CITIZENS FINANCIAL GROUP INCRI

See Note 1 for a description of changes made to the Company’s loans and leases presentation during the first quarter of 2024.

The ACL is a reserve to absorb estimated future credit losses in accordance with GAAP. For additional information regarding the ACL, see “Critical Accounting Estimates — Allowance for Credit Losses” and Note 4, and Note 6 in our 2023 Form 10-K.

The ACL as of June 30, 2024 compared to December 31, 2023 reflects a decrease of $12 million. For further information see Note 4.

(1)Coverage ratio includes total commercial allowance for unfunded lending commitments and total commercial allowance for loan and lease losses in the numerator and total commercial loans and leases in the denominator.

(2) Coverage ratio includes total retail allowance for unfunded lending commitments and total retail allowance for loan losses in the numerator and total retail loans in the denominator.

For the three and six months ended June 30, 2024, net charge-offs increased $32 million and increased $80 million, respectively, compared to the same periods in 2023. The net charge-off ratio increased 12 basis points and 14 basis points, respectively, compared to the same periods.

For the three and six months ended June 30, 2024, the increase in retail net charge-offs was primarily driven by unsecured and education loans, partially offset by a decline in auto, while the increase in commercial was primarily driven by the office segment of CRE, partially offset by a decline in commercial and industrial.

Commercial Loan Asset Quality

Our commercial portfolio consists of traditional commercial and industrial loans, commercial leases, and commercial real estate loans. As discussed in our 2023 Form 10-K, we utilize internal risk ratings to monitor credit quality for commercial loans and leases.

Total commercial criticized balances of $8.4 billion at June 30, 2024 decreased $92 million compared to December 31, 2023.

Commercial and industrial criticized balances of $3.0 billion at June 30, 2024 decreased from $3.5 billion at December 31, 2023, primarily driven by declines in the healthcare and wholesale trade sectors.

Commercial real estate criticized balances of $5.4 billion at June 30, 2024 increased from $5.0 billion at December 31, 2023, attributable to the continued impacts of interest rates and return-to-office dynamics on the Office sector and the continued impacts of interest rates on the Multi-family sector. Approximately 97% of commercial real estate loans remain current on payments as of June 30, 2024.

For more information on the distribution of commercial loans by vintage date and regulatory classification rating, see Note 4.

(1) Credit tenant lease includes loans to nationally recognized tenants with high credit ratings and life sciences includes loans to provide lab and office space for tenants involved in the study and development of scientific discoveries.

(2) Includes Georgia, Maryland, North Carolina, South Carolina and Virginia.

Retail Loan Asset Quality

We utilize credit scores provided by FICO, which are generally refreshed on a quarterly basis, and payment and delinquency status, among other data points, to monitor credit quality for retail loans. FICO credit scores represent current and historical national industry-wide consumer level credit performance data, which management believes are the strongest indicator of potential credit losses over the contractual life of the loan and a good predictor of a borrower’s future payment performance.

(1) The real estate secured portfolio CLTV is calculated as the mortgage and second lien loan balance divided by the most recently available value of the property.

For more information on the aging of accruing and nonaccrual retail loans, and the distribution of retail loans by vintage date and FICO score, see Note 4.