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Fixed Income Investor Presentation June 2016
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
Important Information and GAAP/Non‐GAAP Information
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 and business restrictions 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. 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, 2015, filed with the United States Securities and Exchange Commission on February 26, 2016. Note: Percentage changes, per share amounts, and ratios presented in this document are calculated using whole dollars. Non‐GAAP Financial Measures 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 include "noninterest income", "noninterest income adjusted for card reward accounting change", "total revenue", "total revenue adjusted for card reward accounting change", "noninterest expense", "noninterest expense adjusted for card reward accounting change", "net income", "net income available to common stockholders", "core average deposits" and "core annualized net charge-off rate". In addition, we present computations for "return on average tangible common equity", "return on average total assets", "efficiency ratio", "operating leverage" and "pro forma Basel III fully phased-in common equity tier 1 capital" 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. 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.
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
Overview
2
Company overview and strategy
Improving financial performance
Capital/funding and liquidity
Risk management
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
Company overview and strategy
3
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
13th largest U.S. retail bank holding company with attractive demographics in core markets
Attractive business mix with growing and profitable commercial business complementing strong consumer business
Client-centric model focused on deepening customer relationships
Attractive, client-centric franchise
with scale
Intense focus on strategic priorities driving attractive growth with improving asset mix and returns
Committed to driving enhanced efficiency and effectiveness
Prudently optimizing capital structure and risk profile to help drive improved risk-adjusted returns
Peer-leading capital ratios
Stable, low-cost deposit base
Solid asset quality through credit cycles
Strong, clean balance sheet
supports growth plans
Expected path to improved
profitability
Key investment highlights
4
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
Average industry experience of 27 years
Leadership Team Member Title
Bruce Van Saun Chairman and Chief Executive Officer
Eric Aboaf Chief Financial Officer
David Bowerman Vice Chairman and Head of Citizens Business Services
Brad Conner Vice Chairman and Head of Consumer Banking
Stephen Gannon EVP, General Counsel and Chief Legal Officer
Malcolm Griggs EVP and Chief Risk Officer
Beth Johnson EVP, Chief Marketing Officer and Head of Consumer Strategy
Susan LaMonica EVP and Chief Human Resource Officer
Don McCree Vice Chairman and Head of Commercial Banking
Robert Nelson EVP and Chief Compliance Officer
Brian O’Connell EVP and Regional Director Technology Services
Board Member Committees
Bruce Van Saun Chairman and Chief Executive Officer
Arthur F. Ryan
Lead Director; Chair of Compensation and
Human Resources Committee; Member of
Nominating and Corporate Governance
Committee
Mark Casady Member of Risk Committee
Christine Cumming Member of Risk Committee
Anthony Di Iorio Member of Audit Committee; Nominating and
Corporate Governance Committee
William P. Hankowsky Member of Audit Committee; Compensation
and Human Resources Committee
Howard W. Hanna III Member of Audit Committee; Nominating and
Corporate Governance Committee
Lee Higdon Member of Audit Committee; Compensation
and Human Resources Committee
Charles J. (“Bud”) Koch Chair of Risk Committee; Member of Audit
Committee
Shivan S. Subramaniam
Chair of Nominating and Corporate
Governance Committee; Member of Risk
Committee
Wendy A. Watson
Chair of Audit Committee;
Member of Risk Committee; Compensation
and Human Resources Committee
Marita Zuraitis Member of Risk Committee
5
We are led by a strong and experienced Board & leadership team
Green highlighting denotes new additions since January 2015.
Since January 2015, have attracted or promoted from within more than 25% of our Executive Leadership Group (top 130)
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
Dimension(2) Rank(3)
Assets: $140.1 billion #13
Loans: $101.0 billion #11
Deposits: $102.6 billion #13
Branches: 1,200 #11
ATM network: 3,200 #7
Lead/joint lead bookrunner
#9(4)
Mortgage: $13.3 billion #15
nationally(7)
Student: $5.0 billion Top 4 rank
nationally(5)
Deposits: $102.6 billion Top 5 rank: 9/10 markets(1)
HELOC: $14.9 billion Top 5 rank: 9/9 markets(6)
Middle market lending #5(8) N
atio
nal
In
-Fo
otp
rin
t
Source: SNL Financial, unless otherwise noted. 1) Updated annually, as of 6/30/2015, excludes non-retail branches and banks with limited retail operations. 2) Data as of 3/31/2016, unless otherwise noted. 3) Ranking based on 12/31/2015 data, unless otherwise noted; excludes non-retail depository institutions, includes U.S. subsidiaries of foreign banks. 4) Thomson Reuters LPC, FY 2015 and 1Q16 ranking based on number of deals for Overall Middle Market (defined as Borrower Revenues < $500MM and Deal Size < $500MM). 5) CFG estimate, based on published company reports, where available, private student loan origination data as of 12/31/2015. 6) According to Equifax; origination volume as of 4Q15 7) According to IMF Retail Originators Bank Only ranking; reflects CFG organic origination volume as of 4Q15. 8) Based on market penetration, according to Greenwich Associates 4Q15 rolling four-quarter data (Citizens – Footprint - $25-500MM).
Leading deposit market share of 10.7% in top 10 MSAs(1)
– #2 deposit market share in New England
Relatively diverse economies/affluent demographics
Serve 5 million+ individuals, institutions and companies
~17,900 colleagues
Retail presence in 11 states
Top 5 deposit market share in 9 of 10 largest MSAs(1)
Buffalo, NY: #5 Albany, NY: #2
Pittsburgh, PA: #2 Cleveland, OH: #3
Manchester, NH: #1
Boston, MA: #2
Rochester, NY: #4
Philadelphia, PA: #4
Detroit, MI: #8
Providence, RI: #1
Solid franchise with leading positions in attractive markets
6
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
55%
45%
Commercial
Consumer
Corporate Banking Commercial Real Estate Franchise Finance Asset Finance PE/Sponsor Finance Healthcare/Technology/
Oil & Gas/Not-for-Profit verticals
Capital Markets Global Markets Treasury Solutions Commercial Deposit Services
Retail Deposit Services Mobile/Online Banking Credit/Debit Card Wealth Management Home Equity loans/lines Mortgage Auto Education Finance Business Banking
Consumer Commercial
Deep client relationships
+ Extensive product set
7
Robust product offerings and balanced business mix
64%
36% Commercial
Consumer
Targeting
50/50 Mix
Period-end loans and leases(1)
$99 billion 1Q16 $74 billion 2009
Drive cross-sell and wallet share
1) Reflects loans and leases and loans and leases held for sale in our operating segments (Consumer and Commercial Banking). Excludes loans held in Other/Non-core loans. Non-core assets are primarily loans inconsistent with our strategic goals, generally as a result of geographic location, industry, product type or risk level. 7
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
85% 85%
CFG PeerAverage
0.30%
0.37% 0.33%
CFG PeerAverage
Well capitalized with a common equity tier 1 capital ratio of 11.6%(1) on a fully phased-in Basel III basis
Solid asset quality performance with core net charge-offs of 30 bps(1) in 1Q16
Strong deposit franchise with $84.8 billion of core deposits(1,2), or 83%(1) of average total deposits, and a total deposit cost of 24 bps and strong liquidity coverage
Source: SNL Financial and Company filings. Peers include CMA, BBT, FITB, KEY, PNC, RF, STI and USB; MTB excluded due to recent acquisition. 1) Non-GAAP item. See Appendix for a reconciliation of non-GAAP items. 2) Excludes term and brokered deposits.
1Q16 CET1 ratio
(Basel III transitional basis common equity tier 1 ratio)
1Q16 total deposits/ total liabilities
11.6% 10.4%
CFG PeerAverage
Strong, clean balance sheet funded with low-cost deposits
8
1Q16 net charge-offs/ average loans and leases
Core Non-Core
(1)
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
11.6% 11.1% 9.8% 10.4% 10.6% 10.9% 10.4% 11.1%
9.5% 10.6% 9.9%
15.1% 14.8% 14.7% 14.6% 14.4% 13.9% 13.8% 13.1% 13.1% 12.8% 12.4%
CFG MTB FITB BBT PNC RF PeerAvg
KEY USB CMA STI
0.2% 1.3% 1.1% 1.8% 1.3% 0.7% 1.0% 0.3% 1.6% 0.0% 0.7%
3.2% 2.5% 3.7% 2.4% 2.5% 2.2% 2.3% 1.7% 2.0% 2.3% 1.8%
Relatively high CET1 ratio of 11.6% versus 10.4% for peers, providing an additional capital cushion
─ Though moving toward a more efficient capital structure, CFG targets (~11% CET1) remain well above peers
Tier 2 capital of 3.2% is ~90 bps above peer average
9
Plans to adjust capital structure but remain above peers
Source: SNL Financial; capital targets from company earnings calls and disclosures. 1) Based on regulatory data. CFG Basel III transitional basis, Basel III ratios assume that certain definitions impacting qualifying Basel III capital will phase in through 2019. Ratios reflect the required
U.S. Standardized methodology for calculating RWAs, effective January 1, 2015. 2) Total capital peer average calculated as the sum of the individual instruments’ peer averages.. 3) Total additional tier 1 capital equals tier 1 capital excluding common equity tier 1 and includes preferred equity. 4) Additional tier 1 capital excludes preferred equity.
1Q16 total capital(1)
Publicly stated CET1 targets
CFG ~11%
BBT 9.0-10.0%
FITB 9.0-9.5%
KEY <9.5%
MTB <10.0%
PNC 8.0-9.0%
RF ~9.5%
STI 8.0-9.0%
USB 8.0%
Peer Avg ~9.1%
(2)
Common equity tier 1 Preferred equity Additional tier 1 Tier 2
Total additional tier 1 ratio
Tier 2 ratio
(3)
(4)
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
Improving financial performance
10
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
Building a top-performing regional bank
11
Where we’ve come from
Lagging revenue productivity
─ Under-levered balance sheet
─ Lack of scale in key businesses
─ Sub-optimal asset mix/risk appetite
─ Product and customer proposition behind peers
─ Underinvestment in brand
Where we are now
Developed/implemented plan to address underlying issues and grow revenues
─ In the “middle innings”
─ Making steady progress
─ Delivering meaningful operating leverage during turnaround phase
Where we’re going
Well-balanced Commercial and Consumer business mix
─ Leading customer service and value proposition
─ Capital deployment that delivers optimal risk-adjusted returns. With improved NIM, cross sell and fee income
─ Organic growth focus
─ Powerful, respected brand
Lagging technology investment and sub-optimal expense investment
Technology platform that is customer-centric, reliable, resilient and efficient
Inconsistent and non-comprehensive risk framework
Significant efforts in progress to advance risk/regulatory capabilities
Fully capable of meeting increasingly heightened regulatory expectations; strong embedded risk culture
Immature governance and reporting capabilities
Fully developed reporting capabilities; well-functioning Board and executive team
Commitment to leadership excellence; widely respected, transparent reporting
Need for greater accountability and sense of urgency
Preserving “3C” historical culture while improving execution effectiveness
Top quartile rank – Organizational Health Index, employee engagement
Rev
enu
e Te
chn
olo
gy
Ris
k &
Go
vern
ance
C
ult
ure
Have invested $500 million above natural technology spend level over past 5 years
─ Efficiency initiatives are helping to fund growth initiatives
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
Initiative 1Q16 Status
Commentary
Reenergize household growth Retail checking households grew by ~15,000 or 1% vs. 1Q15. Deposits up 5% vs. prior year quarter and services charges up 5%.
Expand mortgage sales force Origination volume up 15% from the prior year quarter, though LOs relatively flat and conforming mix below 40%. Work continues to improve operational processes.
Reposition Auto Continue to execute on pricing optimization strategy, with stable credit performance. 1Q16 organic origination yields of 3.54%, up 4 bps from prior quarter and 11 bps from 1Q15.
Grow Student/Installment Sustained momentum in Student with total loan balances doubling from 1Q15. Continued strong growth in Apple iPhone product with approximately $310 million of balances by the end of 1Q16.
Expand Business Banking Increasing focus on deposits, cash management, and other fee income streams driving deposits up 6% and deposit fees up 7% compared to 1Q15.
Expand Wealth sales force Financial consultants up 8%, or 25, vs. 1Q15 with strong hiring momentum in 1Q16. Continue to reposition business from transaction to fee-based model, notwithstanding market volatility.
Build out Mid-Corp & verticals Mid-Corp and specialty verticals grew loan balances by over 10% vs. 1Q15. Continue to see strong growth in verticals driven by building industry-based expertise.
Continue development of Capital and Global Markets activities
Business holding fee income flat despite continuing weak market conditions. Rolling out enhanced interest rate products and FX originations platform in 2Q16 to improve delivery and risk management.
Build out Treasury Solutions Fees up 20% vs. 1Q15 led by strength in core cash management services, TOP II pricing initiative, and commercial card.
Grow Franchise Finance Strong growth with balances up 21% YoY(1). Continue expansion in well-established brands of quick service and fast casual franchises.
Expand Middle Market Portfolio relatively stable compared to 1Q15, and up 1% vs. prior quarter. Deposits up ~$450 million, or 6%, and fee income up 6% versus prior year quarter.
Grow CRE Continue to deepen relationships with top developers across core geographies. CRE loans up 2% QoQ and 17% YoY to $8.7 billion. Origination yields up 47 bps from 4Q15.
Reposition Asset Finance Re-aligned business to reduce expense and drive increased penetration with Middle Market customer base. Portfolio balances up 1% compared to 4Q15, supported by initiatives targeting transportation, construction, and renewable sectors.
Balance Sheet Optimization Asset optimization and deposit costs efforts led to NIM improvement in 1Q16. NIM of 2.86% in 1Q16 was 9 bps higher than both 4Q15 and 1Q15 with roughly 5 bps of benefit from Fed increase and 4 bps due to balance sheet initiatives. Cost of deposits remained flat from 4Q15 at 24 bps.
TOP II Efficiency Initiative(2) Initiatives performing well in 1Q16. Remain on track to deliver $90-$115 million of P&L benefit in 2016.
Summary of progress on strategic initiatives C
on
sum
er
Co
mm
erci
al
CFG
12 1) Excludes the impact of $335 million transfer of loan balances to Franchise Finance. 2) “Tapping our Potential” Phase II revenue and efficiency initiatives launched Mid-2015.
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
6.9%
2.7%
CFG Peer median
Strong loan growth (Average total loan growth)
A scaled platform well-positioned to drive value
Continuing to drive balance sheet and revenue momentum in 2016
Growing revenues faster (Revenue growth(1,2))
Asset-sensitive balance sheet (200 bps gradual increase over forward curve(3))
Peer data as of most recent 10-K filing
Robust NII growth (Net interest income growth(1))
13
1Q16 vs. 1Q15
9 bps
5 bps
CFG Peer average133 bps
above peers 4 bps above peers
172 bps above peers
Peer median
Higher NIM expansion (Net interest margin change(1))
Source: SNL Financial and Company filings. Peers include CMA, BBT, FITB, KEY, PNC, RF, STI and USB; MTB excluded due to recent acquisition. 1) Peer results adjusted for unusual or special revenue, expense and acquisition items. 2) Non-GAAP item. Card reward accounting change impact adjusts 1Q16 noninterest income and noninterest expense results by $7 million. 3) Peer data as of 2015 10-K filing. Peer estimates based on public disclosures and utilizes 200 basis point gradual increase above 12-month forward curve except PNC, which is
based on a 100 basis point gradual increase and STI, which is based on 200 basis point shock. PNC and STI excluded from peer median.
4.3% 3.6%
4.9%
Fee income growth (Noninterest income growth(1,2))
240 bps below peers -2.9% -0.5%
-4.9%
CFG results Peer average
CFG excluding the impact of the card reward accounting change (2)
(1)
6.7%
3.0%
CFG Peer average
8.1%
6.4%
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
Well-controlled expenses (Adjusted noninterest expense(1,2) change)
Improving returns as assets grow (Adjusted return on average total assets(1) change)
Return on equity (Adjusted return on average
tangible common equity(1) change)
132 bps above peers
(12) bps
Stable
(144) bps
13 bps above peers
Accelerating profitability (Adjusted net income available to common stockholders(1) change)
Source: SNL Financial and Company filings. Peers include CMA, BBT, FITB, KEY, PNC, RF, STI and USB; MTB excluded due to recent acquisition. 1) Non-GAAP item. Adjusted results exclude $10 million net restructuring charges and special items associated with efficiency and effectiveness programs and separation from
RBS. See important information on use of Non-GAAP items in the Appendix. Peer results adjusted for similar unusual or special revenue, expense and acquisition items. 2) Non-GAAP item. Card reward accounting change impact adjusts 1Q16 noninterest income and noninterest expense results by $7 million.
513 bps above peers
With continued focus on expense control and improving returns 1Q16 vs. 1Q15
14
37 bps above peers
1.4%
1.9%
CFG Peer average
2.3%
CFG Adjusted results Peer average
CFG excluding the impact of the card reward accounting change (2)
(1)
Efficiency improvement (Adjusted efficiency ratio(1) change)
93 bps better than
peers (199) bps
Strong operating leverage (YoY Adjusted Operating Leverage(1))
294 bps 130 bps better than
peers
0.5%
(4.7)%
164 bps
(13) bps
(106) bps
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
CFG net interest margin improved in 2H15, sustain in 2016
15
6 bps better than peers
Focusing on optimizing asset growth and minimizing cost of deposits
CFG Peer average
Source: SNL Financial and Company filings. Peers include CMA, BBT, FITB, KEY, PNC, RF, STI and USB; MTB excluded from 4Q15 and 1Q16 due to recent acquisition.
Lower net interest margin compression
Lower yield compression (Earning asset yield)
In line with peers
Opportunity to minimize deposit costs (Total deposit costs change)
Improving trend
Improving trend
Improving trend
0.22% 0.24% 0.25% 0.24% 0.24%
0.14% 0.14% 0.14% 0.14% 0.16%
1Q15 2Q15 3Q15 4Q15 1Q16
2.77% 2.72% 2.76% 2.77% 2.86%
2.98% 2.96% 2.94% 2.94% 3.01%
1Q15 2Q15 3Q15 4Q15 1Q16
3.12% 3.08% 3.13% 3.15%
3.23%
3.32% 3.28% 3.27% 3.25% 3.35%
1Q15 2Q15 3Q15 4Q15 1Q16
8 bps better than peers
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
Loan yield and deposit cost initiatives
16
Evaluating and refining targeted growth opportunities to drive risk-adjusted returns
Deposit gathering strategies Loan portfolio mix strategies
Investing to drive growth in higher-return categories such as student, other retail including iPhone upgrade loans and core home equity
Reducing capital allocation to lower-return categories such as auto where we slowed growth in 2H15
Continuing momentum in mortgage and credit card
Improving advertising strategies through analytics with a shift to higher-return direct mail
Shifted incentives to emphasize checking account growth
Refined balance minimums for highest-value checking product
Launching Mass Affluent relationship checking product
Increasing use of rate-sensitive segmentation strategies Co
nsu
mer
Ban
kin
g C
om
mer
cial
Ban
kin
g
Targeting select deposit opportunities
─ Key vendors, low share-of-wallet clients
─ Deposit-rich industries, including Healthcare, Technology, and Professional Services
Reducing attrition by increasing focus on ‘at risk’ clients
Expanding/improving penetration with key products, including card services and evergreen offering
Ensuring greater alignment of deposit sales performance to colleague incentive programs
Improving lead-bank status in higher return areas such as Middle Market, Industry Verticals, Franchise Finance
Continuing to drive benefit from 2H15 loan pricing initiatives
TOP II
Capital Allocation Committee
Pricing Calculator
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
We remain positioned for rising rates…
17
Net interest income poised to benefit from rising rates
─ ~65-70% of asset sensitivity is centered around the short end of the yield curve
─ ~84% of the commercial loan portfolio and 46% of home lending portfolio is floating rate
─ Fixed-rate assets amortize more quickly than the various sources of fixed-rate funding
─ Assume interest-bearing deposit betas in the high 50% range through a tightening cycle
─ ~5 percentage points higher than the industry experience in prior rate cycle
…but also see plenty of opportunity to further enhance performance by executing well on our initiatives
Interest rate sensitivity trend
Note: Peer data from SNL as of 1Q16. Peer banks include BBT, CMA, FITB, KEY, MTB, PNC, RF, STI and USB. Peer estimates based on the public disclosures as of the most recent quarter available and utilizes 200 basis point gradual increase above 12-month forward curve, except PNC which is based on a 100 basis point gradual increase and STI which is based on 200 basis point shock. PNC and STI excluded from peer median.
Interest rate sensitivity ranking (200 bps gradual increase) 11.0%
8.0% 6.9% 6.5%
5.4%
2.8% 2.8% 2.2% 2.1% 2.1%
CMA MTB CFG RF PNC USB STI KEY FITB BBT
7.2% 6.8% 7.1% 6.1%
6.9%
3.3% 2.8% 2.7% 2.7% 2.8%
1Q15 2Q15 3Q15 4Q15 1Q16
CFG Peer median
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
Capital/funding and liquidity
18
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
12.2% 11.8% 11.8% 11.7% 11.6%
10.2% 10.2% 10.2% 10.3% 10.3%
1Q15 2Q15 3Q15 4Q15 1Q16
CFG Peer average
15.5% 15.3% 15.4% 15.3% 15.1%
13.8% 13.7% 13.6% 13.5% 13.6%
1Q15 2Q15 3Q15 4Q15 1Q16
CFG Peer average
Stronger capital than peers
19
Announced increase in quarterly common stock dividend of 20% to holders on record on May 4, 2016
In 2015, paid $221 million in dividends and repurchased $500 million in common stock
─ Dividend payout ratio of 26%
─ Total common payout ratio of 85%
Considerations for 2016 CCAR submission
─ Highest capital ratio among regional bank
peers; continue to manage ratios toward peers
─ Ample excess capital can comfortably fund
attractive loan growth and robust capital
management
Tactical Priorities
─ Payout composition objectives
Target 25-30% dividend payout
Buyback attractive given low price-to-
tangible book multiple
─ Limit preferred issuance until ROTCE improves
─ Potentially reduce sub-debt through 2H purchase of RBS holdings
Common equity tier 1 ratio
Total capital ratio
130 bps above peers
150 bps above peers
Source: SNL Financial. Capital targets based on peer bank earnings calls and disclosures. Peers include CMA, BBT, FITB, KEY, PNC, RF, STI and USB; MTB excluded from 4Q15 and 1Q16 due to recent acquisition.
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
1Q16 change from
$s in billions 1Q16 4Q15 1Q15 4Q15 1Q15
$ % $ %
Investments and interest bearing
deposits 25.5$ 25.7$ 27.1$ (0.1)$ — % (1.5)$ (6) %
Total commercial loans 47.0 45.8 43.5 1.2 3 3.5 8
Total retail loans 53.2 52.4 50.4 0.8 2 2.8 5
Total loans and leases 100.3 98.2 94.0 2.1 2 6.3 7
Loans held for sale 0.4 0.3 0.3 — 5 — 7
Total interest-earning assets 126.2 124.2 121.3 2.0 2 4.8 4
Total noninterest-earning assets 12.6 12.1 12.0 0.5 4 0.6 5
Total assets 138.8$ 136.3$ 133.3$ 2.5$ 2 5.5$ 4
Low-cost core deposits(1) 53.6 52.7 49.8 0.9 2 3.7 8
Money market deposits 36.2 36.5 33.6 (0.3) (1) 2.6 8
Term deposits 12.2 12.2 12.2 — — — —
Total deposits 102.0$ 101.4$ 95.6$ 0.6$ 1 6.3$ 7
Total borrowed funds 13.9 12.6 15.5 1.3 10 (1.6) (11)
Total liabilities 119.0$ 116.7$ 113.9$ 2.3$ 2 5.0$ 4
Total stockholders' equity 19.8 19.6 19.4 0.2 1 0.4 2
Total liabilities and equity 138.8$ 136.3$ 133.3$ 2.5$ 2 % 5.5$ 4 %
Consolidated average balance sheet
Linked quarter:
Total earning assets up $2.0 billion, or 2%, with loan growth of $2.1 billion, or 2%
─ Commercial loans up $1.2 billion driven by solid growth in Mid-corporate and Industry Verticals, Corporate Finance and Commercial Real Estate
─ Retail loans up $839 million driven by student, mortgage and iPhone upgrade program (iUp)
Total deposits increased $613 million on strength in low-cost core deposits, partially offset by lower money market balances
Prior-year quarter:
Total earning assets up $4.8 billion, or 4%
─ Commercial loans up 8% driven by strength in Commercial Real Estate, Corporate Finance, Mid-corporate and Industry Verticals and Franchise Finance
─ Retail loans up 5% driven by growth in student, mortgage and auto
Total deposits up $6.3 billion, or 7%, reflecting strength in DDA and checking with interest as well as money market
Borrowed funds down $1.6 billion
─ Senior debt and sub-debt issuances replaced short-term FHLB and repos
20
Highlights
1) Low-cost core deposits include demand, checking with interest and regular savings.
7%
30%
11%15%
11%
6%
20%
50%38%
12%
$126.2 billion Interest earning assets
$115.9 billion Deposits/borrowed funds
Total Retail 43%
Total Commercial
37%
CRE Other
Commercial
Residential mortgage Total home
equity
Automobile
Other Retail
Investments and interest-bearing
deposits
Retail / Personal
Commercial/ Municipal/ Wholesale
Borrowed funds
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
$12.3 $10.3
$5.7 $6.8
$0.7 $0.5
$3.8 $4.0
$1.4 $1.1
$0.9 $0.9
$24.8 $23.7
1Q15 1Q16
90% U.S. Agency MBS
5% AAA-rated non-agency
18% of total earning assets, in line with peers
Primary goal is to provide a source of high-quality liquid assets
─ 48% are Level 1 High-Quality Liquid Assets
qualifying
─ 45% are Level 2A High-Quality Liquid
Assets qualifying
Secondary objective is to optimize for yield
Average effective duration of the fixed income securities portfolio is 2.9 years
Average life of fixed income securities portfolio is 4.0 years, with minimal credit risk
High-quality investment portfolio $s in billions
21
Highlights Yield Yield
2.48%
Total AFS
Total HTM
U.S. Government Guaranteed
Non-Investment Grade
Non-Agency AAA FHLB, Federal Reserve Stock
“GSE” Fannie Mae and
Freddie Mac
Investment portfolio
4.30% 3.91% 2.11% 5.14%
2.45%
2.18%
2.50% 4.54% 2.22%
4.89%
2.03%
2.42%
2.38%
Investment portfolio ratings distribution
Fed agency and other stock Private label HTM GNMA securities HTM Private label AFS US government guaranteed AFS US agency AFS
Note: Data based on book value as of 1Q16.
5% 3% 2%
46% 44%
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
27%
17%39%
11%
6%18%
16%
35%
30%
1%
1) Core excludes term and wholesale deposits. Non-GAAP item. See Appendix for a reconciliation of non-GAAP items.
Term
Savings & Money Market
Checking with Interest
Demand
68% Core(1)
Term
Savings & Money Market
Checking with Interest
Demand
83% Core(1)
Cost of deposits: 1.32% Cost of deposits: 0.24%
$98.8 billion 2009 average deposits $102.0 billion 1Q16 average deposits
Deposit mix has improved significantly with core deposits(1) of 83% in 1Q16
Period-end loan-to-deposit ratio of 99% at 1Q16
– Excluding wholesale deposits, average deposits increased $151 million in 1Q16 from 4Q15
22
Solid deposit base provides attractive, low-cost funding
Wholesale Wholesale
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
17.7%
15.8% 15.7% 14.9% 14.4%
12.5% 12.3% 11.5%
8.8% 7.5%
6.7%
PNC USB FITB BBT KEY Peer Avg CFG MTB STI RF CMA
FHLB advances Repurchase agreements soldFed funds purchased Trading liabilitiesCommercial paper Subordinated notes and debenturesSenior debt/other
1) Source: SNL Financial, based on regulatory data as of 3/31/2016. 2) 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 minimal LCR
requirement of 90% began January 2016.
Continue to broaden funding base with a goal of further enhancing stability and resiliency
Fully compliant with LCR requirement(2)
Holding Company market transactions include: $250 million preferred stock offering in April 2015;
$250 million in ten-year subordinated notes in July 2015; $750 million in ten-year subordinated notes in December
2015; and repurchase of $125 million in subordinated debt in January 2016
Bank market transactions include: $1.5 billion senior note offering in December 2014, with $750 million in three-
year notes and $750 million in five-year notes; $750 million in three-year senior notes in December 2015; $750
million in three-year notes in March 2016; and $1 billion in five-year notes in May 2016
Total Borrowings/Total Liabilities
23
Targeting a more peer-like funding structure
(1)
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
Risk management
24
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
0.6% 0.5% 0.6% 0.6%
1.0%
0.4% 0.3% 0.3% 0.3%
0.8%
1Q
15
2Q
15
3Q
15
4Q
15
1Q
16
0.6% 0.5% 0.5% 0.6% 0.5%
0.6% 0.6% 0.4%
0.6% 0.5%
1Q
15
2Q
15
3Q
15
4Q
15
1Q
16
1.7% 1.6% 1.5% 1.5% 1.5%
1.5% 1.3% 1.3% 1.3%
1.4%
1Q
15
2Q
15
3Q
15
4Q
15
1Q
16
32%
25%
26%
3% 8%
2% 4%
64%
22%
8% 6%
0.3%
$53.0 billion 1Q16 retail portfolio
1) Source: Company data. Portfolio balances loan category, NCO and NPL data as of March 31, 2016. FICO score, LTV ratio, loan term, lien position, risk rating, property type, industry sector and geographic stratifications as of February 29, 2016, as applicable.
2) Footprint defined as 11-state branch footprint (CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI & VT) and contiguous states where CFG maintains offices (IL, IN, KY, MD & ME). 3) Source: SNL Financial. Product view - regulatory reporting basis. Peer banks include CMA, BBT, FITB, KEY, MTB, PNC, RF, STI and USB. NPL% equals nonaccrual loans plus 90+ days past due and still‐accruing loans (excluding FDIC “covered” loans
and loans guaranteed by the U.S. government) as a % of total.
$48.0 billion 1Q16 commercial portfolio
Mid-Atlantic
Midwest
New England
Leases
C&I
CRE Mid-Atlantic
Midwest
New England
25
Diversified and granular loan mix
Weighted-average FICO score of 756
86% collateralized
69% of the consumer real estate portfolio is secured by a 1st lien
Highly granular, diversified portfolio with an average loan balance of less than $10 million across the C&I, CRE and Leasing portfolios
Home Equity
Indirect Auto
Residential Mortgage
Education Finance
Credit Cards
Other Non-Core
Business Banking
Retail NCO% Retail NPL% Commercial NPL% Commercial NCO%
Non-Core
31%
13%
31%
25%
Out of footprint(1,2) 25%
15%
33%
27%
CFG Peers
CFG vs. Peers(3)
Out of footprint
0.1% 0.1% 0.3% 0.2% 0.3%
-0.1% 0.0% 0.0% 0.0% 0.1%
1Q
15
2Q
15
3Q
15
4Q
15
1Q
16
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
Strong credit quality
1) Source: SNL financial, peers include BB&T, Comerica, Fifth Third, Key, M&T, PNC, Regions, SunTrust, and U.S. Bancorp. 2) NPL% equals Nonaccrual plus 90+ days past due and still accruing loans (excluding covered loans and loans guaranteed by the U.S. government) as a % of total.
Overall portfolio credit metrics have generally trended in line with regional banking peers
Core portfolio credit trends are favorable; Non-core portfolio has been a drag, but continues to run off
Core Non-Core
Non-performing loans/Loans Net charge-offs/Average loans
Net charge-offs $s in millions
Non-performing loans $s in billions
26
$2.4
$1.8 $1.9
$1.4 $1.1 $1.1 $1.1
2010 2011 2012 2013 2014 2015 1Q16
$1,849
$1,165
$875
$501 $323 $284
$83
2010 2011 2012 2013 2014 2015 1Q16
2012 2013 2014 2015 1Q16
Total 1.01% 0.59% 0.36% 0.30% 0.33%
Core 0.59% 0.38% 0.30% 0.26% 0.30%
Non-Core 7.03% 5.20% 1.99% 1.68% 1.80%
Peers(1) 0.86% 0.52% 0.38% 0.29% 0.37%
2012 2013 2014 2015 1Q16
Total 2.14% 1.65% 1.18% 1.07% 1.07%
Core 1.81% 1.44% 1.01% 0.93% 0.94%
Non-Core 6.75% 6.27% 6.07% 6.75% 6.78%
Peers(1,2) 1.57% 1.17% 0.97% 0.81% 0.97%
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
27
Allowance metrics stable
Credit expected to remain favorable
Source: SNL Financial and Company filings. Peer banks include BBT, CMA, FITB, KEY, PNC, RF, STI and USB; MTB excluded from 4Q15 and 1Q16 due to recent acquisition.
NCOs stable, comparable to peer average (Net charge off ratio)
Credit costs gradually normalizing with modest reserve build to fund continued loan growth
$91
$364 $375-$425
1Q16 Provision expense
1Q16 Annualized provision expense
Shows credit costs largely
baked-in
Provision outlook
2016 Outlook Largely reflects
reserves to fund loan
growth
$1,174 $1,088 $1,073 $1,106 $1,127
1.24% 1.13% 1.10% 1.12% 1.12%
1Q15 2Q15 3Q15 4Q15 1Q16
NPA$s NPAs/Total loans
1.27% 1.24% 1.23% 1.23% 1.21%
1.02 x 1.10 x 1.12 x 1.10 x 1.09 x
1Q15 2Q15 3Q15 4Q15 1Q16
Allowance/Total loans Allowance/NPAs
Nonperforming assets stable $s in millions
0.23%
0.33% 0.31% 0.31%
0.33%
0.27%
0.26% 0.29% 0.31%
0.37%
1Q15 2Q15 3Q15 4Q15 1Q16
CFG Peer average
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
27%
33%
15%
25%
33%
26%
27%
3% 9%
2%
Core retail portfolio
Highlights
Weighted-average FICO score of 757
61% of the retail portfolio is > 750
Core Mortgage – average portfolio FICO of
771 and LTV of 63%
1Q16 originations of $1.4 billion with
weighted-average FICO of 772 and yield of
3.32%
Auto Finance – Super Prime/Prime book –
purchase only, no leasing, average portfolio
FICO of 734
65% new-car loans
1Q16 originations of $1.5 billion with
weighted-average FICO of 749 and
weighted-average yield of 3.74%
Student Lending – 95% of InSchool loans
co-signed with average portfolio FICO of 774
1Q16 InSchool originations of $53 million
with average FICO of 765 and 93%
co-sign rate
1Q16 refi product originations of $292
million with weighted-average FICO of 780
by Product type by Geography
1Q16 $51.0 billion core retail portfolio
28
Out of Footprint New England
Mid-Atlantic
Midwest
Home Equity
Mortgage
Auto
Cards
Education Finance Other
800+
750-799
700-749
650-699
600-649 <600
by FICO
1) Portfolio balances as of March 31, 2016. FICO score, LTV ratio, loan term, lien position, risk rating, property type, industry sector and geographic stratifications as of
February 29, 2016, as applicable.
3% 5%
11%
20%
28%
33%
(1)
(1)
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
32%
68%
9%
10%
13%
16% 18%
34%
80%
8% 6%
3% 3%
64%
22%
10% 3%
1%
51%
49%
7% 8%
17%
27%
41%
WAFICO 739
WAFICO 768
Core home equity portfolio(1)
1) As of March 31, 2016. Excludes serviced by other portfolio. 2) Portfolio balances as of March 31, 2016. FICO score, LTV ratio, loan term, lien position, risk rating, property type, industry sector and geographic stratifications as of
February 29, 2016, as applicable.
by Loan-to-value
by FICO
by Lien position by Lien position
by FICO
by Loan-to-value
<649 650-699
700-749
750-799
800+
<70%
90-100%
600-649
650-699
700-749 750-799
800+
<600
100%+
80-89%
71-79%
<70%
2nd
1st 2nd
1st
71-79%
80-89%
52% of the portfolio is secured by 1st lien
Weighted-average FICO of 764
86% has an LTV of less than 80%
1Q16 HELOC originations of $1.5 billion
─ Weighted-average FICO score of 795, and a weighted-average CLTV of 63.2%
Highlights
100%+ 90-100%
Total home equity portfolio
29
86% with LTV <80% 88% with LTV <80% $23.1B
$21.5B
$20.2B
$18.6B
$17.1B $16.7B
2011 2012 2013 2014 2015 1Q16
(2)
(2)
(2)
(2)
(2)
(2)
1Q16 $14.5 billion HELOC 1Q16 $2.2 billion HELOAN
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
$14.9
$11.0
($0.7) ($1.5) ($1.7)
Total O/S 2016 2017 2018 2019+
30
Highlights
In no single year is the maturing population balance greater than $2.0 billion
Between 2016 and 2018, $3.9 billion ($3.7 billion core and $135 million non-core) is remaining to mature, including $71 million in balloons, or 26%, of the total drawn HELOC balances and $3.6 billion in undrawn exposure
─ 90% of the payment shock population has a FICO score greater than 740 or an LTV of 80% or lower
Proactive mitigation efforts
Maturing vintages as of March 31, 2016
Initiated comprehensive mitigation plan to manage exposure and assist customers through reset by offering alternative financing/forbearance options
─ Begin reaching out two years in advance of maturity dates
─ Policies, procedures and monitoring requirements; guidance on TDR/collateral dependency recognition
─ Enhanced product to maximize customer options – new 30-year, high-LTV HE loan product
─ Proactive assessment of unused lines before maturity to manage higher-risk customers
HELOC payment shock management
Charged-off
2013 – $668 million 2014 – $899 million
30+ Delinquent
Loan modification
Current without changes
Off-us refinance
CFG refinance
2015 – $1.26 billion
2016-2018 Maturing Population:
33% Sr. Lien; 72% <80% CLTV; 68% >740 FICO
90% <80% CLTV or >740 FICO
Maturity schedule 2016 - 2018 As of March 31, 2016
$s in billions
1) Includes serviced by other portfolio.
(1)
15%
51%
23%
5% 2% 4%
29%
31%
28%
6% 3% 3%
48%
24%
19%
2% 5% 2%
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
$1,211
$1,523 $1,561 $1,426 $1,386
768 760 759
765 772
1Q15 2Q15 3Q15 4Q15 1Q16
Origination volume WA FICO
3% 3% 7%
17%
32%
39%
64%
26%
6% 3% 1%
Core mortgage portfolio overview
Highlights
Jumbo mortgages originated primarily within the Bank’s lending footprint
Predominately in-footprint with a weighted average refreshed portfolio FICO score of 771 and CLTV of 63%
1Q16 originations of $1.4 billion with
weighted-average FICO of 772 and yield
of 3.32%
OREO portfolio of 177 units at $19.8 million
1Q16 $13.1 billion core mortgage portfolio
by Refreshed CLTV by Refreshed FICO
$s in billions 2012 2013 2014 2015 1Q16
EOP balance $9.0 $9.0 $11.5 $12.6 $13.1
Avg. balance $8.9 $8.6 $10.3 $12.0 $13.2 30-Day past due % of EOP loans
5.94% 4.68% 3.44% 2.58% 2.33%
NPLs % of EOP loans 4.12% 3.66% 2.64% 2.30% 1.23%
NCOs % of Avg. loans 0.46% 0.38% 0.16% 0.07% 0.10%
31
600-649 650-699
700-749
750-799
800+
<600
<70%
90-100%
71-79%
80-89%
100%+
Origination detail $s in millions
Credit trends
73% 72% 73% 73% 72%
WA LTV
1) Portfolio balances as of March 31, 2016. FICO score, LTV ratio, loan term, lien position, risk rating, property type, industry sector and geographic stratifications as of
February 29, 2016, as applicable.
(1) (1)
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
1% 1%
14% 2% 2%
36% 24%
20%
$1.8 $2.0
$1.7 $1.5 $1.5
742 742 745 748 749
1Q15 2Q15 3Q15 4Q15 1Q16
Total WA FICO
99% 98% 98% 99%
98%
WA LTV
5%
8%
17%
24%
24%
22% 16%
15%
20% 22%
16%
11%
1% 1%
14% 2% 2%
36% 24%
20%
Auto portfolio credit metrics
32
$s in billions
Auto Finance portfolio – purchase only, no
leasing, weighted-average FICO score of
734
1Q16 originations of $1.5 billion with
weighted-average FICO score of 749 and
weighted-average yield of 3.74%
70% of the portfolio has a FICO score of
greater than 700, 56% < 72 months, and
65% are new-car loans
Highlights
601-649
650-699
700-749
750-799
≥ 800
by FICO score
by Term ≤ 36 37-48
49-60 76-84
61-63 64-66
67-72
73-75
by LTV
80-89%
90-99% 100-109%
110-119%
≥ 120 ≤ 80 ≤ 600
1) Assumes that for loans where refreshed FICO score information not available, the balance stratification is consistent with the remainder of the portfolio. 2) Portfolio balances as of March 31, 2016. FICO score, LTV ratio, loan term, lien position, risk rating, property type, industry sector and geographic
stratifications as of February 29, 2016, as applicable.
(1)
(1,2)
Auto + SCUSA Originations
(2)
(2)
(2)
(2)
1Q16 $13.9 billion Auto portfolio
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
$321 $389
$544
$267
$345
1Q15 2Q15 3Q15 4Q15 1Q16
InSchool ERL
78% 68%
64%
58% 55%
783 780 777 777 777
Core portfolio co-sign rate WA Origination FICO
700-739
Core education finance portfolio overview
Highlights
by Refreshed FICO
Credit trends
Note: YoY delinquency and NPL improvement driven by sale of FFELP loans in 3Q 2014. Previous origination data was based on amounts disbursed to students per quarter and represented balance sheet loan growth. Current data represents full amounts originated per quarter that have been committed to borrowers. 1) Portfolio balances as of March 31, 2016. FICO score, LTV ratio, loan term, lien position, risk rating, property type, industry sector and geographic stratifications as of
February 29, 2016, as applicable.
Core education finance portfolio average FICO score of 771 and
co-sign rate of 55%
95% of InSchool loans co-signed with average portfolio FICO of
774
1Q16 InSchool originations of $53 million with average FICO
of 765 and 93% co-sign rate
Education Refinance Loan portfolio of $1.5 billion
1Q16 refi product originations of $292 million with weighted-
average FICO of 780
SoFi portfolio balance of $973 million with average
FICO of 773
33
<650
740-779
650-699
780-799
800-850
by Segment
InSchool
Legacy run off
Refinance loan
Acquired portfolios
Origination Detail
$s in millions
(1)
(1)
$s in billions 2012 2013 2014 2015 1Q16
EOP balance $1.3 $1.8 $1.9 $4.0 $4.7
Avg. balance $1.3 $1.5 $1.7 $3.0 $4.9 30-Day past due % of EOP loans
5.16% 3.77% 1.13% 0.72% 0.55%
NPLs % of EOP loans
2.60% 1.80% 0.53% 0.45% 0.30%
NCOs % of Avg. loans
0.68% 0.53% 0.37% 0.41% 0.35%
1Q16 $4.7 billion core education finance portfolio
30%
9% 34%
27%
2% 7%
14%
27% 17%
33%
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
20%
7%
6%
6%
5% 5% 5% 4%
4%
4%
4%
3% 3%
3% 2% 2%
2% 2%
13%
Commercial portfolio overview
Asset quality relatively stable and has reached pre-crisis levels
Overall credit risk is moderate and compares well with peers
– $20.7 billion shared national credit portfolio as of 1Q16(5)
– $9.0 billion Commercial Real Estate business portfolio as of 1Q16
Quality of new originations compares favorably to overall portfolio
Highlights 1Q16 $48.0 billion commercial portfolio
Real Estate
All Other(3)
Food & Beverage
Healthcare
Business Services
Machinery & Equipment Transportation
Technology
Banking & Financial Services
34
Restaurants
by Industry Sector
1) By industry SIC code. 2) Comprises exposure to companies at risk from impact of declining oil prices. 3) All Other stratifies over an additional 15 industry classifications with the largest portion representing no more than 1.49% of the total portfolio. 4) Includes non oil-price sensitive industries such as Water Supply, Sewer Systems, Refuse Systems, and Sanitary Systems. 5) 1Q16 shared national credit portfolio balances include approximately $700 million of loans not categorized as shared national credits in prior periods. Management
estimates that on the same basis the shared national credit portfolio would have been approximately $19.0 billion as of 12/31/15. 6) Portfolio balances as of March 31, 2016. FICO score, LTV ratio, loan term, lien position, risk rating, property type, industry sector and geographic stratifications as of February
29, 2016, as applicable.
(1)
Oil & Gas(2)
Investment grade-equivalent risk rating
Entertainment
Education services
Chemicals
Metals & Mining
Healthcare products
Lessors
Automotive
2% 2% 2% 3% 3% 10% 10% 9% 9% 10%
55% 56% 57% 57% 58%
26% 26% 26% 26% 26% 7% 6% 6% 5% 3% $44.2B $45.2B $45.5B $46.4B $48.0B
1Q15 2Q15 3Q15 4Q15 1Q16
AAA to A-
BBB+ to BBB-
BB+ to BB-
B+ to B
B- and Lower
All other energy(4)
(6)
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
30%
22% 1%
18%
2% 6%
7%
4% 5%
5%
54%
2%
24%
2%
16% 2%
27%
11%
24%
38%
New England
Midwest
Mid-Atlantic
Other
Commercial Real Estate line of business overview
35
Strategy to up tier portfolio to larger, more well-capitalized institutional and upper middle-market borrowers – Investment Grade-Equivalent Risk Rated
portfolio up ~$122 million since 1Q15
– REIT portfolio up $388 million since 1Q15
72% of the portfolio is Project-Secured lending, 54% represented by income-producing projects, and 24% Real Estate Investment Trusts, with a particular focus on mid-caps
Less than 2% land financing
1Q16 $9.0 billion Commercial Real Estate Line of Business
by Facility Type
by Investment Grade-equivalent risk rating
Income producing
REIT Corporate
facilities
Construction
Unsecured (excl. REITs)
Other
Land
by Property Type
Office
Multi-family Retail
Non-CRE Collateral
Healthcare
Hospitality
Land
Other CRE Collateral
Industrial
Unsecured
Highlights
By Geography
3% 2% 3% 3% 3% 7% 8% 8% 9% 12%
58% 58% 56% 58% 57%
31% 31%
31% 30% 28% 1%
1% 1% 1% 1%
$7.6B $8.0B
$8.4B $8.7B $9.0B
1Q15 2Q15 3Q15 4Q15 1Q16
AAA to A-BBB+ to BBB-BB+ to BB-B+ to BB- and Lower
(1)
1) Portfolio balances as of March 31, 2016. FICO score, LTV ratio, loan term, lien position, risk rating, property type, industry sector and geographic stratifications as of February 29, 2016 as applicable.
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
25%
19%
17% 5%
8%
26%
1.8%
98.2%
6% 9%
42% 21%
22%
Oil & Gas portfolio overview
Well-diversified portfolio with ~100 clients
Includes $339 million of corporate aircraft leases arising from Asset Finance
$200 million of loans across seven credits moved to nonperforming status in 1Q16 following new regulatory guidance related to multi-tiered structures
─ All loans current, still paying
─ No charge-offs have been recorded
─ No second lien positions
Oil and gas portfolio loan loss reserves of $61 million as of 3/31/16
─ Reserves to total loans of more price-sensitive portfolios now at 6.3%(3)
─ No E&P customers have filed bankruptcy
36
Highlights
Total loans outstanding
Oil & Gas
All other loans
1) Includes Downstream, Integrated, and Midstream sub-categories. 2) Portfolio balances as of March 31, 2016. FICO score, LTV ratio, loan term, lien position, risk rating, property type, industry sector and geographic stratifications as of February 29, 2016 as applicable. 3) Reserves/(More price-sensitive Oil & Gas portfolio outstandings - leases secured by aircraft ($135 million)).
AAA to A-
BBB+ to BBB-
BB+ to BB-
B+ to B
B- and lower
15% investment grade
~$1.1 billion more sensitive to declining oil
prices Midstream
Integrated
Downstream
Reserve-Based Lending (RBL)
Upstream, Non-RBL
Oil Field Services
Oil & Gas portfolio by Sub-sector
Oil & Gas portfolio by Investment grade-equivalent risk rating(2)
1Q16 Oil & Gas Outstandings
$s in mi l l ions
Total
O/S
Uti l i zed
%
Criticized
%
Nonaccrual
s tatus
Less price-sens itive tota l 706$ 64% 0% 0$
Upstream 314 82%
Oi l field Services 344 67%
RBL 457 63%
More price-sens itive tota l 1,115 69% 49% 210
Tota l Oi l & Gas 1,821$ 67% 30% 210$
(1)
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
Non-core portfolio overview
Non-core assets as of 1Q16
Non-core assets
Home equity serviced by others (SBO) $1.3
Consumer real-estate secured 0.4
Student 0.3
Commercial real estate 0.1
Commercial 0.0
Non-core CFG $2.2
Drivers of non-core asset reduction
$20.5 billion of assets identified as Non-Core in June 2009; only $2.2 billion remain
─ Down 62% from end of 2012
─ Represents ~2% of total loan portfolio
SBO portfolio 73% home equity loans and 27% HELOC as of 1Q16
─ Refreshed WA CLTV improved to 89.2% due to Case Shiller forecast improvement; now 90% < 100% LTV
─ Accounted for < 1.3% of total loans but contributed 9.8% of charge-offs in 1Q16
Highlights
37
$s in billions
$20.5
$2.2
($10.3)
($1.3) ($2.8)
($3.9)
Jun-09 Runoff Sales Transfersto Core
NetCharge-
offs
1Q16
$20.5
$17.3
$13.4
$8.4
$5.7 $3.8 $3.1 $2.3 $2.2
June2009
2009 2010 2011 2012 2013 2014 2015 1Q16
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
Appendix
38
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
Non-GAAP reconciliation table
39
(Excluding restructuring charges and special items)
$s in millions
2016 2015 2016 Change from 2015
Noninterest income, excluding special items:
Noninterest income (GAAP) $330 $347
Less: Special items — —
Noninterest income, excluding special items (non-GAAP) $330 $347 (4.9)%
Add: Card reward accounting change 7 -
Noninterest income, adjusted for card reward accounting change and excluding special items (non-GAAP) $337 $347 (2.9)%
Total revenue, excluding special items:
Total revenue (GAAP) A $1,234 $1,183
Less: Special items - -
Total revenues, excluding special items (non-GAAP) B $1,234 $1,183 4.3 %
Add: Card reward accounting change 7 -
Total revenues, adjusted for card reward accounting change and excluding special items (non-GAAP) $1,241 $1,183 4.9 %
Noninterest expense, excluding restructuring charges and special items:
Noninterest expense (GAAP) C $811 $810
Less: Restructuring charges and special items — 10
Noninterest expense, excluding restructuring charges and special items (non-GAAP) D $811 $800 1.4 %
Add: Card reward accounting change 7 -
Noninterest expense, adjusted for card reward accounting change and excluding restructuring charges and special items (non-GAAP) $818 $800 2.3 %
Efficiency ratio:
Efficiency ratio (non-GAAP) C/A 66 % 68 %
Efficiency ratio, excluding restructuring charges and special items (non-GAAP) D/B 66 % 68 % (199) bps
Operating leverage:
Total revenue (GAAP) $1,234 $1,183 4.3%
Noninterest expense (GAAP) $811 $810 0.1%
Operating leverage (non-GAAP) 419 bps
Operating leverage, excluding restructuring charges and special items:
Total revenue, excluding restructuring charges and special items (non-GAAP) $1,234 $1,183 4.3%
Less: Noninterest expense, excluding restructuring charges and special items (non-GAAP) $811 $800 1.4%
Operating leverage, excluding restructuring charges and special items: (non-GAAP) 294 bps
Net income, excluding restructuring charges and special items:
Net income (GAAP) E $223 $209
Add: Restructuring charges and special items, net of income tax expense — 6
Net income, excluding restructuring charges and special items (non-GAAP) F $223 $215 3.7 %
Net income available to common stockholders, excluding restructuring charges and special items:
Net income available to common stockholders (GAAP) G $216 $209
Add: Restructuring charges and special items, net of income tax expense - 6
Net income available to common stockholders, excluding restructuring charges and special items (non-GAAP) H $216 $215 0.5 %
Return on average tangible common equity and return on average tangible common equity, excluding restructuring charges and special items:
Average common equity (GAAP) $19,567 $19,407
Less: Average goodwill (GAAP) 6,876 6,876
Less: Average other intangibles (GAAP) 3 5
Add: Average deferred tax liabilities related to goodwill (GAAP) 481 422
Average tangible common equity (non-GAAP) I $13,169 $12,948
Return on average tangible common equity (non-GAAP) G/I 6.61 % 6.53 %
Return on average tangible common equity, excluding restructuring charges and special items (non-GAAP) H/I 6.61 % 6.73 % (12) bps
Return on average total assets, excluding restructuring charges and special items:
Average total assets (GAAP) J $138,780 $133,325
Return on average total assets, excluding restructuring charges and special items (non-GAAP) F/J 0.65 % 0.65 % - bps
FOR THE QUARTER ENDED MARCH 31,
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
Non-GAAP reconciliation table
40
(Excluding restructuring charges and special items)
$s in millions, except per share data
1) Basel III ratios assume certain definitions impacting qualifying Basel III capital, which otherwise will phase in through 2019, are fully phased-in. Ratios also reflect the required US Standardized methodology for calculating RWAs, effective January 1, 2015.
2016 2009
Pro forma Basel III fully phased-in common equity tier 1 capital ratio1:
Common equity tier 1 (regulatory) $13,570
Less: Change in DTA and other threshold deductions (GAAP) 1
Pro forma Basel III fully phased-in common equity tier 1 (non-GAAP) K $13,569
Risk-weighted assets (regulatory general risk weight approach) $116,591
Add: Net change in credit and other risk-weighted assets (regulatory) 232
Basel III standardized approach risk-weighted assets (non-GAAP) L $116,823
Pro forma Basel III fully phased-in common equity tier 1 capital ratio (non-GAAP)1K/L 11.6%
Core annualized net charge-offs:
Net charge-offs M $83
Average total loans and leases N 100,262
Annualized net charge-off rate M/N 0.33%
Core net charge-offs O $73
Core average total loans and leases P 98,045
Core annualized net charge-off rate O/P 0.30%
Core average deposits:
Average deposits Q $101,981 $98,777
Less: Non-core average deposits 17,131 31,274
Core average deposits R $84,850 $67,503
Core average deposits as a percentage of reported average deposits R/Q 83% 68%
FOR THE QUARTER
ENDED MARCH 31,
FOR THE YEAR
ENDED DECEMBER
198,217,241 55,96,146 127, 127, 127 0,157, 120 91,137,193 189,221,209 192,192,192 255,201,47
41
