Attached files
| file | filename |
|---|---|
| 8-K - 8-K - CITIZENS FINANCIAL GROUP INC/RI | d869349d8k.htm |
 Credit Suisse
2015 Financial Services Forum February 10, 2015
Bruce Van Saun
Chairman and Chief Executive Officer
Exhibit 99.1 |
 Forward-looking statements and Non-GAAP financial measures
Forward-Looking Statements
This document contains forward-looking statements within the Private Securities Litigation
Reform Act of 1995. Any statement that does not describe historical or current facts is a forward-looking statement. These statements often
include the words “believes,”
“expects,”
“anticipates,”
“estimates,”
“intends,”
“plans,”
“goals,”
“targets,”
“initiatives,”
“potentially,”
“probably,”
“projects,”
“outlook”
or similar expressions or future conditional verbs such as “may,”
“will,”
“should,”
“would,”
and “could.”
Forward-looking
statements
are
based
upon
the
current
beliefs
and
expectations
of
management
and
on
information
currently
available
to
management.
Our
statements
speak
as
of
the
date
hereof,
and
we
do
not
assume
any
obligation
to update these statements or to update the reasons why actual results could differ from those
contained in such statements in light of new information or future events. We caution you, therefore, against relying on any of these
forward-looking statements. They are neither statements of historical fact nor guarantees
or assurances of future performance. While there is no assurance that any list of risks and uncertainties or risk factors is complete, important
factors that could cause actual results to differ materially from those in the
forward-looking statements include the following, without limitation: negative
economic conditions that adversely affect the general economy, housing prices, the job market, consumer confidence and spending habits which may affect, among other things, the level of nonperforming assets,
charge-offs and provision expense;
the
rate
of
growth
in
the
economy
and
employment
levels,
as
well
as
general
business
and
economic
conditions;
our ability to implement our strategic plan, including the cost savings and efficiency
components, and achieve our indicative performance targets; our ability to remedy
regulatory deficiencies and meet supervisory requirements and expectations; liabilities
resulting from litigation and regulatory investigations; our capital and liquidity
requirements (including under regulatory capital standards, such as the Basel III capital standards) and our ability to generate capital internally or raise capital on favorable terms;
the effect of the current low interest rate environment or changes in interest rates on our net
interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgages held for sale;
changes in interest rates and market liquidity, as well as the magnitude of such changes, which
may reduce interest margins, impact funding sources and affect the ability to originate and distribute financial products in the
primary and secondary markets;
the
effect
of
changes
in
the
level
of
checking
or
savings
account
deposits
on
our
funding
costs
and
net
interest
margin;
financial services reform and other current, pending or future legislation or regulation that
could have a negative effect on our revenue and businesses, including the Dodd-Frank Act and other legislation and regulation relating to
bank products and services;
a failure
in
or
breach
of
our
operational
or
security
systems
or
infrastructure,
or
those
of
our
third
party
vendors
or
other
service
providers,
including
as
a
result
of
cyber
attacks;
management’s ability to identify and manage these and other risks; and
any failure by us to successfully replicate or replace certain functions, systems and
infrastructure provided by The Royal Bank of Scotland Group plc (“RBS”) In
addition to the above factors, we also caution that the amount and timing of any future common stock dividends or share repurchases will depend on our financial condition, earnings, cash needs, regulatory constraints, capital
requirements
(including
requirements
of
our
subsidiaries),
and
any
other
factors
that
our
Board
of
Directors
deems
relevant
in
making
such
a
determination.
Therefore,
there
can
be
no
assurance
that
we
will
pay
any
dividends
to
holders
of our common stock, or as to the amount of any such dividends. In addition, the timing and
manner of the sale of RBS's remaining ownership of our common stock remains uncertain, and we have no control over the manner in which
RBS may seek to divest such remaining shares. Any such sale would impact the price of our
shares of common stock. More
information
about
factors
that
could
cause
actual
results
to
differ
materially
from
those
described
in
the
forward-looking
statements
can
be
found
under
“Risk
Factors”
in
our
Registration
Statement
on
Form
S-1
filed
with
the
United States Securities and Exchange Commission and declared effective on September 23,
2014. Non-GAAP Financial Measures
This
document
contains
non-GAAP
financial
measures
such
as,
“return
on
average
tangible
common
equity”,
“return
on
average
total
tangible
assets”
and
“efficiency
ratio”.
These
non-GAAP
measures
exclude
goodwill
impairment,
restructuring charges and special items, which are usually included, where applicable, in the
financial results presented in accordance with GAAP. Special items include regulatory expenses, expenses relating to our initial public offering,
and
other
expenses
or
income.
All
references
to
“Adjusted”
results
are
non-GAAP
financial
measures.
These
measures
exclude
restructuring
charges
and
special
items.
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 goodwill impairment, 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 goodwill impairment, restructuring charges and special items. We believe this
presentation also increases comparability of period-to-period results.
Other
companies
may
use
similarly
titled
non-GAAP
financial
measures
that
are
calculated
differently
from
the
way
we
calculate
such
measures.
Accordingly,
our
non-GAAP
financial
measures
may
not
be
comparable
to
similar
measures
used
by
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. A reconciliation of non-GAAP measures to the most comparable financial measure prepared in accordance with GAAP is
included in the Appendix hereto.
1 |
 2
Citizens: Building a top-performing regional bank
HOW
Charting a clear course …
delivering for our stakeholders |
 What
Where
When
3
Citizens: Building a top-performing regional bank
How
Who
Citizens went public on September 24, 2014
70.5% owned by RBS with plan for full divesture by YE 2016
Who
are we? |
 Dimension
(2)
Rank
(3)
Assets -
$132.9 billion
#13
Loans -
$93.4 billion
#13
Deposits -
$95.7 billion
#14
Branches -
~1,200
#11
ATM network -
~3,200
#7
Lead/joint lead
bookrunner
#8
(4)
Deposits -
$95.7 billion
Top 5 rank:
9/10 markets
(1)
HELOC -
$16.0 billion
Top 5 rank:
8/9 markets
(5)
Auto -
$12.7 billion
Top 5 rank:
3/9 markets
(6)
Mortgage –
$11.8 billion
Top 5 rank:
1/9 markets
(7)
Middle-market lending
#5
(8)
Source: SNL Financial, unless otherwise noted.
1.
As of 6/30/2014, excludes non-retail branches and banks with limited retail
operations. 2.
As of 12/31/2014, unless otherwise noted
3.
As of 9/30/2014, unless otherwise noted; excludes non-retail depository institutions,
includes U.S. subsidiaries of foreign banks. 4.
Thomson Reuters LPC, 2014 data based on number of deals for Overall Middle Market (defined as
Borrower Revenues < $500MM and Deal Size < $500MM). 5.
According to Equifax; origination volume as of 3Q14.
6.
According to Autocount; origination volume as of 3Q14.
7.
According to Equifax; origination volume as of 2Q14.
8.
Based on market penetration, according to Greenwich Associates 3Q14 rolling four-quarter
data. Leading deposit market share of 9.1% in top 10 MSAs
(1)
–
#2 deposit market share in New England
Relatively diverse economies/affluent demographics
Serve 5 million+ individuals, institutions and companies
~17,700 colleagues
Solid franchise with leading positions in attractive markets
Retail presence in 11 states
Top 5 deposit market share in 9 of 10 largest MSAs
(1)
Buffalo, NY: #4
Albany, NY: #2
Pittsburgh, PA: #2
Cleveland, OH: #4
Manchester, NH: #1
Boston, MA: #2
Rochester, NY: #4
Philadelphia, PA: #5
Detroit, MI:
#8
Providence, RI: #1
4 |
 Balanced business
mix 5
Period-end loans and leases
(1)
$74B 2009
Consumer
Commercial
$90B 2014
Consumer
Commercial
1.
Reflects loans in our operating segments (Consumer Banking and Commercial Banking).
Excludes Other segment, which includes Non-core loans. Includes loans held
for sale. Targeting 50/50 mix over time
64%
36%
56%
44% |
 Well
capitalized with a 4Q14 Tier 1 common equity ratio of 12.4%; pro forma common equity Tier
1 ratio of 12.1% on a fully phased-in Basel III basis
Solid asset quality performance with 2014 net charge-offs of 36 bps
Strong deposit franchise with $83.6 billion of core deposits
(1)
, or 87% of total period-end deposits,
and a total deposit cost of 17 bps
Internal plan to address Fed’s CCAR standards on track
Strong, clean balance sheet funded with low-cost deposits
6
2014 period-end
Tier 1 common equity ratio
2014 average
cost of deposits
2014 net charge-offs/
average loans and leases
(2)
(2)
(2)
0.36%
0.29%
0.34%
CFG
Peer
Average
0.17%
0.16%
CFG
Peer
Average
12.4%
10.4%
CFG
Peer
Average
Core
Non-Core
Source: SNL financial, Company filings
1)
Core deposits defined as deposits, excluding term deposits. 2)
Peer banks include BB&T (BBT), Comerica (CMA), Fifth Third (FITB), KeyCorp
(KEY), M&T (MTB), PNC (PNC), Regions (RF), SunTrust (STI), and US Bancorp (USB).
3)
Current reporting period regulatory capital ratios are preliminary |
 Corporate
banking Commercial real estate
Franchise finance
Asset finance
PE/sponsor finance
Healthcare/technology/not
for profit verticals
Capital 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
Robust product offerings with strong customer service
Deep client
relationships
+
Drive cross-sell and
wallet share
Extensive
product set
Recipient of numerous awards for our products and services
Highest Mobile Banking
Smartphone Ratings Award
2013 & 2014
Money Magazine
Best Banks in America
2013 & 2014
Three gold Stevie Awards
for sales and service 2014
7 |
 Average industry experience of 26 years
Strong and experienced Board & Leadership team
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
Anthony Di Iorio
Member of Audit Committee; Nominating and
Corporate Governance Committee
Robert Gillespie
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
Leadership Team Member
Title
Bruce Van Saun
Chairman and Chief Executive Officer
David Bowerman
Vice Chairman and Head of Citizens
Business Services
Brad Conner
Vice Chairman and Head of
Consumer Banking
Michael Cleary
EVP and Head of Distribution
Consumer Banking
John Fawcett
Chief Financial Officer
Stephen Gannon
EVP, General Counsel and Chief
Legal Officer
Beth Johnson
EVP and Head of Corporate Strategy
Susan LaMonica
EVP and Director of Human
Resources
Robert Nelson
EVP and Chief Compliance Officer
Brian O’Connell
EVP and Regional Director
Technology Services
Robert Rubino
EVP and Interim Co-Head of
Commercial Banking
Nancy Shanik
EVP and Chief Risk Officer
Stephen Woods
EVP and Interim Co-Head of
Commercial Banking
8 |
 Citizens went
public on September 24, 2014 70.5% owned by RBS with plan for full divesture by YE
2016 Who
are we?
9
Citizens: Building a top-performing regional bank
Where
When
How
Who
What
is the vision for Citizens?
What
are the strategy and key priorities?
What
are the key financial targets?
What |
 Colleagues
Offer fulfilling jobs
Regulators
Comply with
letter and
spirit of rules
and
regulations
Investors
Deliver
strong value
proposition
and
attractive
returns
Communities & Society
Support sustainable prosperity
Aspire to be a top-performing regional bank, delivering well for all stakeholders
10
Customer-centric culture
Customers
Serve our
customers well |
 Our strategy to
achieve this is to: Offer
our
customers
a
differentiated
customer
experience
through
the
quality
of
our
colleagues, products and services
–
Foster a culture around customer-centricity, commitment to excellence, leadership,
teamwork and integrity
Build
a
great
brand
that
invokes
trust
from
our
customers
and
reinforces
our
value
proposition
–
Consumer: Simple. Clear. Personal.
–
Commercial: Thought Leadership
Strive
to
deliver
attractive
risk-adjusted
returns
by
making
good
capital
and
resource
allocation
decisions, being good stewards of our resources, and rigorously evaluating our execution
Operate
with
a
strong
balance
sheet
with
regards
to
capital,
liquidity
and
funding,
coupled
with
a well-defined and prudent risk appetite
Maintain
a
balanced
business
mix
between
Commercial
Banking
and
Consumer
Banking
Position
the
bank
as
a
‘community
leader’
that
makes
a
positive
impact
on
the
communities
and local economies we serve
Our vision and strategy
Our objective is to be a top-performing regional bank that delivers well for our
stakeholders Our vision is to deliver the best possible banking experience
11 |
 12
Position Consumer Banking to deliver improved capabilities and profitability
–
Re-energize household growth and deepen relationships through cross-sell
–
Scale up growth in consumer asset businesses
–
Move towards smaller branch formats with fewer, but more productive bankers, and enhanced
on- line and mobile functionality
Continue our momentum in Commercial Banking
–
Equip our bankers to drive thought leadership and differentiate our customer experience
–
Deepen customer relationships with a focus on Capital Markets and Treasury Solutions
Grow
our
balance
sheet
to
build
scale
while
maintaining
a
strong
capital
position
–
Focus on growing a cost-effective, sustainable deposit base in support of business loan
growth Tightly
manage
expense
base
while
funding
technology,
colleague,
and
regulatory
needs
and
maintaining sufficient investment in our infrastructure
Embed
risk
management
throughout
the
organization
and
build
stronger
relationships
with
regulators
Develop
a
high-performing,
customer-centric
organization
and
culture
–
Live our values every day
–
Empowerment with accountability
Our strategy results in six priorities |
 13
These priorities have been mapped to specific initiatives
Build out Mid-Corporate &
Specialty verticals
Continued development of
Capital Markets
Build out Treasury Solutions
Grow Franchise Finance
Core Commercial growth
Target
7
–
8%
loan
growth
Complete $750 million
remaining capital conversion
transactions
(1)
Target $200 million expense
savings by end of 2016
Continue significant
technology investment
CCAR progress
Regulatory issue remediation
New Vision & Credo
Organization Health Index /
Leadership standards
Improved
Consumer
Bank
Continued Commercial
Momentum
Balance Sheet Growth/
Capital Mix
Normalization
Enhanced Efficiency &
Infrastructure
Embed Robust
Risk/Regulatory
Framework
1.
Subject to regulatory approval.
Reenergize Household growth
Grow Auto
Grow Education Finance
Expand Business Banking
Expand Mortgage sales force
Expand Wealth sales force
High-Performing,
Customer-Centric Culture |
 14
We target a 10%+ run-rate ROTCE by the end of 2016
1.
2013 excludes $4.4 billion pre-tax ($4.1 billion after-tax) goodwill impairment
charge. See appendix for a reconciliation of non-GAAP items. 2.
See appendix for a reconciliation of non-GAAP items.
3.
Excludes restructuring charges and special items.
Making steady progress
Key Indicators
2011
2013
(1)
2014
4Q14
End 2016
Targets
Return on average tangible
common equity ("ROTCE")
(2)
4.2%
4.9%
6.7%
6.1%
Adjusted ROTCE
(2)(3)
4.5%
5.1%
6.1%
6.8%
Return on average total
tangible assets
(2)
0.4%
0.6%
0.7%
0.7%
1.0%+
Adjusted efficiency ratio
(2)(3)
66%
69%
69%
67%
~60%
Tier 1 common equity ratio
13.3%
13.5%
12.4%
12.4%
~11%
Future
target
12%+
10%+ |
 What
is the vision for Citizens?
What
are the strategy and key priorities?
What
are the key financial targets?
Citizens went public on September 24, 2014
70.5% owned by RBS with plan for full divesture by YE 2016
Who
are we?
15
Citizens: Building a top-performing regional bank
What
When
How
Who
Where
will we play?
Where
will we allocate capital?
Where |
 We have made
choices on where we will focus Geography
We pursue national
businesses if:
–
We can be relevant to
customers
–
It is a scalable business
nationally
–
It reinforces the core
business in our footprint
Target: ~25% of revenue
Business
Customers
Consumer
Target: 50% of revenue
Focus on customer segments
with a broad range of needs
Strong focus on mass, mass-
affluent and affluent segments
Build on the strong base we
have with small business
customers
Commercial
Target: 50% of revenue
Focus on companies with
annual revenues between $25
million and $2.5 billion
Only enter specialty verticals
that have strong industry
presence in our footprint
Return on Average Tangible
Common Equity > 10%
Ability to gain market
leadership
Element of recurring fee-
based revenues
Element of self-funding
Critical part of the customer
experience
Consistent with our risk
appetite
Mid-West
Mid-Atlantic
New England
We will concentrate on
opportunities in our current
footprint
Target: ~75%+ of revenue
16 |
 17
Capital allocation focused on maximizing growth and returns
4Q14 Balances
Emphasize risk-adjusted
returns
in allocating capital
Focus on acquiring and
deepening customer
relationships
to
help
drive
cross-sell:
Mortgage
Wealth
Capital Markets
Treasury Solutions
Measure total relationship
profitability in Commercial
when assessing customer
returns
Drive better analytics on
Consumer and Commercial
customer and segment
profitability
53%
42%
5%
1.
Based on 4Q14 average loan balances, excludes held for sale.
$92.0 Billion
$106.0 Billion
Average Loans
(1)
Period-end Risk Weighted Assets
37%
52%
11%
Student
Lending
Student
Lending
Home Lending
Auto
Business Banking
Other Consumer
Middle Market
Mid Corporate & Specialty
Verticals
CRE
Asset Finance
Other Commercial
Treasury/Non-Core
Home Lending
Auto
Business Banking
Other Consumer
Middle Market
Mid Corporate & Specialty
Verticals
CRE
Asset Finance
Other Commercial
Treasury/Non-Core |
 Citizens went
public on September 24, 2014 70.5% owned by RBS with plan for full divesture by YE
2016 Who
are we?
What
is the vision for Citizens?
What
are the strategy and key priorities?
What
are the key financial targets?
Where
will we play?
Where
will we allocate capital?
18
Citizens: Building a top-performing regional bank
What
Where
How
Who
When
will we deliver the key objectives in our Plan?
When
will we get to top-performing?
When |
 2014
Operating Plan Net interest income
High-
single-digit growth
Loan portfolio
Mid-
single-digit growth
Credit quality
35-45 bps of net charge-offs
Efficiency ratio
<70%
Loan-to-deposit ratio
< 100%
ROTCE (adjusted)
(1)
~ 6.0%
Tier 1 Common Equity ratio
~ 120 bps reduction
Plan spans three years to end of 2016; tracked well in 2014
Targets progressed as planned in 2014
19
1.
Non-GAAP item. See important information on use of Non-GAAP items in the
Appendix. |
 External
Factors Macro
Environment
Interest Rates
Housing Market
Overall health of consumer
Competitor
Actions
Competitive hiring market
Easing competitor credit pricing and discipline
Investment in technology, convenience, formats
Consumer
Behavior
Stickiness of deposit base in rising rate environment
Conforming %, purchase mortgage origination mix
Orientation towards financial advice
Current view
entering 2015
External factors broadly consistent except for rates
Focused on further expense initiatives to help
mitigate challenges posed by rate curve
20 |
 1
2
3
4
5
6
7
8
9
10
11a
11b
11c
INITIATIVE
2014 Status
2015
Outlook
Commentary
CFG
Execution
Market
Condition
Reenergize household growth
Arrested household decline with new offerings. Contending with
competition and reduced foot traffic. Key is training/improved lead
generation.
Expand mortgage sales force
Achieved
2014
hiring
goals;
increased
LOs
by
66
including
41
in
4Q14,
with
attrition starting to normalize.
Market conforming product mix and refi activity are wild cards.
Grow Auto
Performed well in 2014 with 35% YoY portfolio growth & yield expansion
throughout the year (+10bps from 1Q14 to 4Q14).
Grow Student
Strong new refi product origination of $169 million in 4Q’14.
Expand Business Banking
Solid loan origination & deposit performance expected to continue.
Expand Wealth sales force
Strong
market
conditions
have
created
competitive
hiring
environment
for financial consultants.
Build out Mid-Corp & verticals
Met RM hiring goals in 2014 and well positioned for growth in 2015.
Continue development of Capital
Markets
Capital markets rank and fees up nicely in 2014. Improved capabilities in
FX and Sales & Trading will be operational in 2015.
Build out Treasury Solutions
New
leader
in
place.
Expect
to
see
ramp
up
in
benefits
from
recent
people
and technology investments over in 2015.
Grow Franchise Finance
Strong
performance
due
to
pace
of
new
client
acquisition
(60+
in
2014).
Core: Middle Market
Strong origination activity expected to continue; focus on reducing
portfolio run-off and optimizing pricing.
Core: CRE
CRE loans up 12% YoY to $7.8 billion at YE 2014. Continued momentum
expected with focus on improvements in yield.
Core: Asset Finance
2015 performance continues to look promising.
21
Initiatives broadly on track |
 22
We are focused on fully meeting regulatory expectations
Step-change improvement in CCAR capabilities
–
Integrated capital planning
–
Deepened expertise in stress testing and modeling
Significant progress
in remediating regulatory issue backlog,
though more to do
Strengthened the risk culture
–
Focus on proactive identification and management of risk
–
Embedding risk appetite across the organization
Intense focus on building an organization that evolves alongside
heightened regulatory standards |
 Achieve
current targets, then raise the bar Strive for consistency in performance, limit tail
risk Target relatively high pay-out ratio, steady and growing dividend
Investors
Customers
Colleagues
Community
Regulators
Continue to improve customer satisfaction
–
Top 10 in JD Power for Consumer segment
–
Top performer in RM quality, value of ideas in Commercial
Gain market share in targeted segments (Consumer & Commercial)
Achieve top quartile Organizational Health rating
Continue to develop talent and enhance culture
Achieve heightened volunteer and financial giving aspirations
Use our position to improve the well-being of the communities we serve
Achieve and sustain heightened standards across broad regulatory
agenda, and earn the respect of our regulators
23
We have a clear plan with rolling objectives for each stakeholder
Once three-year targets are met, we aspire to further stretch our goals
Getting to top performing |
 Citizens went
public on September 24, 2014 70.5% owned by RBS with plan for full divesture by YE
2016 Who
are we?
What
is the vision for Citizens?
What
are the strategy and key priorities?
What
are the key financial targets?
Where
will we play?
Where
will we allocate capital?
When
will we deliver the key objectives in our Plan?
When
will we get to top-performing?
24
Citizens: Building a top-performing regional bank
What
Where
When
Who
How
will we sustain our execution?
How
will we meet the challenges along the way?
How |
 25
Monitoring
metrics
regularly
(vs.
targets)
Maintaining
flexibility
to
adapt
based on progress and environment
To
achieve
this
we
need
to
continue
to
hire,
develop,
and
retain
the
right
talent
Focused
on
strengthening
the
leadership
of
the
organization
Execution: Intense focus delivering against the plan
Identified
and
communicated
priority
initiatives
Assigned
ownership
Aligned
resources
Mapped
out
metrics
and
targets
for
each
initiative
Culture
is focused on:
–
Customer
–
Leadership
–
Accountability and execution
–
Community focus
Key
to
execution
is
the
quality
of
our
talent
and
instilling
the
right
culture
People
Culture
Building
alignment
and
capability
in
our
leadership
–
Over 18 months have attracted or
promoted
from
within
24
new
members
to
our
Executive
Leadership
Group
(top
120) |
 26
How will we deal with the myriad of challenges we face?
Driving balance sheet growth in areas that provide the most
attractive returns
Remaining disciplined on pricing
Increasing focus on fee-generating businesses
Low-rate
environment
Regularly engaging with regulators to get consistent feedback
“early and often”
on plans and progress
Proactively monitoring and mitigating emerging risks
Embedding risk management across the organization
Leading with our value proposition rather than price:
–
Consumer –
“Simple. Clear. Personal.”
–
Commercial –
“Thought Leadership”
Focusing in areas where we’re strongest
–
Geographies; customer segments; products
Investment in technology, convenience, formats
Competitive
landscape
Regulatory |
 27
Investment Thesis
13
th
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 double-digit
ROTCE
Making good progress on a comprehensive
plan to deliver for stakeholders |
 28
Q&A |
 Appendix
29 |
 Non-GAAP
Reconciliation Table 30
(Excluding restructuring charges and special items)
$s in millions, except per share data
QUARTERLY
2011
2013
2014
4Q14
Net income (loss), excluding restructuring charges and special
items:
Net income (loss) (GAAP)
$506
($3,426)
$865
$197
Add: Restructuring charges and special items, net of income
tax expense (benefit)
42
4,097
(75)
20
Net income (loss), excluding restructuring charges and special
items (non-GAAP)
$548
$671
$790
$217
Return on average tangible common equity and return on average
tangible common equity, excluding restructuring charges and
special items:
Average common equity (GAAP)
$23,137
$21,834
$19,399
$19,209
Less: Average goodwill (GAAP)
11,311
9,063
6,876
6,876
Less: Average other intangibles (GAAP)
15
9
7
6
Add: Average deferred tax liabilities related to goodwill
(GAAP)
295
459
377
403
Average tangible common equity (non-GAAP)
$12,106
$13,221
$12,893
$12,730
Return on average tangible common equity (non-GAAP)
4.2 %
(25.9)%
6.7 %
6.1 %
Return on average tangible common equity, excluding
restructuring charges and special items (non-GAAP)
4.5 %
5.1 %
6.1 %
6.8 %
Return on average total tangible assets and return on average
total tangible assets, excluding restructuring charges and special
items:
Average total assets (GAAP)
$128,344
$120,866
$127,624
$130,671
Less: Average goodwill (GAAP)
11,311
9,063
6,876
6,876
Less: Average other intangibles (GAAP)
15
9
7
6
Add: Average deferred tax liabilities related to goodwill
(GAAP)
295
459
377
403
Average tangible assets (non-GAAP)
$117,313
$112,253
$121,118
$124,192
Return on average total tangible assets, excluding restructuring
charges and special items (non-GAAP)
0.4 %
0.6 %
0.7 %
0.7 %
Noninterest expense, excluding restructuring charges and special
items:
Noninterest expense (GAAP)
$3,371
$7,679
$3,392
$824
Less: Restructuring charges and special expense items
65
4,461
169
33
Noninterest expense, excluding restructuring charges and special
items (non-GAAP)
$3,306
$3,218
$3,223
$791
Efficiency ratio and efficiency ratio, excluding restructuring
charges and special items:
Net interest income (GAAP)
$3,320
$3,058
$3,301
$840
Add: Noninterest income (GAAP)
1,711
1,632
1,678
339
Total revenue (GAAP)
$5,031
$4,690
$4,979
$1,179
Efficiency ratio, excluding restructuring charges and special items
(non-GAAP)
66 %
69 %
69 %
67 %
FULL YEAR |
 |