Citizens Financial Group, Inc. Reports Third Quarter Net Income of $220 Million; Diluted EPS of $0.40, up 18% from third quarter 2014

Focused execution on growth and efficiency initiatives drives positive operating leverage

PROVIDENCE, R.I.--(BUSINESS WIRE)--Citizens Financial Group, Inc. (NYSE: CFG or “Citizens") today reported third quarter net income of $220 million, or $0.40 per diluted common share, compared with third quarter 2014 net income of $189 million, or $0.34 per diluted common share. Third quarter 2015 net income was up $30 million from second quarter 2015 net income of $190 million, and diluted EPS increased $0.05 from $0.35 in second quarter 2015. As expected, the company recorded no restructuring charges and special items in third quarter 2015 compared with $25 million after-tax, or $0.05 per diluted common share, in second quarter 2015, and $13 million after-tax, or $0.02 per diluted common share, in the third quarter 2014, as detailed in the Discussion of Results portion of this release. Third quarter 2015 diluted EPS totaled $0.40 compared to Adjusted diluted EPS* of $0.40 in second quarter 2015 and $0.36 in third quarter 2014, reflecting the continued focus on enhancing efficiency and delivering revenue growth in the face of the persistent low-rate environment. Third quarter 2015 net income available to common stockholders was reduced by $7 million, or $0.01 per share, related to preferred stock dividends.

Chairman and Chief Executive Officer Bruce Van Saun commented, “We delivered solid financial results this quarter, reflecting good execution of our growth and efficiency initiatives. During the quarter we continued to add strong leadership to our management team, namely Don McCree to lead our Commercial business, John Bahnken to run Wealth Management, and Chris Nard to run our Mortgage business. We are making significant strides in improving our overall performance and delivering for our stakeholders.”

Return on Average Tangible Common Equity (“ROTCE”)* of 6.6% in third quarter 2015 improved from 5.9% in second quarter 2015 and 5.8% in third quarter 2014. Third quarter 2015 results compare with Adjusted ROTCE* of 6.7% in second quarter 2015 and 6.2% in third quarter 2014.

Citizens also announced that its board of directors declared a quarterly cash dividend of $0.10 per common share. The dividend is payable on November 19, 2015 to shareholders of record at the close of business on November 5, 2015.

Key Highlights

• Third quarter highlights, as compared with second quarter 2015, include 2% net interest income growth, a four basis point improvement in net interest margin, positive operating leverage given good expense discipline, and continued loan growth and business momentum. Tangible book value per share increased by 2%.
• Compared with third quarter 2014 Adjusted results*, third quarter 2015 results also reflect strong positive operating leverage, with 4% total revenue growth and a 1% increase in noninterest expense, improving our efficiency ratio to 66% from 68%.

Third Quarter 2015 vs. Second Quarter 2015

Results

• Total revenue increased 1%, as 2% growth in net interest income was partially offset by a reduction in noninterest income from relatively strong second quarter 2015 levels.
  • Net interest income of $856 million increased $16 million, driven by average loan growth of 1% and an additional day in the quarter.
  • Net interest margin of 2.76% increased four basis points largely reflecting modest balance sheet deleveraging and improving retail and commercial loan yields, partially offset by an increase in deposit costs.
  • Noninterest income of $353 million decreased $7 million, as an increase in other income, including $8 million in branch real estate gains, and service charges and fee growth was more than offset by an $8 million reduction in mortgage servicing rights valuation, lower capital markets fees from relatively strong second quarter levels, and a $7 million reduction in securities gains.
• Noninterest expense of $798 million decreased $43 million, driven by a $40 million decrease in restructuring charges and special items. Noninterest expense was down slightly from adjusted second quarter 2015 levels as the benefit of lower equipment expense and other expense was partially offset by an increase in outside services.
• Efficiency ratio of 66% improved 400 basis points driven by a $40 million decrease in restructuring charges and special items. The efficiency ratio improved 1% from an Adjusted efficiency ratio* of 67% in second quarter 2015.
• Provision for credit losses of $76 million remained broadly stable.

Balance Sheet

• Average interest-earning assets of $123.0 billion decreased $188 million, as loan growth of $1.2 billion, largely in student, mortgage, auto, and commercial real estate was more than offset by a decrease in short-term investment portfolio assets, largely interest-bearing cash balances.
• Average deposits increased $2.5 billion, or 2%, driven by broad-based growth across money market, interest checking and demand deposits.
• Nonperforming loans and leases (“NPLs”) decreased $16 million, or 2%, to 1.06% of loans and leases compared with 1.09% in second quarter 2015 and 1.19% third quarter 2014; Allowance coverage of NPLs increased to 116% from 114% in second quarter 2015 and 111% in third quarter 2014.
• Capital strength remained robust with a common equity Tier 1 (“CET1”) capital ratio of 11.8%.

Third Quarter 2015 vs. Third Quarter 2014

• Total revenue of $1.2 billion increased 4% from the prior year quarter, on 4% growth in net interest income and a 4% increase in noninterest income.
• Net interest income of $856 million increased $36 million, driven by 8% average loan growth.
• Noninterest income was up $12 million, largely as higher other income, card and trust and investment services fees were partially offset by lower mortgage banking, capital markets and foreign exchange and trade finance fees.
• Noninterest expense decreased $12 million, driven by a $21 million decrease in restructuring charges and special items. Noninterest expense increased $9 million on an Adjusted basis* as a reduction in salaries and employee benefits was more than offset by increased advertising, insurance costs, outside services and equipment costs which included the impact of continued investments to drive growth.
• Provision for credit losses of $76 million remained stable, largely reflecting the benefit of improvement in credit quality offset by the effect of continued loan growth.
• Net income of $220 million increased $31 million, or 16%, from third quarter 2014 and increased $18 million, or 9%, from Adjusted* third quarter 2014 levels.
• ROTCE of 6.6% compares with an Adjusted ROTCE* of 6.2% in the third quarter 2014.
• Average interest-earning assets increased 5%, as loan and lease growth of 8% was partially offset by a 6% decrease in the investment portfolio.

Update on Plan Execution

• Progress on initiatives to drive revenue growth and enhance efficiency continues:
  • Consumer Banking –Continued loan and deposit growth, with particular strength in student lending and unsecured credit; checking households up 2% from 3Q14 with new client cross-sell rates up 8%, and addition of new leadership in important growth areas such as Wealth and Mortgage.
  • Commercial Banking – Focus on enhancing risk adjusted returns and comprehensive pricing initiatives is helping to drive attractive loan growth, particularly in Franchise Finance and CRE, with improving loan yields; renewed emphasis on lowering cost of deposit growth is delivering results, and Treasury Solutions fees are up 7% from 3Q14.
  • Expense initiatives - Remain on track to reach our savings target of $200 million by end 2016.
• Incremental revenue and efficiency initiatives are tracking as planned.
  • Balance sheet optimization initiatives to improve effectiveness of deposit gathering efforts and to direct asset growth to higher return categories is progressing well.
  • TOP II initiatives are building momentum – early results for Treasury Solutions pricing initiative are in line with expectations, and Operations Transformation initiatives are being implemented. Consumer and Commercial cross-selling initiatives are showing encouraging early indications.

*These are non-GAAP financial measures. Please see Non-GAAP Reconciliation Tables at the end of this release for an explanation of our use of non-GAAP financial measures and their reconciliation to GAAP. Where there is a reference to an “Adjusted” result in a paragraph, all measures which follow that “Adjusted” result are also “Adjusted” and exclude restructuring charges and special items as applicable. There were no restructuring charges or special items recorded in third quarter 2015.

Earnings highlights										3Q15 change from
($s in millions, except per share data)	3Q15			2Q15			3Q14			2Q15						3Q14
Earnings										$				%		$				%
Net interest income	$	856		$	840		$	820		$	16			2	%	$	36			4	%
Noninterest income		353			360			341			(7	)		(2	)		12			4
Total revenue		1,209			1,200			1,161			9			1			48			4
Noninterest expense		798			841			810			(43	)		(5	)		(12	)		(1	)
Pre-provision profit		411			359			351			52			14			60			17
Provision for credit losses		76			77			77			(1	)		(1	)		(1	)		(1	)
Net income		220			190			189			30			16			31			16
Net income available to common shareholders		213			190			189			23			12			24			13
After-tax restructuring charges and special items^*	$	—		$	25		$	13		$	(25	)		(100	) %	$	(13	)		(100	) %
Net income available to common shareholders excluding restructuring charges and special items^*	$	213		$	215		$	202		$	(2	)		(1	) %	$	11			5	%
Average common shares outstanding
Basic (in millions)		531.0			537.7			560.0			(6.7	)		(1	) %		(29.0	)		(5	) %
Diluted (in millions)		533.4			539.9			560.2			(6.5	)		(1	) %		(26.8	)		(5	) %
Diluted earnings per share	$	0.40		$	0.35		$	0.34		$	0.05			14	%	$	0.06			18	%
Diluted earnings per share, excluding restructuring charges and special items^*	$	0.40		$	0.40		$	0.36		$	—			—	%	$	0.04			11	%
Financial ratios
Net interest margin		2.76	%		2.72	%		2.77	%		4		bps				(1	)	bps
Noninterest income as a % of total revenue		29.2			30.0			29.4			(80	)	bps				(17	)	bps
Effective income tax rate		34.1			32.7			30.8			143		bps				331		bps
Efficiency ratio^*		66			70			70			(400	)	bps				(382	)	bps
Efficiency ratio, excluding restructuring charges and special items^*		66			67			68			(68	)	bps				(200	)	bps
Return on average tangible common equity^*		6.6			5.9			5.8			70		bps				79		bps
Return on average tangible common equity excluding restructuring charges and special items^*		6.6			6.7			6.2			(7	)	bps				38		bps
Return on average common equity		4.4			3.9			3.9			46		bps				53		bps
Return on average total assets		0.7			0.6			0.6			9		bps				7		bps
Return on average total tangible assets^*		0.7	%		0.6	%		0.6	%		9		bps				7		bps
Capital adequacy^(1)(2)
Common equity tier 1 capital ratio^(3)		11.8	%		11.8	%		12.9	%
Total capital ratio		15.4			15.3			16.1
Tier 1 leverage ratio		10.4	%		10.4	%		10.9	%
Asset quality^(2)
Total nonperforming loans and leases as a % of total loans and leases		1.06	%		1.09	%		1.19	%		(3	)	bps				(13	)	bps
Allowance for loan and lease losses as a % of loans and leases		1.23			1.24			1.32			(1	)	bps				(9	)	bps
Allowance for loan and lease losses as a % of nonperforming loans and leases		116			114			111			175		bps				482		bps
Net charge-offs as a % of average loans and leases		0.31	%		0.33	%		0.38	%		(2	)	bps				(7	)	bps
* These are non-GAAP financial measures. Please see Non-GAAP Reconciliation Tables at the end of this release for an explanation of our use of non-GAAP financial measures and reconciliation of those non-GAAP financial measures to GAAP. All references to Adjusted results exclude restructuring charges and special items.
^1Current reporting period regulatory capital ratios are preliminary.
^2Capital adequacy and asset quality ratios calculated on a period-end basis, except net charge-offs.
^3 CET1 capital under Basel III replaced Tier 1 common capital under Basel I effective January 1, 2015.

Discussion of Results:

Third quarter 2015 pre-provision profit of $411 million and net income of $220 million included no restructuring charges and special items. Second quarter 2015 pre-provision profit and net income were reduced by a net $40 million pre-tax, or $25 million after-tax, of restructuring charges and special items, largely related to efforts to improve processes and enhance efficiencies, as well as rebranding and separation from The Royal Bank of Scotland Group plc (“RBS”). Third quarter 2014 pre-provision profit and net income were reduced by a net $21 million pre-tax, or $13 million after-tax, of restructuring charges and special items. All references to Adjusted results* exclude the impact of restructuring charges and special items.

Restructuring charges and special items									3Q15 change from
($s in millions, except per share data)	3Q15		2Q15			3Q14			2Q15			3Q14
Pre-tax total noninterest expense restructuring charges and special items		—		40			21			(40	)		(21	)
After-tax total noninterest expense restructuring charges and special items		—		25			13			(25	)		(13	)
Pre-tax restructuring charges and special items		—		(40	)		(21	)		40			21
After-tax restructuring charges and special items		—		(25	)		(13	)		25			13
Diluted EPS impact	$	—	$	(0.05	)	$	(0.02	)	$	0.05		$	0.02

Adjusted results*							3Q15 change from
($s in millions)	3Q15		2Q15		3Q14		2Q15					3Q14
Net interest income	$	856	$	840	$	820	$	16		2	%	$	36		4	%
Noninterest income		353		360		341		(7	)	(2	)		12		4
Total revenue		1,209		1,200		1,161		9		1			48		4
Adjusted noninterest expense^*		798		801		789		(3	)	—			9		1
Adjusted pre-provision profit^*		411		399		372		12		3			39		10
Provision for credit losses		76		77		77		(1	)	(1	)		(1	)	(1	)
Adjusted pretax income^*		335		322		295		13		4			40		14
Adjusted income tax expense^*		115		107		93		8		7			22		24
Adjusted net income^*	$	220	$	215	$	202	$	5		2		$	18		9
Preferred dividend		7		—		—		7		NM			7		NM
Adjusted net income available to common shareholders*		213		215		202		(2	)	(1	)		11		5
Adjusted diluted earnings per share*	$	0.40	$	0.40	$	0.36	$	—		—	%	$	0.04		11	%
Adjusted diluted earnings per share*	$	0.40	$	0.40	$	0.36	$	—		—	%	$	0.04		11	%

Pre-provision profit of $411 million increased $12 million from Adjusted second quarter 2015* levels, reflecting a $9 million increase in total revenue and relatively flat noninterest expense. Third quarter 2015 net income of $220 million increased $5 million from Adjusted second quarter 2015* levels, largely reflecting strength in total revenue growth, continued expense discipline and an increase in the effective tax rate.

Pre-provision profit increased $39 million from Adjusted third quarter 2014 levels*, driven by a $48 million increase in total revenue, partially offset by noninterest expense growth. Compared to Adjusted third quarter 2014 results*, net income increased $18 million, or 9%, reflecting a $48 million increase in total revenue, partially offset by a $9 million increase in noninterest expense and an increase in the effective tax rate. Adjusted diluted earnings per share was up 11% given net income growth and a 5% reduction in share count.

Net interest income										3Q15 change from
($s in millions)	3Q15			2Q15			3Q14			2Q15						3Q14
											$			%			$			%
Interest income:
Interest and fees on loans and leases and loans held for sale	$	818		$	796		$	756		$	22			3	%	$	62			8	%
Investment securities		154			155			155			(1	)		(1	)		(1	)		(1	)
Interest-bearing deposits in banks		2			1			2			1			100			—			—
Total interest income	$	974		$	952		$	913		$	22			2	%	$	61			7	%
Interest expense:
Deposits	$	65		$	60		$	41		$	5			8	%	$	24			59	%
Federal funds purchased and securities sold under agreements to repurchase		4			2			9			2			100			(5	)		(56	)
Other short-term borrowed funds		17			19			21			(2	)		(11	)		(4	)		(19	)
Long-term borrowed funds		32			31			22			1			3			10			45
Total interest expense	$	118		$	112		$	93		$	6			5	%	$	25			27	%
Net interest income	$	856		$	840		$	820		$	16			2	%	$	36			4	%
Net interest margin		2.76	%		2.72	%		2.77	%		4		bps				(1	)	bps

Net interest income of $856 million in third quarter 2015 increased $16 million from second quarter 2015 reflecting a $1.2 billion increase in average loans and leases, one additional day in the quarter, and improving investment portfolio and retail and commercial loan yields, partially offset by modestly higher deposit funding costs. Net interest margin improved four basis points to 2.76% in third quarter 2015, from 2.72% in second quarter 2015. The increase in the linked quarter margin was driven by modest balance sheet deleveraging and improving retail and commercial loan yields, partially offset by an increase in deposit costs.

Compared to third quarter 2014, net interest income increased $36 million largely as the benefit of average earning asset growth, improving investment portfolio yields, improving retail loan yields and a reduction in pay-fixed swap costs was partially offset by an increase in deposit costs, continued pressure from the persistent low-rate environment on loan yields, and higher borrowing costs related to the issuance of subordinated debt and senior notes. Net interest margin remained relatively stable with third quarter 2014 given the factors mentioned above, as well as the impact of modest balance sheet deleveraging.

Noninterest Income							3Q15 change from
($s in millions)	3Q15		2Q15		3Q14		2Q15					3Q14
								$		%			$		%
Service charges and fees	$	145	$	139	$	144	$	6		4	%	$	1		1	%
Card fees		60		60		58		—		—			2		3
Trust and investment services fees		41		41		39		—		—			2		5
Mortgage banking fees		18		30		21		(12	)	(40	)		(3	)	(14	)
Capital markets fees		21		30		22		(9	)	(30	)		(1	)	(5	)
Foreign exchange and trade finance fees		22		22		26		—		—			(4	)	(15	)
Securities gains, net		2		9		2		(7	)	(78	)		—		—
Other income^1		44		29		29		15		52			15		52
Noninterest income	$	353	$	360	$	341	$	(7	)	(2	) %	$	12		4	%
^1Other income includes bank owned life insurance and other income.

Noninterest income of $353 million in the third quarter 2015 decreased $7 million from second quarter 2015, as a $15 million increase in other income due to $8 million in branch real estate gains, as well as improved service charges and fees, were partially offset by lower mortgage banking fees and capital markets fees, and a $7 million reduction in securities gains. Service charges and fees increased $6 million, reflecting seasonality and overall industry trends. Mortgage banking fees decreased $12 million, the result of an $8 million reduction in mortgage servicing rights valuation, as a second quarter 2015 write-up reversed to a modest impairment, and lower origination volumes and gain on sale spreads.

Compared to third quarter 2014, noninterest income increased $12 million driven by higher other income, trust and investment services fees, card fees and service charges and fees, which were partially offset by lower foreign exchange, trade finance fees, mortgage banking fees, and capital markets fees. Service charges and fees were relatively stable, and card fees and trust and investment services fees increased $4 million. Mortgage banking fees decreased $3 million as a $7 million decrease in mortgage servicing rights valuation more than offset improved gain on sale spreads.

Noninterest expense							3Q15 change from
($s in millions)	3Q15		2Q15		3Q14		2Q15					3Q14
								$		%			$		%
Salaries and employee benefits	$	404	$	411	$	409	$	(7	)	(2	) %	$	(5	)	(1	) %
Outside services		89		99		106		(10	)	(10	)		(17	)	(16	)
Occupancy		75		90		77		(15	)	(17	)		(2	)	(3	)
Equipment expense		62		65		58		(3	)	(5	)		4		7
Amortization of software		35		37		38		(2	)	(5	)		(3	)	(8	)
Other operating expense		133		139		122		(6	)	(4	)		11		9
Total noninterest expense	$	798	$	841	$	810	$	(43	)	(5	) %	$	(12	)	(1	) %
Restructuring charges and special items		—		40		21		(40	)	(100	) %		(21	)	(100	) %
Total noninterest expense, excluding restructuring charges and special items*	$	798	$	801	$	789	$	(3	)	—	%	$	9		1	%

Noninterest expense of $798 million in third quarter 2015 decreased $43 million from second quarter 2015, largely due to a $40 million decrease in restructuring charges and special items. Excluding these charges, noninterest expense declined slightly from second quarter 2015 Adjusted* levels, as lower equipment and other expense were largely offset by an increase in outside services. Our efficiency initiatives continue to help fund investments in the businesses to drive future revenue growth.

Compared with third quarter 2014, noninterest expense decreased $12 million, as a $21 million decrease in restructuring charges and special items was partially offset by higher advertising, insurance and outside services costs. Compared with Adjusted third quarter 2014 results, noninterest expense increased $9 million, largely driven by increases in other expense and equipment expense, partially offset by lower salaries and employee benefits expense.

The effective tax rate increased to 34.1% in third quarter 2015 compared with 32.7% in second quarter 2015, largely reflecting the benefit of a true up of certain tax items during the second quarter. This increase impacted net income by approximately $5 million. The tax rate increased approximately 330 basis points from 30.8% in third quarter 2014.

Consumer Banking Segment										3Q15 change from
($s in millions)	3Q15			2Q15			3Q14			2Q15						3Q14
											$			%			$			%
Net interest income	$	556		$	544		$	532		$	12			2	%	$	24			5	%
Noninterest income		235			230			226			5			2			9			4
Total revenue		791			774			758			17			2			33			4
Noninterest expense		623			613			609			10			2			14			2
Pre-provision profit		168			161			149			7			4			19			13
Provision for credit losses		64			60			66			4			7			(2	)		(3	)
Income before income tax expense		104			101			83			3			3			21			25
Income tax expense		36			35			29			1			3			7			24
Net income	$	68		$	66		$	54		$	2			3	%	$	14			26	%
Average balances
Total loans and leases ^(1)	$	51,886		$	51,024		$	47,848		$	862			2	%	$	4,038			8	%
Total deposits		70,527			69,963			65,609			564			1	%		4,918			7	%
Key metrics
ROTCE ^(2)*		5.7	%		5.7	%		4.6	%		1		bps				110		bps
Efficiency ratio^*		79	%		79	%		80	%		(53	)	bps				(170	)	bps
Loan-to-deposit ratio (period-end)^(1)		74.4	%		73.2	%		74.0	%		115		bps				37		bps
^1Includes held for sale.
^2Operating segments are allocated capital on a risk-adjusted basis considering economic and regulatory capital requirements. We approximate that regulatory capital is equivalent to a sustainable target level of common equity Tier 1 and then allocate that approximation to the segments based on economic capital.

Consumer Banking net income of $68 million in third quarter 2015 increased $2 million, or 3%, compared to second quarter 2015, as revenue growth was partially offset by expense growth tied to investment initiatives and increased provision expense. Net interest income increased $12 million, or 2%, from second quarter 2015, driven by 2% loan growth, with particular strength in student, mortgage, and auto loans, as well as an additional day in the quarter, partially offset by higher deposit costs. Noninterest income increased $5 million, or 2%, from second quarter 2015, and included $8 million in branch real estate gains. Results also reflected growth in service charges and other fees, and trust and investment services fees, partially offset by a $12 million decline in mortgage banking fees, which included an $8 million decrease in mortgage servicing rights valuation as a second quarter write-up reversed to a modest impairment. Noninterest expense of $623 million increased $10 million from second quarter 2015, largely reflecting growth in outside services, salaries and employee benefits expense and higher regulatory costs, partially offset by lower credit collection costs and equipment expense. Provision for credit losses of $64 million increased $4 million, or 7%, from second quarter 2015.

Compared with third quarter 2014, net income increased $14 million, as an increase in total revenues of $33 million was somewhat offset by increased noninterest expense. Net interest income increased $24 million as solid loan growth, particularly in auto, student, and mortgage, was partially offset by the effect of the relatively persistent low-rate environment and higher deposit costs. Noninterest income grew $9 million as branch real estate gains and increased trust and investment services fees were partially offset by lower mortgage banking fees. Noninterest expense increased $14 million, as higher advertising, regulatory costs, salaries and employee benefits expense and our continued investment in the business to drive further growth, was partially offset by lower credit collection costs, insurance and payroll taxes, outside services expense and our continued focus on improving efficiency. Provision for credit losses of $64 million decreased $2 million, or 3%, from third quarter 2014, largely reflecting continued improvement in credit quality modestly offset by the impact of loan growth.

Commercial Banking Segment										3Q15 change from
($s in millions)	3Q15			2Q15			3Q14			2Q15						3Q14
											$			%			$			%
Net interest income	$	299		$	286		$	270		$	13			5	%	$	29			11	%
Noninterest income		100			108			104			(8	)		(7	)		(4	)		(4	)
Total revenue		399			394			374			5			1			25			7
Noninterest expense		175			181			162			(6	)		(3	)		13			8
Pre-provision profit		224			213			212			11			5			12			6
Provision for credit losses		3			7			—			(4	)		(57	)		3			—
Income before income tax expense		221			206			212			15			7			9			4
Income tax expense		76			71			73			5			7			3			4
Net income	$	145		$	135		$	139		$	10			7	%	$	6			4	%
Average balances
Total loans and leases ^(1)	$	41,993		$	41,467		$	37,787		$	526			1	%	$	4,206			11	%
Total deposits		24,604			22,717			20,985			1,887			8	%		3,619			17	%
Key metrics
ROTCE ^(2)*		12.2	%		11.7	%		13.1	%		55		bps				(86	)	bps
Efficiency ratio^*		44	%		46	%		43	%		(232	)	bps				40		bps
Loan-to-deposit ratio (period-end)^(1)		166.0	%		176.2	%		176.9	%		(1,014	)	bps				(1,086	)	bps
^1Includes held for sale.
^2Operating segments are allocated capital on a risk-adjusted basis considering economic and regulatory capital requirements. We approximate that regulatory capital is equivalent to a sustainable target level for common equity Tier 1 and then allocate that approximation to the segments based on economic capital.

Commercial Banking net income of $145 million in third quarter 2015 increased $10 million, or 7%, from second quarter 2015, reflecting an increase in total revenue and a reduction in noninterest expense and provision for credit losses. Net interest income of $299 million increased $13 million, or 5%, from second quarter 2015, driven by an average 1% loan and lease growth and 8% deposit growth. Average loans and leases increased $526 million led by Commercial Real Estate, Franchise Finance and Corporate Finance lines of business. Noninterest income decreased $8 million, or 7%, from second quarter 2015, largely as growth in service charges and other fees, interest rate products fees and leasing income was offset by a decrease in capital markets fees from strong second quarter 2015 levels. Noninterest expense decreased $6 million, or 3%, from second quarter 2015, largely reflecting lower regulatory costs and equipment expense, partially offset by increased outside services and insurance costs. Provision for credit losses of $3 million decreased $4 million, reflecting lower net charge-offs.

Compared to third quarter 2014, net income increased $6 million, or 4%, as a $25 million increase in total revenue was partially offset by a $13 million increase in noninterest expense and a $3 million increase in provision for credit losses. Net interest income increased $29 million, or 11%, from third quarter 2014, reflecting the benefit of a $4.2 billion increase in average loans and leases, as well as deposit growth, partially offset by yield compression. Loan growth was driven by strength in Commercial Real Estate, Industry Verticals, Corporate Finance, Franchise Finance, and Mid Corporate. Noninterest income decreased $4 million, or 4%, from third quarter 2014, as growth in service charges and other fees, card fees, and interest rate products was more than offset by a reduction in foreign exchange and trade finance fees, capital market fees and leasing income. Noninterest expense increased $13 million, or 8%, from third quarter 2014 reflecting a reduction in regulatory costs which was more than offset by higher insurance costs, salaries and employee benefits tied to growth initiatives and higher outside services. Provision for credit losses increased $3 million from third quarter 2014, reflecting higher net-charge-offs.

Other^(1)									3Q15 change from
($s in millions)	3Q15		2Q15			3Q14			2Q15					3Q14
										$		%			$		%
Net interest income	$	1	$	10		$	18		$	(9	)	(90	) %	$	(17	)	(94	) %
Noninterest income		18		22			11			(4	)	(18	)		7		64
Total revenue		19		32			29			(13	)	(41	)		(10	)	(34	)
Noninterest expense		—		47			39			(47	)	(100	)		(39	)	(100	)
Pre-provision profit (loss)		19		(15	)		(10	)		34		227			29		290
Provision for credit losses		9		10			11			(1	)	(10	)		(2	)	(18	)
Income (loss) before income tax expense (benefit)		10		(25	)		(21	)		35		140			31		148
Income tax expense (benefit)		3		(14	)		(17	)		17		121			20		118
Net income (loss)	$	7	$	(11	)	$	(4	)	$	18		164	%	$	11		275	%
Average balances
Total loans and leases ^(2)	$	3,367	$	3,569		$	4,218		$	(202	)	(6	) %	$	(851	)	(20	) %
Total deposits		5,859		5,853			5,082			6		—	%		777		15	%
^1Includes the financial impact of non-core, liquidating loan portfolios and other non-core assets, our treasury activities, wholesale funding activities, securities portfolio, community development assets and other unallocated assets, liabilities, capital, revenues, provision for credit losses and expenses not attributed to our Consumer Banking or Commercial Banking segments.
^2Includes held for sale.

Other recorded net income of $7 million in third quarter 2015, compared with a net loss of $11 million in second quarter 2015, as a reduction in total revenue was more than offset by a $40 million decrease in restructuring charges and special items. Net interest income of $1 million decreased $9 million from the prior quarter driven by lower non-core loan balances. Noninterest income of $18 million decreased $4 million from second quarter 2015, reflecting lower securities gains. Noninterest expense decreased $47 million, driven by lower restructuring charges and special items. Provision for credit losses of $9 million in third quarter decreased $1 million from the prior quarter and represented a $1 million reserve build versus a $1 million release in the prior quarter.

Compared with the third quarter of 2014, net income increased $11 million, as a reduction in total revenue was more than offset by lower expenses and the benefit of a $21 million decrease in restructuring charges and special items. Net interest income decreased $17 million, driven by an increase in wholesale funding costs, and lower non-core loans, partially offset by a reduction in swap costs. Noninterest income increased $7 million, reflecting the effect of an accounting change related to the low‐income housing investment portfolio, offset in income tax expense. Noninterest expense decreased $39 million, driven by lower restructuring charges and special items and lower incentives. Provision for credit losses declined $2 million from the third quarter 2014, which benefited from an $11 million reserve release. Provision expense also reflected a $12 million decrease in non-core charge-offs relative to third quarter 2014.

Consolidated balance sheet review^(1)										3Q15 change from
($s in millions)	3Q15			2Q15			3Q14			2Q15						3Q14
											$			%			$			%
Total assets	$	135,447		$	137,251		$	131,341		$	(1,804	)		(1	) %	$	4,106			3	%
Loans and leases and loans held for sale		97,851			97,235			90,957			616			1			6,894			8
Deposits		101,866			100,615			93,463			1,251			1			8,403			9
Average interest-earning assets (quarterly)		123,017			123,205			117,196			(188	)		—			5,821			5
Stockholders' equity		19,600			19,586			19,383			14			—			217			1
Stockholders' common equity		19,353			19,339			19,383			14			—			(30	)		—
Tangible common equity*	$	12,939		$	12,909		$	12,900		$	30			—	%	$	39			—	%
Loan-to-deposit ratio (period-end)^(2)		96.1	%		96.6	%		97.3	%		(58	)	bps				(126	)	bps
Common equity tier 1 capital ratio^(3)		11.8			11.8			12.9
Total capital ratio^(3)		15.4	%		15.3	%		16.1	%
^1 Represents period-end unless otherwise noted.
^2Includes loans held for sale.
^3 Current reporting period regulatory capital ratios are preliminary. Periods prior to 1Q15 reported on a Basel I basis. Basel III ratios assume that certain definitions impacting qualifying Basel III capital will phase in through 2018. Ratios also reflect the required US Standardized methodology for calculating RWAs, effective January 1, 2015.

Total assets of $135.4 billion decreased $1.8 billion, or 1%, from June 30, 2015 as retail and commercial loan growth was largely offset by a $1.8 billion decrease in investment portfolio assets, largely cash and interest-bearing deposit positions, reflecting more efficient balance sheet management. Total assets increased $4.1 billion, or 3%, from September 30, 2014 reflecting a $6.7 billion, or 7%, increase in loans and leases, partially offset by a $1.7 billion decrease in short-term investment portfolio assets, largely cash and interest-bearing deposit positions.

Average interest-earning assets of $123.0 billion in third quarter 2015, decreased $188 million from the prior quarter, as strength in student, mortgage, commercial real estate and auto loans was more than offset by a decrease in short-term investments and reductions in home equity outstandings. Total Commercial loan and lease growth of $478 million was driven by strength in Commercial Real Estate, Franchise Finance and Corporate Finance businesses. Retail loan growth of $707 million was driven by higher student, mortgage, and auto loans, which were partially offset by lower home equity balances and a reduction in the non-core portfolio. Average interest-earning assets increased $5.8 billion, or 5%, from third quarter 2014 reflecting a $4.0 billion increase in commercial loans and leases and $3.2 billion increase in retail loans, despite a $726 million decrease in the non-core loan portfolio.

Deposits of $101.9 billion increased $1.3 billion, or 1%, from June 30, 2015 reflecting growth in checking with interest and demand deposits. Compared with September 30, 2014, deposits increased $8.4 billion, or 9%, reflecting growth across every category and with particular strength in consumer deposits. The loan-to-deposit ratio of 96.1% as of September 30, 2015 compared with 96.6% as of June 30, 2015 and 97.3% as of September 30, 2014.

Interest-earning assets							3Q15 change from
($s in millions)	3Q15		2Q15		3Q14		2Q15					3Q14
Period-end interest-earning assets								$		%			$		%
Investments and interest-bearing deposits	$	25,406	$	27,227	$	27,073	$	(1,821	)	(7	) %	$	(1,667	)	(6	) %
Loans and leases
Commercial loans and leases		45,269		45,068		41,470		201		—			3,799		9
Retail loans		52,162		51,470		49,279		692		1			2,883		6
Total loans and leases		97,431		96,538		90,749		893		1			6,682		7
Loans held for sale		369		397		205		(28	)	(7	)		164		80
Other loans held for sale		51		300		3		(249	)	(83	)		48		1,600
Total loans and leases and loans held for sale		97,851		97,235		90,957		616		1			6,894		8
Total period-end interest-earning assets	$	123,257	$	124,462	$	118,030	$	(1,205	)	(1	) %	$	5,227		4	%
Average interest-earning assets
Investments and interest-bearing deposits	$	25,771	$	27,145	$	27,343	$	(1,374	)	(5	)	$	(1,572	)	(6	)
Loans and leases
Commercial loans and leases		45,174		44,696		41,191		478		1			3,983		10
Retail loans		51,617		50,910		48,459		707		1			3,158		7
Total loans and leases		96,791		95,606		89,650		1,185		1			7,141		8
Loans held for sale		327		308		176		19		6			151		86
Other loans held for sale		128		146		27		(18	)	(12	)		101		374
Total loans and leases and loans held for sale		97,246		96,060		89,853		1,186		1			7,393		8
Total average interest-earning assets	$	123,017	$	123,205	$	117,196	$	(188	)	—	%	$	5,821		5	%

Investments and interest-bearing deposits of $25.4 billion as of September 30, 2015 decreased $1.8 billion from June 30, 2015, largely reflecting a continued reduction in short-term investments, mainly cash. Compared with September 30, 2014, investments and interest-bearing deposits decreased $1.7 billion, or 6%. As of September 30, 2015, the average effective duration of the securities portfolio was 3.3 years, compared with 3.7 years at June 30, 2015, and 4.0 years at September 30, 2014. The decrease in the third quarter reflects the impact of a decrease in long-term rates, as well as modest repositioning of the investment portfolio.

Period-end loans and leases of $97.4 billion at September 30, 2015 increased $893 million from $96.5 billion at June 30, 2015, and increased $6.7 billion from $90.7 billion at September 30, 2014. The linked quarter increase was driven by a $692 million increase in retail loans and a $201 million increase in commercial loans and leases. Retail loan growth was driven by a $539 million increase in residential mortgage loans, a $491 million increase in student loans and a $149 million increase in auto loans, partially offset by a $515 million decrease in home equity outstandings, including continued runoff in the non-core portfolio. Commercial loan and lease growth was driven by our Commercial Real Estate, Franchise Finance, and Mid Corporate businesses. During the quarter we purchased a net $96 million in auto loans, $131 million in student loans, and $63 million in mortgage loans, and sold $100 million in commercial leases.

Compared with September 30, 2014, period-end loans and leases increased $6.7 billion, reflecting a $3.8 billion increase in commercial loans and leases and a $2.9 billion increase in retail loans. Commercial loan growth was driven by growth in our Commercial Real Estate, Industry Verticals, Franchise Finance, and Corporate Finance businesses. Retail loan growth was driven by a $1.8 billion increase in auto loans, $1.8 billion increase in student loans, and $1.5 billion increase in residential mortgage loans partially offset by a $2.0 billion decrease in home equity outstandings, including continued runoff in the non-core portfolio.

Average loans and leases of $96.8 billion increased $1.2 billion from second quarter 2015, driven by higher student, residential mortgage, commercial real estate, and auto balances. Results also reflect a $187 million decrease in the non-core loan portfolio. Compared with third quarter 2014, average loans and leases increased $7.1 billion, driven by growth in commercial and commercial real estate, and an increase in auto, student and residential mortgage balances, partially offset by a decrease in home equity outstandings and a $726 million reduction in the non-core loan portfolio.

Deposits							3Q15 change from
($s in millions)	3Q15		2Q15		3Q14		2Q15					3Q14
Period-end deposits								$		%			$	%
Demand deposits	$	27,373	$	26,678	$	25,877	$	695		3	%	$	1,496	6	%
Checking with interest		18,350		17,114		15,449		1,236		7			2,901	19
Savings		8,011		8,080		7,655		(69	)	(1	)		356	5
Money market accounts		35,539		35,735		32,870		(196	)	(1	)		2,669	8
Term deposits		12,593		13,008		11,612		(415	)	(3	)		981	8
Total deposits	$	101,866	$	100,615	$	93,463	$	1,251		1	%	$	8,403	9	%
Average deposits
Total average deposits	$	100,990	$	98,533	$	91,676	$	2,457		2	%	$	9,314	10	%

Third quarter 2015 average deposits of $101.0 billion increased $2.5 billion, or 2%, from second quarter 2015, and $9.3 billion, or 10%, from third quarter 2014, reflecting growth in every category. Period-end total deposits at September 30, 2015 of $101.9 billion increased $1.3 billion, or 1%, from June 30, 2015, with particular strength in checking with interest and demand deposits. Compared with September 30, 2014, period-end total deposits increased $8.4 billion, or 9%, driven by growth in every category.

Borrowed funds							3Q15 change from
($s in millions)	3Q15		2Q15		3Q14		2Q15					3Q14
Period-end borrowed funds								$		%			$		%
Federal funds purchased and securities sold under agreements to repurchase	$	1,293	$	3,784	$	5,184	$	(2,491	)	(66	) %	$	(3,891	)	(75	) %
Other short-term borrowed funds		5,861		6,762		6,715		(901	)	(13	)		(854	)	(13	)
Long-term borrowed funds		4,153		3,890		2,062		263		7			2,091		101
Total borrowed funds	$	11,307	$	14,436	$	13,961	$	(3,129	)	(22	)	$	(2,654	)	(19	)
Average borrowed funds	$	12,001	$	14,772	$	14,996	$	(2,771	)	(19	) %	$	(2,995	)	(20	) %

Total borrowed funds of $11.3 billion at September 30, 2015 decreased $3.1 billion from June 30, 2015, largely due to strength in deposit growth which led to a decrease in securities sold under agreement to repurchase and excess cash at the Federal Reserve. Compared with September 30, 2014, total borrowed funds decreased $2.7 billion given strong deposit growth. Average borrowed funds of $12.0 billion decreased $2.8 billion from second quarter 2015 as growth in deposits reduced our reliance on short-term borrowings. Average borrowed funds decreased $3.0 billion from third quarter 2014 reflecting deposit growth and a reduction in short-term borrowings and excess cash.

Capital^(1)										3Q15 change from
($s and shares in millions)	3Q15			2Q15			3Q14			2Q15					3Q14
Period-end capital											$		%			$		%
Stockholders' equity	$	19,600		$	19,586		$	19,383		$	14		—	%	$	217		1	%
Stockholders' common equity	$	19,353		$	19,339		$	19,383			14		—			(30	)	—
Tangible common equity*	$	12,939		$	12,909		$	12,900			30		—			39		—
Tangible common equity per share*	$	24.52		$	24.03		$	23.04			0.49		2			1.48		6
Common shares - at end of period		527.6			537.1			560.0			(9.5	)	(2	)		(32.4	)	(6	)
Common shares - average (diluted)		533.4			539.9			560.2			(6.5	)	(1	) %		(26.8	)	(5	) %
Common equity tier 1 capital ratio^(1)(2)		11.8	%		11.8	%		12.9	%
Total capital ratio^(1)(2)		15.4			15.3			16.1
Tier 1 leverage ratio^(1)(2)		10.4	%		10.4	%		10.9	%
^1 Current reporting period regulatory capital ratios are preliminary.
^2 Periods prior to 1Q15 reported on a Basel I basis. Basel III ratios assume that certain definitions impacting qualifying Basel III capital will phase in through 2018. Ratios also reflect the required US Standardized transitional methodology for calculating RWAs, effective January 1, 2015.

At September 30, 2015, our Basel III Capital ratios on a transitional basis remained well in excess of applicable regulatory requirements, with a CET1 capital ratio of 11.8% and a total capital ratio of 15.4%. Our capital ratios continue to reflect progress against our objective of realigning our capital profile to be more consistent with that of peer regional banks, while maintaining a strong capital base to support our growth aspirations, strategy, and risk appetite. In August, we completed the issuance of $250 million in subordinated debt due 2025, which funded a 9.6 million common stock share repurchase, further reducing RBS’s ownership interest to 20.9%.

Credit quality review										3Q15 change from
($s in millions)	3Q15			2Q15			3Q14			2Q15						3Q14
											$			%			$			%
Nonperforming loans and leases	$	1,034		$	1,050		$	1,079		$	(16	)		(2	) %	$	(45	)		(4	) %
Accruing loans past due 90 days or more		15			8			8			7			88			7			88
Net charge-offs		75			78			88			(3	)		(4	)		(13	)		(15	)
Provision for credit losses		76			77			77			(1	)		(1	)		(1	)		(1	)
Allowance for loan and lease losses	$	1,201		$	1,201		$	1,201		$	—			—	%	$	—			—	%
Total nonperforming loans and leases as a % of total loans and leases		1.06	%		1.09	%		1.19	%		(3	)	bps				(13	)	bps
Net charge-offs as % of total loans and leases		0.31			0.33			0.38			(2	)	bps				(7	)	bps
Allowance for loan and lease losses as a % of nonperforming loans and leases		116.1	%		114.4	%		111.3	%		175		bps				482		bps

Credit quality during the quarter remained strong, with relatively low levels of charge-offs and a decline in nonperforming loans and leases. Nonperforming loans and leases of $1.0 billion at September 30, 2015 decreased $16 million, or 2%, from June 30, 2015, reflecting a $21 million decrease in retail products as a reduction in secured consumer real-estate loans was partially offset by a $5 million increase in commercial loans. Nonperforming loans and leases to total loans and leases of 1.06% at September 30, 2015 decreased three basis points from 1.09% at June 30, 2015, and decreased 13 basis points from 1.19% at September 30, 2014. Nonperforming loans and leases decreased $45 million, or 4%, from third quarter 2014, largely driven by improvement in commercial real estate and secured consumer real estate loans, partially offset by increases in student and auto loans given expected seasoning.

Nonperforming non-core loans totaled $162 million in third quarter 2015, compared with $163 million in second quarter 2015, and $191 million in third quarter 2014. Nonperforming non-core loans to total non-core loans of 6.5% at September 30, 2015, compared with 6.1% at June 30, 2015, and 5.9% at September 30, 2014. This increase was due to a 6.8% reduction in non-core balances during the quarter, which significantly outpaced the reduction in nonperforming non-core loans. Troubled debt restructured loans (“TDRs”) of $1.3 billion were stable compared to $1.3 billion at June 30, 2015, and included $1.2 billion of retail loans and $153 million of commercial loans. Performing TDRs represented 68% of total TDRs as of September 30, 2015, compared with 66% as of June 30, 2015, and 67% as of September 30, 2014.

Net charge-offs of $75 million, or 31 basis points of total loans and leases, decreased $3 million in third quarter 2015, from $78 million, or 33 basis points, in second quarter 2015. Retail product net charge-offs of $70 million remained relatively stable with second quarter 2015 levels. Commercial net charge-offs were $5 million in third quarter 2015, compared with $7 million in second quarter 2015. Overall results included non-core net charge-offs of $9 million in third quarter 2015, compared with $12 million in second quarter 2015, and $21 million in third quarter 2014. Annualized non-core net charge-offs to total average non-core loans and leases was 1.36% in third quarter 2015, compared with 1.70% in second quarter 2015, and 2.52% in third quarter 2014. This reduction in the non-core charge-off rate was driven by higher recoveries in commercial and residential mortgage, and seasonal improvement in student.

Provision for credit losses of $76 million in third quarter 2015 remained stable with second quarter 2015, as improvement in asset quality was offset by a reserve build tied to loan growth. Third quarter 2015 provision for credit losses was also stable with third quarter 2014, as continued improvement in overall credit quality was offset by the impact of loan growth. The total provision for credit losses includes the provision for loan and lease losses as well as the provision for unfunded commitments.

The allowance for loan and lease losses of $1.2 billion remained stable compared to second quarter 2015 and third quarter 2014, largely reflecting continued improvement in overall credit quality. Allowance for loan and lease losses to total loans and leases was 1.23% as of September 30, 2015, compared with 1.24% as of June 30, 2015, and 1.32% as of September 30, 2014. Allowance for loan and lease losses to non-performing loans and leases ratio was 116% as of September 30, 2015, compared with 114% as of June 30, 2015, and 111% as of September 30, 2014.

Corresponding Financial Tables and Information

Investors are encouraged to review the foregoing summary and discussion of Citizens' earnings and financial condition in conjunction with the detailed financial tables and other information available on the Investor Relations portion of the company’s website at www.citizensbank.com/about-us.

Conference Call

CFG management will host a live conference call today with details as follows:
Time:	8:30 am ET
Dial-in:	Individuals may call in by dialing [phone], conference ID 365456
Webcast/Presentation:	The live webcast will be available at http://investor.citizensbank.com, under Events
Replay Information:	A replay of the conference call will be available beginning at 10:30 am ET on October 23 through November 23. Please dial [phone] and enter access code 365456. The webcast replay will be available at http://investor.citizensbank.com.

About Citizens Financial Group, Inc.

Citizens Financial Group, Inc. is one of the nation’s oldest and largest financial institutions, with $135.4 billion in assets as of September 30, 2015. Headquartered in Providence, Rhode Island, Citizens offers a broad range of retail and commercial banking products and services to individuals, small businesses, middle-market companies, large corporations and institutions. In Consumer Banking, Citizens helps its retail customers “bank better” with mobile and online banking, a 24/7 customer contact center and the convenience of approximately 3,200 ATMs and approximately 1,200 Citizens Bank branches in 11 states in the New England, Mid-Atlantic and Midwest regions. Citizens also provides mortgage lending, auto lending, student lending and commercial banking services in select markets nationwide. In Commercial Banking, Citizens offers corporate, institutional and not-for-profit clients a full range of wholesale banking products and services including lending and deposits, capital markets, treasury services, foreign exchange and interest hedging, leasing and asset finance, specialty finance and trade finance.
Citizens operates through its subsidiaries Citizens Bank, N.A., and Citizens Bank of Pennsylvania. Additional information about Citizens and its full line of products and services can be found at www.citizensbank.com.

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 set forth below include “total revenue”, “noninterest income”, “ noninterest expense”, “pre-provision profit”, “income before income tax expense (benefit)”, “income tax expense (benefit)”, “net income”, “net income available to common stockholders”, “salaries and employee benefits”, “outside services”, “occupancy”, “equipment expense”, “amortization of software”, “other operating expense”, “net income per average common share”, “return of average common equity” and “return on average total assets”. In addition, we present computations for "tangible book value per common share", “return on average tangible common equity”, “return on average total tangible assets”, “efficiency ratio”, and “operating leverage” as part of our non-GAAP measures. Additionally, "pro forma Basel III fully phased-in common equity tier 1 capital" computations for periods prior to first quarter 2015 are presented as part of our non-GAAP measures.

We believe these non-GAAP measures provide useful information to investors because these are among the measures used by our management team to evaluate our operating performance and make day-to-day operating decisions. In addition, we believe restructuring charges and special items in any period do not reflect the operational performance of the business in that period and, accordingly, it is useful to consider these line items with and without restructuring charges and special items. We believe this presentation also increases comparability of period-to-period results.

We also consider pro forma capital ratios defined by banking regulators but not effective at each period end to be non-GAAP financial measures. Since analysts and banking regulators may assess our capital adequacy using these pro forma ratios, we believe they are useful to provide investors the ability to assess our capital adequacy on the same basis.

Other companies may use similarly titled non-GAAP financial measures that are calculated differently from the way we calculate such measures. Accordingly, our non-GAAP financial measures may not be comparable to similar measures used by other companies. We caution investors not to place undue reliance on such non-GAAP measures, but instead to consider them with the most directly comparable GAAP measure. Non-GAAP financial measures have limitations as analytical tools, and should not be considered in isolation, or as a substitute for our results as reported under GAAP.

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (Excluding restructuring charges and special items) $s in millions, except per share data
		QUARTERLY TRENDS															FOR THE NINE MONTHS ENDED SEPTEMBER 30
		3Q15			2Q15			1Q15			4Q14			3Q14				2015			2014
Noninterest income, excluding special items:
Noninterest income (GAAP)	A	$	353		$	360		$	347		$	339		$	341		$	1,060		$	1,339
Less: Special items - Chicago gain			—			—			—			—			—			—			288
Noninterest income, excluding special items (non-GAAP)	B	$	353		$	360		$	347		$	339		$	341		$	1,060		$	1,051
Total revenue, excluding special items:
Total revenue (GAAP)	C	$	1,209		$	1,200		$	1,183		$	1,179		$	1,161		$	3,592		$	3,800
Less: Special items - Chicago gain			—			—			—			—			—			—			288
Total revenue, excluding special items (non-GAAP)	D	$	1,209		$	1,200		$	1,183		$	1,179		$	1,161		$	3,592		$	3,512
Noninterest expense, excluding restructuring charges and special items:
Noninterest expense (GAAP)	E	$	798		$	841		$	810		$	824		$	810		$	2,449		$	2,568
Less: Restructuring charges and special items	MM		—			40			10			33			21			50			136
Noninterest expense, excluding restructuring charges and special items (non-GAAP)	F	$	798		$	801		$	800		$	791		$	789		$	2,399		$	2,432
Net income, excluding restructuring charges and special items:
Net income (GAAP)	G	$	220		$	190		$	209		$	197		$	189		$	619		$	668
Add: Restructuring charges and special items, net of income tax expense (benefit)			—			25			6			20			13			31			(95	)
Net income, excluding restructuring charges and special items (non-GAAP)	H	$	220		$	215		$	215		$	217		$	202		$	650		$	573
Net income available to common stockholders (GAAP), excluding restructuring charges and special items
Net income available to common stockholders (GAAP)	I	$	213		$	190		$	209		$	197		$	189		$	612		$	668
Add: Restructuring charges and special items, net of income tax expense (benefit)			—			25			6			20			13			31			(95	)
Net income available to common stockholders, excluding restructuring charges and special items (non-GAAP)	J	$	213		$	215		$	215		$	217		$	202		$	643		$	573
Return on average common equity, excluding restructuring charges and special items:
Average common equity (GAAP)	K	$	19,261		$	19,391		$	19,407		$	19,209		$	19,411		$	19,352		$	19,463
Return on average common equity, excluding restructuring charges and special items (non-GAAP)	J/K		4.40	%		4.45	%		4.49	%		4.48	%		4.14	%		4.45	%		3.94	%
Return on average tangible common equity and return on average tangible common equity, excluding restructuring charges and special items:
Average common equity (GAAP)	L	$	19,261		$	19,391		$	19,407		$	19,209		$	19,411		$	19,352		$	19,463
Less: Average goodwill (GAAP)			6,876			6,876			6,876			6,876			6,876			6,876			6,876
Less: Average other intangibles (GAAP)			4			5			5			6			6			5			7
Add: Average deferred tax liabilities related to goodwill (GAAP)			453			437			422			403			384			438			368
Average tangible common equity (non-GAAP)	M	$	12,834		$	12,947		$	12,948		$	12,730		$	12,913		$	12,909		$	12,948
Return on average tangible common equity (non-GAAP)	I/M		6.60	%		5.90	%		6.53	%		6.12	%		5.81	%		6.34	%		6.90	%
Return on average tangible common equity, excluding restructuring charges and special items (non-GAAP)	J/M		6.60	%		6.67	%		6.73	%		6.76	%		6.22	%		6.67	%		5.92	%
Return on average total assets, excluding restructuring charges and special items:
Average total assets (GAAP)	N	$	135,103		$	135,521		$	133,325		$	130,671		$	128,691		$	134,655		$	126,598
Return on average total assets, excluding restructuring charges and special items (non-GAAP)	H/N		0.65	%		0.64	%		0.65	%		0.66	%		0.62	%		0.65	%		0.61	%
Return on average total tangible assets and return on average total tangible assets, excluding restructuring charges and special items:
Average total assets (GAAP)	N	$	135,103		$	135,521		$	133,325		$	130,671		$	128,691		$	134,655		$	126,598
Less: Average goodwill (GAAP)			6,876			6,876			6,876			6,876			6,876			6,876			6,876
Less: Average other intangibles (GAAP)			4			5			5			6			6			5			7
Add: Average deferred tax liabilities related to goodwill (GAAP)			453			437			422			403			384			438			368
Average tangible assets (non-GAAP)	O	$	128,676		$	129,077		$	126,866		$	124,192		$	122,193		$	128,212		$	120,083
Return on average total tangible assets (non-GAAP)	G/O		0.68	%		0.59	%		0.67	%		0.63	%		0.61	%		0.65	%		0.74	%
Return on average total tangible assets, excluding restructuring charges and special items (non-GAAP)	H/O		0.68	%		0.67	%		0.69	%		0.69	%		0.66	%		0.68	%		0.64	%
		QUARTERLY TRENDS															FOR THE NINE MONTHS ENDED SEPTEMBER 30
		3Q15			2Q15			1Q15			4Q14			3Q14				2015			2014
Efficiency ratio and efficiency ratio, excluding restructuring charges and special items:
Net interest income (GAAP)		$	856		$	840		$	836		$	840		$	820		$	2,532		$	2,461
Add: Noninterest income (GAAP)			353			360			347			339			341			1,060			1,339
Total revenue (GAAP)	C	$	1,209		$	1,200		$	1,183		$	1,179		$	1,161		$	3,592		$	3,800
Efficiency ratio (non-GAAP)	E/C		66.02	%		70.02	%		68.49	%		69.88	%		69.84	%		68.17	%		67.58	%
Efficiency ratio, excluding restructuring charges and special items (non-GAAP)	F/D		66.02	%		66.70	%		67.65	%		67.11	%		68.02	%		66.78	%		69.23	%
Tangible book value per common share:
Common shares - at end of period (GAAP)	P		527,636,510			537,149,717			547,490,812			545,884,519			559,998,324			527,636,510			559,998,324
Stockholders' equity (GAAP)		$	19,353		$	19,339		$	19,564		$	19,268		$	19,383		$	19,353		$	19,383
Less: Goodwill (GAAP)			6,876			6,876			6,876			6,876			6,876			6,876			6,876
Less: Other intangible assets (GAAP)			3			4			5			6			6			3			6
Add: Deferred tax liabilities related to goodwill (GAAP)			465			450			434			420			399			465			399
Tangible common equity (non-GAAP)	Q	$	12,939		$	12,909		$	13,117		$	12,806		$	12,900		$	12,939		$	12,900
Tangible book value per common share (non-GAAP)	Q/P	$	24.52		$	24.03		$	23.96		$	23.46		$	23.04		$	24.52		$	23.04
Net income per average common share - basic and diluted, excluding restructuring charges and special items:
Average common shares outstanding - basic (GAAP)	R		530,985,255			537,729,248			546,291,363			546,810,009			559,998,324			538,279,222			559,998,324
Average common shares outstanding - diluted (GAAP)	S		533,398,158			539,909,366			549,798,717			550,676,298			560,243,747			540,926,361			560,081,031
Net income available to common stockholders (GAAP)	I	$	213		$	190		$	209		$	197		$	189		$	612		$	668
Net income per average common share - basic (GAAP)	I/R		0.40			0.35			0.38			0.36			0.34			1.14			1.19
Net income per average common share - diluted (GAAP)	I/S		0.40			0.35			0.38			0.36			0.34			1.13			1.19
Net income available to common stockholders, excluding restructuring charges and special items (non-GAAP)	J		213			215			215			217			202			643			573
Net income per average common share - basic, excluding restructuring charges and special items (non-GAAP)	J/R		0.40			0.40			0.39			0.40			0.36			1.20			1.02
Net income per average common share - diluted, excluding restructuring charges and special items (non-GAAP)	J/S		0.40			0.40			0.39			0.39			0.36			1.19			1.02
Pro forma Basel III fully phased-in common equity tier 1 capital ratio^1:
Common equity tier 1 (regulatory)		$	13,200		$	13,270		$	13,360		$	13,173		$	13,330
Less: Change in DTA and other threshold deductions (GAAP)			2			3			3			(6	)		(5	)
Pro forma Basel III fully phased-in common equity tier 1 (non-GAAP)	T	$	13,198		$	13,267		$	13,357		$	13,179		$	13,335
Risk-weighted assets (regulatory general risk weight approach)		$	112,277		$	112,131		$	109,786		$	105,964		$	103,207
Add: Net change in credit and other risk-weighted assets (regulatory)			243			247			242			2,882			3,207
Basel III standardized approach risk-weighted assets (non-GAAP)	U	$	112,520		$	112,378		$	110,028		$	108,846		$	106,414
Pro forma Basel III fully phased-in common equity tier 1 capital ratio (non-GAAP)^1	T/U		11.7	%		11.8	%		12.1	%		12.1	%		12.5	%
Salaries and employee benefits, excluding restructuring charges and special items:
Salaries and employee benefits (GAAP)	V	$	404		$	411		$	419		$	397		$	409		$	1,234		$	1,281
Less: Restructuring charges and special items			—			6			(1	)		1			—			5			43
Salaries and employee benefits, excluding restructuring charges and special items (non-GAAP)	W	$	404		$	405		$	420		$	396		$	409		$	1,229		$	1,238
^1 Periods prior to 1Q15 reported on a Basel I basis. Basel III ratios assume certain definitions impacting qualifying Basel III capital, which otherwise will phase in through 2018, are fully phased-in. Ratios also reflect the required US Standardized methodology for calculating RWAs, effective January 1, 2015.
		QUARTERLY TRENDS															FOR THE NINE MONTHS ENDED SEPTEMBER 30
		3Q15			2Q15			1Q15			4Q14			3Q14				2015			2014
Outside services, excluding restructuring charges and special items:
Outside services (GAAP)	X	$	89		$	99		$	79		$	106		$	106		$	267		$	314
Less: Restructuring charges and special items			—			16			8			18			19			24			60
Outside services, excluding restructuring charges and special items (non-GAAP)	Y	$	89		$	83		$	71		$	88		$	87		$	243		$	254
Occupancy, excluding restructuring charges and special items:
Occupancy (GAAP)	X	$	75		$	90		$	80		$	81		$	77		$	245		$	245
Less: Restructuring charges and special items			—			15			2			5			2			17			11
Occupancy, excluding restructuring charges and special items (non-GAAP)	AA	$	75		$	75		$	78		$	76		$	75		$	228		$	234
Equipment expense, excluding restructuring charges and special items:
Equipment expense (GAAP)	BB	$	62		$	65		$	63		$	63		$	58		$	190		$	187
Less: Restructuring charges and special items			—			—			1			1			—			1			3
Equipment expense, excluding restructuring charges and special items (non-GAAP)	CC	$	62		$	65		$	62		$	62		$	58		$	189		$	184
Amortization of software, excluding restructuring charges and special items:
Amortization of software	DD	$	35		$	37		$	36		$	43		$	38		$	108		$	102
Less: Restructuring charges and special items			—			—			—			6			—			—			—
Amortization of software, excluding restructuring charges and special items (non-GAAP)	EE	$	35		$	37		$	36		$	37		$	38		$	108		$	102
Other operating expense, excluding restructuring charges and special items:
Other operating expense (GAAP)	FF	$	133		$	139		$	133		$	134		$	122		$	405		$	439
Less: Restructuring charges and special items			—			3			—			2			—			3			19
Other operating expense, excluding restructuring charges and special items (non-GAAP)	GG	$	133		$	136		$	133		$	132		$	122		$	402		$	420
Pre-provision profit, excluding restructuring charges and special items:
Total revenue, excluding restructuring charges and special items (non-GAAP)	D	$	1,209		$	1,200		$	1,183		$	1,179		$	1,161		$	3,592		$	3,512
Less: Noninterest expense, excluding restructuring charges and special items (non-GAAP)	F		798			801			800			791			789			2,399			2,432
Pre-provision profit, excluding restructuring charges and special items (non-GAAP)	HH	$	411		$	399		$	383		$	388		$	372		$	1,193		$	1,080
Income before income tax expense (benefit), excluding restructuring charges and special items:
Income before income tax expense (GAAP)	II	$	335		$	282		$	315		$	283		$	274		$	932		$	985
Less: Income before income tax expense (benefit) related to restructuring charges and special items (GAAP)			—			(40	)		(10	)		(33	)		(21	)		(50	)		152
Income before income tax expense, excluding restructuring charges and special items (non-GAAP)	JJ	$	335		$	322		$	325		$	316		$	295		$	982		$	833
Income tax expense, excluding restructuring charges and special items:
Income tax expense (GAAP)	KK	$	115		$	92		$	106		$	86		$	85		$	313		$	317
Less: Income tax (benefit) related to restructuring charges and special items (GAAP)			—			(15	)		(4	)		(13	)		(8	)		(19	)		57
Income tax expense, excluding restructuring charges and special items (non-GAAP)	LL	$	115		$	107		$	110		$	99		$	93		$	332		$	260
Restructuring charges and special expense items include:
Restructuring charges		$	0		$	25		$	1		$	10		$	1		$	26		$	104
Special items			0			15			9			23			20			24			32
Restructuring charges and special expense items	MM	$	0		$	40		$	10		$	33		$	21		$	50		$	136
		QUARTERLY TRENDS															3Q15 v 2Q15			3Q15 v 3Q14
		3Q15			2Q15			1Q15			4Q14			3Q14				% Change			% Change
Operating leverage, excluding restructuring charges and special items:
Total revenue, excluding restructuring charges and special items (non-GAAP)	D	$	1,209		$	1,200								$	1,161			0.8	%		4.1	%
Less: Noninterest expense, excluding restructuring charges and special items (non-GAAP)	F	$	798		$	801								$	789			(0.4	)%		1.1	%
Operating leverage, excluding restructuring charges and special items: (non-GAAP)	NN																	1.1	%		3.0	%

NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS - SEGMENTS (dollars in millions)
		THREE MONTHS ENDED SEPT 30,													THREE MONTHS ENDED JUNE 30,
		2015													2015
		Consumer Banking			Commercial Banking			Other			Consolidated				Consumer Banking			Commercial Banking			Other			Consolidated
Net income (loss) (GAAP)	A		68			145			7			220				66			135			(11	)		190
Less: Preferred stock dividends			—			—			7			7				—			—			—			—
Net income available to common stockholders	B	$	68		$	145		$	—		$	213			$	66		$	135			($11	)	$	190
Return on average tangible common equity
Average common equity (GAAP)	C	$	4,791		$	4,722		$	9,748		$	19,261			$	4,681		$	4,625		$	10,085		$	19,391
Less: Average goodwill (GAAP)			—			—			6,876			6,876				—			—			6,876			6,876
Average other intangibles (GAAP)			—			—			4			4				—			—			5			5
Add: Average deferred tax liabilities related to goodwill (GAAP)			—			—			453			453				—			—			437			437
Average tangible common equity (non-GAAP)	D	$	4,791		$	4,722		$	3,321		$	12,834			$	4,681		$	4,625		$	3,641		$	12,947
Return on average tangible common equity (non-GAAP)	B/D		5.67	%		12.24	%		NM			6.60	%			5.66	%		11.69	%		NM			5.90	%
Return on average total tangible assets
Average total assets (GAAP)	E	$	53,206		$	43,113		$	38,784		$	135,103			$	52,489		$	42,617		$	40,415		$	135,521
Less: Average goodwill (GAAP)			—			—			6,876			6,876				—			—			6,876			6,876
Average other intangibles (GAAP)			—			—			4			4				—			—			5			5
Add: Average deferred tax liabilities related to goodwill (GAAP)			—			—			453			453				—			—			437			437
Average tangible assets (non-GAAP)	F	$	53,206		$	43,113		$	32,357		$	128,676			$	52,489		$	42,617		$	33,971		$	129,077
Return on average total tangible assets (non-GAAP)	A/F		0.51	%		1.34	%		NM			0.68	%			0.51	%		1.27	%		NM			0.59	%
Efficiency ratio
Noninterest expense (GAAP)	G	$	623		$	175		$	—		$	798			$	613		$	181		$	47		$	841
Net interest income (GAAP)			556			299			1			856				544			286			10			840
Noninterest income (GAAP)			235			100			18			353				230			108			22			360
Total revenue	H	$	791		$	399		$	19		$	1,209			$	774		$	394		$	32		$	1,200
Efficiency ratio (non-GAAP)	G/H		78.72	%		43.75	%		NM			66.02	%			79.25	%		46.07	%		NM			70.02	%
		THREE MONTHS ENDED MAR 31,													THREE MONTHS ENDED DEC 31,
		2015													2014
		Consumer Banking			Commercial Banking			Other			Consolidated				Consumer Banking			Commercial Banking			Other			Consolidated
Net income (loss) (GAAP)	A		61			147			1			209		#	$	52		$	140		$	5		$	197
Less: Preferred stock dividends			—			—			—			—				—			—			—			—
Net income available to common stockholders	B	$	61		$	147		$	1		$	209			$	52		$	140		$	5		$	197
Return on average tangible common equity
Average common equity (GAAP)	C	$	4,649		$	4,526		$	10,232		$	19,407			$	4,756		$	4,334		$	10,119		$	19,209
Less: Average goodwill (GAAP)			—			—			6,876			6,876				—			—			6,876			6,876
Average other intangibles (GAAP)			—			—			5			5				—			—			6			6
Add: Average deferred tax liabilities related to goodwill (GAAP)			—			—			422			422				—			—			403			403
Average tangible common equity (non-GAAP)	D	$	4,649		$	4,526		$	3,773		$	12,948			$	4,756		$	4,334		$	3,640		$	12,730
Return on average tangible common equity (non-GAAP)	B/D		5.30	%		13.15	%		NM			6.53	%			4.30	%		12.76	%		NM			6.12	%
Return on average total tangible assets
Average total assets (GAAP)	E	$	51,602		$	41,606		$	40,117		$	133,325			$	50,546		$	40,061		$	40,064		$	130,671
Less: Average goodwill (GAAP)			—			—			6,876			6,876				—			—			6,876			6,876
Average other intangibles (GAAP)			—			—			5			5				—			—			6			6
Add: Average deferred tax liabilities related to goodwill (GAAP)			—			—			422			422				—			—			403			403
Average tangible assets (non-GAAP)	F	$	51,602		$	41,606		$	33,658		$	126,866			$	50,546		$	40,061		$	33,585		$	124,192
Return on average total tangible assets (non-GAAP)	A/F		0.48	%		1.43	%		NM			0.67	%			0.40	%		1.38	%		NM			0.63	%
Efficiency ratio
Noninterest expense (GAAP)	G	$	596		$	173		$	41		$	810			$	611		$	180		$	33		$	824
Net interest income (GAAP)			533			276			27			836				536			283			21			840
Noninterest income (GAAP)			219			100			28			347				218			111			10			339
Total revenue	H	$	752		$	376		$	55		$	1,183			$	754		$	394		$	31		$	1,179
Efficiency ratio (non-GAAP)	G/H		79.25	%		46.01	%		NM			68.49	%			81.09	%		45.48	%		NM			69.88	%
		THREE MONTHS ENDED SEPT 30,
		2014
		Consumer Banking			Commercial Banking			Other			Consolidated
Net income (loss) (GAAP)	A	$	54		$	139			($4	)	$	189
Less: Preferred stock dividends			—			—			—			—
Net income available to common stockholders	B	$	54		$	139			($4	)	$	189
Return on average tangible common equity
Average common equity (GAAP)	C	$	4,685		$	4,205		$	10,521		$	19,411
Less: Average goodwill (GAAP)			—			—			6,876			6,876
Average other intangibles (GAAP)			—			—			6			6
Add: Average deferred tax liabilities related to goodwill (GAAP)			—			—			384			384
Average tangible common equity (non-GAAP)	D	$	4,685		$	4,205		$	4,023		$	12,913
Return on average tangible common equity (non-GAAP)	B/D		4.57	%		13.10	%		NM			5.81	%
Return on average total tangible assets
Average total assets (GAAP)	E	$	49,012		$	38,854		$	40,825		$	128,691
Less: Average goodwill (GAAP)			—			—			6,876			6,876
Average other intangibles (GAAP)			—			—			6			6
Add: Average deferred tax liabilities related to goodwill (GAAP)			—			—			384			384
Average tangible assets (non-GAAP)	F	$	49,012		$	38,854		$	34,327		$	122,193
Return on average total tangible assets (non-GAAP)	A/F		0.44	%		1.42	%		NM			0.61	%
Efficiency ratio
Noninterest expense (GAAP)	G	$	609		$	162		$	39		$	810
Net interest income (GAAP)			532			270			18			820
Noninterest income (GAAP)			226			104			11			341
Total revenue	H	$	758		$	374		$	29		$	1,161
Efficiency ratio (non-GAAP)	G/H		80.42	%		43.35	%		NM			69.84	%

NON-GAAP MEASURES - SEGMENTS (CONTINUED) (dollars in millions)
		FOR THE NINE MONTHS ENDED SEPTEMBER 30,
		2015												2014
		Consumer Banking			Commercial Banking			Other			Consolidated			Consumer Banking			Commercial Banking			Other		Consolidated
Net income (loss) (GAAP)	A	$	195		$	427			($3	)	$	619		$	130		$	421		$	117	$	668
Less: Preferred stock dividends			—			—			7			7			—			—			—		—
Net income available to common stockholders	B	$	195		$	427			($10	)	$	612		$	130		$	421		$	117	$	668
Return on average tangible common equity
Average common equity (GAAP)	C	$	4,708		$	4,625		$	10,019		$	19,352		$	4,635		$	4,120		$	10,708	$	19,463
Less: Average goodwill (GAAP)			—			—			6,876			6,876			—			—			6,876		6,876
Average other intangibles (GAAP)			—			—			5			5			—			—			7		7
Add: Average deferred tax liabilities related to goodwill (GAAP)			—			—			438			438			—			—			368		368
Average tangible common equity (non-GAAP)	D	$	4,708		$	4,625		$	3,576		$	12,909		$	4,635		$	4,120		$	4,193	$	12,948
Return on average tangible common equity (non-GAAP)	B/D		5.55	%		12.35	%		NM			6.34	%		3.76	%		13.67	%		NM		6.90	%
Return on average total tangible assets
Average total assets (GAAP)	E	$	52,438		$	42,451		$	39,766		$	134,655		$	48,398		$	37,951		$	40,249	$	126,598
Less: Average goodwill (GAAP)			—			—			6,876			6,876			—			—			6,876		6,876
Average other intangibles (GAAP)			—			—			5			5			—			—			7		7
Add: Average deferred tax liabilities related to goodwill (GAAP)			—			—			438			438			—			—			368		368
Average tangible assets (non-GAAP)	F	$	52,438		$	42,451		$	33,323		$	128,212		$	48,398		$	37,951		$	33,734	$	120,083
Return on average total tangible assets (non-GAAP)	A/F		0.50	%		1.35	%		NM			0.65	%		0.36	%		1.48	%		NM		0.74	%
Efficiency ratio
Noninterest expense (GAAP)	G	$	1,832		$	529		$	88		$	2,449		$	1,902		$	472		$	194	$	2,568
Net interest income (GAAP)			1,633			861			38			2,532			1,615			790			56		2,461
Noninterest income (GAAP)			684			308			68			1,060			681			318			340		1,339
Total revenue	H	$	2,317		$	1,169		$	106		$	3,592		$	2,296		$	1,108		$	396	$	3,800
Efficiency ratio (non-GAAP)	G/H		79.07	%		45.26	%		NM			68.17	%		82.82	%		42.62	%		NM		67.58	%

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 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. In addition, the timing and manner of the sale of RBS’s remaining ownership of our common stock remains uncertain, and we have no control over the manner in which RBS may seek to divest such remaining shares. Any such sale would impact the price of our shares of common stock.

More information about factors that could cause actual results to differ materially from those described in the forward-looking statements can be found under “Risk Factors” in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2014, filed with the United States Securities and Exchange Commission on March 3, 2015.

Note: Percentage changes, per share amounts, and ratios presented in this document are calculated using whole dollars.

CFG-IR