![]() 1Q15 Financial Results April 22, 2015 Exhibit 99.2 |
![]() Forward-looking statements 1 This document contains forward-looking statements within the Private Securities Litigation Reform Act of 1995. Any statement that does not describe historical or current facts is a forward-looking statement. These statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “goals,” “targets,” “initiatives,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would,” and “could.” Forward-looking statements are based upon the current beliefs and expectations of management, and on information currently available to management. Our statements speak as of the date hereof, and we do not assume any obligation to update these statements or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events. We caution you, therefore, against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. While there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation: negative economic conditions that adversely affect the general economy, housing prices, the job market, consumer confidence and spending habits which may affect, among other things, the level of nonperforming assets, charge-offs and provision expense; the rate of growth in the economy and employment levels, as well as general business and economic conditions; our ability to implement our strategic plan, including the cost savings and efficiency components, and achieve our indicative performance targets; our ability to remedy regulatory deficiencies and meet supervisory requirements and expectations; liabilities resulting from litigation and regulatory investigations; our capital and liquidity requirements (including under regulatory capital standards, such as the Basel III capital standards) and our ability to generate capital internally or raise capital on favorable terms; the effect of the current low interest rate environment or changes in interest rates on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgages held for sale; changes in interest rates and market liquidity, as well as the magnitude of such changes, which may reduce interest margins, impact funding sources and affect the ability to originate and distribute financial products in the primary and secondary markets; the effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin; financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including the Dodd-Frank Act and other legislation and regulation relating to bank products and services; a failure in or breach of our operational or security systems or infrastructure, or those of our third party vendors or other service providers, including as a result of cyber attacks; management’s ability to identify and manage these and other risks; and any failure by us to successfully replicate or replace certain functions, systems and infrastructure provided by The Royal Bank of Scotland Group plc (RBS). In addition to the above factors, we also caution that the amount and timing of any future common stock dividends or share repurchases will depend on our financial condition, earnings, cash needs, regulatory constraints, capital requirements (including requirements of our subsidiaries), and any other factors that our board of directors deems relevant in making such a determination. Therefore, there can be no assurance that we will pay any dividends to holders of our common stock, or as to the amount of any such dividends. In addition, the timing and manner of the sale of RBS’s remaining ownership of our common stock remains uncertain, and we have no control over the manner in which RBS may seek to divest such remaining shares. Any such sale would impact the price of our shares of common stock. More information about factors that could cause actual results to differ materially from those described in the forward-looking statements can be found under “Risk Factors” in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2014, filed with the United States Securities and Exchange Commission on March 3, 2015. Note: Percentage changes, per share amounts, and ratios presented in this document are calculated using whole dollars. |
![]() 1Q15 highlights 2 Improving profitability and returns GAAP diluted EPS of $0.38; Adjusted diluted EPS 1 of $0.39, up 30% from 1Q14 Adjusted ROTCE 1 of 6.7% vs. 5.2% in 1Q14 Adjusted operating leverage 1 of nearly 3% vs 1Q14 Strong capital, liquidity, and funding Excellent credit quality and progress on risk management Continued progress on strategic growth and efficiency initiatives Robust capital levels with a Common Equity Tier 1 Ratio of 12.2% with 2% growth from 4Q14 in tangible book value/share 1 to $23.96 Average deposits grew $9.3 billion, or 7% vs 1Q14; Loan-to-deposit ratio of 96% (99% on an average basis) Received non-objection on 2015 CCAR submission Supported successful $3.7 billion secondary offering, and in early April executed $250 million preferred stock offering and share repurchase Continued strong credit quality with net charge-off ratio of 0.23%, down 12 bps from 4Q14 and 18 bps from 1Q14 Allowance for loan and lease losses of 1.27% of total loans and leases stable with 4Q14 NPLs as a % of total loans and leases of 1.20% stable with 4Q14 YoY average loan growth of 9% with strength in Commercial, Auto, Mortgage YoY average loan growth of $7.8 billion broadly on target with $3.8 billion in commercial, $3.5 billion in auto, and a net $518 million across other portfolios Progress in recruiting mortgage loan officers: 442 at quarter end, up 29 in 1Q15 YoY Adjusted noninterest expense 1 down modestly – initiatives on track; have achieved 32% of targeted $200 million goal by end of 2016 1 Adjusted results are non-GAAP items and exclude the effect of net restructuring charges and special items associated with Chicago Divestiture, efficiency and effectiveness programs and separation from RBS. See important information on use of Non-GAAP items in the Appendix. “Chicago Divestiture“ refers to the June 23, 2014 sale of the Chicago-area Charter One branches, small business and select middle market relationships. |
![]() Financial summary – GAAP 3 1 Non-GAAP item. See important information on use of Non-GAAP items in the Appendix. 2 Includes held for sale. 3 Return on average tangible common equity. 4 Return on average total tangible assets. 5 Full-time equivalent employees. Linked quarter: Net income up 6%, reflecting positive operating leverage and lower provision expense NII down modestly on fewer days in the quarter Continued earning asset growth Noninterest income up $8 million on strong mortgage banking income Noninterest expense down $14 million driven by $23 million decrease in restructuring charges and special items Investments to drive future growth continue Prior year quarter: Net income up 26% NII up 3% despite an estimated $13 million decrease tied to Chicago Divestiture 8% average earning asset growth Runoff of pay-fixed swap book helped mitigate continued impact of the low-rate environment Noninterest income down 3% driven by an estimated $12 million impact of the Chicago Divestiture and $17 million lower securities gains, partially offset by underlying growth Noninterest expense held flat Provision decreased $63 million driven by lower charge-offs/strong recoveries Highlights 1Q15 change from $s in millions 1Q15 4Q14 1Q14 4Q14 1Q14 $ % $ % Net interest income 836 $ 840 $ 808 $ (4) $ — % 28 $ 3 % Noninterest income 347 339 358 8 2 % (11) (3) % Total revenue 1,183 1,179 1,166 4 — % 17 1 % Noninterest expense 810 824 810 (14) (2) % — — % Pre-provision profit 373 355 356 18 5 % 17 5 % Provision for credit losses 58 72 121 (14) (19) % (63) (52) % Income before income tax expense 315 283 235 32 11 % 80 34 % Income tax expense 106 86 69 20 23 % 37 54 % Net income 209 $ 197 $ 166 $ 12 $ 6 % 43 $ 26 % $s in billions Average interest earning assets 121.3 $ 118.7 $ 112.5 $ 2.6 $ 2 % 8.8 $ 8 % Average deposits 2 95.6 $ 94.8 $ 91.6 $ 0.8 $ 1 % 4.0 $ 4 % Key metrics Net interest margin 2.77 % 2.80 % 2.89 % (3) bps (12) bps Loan-to-deposit ratio (period-end) 2 95.8 % 97.9 % 95.5 % (205) bps 36 bps ROTCE 1,3 6.5 % 6.1 % 5.2 % 41 bps 129 bps ROTA 1,4 0.7 % 0.6 % 0.6 % 4 bps 10 bps Efficiency ratio 1 68 % 70 % 69 % (139) bps (94) bps FTEs 5 17,792 17,677 18,856 115 1 % (1,064) (6) % Per common share Diluted earnings 0.38 $ 0.36 $ 0.30 $ 0.02 $ 6 % 0.08 $ 27 % Tangible book value 1 23.96 $ 23.46 $ 23.08 $ 0.50 $ 2 % 0.88 $ 4 % Average diluted shares outstanding (in millions) 549.8 550.7 560.0 (0.9) — % (10.2) (2) % |
![]() Restructuring charges and special items 4 GAAP results included restructuring charges and special items related to enhancing efficiencies and improving processes across the organization and separation from The Royal Bank of Scotland Group plc (“RBS”). Expect to utilize the balance of the Chicago Divestiture gain to continue to reinvest to drive future growth, and to fund an additional $35-40 million of further restructuring charges and special expense items in 2Q15. 1 See page 27 for additional details. Restructuring charges and special items 1 1Q15 change from ($s in millions, except per share data) 1Q15 4Q14 1Q14 4Q14 1Q14 Pre-tax restructuring charges and special items 10 $ 33 $ — $ (23) $ (70) % 10 $ NM After-tax restructuring charges and special items 6 $ 20 $ — $ (14) $ (70) % 6 $ NM Diluted EPS impact (0.01) $ (0.03) $ — $ 0.02 $ (67) % (0.01) $ NM |
![]() 1Q15 change from $s in millions 1Q15 4Q14 1Q14 4Q14 1Q14 $ % $ % 184 Net interest income 836 $ 840 $ 808 $ (4) $ — % 28 $ 3 % 185 Noninterest income 347 339 358 8 2 % (11) (3) % 186 Total revenue 1,183 1,179 1,166 4 — % 17 1 % 187 1 800 791 810 9 1 % (10) (1) % 188 Adjusted pre-provision profit 1 383 388 356 (5) (1) % 27 8 % 189 Provision for credit losses 58 72 121 (14) (19) % (63) (52) % 190 Adjusted pretax income¹ 325 316 235 9 3 % 90 38 % 191 Adjusted income tax expense 1 110 99 69 11 11 % 41 59 % 192 Adjusted net income 1 215 $ 217 $ 166 $ (2) $ (1) % 49 $ 30 % s in billions 193 Average interest earning assets 121.3 $ 118.7 $ 112.5 $ 2.6 $ 2 % 8.8 $ 8 % 194 Average deposits 2 95.6 $ 94.8 $ 91.6 $ 0.8 $ 1 % 4.0 $ 4 % Key metrics 195 Net interest margin 2.77 % 2.80 % 2.89 % (3) bps (12) bps 109 Loan-to-deposit ratio (period-end) 2 95.8 % 97.9 % 95.5 % (205) bps 36 bps 197 Adjusted ROTCE 1,3 6.7 % 6.8 % 5.2 % (3) bps 149 bps 198 Adjusted ROTA 1,4 0.7 % 0.7 % 0.6 % — bps 12 bps 199 Adjusted efficiency ratio 1 68 % 67 % 69 % 54 bps (178) bps 200 FTEs 5 17,792 17,677 18,856 115 1 % (1,064) (6) % Per common share 156 Adjusted diluted EPS 1 0.39 $ 0.39 $ 0.30 $ — $ — % 0.09 $ 30 % 157 Tangible book value 1 23.96 $ 23.46 $ 23.08 $ 0.50 $ 2 % 0.88 $ 4 % 158 Average diluted shares outstanding (in millions) 549.8 550.7 560.0 (0.9) — % (10.2) (2) % Adjusted 1Q15 financial summary - excluding restructuring charges and special items 5 1 Non-GAAP item. Adjusted results exclude the effect of net restructuring charges and special items associated with Chicago Divestiture, efficiency and effectiveness programs and separation from RBS. See important information on use of Non-GAAP items in the Appendix. 2 Includes held for sale. 3 Return on average tangible common equity. 4 Return on average total tangible assets. 5 Full-time equivalent employees. Linked quarter: Adjusted net income broadly stable in seasonally weaker quarter Total revenue up $4 million – NII down $4 million driven by fewer days in the quarter ($12 million impact) – NIM broadly stable with underlying 4Q14 results – Noninterest income up $8 million on mortgage banking gain of $10 million, partially offset by seasonal impacts Adjusted noninterest expense increased 1% – Seasonally higher employee benefits and continued investments to drive growth, somewhat offset by the impact of efficiency initiatives Adjusted efficiency ratio up slightly Provision expense down 19% Prior year quarter: Adjusted net income up 30% reflecting positive operating leverage and a $63 million reduction in provision expense Total revenue up $17 million despite an estimated $25 million impact of Chicago Divestiture Adjusted efficiency ratio improved by 178 bps Highlights – NII up 3% with 8% earning asset growth, and NIM contraction of 12 bps – Noninterest income down 3% – Adjusted noninterest expense down 1% driven by Chicago Divestiture impact 1 Adjusted noninterest expense $ |
![]() $s in billions 1Q14 2Q14 3Q14 4Q14 1Q15 Retail loans $46.4 $47.5 $48.5 $49.8 $50.4 Commercial loans 39.7 40.5 41.2 42.3 43.5 Investments and cash² 25.2 26.8 27.3 26.5 27.1 Loans held for sale¹ 1.2 1.2 0.2 0.2 0.3 Total interest-earning assets $112.5 $116.0 $117.2 $118.7 $121.3 Loan Yields 3.41% 3.40% 3.33% 3.34% 3.34% Cost of funds 0.45% 0.43% 0.45% 0.49% 0.50% $113B $116B $117B $119B $121B $808 $833 $820 $840 $836 1Q14 2Q14 3Q14 4Q14 1Q15 2.89% 2.87% 2.77% 2.80% 2.77% Net interest income Linked quarter: NII down modestly Impact of two fewer days in the quarter ($12 million) and slightly higher borrowing and deposit costs Benefit of continued loan growth and a reduction in pay-fixed swap costs NIM remained relatively stable; down 3 bps to 2.77% 4Q14 included an estimated 2 bps non-recurring benefit related to a securities portfolio duration extension trade and reduction in excess cash position Benefit of loan growth and initiatives to improve loan mix and lower swap costs broadly offset by higher deposits Prior year quarter: NII up $28 million, or 3% despite an estimated $13 million impact from Chicago Divestiture, driven by increased investment portfolio income and 9% average loan growth NIM declined 12 bps to 2.77% driven by the continued impact of the low-rate environment 6 Highlights Net interest income $s in millions, except earning assets Average interest-earning assets Average interest earning assets Net interest income Net interest margin $820 3 $795 3 1 2 3 1Q14 and 2Q14 include other loans held for sale associated with Chicago Divestiture. Includes Interest-bearing cash and due from banks and deposits in banks Represents estimated underlying net interest income adjusted for the effect of Chicago Divestiture. |
![]() Linked quarter: Noninterest income up $8 million as gains related to repositioning the mortgage and securities portfolio offset seasonally lower results in other categories Mortgage banking fees up $17 million driven by a $10 million gain on the sale of conforming mortgages as well as higher origination volumes Other income reflects change in accounting on low-income housing investment portfolio 7 Highlights 1 Other income includes interest rate product fees, leasing income, bank owned life insurance, and other income. $s in millions $347 $339 $358 1Q15 4Q14 1Q14 Service charges and fees Card fees Trust and inv services FX & trade finance fees Mortgage banking fees Capital markets fee income Securities gains (losses) Other income Prior year quarter: Noninterest income down $11 million • $17 million decrease in securities gains • $12 million estimated decrease tied to Chicago Divestiture • Underlying fee growth estimated at 5% Noninterest income Strength in capital markets fees and higher FX & trade finance fees and underlying momentum in other core fees more than offset by 1Q14 change from $s in millions 1Q15 4Q14 1Q14 4Q14 1Q14 $ % $ % 215 Service charges and fees 135 $ 144 $ 139 $ (9) $ (6) % (4) $ (3) % 216 Card fees 52 58 56 (6) (10) % (4) (7) % 217 Trust & investment services fees 36 38 39 (2) (5) % (3) (8) % 218 FX & trade finance fees 23 25 22 (2) (8) % 1 5 % 219 Mortgage banking fees 33 16 20 17 106 % 13 65 % 220 Capital markets fees 22 25 18 (3) (12) % 4 22 % 221 Securities gains, net 8 1 25 7 700 % (17) (68) % 222 Other income 1 38 32 39 6 19 % (1) (3) % 225 Noninterest income 347 $ 339 $ 358 $ 8 $ 2 % (11) $ (3) % |
![]() $800 $791 $810 68% 67% 69% 1Q15 4Q14 1Q14 Adjusted salary and benefits Adjusted occupancy & equip Adjusted all other Adjusted efficiency ratio Adjusted noninterest expense – excluding restructuring charges and special items 1 Linked quarter: Adjusted noninterest expense up $9 million driven by seasonal impacts Adjusted salaries and benefits up $24 million driven by the impact of seasonally higher payroll taxes and incentives expense • FTEs up 115 reflecting continued investments to drive growth and effectiveness Virtually all other expense categories reflect strong cost control Efficiency initiatives drove incremental cost savings of $9 million vs. 4Q14 8 Highlights 1 Non-GAAP item. Adjusted results exclude the effect of net restructuring charges and special items associated with Chicago Divestiture, efficiency and effectiveness programs and separation from RBS. See important information on use of Non-GAAP items in the Appendix. Additional details on restructuring charges and special items provided on page 27. 2 Excludes restructuring charges and special items. . 2 2 change from $s in millions 1Q15 4Q14 1Q14 4Q14 1Q14 Adjusted salaries and benefits 1 420 $ 396 $ 405 $ 24 $ 6 % 15 $ 4 % Adjusted occupancy 1 78 76 81 2 3 % (3) (4) % Adjusted equipment expense 62 62 64 — — % (2) (3) % Adjusted outside services 1 71 88 83 (17) (19) % (12) (14) % Adjusted amortization of software 36 37 31 (1) (3) % 5 16 % Adjusted other expense 1 133 132 146 1 1 % (13) (9) % Adjusted noninterest expense 800 $ 791 $ 810 $ 9 $ 1 % (10) $ (1) % Restructuring charges and special items 10 33 — (23) (70) % 10 NM Total noninterest expense 810 $ 824 $ 810 $ (14) $ (2) % — $ — % Prior year quarter: Adjusted noninterest expense decreased $10 million as an estimated $21 million decrease related to the Chicago Divestiture was more than offset by net investments to drive growth and effectiveness as well as regulatory improvements FTEs down 1,064 reflecting the impact of the Chicago Divestiture and various efficiency initiatives, partially offset by investments in growth initiatives 1 1 1 |
![]() 1Q15 change from $s in billions 1Q15 4Q14 1Q14 4Q14 1Q14 $ % $ % 265 Investments and interest bearing deposits 27.1 $ 26.5 $ 25.2 $ 0.6 $ 2 % 1.9 $ 8 % 266 Total commercial loans 43.5 42.3 39.7 1.2 3 % 3.8 10 % 267 Total retail loans 50.4 49.8 46.4 0.7 1 % 4.0 9 % 268 Total loans and leases 94.0 92.0 86.1 1.9 2 % 7.8 9 % 269 Loans held for sale 0.3 0.2 1.2 0.1 43 % (0.9) (73) % 270 Total interest-earning assets 121.3 118.7 112.5 2.6 2 % 8.8 8 % 271 Total noninterest-earning assets 12.0 11.9 11.4 — — % 0.6 5 % 272 Total assets 133.3 $ 130.7 $ 123.9 $ 2.6 $ 2 % 9.4 $ 8 % 273 Low-cost core deposits¹ 49.8 49.7 45.8 0.1 — % 4.1 9 % 274 Money market deposits 33.6 33.2 31.3 0.5 1 % 2.4 8 % 275 Term deposits 12.2 11.9 9.3 0.3 2 % 2.9 31 % Held for sale — — 5.2 — — % (5.2) (100) % 276 Total deposits 95.6 $ 94.8 $ 91.6 $ 0.8 $ 1 % 4.0 $ 4 % 277 Total borrowed funds 15.5 14.0 10.7 1.5 11 % 4.8 44 % 278 Total liabilities 113.9 $ 111.5 $ 104.5 $ 2.4 $ 2 % 9.4 $ 9 % 279 Total stockholders' equity 19.4 19.2 19.4 0.2 1 % — — % 280 Total liabilities and equity 133.3 $ 130.7 $ 123.9 $ 2.6 $ 2 % 9.4 $ 8 % Consolidated 1Q15 average balance sheet Linked quarter: Total earning assets up 2% Commercial loans up $1.2 billion, given strength in Industry Verticals, Middle Market, Mid-Corporate and Commercial Real Estate Retail loans up $664 million driven by growth in auto, mortgage, and student Total deposits increased 1% Growth focused on commercial relationships and consumer term deposits Total earning assets up 8% Retail loans up 9% driven by growth in auto, mortgage and student Commercial loans up 10% due to growth in Mid-Corporate, Commercial Real Estate, Franchise Finance and Industry Verticals Total deposits up $4.0 billion reflecting strength in low-cost core deposits and term deposits Borrowed funds up $4.8 billion reflecting sub-debt issuance tied to our capital exchange transactions, as well as senior debt issuance and FHLB borrowings to fund balance sheet growth 9 Highlights $121.3 billion Interest-earning assets $111.2 billion Deposits/borrowed funds Total Retail 42% Total Commercial 36% 1 Low-cost core deposits include demand, checking with interest, and regular savings. 2 Total deposits includes deposits held for sale. CRE Other Commercial Residential mortgage Total home equity Automobile Other Retail Investments and interest-bearing deposits Retail / Personal Commercial/ Municipal/ Wholesale Borrowed funds 17% 6% 30% 10% 17% 11% 4% 22% 50% 37% 13% Prior year quarter: |
![]() $8.7 $9.2 $9.9 $10.6 $10.9 $19.9 $19.7 $19.1 $18.8 $18.4 $9.3 $10.5 $11.4 $12.4 $12.9 $1.9 $1.8 $1.6 $1.8 $2.3 $3.3 $3.2 $3.0 $3.0 $3.1 $2.9 $2.8 $2.7 $2.6 $2.5 $46.0B $47.2B $47.7B $49.2B $50.1B 1Q14 2Q14 3Q14 4Q14 1Q15 Mortgage Home Equity Auto Student Business Banking Other Consumer Banking average loans and leases Linked quarter: Average loans increased $890 million, or 2% Net average impact of loan purchases and sales of $382 million; average impact of purchases was an increase of $269 million in auto, $191 in student and a decrease of $79 million in mortgages Consumer loan yields up 4 basis points reflecting some variability in auto and student Prior year quarter: Average loans up $3.8 billion largely as growth in auto of $3.3 billion, mortgage of $2.2 billion and student of $0.4 billion was partially offset by lower home equity outstandings ($1.5 billion) Average yields up modestly as improvement in auto and student was partially offset by the continued effect of the low-rate environment 10 Highlights 1 Excludes held for sale. 2 Other includes Credit Card, RV, Marine, Other. Average loans $s in billions Yields 3.71 % 3.70 % 3.67 % 3.68 % 3.72 % 1 2 1 |
![]() $5.4 $5.6 $5.9 $6.0 $6.3 $2.1 $2.2 $2.1 $2.5 $2.9 $2.3 $2.5 $2.7 $2.8 $2.9 $12.4 $12.4 $11.8 $11.7 $12.0 $5.8 $5.8 $6.1 $6.3 $6.1 $6.6 $6.7 $7.0 $7.2 $7.4 $2.0 $2.2 $2.2 $2.5 $2.6 $36.6B $37.4B $37.8B $38.9B $40.2B 1Q14 2Q14 3Q14 4Q14 1Q15 Mid-Corporate Industry Verticals Franchise Finance Middle Market Asset Finance Commercial Real Estate Other Commercial Banking average loans and leases Linked quarter: Average loans up $1.3 billion, or 3% on strength in Industry Verticals, Middle Market, Mid-Corporate and Commercial Real Estate Loan yields decreased 5 bps, reflecting 4Q14 impacts that included higher loan fees and interest recoveries, as well as the continued effect of the low-rate environment Prior year quarter: Average loans up $3.7 billion on strength in Commercial Real Estate, Industry Verticals, Mid-Corporate and Franchise Finance Loan yields down 13 bps largely reflecting continued impact of low-rate environment 11 Highlights 1 Other includes Business Capital, Govt & Professional Banking, Corporate Finance & Global Markets, Treasury Solutions, Corporate and Commercial Banking Admin. $s in billions Average loans Yields 2.71 % 2.67 % 2.61 % 2.63 % 2.58 % 1 |
![]() $72.3B $74.8B $80.8B $82.5B $85.4B $1.4 $1.4 $2.0 $2.8 $3.9 $3.6 $6.0 $6.7 $6.1 $7.0 $5.7 $5.7 $6.3 $5.1 $4.6 $9.3 $9.4 $10.6 $11.9 $12.2 $13.3 $13.8 $15.2 $15.7 $16.0 $38.9 $38.4 $40.1 $40.9 $41.7 1Q14 2Q14 3Q14 4Q14 1Q15 Money market & savings Checking with interest Term & time deposits Total fed funds & repo Short-term borrowed funds Total long-term borrowings Average funding and cost of funds Linked quarter: Average interest-bearing deposits increased $1.4 billion, or 2%, with growth in nearly every category Term deposits up $292 million, money market & savings up $810 million, interest checking up $321 million Total deposit costs increased 2 bps to 0.22%, reflecting shift in mix to longer duration deposits Continued progress in repositioning liabilities structure to better align with peers 12 Highlights Average interest-bearing liabilities $s in billions 1 Interest-bearing liabilities costs excluding deposits held for sale. Prior year quarter: Average interest-bearing deposits increased $8.3 billion, or 14%, on strength across all categories Cost of funds (excluding HFS) increased 4 bps Interest-bearing deposits including HFS were up $4.1 billion, or 6%, as the Chicago Divestiture impact of $5.2 billion was offset by strong overall growth Total cost of funds 1 0.46% 0.44% 0.45% 0.49% 0.50% 1 |
![]() Strong credit quality trends continue Overall credit quality remains strong Net charge-offs were $54 million, or 0.23% of average loans and leases Commercial net recoveries were $22 million in 1Q15, including a large recovery of $15 million (previously expected to occur in 2Q15) Provision for credit losses of $58 million decreased $14 million vs. 4Q14 driven by a single large commercial real estate recovery Results reflect reserve build of $4 million vs. $8 million release in 4Q14 Allowance as a % of total loans and leases stable, 1.27% vs. 1.28% in 4Q14 NPLs to total loans stable, 1.20% vs. 1.18% in 4Q14 Allowance coverage for NPLs 106% vs. 109% in 4Q14 13 Highlights Net charge-offs (recoveries) Provision for credit losses, charge-offs, NPLs Allowance for loan and lease losses $s in millions 1 Allowance for loan and lease losses to nonperforming loans and leases. |
![]() as of $s in billions (period-end) 1Q14 2Q14 3Q14 4Q14 1Q15 Basel I/III transitional basis 1,2 Basel I Basel III Common equity tier 1 capital 13.5 $ 13.4 $ 13.3 $ 13.2 $ 13.4 $ Risk-weighted assets 100.4 $ 101.4 $ 103.2 $ 106.0 $ 109.8 $ Common equity tier 1 risk-based capital ratio 13.4 % 13.3 % 12.9 % 12.4 % 12.2 % Total risk-based capital ratio 16.0 % 16.2 % 16.1 % 15.8 % 15.5 % Basel III fully phased-in 1,2,3 Common equity tier 1 risk-based capital ratio 13.1% 13.0% 12.5% 12.1% 12.1% Basel III minimum for CET1 ratio 2015 2016 2017 2018 2019 Basel III minimum plus Phased-in capital conservation buffer 4.5 % 5.1 % 5.8 % 6.4 % 7.0 % Capital and liquidity remain strong 14 Highlights Loan-to-deposit ratio 5 Capital ratio trend Capital levels remain well above regional peers 1Q15 Basel III common equity tier 1 ratio (transitional basis) down approximately 26 basis points from 4Q14 Net income: 19 bps increase RWA growth: 44 bps decrease Dividends/other: 1 bp decrease As part of plan to adjust capital mix, in early April we completed a $250 million preferred stock offering and repurchased 10.5 million common shares at a price of $23.87 per share Reduced pro forma 3/31/15 CET1 risk- based capital ratio by 23 bps LDR remained relatively stable at 96% (99% on average basis) Already meet initial LCR requirement 4 1 2 3 4 5 Current reporting period regulatory capital ratios are preliminary. Periods prior to 1Q15 reported on a Basel I basis. Basel III ratios assume that certain definitions impacting qualifying Basel III capital will phase in through 2018. Ratios also reflect the required US Standardized methodology for calculating RWAs, effective January 1, 2015. Non-GAAP item. See important information on use of Non-GAAP items in the Appendix. Based on the September 2014 release of the U.S. version of the Liquidity Coverage Ratio (LCR). Note that as a modified LCR company, CFG’s formal compliance requirement of 90% does not begin until January 2016. Period-end Includes held for sale. |
![]() Delivered for all stakeholders in Q1 15 Customers 2014 Greenwich Middle Market Banking Excellence Awards in the Northeast for overall/Client satisfaction Citizens’ mobile apps recognized for two years in a row as among the best in the industry by Javelin Strategy & Research, with average customer ratings of 4.2 out of 5 stars Consumer Banking continues to make progress in customer experience as measured internally and through JD Power assessments Colleagues Announced Eric Aboaf as new CFO and Don McCree as Vice-Chair, Head of Commercial Developed ambitious agenda around leadership standards, employee training and cultural initiatives Continue to attract high quality talent in areas of focus Community Received prestigious Consumer Bankers Association’s Award in recognition of our “Citizens Helping Citizens Manage Money” initiative Partnered in Cleveland to launch and support citywide initiative to improve the economic security of residents Shareowners Tracking well overall on key turnaround initiatives Financial performance broadly in line with expectations Continue work on further revenue and expenses initiatives Supported RBS successful sell down of 155 million shares ($3.7 billion) Regulators Successful CCAR effort, already working on next year Making steady progress on broader regulatory remediation effort Focused on resolving older enforcement matters Objective is to become a top-performing regional bank |
![]() Summary of progress on strategic initiatives 16 INITIATIVE 1Q15 Status 2015 Outlook Commentary Reenergize household growth 1Q15 YoY checking households up 2%; new customer cross-sell rate improved to 3.3 vs. 2.9 in 1Q14 Expand mortgage sales force LOs up 84, or 23%, from 1Q14; Origination volume up 87% over 1Q14 given strong refinance activity Grow Auto Continued level of robust loan growth with portfolio up $3.2B, or 32%, from 1Q14; balanced mix of organic and purchased loan growth Grow Student Strong new refinance product originations of $293 million in 1Q15; new Parent loan product launched in mid-April Expand Business Banking Origination volume of $152mm in 1Q15 up 67% vs. 1Q14 Expand Wealth sales force Added 28 wealth managers and 198 licensed bankers over the past year (overall growth 38%); Competitive hiring environment continues Build out Mid-Corp & verticals Mid-Corp and specialty verticals grew YoY outstanding balances by 15% and 41%, respectively Continue development of Capital Markets Overall Middle Market League Table ranking rose to number 5 in 1Q15, compared to number 9 in 4Q14 and 12 in 1Q14 Build out Treasury Solutions Beginning to see ramp up in benefits from recent people and technology investments driven by core cash management product Grow Franchise Finance Strong client acquisition efforts with a 16% increase in customers in 1Q15 vs. 1Q14 driving origination growth of 19% over the same period Core: Middle Market Originations up 6% in 1Q15 vs. 1Q14, with commitment pipeline up over 20% YoY; continue to see competitive pricing environment Core: CRE CRE loans up 14% YoY to $7.9 billion at 1Q15 Core: Asset Finance New business initiatives progressing with origination activity in 1Q15 up 9% compared to 1Q14 1 Thomson Reuters LPC, 1Q15 data based on number of deals for Overall Middle Market (defined as Borrower Revenues < $500MM and Deal Size < $500MM). 1 2 3 4 5 6 7 8 9 10 11a 11b 11c 1 |
![]() Steady progress against key financial targets 17 Key Indicators 1Q14 1Q15 End 2016 targets Adjusted return on average tangible common equity 5.2% 6.7% 10%+ Adjusted return on average total tangible assets 0.6% 0.7% 1.0%+ Adjusted efficiency ratio 69% 68% ~60% CET 1 risk-based capital ratio 13.4% 12.2% ~11% Delivering on our plan to improve returns 1 Note: Financial targets assume that interest rates will evolve consistent with the market implied forward rates based on the yield curve as of February 28 2014, and that macroeconomic and competitive conditions are consistent with those used in our planning assumptions. 1 1 1 2 3 2 3 Non-GAAP item. Adjusted results exclude the effect of net restructuring charges and special items associated with Chicago Divestiture, efficiency and effectiveness programs and separation from RBS. See important information on use of Non-GAAP items in the Appendix. Current reporting period regulatory capital ratio is preliminary and based on Basel III transitional rules. Periods prior to 1Q15 reported on a Basel I basis. Basel III ratios assume that certain definitions impacting qualifying Basel III capital will phase in through 2018. Ratios also reflect the required US Standardized methodology for calculating RWAs, effective January 1, 2015. Target represents fully phased in Basel III. |
![]() 2Q15 outlook 18 2Q15 expectations vs. 1Q15 Net interest income, net interest margin Operating leverage, efficiency ratio Credit trends and costs Average loan growth rate 1.5 -2% vs. prior quarter Net interest margin broadly stable/down slightly, as pressure from low-rate environment continues Positive day count benefit of $6 million expected Expect return to positive operating leverage and improvement in the efficiency ratio Expect stable asset quality trends but with lower commercial recoveries Provision expense expected to revert towards 25% of low end of full-year guidance range of $350 - $400 million Restructuring costs Restructuring costs of ~$35-$40 million in 2Q15 Capital, liquidity and funding Quarter-end Basel III common equity Tier 1 ratio ~12% Loan-to-deposit ratio 98-99% Continue to diversify funding sources |
![]() Key messages 19 Continuing to execute well against broad market stakeholder agenda Financial performance has been led by balance sheet growth, expense discipline, and favorable credit Keeping NIM stable is near-term priority pending higher rates Currently making the necessary investments to get key fee-based activities to scale, will take some time to realize the benefit Asset quality and capital ratios remain strong |
![]() Appendix 20 |
![]() $356 $383 1Q14 1Q15 $166 $215 $0.30 $0.39 1Q14 1Q15 $87.1 $94.5 1Q14 1Q15 $87.5 $99.0 1Q14 1Q15 0.6% 0.7% 1Q14 1Q15 5.2% 6.7% 1Q14 1Q15 Quarter over quarter results 21 Adjusted pre-provision profit 1 $s in millions Adjusted return on average tangible assets 1 Adjusted net income 1 $s in millions 1 Adjusted results are non-GAAP items and exclude the effect of net restructuring charges and special items associated with Chicago Divestiture, efficiency and effectiveness programs and separation from RBS. See important information on use of Non-GAAP items in the Appendix. 2 Excludes loans and deposits held for sale. tangible common equity 1 149 bps 12 bps 30% 8% Period-end loans 2 $s in billions Period-end deposits 2 $s in billions 13% 9% 30% Adjusted Diluted EPS Adjusted return on average 1 |
![]() $388 $383 4Q14 1Q15 12.4% 12.2% 4Q14 1Q15 0.7% 0.7% 4Q14 1Q15 10.6% 10.5% 4Q14 1Q15 6.8% 6.7% 4Q14 1Q15 $217 $215 $0.39 $0.39 4Q14 1Q15 Linked quarter results 22 Adjusted pre-provision profit 1 $s in millions Adjusted return on average tangible assets 1 Adjusted net income 1 $s in millions Adjusted return on average tangible common equity 1 Tier 1 leverage ratio 2 3 bps unchanged ~10 bps 1% 1% 1 effectiveness programs and separation from RBS. See important information on use of Non-GAAP items in the Appendix. 2 Current reporting period regulatory capital ratios are preliminary. 3 Basel I tier 1 common equity ratio. unchanged Adjusted Diluted EPS 1 3 Basel III common equity tier 1 risk-based capital ratio 2 ~20 bps Adjusted results are non-GAAP items and exclude the effect of net restructuring charges and special items associated with Chicago Divestiture, efficiency and |
![]() Net interest margin NIM% walk 1Q14 to 1Q15 NIM% walk 4Q14 to 1Q15 23 2.89% 2.77% 0.05% (0.05%) (0.05%) (0.04%) (0.02%) (0.01%) 1Q14 NIM% Pay-fixed swap costs Sub-debt/Term issuance Loan yields, mix, & fees Deposit costs Chicago Divestiture Other short- term borrowed funds 1Q15 NIM% 2.80% 2.77% 0.02% (0.02%) (0.01%) (0.01%) (0.01%) 4Q14 NIM% Pay-fixed swap costs Investment yields Deposit costs Loan yields, mix, & fees Term-debt issuance 1Q15 NIM% |
![]() Consumer Banking segment 24 1 Non-GAAP item. Adjusted results exclude the effect of net restructuring charges and special items associated with Chicago Divestiture, efficiency and effectiveness programs and separation from RBS. See important information on use of Non-GAAP items in the Appendix. 2 Includes held for sale. 3 Operating segments are allocated capital on a risk-adjusted basis considering economic and regulatory capital requirements. We approximate that regulatory capital is equivalent to a sustainable target level for Tier 1 common equity and then allocate that approximation to the segments based on economic capital. Highlights 1Q15 change from $s in millions 1Q15 4Q14 1Q14 4Q14 1Q14 $ % $ % 310 Net interest income 533 $ 536 $ 537 $ (3) $ (1) % (4) $ (1) % 311 Noninterest income 219 218 219 1 — % — — % 312 Total revenue 752 754 756 (2) — % (4) (1) % 313 Noninterest expense 596 611 638 (15) (2) % (42) (7) % 314 Pre-provision profit 156 143 118 13 9 % 38 32 % 315 Provision for credit losses 63 64 70 (1) (2) % (7) (10) % 316 Income before income tax expense 93 79 48 14 18 % 45 94 % 317 Income tax expense 32 27 16 5 19 % 16 100 % 318 Net income 61 $ 52 $ 32 $ 9 $ 17 % 29 $ 91 % Average balances $s in billions 319 50.3 $ 49.4 $ 46.2 $ 0.9 $ 2 % 4.1 $ 9 % 320 67.5 $ 66.4 $ 70.8 $ 1.1 $ 2 % (3.3) $ (5) % Mortgage Banking metrics Originations 1,211 $ 1,101 $ 648 $ 110 $ 10 % 563 $ 87 % Origination Pipeline 1,609 1,110 828 499 45 % 781 94 % Gain on sale of secondary originations 2.65% 1.98% 1.98% 67 bps 67 bps Performance metrics 321 ROTCE 1,3 5.3% 4.3% 2.8% 100 bps 249 bps 322 Efficiency ratio 1 79% 81% 84% (184) bps (514) bps Linked quarter: Net income up $9 million Net interest income decreased $3 million driven by two fewer days in the quarter – loan growth and improved yields, partially offset by higher deposit costs – Average loans and deposit growth of 2% Noninterest income relatively stable driven by a $17 million increase in mortgage banking, including a $10 million gain on the sale of conforming mortgages – Mortgage originations up 10% – Service charges and card fees lower, primarily due to seasonality Noninterest expense decreased $15 million driven by a reduction in outside services, equipment, advertising and employee benefits Prior year quarter: Net income up $29 million Revenue down $4 million driven by an estimated $31 million decrease related to Chicago Divestiture; underlying up $25 million on strong loan growth and momentum in household growth and mortgage – Loans up $4.1 billion; total deposits down $3.3 billion reflecting Chicago Divestiture Noninterest expense down $42 million, including $20 million related to Chicago Divestiture Total loans and leases² Total deposits² |
![]() Commercial Banking segment 25 1 Non-GAAP item. Adjusted results exclude the effect of net restructuring charges and special items associated with Chicago Divestiture, efficiency and effectiveness programs and separation from RBS. See important information on use of Non-GAAP items in the Appendix. 2 Includes held for sale. 3 Operating segments are allocated capital on a risk-adjusted basis considering economic and regulatory capital requirements. We approximate that regulatory capital is equivalent to a sustainable target level for Tier 1 common equity and then allocate that approximation to the segments based on economic capital. 1Q15 change from $s in millions 1Q15 4Q14 1Q14 4Q14 1Q14 $ % $ % 323 Net interest income 276 $ 283 $ 256 $ (7) $ (2) % 20 $ 8 % 324 Noninterest income 100 111 107 (11) (10) % (7) (7) % 325 Total revenue 376 394 363 (18) (5) % 13 4 % 326 Noninterest expense 173 180 153 (7) (4) % 20 13 % 327 Pre-provision profit 203 214 210 (11) (5) % (7) (3) % 328 Provision for credit losses (21) 1 (5) (22) NM (16) (320) % 329 Income before income tax expense 224 213 215 11 5 % 9 4 % 330 Income tax expense 77 73 74 4 5 % 3 4 % 331 Net income 147 $ 140 $ 141 $ 7 $ 5 % 6 $ 4 % Average balances $s in billions 332 Total loans and leases² 40.2 $ 38.9 $ 36.6 $ 1.3 $ 3 % 3.7 $ 10 % 333 Total deposits² 21.9 $ 22.5 $ 17.4 $ (0.6) $ (3) % 4.5 $ 26 % Performance metrics 334 ROTCE 1,3 13.2% 12.8% 14.2% 39 bps (102) bps 335 Efficiency ratio 1 46% 45% 42% 53 bps 388 bps Linked quarter: Commercial Banking net income increased $7 million Total revenue down $18 million, net interest income down $7 million on a 3% increase in loans and 3% decrease in deposits – Strength in Industry Verticals, Middle Market, Mid- Corporate, and Commercial Real Estate, – Deposits down $568 million, or 3% Noninterest income down $11 million reflecting seasonal weakness in interest rate products, capital markets, leasing and foreign exchange and trade finance Noninterest expense decreased $7 million driven by lower regulatory costs, depreciation on leased equipment, and outside services partially offset by higher insurance and tax costs and salaries and benefits Prior year quarter: Net income up $6 million reflecting higher revenue and expenses and lower provision expense NII up $20 million on $3.7 billion increase in loans and $4.5 billion increase in deposits Noninterest income down $7 million from 1Q14 which included unusually high leasing income Noninterest expense up $20 million reflecting higher salaries and benefits and insurance and taxes Highlights |
![]() Other Linked quarter: Net income decreased $4 million from 4Q14 Net interest income increased $6 million, as lower swap expense was partially offset by increased wholesale funding and lower investment portfolio income Noninterest income increased $18 million driven by securities gains and a change in low-income housing investment portfolio accounting (offset in taxes) Noninterest expense increased $8 million reflecting increased incentive expense and higher insurance and tax expense Provision for credit losses up $9 million which included a $4 million reserve build Prior year quarter: Net income up $8 million from a loss of $7 million in 1Q14 Net interest income up $12 million given a reduction in hedging costs and the benefit of growth in investment portfolio income Noninterest income down $4 million reflecting a decrease in securities gains Provision for credit losses down $40 million from 1Q14 which included a $34 million reserve build 26 1 Includes held for sale. Highlights 1Q15 change from $s in millions 1Q15 4Q14 1Q14 4Q14 1Q14 $ % $ % 336 Net interest income 27 $ 21 $ 15 $ 6 $ 29 % 12 $ 80 % 337 Noninterest income 28 10 32 18 180 % (4) (13) % 338 Total revenue 55 31 47 24 77 % 8 17 % 339 Noninterest expense 41 33 19 8 24 % 22 116 % 340 Pre-provision profit (loss) 14 (2) 28 16 800 % (14) (50) % 341 Provision for credit losses 16 7 56 9 129 % (40) (71) % 342 Income (loss) before income tax expense (benefit) (2) (9) (28) 7 78 % 26 93 % 343 Income tax expense (benefit) (3) (14) (21) 11 79 % 18 86 % 344 Net income (loss) 1 $ 5 $ (7) $ (4) $ (80) % 8 $ 114 % Average balances $s in billions 345 Total loans and leases 1 3.8 $ 4.0 $ 4.6 $ (0.2) $ (5) % (0.8) $ (18) % 346 Total deposits 6.2 $ 5.9 $ 3.4 $ 0.3 $ 5 % 2.8 $ 83 % |
![]() Restructuring charges and special items 27 GAAP results included restructuring charges and special items related to enhancing efficiencies and improving processes across the organization and separation from the Royal Bank of Scotland Group plc (“RBS”). Expect to utilize the balance of the Chicago Divestiture gain to continue to reinvest to drive future growth, and to fund an additional $35-40 million of further restructuring charges and special expense items in 2Q15. as of and for the three months ended Restructuring charges and special items ($s in millions, except per share data) pre-tax after-tax pretax after tax pre-tax after-tax Noninterest expense restructuring charges and special items: Salaries and employee benefits (1) — 1 — (2) — Outside services 8 5 18 12 (10) (7) Occupancy 2 1 5 3 (3) (2) Equipment expense 1 — 1 — — — Software expense — — 6 4 (6) (4) Other operating expense — — 2 1 (2) (1) Total noninterest expense restructuring charges and special items 10 $ 6 $ 33 $ 20 $ (23) $ (14) $ Net restructuring charges and special items (10) $ (6) $ (33) $ (20) $ 23 $ 14 $ Diluted EPS impact (0.01) $ (0.03) $ 0.02 $ March 31, 2015 December 31, 2014 increase/decrease |
![]() Loan Reconciliation 28 Average balances $s in millions Consumer Banking Segment 46,154 $ 47,368 $ 47,848 $ 49,351 $ 50,260 $ Add: Non-core loans 3,199 3,066 2,932 2,801 2,667 Retail loans in Commercial Banking (1) 117 135 134 145 143 Other 798 776 736 681 629 Less: Commercial loans in Consumer Banking (2) 3,265 3,221 3,022 3,017 3,056 Chicago Divestiture loans reclassed to LHFS 477 438 LHFS 123 138 170 179 197 Total Retail loans 46,403 $ 47,547 $ 48,459 $ 49,782 $ 50,446 $ Commercial Banking Segment 36,577 $ 37,389 $ 37,787 $ 38,926 $ 40,241 $ Add: Commercial loans in Consumer Banking (2) 3,265 3,221 3,022 3,017 3,056 Non-core loans 463 405 353 309 266 CRA 139 165 171 182 198 Other 22 21 25 28 25 Less: Retail loans in Commercial Banking (1) 117 135 134 145 143 Chicago Divestiture loans reclassed to LHFS 587 489 LHFS 32 106 33 54 136 Total Commercial loans 39,729 $ 40,472 $ 41,191 $ 42,263 $ 43,506 $ (1) Primarily Treasury Solutions (Credit cards) (2) Primarily Business Banking 1Q14 2Q14 3Q14 4Q14 1Q15 |
![]() $3.6B $3.4B $3.2B $3.0B $2.9B 1Q14 2Q14 3Q14 4Q14 1Q15 Retail Commercial SBO Non-core home equity portfolio serviced by others (SBO) SBO balances by FICO SBO balances by LTV SBO balances and charge-offs Top 5 SBO balances by state Non-core period-end loans SBO balances by product SBO Lien Position 1st Lien 2nd Lien < 70 70-79 80-89 90-99 100-119 120+ < 620 620-679 680-719 720-759 760+ HE Loan HELOC 29 $s in millions 1 A portion of the serviced by others portfolio is serviced by CFG. 2 SBO distribution gross period-end balances as of March 31, 2015. 3 FICO scores updated quarterly. 25% 20% 24% 16% 12% 3 14% 17% 18% 20% 31% $1.2B 69% $0.5B 31% 5% 95% $307 $111 $105 $102 $91 $548 $489 2 2 2 2 2,3 1 |
![]() Non-GAAP Financial Measures 30 This document contains non-GAAP financial measures. The table below presents reconciliations of certain non-GAAP measures. These reconciliations exclude restructuring charges and/or special items, which are usually included, where applicable, in the financial results presented in accordance with GAAP. Restructuring charges and special items include expenses related to our efforts to improve processes and enhance efficiencies, as well as rebranding, separation from RBS and regulatory expenses. The non-GAAP measures set forth below include “total revenue”, “noninterest income”, “ noninterest expense”, “pre-provision profit”, “income before income tax expense (benefit)”, “income tax expense (benefit)”, “net income (loss)”, “salaries and employee benefits”, “outside services”, “occupancy”, “equipment expense”, “amortization of software”, “other operating expense”, “net income (loss) per average common share”, “return of average common equity” and “return on average total assets”. In addition, we present computations for "tangible book value per common share", “return on average tangible common equity”, “return on average total tangible assets” and “efficiency ratio” as part of our non-GAAP measures. Additionally, "pro forma Basel III fully phased-in common equity tier 1 capital" computations for periods prior to 1Q15 are presented as part of our non-GAAP measures. We believe these non-GAAP measures provide useful information to investors because these are among the measures used by our management team to evaluate our operating performance and make day-to-day operating decisions. In addition, we believe restructuring charges and special items in any period do not reflect the operational performance of the business in that period and, accordingly, it is useful to consider these line items with and without restructuring charges and special items. We believe this presentation also increases comparability of period-to-period results. Prior to first quarter 2015, we also consider pro forma capital ratios defined by banking regulators but not effective at each period end to be non-GAAP financial measures. Since analysts and banking regulators may assess our capital adequacy using these pro forma ratios, we believe they are useful to provide investors the ability to assess our capital adequacy on the same basis. Other companies may use similarly titled non-GAAP financial measures that are calculated differently from the way we calculate such measures. Accordingly, our non-GAAP financial measures may not be comparable to similar measures used by other companies. We caution investors not to place undue reliance on such non-GAAP measures, but instead to consider them with the most directly comparable GAAP measure. Non-GAAP financial measures have limitations as analytical tools, and should not be considered in isolation, or as a substitute for our results as reported under GAAP. |
![]() Non-GAAP Reconciliation Table 31 (Excluding restructuring charges and special items) $s in millions, except per share data 1Q15 4Q14 3Q14 2Q14 1Q14 Noninterest income, excluding special items: Noninterest income (GAAP) A $347 $339 $341 $640 $358 — — — 288 — Noninterest income, excluding special items (non-GAAP) B $347 $339 $341 $352 $358 Total revenue, excluding special items: Total revenue (GAAP) C $1,183 $1,179 $1,161 $1,473 $1,166 — — — 288 — Total revenue, excluding special items (non-GAAP) D $1,183 $1,179 $1,161 $1,185 $1,166 Noninterest expense (GAAP) E $810 $824 $810 $948 $810 Less: Restructuring charges and special items LL 10 33 21 115 — F $800 $791 $789 $833 $810 Net income, excluding restructuring charges and special items: Net income (GAAP) G $209 $197 $189 $313 $166 Add: Restructuring charges and special items, net of income tax expense (benefit) 6 20 13 (108) — Net income, excluding restructuring charges and special items (non-GAAP) H $215 $217 $202 $205 $166 Average common equity (GAAP) I $19,407 $19,209 $19,411 $19,607 $19,370 items (non-GAAP) H/I 4.49 % 4.48 % 4.14 % 4.19 % 3.48 % Return on average tangible common equity and return on average tangible common equity, excluding restructuring charges and special items: Average common equity (GAAP) I $19,407 $19,209 $19,411 $19,607 $19,370 Less: Average goodwill (GAAP) 6,876 6,876 6,876 6,876 6,876 Less: Average other intangibles (GAAP) 5 6 6 7 7 Add: Average deferred tax liabilities related to goodwill (GAAP) 422 403 384 369 351 Average tangible common equity (non-GAAP) J $12,948 $12,730 $12,913 $13,093 $12,838 Return on average tangible common equity (non-GAAP) G/J 6.53 % 6.12 % 5.81 % 9.59 % 5.24 % Return on average tangible common equity, excluding restructuring charges and special items (non-GAAP) H/J 6.73 % 6.76 % 6.22 % 6.28 % 5.24 % Return on average total assets, excluding restructuring charges and special items: Average total assets (GAAP) K $133,325 $130,671 $128,691 $127,148 $123,904 Return on average total assets, excluding restructuring charges and special items (non-GAAP) H/K 0.65 % 0.66 % 0.62 % 0.65 % 0.54 % Return on average total tangible assets and return on average total tangible assets, excluding restructuring charges and special items: Average total assets (GAAP) K $133,325 $130,671 $128,691 $127,148 $123,904 Less: Average goodwill (GAAP) 6,876 6,876 6,876 6,876 6,876 Less: Average other intangibles (GAAP) 5 6 6 7 7 Add: Average deferred tax liabilities related to goodwill (GAAP) 422 403 384 369 351 Average tangible assets (non-GAAP) L $126,866 $124,192 $122,193 $120,634 $117,372 Return on average total tangible assets (non-GAAP) G/L 0.67 % 0.63 % 0.61 % 1.04 % 0.57 % special items (non-GAAP) H/L 0.69 % 0.69 % 0.66 % 0.68 % 0.57 % QUARTERLY TRENDS Noninterest expense, excluding restructuring charges and special items: Noninterest expense, excluding restructuring charges and special items (non-GAAP) Return on average common equity, excluding restructuring charges and special items: Return on average common equity, excluding restructuring charges and special Return on average total tangible assets, excluding restructuring charges and Less: Special items - Chicago gain Less: Special items - Chicago gain |
![]() 1Q15 4Q14 3Q14 2Q14 1Q14 Efficiency ratio and efficiency ratio, excluding restructuring charges and special items: Net interest income (GAAP) $836 $840 $820 $833 $808 Add: Noninterest income (GAAP) 347 339 341 640 358 Total revenue (GAAP) C $1,183 $1,179 $1,161 $1,473 $1,166 Efficiency ratio (non-GAAP) E/C 68.49 % 69.88 % 69.84 % 64.33 % 69.43 % Efficiency ratio, excluding restructuring charges and special items (non-GAAP) F/D 67.65 % 67.11 % 68.02 % 70.23 % 69.43 % Tangible book value per common share: Common shares - at end of period (GAAP) M 547,490,812 545,884,519 559,998,324 559,998,324 559,998,324 Stockholders' equity (GAAP) $19,564 $19,268 $19,383 $19,597 $19,442 Less: Goodwill (GAAP) 6,876 6,876 6,876 6,876 6,876 Less: Other intangible assets (GAAP) 5 6 6 7 7 Add: Deferred tax liabilities related to goodwill (GAAP) 434 420 399 384 366 Tangible common equity (non-GAAP) N $13,117 $12,806 $12,900 $13,098 $12,925 Tangible book value per common share (non-GAAP) N/M 23.96 23.46 23.04 23.39 23.08 Net income per average common share - basic and diluted, excluding restructuring charges and special items: Average common shares outstanding - basic (GAAP) O 546,291,363 546,810,009 559,998,324 559,998,324 559,998,324 Average common shares outstanding - diluted (GAAP) P 549,798,717 550,676,298 560,243,747 559,998,324 559,998,324 Net income applicable to common stockholders (GAAP) Q $209 $197 $189 $313 $166 Net income per average common share - basic (GAAP) Q/O 0.38 0.36 0.34 0.56 0.30 Net income per average common share - diluted (GAAP) Q/P 0.38 0.36 0.34 0.56 0.30 Net income applicable to common stockholders, excluding restructuring charges and special items (non-GAAP) R 215 217 202 205 166 Net income per average common share - basic, excluding restructuring charges and special items (non-GAAP) R/O 0.39 0.40 0.36 0.37 0.30 Net income per average common share - diluted, excluding restructuring charges and special items (non-GAAP) R/P 0.39 0.39 0.36 0.37 0.30 Pro forma Basel III fully phased-in common equity tier 1 capital ratio¹: Common equity tier 1 (regulatory) $13,360 $13,173 $13,330 $13,448 $13,460 Less: Change in DTA and other threshold deductions (GAAP) (3) (6) (5) (7) (7) Pro forma Basel III fully phased-in common equity tier 1 (non-GAAP) S $13,357 $13,179 $13,335 $13,455 $13,467 Risk-weighted assets (regulatory general risk weight approach) $109,786 $105,964 $103,207 $101,397 $100,368 Add: Net change in credit and other risk-weighted assets (regulatory) 242 2,882 3,207 2,383 2,450 Basel III standardized approach risk-weighted assets (non-GAAP) T $110,028 $108,846 $106,414 $103,780 $102,818 Pro forma Basel III fully phased-in common equity tier 1 capital ratio (non-GAAP)¹ S/T 12.1% 12.1% 12.5% 13.0% 13.1% Salaries and employee benefits, excluding restructuring charges and special items: Salaries and employee benefits (GAAP) U $419 $397 $409 $467 $405 Less: Restructuring charges and special items (1) 1 — 43 — Salaries and employee benefits, excluding restructuring charges and special items (non-GAAP) V $420 $396 $409 $424 $405 1 Periods prior to 1Q15 reported on a Basel I basis. Basel III ratios assume certain definitions impacting qualifying Basel III capital, which otherwise will phase in through 2018, are fully phased-in. Ratios also reflect the required US Standardized methodology for calculating RWAs, effective January 1, 2015. QUARTERLY TRENDS Non-GAAP Reconciliation Table 32 (Excluding restructuring charges and special items) $s in millions, except per share data |
![]() Non-GAAP Reconciliation Table 33 (Excluding restructuring charges and special items) $s in millions, except per share data 1Q15 4Q14 3Q14 2Q14 1Q14 % Change Outside services, excluding restructuring charges and special items: Outside services (GAAP) W $79 $106 $106 $125 $83 Less: Restructuring charges and special items 8 18 19 41 — Outside services, excluding restructuring charges and special items (non-GAAP) X $71 $88 $87 $84 $83 Occupancy, excluding restructuring charges and special items: Occupancy (GAAP) Y $80 $81 $77 $87 $81 Less: Restructuring charges and special items 2 5 2 9 — Occupancy, excluding restructuring charges and special items (non-GAAP) Z $78 $76 $75 $78 $81 Equipment expense, excluding restructuring charges and special items: Equipment expense (GAAP) AA $63 $63 $58 $65 $64 Less: Restructuring charges and special items 1 1 — 3 — Equipment expense, excluding restructuring charges and special items (non-GAAP) BB $62 $62 $58 $62 $64 Amortization of software, excluding restructuring charges and special items: Amortization of software CC $36 $43 $38 $33 $31 Less: Restructuring charges and special items — 6 — — — Amortization of software, excluding restructuring charges and special items (non- GAAP) DD $36 $37 $38 $33 $31 Other operating expense, excluding restructuring charges and special items: Other operating expense (GAAP) EE $133 $134 $122 $171 $146 Less: Restructuring charges and special items — 2 — 19 — Other operating expense, excluding restructuring charges and special items (non- GAAP) FF $133 $132 $122 $152 $146 Pre-provision profit, excluding restructuring charges and special items: D $1,183 $1,179 $1,161 $1,185 $1,166 Less: Noninterest expense, excluding restructuring charges and special items (non- GAAP) F 800 791 789 833 810 Pre-provision profit, excluding restructuring charges and special items (non-GAAP) GG $383 $388 $372 $352 $356 Income before income tax expense (benefit), excluding restructuring charges and special items: Income before income tax expense (GAAP) HH $315 $283 $274 $476 $235 Less: Income before income tax expense (benefit) related to restructuring charges and special items (GAAP) (10) (33) (21) 173 — Income before income tax expense, excluding restructuring charges and special items (non-GAAP) II $325 $316 $295 $303 $235 Income tax expense, excluding restructuring charges and special items: Income tax expense (GAAP) JJ $106 $86 $85 $163 $69 Less: Income tax (benefit) related to restructuring charges and special items (GAAP) (4) (13) (8) 65 — Income tax expense, excluding restructuring charges and special items (non-GAAP) KK $110 $99 $93 $98 $69 Restructuring charges and special expense items include: Restructuring charges $1 $10 $1 $103 $0 Special items 9 23 20 12 0 Restructuring charges and special expense items LL $10 $33 $21 $115 $0 Net interest income, excluding the effect of Chicago Divesture: Net interest income (GAAP) 833 808 Less: Estimated effect of Chicago Divesture 13 13 Net interest income, excluding effect of Chicago Divesture (non-GAAP) MM $820 $795 Operating leverage, excluding restructuring charges and special items: D $1,183 $1,166 1.5 % GAAP) F 800 810 (1.2)% Operating leverage, excluding restructuring charges and special items (non-GAAP) NN 2.7 % 1Q15 v 1Q14 QUARTERLY TRENDS Total revenue, excluding restructuring charges and special items (non-GAAP) Total revenue, excluding restructuring charges and special items (non-GAAP) Noninterest expense, excluding restructuring charges and special items (non- |
![]() Non-GAAP Reconciliation Table 34 Non-GAAP Reconciliation - Segments $s in millions Consumer Banking Commercial Banking Other Consolidated Consumer Banking Commercial Banking Other Consolidated Consumer Banking Commercial Banking Other Consolidated Net income (loss) (GAAP) A $61 $147 $1 $209 $52 $140 $5 $197 $54 $139 ($4) $189 Return on average tangible common equity Average common equity (GAAP) B $4,649 $4,526 $10,232 $19,407 $4,756 $4,334 $10,119 $19,209 $4,685 $4,205 $10,521 $19,411 Less: Average goodwill (GAAP) — — 6,876 6,876 — — 6,876 6,876 — — 6,876 6,876 Average other intangibles (GAAP) — — 5 5 — — 6 6 — — 6 6 Add: Average deferred tax liabilities related to goodwill (GAAP) — — 422 422 — — 403 403 — — 384 384 Average tangible common equity (non-GAAP) C $4,649 $4,526 $3,773 $12,948 $4,756 $4,334 $3,640 $12,730 $4,685 $4,205 $4,023 $12,913 Return on average tangible common equity (non-GAAP) A/C 5.30 % 13.15 % NM 6.53 % 4.30 % 12.76 % NM 6.12 % 4.57 % 13.10% NM 5.81 % Return on average total tangible assets Average total assets (GAAP) D $51,602 $41,606 $40,117 $133,325 $50,546 $40,061 $40,064 $130,671 $49,012 $38,854 $40,825 $128,691 Less: Average goodwill (GAAP) — — 6,876 6,876 — — 6,876 6,876 — — 6,876 6,876 Average other intangibles (GAAP) — — 5 5 — — 6 6 — — 6 6 Add: Average deferred tax liabilities related to goodwill (GAAP) — — 422 422 — — 403 403 — — 384 384 Average tangible assets (non-GAAP) E $51,602 $41,606 $33,658 $126,866 $50,546 $40,061 $33,585 $124,192 $49,012 $38,854 $34,327 $122,193 Return on average total tangible assets (non-GAAP) A/E 0.48 % 1.43 % NM 0.67 % 0.40 % 1.38 % NM 0.63 % 0.44 % 1.42 % NM 0.61 % Efficiency ratio Noninterest expense (GAAP) F $596 $173 $41 $810 $611 $180 $33 $824 $609 $162 $39 $810 Net interest income (GAAP) 533 276 27 836 536 283 21 840 532 270 18 820 Noninterest income (GAAP) 219 100 28 347 218 111 10 339 226 104 11 341 Total revenue G $752 $376 $55 $1,183 $754 $394 $31 $1,179 $758 $374 $29 $1,161 Efficiency ratio (non-GAAP) F/G 79.25 % 46.01 % NM 68.49 % 81.09 % 45.48 % NM 69.88 % 80.42 % 43.35 % NM 69.84 % (dollars in millions) Consumer Banking Commercial Banking Other Consolidated Consumer Banking Commercial Banking Other Consolidated Net income (loss) (GAAP) A $44 $141 $128 $313 $32 $141 ($7) $166 Return on average tangible common equity Average common equity (GAAP) B $4,640 $4,129 $10,838 $19,607 $4,568 $4,023 $10,779 $19,370 Less: Average goodwill (GAAP) — — 6,876 6,876 — — 6,876 6,876 Average other intangibles (GAAP) — — 7 7 — — 7 7 Add: Average deferred tax liabilities related to goodwill (GAAP) — — 369 369 — — 351 351 Average tangible common equity (non-GAAP) C $4,640 $4,129 $4,324 $13,093 $4,568 $4,023 $4,247 $12,838 Return on average tangible common equity (non-GAAP) A/C 3.87 % 13.78 % NM 9.59 % 2.81 % 14.17 % NM 5.24 % Return on average total tangible assets Average total assets (GAAP) D $48,556 $38,022 $40,570 $127,148 $47,610 $36,955 $39,339 $123,904 Less: Average goodwill (GAAP) — — 6,876 6,876 — — 6,876 6,876 Average other intangibles (GAAP) — — 7 7 — — 7 7 Add: Average deferred tax liabilities related to goodwill (GAAP) — — 369 369 — — 351 351 Average tangible assets (non-GAAP) E $48,556 $38,022 $34,056 $120,634 $47,610 $36,955 $32,807 $117,372 Return on average total tangible assets (non-GAAP) A/E 0.37 % 1.50 % NM 1.04 % 0.27 % 1.54 % NM 0.57 % Efficiency ratio Noninterest expense (GAAP) F $655 $157 $136 $948 $638 $153 $19 $810 Net interest income (GAAP) 546 264 23 833 537 256 15 808 Noninterest income (GAAP) 236 107 297 640 219 107 32 358 Total revenue G $782 $371 $320 $1,473 $756 $363 $47 $1,166 Efficiency ratio (non-GAAP) F/G 83.61 % 42.36 % NM 64.33 % 84.39 % 42.13 % NM 69.43 % Three Months Ended September 30, 2015 2014 2014 NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS - SEGMENTS (CONTINUED) 2014 2014 Three Months Ended March 31, Three Months Ended December 31, Three Months Ended June 30, Three Months Ended March 31, |
![]() 35 |