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Citizens Financial (CFG) to Fortify Balance Sheet, Liquidity
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Citizens Financial Group, Inc. (CFG - Free Report) at the Barclays Global Financial Services Conference stated its balance sheet optimization plans to strengthen its capital and liquidity position. Accordingly, the company plans to reduce its non-core loan portfolio by $9.2 billion from $13.7 billion as of second-quarter 2023 end.
Management seems in no rush to sell a non-core portfolio and intends to avoid recording losses related to the sales. The reduction is likely to take place by 2025 end.
CFG expects to utilize the proceeds from asset sales to pay off its high-cost funding and support organic loan growth that will exceed non-core loan portfolio run-off. Further, management expects to ring-fence its collateralized borrowings to fund auto loans.
The bank has been focusing on loan growth through the expansion of its private banking business. In June 2023, the company added 50 senior bankers and 100 support staff in Boston, Florida, New York and San Francisco. These new teams will operate under Citizens Private Bank. It expects to launch the brand by 2023 end.
Citizens Financial aims to strengthen its liquidity position by increasing structural funding and reducing borrowings from the Federal Home Loan Banking system. Notably, its high-quality deposits offer robust liquidity. Also, the company expects to improve its cash and securities as a percentage of interest-earning assets to around 25% from 22% as of second-quarter 2023 end.
Since CFG is awaiting new rules for requirements regarding liquidity coverage ratio (LCR), it is proactively bolstering its LCR.
The company is expecting to meet its proposed long-term debt requirement by issuance over a multiple-year phase-in period. Based on second-quarter 2023 levels, an incremental eligible long-term debt of approximately $4.3 billion would be required to achieve risk-weighted assets of 6%.
An annualized impact of 4-5 cents per share is estimated due to incremental issuance on second-quarter pro-forma results. This equates to a 1-2% impact on the company’s earnings per share over the phase-in period.
Over the past six months, shares of this Zacks Rank #3 (Hold) company have lost 9.9% compared with the industry’s decline of 1.4%.
Image Source: Zacks Investment Research
Finance Stocks Worth a Look
A couple of better-ranked stocks from the same industry are New York Community Bancorp, Inc. (NYCB - Free Report) and Flushing Financial Corporation (FFIC - Free Report) .
NYCB’s current-year earnings estimate has been revised 14.5% upward over the past 60 days. NYCB’s shares have gained 8.1% over the past three months. The stock currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for FFIC’s current-year earnings has been revised 3.5% upward over the past 30 days. Over the past three months, FFIC’s share price has decreased 10%. The stock currently carries a Zacks Rank #2 (Buy).
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Citizens Financial (CFG) to Fortify Balance Sheet, Liquidity
Citizens Financial Group, Inc. (CFG - Free Report) at the Barclays Global Financial Services Conference stated its balance sheet optimization plans to strengthen its capital and liquidity position. Accordingly, the company plans to reduce its non-core loan portfolio by $9.2 billion from $13.7 billion as of second-quarter 2023 end.
Management seems in no rush to sell a non-core portfolio and intends to avoid recording losses related to the sales. The reduction is likely to take place by 2025 end.
CFG expects to utilize the proceeds from asset sales to pay off its high-cost funding and support organic loan growth that will exceed non-core loan portfolio run-off. Further, management expects to ring-fence its collateralized borrowings to fund auto loans.
The bank has been focusing on loan growth through the expansion of its private banking business. In June 2023, the company added 50 senior bankers and 100 support staff in Boston, Florida, New York and San Francisco. These new teams will operate under Citizens Private Bank. It expects to launch the brand by 2023 end.
Citizens Financial aims to strengthen its liquidity position by increasing structural funding and reducing borrowings from the Federal Home Loan Banking system. Notably, its high-quality deposits offer robust liquidity. Also, the company expects to improve its cash and securities as a percentage of interest-earning assets to around 25% from 22% as of second-quarter 2023 end.
Since CFG is awaiting new rules for requirements regarding liquidity coverage ratio (LCR), it is proactively bolstering its LCR.
The company is expecting to meet its proposed long-term debt requirement by issuance over a multiple-year phase-in period. Based on second-quarter 2023 levels, an incremental eligible long-term debt of approximately $4.3 billion would be required to achieve risk-weighted assets of 6%.
An annualized impact of 4-5 cents per share is estimated due to incremental issuance on second-quarter pro-forma results. This equates to a 1-2% impact on the company’s earnings per share over the phase-in period.
Over the past six months, shares of this Zacks Rank #3 (Hold) company have lost 9.9% compared with the industry’s decline of 1.4%.
Image Source: Zacks Investment Research
Finance Stocks Worth a Look
A couple of better-ranked stocks from the same industry are New York Community Bancorp, Inc. (NYCB - Free Report) and Flushing Financial Corporation (FFIC - Free Report) .
NYCB’s current-year earnings estimate has been revised 14.5% upward over the past 60 days. NYCB’s shares have gained 8.1% over the past three months. The stock currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for FFIC’s current-year earnings has been revised 3.5% upward over the past 30 days. Over the past three months, FFIC’s share price has decreased 10%. The stock currently carries a Zacks Rank #2 (Buy).