Citizens reports $1.7B profit for 2018

PROVIDENCE – Citizens Financial Group Inc., the holding company of Citizens Bank, turned a $1.72 billion profit last year, an increase of $69 million or 4.2 percent from 2017, the company reported Friday.

As a result, earnings per diluted share rose to $3.52 in 2018, compared with $3.25 per share in 2017.

Revenue grew to $6.1 billion last year, up $421 million or 7.4 percent from 2017.

The increase in Citizens revenue was driven by a 9 percent increase in net interest income from $4.2 billion to $4.5 billion, the difference between interest earned on assets such as all loans, mortgages, and securities, and interest paid out on customer deposits. That included average loan growth of 4 percent.

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Revenue growth also was driven by a 5 percent increase in non-interest income, from $1.5 billion to $1.6 billion – primarily derived from customer fees and service charges. Much of the increase came from the acquisition in August of Tennessee-based Franklin American Mortgage Co., as well as strength in foreign exchange and interest-rate products, trust and investment service fees and card fees, partly offset by lower capital markets fees and mortgage fees, Citizens said.

Non-interest expense, largely composed of employee salaries and benefits, grew to $3.6 million last year, an increase of 4 percent from 2017. The increase was driven by a $59 million impact from the Franklin acquisition, Citizens said.

Year-end assets stood at $160.5 billion, up $8.2 billion or 5 percent from a year earlier, driven by a $6.6 billion increase in loans and leases. That included a $1.5 billion increase tied to the Franklin acquisition. The impact of the $511 million Franklin deal on earnings was $62 million last year, Citizens said.

Year-end deposits stood at $119.6 billion, up $4.5 billion or 4 percent from a year earlier. That was driven by growth in term deposits, savings, checking with interest, and demand deposits, partially offset by a decrease in money market accounts, Citizens said.

Net interest margin, the difference between interest income generated by the bank and interest paid to lenders, was 3.19 percent in 2018, up 17 basis points from 3.02 percent in 2017, Citizens said.

In the fourth quarter, profit was $465 million, a decline from $666 million in the fourth quarter of 2017. However, Citizens said fourth quarter 2017 profit was boosted by a $317 million “after-tax” benefit.

That included a benefit from the passage of tax claw changes passed in 2017, which reduced the corporate tax rate by about 40 percent. When excluding the tax benefit, fourth quarter profit rose 32 percent, led by revenue growth of 9 percent, Citizens said.

Non-interest expenses increased to $951 million in the fourth quarter, up 6 percent from $910 million a year earlier, driven by the impact of the Franklin acquisition, Citizens said. That included employee salaries and benefits totaling $483 million in the fourth quarter, an increase of 7 percent from a year earlier.

“We are pleased to end the year with another quarter of strong results for Citizens, continuing our track record of consistent execution and delivering against our goals,” Citizens Chairman and CEO Bruce Van Saun said in a statement.

“We are executing well and head into 2019 with good momentum as evidenced by our continued strong operating leverage, balance sheet growth, expanding customer base and broadening our capabilities, including our recent acquisition of Clarfeld Financial Advisors,” he said.

Citizens this month completed the acquisition of Clarfeld, a New York wealth management firm with a reported $7.5 billion in assets under management. Terms were not disclosed.

Scott Blake is a PBN staff writer. Email him at