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Analyst Blog

On Nov 14, 2016, we issued an updated research report on Citizens Financial Group, Inc. (CFG - Free Report) . The Providence, RI-based company’s latest quarterly results depicted strength in several areas, including growing loans and deposits and improving efficiency.

Driven by higher net interest income as well as fee income, Citizens Financial’s third-quarter 2016 earnings beat the Zacks Consensus Estimate and improved year over year as well.

Non-interest expenses were up 9% year over year to $867 million in third-quarter 2016. However, efficiency ratio declined to 63% from 66% in the prior-year quarter. Generally, lower ratio is indicative of the improved efficiency of the bank.

Further, Citizens Financial remains focused on implementation of TOP II and TOP III efficiency initiatives, which are expected to boost overall performance. Notably, its TOP II initiatives are anticipated to result in a pre-tax benefit of $95–$100 million in 2016.

As of Sep 30, 2016, period end total loan and lease balances increased 8% year over year to $105.5 billion, reflecting growth in commercial and retail loan portfolios. As of the same date, deposits rose 6% from the prior-year quarter to $108.3 billion. Notably, the company continues to benefit from its increasing non-interest bearing deposits that provide a low-cost funding base.

Shares of the company have gained more than 20% since the release of its third-quarter 2016 results on Oct 21.

CITIZENS FIN GP Price

The Dec 2015 rate hike had moderately expanded the company’s net interest rate margin (NIM) during the first nine months of 2016. However, the slow rise in interest rates provides little opportunity for significant expansion in margin.

Over the past 30 days, the Zacks Consensus Estimate has moved north 2.2% to $1.90 for 2016 and 1.9% to $2.10 per share for 2017.

Citizens Financial currently carries a Zacks Rank #2 (Buy).

Other Stocks to Consider

Farmers Capital Bank Corporation (FFKT - Free Report) : The Zacks Consensus Estimate for 2016 has moved up 8.3% to $2.35 per share for 2016 and 7.2% to $2.08 for 2017, over the last 30 days. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

LegacyTexas Financial Group Inc. (LTXB - Free Report) : Over the last 30 days, the Zacks Consensus Estimate for the current year has increased 7.2% to $2.09 per share and advanced 6.5% to $2.31 for 2017. The company carries a Zacks Rank #1.

HomeStreet, Inc. (HMST - Free Report) : This Zacks Rank #1 stock witnessed a 17.3% increase in the Zacks Consensus Estimate to $2.91 per share for 2016. Also, it moved up 7.1% to $2.88 per share for 2017.

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