreement”) with Investors Bancorp, Inc. and CBNA’s agreement dated May 26, 2021 (“HSBC branch acquisition agreement”) with HSBC to acquire certain branches from HSBC also constitute forward-looking statements and are subject to the risk that actual results could be materially different from those expressed in those statements, including if either of both transactions are not consummated in a timely manner or at all, or if integration is more costly or difficult than expected.

More information about factors that could cause actual results to differ materially from those described in the forward-looking statements can be found in the “Risk Factors” section in Part II, Item 1A of this report and Part I, Item 1A of our ~~Annual Report on~~2020 Form ~~10-K for the year ended December 31, 2019 and Part II, Item 1A of our Quarterly Report on Form 10-Q for the period ended June 30, 2020~~.10-K.

INTRODUCTION

Citizens Financial Group, Inc. is one of the nation’s oldest and largest financial institutions with ~~$179.2~~$185.1 billion in assets as of ~~September~~June 30, ~~2020.~~ 2021. Our mission is to help customers, colleagues and communities each reach their potential by listening to them and understanding their needs in order to offer tailored advice, ideas and solutions. Headquartered in Providence, Rhode Island, we offer a broad range of retail and commercial banking products and services to individuals, small businesses, middle-market companies, large corporations and institutions. In Consumer Banking, we provide an integrated experience that includes mobile and online banking, a 24/7 customer contact center as well as the convenience of approximately ~~2,700~~ 3,000 ATMs and 1,000 branches in 11 states in the New England, Mid-Atlantic, and Midwest regions. Consumer Banking products and services include a full range of banking, lending, savings, wealth management and small business offerings. In Commercial Banking, we offer 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 rate products, and asset finance. More information is available at www.citizensbank.com.

On May 26, 2021, CBNA entered into an agreement to acquire 80 East Coast branches and the national online deposit business from HSBC. The acquisition provides an attractive entry into important metro markets and supports our national expansion strategy. Under the agreement, CBNA will acquire approximately $9.0 billion in deposits and approximately $2.2 billion in loans for a 2.0 percent premium paid on deposits at closing. The 80 branch purchase includes 66 locations in the New York City Metro area, 9 locations in the Mid-Atlantic/Washington D.C. area, and 5 locations in Southeast Florida. The transaction is expected to close in the first quarter of 2022, subject to customary closing terms and conditions and regulatory approvals.

On July 28, 2021 Citizens entered into a definitive agreement and a plan of merger under which Citizens will acquire Investors for a combination of stock and cash. The acquisition of Investors enhances Citizens’ banking franchise, adding an attractive middle market/small business and consumer customer base while building its physical presence in the northeast with the addition of 154 branches located in the greater New York City and Philadelphia metropolitan areas and across New Jersey. See Note 17 in Item 1 for further information.

Citizens Financial Group, Inc. | 8

The following MD&A is intended to assist readers in their analysis of the accompanying unaudited interim Consolidated Financial Statements and supplemental financial information. It should be read in conjunction with the unaudited interim Consolidated Financial Statements and Notes to the unaudited interim Consolidated Financial Statements in Part I, Item 1, as well as other information contained in this document and our ~~2019~~2020 Form 10-K.

Non-GAAP Financial Measures

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

Other companies may use similarly titled non-GAAP financial measures that are calculated differently from the way we calculate such measures. Accordingly, our non-GAAP financial measures may not be comparable to similar measures used by such companies. We caution investors not to place undue reliance on such non-GAAP financial measures, but to consider them with the most directly comparable GAAP measures. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for our results reported under GAAP.

Non-GAAP measures are denoted throughout our MD&A by the use of the term ~~Non-GAAP~~Underlying or ~~Underlying~~identified as excluding the impact of certain items and where there is a reference to ~~Non-GAAP or Underlying results~~these metrics in that paragraph, all measures that follow that reference are on the same basis when applicable. For more information on the computation of non-GAAP financial measures, see “—Non-GAAP Financial Measures and Reconciliations.”

FINANCIAL PERFORMANCE

Quarterly Results - Key Highlights

~~Third~~ Second quarter ~~2020~~2021 net income of ~~$314~~$648 million ~~decreased 30%~~increased 156% from ~~$449~~$253 million in the ~~third~~second quarter of ~~2019,~~2020, with earnings per diluted common share of ~~$0.68, down $0.29~~$1.44, up $0.91 from ~~$0.97~~$0.53 per diluted common share in ~~third~~the second quarter ~~2019. Third~~of 2020. Second quarter ~~2020~~2021 ROTCE of ~~8.3%~~17.5% compared to ~~12.4%~~6.6% in ~~third~~the second quarter ~~2019.~~of 2020.

~~Third~~ Second quarter 2021 results reflected $8 million of expenses, net of tax benefit, or $0.02 per diluted common share, from notable items largely tied to TOP 6 transformational and revenue and efficiency initiatives as well as integration costs. Second quarter 2020 results reflected ~~$24~~$10 million ~~after-tax,~~of expenses, net of tax benefit, or ~~$0.05~~$0.02 per diluted common share, of notable items largely tied to TOP 6 transformational and revenue and efficiency ~~initiatives.~~initiatives as well as integration costs. On an Underlying basis, which excludes notable items, ~~third~~second quarter ~~2020~~2021 net income available to common stockholders of ~~$313~~$624 million compared with ~~$436~~$235 million in the ~~third~~second quarter of ~~2019.~~2020. Underlying EPS of ~~$0.73~~$1.46 compared to ~~$0.98~~$0.55 in the ~~third~~second quarter of ~~2019.~~2020. Underlying ~~third~~second quarter ~~2020~~2021 ROTCE of ~~9.0%~~17.7% compared with ~~12.6%~~6.9% in the ~~third~~second quarter of ~~2019. Tangible~~2020. Second quarter 2021 tangible book value per common share of ~~$32.24~~$33.95 increased 2%6% from ~~third~~the second quarter ~~2019.~~of 2020.


Table 1: Notable Items																	Table 1: Notable Items
	Three Months Ended September 30,																	Three Months Ended June 30,
	2020								2019									2021			2020
(in millions)	Noninterest expense		Income tax expense			Net Income			Noninterest expense		Income tax expense			Net Income			(in millions)	Noninterest expense	Income tax expense	Net Income		Noninterest expense	Income tax expense	Net Income
Reported results (GAAP):		$988		$61			$314			$973		$115			$449		Reported results (GAAP):	$991	$183	$648		$979	$54	$253
Less notable items:																	Less notable items:
Total integration costs	2		—			(2		)	4		(1		)	(3		)	Total integration costs	2	(1)	(1)		2	(1)	(1)
Other notable items⁽¹⁾	29		(7		)	(22		)	15		(14		)	(1		)	Other notable items(1)	9	(2)	(7)		17	(8)	(9)
Total notable items	31		(7		)	(24		)	19		(15		)	(4		)	Total notable items	11	(3)	(8)		19	(9)	(10)
Underlying results* (non-GAAP)		$957		$68			$338			$954		$130			$453
Underlying results (non-GAAP)																	Underlying results (non-GAAP)	$980	$186	$656		$960	$63	$263

⁽¹⁾ Other notable items for the second quarter of 2021 and 2020 include noninterest expense of ~~$29~~$9 million and $17 million, respectively, related to our TOP 6

Citizens Financial Group, Inc. | 9

transformational and revenue and efficiency initiatives.

* Where there is a reference•Total revenue of $1.6 billion decreased $141 million, or 8%, from the second quarter of 2020, driven by declines of 18% and 3% in noninterest income and net interest income, respectively.

•Net interest income of $1.1 billion decreased 3% compared to ~~Non-GAAP or “Underlying” results in a paragraph, all measures that follow that reference are on~~ the ~~same basis when applicable. For more information on the computation~~second quarter of ~~non-GAAP financial measures, see “—Introduction — Non-GAAP Financial Measures” and “—Non-GAAP Financial Measures and Reconciliations.”~~


•	~~Total revenue of~~2020 given lower net interest margin, ~~$1.8 billionincrease~~d ~~$153 million, or~~ 9%~~, from the~~ ~~third quarter2019, reflecting increased noninterest income and a slight decrease in net interest income.~~


◦	~~Net interest income of~~ ~~$1.1 billion~~ ~~was down 1% compared to the~~ ~~third quarter2019, as lower net interest margin was only~~ partially ~~offset by growth in average interest-earning assets of~~ 9%.


◦	~~Net interest margin of~~ ~~2.82%decrease~~d 28 ~~basis points compared to~~ ~~3.10%~~ in ~~third quarter2019, reflecting the impact of lower interest rates and higher cash balances given strong deposit flows, partially offset by improved funding mix and lower funding costs.~~


–	~~Net interest margin on a fully taxable-equivalent basis of~~ ~~2.83%decreased by~~ 29 ~~basis points, compared to~~ ~~3.12%~~ in ~~third quarter2019~~.


–	~~Average loans and leases of~~ ~~$124.9 billionincrease~~d ~~$7.7 billion, or~~ 7%~~, from~~ ~~$117.3 billion~~ ~~in the~~ ~~third quarter2019, reflecting a~~ ~~$6.9 billionincrease~~ ~~in commercial loans and leases, which includes $4.7 billion of PPP loans, and a~~ ~~$777 millionincrease~~ ~~in retail loans.~~


–	~~Average deposits of~~ ~~$141.4 billionincrease~~d ~~$17.4 billion, or~~ ~~14%, from~~ ~~$123.9 billion~~ ~~in the~~ ~~third quarter2019, reflecting growth in demand deposits, money market accounts, regular savings, and checking with interest, partially offset by lower term deposits.~~

◦

~~Noninterest income of~~ ~~$654 millionincrease~~d ~~$161 million, or~~ ~~33%, from the~~ ~~third quarter2019~~, driven by higher mortgage banking fees and strength in capital markets fees and trust and investment services fees, partially offset by lower services charges and fees, card fees, and foreign exchange and interest rate products reflecting the impact of COVID-19 and associated lockdowns. Other income reflected the gain on sale of education loans and increased from third quarter 2019, which included a benefit related to a lease restructuring.


•	~~Noninterest expense of~~ ~~$988 millionincrease~~d ~~$15 million, or~~ 2%~~, compared to~~ ~~$973 million~~ in ~~third quarter2019~~.


◦	~~On an Underlying basis, noninterest expense was stable with~~ ~~third quarter2019, reflecting higher equipment and software, salaries and employee benefits and outside services expense, almost wholly~~

offset by 2% growth in interest-earning assets.

◦Net interest margin of 2.71% decreased 16 basis points compared to 2.87% in the second quarter of 2020, primarily reflecting the impact of a lower rate environment, lower interest-earning asset yields and elevated cash balances given strong deposit flows, partially offset by improved funding mix and deposit pricing.

–Net interest margin on a fully taxable-equivalent basis of 2.72% decreased 16 basis points compared to 2.88% in the second quarter of 2020.

–Average loans and leases of $123.5 billion decreased $5.3 billion, or 4%, from $128.8 billion in the second quarter of 2020, driven by a $6.8 billion decrease in commercial reflecting line of credit repayments and net payoffs partially offset by a $1.2 billion increase in PPP loans. The overall decrease in commercial was partially offset by a $1.5 billion increase in retail driven by growth in education and residential mortgage, which reflects the exercise of the early buyout option of loans previously sold to GNMA, partially offset by decreases in home equity and other retail given run-off of personal unsecured installment loans.

–Average deposits of $150.3 billion increased $8.8 billion, or 6%, from $141.6 billion in the second quarter of 2020, reflecting an increase in demand deposits, money market accounts, savings and checking with interest, partially offset by a decrease in term deposits.

◦Noninterest income of $485 million decreased $105 million, or 18%, from the second quarter of 2020, driven by a decline in mortgage banking fees, partially offset by higher capital markets fees, trust and investment services fees, services charges and fees, and card fees.

•Noninterest expense of $991 millionwas stable compared to the second quarter of 2020.

◦On an Underlying basis, noninterest expense of $980 million increased $20 million, or 2%, from the second quarter of 2020, reflecting higher outside services, equipment and software expense and salaries and employee benefits, partially offset by a decrease in other operating ~~expense given lower travel and advertising expenses, as well as a $10 million charge related~~expense.

•The efficiency ratio of 61.6% compared to ~~a lease restructuring~~55.9% in the ~~prior year.~~second quarter of 2020.

•

~~The efficiency ratio of~~ ~~55.2%~~ ~~compared to~~ ~~59.4%~~ in ~~third quarter2019~~.

◦On an Underlying basis, the efficiency ratio of 60.9% compared to 54.9% in the second quarter of 2020.

•Credit provision benefit of $213 million compares with a $464 million credit provision expense in the second quarter of 2020, reflecting strong credit performance across the retail and commercial loan portfolios and improvement in the macroeconomic outlook.


◦	~~On an Underlying basis, the efficiency ratio of~~ ~~53.4%~~ ~~compared to~~ ~~58.2%~~ ~~in the~~ ~~third quarter2019~~.


•	~~Provision for credit losses of~~ ~~$428 millionincrease~~d ~~$327 million~~ ~~from~~ ~~$101 million~~ ~~in the~~ ~~third quarter2019, primarily driven by a $209 million reserve build largely associated with commercial.~~

Year to Date and Period End - Key Highlights

Net income of ~~$601~~$1.3 billion increased $972 million ~~decreased 55%~~ from the first ~~nine months~~half of ~~2019,~~2020, with earnings per diluted common share of ~~$1.23, down $1.60~~$2.81, up $2.26 from ~~$2.83~~$0.55 per diluted common share in the first ~~nine months~~half of ~~2019.~~2020. ROTCE of ~~5.1% declined~~17.3% increased from ~~12.7%~~3.5% in the first ~~nine months~~half of ~~2019.~~2020. Improved results primarily reflect the impact of the COVID-19 pandemic and associated lockdowns in the first half of 2020, resulting in a significant ACL reserve build in the first half of 2020.

In the first ~~nine months~~half of ~~2020,~~2021, results reflected ~~a $59~~$23 million ~~after-tax reduction,~~of expenses, net of tax benefit, or ~~$0.14~~$0.06 per diluted common share, from notable items, largely tied to TOP 6 transformational and revenue and efficiency ~~initiatives.~~initiatives as well as integration costs. In the first ~~nine months~~half of ~~2019,~~2020, there were ~~$13~~$35 million of expenses, net of tax benefit, or ~~$0.03~~$0.09 per diluted common share, ~~after-tax of~~from notable items, largely tied to ~~integration costs associated with acquisitions and~~ TOP 6 transformational and revenue and efficiency ~~initiatives.~~ initiatives as well as integration costs.

Citizens Financial Group, Inc. | 10


Table 2: Notable Items																	Table 2: Notable Items
	Nine Months Ended September 30,																	Six Months Ended June 30,
	2020								2019									2021			2020
(in millions)	Noninterest expense		Income tax expense			Net Income			Noninterest expense		Income tax expense			Net Income			(in millions)	Noninterest expense	Income tax expense	Net Income		Noninterest expense	Income tax expense	Net Income
Reported results (GAAP)		$2,979		$126			$601			$2,861		$369			$1,341		Reported results (GAAP)	$2,009	$353	$1,259		$1,991	$65	$287
Less notable items:																	Less notable items:
Total integration costs	8		(2		)	(6		)	16		(4		)	(12		)	Total integration costs	2	(1)	(1)		6	(2)	(4)
Other notable items⁽¹⁾	75		(22		)	(53		)	15		(14		)	(1		)	Other notable items (1)	29	(7)	(22)		46	(15)	(31)
Total notable items	83		(24		)	(59		)	31		(18		)	(13		)	Total notable items	31	(8)	(23)		52	(17)	(35)
Underlying results* (non-GAAP)		$2,896		$150			$660			$2,830		$387			$1,354
Underlying results (non-GAAP)																	Underlying results (non-GAAP)	$1,978	$361	$1,282		$1,939	$82	$322

⁽¹⁾ For the six months ended June 30, 2021 and 2020, Other notable items include noninterest expense ~~of $75~~of $29 million and $46 million, respectively, related to our TOP 6 transformational and revenue and efficiency ~~initiatives and an~~initiatives. Other notable items for the six months ended June 30, 2020 also included a $4 million income tax benefit ~~of $4 million~~ related to legacy tax matters.


•	•Net income available to common stockholders of $1.2 billion increased $967 million, compared to $237 million in the first half of 2020.~~$526 milliondecrease~~d ~~$765 million, or~~ ~~59%, compared to~~ ~~$1.3 billion~~ ~~in the~~ ~~first nine months~~ of ~~2019~~.


◦	~~On an Underlying basis, which excludes notable items,~~ ~~first nine months2020~~ ~~net income available to common stockholders of~~ ~~$585 million~~ ~~compared with~~ ~~$1.3 billion~~ ~~in the~~ ~~first nine months~~ of ~~2019~~.


◦	~~On an Underlying basis, EPS of~~ ~~$1.37~~ ~~per share compared to~~ ~~$2.86~~ ~~in the~~ ~~first nine months~~ of ~~2019~~.


•	~~Total revenue of~~ ~~$5.2 billionincrease~~d ~~$344 million, or~~ 7%~~, from the~~ ~~first nine months~~ of ~~2019, reflecting a~~ ~~26%increase~~ ~~in noninterest income and stable net interest income.~~


◦	~~Net interest income of~~ ~~$3.5 billion~~ ~~was stable, reflecting~~ 8% ~~growth in average interest-earning assets offset by the impact of the lower rate and challenging yield-curve environment.~~


◦	~~Net interest margin of~~ ~~2.93%decrease~~d 25 ~~basis points from~~ ~~3.18%~~ ~~in the~~ ~~first nine months~~ of ~~2019, reflecting the impact of lower interest rates, partially offset by lower funding costs and improved funding mix, as well as continued mix shift towards higher yielding assets.~~


–	~~Net interest margin on a fully taxable-equivalent basis of~~ ~~2.93%decreased by~~ 26 ~~basis points, compared to~~ ~~3.19%~~ ~~in the~~ ~~first nine months~~ of ~~2019~~.


–	~~Average loans and leases of~~ ~~$124.9 billionincrease~~d ~~$7.3 billion, or~~ 6%~~, from~~ ~~$117.6 billion~~ ~~in the~~ ~~first nine months~~ of ~~2019, reflecting a~~ ~~$6.1 billionincrease~~ ~~in commercial loans and leases primarily driven by $2.7 billion of PPP loans and growth in commercial real estate loans as well as a~~ ~~$1.3 billionincrease~~ ~~in retail loans.~~


–	~~Period-end loan growth of~~ ~~$5.0 billion, or~~ 4%~~, from the fourth quarter of~~ ~~2019, reflected~~ 8% ~~growth in total commercial loans and leases driven by $4.7 billion of PPP loans.~~


–	~~Average deposits of~~ ~~$136.5 billionincrease~~d ~~$14.0 billion, or~~ ~~11%, from~~ ~~$122.5 billion~~ ~~in the~~ ~~first nine months~~ of ~~2019, reflecting growth in money market accounts, demand deposits, savings and checking with interest, partially offset by a decrease in term deposits.~~


–	~~Period-end deposit growth of~~ ~~$17.6 billion, or~~ ~~14%, from the fourth quarter of 2019, outpacing loan growth.~~


◦	~~Noninterest income of~~ ~~$1.7 billionincrease~~d ~~$358 million, or~~ ~~26%, from the~~ ~~first nine months~~ of ~~2019, driven by mortgage banking, partially offset by lower service charges and fees, card fees, foreign exchange and interest rate products revenue, and other income.~~


•	~~Noninterest expense of~~ ~~$3.0 billionincrease~~d ~~$118 million, or~~ 4%~~, from~~ ~~$2.9 billion~~ ~~in the~~ ~~first nine months~~ of ~~2019, driven by higher salaries and employee benefits, outside services, and equipment and software expense, partially offset by lower other operating expense given lower travel and advertising expenses.~~


◦	~~On an Underlying basis, noninterest expense~~ ~~increase~~d 2% ~~from the~~ ~~first nine months~~ of ~~2019~~.


•	~~The efficiency ratio of~~ ~~57.3%~~ ~~compared to~~ ~~58.9%~~ ~~for the~~ ~~first nine months~~ of ~~2019, and ROTCE of~~ ~~5.1%~~ ~~compared to~~ ~~12.7%~~.


◦	~~On an Underlying basis, the efficiency ratio of~~ ~~55.7%~~ ~~compared to~~ ~~58.3%~~ ~~for the~~ ~~first nine months~~ of ~~2019~~ ~~and ROTCE of~~ ~~5.7%compared to12.9%, reflecting the challenging environment presented by COVID-19, in particular, provision impact.~~


•	~~Provision for credit losses of~~ ~~$1.5 billionincrease~~d ~~$1.2 billion~~ ~~from~~ ~~$283 million~~ ~~for the~~ ~~first nine months~~ of ~~2019~~, reflecting our adoption of CECL and its reliance on forecasts of expected future losses, combined with the approximate $990 million impact from COVID-19 and associated lockdowns and the resulting sudden rise in unemployment and drop in GDP.


•	~~Tangible book value per common share of~~ ~~$32.24~~ ~~increased~~ 2% ~~from the~~ ~~first nine months~~ of ~~2019. Fully diluted average common shares outstanding~~ ~~decrease~~d ~~28.1 million~~ ~~shares, or~~ 6%~~, over the same period.~~

◦On an Underlying basis, which excludes notable items, first half 2021 net income available to common stockholders of $1.2 billion compared with $272 million in the first half of 2020.

◦On an Underlying basis, EPS of $2.87 compared to $0.64 in the first half of 2020.

•Total revenue of $3.3 billion decreased $139 million, or 4%, from the first half of 2020, driven by declines of 6% and 3% in noninterest income and net interest income, respectively.

◦Net interest income of $2.2 billion decreased 3% given lower net interest margin, partially offset by 6% growth in interest-earning assets.

◦Net interest margin of 2.73% decreased 25 basis points from 2.98% in the first half of 2020, primarily reflecting the impact of a lower rate environment, lower interest-earning asset yields and elevated cash balances given strong deposit flows, partially offset by improved funding mix and deposit pricing.

–Net interest margin on a FTE basis of 2.74% decreased by 25 basis points, compared to 2.99% in the first half of 2020.

–Average loans and leases of $123.2 billion decreased $1.7 billion, or 1%, from $124.9 billion in the first half of 2020, driven by a $2.7 billion decrease in commercial reflecting line of credit repayments and net payoffs, partially offset by a $960 million increase in retail driven by growth in education and residential mortgage, which reflects the exercise of the early buyout option of loans previously sold to GNMA, partially offset by decreases in home equity and other retail given run-off of personal unsecured installment loans.

–Period-end loans declined $509 million from the fourth quarter of 2020, reflecting a 3% decline in commercial, partially offset by 2% growth in retail.

–Average deposits of $148.5 billion increased $14.4 billion, or 11%, from $134.1 billion in the first half of 2020, reflecting an increase in demand deposits, money market accounts, savings and checking with interest, partially offset by a decrease in term deposits.

–Period-end deposit growth of $3.5 billion, or 2%, from the fourth quarter of 2020, reflecting growth in demand deposits, savings and checking with interest, partially offset by a decline in term deposits and money market accounts.

◦Noninterest income of $1.0 billion decreased $60 million, or 6%, from the first half of 2020, driven by by a decline in mortgage banking fees, partially offset by higher capital markets fees, trust and investment services fees, card fees, and letter of credit and loan fees.

•Noninterest expense of $2.0 billion was stable compared to the first half of 2020.

◦On an Underlying basis, noninterest expense increased 2% from the first half of 2020, reflecting higher outside services, equipment and software expense, and salaries and employee benefits, partially offset by a decrease in other operating expense.

Citizens Financial Group, Inc. | 11

•The efficiency ratio of 61.5% compared to 58.4% for the first half of 2020, and ROTCE of 17.3% compared to 3.5%.

◦On an Underlying basis, the efficiency ratio of 60.6% compared to 56.9% for the first half of 2020, and ROTCE of 17.7%compared to4.0%.

•Credit provision benefit of $353 million compares with a $1.1 billion credit provision expense for the first half of 2020, reflecting strong credit performance across the retail and commercial loan portfolios and improvement in the macroeconomic outlook.

•Tangible book value per common share of $33.95 increased 6% from the first half of 2020. Fully diluted average common shares outstanding was stable over the same period.

Citizens Financial Group, Inc. | 12

SELECTED CONSOLIDATED FINANCIAL DATA

The summary of the Consolidated Operating Data for the for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 and the summary Consolidated Balance Sheet data as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 are derived from our unaudited interim Consolidated Financial Statements, included in Part I, Item 1. Our historical results are not necessarily indicative of the results expected for any future period.


Table 3: Summary of Consolidated Operating Data													Table 3: Summary of Consolidated Operating Data
	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,						Six Months Ended June 30,
(dollars in millions, except per share amounts)	2020			2019			2020			2019			(dollars in millions, except per share amounts)	2021			2020			2021			2020
OPERATING DATA:													OPERATING DATA:
Net interest income		$1,137			$1,145			$3,457			$3,471		Net interest income	$1,124			$1,160			$2,241			$2,320
Noninterest income	654			493			1,741			1,383			Noninterest income	485			590			1,027			1,087
Total revenue	1,791			1,638			5,198			4,854			Total revenue	1,609			1,750			3,268			3,407
Provision for credit losses	428			101			1,492			283			Provision for credit losses	(213)			464			(353)			1,064
Noninterest expense	988			973			2,979			2,861			Noninterest expense	991			979			2,009			1,991
Income before income tax expense	375			564			727			1,710			Income before income tax expense	831			307			1,612			352
Income tax expense	61			115			126			369			Income tax expense	183			54			353			65
Net income		$314			$449			$601			$1,341		Net income	$648			$253			$1,259			$287
Net income available to common stockholders		$289			$432			$526			$1,291		Net income available to common stockholders	$616			$225			$1,204			$237
Net income per common share - basic		$0.68			$0.97			$1.23			$2.84		Net income per common share - basic	$1.45			$0.53			$2.83			$0.56
Net income per common share - diluted		$0.68			$0.97			$1.23			$2.83		Net income per common share - diluted	$1.44			$0.53			$2.81			$0.55
OTHER OPERATING DATA:													OTHER OPERATING DATA:
Return on average common equity	5.60		%	8.35		%	3.45		%	8.50		%	Return on average common equity	11.85	%		4.44	%		11.71	%		2.35	%
Return on average tangible common equity	8.33			12.44			5.15			12.72			Return on average tangible common equity	17.50			6.62			17.34			3.51
Return on average total assets	0.70			1.10			0.46			1.11			Return on average total assets	1.41			0.57			1.38			0.33
Return on average total tangible assets	0.73			1.15			0.48			1.16			Return on average total tangible assets	1.46			0.59			1.44			0.35
Efficiency ratio	55.18			59.40			57.31			58.94			Efficiency ratio	61.63			55.91			61.49			58.43
Operating leverage⁽¹⁾	7.77			(2.16		)	2.95			(0.18		)	(9.42)			4.60			(5.02)			0.48
Net interest margin, FTE⁽²⁾⁽¹⁾	2.83			3.12			2.93			3.19			2.72			2.88			2.74			2.99
Effective income tax rate	16.10			20.46			17.27			21.58			Effective income tax rate	21.96			17.69			21.86			18.51

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS

For more information on the computation of our non-GAAP financial measures, see “—Introduction — Non-GAAP Financial Measures,” included in this Report. The following tables present computations of non-GAAP financial measures representing our Underlying results used throughout the MD&A:


Table 33: Reconciliations of Non-GAAP Measures
		As of and for the Three Months Ended June 30,				As of and for the Six Months Ended June 30,
(in millions, except share, per share and ratio data)	Ref.	2021		2020		2021		2020









Total revenue, Underlying:
Total revenue (GAAP)	A	$1,609		$1,750		$3,268		$3,407
Less: Notable items		—		—		—		—





Total revenue, Underlying (non-GAAP)	B	$1,609		$1,750		$3,268		$3,407
Noninterest expense, Underlying:
Noninterest expense (GAAP)	C	$991		$979		$2,009		$1,991
Less: Notable items		11		19		31		52






Noninterest expense, Underlying (non-GAAP)	D	$980		$960		$1,978		$1,939
Pre-provision profit:
Total revenue (GAAP)	A	$1,609		$1,750		$3,268		$3,407
Less: Noninterest expense (GAAP)	C	991		979		2,009		1,991
Pre-provision profit (GAAP)		$618		$771		$1,259		$1,416
Pre-provision profit, Underlying
Total revenue, Underlying (non-GAAP)	B	$1,609		$1,750		$3,268		$3,407
Less: Noninterest expense, Underlying (non-GAAP)	D	980		960		1,978		1,939
Pre-provision profit, Underlying (non-GAAP)		$629		$790		$1,290		$1,468




Income before income tax expense, Underlying:
Income before income tax expense (GAAP)	E	$831		$307		$1,612		$352
Less: Income (loss) before income tax expense (benefit) related to notable items		(11)		(19)		(31)		(52)
Income before income tax expense, Underlying (non-GAAP)	F	$842		$326		$1,643		$404
Income tax expense and effective income tax rate, Underlying:
Income tax expense (GAAP)	G	$183		$54		$353		$65
Less: Income tax expense (benefit) related to notable items		(3)		(9)		(8)		(17)






Income tax expense, Underlying (non-GAAP)	H	$186		$54		$361		$82
Effective income tax rate (GAAP)	G/E	21.96	%	17.69	%	21.86	%	18.51	%
Effective income tax rate, Underlying (non-GAAP)	H/F	22.01		19.36		21.93		20.36
Net income, Underlying:
Net income (GAAP)	I	$648		$253		$1,259		$287
Add: Notable items, net of income tax benefit		8		10		23		35






Net income, Underlying (non-GAAP)	J	$656		$253		$1,282		$322
Net income available to common stockholders, Underlying:
Net income available to common stockholders (GAAP)	K	616		225		$1,204		$237
Add: Notable items, net of income tax benefit		8		10		23		35






Net income available to common stockholders, Underlying (non-GAAP)	L	$624		$235		$1,227		$272
Return on average common equity and return on average common equity, Underlying:
Average common equity (GAAP)	M	$20,833		$20,446		$20,723		$20,335
Return on average common equity	K/M	11.85	%	4.44	%	11.71	%	2.35	%
Return on average common equity, Underlying (non-GAAP)	L/M	12.02		4.63		11.93		2.69

Citizens Financial Group, Inc. | 47

As of and for the Three Months Ended September 30, As of and for the Nine Months Ended September 30,
(in millions, except share, per share and ratio data) Ref. 2020
2019
2020
2019
Total revenue, Underlying:
Total revenue (GAAP) A
$1,791

$1,638

$5,198

$4,854
Less: Notable items —
—
—
—
Total revenue, Underlying (non-GAAP) B
$1,791

$1,638

$5,198

$4,854
Noninterest expense, Underlying:
Noninterest expense (GAAP) C
$988

$973

$2,979

$2,861
Less: Notable items 31
19
83
31
Noninterest expense, Underlying (non-GAAP) D
$957

$954

$2,896

$2,830
Pre-provision profit:
Total revenue (GAAP) A
$1,791

$1,638

$5,198

$4,854
Less: Noninterest expense (GAAP) C 988
973
2,979
2,861
Pre-provision profit (GAAP)
$803

$665

$2,219

$1,993
Pre-provision profit, Underlying
Total revenue, Underlying (non-GAAP) B
$1,791

$1,638

$5,198

$4,854
Less: Noninterest expense, Underlying (non-GAAP) D 957
954
2,896
2,830
Pre-provision profit, Underlying (non-GAAP)
$834

$684

$2,302

$2,024
Income before income tax expense, Underlying:
Income before income tax expense (GAAP) E
$375

$564

$727

$1,710
Less: Expense before income tax benefit related to notable items (31 ) (19 ) (83 ) (31 )
Income before income tax expense, Underlying (non-GAAP) F
$406

$583

$810

$1,741
Income tax expense and effective income tax rate, Underlying:
Income tax expense (GAAP) G
$61

$115

$126

$369
Less: Income tax benefit related to notable items (7 ) (15 ) (24 ) (18 )
Income tax expense, Underlying (non-GAAP) H
$68

$130

$150

$387
Effective income tax rate (GAAP) G/E 16.10 % 20.46 % 17.27 % 21.58 %
Effective income tax rate, Underlying (non-GAAP) H/F 16.79
22.29
18.57
22.20
Net income, Underlying:
Net income (GAAP) I
$314

$449

$601

$1,341
Add: Notable items, net of income tax benefit 24
4
59
13
Net income, Underlying (non-GAAP) J
$338

$453

$660

$1,354
Net income available to common stockholders, Underlying:
Net income available to common stockholders (GAAP) K 289
432

$526

$1,291
Add: Notable items, net of income tax benefit 24
4
59
13
Net income available to common stockholders, Underlying (non-GAAP) L
$313

$436

$585

$1,304
Return on average common equity and return on average common equity, Underlying:
Average common equity (GAAP) M
$20,534

$20,533

$20,401

$20,300
Return on average common equity K/M 5.60 % 8.35 % 3.45 % 8.50 %
Return on average common equity, Underlying (non-GAAP)
L/M 6.05
8.45
3.83
8.59


		As of and for the Three Months Ended June 30,				As of and for the Six Months Ended June 30,
(in millions, except share, per share and ratio data)	Ref.	2021		2020		2021		2020
Return on average tangible common equity and return on average tangible common equity, Underlying:
Average common equity (GAAP)	M	$20,833		$20,446		$20,723		$20,335
Less: Average goodwill (GAAP)		7,050		7,050		7,050		7,048
Less: Average other intangibles (GAAP)		53		65		55		66
Add: Average deferred tax liabilities related to goodwill (GAAP)		381		375		380		374
Average tangible common equity	N	$14,111		$13,706		$13,998		$13,595
Return on average tangible common equity	K/N	17.50	%	6.62	%	17.34	%	3.51	%
Return on average tangible common equity, Underlying (non-GAAP)	L/N	17.74		6.90		17.67		4.03
Return on average total assets and return on average total assets, Underlying:
Average total assets (GAAP)	O	$184,456		$179,793		$183,518		$173,485
Return on average total assets	I/O	1.41	%	0.57	%	1.38	%	0.33	%
Return on average total assets, Underlying (non-GAAP)	J/O	1.43		0.59		1.41		0.37
Return on average total tangible assets and return on average total tangible assets, Underlying:
Average total assets (GAAP)	O	$184,456		$179,793		$183,518		$173,485
Less: Average goodwill (GAAP)		7,050		7,050		7,050		7,048
Less: Average other intangibles (GAAP)		53		65		55		66
Add: Average deferred tax liabilities related to goodwill (GAAP)		381		375		380		374
Average tangible assets	P	$177,734		$173,053		$176,793		$166,745
Return on average total tangible assets	I/P	1.46	%	0.59	%	1.44	%	0.35	%
Return on average total tangible assets, Underlying (non-GAAP)	J/P	1.48		0.61		1.46		0.39
Efficiency ratio and efficiency ratio, Underlying:
Efficiency ratio	C/A	61.63	%	55.91	%	61.49	%	58.43	%
Efficiency ratio, Underlying (non-GAAP)	D/B	60.92		54.85		60.55		56.91
Operating leverage and operating leverage, Underlying:
(Decrease) increase in total revenue		(8.00)	%	7.49	%	(4.08)	%	5.94	%
Increase in noninterest expense		1.42		2.89		0.94		5.46
Operating leverage		(9.42)	%	4.60	%	(5.02	%)	0.48	%
(Decrease) increase in total revenue, Underlying (non-GAAP)		(8.00)	%	7.49	%	(4.08)	%	5.94	%
Increase in noninterest expense, Underlying (non-GAAP)		2.18		1.62		2.05		5.46
Operating leverage, Underlying (non-GAAP)		(10.18)	%	5.87	%	(6.13	%)	2.60	%
Tangible book value per common share:
Common shares - at period end (GAAP)	Q	426,083,143		426,824,594		426,083,143		426,824,594
Common stockholders' equity (GAAP)		$21,185		$20,453		$21,185		$20,453
Less: Goodwill (GAAP)		7,050		7,050		7,050		7,050
Less: Other intangible assets (GAAP)		52		63		52		63
Add: Deferred tax liabilities related to goodwill (GAAP)		383		376		383		376
Tangible common equity	R	$14,466		$13,716		$14,466		$13,716
Tangible book value per common share	R/Q	$33.95		$32.13		$33.95		$32.13
Net income per average common share - basic and diluted and net income per average common share - basic and diluted, Underlying:
Average common shares outstanding - basic (GAAP)	S	425,948,706		426,613,053		425,951,197		427,165,737
Average common shares outstanding - diluted (GAAP)	T	427,561,572		427,566,920		427,668,242		428,292,580
Net income per average common share - basic (GAAP)	K/S	$1.45		$0.53		$2.83		$0.56
Net income per average common share - diluted (GAAP)	K/T	1.44		0.53		2.81		0.55
Net income per average common share - basic, Underlying (non-GAAP)	L/S	1.47		0.55		2.88		0.64
Net income per average common share - diluted, Underlying (non-GAAP)	L/T	1.46		0.55		2.87		0.64
Dividend payout ratio and dividend payout ratio, Underlying:
Cash dividends declared and paid per common share	U	$0.39		$0.39		$0.78		$0.78
Dividend payout ratio	U/(K/S)	27	%	74	%	28	%	140	%
Dividend payout ratio, Underlying (non-GAAP)	U/(L/S)	27		71		27		122

Citizens Financial Group, Inc. | 48

As of and for the Three Months Ended September 30, As of and for the Nine Months Ended September 30,
(in millions, except share, per share and ratio data) Ref. 2020
2019
2020
2019
Return on average tangible common equity and return on average tangible common equity, Underlying:
Average common equity (GAAP) M
$20,534

$20,533

$20,401

$20,300
Less: Average goodwill (GAAP) 7,050
7,044
7,049
7,034
Less: Average other intangibles (GAAP) 62
73
65
71
Add: Average deferred tax liabilities related to goodwill (GAAP) 375
372
375
371
Average tangible common equity N
$13,797

$13,788

$13,662

$13,566
Return on average tangible common equity K/N 8.33 % 12.44 % 5.15 % 12.72 %
Return on average tangible common equity, Underlying (non-GAAP) L/N 9.00
12.58
5.71
12.86
Return on average total assets and return on average total assets, Underlying:
Average total assets (GAAP) O
$177,675

$162,110

$174,892

$161,344
Return on average total assets I/O 0.70 % 1.10 % 0.46 % 1.11 %
Return on average total assets, Underlying (non-GAAP) J/O 0.76
1.11
0.50
1.12
Return on average total tangible assets and return on average total tangible assets, Underlying:
Average total assets (GAAP) O
$177,675

$162,110

$174,892

$161,344
Less: Average goodwill (GAAP) 7,050
7,044
7,049
7,034
Less: Average other intangibles (GAAP) 62
73
65
71
Add: Average deferred tax liabilities related to goodwill (GAAP) 375
372
375
371
Average tangible assets P
$170,938

$155,365

$168,153

$154,610
Return on average total tangible assets I/P 0.73 % 1.15 % 0.48 % 1.16 %
Return on average total tangible assets, Underlying (non-GAAP) J/P 0.79
1.16
0.52
1.17
Efficiency ratio and efficiency ratio, Underlying:
Efficiency ratio C/A 55.18 % 59.40 % 57.31 % 58.94 %
Efficiency ratio, Underlying (non-GAAP) D/B 53.44
58.22
55.72
58.30
Operating leverage and operating leverage, Underlying:
Increase in total revenue 9.29 % 4.72 % 7.07 % 7.03 %
Increase in noninterest expense 1.52
6.88
4.12
7.21
Operating leverage 7.77 % (2.16 )% 2.95 % (0.18 )%
Increase in total revenue, Underlying (non-GAAP) 9.29 % 4.70 % 7.07 % 7.03 %
Increase in noninterest expense, Underlying (non-GAAP) 0.32
5.78
2.32
6.41
Operating leverage, Underlying (non-GAAP) 8.97 % (1.08 )% 4.75 % 0.62 %
Tangible book value per common share:
Common shares - at period end (GAAP) Q 427,073,084
443,913,525
427,073,084
443,913,525
Common stockholders' equity (GAAP)
$20,504

$20,718

$20,504

$20,718
Less: Goodwill (GAAP) 7,050
7,044
7,050
7,044
Less: Other intangible assets (GAAP) 60
71
60
71
Add: Deferred tax liabilities related to goodwill (GAAP) 377
373
377
373
Tangible common equity R
$13,771

$13,976

$13,771

$13,976
Tangible book value per common share R/Q
$32.24

$31.48

$32.24

$31.48
Net income per average common share - basic and diluted and net income per average common share - basic and diluted, Underlying:
Average common shares outstanding - basic (GAAP) S 426,846,096
445,703,987
427,058,412
454,802,186
Average common shares outstanding - diluted (GAAP) T 427,992,349
447,134,595
428,142,358
456,218,755
Net income per average common share - basic (GAAP) K/S
$0.68

$0.97

$1.23

$2.84
Net income per average common share - diluted (GAAP) K/T 0.68
0.97
1.23
2.83
Net income per average common share - basic, Underlying (non-GAAP) L/S 0.73
0.98
1.37
2.87
Net income per average common share - diluted, Underlying (non-GAAP) L/T 0.73
0.98
1.37
2.86
Dividend payout ratio and dividend payout ratio, Underlying:
Cash dividends declared and paid per common share U
$0.39

$0.36

$1.17

$1.00
Dividend payout ratio U/(K/S) 58 % 37 % 95 % 35 %
Dividend payout ratio, Underlying (non-GAAP) U/(L/S) 53
37
85
35

The following table presents computations of non-GAAP financial measures representing certain metrics excluding the impact of PPP loans used throughout the MD&A:


Table 34: Reconciliations of Non-GAAP Measures - Excluding PPP
(in millions, except share, per share and ratio data)	Ref.	June 30, 2021		December 31, 2020
Allowance for credit losses to total loans and leases, excluding the impact of PPP loans:
Total loans and leases (GAAP)	A	$122,581		$123,090
Less: PPP loans		3,479		4,155
Total loans and leases, excluding the impact of PPP loans (non-GAAP)	B	$119,102		$118,935
Allowance for credit losses (GAAP)	C	$2,081		$2,670
Allowance for credit losses to total loans and leases (GAAP)	C/A	1.70	%	2.17	%
Allowance for credit losses to total loans and leases, excluding the impact of PPP loans (non-GAAP)	C/B	1.75	%	2.24	%

The following table presents computations of non-GAAP financial measures representing certain metrics

excluding the impact of elevated cash levels used in “—Net Interest Income”:


Table 35: Reconciliations of Non-GAAP Measures - Excluding Elevated Cash
		As of and for the Three Months Ended June 30,				As of and for the Six Months Ended June 30,
(in millions, except ratio data)	Ref.	2021		2020		2021		2020
Net interest income, FTE, excluding the impact of elevated cash:
Net interest income, FTE (GAAP)	A	$1,126		$1,163		$2,246		$2,327
Less: Net interest income associated with elevated cash		—		—		—		—
Net interest income, FTE, excluding the impact of elevated cash (non-GAAP)	B	$1,126		$1,163		$2,246		$2,327
Average interest-earning assets, excluding the impact of elevated cash:
Total interest-earning assets (GAAP)	C	$166,333		$162,390		$165,433		$156,668
Less: Elevated cash		9,363		3,416		9,175		1,707
Total average interest-earning assets, excluding the impact of elevated cash (non-GAAP)	D	$156,970		$158,974		$156,258		$154,961
Day count	E	91		91		181		182
Day count (year)	F	365		366		365		366
Ratios:
Net interest margin, FTE (GAAP)	A / C / E * F	2.72	%	2.88	%	2.74	%	2.99	%
Net interest margin, FTE, excluding the impact of elevated cash (non-GAAP)	B / D / E * F	2.88	%	2.94	%	2.90	%	3.02	%

Citizens Financial Group, Inc. | 49

(in millions, except share, per share and ratio data) Ref. September 30, 2020 December 31, 2019
Allowance for credit losses to total loans and leases, excluding the impact of PPP loans:
Total loans and leases (GAAP) A
$124,071

$119,088
Less: PPP loans 4,653
—
Total loans and leases, excluding the impact of PPP loans (non-GAAP) B
$119,418

$119,088
Allowance for credit losses (GAAP) C
$2,736

$1,296
Allowance for credit losses to total loans and leases (GAAP) C/A 2.21 % 1.09 %
Allowance for credit losses to total loans and leases, excluding the impact of PPP loans (non-GAAP) C/B 2.29 % 1.09 %

ITEM 1. FINANCIAL STATEMENTS



	Page
Consolidated Balance Sheets ~~as of September 30, 2020~~ (unaudited) ~~and December 31, 2019 (unaudited)~~			5051
Consolidated Statements of Operations (unaudited) ~~for the Three and Nine Months Ended September 30, 2020 and 2019~~			5152
Consolidated Statements of Comprehensive Income (unaudited) ~~for the Three and Nine Months Ended September 30, 2020 and 2019~~			5253
Consolidated Statements of Changes in Stockholders’ Equity (unaudited) ~~for the Three and Nine Months Ended September 30, 2020 and 2019~~			5354
Consolidated Statements of Cash Flows (unaudited) ~~for the Nine Months Ended September 30, 2020 and 2019~~			5556
Notes to Consolidated Financial Statements (unaudited)			5657
Note 1 - Basis of Presentation			5657
Note 2 - Securities			5857
Note 3 - Loans and Leases			6160
Note 4 - Allowance for Credit Losses, Nonaccruing Loans and Leases, and Concentrations of Credit Risk			6361
Note 5 - Mortgage Banking and Other			7270
~~Note 6 - Goodwill~~			74

Note 76 - Variable Interest Entities			7572
Note 7 - Borrowed Funds			72
Note 8 - ~~Borrowed Funds~~Derivatives			7774
Note 9 ~~- Derivatives~~		79
~~Note 10~~ - Accumulated Other Comprehensive Income (Loss)		8277

Note 10 - Stockholders’ Equity			78
Note 11 ~~- Stockholders’ Equity~~		83
~~Note 12~~ - Commitments and Contingencies		8479
Note 1312 - Fair Value Measurements			8680
Note 1413 - Noninterest Income			9186

Note 1514 - Other Operating Expense			9186

Note 1615 - Earnings Per Share			9287

Note 1716 - Business Operating Segments			9287
Note 17 - Subsequent Events			89

Citizens Financial Group, Inc. | 50

CONSOLIDATED BALANCE SHEETS (UNAUDITED)


(in millions, except share data)	September 30, 2020			December 31, 2019			(in millions, except share data)	June 30, 2021	December 31, 2020
ASSETS:							ASSETS:
Cash and due from banks		$904			$1,175		Cash and due from banks	$1,035	$1,037
Interest-bearing cash and due from banks	8,312			2,211			Interest-bearing cash and due from banks	11,606	11,696
Interest-bearing deposits in banks	328			297			Interest-bearing deposits in banks	401	306
Debt securities available for sale, at fair value (including $577 and $359 pledged to creditors, respectively)⁽¹⁾	22,884			20,613
Debt securities held to maturity (fair value of $2,709 and $3,242 respectively, and including $159 and $249 pledged to creditors, respectively)⁽¹⁾	2,578			3,202
Equity investment securities, at fair value	57			47
Equity investment securities, at cost	605			807
Debt securities available for sale, at fair value (including $568 and $549 pledged to creditors, respectively)(1)							Debt securities available for sale, at fair value (including $568 and $549 pledged to creditors, respectively)(1)	24,583	22,942
Debt securities held to maturity (fair value of $2,790 and $3,357 respectively, and including $124 and $144 pledged to creditors, respectively)(1)							Debt securities held to maturity (fair value of $2,790 and $3,357 respectively, and including $124 and $144 pledged to creditors, respectively)(1)	2,711	3,235
Loans held for sale, at fair value	3,587			1,946			Loans held for sale, at fair value	3,616	3,564
Other loans held for sale	127			1,384			Other loans held for sale	82	439
Loans and leases	124,071			119,088			Loans and leases	122,581	123,090
Less: Allowance for loan and lease losses	(2,542		)	(1,252		)	Less: Allowance for loan and lease losses	(1,947)	(2,443)
Net loans and leases	121,529			117,836			Net loans and leases	120,634	120,647
Derivative assets	2,030			807			Derivative assets	1,655	1,915
Premises and equipment, net	747			761			Premises and equipment, net	735	759
Bank-owned life insurance	1,751			1,725			Bank-owned life insurance	2,268	1,756
Goodwill	7,050			7,044			Goodwill	7,050	7,050
Other assets	6,739			5,878			Other assets	8,728	8,003
TOTAL ASSETS		$179,228			$165,733		TOTAL ASSETS	$185,104	$183,349
LIABILITIES AND STOCKHOLDERS’ EQUITY:							LIABILITIES AND STOCKHOLDERS’ EQUITY:
LIABILITIES:							LIABILITIES:
Deposits:							Deposits:
Noninterest-bearing		$41,249			$29,233		Noninterest-bearing	$47,480	$43,831
Interest-bearing	101,672			96,080			Interest-bearing	103,156	103,333
Total deposits	142,921			125,313			Total deposits	150,636	147,164
Short-term borrowed funds	252			274			Short-term borrowed funds	62	243
Derivative liabilities	100			120			Derivative liabilities	144	128
Deferred taxes, net	638			866			Deferred taxes, net	720	629
Long-term borrowed funds	9,109			14,047			Long-term borrowed funds	6,957	8,346
Other liabilities	3,739			2,912			Other liabilities	3,386	4,166
TOTAL LIABILITIES	156,759			143,532			TOTAL LIABILITIES	161,905	160,676
Contingencies (refer to Note 12)
Contingencies (refer to Note 11)							Contingencies (refer to Note 11)	0	0
STOCKHOLDERS’ EQUITY:							STOCKHOLDERS’ EQUITY:
Preferred stock:							Preferred stock:
$25.00 par value,100,000,000 shares authorized; 2,000,000 and 1,600,000 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively	1,965			1,570
$25.00 par value,100,000,000 shares authorized; 2,050,000 and 2,000,000 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively							$25.00 par value,100,000,000 shares authorized; 2,050,000 and 2,000,000 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively	2,014	1,965
Common stock:							Common stock:
$0.01 par value, 1,000,000,000 shares authorized; 569,739,386 shares issued and 427,073,084 shares outstanding at September 30, 2020 and 568,238,730 shares issued and 433,121,083 shares outstanding at December 31, 2019	6			6
$0.01 par value, 1,000,000,000 shares authorized; 570,994,369 shares issued and 426,083,143 shares outstanding at June 30, 2021 and 569,876,133 shares issued and 427,209,831 shares outstanding at December 31, 2020							$0.01 par value, 1,000,000,000 shares authorized; 570,994,369 shares issued and 426,083,143 shares outstanding at June 30, 2021 and 569,876,133 shares issued and 427,209,831 shares outstanding at December 31, 2020	6	6
Additional paid-in capital	18,922			18,891			Additional paid-in capital	18,964	18,940
Retained earnings	6,189			6,498			Retained earnings	7,314	6,445
Treasury stock, at cost, 142,666,302 and 135,117,647 shares at September 30, 2020 and December 31, 2019, respectively	(4,623		)	(4,353		)
Treasury stock, at cost, 144,911,226 and 142,666,302 shares at June 30, 2021 and December 31, 2020, respectively							Treasury stock, at cost, 144,911,226 and 142,666,302 shares at June 30, 2021 and December 31, 2020, respectively	(4,718)	(4,623)
Accumulated other comprehensive income (loss)	10			(411		)	Accumulated other comprehensive income (loss)	(381)	(60)
TOTAL STOCKHOLDERS’ EQUITY		$22,469			$22,201		TOTAL STOCKHOLDERS’ EQUITY	$23,199	$22,673
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$179,228			$165,733		TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$185,104	$183,349

⁽¹⁾ Includes only collateral pledged by the Company where counterparties have the right to sell or pledge the collateral.

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

Citizens Financial Group, Inc. | 51

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


	Three Months Ended June 30,		Six Months Ended June 30,
(in millions, except share and per share data)	2021	2020	2021	2020
INTEREST INCOME:
Interest and fees on loans and leases	$1,058	$1,192	$2,119	$2,494
Interest and fees on loans held for sale, at fair value	24	20	42	35
Interest and fees on other loans held for sale	2	7	8	16
Investment securities	124	130	252	277
Interest-bearing deposits in banks	3	1	6	6
Total interest income	1,211	1,350	2,427	2,828
INTEREST EXPENSE:
Deposits	42	124	92	351
Short-term borrowed funds	0	0	0	1
Long-term borrowed funds	45	66	94	156
Total interest expense	87	190	186	508
Net interest income	1,124	1,160	2,241	2,320
Provision for credit losses	(213)	464	(353)	1,064
Net interest income after provision for credit losses	1,337	696	2,594	1,256
NONINTEREST INCOME:
Mortgage banking fees	85	276	250	435
Service charges and fees	100	84	199	202
Capital markets fees	91	61	172	104
Card fees	64	48	119	104
Trust and investment services fees	60	45	118	98
Letter of credit and loan fees	38	31	76	65
Foreign exchange and interest rate products	28	34	56	58
Securities gains, net	3	3	6	3

Other income	16	8	31	18
Total noninterest income	485	590	1,027	1,087
NONINTEREST EXPENSE:
Salaries and employee benefits	524	513	1,072	1,062
Equipment and software	155	142	307	275
Outside services	137	131	276	266
Occupancy	82	82	170	166
Other operating expense	93	111	184	222
Total noninterest expense	991	979	2,009	1,991
Income before income tax expense	831	307	1,612	352
Income tax expense	183	54	353	65
NET INCOME	$648	$253	$1,259	$287
Net income available to common stockholders	$616	$225	$1,204	$237
Weighted-average common shares outstanding:
Basic	425,948,706	426,613,053	425,951,197	427,165,737
Diluted	427,561,572	427,566,920	427,668,242	428,292,580
Per common share information:
Basic earnings	$1.45	$0.53	$2.83	$0.56
Diluted earnings	1.44	0.53	2.81	0.55

Three Months Ended September 30, Nine Months Ended September 30,
(in millions, except share and per share data) 2020
2019
2020
2019
INTEREST INCOME:
Interest and fees on loans and leases
$1,120

$1,356

$3,614

$4,129
Interest and fees on loans held for sale, at fair value 21
19
56
45
Interest and fees on other loans held for sale 16
2
32
8
Investment securities 121
153
398
483
Interest-bearing deposits in banks 2
8
8
23
Total interest income 1,280
1,538
4,108
4,688
INTEREST EXPENSE:
Deposits 89
297
440
892
Short-term borrowed funds 0
2
1
8
Long-term borrowed funds 54
94
210
317
Total interest expense 143
393
651
1,217
Net interest income 1,137
1,145
3,457
3,471
Provision for credit losses 428
101
1,492
283
Net interest income after provision for credit losses 709
1,044
1,965
3,188
NONINTEREST INCOME:
Service charges and fees 97
128
299
377
Mortgage banking fees 287
117
722
222
Card fees 57
67
161
190
Capital markets fees 58
39
162
150
Trust and investment services fees 53
50
151
150
Foreign exchange and interest rate products 27
35
85
106
Letter of credit and loan fees 37
34
102
100
Securities gains, net 1
3
4
15
Net impairment losses recognized in earnings on debt securities 0
(1 ) 0
(2 )
Other income 37
21
55
75
Total noninterest income 654
493
1,741
1,383
NONINTEREST EXPENSE:
Salaries and employee benefits 524
508
1,586
1,524
Equipment and software expense 149
130
424
381
Outside services 139
128
405
356
Occupancy 81
80
247
245
Other operating expense 95
127
317
355
Total noninterest expense 988
973
2,979
2,861
Income before income tax expense 375
564
727
1,710
Income tax expense 61
115
126
369
NET INCOME
$314

$449

$601

$1,341
Net income available to common stockholders
$289

$432

$526

$1,291
Weighted-average common shares outstanding:
Basic 426,846,096
445,703,987
427,058,412
454,802,186
Diluted 427,992,349
447,134,595
428,142,358
456,218,755
Per common share information:
Basic earnings
$0.68

$0.97

$1.23

$2.84
Diluted earnings 0.68
0.97
1.23
2.83

The accompanying Notes to unaudited interim Consolidated Financial Statements are an integral part of these statements.

Citizens Financial Group, Inc. | 52

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


	Three Months Ended June 30,		Six Months Ended June 30,
(in millions)	2021	2020	2021	2020
Net income	$648	$253	$1,259	$287
Other comprehensive income (loss):
Net unrealized derivative instruments gains (losses) arising during the periods, net of income taxes of $16, $(3), $9 and $30, respectively	46	(8)	25	88
Reclassification of net derivative (gains) losses included in net income, net of income taxes of $(10), $(11), $(19) and $(12), respectively	(27)	(34)	(52)	(37)
Net unrealized debt securities gains (losses) arising during the periods, net of income taxes of $3, $16, $(97) and $145, respectively	10	49	(297)	449
Reclassification of net debt securities (gains) losses to net income, net of income taxes of $0, $(1), $(1) and $(1), respectively	(3)	(2)	(5)	(2)
Amortization of actuarial loss, net of income taxes of $1, $0, $1 and $1, respectively	4	4	8	7
Total other comprehensive income (loss), net of income taxes	30	9	(321)	505
Total comprehensive income (loss)	$678	$262	$938	$792

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2020
2019
2020
2019
Net income
$314

$449

$601

$1,341
Other comprehensive income (loss):
Net unrealized derivative instruments (losses) gains arising during the periods, net of income taxes of $0, ($1), $30 and $35, respectively 0
(4 ) 88
103
Reclassification adjustment for net derivative (gains) losses included in net income, net of income taxes of ($15), $4, ($27) and $13, respectively (42 ) 10
(79 ) 40
Net unrealized debt securities (losses) gains arising during the periods, net of income taxes of ($14), $13, $131 and $165, respectively (44 ) 42
405
509
Other-than-temporary impairment not recognized in earnings on debt securities, net of income taxes of $0, $0, $0 and $0, respectively 0
(1 ) 0
0
Reclassification of net debt securities gains to net income, net of income taxes of $0, $0, ($1) and ($3), respectively (1 ) (2 ) (3 ) (10 )
Amortization of actuarial loss, net of income taxes of $1, $2, $2 and $5, respectively 3
3
10
9
Total other comprehensive income, net of income taxes (84 ) 48
421
651
Total comprehensive income
$230

$497

$1,022

$1,992

The accompanying Notes to unaudited interim Consolidated Financial Statements are an integral part of these statements.

Citizens Financial Group, Inc. | 53

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)


	Preferred Stock		Common Stock		Additional Paid-in Capital	Retained Earnings	Treasury Stock, at Cost	Accumulated Other Comprehensive Income (Loss)	Total
(in millions)	Shares	Amount	Shares	Amount
Balance at April 1, 2020	2	$1,570	427	$6	$18,901	$6,011	($4,623)	$85	$21,950
Dividends to common stockholders	—	—	—	—	—	(168)	—	—	(168)
Dividends to preferred stockholders	—	—	—	—	—	(28)	—	—	(28)
Preferred stock issued	—	395	—	—	—	—	—	—	395
Treasury stock purchased	—	—	—	—	—	—	—	—	0
Share-based compensation plans	—	—	—	—	1	—	—	—	1
Employee stock purchase plan purchased	—	—	—	—	6	—	—	—	6

Total comprehensive income (loss):
Net income	—	—	—	—	—	253	—	—	253
Other comprehensive income (loss)	—	—	—	—	—	—	—	9	9
Total comprehensive income (loss)	—	—	—	—	—	253	—	9	262
Balance at June 30, 2020	2	$1,965	427	$6	$18,908	$6,068	($4,623)	$94	$22,418
Balance at April 1, 2021	2	$1,965	426	$6	$18,945	$6,866	($4,718)	($411)	$22,653
Dividends to common stockholders	—	—	—	—	—	(168)	—	—	(168)
Dividends to preferred stockholders	—	—	—	—	—	(32)	—	—	(32)
Preferred stock issued	—	296	—	—	—	—	—	—	296

Preferred stock called	—	(247)	—	—	—	—	—	—	(247)
Share-based compensation plans	—	—	—	—	13	—	—	—	13
Employee stock purchase plan purchased	—	—	—	—	6	—	—	—	6

Total comprehensive income (loss):
Net income	—	—	—	—	—	648	—	—	648
Other comprehensive income (loss)	—	—	—	—	—	—	—	30	30
Total comprehensive income (loss)	—	—	—	—	—	648	—	30	678
Balance at Balance at June 30, 2021	2	$2,014	426	$6	$18,964	$7,314	($4,718)	($381)	$23,199

Preferred
Stock

Common
Stock
Additional Paid-in Capital Retained Earnings Treasury Stock, at Cost Accumulated Other Comprehensive Income (Loss) Total
(in millions) Shares Amount Shares Amount
Balance at Balance at July 1, 2019 1

$1,133
458

$6

$18,860

$5,959

($3,453 )
($488 )
$22,017
Dividends to common stockholders —
—
—
—
—
(162 ) —
—
(162 )
Dividends to preferred stockholders —
—
—
—
—
(17 ) —
—
(17 )
Treasury stock purchased —
—
(14 ) —
—
—
(500 ) —
(500 )
Share-based compensation plans —
—
0
—
11
—
0
—
11
Employee stock purchase plan shares purchased —
—
—
—
5
—
—
—
5
Total comprehensive income:
Net income —
—
—
—
—
449
—
—
449
Other comprehensive loss —
—
—
—
—
—
—
48
48
Total comprehensive income —
—
—
—
—
449
—
48
497
Balance at September 30, 2019 1

$1,133
444

$6

$18,876

$6,229

($3,953 )
($440 )
$21,851
Balance at July 1, 2020 2

$1,965
427

$6

$18,908

$6,068

($4,623 )
$94

$22,418
Dividends to common stockholders —
—
—
—
—
(168 ) —
—
(168 )
Dividends to preferred stockholders —
—
—
—
—
(25 ) —
—
(25 )
Preferred stock issued 0
0
—
—
—
—
—
—
0
Treasury stock purchased —
—
0
—
—
—
0
—
0
Share-based compensation plans —
—
0
—
10
—
0
—
10
Employee stock purchase plan shares purchased —
—
—
—
4
—
—
—
4
Total comprehensive income:
Net income —
—
—
—
—
314
—
—
314
Other comprehensive income —
—
—
—
—
—
—
(84 ) (84 )
Total comprehensive income —
—
—
—
—
314
—
(84 ) 230
Balance at September 30, 2020 2

$1,965
427

$6

$18,922

$6,189

($4,623 )
$10

$22,469

The accompanying Notes to unaudited interim Consolidated Financial Statements are an integral part of these statements.

Citizens Financial Group, Inc. | 54

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)


	Preferred Stock		Common Stock		Additional Paid-in Capital	Retained Earnings	Treasury Stock, at Cost	Accumulated Other Comprehensive Income (Loss)	Total
(in millions)	Shares	Amount	Shares	Amount
Balance at January 1, 2020	2	1,570	433	6	18,891	6,498	(4,353)	(411)	22,201
Dividends to common stockholders	—	—	—	—	—	(336)	—	—	(336)
Dividends to preferred stockholders	—	—	—	—	—	(50)	—	—	(50)
Preferred stock issued	—	395	—	—	—	—	—	—	395
Treasury stock purchased	—	—	(7)	—	—	—	(270)	—	(270)
Share-based compensation plans	—	—	1	—	7	—	0	—	7
Employee stock purchase plan purchased	—	—	—	—	10	—	—	—	10
Cumulative effect of change in accounting principle	—	—	—	—	—	(331)	—	—	(331)
Total comprehensive income (loss):
Net income	—	—	—	—	—	287	—	—	287
Other comprehensive income (loss)	—	—	—	—	—	—	—	505	505
Total comprehensive income (loss)	—	—	—	—	—	287	—	505	792
Balance at June 30, 2020	2	1,965	427	6	18,908	6,068	(4,623)	94	22,418
Balance at January 1, 2021	2	$1,965	427	$6	$18,940	$6,445	($4,623)	($60)	$22,673
Dividends to common stockholders	—	—	—	—	—	(335)	—	—	(335)
Dividends to preferred stockholders	—	—	—	—	—	(55)	—	—	(55)
Preferred stock issued	—	296	—	—	—	—	—	—	296
Preferred stock called	—	(247)	—	—	—	—	—	—	(247)
Treasury stock purchased	—	—	(2)	—	—	—	(95)	—	(95)
Share-based compensation plans	—	—	1	—	13	—	0	—	13
Employee stock purchase plan purchased	—	—	—	—	11	—	—	—	11

Total comprehensive income (loss):
Net income	—	—	—	—	—	1,259	—	—	1,259
Other comprehensive income (loss)	—	—	—	—	—	—	—	(321)	(321)
Total comprehensive income (loss)	—	—	—	—	—	1,259	—	(321)	938
Balance at June 30, 2021	2	$2,014	426	$6	$18,964	$7,314	($4,718)	($381)	$23,199

Preferred
Stock

Common
Stock
Additional Paid-in Capital Retained Earnings Treasury Stock, at Cost Accumulated Other Comprehensive Income (Loss) Total
(in millions) Shares Amount Shares Amount
Balance at January 1, 2019 1

$840
466

$6

$18,815

$5,385

($3,133 )
($1,096 )
$20,817
Dividends to common stockholders —
—
—
—
—
(459 ) —
—
(459 )
Dividends to preferred stockholders —
—
—
—
—
(50 ) —
—
(50 )
Preferred stock issued 0
293
—
—
—
—
—
—
293
Treasury stock purchased —
—
(23 ) —
—
—
(820 ) —
(820 )
Share-based compensation plans —
—
1
—
48
—
0
—
48
Employee stock purchase plan shares purchased —
—
—
—
13
—
—
—
13
Cumulative effect of change in accounting principle —
—
—
—
—
12
—
5
17
Total comprehensive income:
Net income —
—
—
—
—
1,341
—
—
1,341
Other comprehensive income —
—
—
—
—
—
—
651
651
Total comprehensive income —
—
—
—
—
1,341
—
651
1,992
Balance at September 30, 2019 1

$1,133
444

$6

$18,876

$6,229

($3,953 )
($440 )
$21,851
Balance at January 1, 2020 2

$1,570
433

$6

$18,891

$6,498

($4,353 )
($411 )
$22,201
Dividends to common stockholders —
—
—
—
—
(504 ) —
—
(504 )
Dividends to preferred stockholders —
—
—
—
—
(75 ) —
—
(75 )
Preferred stock issued 0
395
—
—
—
—
—
—
395
Treasury stock purchased —
—
(7 ) —
0
—
(270 ) —
(270 )
Share-based compensation plans —
—
1
—
17
—
0
—
17
Employee stock purchase plan shares purchased —
—

—
14
—
—
—
14
Cumulative effect of change in accounting principle —
—
—
—
—
(331 ) —
0
(331 )
Total comprehensive income:
Net income —
—
—
—
—
601
—
—
601
Other comprehensive income —
—
—
—
—
—
—
421
421
Total comprehensive income —
—
—
—
—
601
—
421
1,022
Balance at September 30, 2020 2

$1,965
427

$6

$18,922

$6,189

($4,623 )
$10

$22,469

The accompanying Notes to unaudited interim Consolidated Financial Statements are an integral part of these statements.

Citizens Financial Group, Inc. | 55

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Nine Months Ended September 30,							Six Months Ended June 30,
(in millions)	2020			2019			(in millions)	2021	2020
OPERATING ACTIVITIES							OPERATING ACTIVITIES
Net income		$601			$1,341		Net income	$1,259	$287
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net change in cash due to operating activities:							Adjustments to reconcile net income to net change in cash due to operating activities:
Provision for credit losses	1,492			283			Provision for credit losses	(353)	1,064
Net change in loans held for sale	(655		)	(697		)	Net change in loans held for sale	322	(737)
Depreciation, amortization and accretion	413			432			Depreciation, amortization and accretion	317	316
Amortization of intangibles	6			8
Deferred income taxes	(251		)	(41		)	Deferred income taxes	199	(208)
Share-based compensation	34			44			Share-based compensation	35	23
Net gain on sales of:							Net gain on sales of:
Debt securities	(4		)	(21		)	Debt securities	(6)	(3)

Premises and equipment	0			(6		)	Premises and equipment	(1)	0
Increase in other assets	(2,960		)	(506		)
Increase in other liabilities	569			133
Net cash (used in) provided by operating activities	(755		)	970

Net (increase) decrease in other assets							Net (increase) decrease in other assets	(2,129)	(2,454)
Net increase (decrease) in other liabilities							Net increase (decrease) in other liabilities	247	299
Net change due to operating activities							Net change due to operating activities	(110)	(1,413)
INVESTING ACTIVITIES							INVESTING ACTIVITIES
Investment securities:							Investment securities:
Purchases of debt securities available for sale	(5,547		)	(4,633		)	Purchases of debt securities available for sale	(6,413)	(3,308)
Proceeds from maturities and paydowns of debt securities available for sale	4,583			2,728			Proceeds from maturities and paydowns of debt securities available for sale	4,321	2,521
Proceeds from sales of debt securities available for sale	48			1,495			Proceeds from sales of debt securities available for sale	104	0

Proceeds from maturities and paydowns of debt securities held to maturity	629			280			Proceeds from maturities and paydowns of debt securities held to maturity	530	349
Net decrease in equity securities, at fair value	0			136
Net decrease in equity securities, at cost	202			100
Net increase in interest-bearing deposits in banks	(31		)	(10		)

Net (increase) decrease in interest-bearing deposits in banks							Net (increase) decrease in interest-bearing deposits in banks	(95)	(178)

Acquisitions, net of cash acquired	(3		)	(129		)	Acquisitions, net of cash acquired	0	(3)
Net increase in loans and leases	(5,303		)	(1,534		)
Net (increase) decrease in loans and leases							Net (increase) decrease in loans and leases	497	(7,014)
Capital expenditures, net	1			(47		)	Capital expenditures, net	(32)	(53)
Purchase of bank-owned life insurance							Purchase of bank-owned life insurance	(500)	0
Other	(78		)	(172		)	Other	(115)	87
Net cash used in investing activities	(5,499		)	(1,786		)
Net change due to investing activities							Net change due to investing activities	(1,703)	(7,599)
FINANCING ACTIVITIES							FINANCING ACTIVITIES
Net increase in deposits	17,608			5,139
Net decrease in short-term borrowed funds	(43		)	(244		)
Net increase (decrease) in deposits							Net increase (decrease) in deposits	3,472	18,305
Net increase (decrease) in short-term borrowed funds							Net increase (decrease) in short-term borrowed funds	(183)	(18)
Proceeds from issuance of long-term borrowed funds	8,323			7,300			Proceeds from issuance of long-term borrowed funds	0	8,309
Repayments of long-term borrowed funds	(13,258		)	(10,556		)	Repayments of long-term borrowed funds	(1,357)	(13,253)
Treasury stock purchased	(270		)	(820		)	Treasury stock purchased	(95)	(270)
Net proceeds from issuance of preferred stock	395			293			Net proceeds from issuance of preferred stock	296	395
Dividends declared and paid to common stockholders	(504		)	(459		)
Dividends declared and paid to preferred stockholders	(73		)	(48		)
Dividends paid to common stockholders							Dividends paid to common stockholders	(335)	(336)
Dividends paid to preferred stockholders							Dividends paid to preferred stockholders	(55)	(45)
Premium paid to exchange subordinated debt	(80		)	0			Premium paid to exchange subordinated debt	(1)	0
Payments of employee tax withholding for share-based compensation	(14		)	(21		)	Payments of employee tax withholding for share-based compensation	(21)	(15)
Net cash provided by financing activities	12,084			584
Increase (decrease) in cash and cash equivalents ⁽¹⁾	5,830			(232		)
Net change due to financing activities							Net change due to financing activities	1,721	13,072
Net change in cash and cash equivalents (1)							Net change in cash and cash equivalents (1)	(92)	4,060
Cash and cash equivalents at beginning of period ⁽¹⁾	3,386			4,074			Cash and cash equivalents at beginning of period (1)	12,733	3,386
Cash and cash equivalents at end of period ⁽¹⁾		$9,216			$3,842		Cash and cash equivalents at end of period (1)	$12,641	$7,446

⁽¹⁾ Cash and cash equivalents includes cash and due from banks and interest-bearing cash and due from banks as reflected onin the Consolidated Balance Sheets.

The accompanying Notes to unaudited interim Consolidated Financial Statements are an integral part of these statements.

Citizens Financial Group, Inc. | 56

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

Basis of Presentation

The unaudited interim Consolidated Financial Statements, including the Notes presented in this document of Citizens Financial Group, Inc., have been prepared in accordance with GAAP interim reporting requirements, and therefore do not include all information and Notes included in the audited Consolidated Financial Statements in conformity with GAAP. These unaudited interim Consolidated Financial Statements and Notes presented in this document should be read in conjunction with the Company’s audited Consolidated Financial Statements and accompanying Notes included in the Company’s ~~2019~~2020 Form 10-K. The Company’s principal business activity is banking, conducted through its banking subsidiary, CBNA.

The unaudited interim Consolidated Financial Statements include the accounts of the Company and subsidiaries in which the Company has a controlling financial interest. All intercompany transactions and balances have been eliminated. The Company has evaluated its unconsolidated entities and does not believe that any entity in which it has an interest, but does not currently consolidate, meets the requirements to be consolidated as a variable interest entity. The unaudited interim Consolidated Financial Statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods. The results for interim periods are not necessarily indicative of results for a full year.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the ~~ACL, the fair value of MSRs, and the evaluation and measurement of impairment of goodwill.~~ACL.

Significant Accounting Policies

For further information regarding the Company’s significant accounting policies, see Note 1 in the Company’s ~~2019~~2020 Form 10-K.

~~Accounting Pronouncements Adopted in 2020~~



~~Pronouncement~~	~~Summary of Guidance~~	~~Effects on Financial Statements~~
~~Financial Instruments - Credit Losses~~ ~~Issued June 2016~~	• ~~Required effective date: January 1, 2020.~~ • Establishes a single allowance framework for financial assets carried at amortized cost (including securities HTM), which reflects management’s estimate of credit losses over the full remaining expected life of the financial assets. • ~~Amends impairment guidance for securities AFS to incorporate an allowance, which allows for reversals of impairment losses in the event that the credit of an issuer improves.~~ • ~~Requires a cumulative-effect adjustment to retained earnings, net of taxes, as of the beginning of the reporting period of adoption.~~ • ~~Requires enhanced credit quality disclosures including disaggregation of credit quality indicators by vintage.~~	• The Company adopted the new standard on January 1, 2020, retrospectively for loans and leases and HTM securities and prospectively for AFS securities. Refer to Note 4 for discussion of the significant accounting policy for the allowance for credit losses following adoption. • Adoption resulted in a cumulative-effect reduction of $337 million, net of taxes of $114 million, to retained earnings and a corresponding increase to the ACL of $451 million. Refer to Note 4 for the impact of the adoption to the ALLL and reserve for unfunded commitments. • Adoption of the new standard could produce higher volatility in the quarterly provision for credit losses than the prior incurred loss reserve process and could adversely impact the Company’s ongoing earnings. • ~~Based on the credit quality of the Company’s existing debt securities portfolio, the Company did not recognize an allowance for HTM and AFS debt securities upon adoption.~~
~~Goodwill~~ ~~Issued January 2017~~	• ~~Requires an impairment loss to be recognized when the estimated fair value of a reporting unit falls below its carrying value.~~ • ~~Eliminates the second condition in the current guidance that requires an impairment loss to be recognized only if the estimated implied fair value of the goodwill is below its carrying value.~~ • ~~Applied prospectively to all goodwill impairment tests performed after the adoption date.~~	• ~~The Company adopted the new standard on January 1, 2020. Refer to Note 6 for discussion of the significant accounting policy for goodwill impairment following adoption.~~ • ~~Adoption did not have a material impact on the Company’s Consolidated Financial Statements.~~
~~Disclosure Requirements - Fair Value Measurements~~ ~~Issued August 2018~~	• ~~Amends disclosure requirements on fair value measurements.~~ • Eliminates requirements for certain disclosures that are no longer considered relevant or cost beneficial, requires new disclosures and modifies existing disclosures that are expected to enhance the usefulness of the financial statements. • ~~Prospective application is required for new disclosures.~~ • ~~Retrospective application is required for all other amendments for all periods presented.~~	• ~~The Company adopted the new standard on January 1, 2020.~~ • ~~Adoption did not have a material impact on the Company’s Consolidated Financial Statements. Required fair value measurement disclosures are included in Note 13.~~
~~Simplifying the Accounting for Income Taxes~~ ~~Issued December 2019~~	• Simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. • ~~Simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates.~~ • ~~Clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.~~	~~• The Company adopted the new standard on January 1, 2020.~~ ~~• Adoption did not have an impact on the Company’s Consolidated Financial Statements.~~



~~Pronouncement~~	~~Summary of Guidance~~	~~Effects on Financial Statements~~
~~Facilitation of the Effects of Reference Rate Reform on Financial Reporting~~ ~~Issued March 2020~~	• Provides the option to apply a number of practical expedients when evaluating if a contract modification as the result of reference rate reform is considered a new contract or a continuation of an existing contract. • ~~Provides optional expedients to the evaluation of, and accounting for, fair value and cash flow hedges affected by reference rate reform.~~ • ~~Provides an optional one-time election to sell or transfer debt securities classified as HTM that reference a rate affected by reference rate reform~~	• ~~The Company adopted the new standard in the first quarter of 2020 upon issuance and is effective through December 31, 2022.~~ • ~~Adoption did not have a material impact on the Company’s Consolidated Financial Statements.~~

NOTE 2 - SECURITIES

The following table presents the major components of securities at amortized cost and fair value:


	June 30, 2021				December 31, 2020
(in millions)	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
U.S. Treasury and other	$11	$0	$0	$11	$11	$0	$0	$11
State and political subdivisions	3	0	0	3	3	0	0	3
Mortgage-backed securities, at fair value:
Federal agencies and U.S. government sponsored entities	23,960	354	(202)	24,112	21,954	571	(19)	22,506
Other/non-agency	267	13	0	280	396	26	0	422
Total mortgage-backed securities, at fair value	24,227	367	(202)	24,392	22,350	597	(19)	22,928
Collateralized loan obligations, at fair value	177	0	0	177	0	0	0	0
Total debt securities available for sale, at fair value	$24,418	$367	($202)	$24,583	$22,364	$597	($19)	$22,942
Federal agencies and U.S. government sponsored entities	$1,887	$77	$0	$1,964	$2,342	$122	$0	$2,464
Total mortgage-backed securities, at cost	1,887	77	0	1,964	2,342	122	0	2,464
Asset-backed securities, at cost	824	2	0	826	893	0	0	893
Total debt securities held to maturity	$2,711	$79	$0	$2,790	$3,235	$122	$0	$3,357
Equity securities, at cost	$602	$—	$—	$602	$604	$—	$—	$604
Equity securities, at fair value	80	—	—	80	66	—	—	66

September 30, 2020 December 31, 2019
(in millions) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
U.S. Treasury and other
$11

$0

$0

$11

$71

$0

$0

$71
State and political subdivisions 4
0
0
4
5
0
0
5
Mortgage-backed securities, at fair value:
Federal agencies and U.S. government sponsored entities 20,962
617
(38 ) 21,541
19,803
143
(71 ) 19,875
Other/non-agency 482
33
0
515
638
24
0
662
Total mortgage-backed securities, at fair value 21,444
650
(38 ) 22,056
20,441
167
(71 ) 20,537
Asset-backed securities, at fair value⁽¹⁾
813
0
0
813
0
0
0
0
Total debt securities available for sale, at fair value
$22,272

$650

($38 )
$22,884

$20,517

$167

($71 )
$20,613
Mortgage-backed securities, at cost:
Federal agencies and U.S. government sponsored entities
$2,578

$131

$0

$2,709

$3,202

$45

($5 )
$3,242
Total debt securities held to maturity, at cost
$2,578

$131

$0

$2,709

$3,202

$45

($5 )
$3,242
Money market mutual fund investments
$57

$—

$—

$57

$47

$—

$—

$47
Total equity securities, at fair value
$57

$—

$—

$57

$47

$—

$—

$47
Federal Reserve Bank stock
$577

$—

$—

$577

$577

$—

$—

$577
Federal Home Loan Bank stock 20
—
—
20
222
—
—
222
Other equity securities 8
—
—
8
8
—
—
8
Total equity securities, at cost
$605

$—

$—

$605

$807

$—

$—

$807

Citizens Financial Group, Inc. | 57

(1) In September 2020, Citizens sold $973 million of private in-school education loans, inclusive of accrued interest, capitalized interest and fees. Additionally, the Company provided financing to the purchaser for a portion of the sale price in the form of $813 million of asset-backed securities, collateralized by the sold assets, which are classified as AFS. Refer to Note 7 for additional information.

Accrued interest receivable on debt securities totaled ~~$57~~$54 million and ~~$58~~$55 million as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, and is included in other assets onin the Consolidated Balance Sheets.

The following table presents the amortized cost and fair value of debt securities by contractual maturity as of ~~September~~June 30, ~~2020.~~2021. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without incurring penalties.


	September 30, 2020											June 30, 2021
	Distribution of Maturities											Distribution of Maturities
(in millions)	1 Year or Less		After 1 Year through 5 Years		After 5 Years through 10 Years		After 10 Years		Total		(in millions)	1 Year or Less	After 1 Year through 5 Years	After 5 Years through 10 Years	After 10 Years	Total
Amortized cost:											Amortized cost:
U.S. Treasury and other		$11		$0		$0		$0		$11	U.S. Treasury and other	$11	$0	$0	$0	$11
State and political subdivisions	0		0		0		4		4		State and political subdivisions	0	0	0	3	3
Mortgage-backed securities:											Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	4		147		1,591		19,220		20,962		Federal agencies and U.S. government sponsored entities	6	42	1,861	22,051	23,960
Other/non-agency	0		0		0		482		482		Other/non-agency	0	0	0	267	267
Asset-backed securities	0		0		813		0		813
Collateralized loan obligations											Collateralized loan obligations	0	0	0	177	177
Total debt securities available for sale	15		147		2,404		19,706		22,272		Total debt securities available for sale	17	42	1,861	22,498	24,418
Mortgage-backed securities:											Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	0		0		0		2,578		2,578		Federal agencies and U.S. government sponsored entities	0	0	0	1,887	1,887
Asset-backed securities											Asset-backed securities	0	0	824	0	824
Total debt securities held to maturity	0		0		0		2,578		2,578		Total debt securities held to maturity	0	0	824	1,887	2,711
Total amortized cost of debt securities		$15		$147		$2,404		$22,284		$24,850	Total amortized cost of debt securities	$17	$42	$2,685	$24,385	$27,129

Fair value:											Fair value:
U.S. Treasury and other		$11		$0		$0		$0		$11	U.S. Treasury and other	$11	$0	$0	$0	$11
State and political subdivisions	0		0		0		4		4		State and political subdivisions	0	0	0	3	3
Mortgage-backed securities:											Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	4		153		1,647		19,737		21,541		Federal agencies and U.S. government sponsored entities	6	44	1,916	22,146	24,112
Other/non-agency	0		0		0		515		515		Other/non-agency	0	0	0	280	280
Asset-backed securities	0		0		813		0		813
Collateralized loan obligations											Collateralized loan obligations	0	0	0	177	177
Total debt securities available for sale	15		153		2,460		20,256		22,884		Total debt securities available for sale	17	44	1,916	22,606	24,583
Mortgage-backed securities:											Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	0		0		0		2,709		2,709		Federal agencies and U.S. government sponsored entities	0	0	0	1,964	1,964
Asset-backed securities											Asset-backed securities	0	0	826	0	826
Total debt securities held to maturity	0		0		0		2,709		2,709		Total debt securities held to maturity	0	0	826	1,964	2,790
Total fair value of debt securities		$15		$153		$2,460		$22,965		$25,593	Total fair value of debt securities	$17	$44	$2,742	$24,570	$27,373

Taxable interest income from investment securities as presented onin the Consolidated Statements of Operations was ~~$121~~$124 million and ~~$153~~$130 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$398~~$252 million and ~~$483~~$277 million for the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, ~~and 2019,~~ respectively.

The following table presents realized gains and losses on securities:


	Three Months Ended June 30,		Six Months Ended June 30,
(in millions)	2021	2020	2021	2020
Gains on sale of debt securities	$3	$3	$6	$3
Losses on sale of debt securities	0	0	0	0
Debt securities gains, net	$3	$3	$6	$3

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2020
2019
2020
2019
Gains on sale of debt securities⁽¹⁾

$1

$5

$4

$21
Losses on sale of debt securities 0
0
0
0
Debt securities gains, net
$1

$5

$4

$21

Citizens Financial Group, Inc. | 58

⁽¹⁾ ~~For the three and nine months ended September 30, 2019, $2 millionand~~$6 million, respectively, of gains on sale of debt securities were recognized in mortgage banking fees in the Consolidated Statement of Operations as they related to AFS securities held as economic hedges of the value of the MSR portfolio recognized using the amortization method.

The following table presents the amortized cost and fair value of debt securities pledged:


	June 30, 2021		December 31, 2020
(in millions)	Amortized Cost	Fair Value	Amortized Cost	Fair Value
Pledged against derivatives, to qualify for fiduciary powers, and to secure public and other deposits as required by law	$4,996	$5,028	$3,818	$3,937
Pledged against FHLB borrowed funds	266	280	394	423
Pledged against repurchase agreements	49	52	224	231

September 30, 2020 December 31, 2019
(in millions) Amortized Cost Fair Value Amortized Cost Fair Value
Pledged against repurchase agreements
$227

$234

$265

$266
Pledged against FHLB borrowed funds 478
515
638
662
Pledged against derivatives, to qualify for fiduciary powers, and to secure public and other deposits as required by law 3,506
3,620
3,670
3,672

~~Citizens~~The Company regularly enters into security repurchase agreements with unrelated counterparties, which involve the transfer of a security from one party to another, and a subsequent transfer of substantially the same security back to the original party. ~~The Company’s~~These repurchase agreements are typically short-term in nature and are accounted for as secured borrowed funds onin the Company’s Consolidated Balance Sheets. ~~Citizens~~The Company recognized no0 offsetting of short-term receivables or payables as of ~~September~~June 30, ~~2020~~2021 or December 31, ~~2019. Citizens~~2020. The Company offsets certain derivative assets and derivative liabilities onin the Consolidated Balance Sheets. For further information, see Note 9.8.

Securitizations of mortgage loans retained in the investment portfolio were ~~$34~~$82 million and $163 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020. Securitizations~~2021, respectively. There were 0 securitizations of mortgage loans retained in the investment portfolio ~~were $28 million and $72 million~~ for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019, respectively.~~2020. These securitizations include a substantive guarantee by a third party. In ~~2020, the guarantors were FNMA and FHLMC. In 2019,~~2021, the guarantors were FNMA, FHLMC, and GNMA. The debt securities received from the guarantors are classified as AFS.

Impairment

~~Upon purchase~~As of HTM investment securities and at each subsequent measurement date, Citizens is required to evaluate the securities for risk of loss over their life and, if necessary, establish an associated reserve. Recognition of a reserve for expected credit losses is not required if the amountJune 30, 2021, the Company ~~expects to realize is zero (commonly referred to as “zero expected credit losses”). The Company evaluated its existing HTM portfolio and~~ concluded that ~~all~~70% of ~~the~~HTM securities met the zero expected credit loss ~~criteria, and~~criteria; therefore, no ~~CECL reserve~~ACL was ~~booked for HTM securities as of~~recognized. For the ~~balance sheet date.~~

~~Citizens reviews its AFS debt securities for impairment at~~remaining 30%, the individual security level on a quarterly basis, or more frequently if a potential loss triggering event occurs. The initial indicator of impairment for debt securities classified as AFS is a decline in fair value below its amortized cost basis. For any security that has declined in fair value below the amortized cost basis, the Company recognizes an impairment loss in current period earnings if management has the intent to sell the security or if it is more likely than not it will be required to sell the security before recovery of its amortized cost basis.

~~Estimating the recovery of the amortized cost basis of a debt security is based upon an assessment of the cash flows~~lifetime expected credit losses were determined to be ~~collected. If~~insignificant based on the present value of cash flows expected to be collected, discounted at the security’s original effective yield, is less than the amortized cost basis, impairment equal to the shortfall in cash flows has occurred. Citizens evaluates whether any portion of the impairment is attributable to credit-related factors or various other market factors affecting the fair value of the security (e.g., interest rates, spread levels, liquidity in the sector, etc.), and the public credit rating of the security. If credit-related factors exist, credit-related impairment has occurred regardlessmodeling of the Company’s ~~intent to hold~~credit loss position in the ~~security until it recovers.~~

security. The ~~credit-related portion of impairment is recognized in current period earnings as provision expense~~Company monitors the credit exposure through the ~~establishment~~use of ~~an allowance for AFS~~credit quality indicators. For these securities, to the extent the allowance does not reduce the value of the AFS security below its current fair value. The remaining non-credit related portion of impairment is recognized in OCI. Improvement in credit losses in subsequent periods results in a reversal of the allowance for AFS securities and a corresponding decrease to provision expense, to the extent the allowance does not become negative. Accrued interest receivable on AFS debt securities is excluded from the balances used to calculate the allowance for AFS securities. All accrued and uncollected interest is immediately reversed against interest income when it is deemed uncollectible. The Company has evaluated any AFS securities in an unrealized loss position at September 30, 2020 and concluded that all unrealized losses are due to non-credit related factors. As such, the Company ~~does~~uses external credit ratings or an internally derived credit rating when an external rating is not ~~have an allowance for AFS~~available. All securities ~~as of September~~were determined to be investment grade at June 30, ~~2020.~~

2021.

The following ~~table presents~~tables present AFS mortgage-backed debt securities with fair values below their respective carrying values, separated by the duration the securities have been in a continuous unrealized loss position:

June 30, 2021

Less than 12 Months

12 Months or Longer

Total

(dollars in millions)

Fair Value

Gross Unrealized Losses

Fair Value

Gross Unrealized Losses

Fair Value

Gross Unrealized Losses

Federal agencies and U.S. government sponsored entities

$10,916

($200)

$92

($2)

$11,008

($202)

September 30, 2020
Less than 12 Months 12 Months or Longer Total
(dollars in millions) Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses
Federal agencies and U.S. government sponsored entities
$2,524

($38 )
$0

$0

$2,524

($38 )

The following table present AFS and HTM mortgage-backed debt securities with fair values below their respective carrying values, separated by the duration the securities have been in a continuous unrealized loss position:

December 31, 2019
Less than 12 Months 12 Months or Longer Total
(dollars in millions) Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses
Federal agencies and U.S. government sponsored entities
$5,135

($24 )
$3,748

($52 )
$8,883

($76 )

December 31, 2020

Less than 12 Months

12 Months or Longer

Total

(dollars in millions)

Fair Value

Gross Unrealized Losses

Fair Value

Gross Unrealized Losses

Fair Value

Gross Unrealized Losses

Federal agencies and U.S. government sponsored entities

$1,991

($19)

$1,991

($19)

Citizens does not currently have the intent to sell these ~~impaired~~ debt securities, and it is not more likely than not that the Company will be required to sell these debt securities prior to recovery of their amortized cost bases. Citizens has determined that credit losses are not expected to be incurred on the ~~remaining~~ agency and non-agency MBS identified with unrealized losses as of ~~September~~June 30, ~~2020.~~2021. The unrealized losses on these debt securities reflect non-credit-related factors ~~such as changing~~driven by changes in interest ~~rates and market liquidity.~~rates. Therefore, ~~Citizens~~the Company has determined that these debt securities are not ~~other-than-temporarily~~ impaired. ~~Any subsequent increases in the valuation of impaired debt securities will not impact their recorded cost bases.~~

Citizens Financial Group, Inc. | 59

NOTE 3 - LOANS AND LEASES

Loans held for investment are reported at the amount of their outstanding principal, net of charge-offs, unearned income, deferred loan origination fees and costs, and unamortized premiums or discounts on purchased loans.

Loans and leases are disclosed in portfolio segments and classes. The Company’s loan and lease portfolio segments are commercial and retail. The classes of loans and leases are: commercial, commercial real estate, leases, residential mortgages, home equity, automobile, education and other retail.

The following table presents ~~the Company’s~~ loans and leases, excluding ~~LHFS, disclosed in portfolio segments~~LHFS.


(in millions)	June 30, 2021	December 31, 2020
Commercial and industrial (1)	$42,842	$44,173
Commercial real estate	14,412	14,652
Leases	1,829	1,968
Total commercial	59,083	60,793
Residential mortgages (2)	20,538	19,539
Home equity	11,841	12,149
Automobile	12,780	12,153
Education	12,800	12,308
Other retail	5,539	6,148
Total retail	63,498	62,297
Total loans and leases	$122,581	$123,090

(1) Includes $3.5 billion and ~~classes:~~

(in millions) September 30, 2020 December 31, 2019
Commercial⁽¹⁾

$45,185

$41,479
Commercial real estate 14,889
13,522
Leases 2,288
2,537
Total commercial loans and leases 62,362
57,538
Residential mortgages 19,633
19,083
Home equity 12,322
13,154
Automobile 12,035
12,120
Education 11,631
10,347
Other retail 6,088
6,846
Total retail loans 61,709
61,550
Total loans and leases
$124,071

$119,088

⁽¹⁾~~Includes~~$4.2 billion of PPP loans fully guaranteed by the SBA ~~of $4.7 billion~~ as of ~~September~~June 30, ~~2020.~~2021 and December 31, 2020, respectively.

(2) Includes fully or partially guaranteed FHA, VA and USDA loans of $1.4 billion at June 30, 2021 and $249 million at December 31, 2020, including loans acquired through an exercise of the GNMA early buyout option.

~~Accrued~~Included in other assets is accrued interest receivable on loans and leases held for investment ~~totaled $470~~totaling $467 million and ~~$495~~$449 million as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

During the three months ended June 30, 2021 and 2020, the Company purchased $351 million and $691 million of education loans, and $176 million and $255 million of other retail loans. During the six months ended June 30, 2021 and 2020, the Company purchased $652 million and $909 million of education loans, and $353 million and $527 million of other retail loans, respectively.

During the three months ended June 30, 2021 and 2020, the Company sold $237 million and $71 million of commercial loans, respectively. During the six months ended June 30, 2021 and 2020, the Company sold $563 million and $262 million of commercial loans, respectively. During the six months ended June 30, 2020, the company sold $1.5 billion of residential mortgage loans as compared to NaN in the same period of 2021.

Loans pledged as collateral for FHLB borrowed funds, primarily residential mortgages and home equity products, totaled $24.7 billion and $25.5 billion at June 30, 2021 and December 31, 2020, respectively. Loans pledged as collateral to support the contingent ability to borrow at the FRB discount window, if necessary, were primarily comprised of education, automobile, commercial and industrial, and commercial real estate loans, and totaled $39.7 billion and $40.0 billion at June 30, 2021 and December 31, 2020, respectively.

Interest income on direct financing and sales-type leases was $12 millionand $19 millionfor the three months ended June 30, 2021 and 2020, respectively, and is ~~included in other assets~~reported within interest and fees on loans and leases in the Consolidated ~~Balance Sheets.~~Statements of Operations. For the six months ended June 30, 2021 and 2020, this interest income was $25 million and $37 million, respectively.

The following table presents the composition of LHFS.


	September 30, 2020						December 31, 2019							June 30, 2021			December 31, 2020
(in millions)	Residential Mortgages⁽¹⁾		Commercial⁽²⁾		Total		Residential Mortgages⁽¹⁾		Commercial⁽²⁾		Total		(in millions)	Residential Mortgages(1)	Commercial(2)	Total		Residential Mortgages(1)	Commercial(2)	Total
Loans held for sale at fair value		$3,425		$162		$3,587		$1,778		$168		$1,946	Loans held for sale at fair value	$3,499	$117	$3,616		$3,416	$148	$3,564
Other loans held for sale	0		127		127		1,101		283		1,384		Other loans held for sale	0	82	82		0	439	439

⁽¹⁾ Residential mortgage LHFS are originated for sale.

⁽²⁾Commercial LHFS at fair value consist of loans managed by the Company’s commercial secondary loan desk. Other commercial LHFS generally consist of loans associated with the Company’s syndication business.

Citizens Financial Group, Inc. | 60

Loans pledged as collateral for FHLB borrowed funds, primarily residential mortgages and home equity loans, totaled $25.2 billion and $25.3 billion at September 30, 2020 and December 31, 2019, respectively. Loans pledged as collateral to support the contingent ability to borrow at the FRB discount window were primarily comprised of auto, commercial, commercial real estate, and education loans, and totaled $39.2 billion and $17.4 billion at September 30, 2020 and December 31, 2019, respectively.

During the three months ended September 30, 2020, the Company purchased $801 million of education loans and $101 million of other retail loans. During the three months ended September 30, 2019, the Company purchased $164 million of education loans and $66 million of other retail loans. During the nine months ended September 30, 2020, the Company purchased $1.7 billion of education loans and $628 million of other retail loans. During the nine months ended September 30, 2019, the Company purchased $464 million of education loans and $66 million of other retail loans.

During the three months ended September 30, 2020, the Company sold $94 million of commercial loans and $879 million of education loans. For further information, see Note 2 and Note 7. During the three months ended September 30, 2019, the Company sold $109 million of commercial loans. During the nine months ended September 30, 2020, the Company sold $356 million of commercial loans, $879 million of education loans and $1.5 billion of residential mortgage loans. During the nine months ended September 30, 2019, the Company sold $291 million of commercial loans and $628 million of retail loans, including $22 million of retail TDRs.

~~Interest income on direct financing and sales-type leases was $17 millionand $18 million~~for the three months ended September 30, 2020 and 2019, respectively, and was $54 million and $58 million for the nine months ended September 30, 2020 and 2019, respectively, and is reported within interest and fees on loans and leases in the Consolidated Statements of Operations.

NOTE 4 - ALLOWANCE FOR CREDIT LOSSES, NONACCRUING LOANS AND LEASES, AND CONCENTRATIONS OF CREDIT RISK

Allowance for Credit Losses

~~Management’s~~Recorded in the ACL is management’s estimate of expected credit losses in the Company’s loan and lease ~~portfolios is recorded in the ALLL and the reserve for unfunded lending commitments (collectively the ACL).~~portfolios. See Note 5 in the Company’s ~~2019~~2020 Form 10-K for a detailed discussion of the ACL reserve methodology and estimation techniques as of December 31, ~~2019. Upon adoption of CECL effective January 1, 2020,~~2020. There were no significant changes to the ~~Company’s~~ ACL reserve methodology ~~changed to estimate expected credit losses over the contractual life of loans and leases.~~

The ACL is maintained at a level the Company believes to be appropriate to absorb expected lifetime credit losses over the contractual life of the loan and lease portfolios and on the unfunded lending commitments. The determination of the ACL is based on periodic evaluation of the loan and lease portfolios and unfunded lending commitments that are not unconditionally cancelable considering a number of relevant underlying factors, including key assumptions and evaluation of quantitative and qualitative information.

~~Key assumptions used~~ in the ACL measurement process include the use of a two-year reasonable and supportable economic forecast period followed by a one-year period during which the expected credit losses revert to long-term historical macroeconomic inputs.

The evaluation of quantitative and qualitative information is performed through assessments of groups of assets that share similar risk characteristics and certain individual loans and leases that do not share similar risk characteristics with the collective group. Loans are grouped generally by product type (e.g., commercial, commercial real estate, residential mortgage, etc.), and significant loan portfolios are assessed for credit losses using econometric models.

The quantitative evaluation of the adequacy of the ACL utilizes a single economic forecast as its foundation, and is primarily based on econometric models that use known or estimated data as of the balance sheet date and forecasted data over the reasonable and supportable period. Known and estimated data include current PD, LGD and EAD (for commercial loans and leases), timing and amount of expected draws (for unfunded lending commitments), FICO, LTV, term and time on books (for retail loans), mix and level of loan balances, delinquency levels, assigned risk ratings, previous loss experience, current business conditions, amounts and timing of expected future cash flows, and factors particular to a specific commercial credit such as competition, business and management performance. Forward-looking economic assumptions include real gross domestic product, unemployment rate, interest rate curve, and changes in collateral values. This data is aggregated to estimate expected credit losses over the contractual life of the loans and leases, adjusted for expected prepayments. In highly volatile economic environments historical information, such as commercial customer financial statements or consumer credit ratings, may not be as important to estimating future expected losses as forecasted inputs to the models.

The ACL may also be affected materially by a variety of qualitative factors that the Company considers to reflect current judgment of various events and risks that are not measured in the statistical procedures including uncertainty related to the economic forecasts used in the modeled credit loss estimates, loan growth, back testing results, credit underwriting policy exceptions, regulatory and audit findings, and peer comparisons. The qualitative allowance is further informed by multiple alternative scenarios to support the period-end ACL balance.

The measurement process results in specific or pooled allowances for loans, leases and unfunded lending commitments, and qualitative allowances that are judgmentally determined and applied across the portfolio.

There are certain loan portfolios that may not need an econometric model to enable the Company to calculate management’s best estimate of the expected credit losses. Less data intensive, non-modeled approaches to estimating losses are considered more efficient and practical for portfolios that have lower levels of outstanding balances (e.g., runoff or closed portfolios, new products or products that are not significant to the Company’s overall credit risk exposure).

Loans and leases that do not share similar risk characteristics are individually assessed for expected credit losses. Nonaccruing commercial and commercial real estate loans with an outstanding balance of $5 million or greater and all commercial and commercial real estate TDRs (regardless of size) are assessed on an individual loan level basis. Generally, the measurement of ACL on individual loans and leases is the present value of its future cash flows or the fair value of its underlying collateral, if the loan or lease is collateral dependent. Loans that are deemed

to be collateral dependent are written down to the fair value, less costs to sell, if sale of the collateral is expected as of the evaluation date and are reassessed each subsequent period to determine if a change to the ACL is required. Subsequent evaluations may result in an increase or decrease to the ACL, based on a corresponding change in the fair value of the collateral during the period. Any subsequent decrease to the ACL (because of an increase to the collateral-dependent loan’s fair value) is limited to the total amount previously written off for that loan. For retail TDRs that are not collateral dependent, the ACL is developed using the present value of expected future cash flows compared to the amortized cost basis in the loans. Expected re-default factors are considered in this analysis. Retail TDRs that are deemed collateral dependent are written down to fair market value less cost to sell.

Expected recoveries are considered in management’s estimate of the ACL and may result in a negative adjustment (i.e., reduction) to the ACL balance. A loan is collateral dependent if repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty as of the evaluation date. Generally, repayment would be expected to be provided substantially by the sale or continued operation of the underlying collateral if cash flows to repay the loan from all other available sources (including guarantors) are expected to be no more than nominal. If repayment is dependent only on the operation of the collateral, the fair value of the collateral would not be adjusted for estimated costs to sell. If a loan is considered collateral dependent, the ACL is calculated as the difference between the fair value of collateral (adjusted for the costs to sell if the sale of the collateral is expected) and the amortized cost basis as of the evaluation date. It is possible to have a negative ACL for a collateral dependent loan if the fair value of the collateral increases in a subsequent reporting period. The negative ACL cannot exceed the total amount previously charged off.

Accrued interest receivable on loans and leases is excluded from asset balances used to calculate the ACL. All accrued and uncollected interest is immediately reversed against interest income when a loan or lease is placed on nonaccrual status. Uncollectible interest is written off timely in accordance with regulatory guidelines. Generally, loans and leases are placed on nonaccrual status when contractually past due 90 days or more, or earlier if management believes that the probability of collection is insufficient to warrant further accrual. Residential mortgages are placed on nonaccrual status when contractually past due 120 days or more, or sooner if deemed collateral dependent, unless guaranteed by the Federal Housing Administration. Loans in COVID-19 pandemic-related forbearance programs continue to accrue interest during the forbearance period; a reserve is established for interest income expected to be uncollectible following forbearance. The amount of accrued interest receivable reversed against interest income for the threesix months ended ~~September~~June 30, 2020 was $4 million for total commercial and retail, respectively. Accrued interest reversed against interest income for the nine months ended September 30, 2020 was $7 million and $13 million for total commercial and retail, respectively.

The Company estimates expected credit losses associated with off-balance sheet financial instruments such as standby letters of credit, financial guarantees and unfunded loan commitments that are not unconditionally cancelable. Off-balance sheet financial instruments are subject to individual reviews and are analyzed and segregated by risk according to the Company’s internal risk rating scale. These risk classifications, in conjunction with historical loss experience, current and future economic conditions, timing and amount of expected draws, and performance trends within specific portfolio segments, result in the estimate of the reserve for unfunded lending commitments. The Company does not recognize a reserve for future draws from credit lines that are unconditionally cancelable (e.g., credit cards).

The ALLL and the reserve for unfunded lending commitments are reported on the Consolidated Balance Sheets in the allowance for loan and lease losses and in other liabilities, respectively. Provision for credit losses related to the loan and lease portfolios and the unfunded lending commitments are reported in the Consolidated Statements of Operations as provision for credit losses.

2021.

The following table presents a summary of changes in the ALLL and the ~~reserve~~allowance for unfunded lending commitments for the three ~~and nine~~ months ended ~~September~~and six months ended June 30, ~~2020:~~2021:

Three Months Ended September 30, 2020
Nine Months Ended September 30, 2020
(in millions) Commercial
Retail
Total

Commercial
Retail
Total
Allowance for loan and lease losses, beginning of period
$1,235

$1,213

$2,448

$674

$578

$1,252
Cumulative effect of change in accounting principle 0
0
0

(176 ) 629
453
Allowance for loan and lease losses, beginning of period, adjusted 1,235
1,213
2,448

498
1,207
1,705
Charge-offs (171 ) (86 ) (257 )
(292 ) (319 ) (611 )
Recoveries 1
37
38

7
101
108
Net charge-offs (170 ) (49 ) (219 )
(285 ) (218 ) (503 )
Provision charged to income 224
89
313

1,076
264
1,340
Allowance for loan and lease losses, end of period
$1,289

$1,253

$2,542

$1,289

$1,253

$2,542

Reserve for unfunded lending commitments, beginning of period
$69

$10

$79

$44

$0

$44
Cumulative effective of change in accounting principle 0
0
0

(3 ) 1
(2 )
Reserve for unfunded lending commitments, beginning of period, adjusted 69
10
79

41
1
42
Provision for unfunded lending commitments 83
32
115

111
41
152
Reserve for unfunded lending commitments, end of period
$152

$42

$194

$152

$42

$194


	Three Months Ended June 30, 2021			Six Months Ended June 30, 2021
(in millions)	Commercial	Retail	Total	Commercial	Retail	Total
Allowance for loan and lease losses, beginning of period	$1,146	$1,048	$2,194	$1,233	$1,210	$2,443


Charge-offs	(45)	(80)	(125)	(179)	(173)	(352)
Recoveries	4	43	47	34	82	116
Net charge-offs	(41)	(37)	(78)	(145)	(91)	(236)

Provision charged to income	(152)	(17)	(169)	(135)	(125)	(260)
Allowance for loan and lease losses, end of period	$953	$994	$1,947	$953	$994	$1,947

Allowance for unfunded lending commitments, beginning of period	$165	$13	$178	$186	$41	$227


Provision for unfunded lending commitments	(44)	0	(44)	(65)	(28)	(93)
Allowance for unfunded lending commitments, end of period	$121	$13	$134	$121	$13	$134

~~The following table provides additional detail on the cumulative effect~~Overall, an ending ACL balance of ~~change in accounting principle on the ACL and related coverage ratios:~~

December 31, 2019 January 1, 2020 September 30, 2020
(in millions) Amortized Cost Basis ACL Balance Coverage Impact of Adoption of CECL ACL Balance Coverage Amortized Cost Basis ACL Balance Coverage
Commercial⁽¹⁾

$41,479

$575
1.4 %
($199 )
$376
0.9 %
$45,185

$826
1.8 %
Commercial real estate 13,522
124
0.9
(57 ) 67
0.5
14,889
548
3.7
Leases 2,537
19
0.7
77
96
3.8
2,288
67
2.9
Total commercial loans and leases 57,538
718
1.2
(179 ) 539
0.9
62,362
1,441
2.3
Residential 19,083
35
0.2
95
130
0.7
19,633
133
0.7
Home equity 13,154
83
0.6
73
156
1.2
12,322
156
1.3
Automobile 12,120
123
1.0
83
206
1.7
12,035
221
1.8
Education 10,347
116
1.1
298
414
4.0
11,631
386
3.3
Other retail 6,846
221
3.2
81
302
4.4
6,088
399
6.6
Total retail loans 61,550
578
0.9
630
1,208
2.0
61,709
1,295
2.1
Total loans and leases
$119,088

$1,296
1.1 %
$451

$1,747
1.5 %
$124,071

$2,736
2.2 %

⁽¹⁾~~The commercial coverage ratio includes a 21 basis point reduction associated with PPP loans as of September~~$2.1 billion at June 30, 2021 compared to $2.7 billion at December 31, 2020.

The difference in ACL as of ~~September~~June 30, ~~2020~~2021 as compared to December 31, ~~2019 continues~~2020 was due to ~~be driven by~~net charge-offs of $236 million, as detailed below, coupled with a credit provision benefit of $353 million. This reflected strong credit performance across the ~~COVID-19 pandemic~~retail and ~~associated lockdowns~~commercial loan portfolios, and the resulting economic impacts from March to September 2020, as well as the Company’s adoption of CECL on January 1, 2020. Citizens added $451 million in ACL upon adoption of CECL, and has since added an additional $989 millionimprovement in the ~~nine months ended September 30, 2020, resulting in an ending ACL balance of $2.7 billion.~~macroeconomic outlook.

The increase in commercial net charge-offs inof $30 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 as compared to the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 was driven by COVID-19-related charge-offs in ~~CRE, metals and mining, oil and gas, and casual dining industry sectors.~~CRE. Retail net charge-offs were ~~flat~~down $78 million in the ~~nine~~six months ended ~~September 20, 2020~~June 30, 2021 as compared to the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~

2020 as a result of government stimulus and forbearance programs as well as strong collateral values in automobile and residential real estate.

To determine the ACL as of ~~September~~June 30, ~~2020,~~2021, Citizens utilized an economic ~~scenario~~forecast that generally reflects real GDP growth of ~~4.5%~~approximately 5.7% over ~~2021, returning to fourth quarter 2019 real GDP levels by the first quarter of 2022.~~2021. The ~~scenario~~forecast also projects the ~~fourth quarter 2020~~ unemployment rate to be in the range of 9%5.9% to ~~9.5%, and falling~~6.6% throughout 2021. This forecast reflects an overall improved macroeconomic outlook as compared to 7%December 31, 2020. In addition to ~~7.5% by the fourth quarter of 2021. While the macroeconomic forecast was slightly improved relative~~judgment applied to the ~~second quarter 2020 forecast,~~commercial portfolio as a whole, Citizens continued to apply management judgment to adjust the modeled reserves in the commercial industry sectors most impacted by the ~~COVID-19-related~~COVID-19 pandemic and associated lockdowns, including inCRE retail and hospitality and casual ~~dining, retail trade, price-sensitive energy and related, and educational services, as well as in certain retail products.~~dining.

Citizens Financial Group, Inc. | 61

The following table presents a summary of changes in the ALLL and the ~~reserve~~allowance for unfunded lending commitments for the three months and ~~nine~~six months ended ~~September~~June 30, ~~2019:~~2020:

Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
(in millions) Commercial
Retail
Total
Commercial
Retail
Total
Allowance for loan and lease losses, beginning of period
$680

$547

$1,227

$690

$552

$1,242
Charge-offs (35 ) (124 ) (159 ) (106 ) (347 ) (453 )
Recoveries 3
43
46
17
128
145
Net charge-offs (32 ) (81 ) (113 ) (89 ) (219 ) (308 )
Provision charged to income 64
85
149
111
218
329
Allowance for loan and lease losses, end of period
$712

$551

$1,263

$712

$551

$1,263

Reserve for unfunded lending commitments, beginning of period
$93

$0

$93

$91

$0

$91
Provision for unfunded lending commitments (48 ) 0
(48 ) (46 ) 0
(46 )
Reserve for unfunded lending commitments, end of period
$45

$0

$45

$45

$0

$45


	Three Months Ended June 30, 2020			Six Months Ended June 30, 2020
(in millions)	Commercial	Retail	Total	Commercial	Retail	Total
Allowance for loan and lease losses, beginning of period	$752	$1,419	$2,171	$674	$578	$1,252
Cumulative effect of change in accounting principle	0	0	0	(176)	629	453
Allowance for loan and lease losses, beginning of period, adjusted	752	1,419	2,171	498	1,207	1,705
Charge-offs	(74)	(106)	(180)	(121)	(233)	(354)
Recoveries	3	30	33	6	64	70
Net charge-offs	(71)	(76)	(147)	(115)	(169)	(284)

Provision charged to income	554	(130)	424	852	175	1,027
Allowance for loan and lease losses, end of period	$1,235	$1,213	$2,448	$1,235	$1,213	$2,448

Allowance for unfunded lending commitments, beginning of period	$38	$1	$39	$44	$0	$44
Cumulative effect of change in accounting principle	0	0	0	(3)	1	(2)
Allowance for unfunded lending commitments, beginning of period, adjusted	38	1	39	41	1	42
Provision for unfunded lending commitments	31	9	40	28	9	37
Allowance for unfunded lending commitments, end of period	$69	$10	$79	$69	$10	$79

Credit Quality Indicators

~~Loan~~The Company presents loan and lease portfolio segments and classes ~~excluding LHFS, are presented~~ by credit quality indicator and vintage year. Citizens defines the vintage date for the purpose of this disclosure as the date of the most recent credit decision. In general, renewals are categorized as new credit decisions and reflect the renewal date as the vintage date. Loans modified in a TDR are considered ~~to be~~ a continuation of the original loan and vintage date corresponds with the ~~initial loan origination date.~~most recent credit decision.

For commercial loans and leases, Citizens utilizes regulatory classification ratings to monitor credit quality. ~~Regulatory~~The assignment of regulatory classification ratings ~~are assigned~~occurs at loan origination and are periodically re-evaluated by Citizens utilizing a risk-based approach, ~~or at~~including any time management becomes aware of information affecting the borrowers' ability to fulfill their obligations. ~~Both~~The review process considers both quantitative and qualitative ~~factors are considered in this review process.~~factors. Loans with a “pass” rating are those that the Company believes will be fully ~~repaid~~repay in accordance with the contractual loan terms. Commercial loans and leases ~~that are~~identified as “criticized” ~~are those that~~ have some weakness or potential weakness that indicate an increased probability of future loss. ~~“Criticized”~~Citizens groups “criticized” loans ~~are grouped~~ into three categories, “special mention,” ~~“substandard”~~“substandard,” and “doubtful.” Special mention loans have potential weaknesses that, if left uncorrected, may result in deterioration of the Company’s credit position at some future date. Substandard loans are inadequately protected loans; these loans have well-defined weaknesses that could hinder normal repayment or collection of the debt. Doubtful loans have the same weaknesses as substandard, with the added ~~characteristics~~characteristic that the possibility of loss is high and collection of the full amount of the loan is improbable.

Citizens Financial Group, Inc. | 62

The following table presents the amortized cost basis of commercial loans and leases, by vintage date and regulatory classification rating, as of ~~September~~June 30, ~~2020:~~2021:


	Term Loans by Origination Year												Revolving Loans							Term Loans by Origination Year						Revolving Loans
(in millions)	2020		2019		2018		2017		2016		Prior to 2016		Within the Revolving Period		Converted to Term		Total		(in millions)	2021	2020	2019	2018	2017	Prior to 2017	Within the Revolving Period	Converted to Term	Total
Commercial
Commercial and industrial																			Commercial and industrial
Pass⁽¹⁾		$7,478		$6,823		$4,838		$2,747		$1,515		$2,453		$15,115		$182		$41,151	Pass(1)	$5,146	$5,140	$5,260	$3,623	$1,975	$2,797	$15,853	$151	$39,945
Special Mention	58		275		237		149		92		222		892		125		2,050		Special Mention	3	41	196	196	74	181	454	0	1,145
Substandard	60		220		326		100		85		140		630		19		1,580		Substandard	32	125	263	267	114	226	583	21	1,631
Doubtful	52		22		35		43		20		42		186		4		404		Doubtful	27	16	16	22	12	18	7	3	121
Total commercial	7,648		7,340		5,436		3,039		1,712		2,857		16,823		330		45,185
Total commercial and industrial																			Total commercial and industrial	5,208	5,322	5,735	4,108	2,175	3,222	16,897	175	42,842
Commercial real estate																			Commercial real estate
Pass	1,774		3,406		3,608		1,553		825		1,112		1,073		0		13,351		Pass	462	2,572	3,726	3,013	1,026	1,507	809	0	13,115
Special Mention	11		216		128		237		171		9		77		0		849		Special Mention	73	7	193	102	155	122	14	0	666
Substandard	68		1		170		50		53		66		60		0		468		Substandard	1	39	210	135	146	73	0	0	604
Doubtful	20		38		53		0		36		3		24		47		221		Doubtful	0	9	16	0	0	2	0	0	27
Total commercial real estate	1,873		3,661		3,959		1,840		1,085		1,190		1,234		47		14,889		Total commercial real estate	536	2,627	4,145	3,250	1,327	1,704	823	0	14,412
Leases																			Leases
Pass	332		327		265		169		200		917		0		0		2,210		Pass	269	368	216	203	98	622	0	0	1,776
Special Mention	0		2		3		6		5		25		0		0		41		Special Mention	1	2	1	2	5	18	0	0	29
Substandard	0		2		2		5		4		0		0		0		13		Substandard	0	16	5	1	0	1	0	0	23
Doubtful	0		0		9		1		3		11		0		0		24		Doubtful	0	0	0	0	0	1	0	0	1
Total leases	332		331		279		181		212		953		0		0		2,288		Total leases	270	386	222	206	103	642	0	0	1,829
Total commercial loans and leases
Total commercial																			Total commercial
Pass⁽¹⁾	9,584		10,556		8,711		4,469		2,540		4,482		16,188		182		56,712		Pass(1)	5,877	8,080	9,202	6,839	3,099	4,926	16,662	151	54,836
Special Mention	69		493		368		392		268		256		969		125		2,940		Special Mention	77	50	390	300	234	321	468	0	1,840
Substandard	128		223		498		155		142		206		690		19		2,061		Substandard	33	180	478	403	260	300	583	21	2,258
Doubtful	72		60		97		44		59		56		210		51		649		Doubtful	27	25	32	22	12	21	7	3	149
Total commercial loans and leases		$9,853		$11,332		$9,674		$5,060		$3,009		$5,000		$18,057		$377		$62,362
Total commercial																			Total commercial	$6,014	$8,335	$10,102	$7,564	$3,605	$5,568	$17,720	$175	$59,083

⁽¹⁾ Includes ~~$4.7~~$3.5 billion of PPP loans designated as pass that are fully guaranteed by the SBA originating in 2021 and 2020.

Citizens Financial Group, Inc. | 63

The following table presents the amortized cost basis of commercial loans and leases, by vintage date and regulatory classification rating, as of December 31, 2020:


	Term Loans by Origination Year						Revolving Loans
(in millions)	2020	2019	2018	2017	2016	Prior to 2016	Within the Revolving Period	Converted to Term	Total
Commercial and industrial
Pass(1)	$8,036	$5,730	$4,180	$2,174	$1,157	$1,980	$17,281	$340	$40,878
Special Mention	34	264	163	84	60	173	771	34	1,583
Substandard	91	195	248��	100	81	127	600	22	1,464
Doubtful	65	10	34	38	3	31	63	4	248
Total commercial and industrial	8,226	6,199	4,625	2,396	1,301	2,311	18,715	400	44,173
Commercial real estate
Pass	1,848	2,836	2,810	1,106	566	919	3,271	0	13,356
Special Mention	19	130	121	92	94	48	300	0	804
Substandard	116	2	65	5	53	26	149	0	416
Doubtful	16	26	8	0	0	2	24	0	76
Total commercial real estate	1,999	2,994	3,004	1,203	713	995	3,744	0	14,652
Leases
Pass	455	246	229	139	180	673	0	0	1,922
Special Mention	3	4	2	4	2	18	0	0	33
Substandard	0	2	2	4	4	0	0	0	12
Doubtful	0	0	0	0	0	1	0	0	1
Total leases	458	252	233	147	186	692	0	0	1,968
Total commercial
Pass(1)	10,339	8,812	7,219	3,419	1,903	3,572	20,552	340	56,156
Special Mention	56	398	286	180	156	239	1,071	34	2,420
Substandard	207	199	315	109	138	153	749	22	1,892
Doubtful	81	36	42	38	3	34	87	4	325
Total commercial	$10,683	$9,445	$7,862	$3,746	$2,200	$3,998	$22,459	$400	$60,793

(1) Includes $4.2 billion PPP loans designated as pass that are fully guaranteed by the SBA originating in 2020.

For retail loans, Citizens utilizes FICO credit scores ~~provided by FICO which are generally refreshed on a quarterly basis~~ and the loan’s payment and delinquency status to monitor credit quality. Management believes FICO ~~credit~~ scores are ~~considered~~ the strongest indicator of credit losses over the contractual life of the loan asand assist management in predicting the ~~scores~~borrower’s future payment performance. Scores are based on current and historical national industry-wide consumer level credit performance ~~data, and assist management in predicting the borrower’s future payment performance.~~data.

Citizens Financial Group, Inc. | 64

The following table presents the amortized cost basis of retail loans, by vintage date and FICO scores, as of ~~September~~June 30, ~~2020:~~2021:


	Term Loans by Origination Year												Revolving Loans							Term Loans by Origination Year						Revolving Loans
(in millions)	2020		2019		2018		2017		2016		Prior to 2016		Within the Revolving Period		Converted to Term		Total		(in millions)	2021	2020	2019	2018	2017	Prior to 2017	Within the Revolving Period	Converted to Term	Total
Residential mortgages																			Residential mortgages
800+		$1,971		$1,983		$751		$1,297		$1,833		$2,061		$0		$0		$9,896	800+	$851	$3,079	$1,574	$454	$897	$2,697	$0	$0	$9,552
740-799	2,351		1,341		463		612		776		977		0		0		6,520		740-799	1,619	2,261	890	311	448	1,335	0	0	6,864
680-739	596		408		193		207		317		500		0		0		2,221		680-739	377	653	360	178	169	660	0	0	2,397
620-679	101		97		44		51		69		235		0		0		597		620-679	42	112	180	103	117	328	0	0	882
<620	17		23		34		56		54		197		0		0		381		<620	2	49	153	162	167	293	0	0	826
No FICO available⁽¹⁾	4		1		0		1		0		12		0		0		18		No FICO available(1)	2	3	1	0	0	11	0	0	17
Total residential mortgages	5,040		3,853		1,485		2,224		3,049		3,982		0		0		19,633		Total residential mortgages	2,893	6,157	3,158	1,208	1,798	5,324	0	0	20,538
Home equity																			Home equity
800+	3		9		11		7		5		245		4,319		360		4,959		800+	1	2	6	6	5	170	4,292	318	4,800
740-799	1		7		7		7		4		204		3,224		340		3,794		740-799	0	1	5	6	6	146	3,333	306	3,803
680-739	0		4		9		14		8		197		1,671		293		2,196		680-739	0	1	8	13	18	162	1,608	274	2,084
620-679	0		8		16		19		12		146		420		201		822		620-679	0	3	13	24	20	133	336	182	711
<620	1		15		27		30		18		129		117		213		550		<620	0	3	20	25	23	106	79	187	443
No FICO available⁽¹⁾	0		0		0		0		0		0		1		0		1		No FICO available(1)	0	0	0	0	0	0	0	0	0
Total home equity	5		43		70		77		47		921		9,752		1,407		12,322		Total home equity	1	10	52	74	72	717	9,648	1,267	11,841
Automobile																			Automobile
800+	780		862		472		358		209		91		0		0		2,772		800+	756	951	681	333	223	122	0	0	3,066
740-799	1,130		1,127		606		406		214		87		0		0		3,570		740-799	1,096	1,320	813	401	242	122	0	0	3,994
680-739	1,028		1,012		527		327		170		69		0		0		3,133		680-739	969	1,109	690	335	190	98	0	0	3,391
620-679	523		557		300		185		102		46		0		0		1,713		620-679	458	506	345	184	108	63	0	0	1,664
<620	90		245		202		157		96		48		0		0		838		<620	59	138	180	133	90	61	0	0	661
No FICO available⁽¹⁾	1		1		0		0		0		7		0		0		9		No FICO available(1)	3	0	0	0	0	1	0	0	4
Total automobile	3,552		3,804		2,107		1,433		791		348		0		0		12,035		Total automobile	3,341	4,024	2,709	1,386	853	467	0	0	12,780
Education																			Education
800+	1,191		1,276		810		772		586		776		0		0		5,411		800+	564	1,843	1,103	662	590	1,066	0	—	5,828
740-799	1,307		1,151		621		449		292		443		0		0		4,263		740-799	759	1,831	892	480	338	614	0	0	4,914
680-739	385		378		217		160		110		239		0		0		1,489		680-739	204	536	289	172	123	300	0	0	1,624
620-679	27		52		42		36		31		108		0		0		296		620-679	14	54	45	37	29	110	0	0	289
<620	2		7		13		14		12		56		0		0		104		<620	1	6	10	12	10	49	0	0	88
No FICO available⁽¹⁾	6		0		0		0		0		62		0		0		68		No FICO available(1)	2	0	0	0	0	55	0	0	57
Total education	2,918		2,864		1,703		1,431		1,031		1,684		0		0		11,631		Total education	1,544	4,270	2,339	1,363	1,090	2,194	0	0	12,800
Other retail																			Other retail
800+	286		474		174		79		17		49		313		0		1,392		800+	107	343	209	100	48	42	357	0	1,206
740-799	419		611		217		97		23		33		621		2		2,023		740-799	169	479	285	128	58	36	662	2	1,819
680-739	356		409		141		60		13		17		555		6		1,557		680-739	150	372	190	85	37	18	593	5	1,450
620-679	195		156		51		19		3		6		181		7		618		620-679	94	181	65	28	10	6	208	6	598
<620	18		45		24		9		2		4		81		9		192		<620	11	39	23	13	4	2	66	7	165
No FICO available⁽¹⁾	36		1		0		0		0		0		267		2		306		No FICO available(1)	6	8	0	0	0	0	285	2	301
Total other retail	1,310		1,696		607		264		58		109		2,018		26		6,088		Total other retail	537	1,422	772	354	157	104	2,171	22	5,539
Retail
Total retail																			Total retail
800+	4,231		4,604		2,218		2,513		2,650		3,222		4,632		360		24,430		800+	2,279	6,218	3,573	1,555	1,763	4,097	4,649	318	24,452
740-799	5,208		4,237		1,914		1,571		1,309		1,744		3,845		342		20,170		740-799	3,643	5,892	2,885	1,326	1,092	2,253	3,995	308	21,394
680-739	2,365		2,211		1,087		768		618		1,022		2,226		299		10,596		680-739	1,700	2,671	1,537	783	537	1,238	2,201	279	10,946
620-679	846		870		453		310		217		541		601		208		4,046		620-679	608	856	648	376	284	640	544	188	4,144
<620	128		335		300		266		182		434		198		222		2,065		<620	73	235	386	345	294	511	145	194	2,183
No FICO available⁽¹⁾	47		3		0		1		0		81		268		2		402		No FICO available(1)	13	11	1	0	0	67	285	2	379
Total retail		$12,825		$12,260		$5,972		$5,429		$4,976		$7,044		$11,770		$1,433		$61,709	Total retail	$8,316	$15,883	$9,030	$4,385	$3,970	$8,806	$11,819	$1,289	$63,498


Table 5: Major Components of Net Interest Income, Quarter-to-Date																				Table 5: Major Components of Net Interest Income, Quarter-to-Date
	Three Months Ended September 30,																				Three Months Ended June 30,
	2020							2019							Change						2021				2020				Change
(dollars in millions)	Average Balances			Income/ Expense		Yields/ Rates		Average Balances			Income/ Expense		Yields/ Rates		Average Balances			Yields/ Rates (bps)		(dollars in millions)	Average Balances	Income/ Expense	Yields/ Rates		Average Balances	Income/ Expense	Yields/ Rates		Average Balances	Yields/ Rates (bps)
Assets																				Assets
Interest-bearing cash and due from banks and deposits in banks		$6,250			$2	0.10	%		$1,474			$8	2.09	%		$4,776		(199) bps		Interest-bearing cash and due from banks and deposits in banks	$11,259	$3	0.12	%	$5,231	$1	0.09	%	$6,028	3 bps
Taxable investment securities	24,654			121		1.95		25,635			153		2.38		(981		)	(43	)	Taxable investment securities	27,597	124	1.80		25,180	130	2.15		2,417	(35)
Non-taxable investment securities	4			—		2.60		5			—		2.60		(1		)	—		Non-taxable investment securities	3	—	2.60		4	—	2.60		(1)	—
Total investment securities	24,658			121		1.95		25,640			153		2.38		(982		)	(43	)	Total investment securities	27,600	124	1.80		25,184	130	2.15		2,416	(35)
Commercial	46,844			383		3.20		41,476			442		4.17		5,368			(97	)
Commercial and industrial																				Commercial and industrial	44,388	345	3.08		50,443	412	3.23		(6,055)	(15)
Commercial real estate	14,644			96		2.57		12,892			155		4.70		1,752			(213	)	Commercial real estate	14,473	95	2.58		14,540	106	2.87		(67)	(29)
Leases	2,373			16		2.65		2,615			19		2.85		(242		)	(20	)	Leases	1,792	12	2.76		2,426	16	2.75		(634)	1
Total commercial loans and leases	63,861			495		3.03		56,983			616		4.23		6,878			(120	)	Total commercial loans and leases	60,653	452	2.96		67,409	534	3.14		(6,756)	(18)
Residential mortgages	19,427			153		3.15		19,405			171		3.53		22			(38	)	Residential mortgages	20,242	154	3.04		18,872	150	3.19		1,370	(15)
Home equity	12,416			100		3.21		13,501			178		5.24		(1,085		)	(203	)	Home equity	11,825	92	3.13		12,736	111	3.50		(911)	(37)
Automobile	12,019			128		4.23		12,036			129		4.25		(17		)	(2	)	Automobile	12,526	125	4.00		11,998	129	4.33		528	(33)
Education	10,929			130		4.74		9,459			141		5.89		1,470			(115	)	Education	12,632	135	4.26		11,183	145	5.21		1,449	(95)

Other retail	6,260			114		7.22		5,873			121		8.21		387			(99	)	Other retail	5,612	100	7.13		6,557	123	7.52		(945)	(39)
Total retail loans	61,051			625		4.08		60,274			740		4.88		777			(80	)	Total retail loans	62,837	606	3.86		61,346	658	4.31		1,491	(45)
Total loans and leases	124,912			1,120		3.54		117,257			1,356		4.56		7,655			(102	)	Total loans and leases	123,490	1,058	3.42		128,755	1,192	3.69		(5,265)	(27)
Loans held for sale, at fair value	3,295			21		2.60		1,970			19		3.71		1,325			(111	)	Loans held for sale, at fair value	3,751	24	2.55		2,710	20	2.85		1,041	(30)
Other loans held for sale	1,061			16		6.02		134			2		6.42		927			(40	)	Other loans held for sale	233	2	2.99		510	7	4.66		(277)	(167)
Interest-earning assets	160,176			1,280		3.15		146,475			1,538		4.15		13,701			(100	)	Interest-earning assets	166,333	1,211	2.90		162,390	1,350	3.33		3,943	(43)
Allowance for loan and lease losses	(2,444		)					(1,226		)					(1,218		)
Goodwill	7,050							7,044							6
Other noninterest-earning assets	12,893							9,817							3,076

Noninterest-earning assets																				Noninterest-earning assets	18,123				17,403				720
Total assets		$177,675							$162,110							$15,565				Total assets	$184,456				$179,793				$4,663
Liabilities and Stockholders’ Equity																				Liabilities and Stockholders’ Equity
Checking with interest		$26,638			$8	0.13	%		$23,422			$52	0.88	%		$3,216		(75)		Checking with interest	$27,278	$5	0.08	%	$26,312	$11	0.17	%	$966	(9)
Money market accounts	45,187			33		0.28		37,161			116		1.24		8,026			(96)		Money market accounts	49,394	21	0.17		45,187	39	0.35		4,207	(18)
Regular savings	16,902			10		0.24		13,442			20		0.59		3,460			(35)		Regular savings	20,077	5	0.10		15,883	15	0.39		4,194	(29)
Term deposits	12,032			38		1.25		20,951			109		2.05		(8,919		)	(80)		Term deposits	6,970	11	0.61		16,470	59	1.44		(9,500)	(83)
Total interest-bearing deposits	100,759			89		0.35		94,976			297		1.24		5,783			(89)		Total interest-bearing deposits	103,719	42	0.16		103,852	124	0.48		(133)	(32)

Short-term borrowed funds	240			—		0.13		600			2		1.43		(360		)	(130)		Short-term borrowed funds	69	—	0.87		222	—	0.29		(153)	58
Long-term borrowed funds	9,196			54		2.35		12,134			94		3.07		(2,938		)	(72)		Long-term borrowed funds	7,434	45	2.41		11,755	66	2.22		(4,321)	19
Total borrowed funds	9,436			54		2.30		12,734			96		3.00		(3,298		)	(70)		Total borrowed funds	7,503	45	2.40		11,977	66	2.18		(4,474)	22
Total interest-bearing liabilities	110,195			143		0.52		107,710			393		1.45		2,485			(93)		Total interest-bearing liabilities	111,222	87	0.31		115,829	190	0.66		(4,607)	(35)
Demand deposits	40,608							28,945							11,663					Demand deposits	46,630				37,745				8,885
Other liabilities	4,374							3,789							585					Other liabilities	3,741				4,086				(345)
Total liabilities	155,177							140,444							14,733					Total liabilities	161,593				157,660				3,933
Stockholders’ equity	22,498							21,666							832					Stockholders’ equity	22,863				22,133				730
Total liabilities and stockholders’ equity		$177,675							$162,110							$15,565				Total liabilities and stockholders’ equity	$184,456				$179,793				$4,663
Interest rate spread						2.63	%						2.70	%				(7)		Interest rate spread			2.59	%			2.67	%		(8)
Net interest income and net interest margin					$1,137	2.82	%					$1,145	3.10	%				(28)		Net interest income and net interest margin		$1,124	2.71	%		$1,160	2.87	%		(16)
Net interest income and net interest margin, FTE⁽¹⁾					$1,140	2.83	%					$1,150	3.12	%				(29)		Net interest income and net interest margin, FTE(1)		$1,126	2.72	%		$1,163	2.88	%		(16)
Memo: Total deposits (interest-bearing and demand)		$141,367			$89	0.25	%		$123,921			$297	0.95	%		$17,446		(70) bps		Memo: Total deposits (interest-bearing and demand)	$150,349	$42	0.11	%	$141,597	$124	0.35	%	$8,752	(24) bps



	Nine Months Ended September 30,
	2020							2019								Change
(dollars in millions)	Average Balances			Income/ Expense		Yields/ Rates		Average Balances			Income/ Expense		Yields/ Rates			Average Balances			Yields/ Rates (bps)
Assets:
Interest-bearing cash and due from banks and deposits in banks		$4,453			$8	0.24	%		$1,400			$23	2.15	%	��		$3,053		(191) bps
Taxable investment securities	25,056			398		2.12		25,466			483		2.53			(410		)	(41	)
Non-taxable investment securities	4			—		2.60		5			—		2.60			(1		)	—
Total investment securities	25,060			398		2.12		25,471			483		2.53			(411		)	(41	)
Commercial	46,813			1,212		3.40		41,597			1,373		4.35			5,216			(95	)
Commercial real estate	14,354			341		3.12		13,179			486		4.86			1,175			(174	)
Leases	2,427			50		2.74		2,744			59		2.86			(317		)	(12	)
Total commercial loans and leases	63,594			1,603		3.31		57,520			1,918		4.40			6,074			(109	)
Residential mortgages	19,056			467		3.27		19,245			522		3.61			(189		)	(34	)
Home equity	12,730			363		3.81		13,774			541		5.26			(1,044		)	(145	)
Automobile	12,063			388		4.30		12,030			374		4.16			33			14
Education	10,908			424		5.19		9,256			412		5.94			1,652			(75	)
Other retail	6,556			369		7.51		5,736			362		8.43			820			(92	)
Total retail loans	61,313			2,011		4.38		60,041			2,211		4.92			1,272			(54	)
Total loans and leases	124,907			3,614		3.84		117,561			4,129		4.67			7,346			(83	)
Loans held for sale, at fair value	2,635			56		2.85		1,514			45		3.92			1,121			(107	)
Other loans held for sale	791			32		5.32		161			8		6.41			630			(109	)
Interest-earning assets	157,846			4,108		3.45		146,107			4,688		4.26			11,739			(81	)
Allowance for loan and lease losses	(2,109		)					(1,239		)						(870		)
Goodwill	7,049							7,034								15
Other noninterest-earning assets	12,106							9,442								2,664
Total assets		$174,892							$161,344								$13,548
Liabilities and Stockholders’ Equity:
Checking with interest		$25,857			$56	0.29	%		$23,444			$161	0.92	%			$2,413		(63)
Money market accounts	43,411			165		0.51		35,873			340		1.27			7,538			(76)
Regular savings	15,667			43		0.37		13,134			58		0.59			2,533			(22)
Term deposits	15,692			176		1.49		21,456			333		2.07			(5,764		)	(58)
Total interest-bearing deposits	100,627			440		0.58		93,907			892		1.27			6,720			(69)
Short-term borrowed funds	368			1		0.53		720			8		1.56			(352		)	(103)
Long-term borrowed funds	11,660			210		2.39		13,076			317		3.22			(1,416		)	(83)
Total borrowed funds	12,028			211		2.33		13,796			325		3.13			(1,768		)	(80)
Total interest-bearing liabilities	112,655			651		0.77		107,703			1,217		1.51			4,952			(74)
Demand deposits	35,922							28,601								7,321
Other liabilities	4,172							3,637								535
Total liabilities	152,749							139,941								12,808
Stockholders’ equity	22,143							21,403								740
Total liabilities and stockholders’ equity		$174,892							$161,344								$13,548
Interest rate spread						2.68	%						2.75	%					(7)
Net interest income and net interest margin					$3,457	2.93	%					$3,471	3.18	%					(25)
Net interest income and net interest margin, FTE⁽¹⁾					$3,467	2.93	%					$3,488	3.19	%					(26)
Memo: Total deposits (interest-bearing and demand)		$136,549			$440	0.43	%		$122,508			$892	0.97	%			$14,041		(54) bps


Table 6: Major Components of Net Interest Income, Year-to-Date
	Six Months Ended June 30,
	2021				2020				Change
(dollars in millions)	Average Balances	Income/ Expense	Yields/ Rates		Average Balances	Income/ Expense	Yields/ Rates		Average Balances	Yields/ Rates (bps)
Assets:
Interest-bearing cash and due from banks and deposits in banks	$11,061	$6	0.11	%	$3,545	$6	0.36	%	$7,516	(25) bps
Taxable investment securities	27,316	252	1.84		25,259	277	2.24		2,057	(40)
Non-taxable investment securities	3	—	2.60		4	—	2.60		(1)	—
Total investment securities	27,319	252	1.84		25,263	277	2.24		2,056	(40)
Commercial and industrial	44,338	692	3.10		46,797	829	3.50		(2,459)	(40)
Commercial real estate	14,574	189	2.58		14,208	245	3.40		366	(82)
Leases	1,852	25	2.73		2,454	34	2.79		(602)	(6)
Total commercial loans and leases	60,764	906	2.97		63,459	1,108	3.45		(2,695)	(48)
Residential mortgages	19,817	302	3.05		18,869	314	3.33		948	(28)
Home equity	11,912	187	3.16		12,889	263	4.10		(977)	(94)
Automobile	12,378	250	4.07		12,085	260	4.33		293	(26)
Education	12,534	269	4.32		10,897	294	5.42		1,637	(110)


Other retail	5,765	205	7.19		6,706	255	7.65		(941)	(46)
Total retail loans	62,406	1,213	3.91		61,446	1,386	4.53		960	(62)
Total loans and leases	123,170	2,119	3.44		124,905	2,494	3.98		(1,735)	(54)
Loans held for sale, at fair value	3,535	42	2.40		2,300	35	3.03		1,235	(63)
Other loans held for sale	348	8	4.48		655	16	4.45		(307)	3
Interest-earning assets	165,433	2,427	2.94		156,668	2,828	3.61		8,765	(67)



Noninterest-earning assets	18,085				16,817				1,268
Total assets	$183,518				$173,485				$10,033
Liabilities and Stockholders’ Equity:
Checking with interest	$26,700	$11	0.09	%	$25,462	$48	0.38	%	$1,238	(29)
Money market accounts	49,465	43	0.17		42,513	132	0.63		6,952	(46)
Regular savings	19,348	10	0.10		15,042	33	0.44		4,306	(34)
Term deposits	7,767	28	0.73		17,543	138	1.58		(9,776)	(85)
Total interest-bearing deposits	103,280	92	0.18		100,560	351	0.70		2,720	(52)


Short-term borrowed funds	109	—	0.59		433	1	0.64		(324)	(5)
Long-term borrowed funds	7,882	94	2.38		12,906	156	2.40		(5,024)	(2)
Total borrowed funds	7,991	94	2.36		13,339	157	2.35		(5,348)	1
Total interest-bearing liabilities	111,271	186	0.34		113,899	508	0.90		(2,628)	(56)
Demand deposits	45,230				33,553				11,677
Other liabilities	4,297				4,070				227
Total liabilities	160,798				151,522				9,276
Stockholders’ equity	22,720				21,963				757
Total liabilities and stockholders’ equity	$183,518				$173,485				$10,033
Interest rate spread			2.60	%			2.71	%		(11)
Net interest income and net interest margin		$2,241	2.73	%		$2,320	2.98	%		(25)
Net interest income and net interest margin, FTE(1)		$2,246	2.74	%		$2,327	2.99	%		(25)
Memo: Total deposits (interest-bearing and demand)	$148,510	$92	0.12	%	$134,113	$351	0.53	%	$14,397	(41) bps



	Consumer Banking				Commercial Banking
	Nine Months Ended September 30,				Nine Months Ended September 30,
(dollars in millions)	2020		2019		2020		2019
Net interest income		$2,452		$2,386		$1,205		$1,103
Noninterest income	1,280		860		413		432
Total revenue	3,732		3,246		1,618		1,535
Noninterest expense	2,215		2,133		644		639
Profit before credit losses	1,517		1,113		974		896
Charge-offs	232		228		274		73
Income before income tax expense	1,285		885		700		823
Income tax expense	322		219		147		184
Net income		$963		$666		$553		$639
Average Balances:
Total assets		$71,227		$65,624		$61,722		$55,793
Total loans and leases⁽¹⁾⁽²⁾	67,763		62,803		58,784		54,299
Deposits	90,377		84,619		38,905		30,535
Interest-earning assets	67,866		62,856		59,201		54,585


Table 18: Commercial Loans and Leases by Industry Sector
	June 30, 2021			December 31, 2020
(dollars in millions)	Balance	% of Total Loans and Leases		Balance	% of Total Loans and Leases
Finance and insurance	$6,693	5	%	$6,473	5	%
Health, pharma, and social assistance	3,078	3		3,253	3
Accommodation and food services	3,127	3		3,159	3
Professional, scientific, and technical services	2,644	2		2,804	2
Other manufacturing	3,705	3		3,686	3
Technology	3,765	3		3,546	3
Retail trade	2,224	2		2,312	2
Energy and related	1,936	2		2,237	2
Wholesale trade	2,226	2		1,976	2
Arts, entertainment, and recreation	1,131	1		1,383	1
Other services	1,758	1		1,360	1
Administrative and waste management services	1,261	1		1,327	1
Transportation and warehousing	1,196	1		1,169	1
Consumer products manufacturing	1,075	1		1,078	1
Automotive	1,066	1		1,057	1
Educational services	693	—		844	—
Chemicals	726	—		736	—
Real estate and rental and leasing	949	1		734	—
All other (2)	110	—		884	1
Total commercial and industrial	39,363	32		40,018	32
Real estate and rental and leasing	12,907	11		13,167	11
Accommodation and food services	814	1		749	1
Finance and insurance	498	—		498	—
All other (2)	193	—		238	—
Total commercial real estate	14,412	12		14,652	12
Total leases	1,829	1		1,968	2
Total commercial (1,3)	$55,604	45	%	$56,638	46	%


Table 4: Summary of Consolidated Balance Sheet data							Table 4: Summary of Consolidated Balance Sheet data
(dollars in millions)	September 30, 2020			December 31, 2019			(dollars in millions)	June 30, 2021		December 31, 2020
BALANCE SHEET DATA:							BALANCE SHEET DATA:
Total assets		$179,228			$165,733		Total assets	$185,104		$183,349
Loans held for sale, at fair value	3,587			1,946			Loans held for sale, at fair value	3,616		3,564
Other loans held for sale	127			1,384			Other loans held for sale	82		439
Loans and leases	124,071			119,088			Loans and leases	122,581		123,090
Allowance for loan and lease losses	(2,542		)	(1,252		)	Allowance for loan and lease losses	(1,947)		(2,443)
Total securities	26,124			24,669			Total securities	27,976		26,847
Goodwill	7,050			7,044			Goodwill	7,050		7,050
Total liabilities	156,759			143,532			Total liabilities	161,905		160,676
Total deposits	142,921			125,313			Total deposits	150,636		147,164
Short-term borrowed funds	252			274			Short-term borrowed funds	62		243
Long-term borrowed funds	9,109			14,047			Long-term borrowed funds	6,957		8,346
Total stockholders’ equity	22,469			22,201			Total stockholders’ equity	23,199		22,673
OTHER BALANCE SHEET DATA:							OTHER BALANCE SHEET DATA:
Asset Quality Ratios:							Asset Quality Ratios:
Allowance for loan and lease losses to loans and leases	2.05		%	1.05		%	Allowance for loan and lease losses to loans and leases	1.59	%	1.98	%
Allowance for credit losses to loans and leases	2.21			1.09			Allowance for credit losses to loans and leases	1.70		2.17
Allowance for credit losses to loans and leases, excluding the impact of PPP loans⁽¹⁾	2.29			1.09			Allowance for credit losses to loans and leases, excluding the impact of PPP loans(1)	1.75		2.24
Allowance for loan and lease losses to nonaccruing loans and leases	199.04			177.99			Allowance for loan and lease losses to nonaccruing loans and leases	250		240
Allowance for credit losses to nonaccruing loans and leases	214.22			184.31			Allowance for credit losses to nonaccruing loans and leases	267		262
Nonaccruing loans and leases to loans and leases	1.03			0.59			Nonaccruing loans and leases to loans and leases	0.64		0.83
Capital Ratios:							Capital Ratios:
CET1 capital ratio	9.8		%	10.0		%	CET1 capital ratio	10.3	%	10.0	%
Tier 1 capital ratio	11.2			11.1			Tier 1 capital ratio	11.6		11.3
Total capital ratio	13.3			13.0			Total capital ratio	13.5		13.4
Tier 1 leverage ratio	9.5			10.0			Tier 1 leverage ratio	9.7		9.4


Table 7: Noninterest Income																			Table 7: Noninterest Income
	Three Months Ended September 30,									Nine Months Ended September 30,										Three Months Ended June 30,					Six Months Ended June 30,
(in millions)	2020		2019		Change			Percent		2020		2019		Change			Percent		(in millions)	2021	2020	Change	Percent		2021	2020	Change	Percent
Mortgage banking fees																			Mortgage banking fees	$85	$276	($191)	(69	%)	$250	$435	($185)	(43	%)
Service charges and fees		$97		$128		($31	)	(24	%)		$299		$377		($78	)	(21	%)	Service charges and fees	100	84	16	19		199	202	(3)	(1)
Mortgage banking fees	287		117		170			145		722		222		500			225
Capital markets fees																			Capital markets fees	91	61	30	49		172	104	68	65
Card fees	57		67		(10		)	(15	)	161		190		(29		)	(15	)	Card fees	64	48	16	33		119	104	15	14
Capital markets fees	58		39		19			49		162		150		12			8
Trust and investment services fees	53		50		3			6		151		150		1			1		Trust and investment services fees	60	45	15	33		118	98	20	20
Letter of credit and loan fees																			Letter of credit and loan fees	38	31	7	23		76	65	11	17
Foreign exchange and interest rate products	27		35		(8		)	(23	)	85		106		(21		)	(20	)	Foreign exchange and interest rate products	28	34	(6)	(18)		56	58	(2)	(3)
Letter of credit and loan fees	37		34		3			9		102		100		2			2
Securities gains, net	1		3		(2		)	(67	)	4		15		(11		)	(73	)	Securities gains, net	3	3	—	—		6	3	3	100
Other income ⁽¹⁾	37		20		17			85		55		73		(18		)	(25	)	Other income (1)	16	8	8	100		31	18	13	72
Noninterest income		$654		$493		$161		33	%		$1,741		$1,383		$358		26	%	Noninterest income	$485	$590	($105)	(18	%)	$1,027	$1,087	($60)	(6	%)


Table 8: Noninterest Expense																			Table 8: Noninterest Expense
	Three Months Ended September 30,									Nine Months Ended September 30,										Three Months Ended June 30,					Six Months Ended June 30,
(in millions)	2020		2019		Change			Percent		2020		2019		Change			Percent		(in millions)	2021	2020	Change	Percent		2021	2020	Change	Percent
Salaries and employee benefits		$524		$508		$16		3	%		$1,586		$1,524		$62		4	%	Salaries and employee benefits	$524	$513	$11	2	%	$1,072	$1,062	$10	1	%
Equipment and software expense	149		130		19			15		424		381		43			11
Equipment and software																			Equipment and software	155	142	13	9		307	275	32	12
Outside services	139		128		11			9		405		356		49			14		Outside services	137	131	6	5		276	266	10	4
Occupancy	81		80		1			1		247		245		2			1		Occupancy	82	82	—	—		170	166	4	2
Other operating expense	95		127		(32		)	(25	)	317		355		(38		)	(11	)	Other operating expense	93	111	(18)	(16)		184	222	(38)	(17)
Noninterest expense		$988		$973		$15		2	%		$2,979		$2,861		$118		4	%	Noninterest expense	$991	$979	$12	1	%	$2,009	$1,991	$18	1	%


Table 9: Selected Financial Data for Business Operating Segments, Quarter-to-Date									Table 9: Selected Financial Data for Business Operating Segments, Quarter-to-Date
	Consumer Banking				Commercial Banking					Consumer Banking		Commercial Banking
	Three Months Ended September 30,				Three Months Ended September 30,					Three Months Ended June 30,		Three Months Ended June 30,
(dollars in millions)	2020		2019		2020		2019		(dollars in millions)	2021	2020	2021	2020
Net interest income		$845		$799		$421		$360	Net interest income	$897	$814	$419	$419
Noninterest income	495		336		144		133		Noninterest income	283	428	178	144
Total revenue	1,340		1,135		565		493		Total revenue	1,180	1,242	597	563
Noninterest expense	742		718		210		213		Noninterest expense	751	735	226	213
Profit before credit losses	598		417		355		280		Profit before credit losses	429	507	371	350
Charge-offs	55		83		161		27
Net charge-offs									Net charge-offs	45	80	34	70
Income before income tax expense	543		334		194		253		Income before income tax expense	384	427	337	280
Income tax expense	136		83		41		57		Income tax expense	98	107	72	59
Net income		$407		$251		$153		$196	Net income	$286	$320	$265	$221
Average Balances:									Average Balances:
Total assets		$73,605		$66,365		$60,889		$55,614	Total assets	$75,600	$71,634	$57,527	$65,280
Total loans and leases⁽¹⁾⁽²⁾	69,719		63,553		57,796		53,814		Total loans and leases(1)(2)	71,389	68,205	54,758	62,011
Deposits	94,212		85,595		41,393		31,491		Deposits	100,933	91,648	44,049	41,750
Interest-earning assets	69,925		63,605		58,177		54,087		Interest-earning assets	72,308	68,256	55,143	62,422


Table 10: Selected Financial Data for Business Operating Segments, Year-to-Date
	Consumer Banking		Commercial Banking
	Six Months Ended June 30,		Six Months Ended June 30,
(dollars in millions)	2021	2020	2021	2020
Net interest income	$1,760	$1,607	$840	$784
Noninterest income	634	785	348	269
Total revenue	2,394	2,392	1,188	1,053
Noninterest expense	1,501	1,473	453	434
Profit before credit losses	893	919	735	619
Net charge-offs	104	177	135	113
Income before income tax expense	789	742	600	506
Income tax expense	201	186	124	106
Net income	$588	$556	$476	$400
Average Balances:
Total assets	$75,443	$70,024	$57,632	$62,142
Total loans and leases(1)(2)	70,792	66,774	54,786	59,283
Deposits	99,067	88,438	44,012	37,647
Interest-earning assets	71,725	66,825	55,159	59,719


Table 11: Amortized Cost and Fair Value of AFS and HTM Securities
	June 30, 2021		December 31, 2020
(in millions)	Amortized Cost	Fair Value	Amortized Cost	Fair Value
U.S. Treasury and other	$11	$11	$11	$11
State and political subdivisions	3	3	3	3
Mortgage-backed securities, at fair value:
Federal agencies and U.S. government sponsored entities	23,960	24,112	21,954	22,506
Other/non-agency	267	280	396	422
Total mortgage-backed securities, at fair value	24,227	24,392	22,350	22,928

Collateralized loan obligations, at fair value	177	177	—	—
Total debt securities available for sale, at fair value	$24,418	$24,583	$22,364	$22,942
Mortgage-backed securities, at cost:
Federal agencies and U.S. government sponsored entities	$1,887	$1,964	$2,342	$2,464

Total mortgage-backed securities, at cost	1,887	1,964	2,342	2,464
Asset-backed securities, at cost	824	826	893	893
Total debt securities held to maturity	$2,711	$2,790	$3,235	$3,357
Total debt securities available for sale and held to maturity	$27,129	$27,373	$25,599	$26,299
Equity securities, at cost	$602	$602	$604	$604
Equity securities, at fair value	80	80	66	66


Table 12: Composition of Loans and Leases, Excluding LHFS										Table 12: Composition of Loans and Leases, Excluding LHFS
(in millions)	September 30, 2020		December 31, 2019		Change			Percent		(in millions)	June 30, 2021		December 31, 2020		Change		Percent
Commercial⁽¹⁾		$45,185		$41,479		$3,706		9	%
Commercial and industrial (1)										Commercial and industrial (1)	$42,842		$44,173		($1,331)		(3)	%
Commercial real estate	14,889		13,522		1,367			10		Commercial real estate	14,412		14,652		(240)		(2)
Leases	2,288		2,537		(249		)	(10	)	Leases	1,829		1,968		(139)		(7)
Total commercial loans and leases	62,362		57,538		4,824			8
Total commercial										Total commercial	59,083		60,793		(1,710)		(3)
Residential mortgages(2)	19,633		19,083		550			3		20,538		19,539		999		5
Home equity	12,322		13,154		(832		)	(6	)	Home equity	11,841		12,149		(308)		(3)
Automobile	12,035		12,120		(85		)	(1	)	Automobile	12,780		12,153		627		5
Education	11,631		10,347		1,284			12		Education	12,800		12,308		492		4
Other retail	6,088		6,846		(758		)	(11	)	Other retail	5,539		6,148		(609)		(10)
Total retail loans	61,709		61,550		159			—
Total retail										Total retail	63,498		62,297		1,201		2
Total loans and leases⁽²⁾		$124,071		$119,088		$4,983		4	%	$122,581		$123,090		($509)		—	%


•	~~Approximately~~ ~~$795 million, or~~ ~~1.4%, of our commercial portfolio, and~~


Table 13: ACL and Related Coverage Ratios by Portfolio
	June 30, 2021				December 31, 2020
(in millions)	Loans and Leases	Allowance	Coverage		Loans and Leases	Allowance	Coverage
Allowance for Loan and Lease Losses
Commercial and industrial	$42,842	$674	1.57	%	$44,173	$821	1.86	%
Commercial real estate	14,412	218	1.51		14,652	360	2.46
Leases	1,829	61	3.36		1,968	52	2.67
Total commercial	59,083	953	1.61		60,793	1,233	2.03
Residential mortgages	20,538	140	0.68		19,539	141	0.72
Home equity	11,841	102	0.86		12,149	134	1.10
Automobile	12,780	168	1.31		12,153	200	1.65
Education	12,800	322	2.51		12,308	361	2.93
Other retail	5,539	262	4.74		6,148	374	6.07
Total retail	63,498	994	1.57		62,297	1,210	1.94
Total loans and leases	$122,581	$1,947	1.59	%	$123,090	$2,443	1.98	%
Allowance for Unfunded Lending Commitments
Commercial(1)		$121	1.82	%		$186	2.33	%
Retail(2)		13	1.59			41	2.01
Total allowance for unfunded lending commitments		134				227
Allowance for credit losses(3)	$122,581	$2,081	1.70	%	$123,090	$2,670	2.17	%


Table 14: Nonaccrual Loans and Leases
(dollars in millions)	June 30, 2021		December 31, 2020		Change		Percent
Commercial and industrial	$163		$280		($117)		(42	%)
Commercial real estate	102		176		(74)		(42)
Leases	1		2		(1)		(50)
Total commercial loans and leases	266		458		(192)		(42)
Residential mortgages(1)	174		167		7		4
Home equity	234		276		(42)		(15)
Automobile	62		72		(10)		(14)
Education	21		18		3		17
Other retail	22		28		(6)		(21)
Total retail loans	513		561		(48)		(9)
Nonaccrual loans and leases	$779		$1,019		($240)		(24	%)
Nonaccrual loans and leases to total loans and leases	0.64	%	0.83	%	(19	bps)
Allowance for loan and lease losses to nonaccruing loans and leases	250		240		10	%
Allowance for credit losses to nonaccruing loans and leases	267		262		5	%


Table 15: Net Charge-offs and Charge-Off Ratios, Quarter-to-Date
	Three Months Ended June 30,				Three Months Ended June 30,
(dollars in millions)		2021	2020	Change		2021		2020		Change
Commercial and industrial		$28	$65	($37)		0.25	%	0.52	%	(27	bps)
Commercial real estate		—	—	—		—		—		—
Leases		13	6	7		2.97		1.03		194
Total commercial		41	71	(30)		0.27		0.42		(15)
Residential mortgages		(1)	1	(2)		(0.03)		0.02		(5)
Home equity		(10)	(2)	(8)		(0.33)		(0.05)		(28)
Automobile		(2)	20	(22)		(0.04)		0.68		(72)
Education		13	10	3		0.40		0.34		6
Other retail		37	47	(10)		2.63		2.93		(30)
Total retail loans		37	76	(39)		0.24		0.50		(26)
Total net charge-offs		$78	$147	($69)		0.25	%	0.46	%	(21	bps)


Table 16: Net Charge-offs and Charge-Off Ratios, Year-to-Date
	Six Months Ended June 30,				Six Months Ended June 30,
(dollars in millions)		2021	2020	Change		2021		2020		Change
Commercial and industrial		$105	$109	($4)		0.48	%	0.47	%	1	bps
Commercial real estate		26	—	26		0.36		—		36
Leases		14	6	8		1.58		0.55		103
Total commercial		145	115	30		0.48		0.37		11
Residential mortgages		(2)	1	(3)		(0.02)		0.01		(3)
Home equity		(17)	(5)	(12)		(0.29)		(0.08)		(21)
Automobile		9	47	(38)		0.15		0.78		(63)
Education		20	24	(4)		0.32		0.44		(12)
Other retail		81	102	(21)		2.82		3.07		(25)
Total retail loans		91	169	(78)		0.29		0.56		(27)
Total net charge-offs		$236	$284	($48)		0.39	%	0.46	%	(7	bps)


Table 17: Commercial Loans and Leases by Regulatory Classification
	June 30, 2021
		Criticized
(in millions)	Pass	Special Mention	Substandard	Doubtful	Total
Commercial and industrial(1)	$39,945	$1,145	$1,631	$121	$42,842
Commercial real estate	13,115	666	604	27	14,412
Leases	1,776	29	23	1	1,829
Total commercial	$54,836	$1,840	$2,258	$149	$59,083


Table 19: Aging of Retail Loans as a Percentage of Loan Class																									Table 19: Aging of Retail Loans as a Percentage of Loan Class
																										June 30, 2021								December 31, 2020
																										Days Past Due								Days Past Due
	September 30, 2020								June 30, 2020								December 31, 2019									Current-29		30-59		60-89		90+			Current-29		30-59		60-89		90+
	Days Past Due								Days Past Due								Days Past Due
	Current-29		30-59		60-89		90 or More		Current-29		30-59		60-89		90 or More		Current-29		30-59		60-89		90 or More
Residential mortgages	98.96	%	0.33	%	0.08	%	0.63	%	98.95	%	0.34	%	0.17	%	0.54	%	99.29	%	0.18	%	0.09	%	0.44	%

Residential mortgages(1)																									Residential mortgages(1)	96.83	%	0.86	%	0.30	%	2.03	%		98.73	%	0.30	%	0.11	%	0.86	%
Home equity	97.44		0.41		0.24		1.91		97.37		0.57		0.33		1.73		97.57		0.69		0.30		1.44		Home equity	98.03		0.27		0.14		1.56			97.53		0.50		0.23		1.74
Automobile	98.26		1.22		0.43		0.09		97.97		1.35		0.55		0.13		97.26		1.87		0.67		0.20		Automobile	98.69		0.89		0.34		0.08			97.93		1.40		0.53		0.14
Education	99.61		0.24		0.10		0.05		99.59		0.24		0.11		0.06		99.45		0.29		0.14		0.12		Education	99.58		0.23		0.10		0.09			99.56		0.27		0.11		0.06
Other retail	98.64		0.54		0.36		0.46		98.54		0.49		0.39		0.58		98.29		0.66		0.45		0.60		Other retail	98.47		0.67		0.36		0.51			98.36		0.62		0.47		0.55
Total retail loans	98.62	%	0.52	%	0.21	%	0.65	%	98.51	%	0.58	%	0.29	%	0.62	%	98.43	%	0.70	%	0.30	%	0.57	%
Total retail																									Total retail	98.12	%	0.61	%	0.24	%	1.02	%		98.47	%	0.58	%	0.25	%	0.70	%


Table 20: Retail Asset Quality Metrics					Table 20: Retail Asset Quality Metrics
	September 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
Average refreshed FICO for total portfolio	769		764		Average refreshed FICO for total portfolio	769		771
CLTV ratio for secured real estate⁽¹⁾	60	%	59	%	CLTV ratio for secured real estate(1)	58	%	60	%
Nonaccruing retail loans to total retail	0.84		0.74		Nonaccruing retail loans to total retail	0.81		0.90


Table 21: Accruing and Nonaccruing Troubled Debt Restructurings
	June 30, 2021
		As a % of Accruing TDRs
(dollars in millions)	Accruing	30-89 Days Past Due		90+ Days Past Due		Nonaccruing	Total
Commercial and industrial	150	0.3	%	—	%	70	220
Commercial real estate	—	—		—		9	9
Total commercial	150	0.3		—		79	229
Residential mortgages(1)	343	3.9		9.5		34	377
Home equity	211	0.5		—		81	292
Automobile	3	0.1		—		39	42
Education	113	0.4		0.2		11	124
Other retail	22	0.2		—		3	25
Total retail	692	5.1		9.6		168	860
Total	$842	5.4	%	9.6	%	$247	$1,089



	September 30, 2020
			As a % of Accruing Retail TDRs
(dollars in millions)	Accruing		30-89 Days Past Due		90+ Days Past Due		Nonaccruing		Total
Residential mortgages		$151	2.3	%	1.1	%		$49		$200
Home equity	234		1.1		—		82		316
Automobile	3		0.1		—		38		41
Education	120		0.7		0.3		9		129
Other retail	27		0.3		—		2		29
Total		$535	4.5	%	1.4	%		$180		$715


Table 22: Composition of Deposits										Table 22: Composition of Deposits
(in millions)	September 30, 2020		December 31, 2019		Change			Percent		(in millions)	June 30, 2021	December 31, 2020	Change	Percent
Demand		$41,249		$29,233		$12,016		41	%	Demand	$47,480	$43,831	$3,649	8	%
Checking with interest	27,141		24,840		2,301			9		Checking with interest	28,074	27,204	870	3
Regular savings	17,237		13,779		3,458			25		Regular savings	20,382	18,044	2,338	13
Money market accounts	46,400		38,725		7,675			20		Money market accounts	48,150	48,569	(419)	(1)
Term deposits	10,894		18,736		(7,842		)	(42	)	Term deposits	6,550	9,516	(2,966)	(31)
Total deposits		$142,921		$125,313		$17,608		14	%	Total deposits	$150,636	$147,164	$3,472	2	%


Table 23: Summary of Long-Term Borrowed Funds					Table 23: Summary of Long-Term Borrowed Funds
(in millions)	September 30, 2020		December 31, 2019		(in millions)	June 30, 2021		December 31, 2020
Parent Company:					Parent Company:
2.375% fixed-rate senior unsecured debt, due July 2021(1)		$350		$349	$—		$350
4.150% fixed-rate subordinated debt, due September 2022 ⁽¹⁾⁽²⁾	181		348		168		182
3.750% fixed-rate subordinated debt, due July 2024 ⁽¹⁾⁽²⁾	159		250		90		159
4.023% fixed-rate subordinated debt, due October 2024 ⁽¹⁾⁽²⁾	25		42		17		25
4.350% fixed-rate subordinated debt, due August 2025 ⁽¹⁾⁽²⁾	193		249		133		193
4.300% fixed-rate subordinated debt, due December 2025⁽¹⁾⁽²⁾	450		750		336		450
2.850% fixed-rate senior unsecured notes, due July 2026	497		496		2.850% fixed-rate senior unsecured notes, due July 2026	497		497
2.500% fixed-rate senior unsecured notes, due February 2030	297		—		2.500% fixed-rate senior unsecured notes, due February 2030	298		297
3.250% fixed-rate senior unsecured notes, due April 2030	745		—		3.250% fixed-rate senior unsecured notes, due April 2030	745		745
2.638% fixed-rate subordinated debt, due September 2032 ⁽¹⁾	542		—
3.750% fixed-rate reset subordinated debt, due February 2031 (2)					3.750% fixed-rate reset subordinated debt, due February 2031 (2)	69		—
4.300% fixed-rate reset subordinated debt, due February 2031 (2)					4.300% fixed-rate reset subordinated debt, due February 2031 (2)	135		—
4.350% fixed-rate reset subordinated debt, due February 2031 (2)					4.350% fixed-rate reset subordinated debt, due February 2031 (2)	60		—
2.638% fixed-rate subordinated debt, due September 2032					2.638% fixed-rate subordinated debt, due September 2032	547		543
CBNA’s Global Note Program:					CBNA’s Global Note Program:
2.250% senior unsecured notes, due March 2020	—		700
2.678% floating-rate senior unsecured notes, due March 2020 ⁽²⁾	—		300
2.217% floating-rate senior unsecured notes, due May 2020 ⁽²⁾	—		250
2.200% senior unsecured notes, due May 2020	—		500
2.250% senior unsecured notes, due October 2020	750		750

2.550% senior unsecured notes, due May 2021	1,005		991		2.550% senior unsecured notes, due May 2021	—		1,003
3.250% senior unsecured notes, due February 2022	720		711		3.250% senior unsecured notes, due February 2022	708		716
0.985% floating-rate senior unsecured notes, due February 2022 ⁽²⁾	299		299
1.044% floating-rate senior unsecured notes, due May 2022 ⁽²⁾	250		250
0.874% floating-rate senior unsecured notes, due February 2022 (3)					0.874% floating-rate senior unsecured notes, due February 2022 (3)	300		299
0.951% floating-rate senior unsecured notes, due May 2022 (3)					0.951% floating-rate senior unsecured notes, due May 2022 (3)	250		250
2.650% senior unsecured notes, due May 2022	512		501		2.650% senior unsecured notes, due May 2022	507		510
3.700% senior unsecured notes, due March 2023	530		515		3.700% senior unsecured notes, due March 2023	520		527
1.168% floating-rate senior unsecured notes, due March 2023 ⁽²⁾	249		249
1.096% floating-rate senior unsecured notes, due March 2023 (3)					1.096% floating-rate senior unsecured notes, due March 2023 (3)	250		249
2.250% senior unsecured notes, due April 2025	745		—		2.250% senior unsecured notes, due April 2025	746		746
3.750% senior unsecured notes, due February 2026	555		521		3.750% senior unsecured notes, due February 2026	536		551
Additional Borrowings by CBNA and Other Subsidiaries:					Additional Borrowings by CBNA and Other Subsidiaries:
Federal Home Loan Bank advances, 0.943% weighted average rate, due through 2038	19		5,008
Federal Home Loan Bank advances, 0.909% weighted average rate, due through 2038					Federal Home Loan Bank advances, 0.909% weighted average rate, due through 2038	18		19
Other	36		18		Other	27		35
Total long-term borrowed funds		$9,109		$14,047	Total long-term borrowed funds	$6,957		$8,346


Table 24: Regulatory Capital Ratios Under the U.S. Basel III Standardized Rules											Table 24: Regulatory Capital Ratios Under the U.S. Basel III Standardized Rules
	September 30, 2020				December 31, 2019				Required Minimum plus Required CCB for Non-Leverage Ratios⁽¹⁾			June 30, 2021			December 31, 2020			Required Minimum plus Required CCB for Non-Leverage Ratios(1)
(in millions, except ratio data)	Amount		Ratio		Amount		Ratio				(in millions, except ratio data)	Amount	Ratio		Amount	Ratio
CET1 capital		$14,345	9.8	%		$14,304	10.0	%	7.0	%	CET1 capital	$15,266	10.3	%	$14,607	10.0	%	7.9	%
Tier 1 capital	16,310		11.2		15,874		11.1		8.5		Tier 1 capital	17,280	11.6		16,572	11.3		9.4
Total capital	19,427		13.3		18,542		13.0		10.5		Total capital	20,111	13.5		19,602	13.4		11.4
Tier 1 leverage	16,310		9.5		15,874		10.0		4.0		Tier 1 leverage	17,280	9.7		16,572	9.4		4.0
Risk-weighted assets	146,131				142,915						Risk-weighted assets	148,563			146,781
Quarterly adjusted average assets	171,938				158,782						Quarterly adjusted average assets	178,929			175,370


Table 25: Capital Composition Under the U.S. Basel III Capital Framework
(in millions)	June 30, 2021	December 31, 2020
Total common shareholders' equity	$21,185	$20,708
Exclusions:
Modified CECL transitional amount	420	568
Net unrealized (gains)/losses recorded in accumulated other comprehensive income (loss), net of tax:
Debt and equity securities	(78)	(380)
Derivatives	38	11
Unamortized net periodic benefit costs	421	429
Deductions:
Goodwill	(7,050)	(7,050)
Deferred tax liability associated with goodwill	383	379
Other intangible assets	(53)	(58)
Total common equity tier 1	15,266	14,607
Qualifying preferred stock	2,014	1,965
Total tier 1 capital	17,280	16,572
Qualifying subordinated debt(1)	1,284	1,204
Allowance for credit losses	2,081	2,670
Exclusions from tier 2 capital:
Modified AACL transitional amount	(534)	(682)
Excess allowance for credit losses(2)	—	(162)
Adjusted allowance for credit losses	1,547	1,826
Total capital	$20,111	$19,602


•	~~Declared and paid quarterly common stock dividends of $0.39 per share for first, second, and third quarters of~~ ~~2020, aggregating to~~ ~~$504 million~~;


•	~~Declared a semi-annual dividend of $27.50 per share in first quarter~~ ~~2020, a quarterly dividend of $13.48 per share in second quarter of 2020 and a quarterly dividend of $10.90 in the third quarter 2020 on the~~ ~~5.500%~~ ~~fixed-to-floating rate non-cumulative perpetual Series A Preferred Stock, aggregating to~~ ~~$13 million~~;


•	~~Declared a semi-annual dividend of $30.00 per share on the~~ ~~6.000%~~ ~~fixed-to-floating rate non-cumulative perpetual Series B Preferred Stock, aggregating to~~ ~~$9 million~~;


•	~~Declared quarterly dividends of $15.94 per share for first, second, and third quarters of~~ ~~2020~~ ~~on the~~ ~~6.375%~~ ~~fixed-to-floating rate non-cumulative perpetual Series C Preferred Stock, aggregating to~~ ~~$14 million~~;


•	~~Declared quarterly dividends of $15.88 per share for first, second, and third quarters of~~ ~~2020~~ ~~on the~~ ~~6.350%~~ ~~fixed-to-floating rate non-cumulative perpetual Series D Preferred Stock, aggregating to~~ ~~$14 million~~;


•	~~Declared quarterly dividends of $12.50 per share for first, second, and third quarters of~~ ~~2020~~ ~~on the 5.000% fixed-rate non-cumulative perpetual Series E Preferred Stock, aggregating to~~ ~~$17 million~~;


•	~~Declared quarterly dividends of $19.15 per share for the third quarter of~~ ~~2020~~ ~~on the 5.650% fixed-rate non-cumulative perpetual Series F Preferred Stock, aggregating to~~ $8 ~~million; and~~


•	~~Repurchased $270~~ ~~million of our outstanding common stock.~~


Table 26: CBNA's Capital Ratios Under the U.S. Basel III Standardized Rules
	June 30, 2021			December 31, 2020
(dollars in millions, except ratio data)	Amount	Ratio		Amount	Ratio
CET1 capital	$16,545	11.2	%	$16,032	10.9	%
Tier 1 capital	16,545	11.2		16,032	10.9
Total capital	19,217	13.0		18,980	13.0
Tier 1 leverage	16,545	9.3		16,032	9.2
Risk-weighted assets	148,105			146,558
Quarterly adjusted average assets	178,441			174,954