CFG 10-K & 10-Q changes, risk factors and insider trading

We are subject to a number of risks potentially impacting our business, financial condition, results of operationsoperations, and cash flows. As a financial services organization, certain elements of risk are inherent in what we do and the decisions we make. Therefore, we encounter risk as part of the normal course of our business and design risk management processes to help manage these risks. See the “Risk GovernanceManagement” section in Item 7 for a discussion of our risk management framework and the primary risks we face.

You should carefully consider the following risk factors that may affect our business, financial condition, results of operationsoperations, or cash flows. However, the risk factors described below are not the only ones we face and should not be considered a complete list of risks that we may encounter. Additional risks not presently known to us or that we believe to be immaterial may also adversely affect our business. See the “Forward-Looking Statements” section above for other factors that could affect us.

Our business strategy is designed to maximize the full potential of our business, drive sustainable growth and enhance profitability, with our success resting on our ability to distinguish ourselves. Our future success and the value of our stock depends, in part, on our ability to effectively implement our business strategy and achieve our financial performance goals across our Consumer and Commercial businesses, including our Private Bank. There are risksRisks and uncertainties,uncertainties associated with each element of our strategy exist, many of which are not within our control, associated with each element of our strategy.control. If we are not able to successfully execute our business strategy, we may not achieve our financial performance goals and any shortfall may be material. See the “Business Strategy” section in Item 1 for further information.

Supervisory requirements and expectations on us as a financial holding company and a bank holding company and any regulator-imposed limits on our activities could adversely affect our ability to implement our strategic plan, expand our business, continue to improve our financial performanceperformance, and make capital distributions to our stockholders.

Our operations are subject to extensive regulation, supervisionsupervision, and examination by the federal banking regulators, as well as the CFPB. As part of the supervisory and examination process, if we are unsuccessful in meeting the regulatory requirements and supervisory expectations that apply to us, regulatory agencies may from time to time take supervisory actions against us, including actions that may not be publicly disclosed. Such actions may include restrictions on our activities or the activities of our subsidiaries, informal (nonpublic) or formal (public) supervisory actionsactions, or public enforcement actions, including the payment of civil money penalties, which could increase our costs and limit our ability to implement our strategic plans and expand our business,business andand, as a resultresult, could have a material adverse effect on our business, financial conditioncondition, or results of operations. See the “Regulation and Supervision” section in Item 1 for further information.

Inflationary pressures could have an adverse effect on our business, financial positionposition, and results of operations.

Volatility and uncertainty related to inflation and theits associated effects of inflation may enhance or contribute to some of thecertain risks ofthat ourwe businessface by negatively impacting our funding costs and expenses, including increasing funding costs and expenses related to talent acquisition and retention,retention. andInflation may also negatively impactingimpact consumer demand and client purchasing power for our products and services, as well as the ability of our borrowers to repay their obligations. These inflationary pressures would likely have an adverse impact on our business, financial positionposition, and results of operations.

We rely on customer deposits to be our primary stable and low-cost source of funding. Our other funding sources alsoare includedependent on our ability to securitize loans in secondary markets, raise funds in the debt and equity capital markets, pledge loans and/or securities for borrowing from the FHLB, pledge securities as collateral for borrowing under repurchase agreements, and sell AFS securities.

Our ability to meet our obligations and support our operations could be materially affected by a variety of conditions, including market-wide illiquidity or disruption, a general loss of market or customer confidence in the financial services industry generally or in the Company specifically, or reductions in one or more of our credit ratings. ThisThese conditions could limit our ability to retain our deposits, securitize or sell assets, access the debt orand equity capital markets, or otherwise borrow money at a reasonable cost. Additionally,If these conditions, among others, ifare severe enough,enough they could also create unanticipated material outflows of cash due to, among other factors, draws on unfunded commitments or deposit attrition, which could have a significant adverse impact on our liquidity. Further,In addition, changes to the FHLB’s or the FRB’s underwriting guidelines for wholesale borrowings or lending policies may limit or restrict our ability to borrow,borrow and therefore could have a significant adverse impact on our liquidity.liquidity as a result.

Changes in interest rates can have a material impact on the value of our securities portfolio, the primary objective of which is to provide a readily available source of liquidity. An increase in rates could lower the collateral value of these securities, reducing the amount we could borrow,borrow and leadleading to losses in the event of their sale.

Since our earning assets are primarily in the form of loans and debt securities, changes in interest rates can have a material impact on our net interest income, net interest margin, fee income, and credit costs. Our asset yields and funding costs may not rise or fall in parallel in response to changes in interest rates, causing our net interest income to increase or decrease and our net interest margin to expand or contract. If our funding costs rise faster than our asset yields, or if our asset yields fall faster than our funding costs, our net interest income could decrease,decrease and our net interest margin could contract.

An increase in interest rates could cause lowerweaken demand for loans by customers, reducing our net interest income due to lower loan balances and origination-related fee income due to lower production volume,volume. andAn increase in rates could also have an adverse impact on our credit costs, as borrowers may have difficulty in making higher interest payments.payments, Additionally,as anwell increaseas inon ratesour AFS securities portfolio, which could causetrigger the recognition of losses onin ourthe AFS securities portfolio ifevent the securities neededneed to be sold.

Similarly, a decrease in interest rates could reduce our net interest income, net interest marginmargin, and fee income. A prolonged period of low interest rates may result in us holding lower yielding loans and securities should rates rise rapidly after thesuch perioda of low interest rates.period.

Changes in the spread between short-term and long-term interest rates (i.e., the yield curve) can also have a material impact on our net interest income and net interest margin. If theThe yield curve, typically upward sloping with short-term rates lower than long-term rates, werecould to flatten or invert,cause our net interest income and net interest margin mayto decreasedecline if it were to flatten or invert, as the cost of our short-term funding increasesis likely to increase relative to the yield we can earn on our long-term assets.

Interest rates and the yield curve are highly sensitive to many factors that are beyond our control, including general economic conditions and the policies of various governmental and regulatory agenciesagencies, and,most in particular,notably the Federal Open Market Committee. Although we have policies and procedures designed to manage our interest rate risk,risk as further discussed in the “Risk GovernanceManagement” section in Item 7, there can be no assurance that these policies and procedures will be effective in avoidingpreventing material adverse effects on our profitability.

We could fail to attract, retainretain, or motivate highly-skilled and qualified personnel, including our senior management, other key employeesemployees, or members of our Board, which could impair our ability to successfully execute our strategic plan and otherwise adversely affect our business.

Our ability to implement our strategic plan and our future success depends on our ability to attract, retainretain, and motivate highly-skilled and qualified personnel, including our senior management andmanagement, other key employeesemployees, and directors. The marketplace for skilled personnel continues to be competitive, which means the cost of hiring, incentivizingincentivizing, and retaining skilled personnel may continue to rise. The failure to attract and retain highly-skilled and qualified personnel could place us at a significant competitive disadvantage and impair our ability to implement our strategic plan successfully and achieve our performance targets, which could have a material adverse effect on our business, financial conditioncondition, and results of operations.

Limitations on the manner in which regulated financial institutions, such as us, can compensate their officers and employees, including those contained in pending rule proposals implementing the requirements of Section 956 of the Dodd-Frank Act,employees may make it more difficult for such institutions to compete for talent with financial institutions and other companies not subject to these or similar limitations. If we are unable to compete effectively, our business, financial conditioncondition, and results of operations could be adversely affected, perhaps materially.

A reduction in our credit ratings could have a material adverse effect on our business, financial conditioncondition, and results of operations.

Credit ratings affect the cost and associated terms upon which we are able to obtain funding. Rating agencies regularly evaluate us, with their ratings based on a number of factors, including our financial strength and conditions affecting the financial services industry generally. Any downgrade in our ratings would likely increase our borrowing costs and could limit our access to capital markets, which would adversely affect our business. For example, a ratings downgrade could adversely affect our ability to sell or market our securities, including long-term debt, engage in certain longer-term derivative transactionstransactions, and retain customers, who may require a minimum credit rating in order to place funds with us. In addition, under the terms of our derivatives contracts, we may be required to maintain a minimum credit rating, post additional collateral or terminate such contracts.contracts if we don’t maintain a minimum credit rating. Any of these impacts of a ratings downgrade could increase our cost of funding, reduce our liquidityliquidity, and have adverse effects on our business, financial conditioncondition, and results of operations. For more information regarding our credit ratings, see the “Liquidity Risk” section in Item 7.

Risks arising from actual or perceived changes in credit quality and uncertainty over the recoverability of amounts due from borrowers is inherent in our businesses. If the economic environment were to deteriorate, more of our borrowers may have difficulty in repaying their loans which could result in higher credit losses and increased loan loss provision expense. Further, our credit risk and credit losses may increase to the extent our loans are concentrated by loan type, industry segment, collateral type, borrower type, or location of the collateral or borrower.

A significant portion of our earningsearning assets are in the form of loans to borrowers across the U.S., primarily for residential, commercial and industrial, commercial real estate, education, and other retail purposes. A deterioration in economic conditions or changes in consumer or business behavior that negatively impactsimpact home or commercial property values could, in event of the borrower’s default, result in materially higher credit losses. Similarly, elevated unemployment levels and higher interest rates can adversely affect our customers’ ability to repay their loans, which can negatively impact our credit performance.

The credit quality of our borrowers may deteriorate for a number of reasons that are outside our control, including prevailing economic and market conditions and collateral valuations. The trends and risks affecting borrower credit quality have caused, and in the future may cause, us to experience credit losses, impairment charges, increased repurchase demands, higher recovery costs, and an inability to engage in routine funding transactions, which could have a material adverse effect on our business, financial conditioncondition, and results of operations.

Our risk management framework is made up of various processes and strategies to manage our risk exposure.exposure The framework to manage risk, including the framework’s underlying assumptions,and may not be effective under all conditions and circumstances. If theour risk management framework proves ineffective, we could suffer unexpected losses and could be materially adversely affected.

One of the main types of risks inherent in our business is credit risk. An important feature of our credit risk management system is to employ an internal credit risk control system through which we identify, measure, monitormonitor, and mitigate the existing and emerging credit risk of our customers. This process involves a detailed analysis of the customer or credit risk, taking into account both quantitative and qualitative factors, and is inherently subject to human error. In exercising their judgment, our employees may not always be able to assign an accurate credit rating to a customer or credit risk, which may result in our exposure to higher credit risks than indicated by our risk rating system.

The processes we use to estimate loan losses, measure the fair value of financial instrumentsinstruments, and estimate the effects of changing interest rates and other market measures on our financial condition and results of operations are reliant upon the use of analytical and forecasting models. Some of our tools and metrics for managing risk are based on observed historical market behavior, and we rely on quantitative models to measure risks and to estimate certain financial values. Models may be used in processes such as determining the pricing of various products, grading loans and extending credit, measuring interest rate and other market risks, predicting losses, assessing capital adequacyadequacy, and calculating regulatory capital levels, as well as estimating the value of financial instruments and balance sheet items, including goodwill. Poorly designed or implemented models could adversely affect our business decisions if the information is inadequate. In addition, our models may fail to predict future risk exposures if the information used is inaccurate, obsoleteobsolete, or not sufficiently comparable to actual events as they occur. We seek to incorporate appropriate historical data in our models, but the range of market values and behaviors reflected in any period of historical data is not always predictive of future developments in any particular period and the period of data we incorporate into our models may turn out to be inappropriate for the future period being modeled. In these instances, our ability to manage risk would be limited and our risk exposure and losses could be significantly greater than our models indicated, which could harm our reputation and adversely affect our revenues and profits. Finally, information provided to our regulators based on poorly designed or implemented models could be inaccurate or insufficient, which could adversely affect some of the decisions that our regulators make, including those related to capital distributions to our stockholders, and subject us to supervisory criticism and costs relatingrelated to remediation.

The preparation of consolidated financial statements in conformity with GAAP requires management to make significant estimates that affect the financial statements. Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations and, at times, require management to exercise judgment in their application so as to report our financial condition and results of operations in the most appropriate manner. Certain accounting policies are critical because they require management to make difficult, subjectivesubjective, or complex judgments about matters that are inherently uncertain and the likelihood that materially different estimates would result under different conditions or through the utilization of different assumptions. Our critical accounting estimates include the ACL, fair value measurementsmeasurements, and the evaluation and measurement of goodwill for impairment. If our estimates are inaccurate or need to be adjusted periodically, our financial condition and results of operations could be materially impacted. For more information regarding our use of estimates in the preparation of our consolidated financial statements, see Note 1 in Item 8 and the “Critical Accounting Estimates” section in Item 7.

Our operations depend on our ability to process a very large number of transactions efficiently and accurately while complying with applicable laws and regulations. Operational risk and losses can result from internal and external fraud; improper conduct or errors by employees or third parties; failure to document transactions properly or to obtain proper authorization; failure to comply with applicable legal and regulatory requirements and business conduct rules; equipment failures, including those caused by natural disasters or by electrical, telecommunicationstelecommunications, or other essential utility outages; business continuity and data security system failures, including those caused by computer viruses, cyber-attacks against us or our vendors, coding errors, or unforeseen problems encountered while implementing new computer systems or upgrades to existing systems; or the inadequacy or failure of systems and controls, including those of our suppliers or counterparties. Although we implement risk controls and loss mitigation actions and devote substantial resources to developing efficient procedures, identifying and rectifying weaknesses in existing procedures and training staff, it is not possible to be certain that such actions have been or will be effective in controlling each of the operational risks we face. Any weakness in these systems or controls, or any breaches or alleged breaches of such laws or regulations, could result in increased regulatory supervision, enforcement actionsactions, and other disciplinary action, especially in light of heightened regulatory expectations around information security, and have an adverse impact on our business, applicable authorizations and licenses, reputationreputation, and results of operations.

Technology within the financial services industry continues to evolve and new, unexpected technological changes, including those related to artificial intelligence, could have a transformative effect on the way banks offer products and services. We believe our success depends, to a great extent, on our ability to utilize technology to offer products and services that address the needs of our customers and to create efficiencies in our operations. However, we may not be able to, among other things, keep up with the rapid pace of technological changes, effectively implement new technology-driven products and services, or be successful in marketing these products and services to our customers. As a result, our ability to compete effectively to attract or retain business may be impaired, and our business, financial conditioncondition, or results of operations may be adversely affected.

In addition, changes in the legal and regulatory framework under which we operate require us to update our information systems to ensure compliance. Our need to review and evaluate the impact of ongoing rule proposals, final rulesrules, and implementation guidance from regulators further complicates the development and implementation of new information systems for our business. Regulatory guidance continues to be focused on the need for financial institutions to perform appropriate due diligence and ongoing monitoring of third-party vendor relationships, thus increasing the scope of management involvement and decreasing the efficiency otherwise resulting from our relationships with third-party technology providers. Given the significant number of ongoing regulatory reform initiatives, it is possible that we may incur higher than expected information technology costs in order to comply with current and impending regulations. Also, see “Supervisory requirements and expectations on us as a financial holding company and a bank holding company and any regulator-imposed limits on our activities could adversely affect our ability to implement our strategic plan, expand our business, continue to improve our financial performanceperformance, and make capital distributions to our stockholders.”

Evolving technologies, including the introduction of Generative Artificial Intelligence and Large Language Models, and the increased sophistication and activities of organized crime, hackers, terrorists, nation-states, activistsactivists, and other external parties present a significant information security risk to large financial institutions such as us. Third parties with whom we or our customers do business also present operational and information security risks to us, including security breaches or failures of their own systems. Risks related to cyber-attackscyberattacks on our vendors and other third parties, including supply chain attacks affecting our software and information technology service providers, are on the rise as such attacks become more frequent and severe. Employee error, failure to follow security procedures, or malfeasance also present these risks. Our operations rely on the secure processing, transmissiontransmission, and storage of confidential information in our computer systems and networks as well as in the third-party computer systems and networks used to provide products and services on our behalf. Although we believe that we have appropriate information security procedures and controls based on our adherence to applicable laws and regulations and industry standards, our technologies, systems, and networks may be the target of cyber-attackscyberattacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, theft, salesale, or loss or destruction of the confidential and/or proprietary information of CFG, and our customers, vendors, counterparties, or employees. We and our third-party vendors are under continuous threat of loss or network degradation due to cyber-attacks,cyberattacks, such as computer viruses, malicious or destructive code, phishing attacks, ransomware, and Distributed Denial of Service (“DDoS”) attacks (collectively, “fraudulent schemes”). Also, our customers are routinely the target of fraudulent schemes. This is especially trueschemes as we continue to expand customer capabilities to utilize the Internet and other remote channels to transact business. Two of the most significant cyber-attackcyberattack risks that we face as a result of these fraudulent schemes are potential loss of funds resulting from customers falling victim to cybercriminal communications directed to them or unauthorized access to sensitive customer data. Cybercriminals can use fraudulent schemes directly targeting our customers or our own systems to compromise and directly extract funds from a customer’s account or access sensitive customer data. Certain technology protections such as Customer Profiling and Step-Up Authentications have been implemented, but there can be no assurance that these protections will be effective.

As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our layers of defense, to investigate and remediate any information security vulnerabilities internally, to assess and mitigate issues associated with customers that have fallen victim to fraudulent schemes, and perform additional due diligence with respect to our third-party vendors. System enhancements and updates may also create risks associated with implementing new systems and integrating them with existing ones. Due to the complexity and interconnectedness of information technology systems, the process of enhancing our layers of defense can itself create a risk of system disruptions and security issues. In addition, addressing certain information security vulnerabilities, such as hardware-based vulnerabilities, may affect the performance of our information technology systems. The ability of our hardware and software providers to deliver patches and updates to mitigate vulnerabilities in a timely manner can introduce additional risks, particularly when a vulnerability is being actively exploited by threat actors. Cyber-attacksCyberattacks against the patches themselves have also proven to be a significant risk that companies will have to address going forward.

Despite our efforts to prevent a cyber-attack,cyberattack, a successful cyber-attackone could persist for an extended period of time before being detected, and, following detection, could take considerable time for us to obtain full and reliable information about the cybersecurity incident and the extent, amountamount, and type of information compromised. During the course of an investigation, we may not necessarily know the full effects of the incident or how to remediate it, and actions and decisions that are taken or made in an effort to mitigate risk may further increase the costs and other negative consequences of the incident. Moreover, existing regulations may require us to disclose information about a cybersecurity event before it has been resolved or fully investigated.

The techniques used by cyber criminals change frequently, may not be recognized until launchedlaunched, and can be initiated from a variety of sources, including terrorist organizations and hostile foreign governments. These actors may attempt to fraudulently induce employees, customerscustomers, or other third-party users of our systems to disclose sensitive information in order to gain access to data or our systems. In the event that a cyber-attackcyberattack is successful, our business, financial conditioncondition, or results of operations may be adversely affected.

Any failure, interruptioninterruption, or breach in the security of our communication and information systems, includingsystem due toto, cyber-attacksamong other things, cyberattacks or our failure to adequately maintain and manage our systems or implement system changes and upgrades, could result in failures or disruptions in our customer relationship management, general ledger, deposit, loanloan, and other systems. Although our policies and procedures are designed to prevent or limit the effect of the possible failure, interruptioninterruption, or security breach of our information systems, there can be no assurance that these policies and procedures will be successful and that any such failure, interruptioninterruption, or security breach will not occur or, if they do occur, that they will be adequately addressed. The occurrence of any failure, interruptioninterruption, or security breach of our information systems could require us to devote substantial resources to recovery and response efforts, damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutinyscrutiny, or expose us to civil litigation and possible financial liability. Although we maintain insurance coverage for information security events, we may incur losses as a result of such events that are not insured against or not fully covered by our insurance.

Our success and results depend on our reputation and the strength of our brands. We are vulnerable to adverse market perception as we operate in an industry where integrity, customer trusttrust, and confidence are paramount. We are exposed to the risk that litigation, employee misconduct, operational failures, the outcome of regulatory or other investigations or actions, press speculation and negative publicity, and perception of our environmental, socialsustainability and governance practices and disclosures, among other factors, could damage our brands or reputation. Our brands and reputation could also be harmed if we sell products or services that do not perform as expected or customers’ expectations for the product are not satisfied.

Unpredictable catastrophic events could have an adverse effect on our business, financial positionposition, and results of operations.

The occurrence of catastrophic events, including pandemics, terrorists attacks, extreme weather events, such as hurricanes, tropical storms, or tornadoes, and other large-scale catastrophes could adversely affect our business, financial conditioncondition, or results of operations. Such events could affect the stability of our deposit base, impair the ability of our borrowers to repay outstanding loans, impair the value of collateral securing loans, and cause significant property damage or operational disruptions, resulting in loss of revenue or causing us to incur additional expenses.

Furthermore, although we maintain both business continuity and disaster recovery plans, if a catastrophic event rendered our production and recovery data unusable, there can be no assurance that these plans and related capabilities will adequately protect us from such an event, and our business, financial conditioncondition, or results of operations could be adversely affected.

Ongoing geopolitical instability, such as the wars in Ukraine and the Middle East, has negatively impacted, and could in the future negatively impact, the global and U.S. economies, including by causing supply chain disruptions, rising prices for oil and other commodities, volatility in capital markets and foreign currency exchange rates, rising interest ratesrates, and heightened cybersecurity risks. The extent to which such geopolitical instability adversely affects our business, financial conditioncondition, and results of operations, as well as our liquidity and capital profile, will depend on future developments, which are highly uncertain and unpredictable, including the extent and duration of the wars and the associated immeasurable humanitarian toll inflicted as a result. If geopolitical instability adversely affects us, it may also have the effect of heightening other risks related to our business.

We operate in an industry that is highly competitive, which could result in losing business or margin declines and have a material adverse effect on our business, financial conditioncondition, and results of operations.

We operate in a highly competitive industry, which could become even more competitive as a result of legislative, regulatoryregulatory, and technological changes, as well as continued consolidation. We face aggressive competition from other domestic and foreign lending institutions and from numerous other providers of financial services, including non-banking financial institutions that are not subject to the same regulatory restrictions as banks and BHCs, securities firms and insurance companies, and competitors that may have greater financial resources.

With respect to non-banking financial institutions, technology and other changes have lowered barriers to entry and made it possible for non-banks to offer products and services traditionally provided by banks. For example, consumers can maintain funds that would have historically been held as bank deposits in brokerage accounts or mutual funds and can also complete transactions such as paying bills and/or transferring funds directly without the assistance of banks. In addition, the emergence, adoptionadoption, and evolution of new technologies that do not require intermediation, including distributed ledgers such as digital assets and blockchain, as well as advances in automation, artificial intelligenceintelligence, and robotics, could significantly affect the competition for financial services. The process of eliminating banks as intermediaries, known as “disintermediation,” could result in the loss of fee income, as well as the loss of customer deposits and the related income generated from those deposits. Some of our non-bank competitors are not subject to the same extensiveregulations regulationsthat we are and, therefore, may have greater flexibility in competing for business. As a result of these and other sources of competition, we could lose business to competitors or be forced to price products and services on less advantageous terms to retain or attract clients, either of which would adversely affect our profitability.

Financial services institutions are typically interconnected as a result of trading, investment, liquidity, clearing, counterpartycounterparty, and other relationships. Within the financial services industry, the default by any one institution could lead to defaults by other institutions. Concerns about, or a default by, one institution could lead to significant market and customer perception of the risk of similar problems at other institutions. This perception of risk could, in and of itself, lead to adverse impacts on liquidity, as the financial soundness of financial institutions is closely related as a result of thesethe credit, trading, clearing and otheraforementioned relationships. Even the perceived lack of creditworthiness of, or questions about, a counterparty may lead to market-wide liquidity problems and losses or defaults by various institutions. This systemic risk may adversely affect financial intermediaries, such as clearing agencies, banksbanks, and exchanges with which we interact on a daily basis, or key funding providers such as the FHLBs, any of which could have a material adverse effect on our access to liquidity or otherwise have a material adverse effect on our business, financial conditioncondition, and results of operations.

As a financial holding company and a bank holding company, we are subject to comprehensive regulation that could have a material adverse effect on our business and results of operations.

As a FHC and a BHC, we are subject to comprehensive regulation, supervisionsupervision, and examination by the FRB. In addition, CBNA is subject to comprehensive regulation, supervisionsupervision, and examination by the OCC. Our regulators supervise us through regular examinations and other means that allow them to gauge management’s ability to identify, assessassess, and control risk in all areas of operations in a safe and sound manner and to ensure compliance with laws and regulations. In the course of their supervision and examinations, our regulators may require improvements in various areas. We may be required to devote substantial resources to meet supervisory expectations or remediate supervisory findings. In addition, the failure to meet supervisory expectations can result in practical limitations on the ability of a bank, BHCBHC, or FHC to engage in new activities, pursue growth opportunities, engage in acquisitions, return capital to shareholders through repurchases or dividends, or continue to conduct existing activities. If we are unable to implement and maintain any required actions in a timely and effective manner, we could become subject to informal (nonpublic) or formal (public) supervisory actions and public enforcement orders that could lead to significant restrictions on our existing business or on our ability to engage in any new business. Such forms of supervisory action could include, without limitation, written agreements, cease and desist orders, and consent orders and may, among other things, result in restrictions on our ability to pay dividends, requirements to increase capital, restrictions on our activities, the imposition of civil monetary penalties, and enforcement of such actions through injunctions or restraining orders. We could also be required to dispose of certain assets and liabilities within a prescribed period. The terms of any such supervisory or enforcement action could have a material adverse effect on our business, financial conditioncondition, and results of operations.

We are a BHC that has elected to become a FHC pursuant to the Bank Holding Company Act. FHCs are allowed to engage in certain financial activities in which a BHC is not otherwise permitted to engage. However, to maintain FHC status, a BHC and all of its depository institution subsidiaries must be “well capitalized” and “well managed.” If a BHC ceases to meet these capital and management requirements, there are many penalties it would be faced with, including the imposition of limitations or conditions on the conduct of its activities by the FRB, as well as the inability to undertake any of the broader financial activities permissible for FHCs or to acquire a company engaged in such financial activities without prior approval of the FRB. If a company does not return to compliance within 180 days, which period may be extended, the FRB may require divestiture of the company’s depository institutions. If we fail to meet FHC requirements and remediate deficiencies in a timely manner, there could be a material adverse effect on our business, financial conditioncondition, and results of operations.

From time to time, bank regulatory agencies take supervisory actions that restrict or limit a financial institution’s activities and lead it to raise capital or subject it to other requirements. In addition, as part of our regular examination process, our regulators may advise us to conduct significant remediation activities or operate under various restrictions as a prudential matter. Any such actions or restrictions, if and in whatever manner imposed, could adversely affect our costs and revenues. Moreover, efforts to comply with any such nonpublic supervisory actions or restrictions may require material investments in additional resources and systems, as well as a significant commitment of managerial time and attention. As a result, such supervisory actions or restrictions, if and in whatever manner imposed, could have a material adverse effect on our business and results of operations.

The regulatory environment in which we operate continues to be subject to significant and evolving regulatory requirements that could have a material adverse effect on our business and earnings.

We are heavily regulated by multiple banking, consumer protection, securitiessecurities, and other regulatory authorities at the federal and state levels. This regulatory oversight is primarily established to protect depositors, the DIF, consumers of financial products, and the financial system as a whole, not for the protection of shareholders or other investors. Changes to statutes, regulations, rulesrules, or policies, including their interpretation, implementationimplementation, or enforcement, could affect us in substantial and unpredictable ways, including by, for example, subjecting us to additional costs, limiting the types of financial services and other products we may offer, limiting our ability to pursue acquisitionsacquisitions, and increasing the ability of third parties, including non-banks, to offer competing financial services and products. In recent years, we, together with the rest of the financial services industry, have faced particularly intense scrutiny, with many new regulatory initiatives and vigorous oversight and enforcement on the part of numerous regulatory and governmental authorities. Legislatures and regulators have pursued a broad array of initiatives intended to promote the safety and soundness of financial institutions, financial market stability, the transparency and liquidity of financial markets, and consumer and investor protection. Certain regulators and law enforcement authorities have also recently required admissions of wrongdoing and, in some cases, criminal pleas as part of the resolutions of matters brought by them against financial institutions. Any such resolution of a matter involving us could lead to increased exposure to civil litigation, could adversely affect our reputation, could result in penalties or limitations on our ability to do business or engage in certain activitiesactivities, and could have other negative effects. In addition, a single event or issue may give rise to numerous and overlapping investigations and proceedings, including by multiple federal and state regulators and other governmental authorities.

We are also subject to laws and regulations relating to the privacy of the information of our customers, employees, counterpartiescounterparties, and others, and any failure to comply with these laws and regulations could expose us to liability and/or reputational damage. As new privacy-related laws and regulations are implemented, the time and resources needed for us to comply with those laws and regulations, as well as our potential liability for non-compliance and our reporting obligations in the case of data breaches, may significantly increase.

Citizens Financial Group, Inc. is one of the nation’s oldest and largest financial institutions, with $217.5$226.4 billion in assets as of December 31, 2024.2025. Headquartered in Providence, Rhode Island, we offer a broad range of retailretail, private banking, wealth management, and commercial banking products and services to individuals, small businesses, middle-market companies, large corporationscorporations, and institutions. We help our customers reach their potential by listening to them and by understanding their needs in order to offer tailored advice, ideasideas, and solutions. In Consumer Banking, we provide an integrated experience that includes mobile and online banking, a full-service customer contact centercenter, and the convenience of approximately 3,100 ATMs and more thanapproximately 1,000 branches in 14 states and the District of Columbia. Consumer Banking products and services include a full range of banking, lending, savings, wealth managementmanagement, and small business offerings. Consumer Banking includes Citizens Private Bank and Private Wealth, which integrates banking services and wealth management solutions to serve high- and ultra-high-net-worth individuals and families, as well as investors, entrepreneurs, and businesses. In Commercial Banking, we offer a broad complement of financial products and solutions, including lending and leasing, deposit and treasury management services, foreign exchange, interest rate and commodity risk management solutions, as well as loan syndication, corporate finance, merger and acquisition, and debt and equity capital markets capabilities.

Key Financial Highlights

•Net income decreasedof $99$1.8 billion increased $322 million, with earnings per diluted common share downup $0.10$0.83 to $3.03$3.86 compared to 2023.2024.

•The efficiency ratio of 67.0% was stable64.40% compared to 2023.67.03% in 2024.

RESULTSCONSOLIDATED STATEMENT OF OPERATIONS —ANALYSIS 2024– 2025 compared with 20232024

Net interest income is our largest source of revenue and is the difference between the interest earned on interest-earning assets (generally loans and investment securities) and the interest expense incurred in connection with interest-bearing liabilities (generally deposits and borrowed funds). The level of our net interest income is primarily a function of the difference between the effective yield on our average interest-earning assets and the effective cost of our interest-bearing liabilities. Factors that influence our net interest income include, but are not limited to, the pricing and mix of interest-earning assets and interest-bearing liabilities which, in turn, are impacted by external factors such as economic conditions, competition for loans and deposits, the monetary policy of the FRBFRB, and market interest rates. For further discussion, refer to the “Market Risk” and “Risk Governance” sectionssection of this report.

The following table presents the major components of our net interest income. Average balance represents amortized cost, excluding the unamortized basis adjustments related to the transfer of certain HTM securities from AFS, and LHFS.AFS. The yield/rate is based on annualized interest income or expense for the periods presented and includes the impact of hedging activities associated with the respective asset and liability categories.

(21) Net interest income and net interest margin is presented on aan FTE basis usingare thenon-GAAP federalfinancial statutorymeasures. taxSee rate“Non-GAAP ofFinancial 21%. The FTE impact is predominantly attributable to commercial and industrial loansMeasures” for themore periods presented.information.

Average interest-earning assets decreased $3.6$1.0 billion compared to 2023,2024, driven by a decline in total loans and leases,leases and cash held in interest-bearing deposits, partially offset by an increase in investment securities and cashloans held infor interest-bearing deposits.sale.

Average totaldeposits borrowedincreased funds decreased $2.5$1.2 billion compared to 2023,2024, reflectingdriven aprimarily declineby growth in FHLBthe advancesPrivate driven by Non-Core portfolio runoff,Bank, partially offset by a remixreduction ofin fundinghigher-cost tobrokered long-term senior debt and secured borrowings collateralized by loans.deposits.

The primary drivers for the change in noninterest income for the year ended December 31, 2024,2025, compared to 2023,2024, are described below.below:

Citizens Financial Group, Inc., headquartered in Providence, Rhode Island, is one of the nation’s oldest and largest financial institutions. We offer a broad range of retail, private banking, wealth management, and commercial banking products and services to individuals, small businesses, middle-market companies, large corporations, and institutions. We help our customers reach their potential by listening to them and by understanding their needs in order to offer tailored advice, ideas, and solutions. In Consumer Banking, we provide an integrated experience that includes mobile and online banking, a full-service customer contact center, and the convenience of approximately 3,000 ATMs and approximately 1,000 branches in 14 states and the District of Columbia. Consumer Banking products and services include a full range of banking, lending, savings, wealth management, and small business offerings. Consumer Banking includes Citizens Private Bank and Private Wealth, which integratesintegrate banking services and wealth management solutions to serve high- and ultra-high-net-worth individuals and families, as well as investors, entrepreneurs, and businesses. In Commercial Banking, we offer a broad complement of financial products and solutions, including lending and leasing, deposit and treasury management services, foreign exchange, interest rate and commodity risk management solutions, as well as loan syndication, corporate finance, merger and acquisition, and debt and equity capital markets capabilities.

At MarchJune 31,30, 2026, we had total assets of $227.9$233.8 billion, total deposits of $184.0$185.6 billion, and total stockholders’ equity of $26.2 billion. In addition, we had total client assets of $62.6$65.7 billion, including assets under management of $36.8$38.7 billion, representing assets for which continuous and regular supervisory or management services are provided, and transactional assets of $25.8$27.0 billion, representing assets for which execution, custody, recordkeeping, reporting, and other services are provided.

This summary highlights select financial information of the Company as well as information regarding certain significant events and transactions occurring during the three months ended March 31, 2026.period. This summary should be read in conjunction with this entire document for a more complete understanding of trends, events, commitments, uncertainties, liquidity, capital resources, and critical accounting policies and estimates. Each of these items, taken individually or collectively, could have an impact on the Company’s financial condition, results of operations, and cash flows. For additional information regarding our financial performance and condition, see “Consolidated Statement of Operations Analysis” and “Consolidated Balance Sheet Analysis.”

•Net income of $517$587 million and $1.1 billion for the three and six months ended MarchJune 31,30, 20262026, respectively, increased $144$151 million and $295 million, with earnings per diluted common share up $0.36$0.38 to $1.13$1.30 and up $0.73 to $2.42, compared to the same periodperiods in 2025.

•Net interest income of $1.6 billion and $3.2 billion for the three and six months ended MarchJune 31,30, 20262026, respectively, increased $171$194 million and $365 million, and net interest margin of 3.14%3.16% and 3.15%, respectively, increased 2522 basis points and 24 basis points, compared to the same periodperiods in 2025. The increase in net interest income reflects an increase in interest-earning assets, higher net interest margin driven by improved funding costs, including the reduction of higher-cost funding given runoff of the auto loan portfolio,margin, terminated swap impacts, and fixed-rate asset repricing benefits, partially offset by lower asset yields.benefits.

•Noninterest expenseincome of $1.4$652 million and $1.3 billion for the three and six months ended MarchJune 31,30, 20262026, respectively, increased $64$52 million and $114 million compared to the same periodperiods in 2025, driven by salariesgrowth andacross employeenumerous benefitsfee reflectingcategories, hiring related to the Private Bank and Private Wealth build-out and strongprimarily capital markets feeand performance,wealth fees, partially offset by amortgage declinebanking infees otherdriven operating expense reflectingby lower FDICMSR depositvaluation insuranceresults, costs.net of hedge impact.

•ProvisionNoninterest expense of $140$1.4 millionbillion and $2.8 billion for the three and six months ended MarchJune 31,30, 20262026, decreasedrespectively, $13increased $75 million and $139 million compared to the same periodperiods in 2025, reflectingdriven runoffby of certain retail portfoliossalaries and improvingemployee creditbenefits trendsreflecting hiring related to the Private Bank and loanPrivate mix.Wealth build-out, and compensation associated with growth in capital markets fees.

•The efficiency ratio of 63.6%61.1% and 62.3% for the three and six months ended MarchJune 31,30, 20262026, respectively, compared to 67.9%64.8% and 66.3% for the same periodperiods in 2025.

•ROTCE of 12.2%13.9% and 13.1% for the three and six months ended MarchJune 31,30, 20262026, respectively, compared to 9.6%11.0% and 10.4% for the same periodperiods in 2025.

•Tangible book value per common share of $37.94$38.29 at MarchJune 31,30, 2026 was broadly stable compared to $38.07 at December 31, 2025.

During the three months ended MarchJune 31,30, 2026, the Parent Company repurchased $300$225 million of its outstanding common stock, with remaining capacity of $1.0$775 billionmillion as of MarchJune 31,30, 2026. See Note 10 and Item 2 for additional information on share repurchase activity.

In March 2026, the FRB, FDIC, and OCC issued joint proposals to modernize the regulatory capital framework for banking organizations. The first proposal would subject Category I and II banking organizations to a single set of risk-based capital requirements under an expanded risk-based approach (“ERBA”) and a revised market risk framework (the “ERBA proposal”). Category III and Category IV banking organizations would be subject to the revised market risk framework if specified thresholds for aggregate trading assets and liabilities are met and would also have the option to adopt the ERBA in its entirety. The second proposal would revise certain elements of the capital rule under the standardized approach (the “revised standardized approach proposal”) and would apply to banking organizations that are not classified as Category I or II and have not otherwise optedelected to adopt the ERBA.

The ERBA proposal would introduce differentiated capital requirements based on specified credit risk factors, establish a standardized operational risk requirement aligned with a banking organization’s business volume, and implement a revised market risk framework that incorporates a new models-based methodology designed to better capture tail risk and market liquidity risk.framework. The proposal would also increase the aggregate trading assets and liabilities threshold for application of the market risk framework from $1 billion to $5 billion for non-Category I and II banking organizations. The revised standardized approach proposal would modify risk-based capital requirements by introducing a broader range of risk weights for residential mortgages based on more granular risk factors and reducing risk weights for certain other exposures. The proposal would also require most elements of AOCI to be recognized in regulatory capital, subject to a five-year transition period. We continue to monitor these proposals and evaluate their potential impact on our regulatory capital ratios.

The following tabletables presentspresent the major components of our net interest income. Average balance represents amortized cost, excluding the unamortized basis adjustments related to the transfer of certain HTM securities from AFS. The yield/rate is based on annualized interest income or expense for the periods presented and includes the impact of hedging activities associated with the respective asset and liability categories.

Net interest income increased $171$194 million,million orand 12%,$365 million for the three and six months ended June 30, 2026, respectively, and net interest margin increased 2522 basis points forand the24 threebasis months ended March 31, 2026,points, compared to the same periodperiods in 2025. The increase in net interest income reflects an increase in interest-earning assets, higher net interest margin driven by improved funding costs, including the reduction of higher-cost funding given runoff of the auto loan portfolio,margin, terminated swap impacts, and fixed-rate asset repricing benefits, partially offset by lower asset yields.benefits.

Average interest-earning assets increased $6.9$10.5 billion and $8.7 billion for the three and six months ended MarchJune 31,30, 2026, respectively, compared to the same periodperiods in 2025, driven by an increase in total loans and leases, cash held in interest-bearing deposits, and investment securities.

Average deposits increased $8.6$9.5 billion and $9.1 billion for the three and six months ended MarchJune 31,30, 2026, respectively, compared to the same periodperiods in 2025, driven primarily by growth in the Private Bank and in commercial, partially offset by a reduction in higher-cost brokered deposits.

Average total borrowed funds increased $677 million and decreased $1.8$556 billionmillion for the three and six months ended MarchJune 31,30, 2026, respectively, compared to the same periodperiods in 2025,2025. drivenThe primarilyfluctuation byduring the three- and six-month periods reflects an increase in FHLB advances and a decline in auto collateralized borrowings, given runoff of the auto loan portfolio, partially offset by an increase in FHLB advances.paydowns.

The primary drivers for the change in noninterest income for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, are described below:

•Capital markets fees increased driven by higher M&A, loan syndication, and bond underwriting fees during the three- and six-month periods, with higher equity underwriting fees also a driver during the six-month period;

•Wealth fees increased primarily driven by growth in assets under management, largely fromreflecting net inflows and market appreciation; and

•Mortgage banking fees decreased reflectingprimarily driven by lower MSR valuation results, net of hedge impact, and lower servicing revenue, partially offset by higher production revenue.impact.

The primary drivers for the change in noninterest expense for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025, are described below:

•Salaries and employee benefits increased reflecting hiring related to the Private Bank and Private Wealth build-out, and strongcompensation associated with growth in capital markets fee performancefees; and

•Other operating expense declined during the six-month period reflecting lower FDIC deposit insurance costs.

Provision expense of $140$134 million and $274 million for the three and six months ended MarchJune 31,30, 20262026, respectively, compared with a provision of $153$164 million and $317 million for the same periodperiods in 2025, reflecting the runoff of certain retail portfolios and improving credit trends and loan mix.

Income tax expense of $133$168 million and $301 million increased $38$50 million and our$88 million for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025. The effective income tax rate of 20.5%22.3% increasedand from 20.3%21.4% for the three and six months ended MarchJune 31,30, 2026,2026 increased from 21.4% and 20.9%, respectively, compared to the same periodperiods in 2025. These increases were driven by a reduced benefit from tax-advantaged investments on higher pre-taxpretax income. Provision for income taxes is calculated by applying the estimated annual effective tax rate to year-to-date pre-taxpretax income, adjusting for discrete items that occurred during the period.

(1) Excludes portfolio level basis adjustments of $(440) million and $17 million, respectively, for securities designated in active fair value hedge relationships under the portfolio layer method at MarchJune 31,30, 2026 and December 31, 2025.

As of MarchJune 31,30, 2026, U.S. Treasuries and mortgage-backed securities issued by GNMA and GSEs represented 98%99% of the fair value of our debt securities portfolio, with approximately $39.4$40.2 billion of unencumbered high-quality liquid securities serving as potential collateral for borrowings from the FHLB, FRB discount window, and the Fixed Income Clearing Corporation bilateral repurchase agreement market.

For further discussion of the use of our securities as liquidity collateralcollateral, see the “Liquidity Risk” section in this report. For further discussion of liquidity requirements, see “Regulation and Supervision – Liquidity Requirements” in our 2025 Form 10-K.

We manage our securities portfolio duration and convexity risk through asset selection and securities structure, and maintain duration levels within our risk appetite in the context of our broader interest rate risk framework and limits. As of MarchJune 31,30, 2026, the portfolio’s average effective duration, including hedging actions to reduce duration, was 44.1 years compared with 3.8 years as of December 31, 2025.

The increase in total loans and leases as of MarchJune 31,30, 2026 compared to December 31, 2025 reflects a $777$3.5 millionbillion increase in commercial driven by net new money originations in corporate banking and higher line of credit utilization, partially offset by CRE paydowns. Retail reflects a $198$1.3 millionbillion increase driven by growth in home equity and mortgage, including the Private Bank, partially offset by runoff of the auto loan portfolio.

Total deposits as of MarchJune 31,30, 2026 were broadly stableincreased compared to December 31, 2025, reflecting growth in the Private Bank, partially offset by lower commercial deposits given seasonality.Bank.

Total borrowed funds of $12.3$16.3 billion as of MarchJune 31,30, 2026 increased $1.0$5.1 billion compared to December 31, 2025, driven by an increase in FHLB advances and senior and subordinated debt, given net issuances, and FHLB advances, partially offset by a decline in secured borrowings collateralized by auto loans as the associated portfolio runs off. For more information regarding our borrowed funds, see “Liquidity Risk” and Note 7.

We have two reportable business segments: Consumer Banking and Commercial Banking. The business segments are determined based on the products and services provided, or the type of customer served. Each business segment hasis managed by a segment head thatwho reportsreports, directly or indirectly, to the Chief Executive Officer, who has final authority overfor resource allocation decisions and performance assessment. The business segments reflect this management structure and the manner in which financial information is currently evaluated by the Chief Executive Officer. See Note 16 for more information regarding our business segments.

The following tabletables presentspresent certain financial data of our reportable business segments. Total business segment financial results differ from total consolidated financial results. These differences are reflected in Other non-segment operations, consisting primarily of treasury and community development, and include assets, liabilities, capital, revenues, provision (benefit) for credit losses, expenses, and income tax expense (benefit) not attributed to the Company’s reportable business segments.