Citizens Bank Ipo Prospectus

Citizens bank ipo prospectus

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Filed Pursuant to Rule 424(b)(4)
Registration Statement No. 333-202708







The selling stockholder is offering 135,000,000 shares of common stock of Citizens Financial Group, Inc. We will not receive any of the proceeds from the sale of shares of common stock by the selling stockholder.

Our common stock is listed on the New York Stock Exchange, or NYSE, under the symbol “CFG.” On March 25, 2015, the closing sales price of our common stock as reported on the NYSE was $24.00 per share.



Investing in our common stock involves risks. See “Risk Factors” beginning on page 19.








Price to Public




Proceeds to

Per Share

    $23.75    $0.2850    $23.4650


    $3,206,250,000    $38,475,000    $3,167,775,000


(1)The selling stockholder has also agreed to reimburse the underwriters for certain expenses related to review and qualification of this offering by the Financial Industry Regulatory Authority, Inc.

See “Underwriting.”

The selling stockholder has granted the underwriters the right to purchase an additional 20,250,000 shares of common stock.

The underwriters expect to deliver the shares of common stock to purchasers on March 30, 2015.

Neither the Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of these securities, or determined if this prospectus is truthful or complete.

Retirement and Investing

Any representation to the contrary is a criminal offense.



Joint Global Coordinators


Morgan Stanley Goldman, Sachs & Co.



Joint Book-Running Managers


J.P. Morgan Citigroup


Credit Suisse


Deutsche Bank Securities



  UBS Investment Bank  Wells Fargo Securities








A Stifel Company


RBC Capital Markets  Sandler O’Neill + Partners, L.P.



Prospectus dated March 25, 2015.

Citizens Financial CEO on Yield Curve, Student Loans, Digital Banking

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In this prospectus, “we,” “us,” “our” and “CFG” refer to Citizens Financial Group, Inc.

together with its consolidated subsidiaries, “CBNA” means Citizens Bank, N.A., “CBPA” means Citizens Bank of Pennsylvania, “our banking subsidiaries” means CBNA and CBPA, “RBS” means The Royal Bank of Scotland Group plc and the “RBS Group” means RBS together with its subsidiaries (other than CFG).

Unless otherwise noted, when we refer to our “peers” or “peer regional banks,” we refer to BB&T, Comerica, Fifth Third Bancorp, KeyCorp, M&T Bank Corporation, The PNC Financial Services Group, Inc., SunTrust Banks, Inc., Regions Financial, and U.S.


Citizens Financial IPO Prices at $21.50 a Share, Below Range

When we refer to our approximately 17,700 employees, we include the full-time equivalent of our approximately 17,070 full-time employees, 625 part-time employees, including employees on leave, and 615 positions filled by temporary employees.

We and the selling stockholder have not authorized anyone to provide any information other than that contained or incorporated by reference in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you.

The selling stockholder is offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where such offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the common stock.

Our business, financial condition, results of operations and prospects may have changed since that date.

Citizens Bank Jumps 7.4% in IPO Carveout



We have proprietary rights to trademarks, trade names and service marks appearing in this prospectus that are important to our business. This prospectus also contains additional trade names, trademarks and service marks belonging to the RBS Group. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus are without the ® and ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent

under applicable law, our rights or the rights of the applicable licensors to these trademarks, service



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marks and trade names.

All trademarks, service marks and trade names appearing in this prospectus are the property of their respective owners.

Within this prospectus, we reference certain industry and sector information and statistics. We have obtained this information and statistics from various independent third-party sources, including independent industry publications, reports by market research firms and other independent sources.

Nothing in the data used or derived from third-party sources should be construed as advice. The SNL Financial LC, or SNL Financial, data included in this prospectus excludes all non-retail bank holding companies.

The scope of “non-retail banks” is subject to the discretion of SNL Financial, but typically includes: industrial bank and non-depository trust charters, institutions with over 20% brokered deposits (of total deposits), institutions with over 20% credit card loans (of total loans), institutions deemed not to broadly participate in the banking services market and other nonretail competitor banks.

Some data and other information are also based on our good faith estimates, which are derived from our review of internal surveys and independent sources.

We believe these external sources and estimates are reliable, but have not independently verified them.



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



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This summary highlights selected information contained elsewhere in this prospectus.

This summary may not contain all of the information that you should consider before investing in our common stock. Therefore, you should read the entire prospectus carefully, including the section entitled “Risk Factors” in this prospectus and the documents incorporated by reference in this prospectus as well the audited consolidated financial statements and related notes incorporated by reference in this prospectus, before making an investment decision to invest in our common stock.

Company Overview

We are the 13th largest retail bank holding company in the United States, according to SNL Financial, with $132.9 billion of total assets as of December 31, 2014.

Headquartered in Providence, Rhode Island, we deliver a comprehensive range of retail and commercial banking products and services to more than five million individuals, institutions and companies.

Our approximately 17,700 employees strive to meet the financial needs of customers and prospects through approximately 1,200 branches operating in an 11-state footprint across the New England, Mid-Atlantic and Midwest regions and through our online, telephone and mobile banking platforms. We also maintain over 100 retail and commercial non-branch offices located both in our banking footprint and in eleven other states and the District of Columbia.

As of December 31, 2014, our 11-state branch banking footprint contains approximately 29.9 million households and 3.1 million businesses according to SNL Financial, and approximately 75% of our loans were to customers located in our footprint.

As of December 31, 2014, we had loans and leases and loans held for sale of $93.7 billion, deposits of $95.7 billion and stockholders’ equity of $19.3 billion, and we generated revenues of $5.0 billion for the year ended December 31, 2014.

We operate our business through two operating segments: Consumer Banking and Commercial Banking. As of December 31, 2014, the contributions of Consumer Banking and Commercial Banking to the loans in our operating segments were approximately 56% and 44%, respectively.

Consumer Banking serves retail customers and small businesses with annual revenues of up to $25 million. Consumer Banking products and services include deposit products, mortgage and home equity lending, student loans, auto financing, credit cards, business loans, wealth management and investment services.

Commercial Banking primarily targets companies and institutions with annual revenues of $25 million to $2.5 billion and strives to be the lead bank for its clients.

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Commercial Banking offers a broad complement of financial products and solutions, including lending and leasing, trade financing, deposit and treasury management, foreign exchange and interest rate risk management, corporate finance and debt and equity capital markets capabilities.


The following table presents certain financial information for our segments as of and for the year ended December 31, 2014:


   As of and for the Year Ended December 31, 2014 
   Other(1)    Consolidated 
   (dollars in millions) 

Total loans and leases and loans held for sale (average)

  $47,745    $37,683    $4,316    $89,744  

Total deposits and deposits held for sale (average)

   68,214     19,838     4,513     92,565  

Net interest income

   2,151     1,073     77     3,301  

Noninterest income

   899     429     350     1,678  













Total revenue

$3,050  $1,502  $427  $4,979  

Net Income

$182  $561  $122  $865  


(1) Includes 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, revenues, provision for credit losses and expenses not attributed to our Consumer Banking or Commercial Banking segments.

For a description of non-core assets, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Analysis of Financial Condition” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (the “2014 Form 10-K”) incorporated by reference in this prospectus.

Citizens bank ipo prospectus

Our Competitive Strengths

Our long operating history, through a range of challenging economic cycles, forms the basis for our competitive strengths. From our community bank roots, we bring a commitment to strong customer relationships, local service and an active involvement in the communities we serve. Our growth enabled us to develop significant scale in highly desirable markets and broad product capabilities.

The actions taken since the global financial crisis have resulted in a business model with solid asset quality, a stable core deposit mix and a superior capital position.

Citizens bank ipo prospectus

In particular, we believe the following strengths differentiate us from our competitors and provide a strong foundation from which to execute our strategy to deliver enhanced growth, profitability and returns.


  Significant Scale with Strong Market Penetration in Attractive Geographic Markets: We believe our market share and scale in our footprint is central to our success and growth.

With approximately 1,200 branches, approximately 3,200 ATMs, 17,700 employees, and over 100 non-branch offices as well as our online, telephone and mobile banking platforms, we serve more than five million individuals, institutions and companies.

As of June 30, 2014, we ranked second by deposit market share in the New England region,1 and we ranked in the top five in nine of our key metropolitan statistical areas (“MSAs”), including Boston, Providence, Philadelphia, Pittsburgh and Cleveland according to SNL Financial. We believe this strong market share in our core regions, which have relatively diverse economies and affluent demographics, will help us achieve our long-term growth objectives.

Citizens Financial Group, Inc. files for Initial Public Offering

The following table sets forth information regarding our competitive position in our principal MSAs.


1 The New England region consists of the states of Maine, New Hampshire, Vermont, Massachusetts, Rhode Island and Connecticut.



   Deposits   Market
   (dollars in millions) 

Boston, MA

   206    $26,937     2     14.9

Philadelphia, PA

   181     14,307     5     4.4  

Providence, RI

   100     10,544     1     29.5  

Pittsburgh, PA

   128     7,505     2     8.6  

Cleveland, OH

   58     5,207     4     9.2  

Detroit, MI

   90     4,374     8     4.2  

Manchester, NH

   22     4,250     1     39.9  

Albany, NY

   25     3,139     2     13.1  

Buffalo, NY

   41     1,582     4     4.4  

Rochester, NY

   34     1,520     4     9.6  

Source: FDIC, June 2014.


 (1) Excludes “non-retail banks” as defined by SNL Financial. See “Certain Important Information.”


  Strong Customer Relationships: We focus on building strong customer relationships by delivering a consistent, high-quality level of service supported by a wide range of products and services.

We believe that we provide a distinctive customer experience characterized by offering the personal touch of a local bank with the product selection of a larger financial institution. Our Consumer Banking cross-sell efforts have improved to 5.0 products and services per retail household as of December 31, 2014 compared to 4.4 products and services as of December 31, 2010.

Tepid Reception for Regional Lender Underscores Mixed Performance of Financial Shares This Year

Additionally, the overall customer satisfaction index as measured by J.D. Power and Associates improved 6.5% in the New England region from 2013 to 2014.

Our ability to provide a unique customer experience is also evidenced by our Commercial Banking middle market team ranking among the top five in customer and lead bank penetration, with a 10% market penetration in our footprint based on Greenwich Associates’ rolling four-quarter data as of December 31, 2014.


  Stable, Low-Cost Core Deposit Base: We have a strong funding profile, with $95.7 billion of total deposits as of December 31, 2014, consisting of 27% in noninterest-bearing deposits and 73% in interest-bearing deposits.

Noninterest-bearing deposits provide a lower-cost funding base, and we grew this base to $26.1 billion at December 31, 2014, up 32% from $19.7 billion at December 31, 2010.

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For the year ended December 31, 2014, our total average cost of deposits was 0.17%, down from 0.23% for the year ended December 31, 2013, 0.40% for the year ended December 31, 2012, 0.54% for the year ended December 31, 2011 and 0.77% for the year ended December 31, 2010.



Superior Capital Position: We are among the most well capitalized large regional banks in the United States, with a Tier 1 common equity ratio of 12.4% compared to a peer average of 10.4% as of December 31, 2014 according to SNL Financial. Our peer regional banks consist of BB&T, Comerica, Fifth Third Bancorp, KeyCorp, M&T Bank Corporation, The PNC Financial Services Group, Inc., SunTrust Banks, Inc., Regions Financial and U.S.

Bancorp. Our fully phased-in pro forma Basel III Common Equity Tier 1 (“CET1”) ratio at December 31, 2014 was 12.1%. Our strong capital position provides us the financial flexibility to continue to invest in our businesses and execute our strategic growth initiatives.

Through recent capital optimization efforts, we have sought to better align our capital base with that of our bank peers by reducing our Tier 1 common equity capital and increasing other Tier 1 and Tier 2 capital levels. Most recently, we executed a capital exchange transaction with RBS Group on October 8, 2014, which involved the issuance of $334 million of Tier 2 subordinated debt and the simultaneous repurchase of 14.3 million shares of common stock owned by RBS Group.

In addition, we plan to continue our strategy of capital optimization by repurchasing an



additional $500 million to $750 million of common equity with the issuance of preferred stock, subordinated debt, or senior debt in 2015 and 2016, subject to regulatory approval and market conditions.


  Solid Asset Quality Throughout a Range of Credit Cycles: Our experienced credit risk professionals and conservative credit culture, combined with centralized processes and consistent underwriting standards across all business lines, have allowed us to maintain strong asset quality through a variety of business cycles.

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As a result, we weathered the global financial crisis better than our peers: for the two-year period ending December 31, 2009, net charge-offs averaged 1.63% of average loans compared to a peer average of 1.76% according to SNL Financial. More recently, the credit quality of our loan portfolio has continued to improve with nonperforming assets as a percentage of total assets of 0.86% at December 31, 2014 compared to 1.20% and 1.55% as of December 31, 2013 and 2012, respectively.

Net charge-offs declined substantially to 0.36% of average loans in 2014 versus 0.59% in 2013. Our allowance for loan and lease losses was 1.28% of total loans at December 31, 2014 compared with 1.42% as of December 31, 2013. We believe the high quality of our loan portfolio provides us with significant capacity to prudently seek to add more attractive, higher yielding risk-adjusted returns while still maintaining appropriate risk discipline and solid asset quality.


  Experienced Management Team Supported by a High-Performing, Talented Workforce: Our leadership team of seasoned industry professionals is supported by a highly motivated, diverse set of managers and employees committed to delivering a strong customer value proposition.

Our highly experienced and talented executive management team, whose members have more than 20 years of banking experience on average, provide strong leadership to deliver on our overall business objectives. We have recently made selective additions to our management team and added key business line leaders. Bruce Van Saun, our Chairman and CEO, has more than 30 years of financial services experience including four years as RBS Group Finance Director. Earlier in his career, Mr. Van Saun held a number of senior positions at The Bank of New York Mellon, Deutsche Bank, Wasserstein Perella Group and Kidder Peabody & Co.


  Commitment to Communities: Community involvement is one of our principal values and we strive to contribute to a better quality of life by serving the communities across our footprint through employee volunteer efforts, a foundation that funds a range of non-profit organizations and executives that provide board leadership to community organizations. These efforts contribute to a culture that seeks to promote positive employee morale and provide differentiated brand awareness in the community relative to peer banks, while also making a positive difference within the communities we serve.

Employees gave more than 59,000 volunteer hours companywide in 2014 and also served on approximately 480 community boards across our footprint. We believe our strong commitment to our communities provides a competitive advantage by strengthening customer relationships and increasing loyalty.

Business Strategy

Building on our core strengths, our objective is to be a top-performing bank that delivers well for each of our stakeholders by offering the best possible banking experience for customers.

Citizens bank ipo prospectus

We plan to achieve this by leveraging our strong customer relationships, leading market share rankings in attractive markets, customer-centric colleagues, and our high quality balance sheet.


Our strategy is designed to maximize the full potential of our business and drive sustainable growth and enhanced profitability.

As a core measure of success, our two- to three-year financial targets include a Return on Average Tangible Common Equity (“ROTCE”)2 ratio of greater than 10% and an efficiency ratio in the 60% range. Our financial targets are based on numerous assumptions including the yield curve evolving consistent with market implied forward rates as of February 28, 2014, and that macroeconomic and competitive conditions are consistent with those used in our planning assumptions.

While our strategic plan and our ROTCE target and its components are presented with numerical specificity, and we believe such targets to be reasonable, given the uncertainties surrounding our assumptions, including possible regulatory restrictions on activities we intend to pursue, there are significant risks that these assumptions may not be realized and thus our goals may not be achieved. Accordingly, our actual results may differ from these targets and the differences may be material and adverse, particularly if actual events adversely differ from one or more of our key assumptions.

We caution investors not to place undue reliance on any of these assumptions or targets. See “Special Note Regarding Forward-Looking Statements” and “Risk Factors” in this prospectus.

We intend to deliver on this by adhering to the following strategic principles:


  Offer customers a differentiated experience through the quality of our colleagues, products and services, and foster a culture around customer-centricity, commitment to excellence, leadership, teamwork and integrity.


  Build a great brand that invokes trust from customers and reinforces our value proposition of being “Simple. Clear. Personal.” for Consumer Banking customers and providing solutions-oriented “Thought Leadership” to Commercial clients.


  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.

In order to successfully execute on these principles, we have developed the following strategic priorities, each of which is underpinned by a series of initiatives as summarized below. We have made solid progress on our strategic priorities and the underlying initiatives over the past year, due primarily to the strength of our business model, management team, culture of accountability and risk management framework.


2 ROTCE is not recognized under Accounting Principles Generally Accepted in the United States of America (“GAAP”). For more information on the computation of ROTCE and other non-GAAP financial measures, see “Summary Consolidated Financial and Other Data.”


Position Consumer Banking to deliver improved capabilities and profitability: Consumer Banking offers a “Simple.

Clear. Personal.” value proposition to our customers. The focus is on building strong customer relationships along with a robust product portfolio that is designed to be simple and easy to understand while creating a fair value exchange for our customers. The following initiatives are being implemented to execute against our value proposition:


  Reenergize household growth and deepen relationships. We strive to grow and deepen existing customer relationships by delivering a differentiated customer experience.

We believe this approach will enable us to win, retain and expand customer relationships, as well as increase cross-sell and share of wallet penetration.


  Build a strong residential mortgage business. Recognizing the critical importance of the mortgage product to the customer experience and relationship, we are building out our mortgage team and platform to achieve a solid market share position and generate consistent origination volumes.


  Invest in and grow Business Banking. We have recognized that strengthening efforts in the business banking market is critical to grow profitable relationships and drive scalable growth of the franchise.


  Expand and enhance Wealth Management. We view our wealth management business as an opportunity for continued growth and as vital to deepening the customer relationship and improving fee income generation.

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  Grow our Auto business. Our auto initiative supports diversification of revenue generation outside of our traditional retail distribution channels.


  Drive growth in Education Finance. We have identified the underserved private student lending market as an attractive source of risk-adjusted revenue growth.

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We are well-positioned for growth in student lending with a unique education refinance product that serves a critical borrower need.

These initiatives have already resulted in a stronger Consumer Banking franchise highlighted by 2014 net checking account growth of over 78,000 and nearly 2.2 million checking households. The percent of new-to-bank customers with over two products within 30 days of account opening increased by 7.8 percentage points from 2013 to 30.4% in 2014.

Additionally, Consumer Banking loans and leases of $49.9 billion at December 31, 2014 grew $4.9 billion, or 11%, from December 31, 2013. Finally, the overall customer satisfaction index for Consumer Banking as measured by J.D. Power and Associates improved 6.5% in the New England region from 2013 to 2014.

Continue the momentum in Commercial Banking: We continue to see further build-out of the Commercial Banking business as critical to achieving a balanced business mix, and consequently have grown the contribution of Commercial loans to be 44% of operating segment loans (compared to 38% at year end 2010).

The initiatives below have enabled the Commercial Banking business to continue its positive momentum while building upon existing strengths to further develop the “Thought Leadership” value proposition.


  Build out mid-corporate and verticals. Since the third quarter of 2013, we have been building capabilities nationally in the mid-corporate space, which is focused on serving larger, mostly public clients with annual revenue of more than $500 million.

The geographic expansion has been selective and in markets where our established expertise and product capabilities can be relevant.


  Development of Capital Markets. We are strengthening capabilities in Capital Markets to provide comprehensive solutions to meet client needs, including the recent addition of an institutional sales capability and loan trading desk.


  Build out Treasury Solutions. We have made investments to upgrade our Treasury Solutions systems and products while also strengthening the leadership team to better meet client needs and diversify the revenue base into other noninterest income areas.


  Leveraging Franchise Finance capabilities with credibility. We are a top provider of capital to leading franchises including McDonald’s, Taco Bell, Dunkin’ Donuts, Buffalo Wild Wings, Wendy’s and Applebee’s. We are also broadening our target market to focus on regional restaurant operating companies and expanding penetration of gas station and convenience dealers.


  Core Commercial Banking growth. We continue to build on our strong core lending capabilities in Middle Market, Commercial Real Estate and Asset Finance, which has resulted in solid origination volumes.

The Commercial Banking business has continued to display solid financial results and executed well on these initiatives with loan portfolio growth of $3.7 billion, or 10%, year-over-year along with strong deposit growth as average deposits increased $2.3 billion in 2014, or 13%, compared to the average level of deposits for 2013.

In addition, we improved our league table standings in the overall national middle market bookrunner league table to eighth by number of syndicated loans for the full year 2014 according to Thomson Reuters and received a number one rank by Greenwich Associates in our Net Promoter Score3 compared to the top four competitors in our footprint based on rolling four-quarter data through December 31, 2014.

Grow the balance sheet to build scale and better leverage our cost base and infrastructure: We have a scalable operating platform that has the capacity to accommodate a significantly larger balance sheet than our current size.

Prior to the global financial crisis, we had expanded to nearly $170 billion in assets, which was then intentionally contracted in order to reposition the bank and strengthen our business profile through the runoff of non-core assets and reduced dependency on wholesale funding.

Over the past year, we have begun to grow the consolidated balance sheet again through organic growth and selective portfolio purchases:


  Total assets increased $10.7 billion to $132.9 billion at December 31, 2014, or 9%, compared to December 31, 2013;


  Loans and leases (excluding loans and leases held for sale) increased by $7.6 billion, or 9%, from December 31, 2013, reflecting a $3.8 billion increase in commercial and a $3.7 billion increase in retail loans; and


  Total deposits (excluding deposits held for sale) increased $8.8 billion, or 10%, compared with December 31, 2013, driven by growth in term deposits, checking with interest, money market and demand deposits.

Balance sheet expansion is critical to executing on our strategic priority of enhancing our return profile and efficiency by better leveraging our existing capital position, infrastructure and expense base.


3 Net Promoter Score is a customer loyalty metric, which is calculated by subtracting the percentage of customers who on a scale of 1-10 are detractors (rating 0-6) from the percentage of customers who are promoters (rating 9-10).


Develop a high-performing, customer-centric organization and culture: In the midst of an evolving and challenging business environment, we are focused on delivering the best possible banking experience through our colleagues.

As such, we strive to ensure that managers and colleagues are customer centric, have a commitment to excellence and live the values and credo every day. To further strengthen the organization’s health, we have embarked on initiatives focused on a variety of people issues including recruiting, talent management, succession planning, leadership development, organizational structure and incentives.

Continue to embed risk management throughout the organization and build strong relationships with regulators: We remain committed to implementing a comprehensive enterprise risk management program through enhancements across key management areas. Critical objectives of the program are to have fully developed and embedded policies and risk appetite, frameworks and standards, clearly articulated roles and responsibilities across all lines of defense, and a culture that reinforces and rewards risk-based behaviors.

Focus on improved efficiency and disciplined expense management: We believe that our focus on operational efficiency is critical to our profitability and ability to reinvest in the franchise. We launched an initiative in late 2013 designed to improve the effectiveness, efficiency, and competitiveness of the franchise.

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Reflecting our focus on cost discipline, these expense initiatives delivered against milestones with 28% of targeted efficiency initiatives savings in 2014 with an expectation that we will achieve $200 million by the end of 2016. Proceeds from the program are being reinvested in the franchise, including investments in technology and in our strategic initiatives designed to further improve the customer experience and position us for future growth.

Our strategic initiatives are focused on the fundamentals of growing customers, relationships, loans, deposits, total revenue and overall profitability. While the above priorities are designed to enhance performance over the long-term, successful execution to date has resulted in improved financial performance in 2014, as highlighted below:


  Net income for 2014 of $865 million increased from a loss of $3.4 billion in 2013, which included an after-tax goodwill impairment charge of $4.1 billion.

Adjusted net income (excluding a net $180 million after-tax gain related to the Chicago Divestiture and $105 million after-tax restructuring charges and special noninterest expense items) of $790 million in 2014 increased 18% compared to $671 million in 2013 (excluding the goodwill impairment charge);


  Net interest margin of 2.83% in 2014 remained relatively stable, down two basis points compared to 2013 despite the continued effect of the relatively stable low interest rate environment;


  Credit quality continued to improve with net charge-offs declining to 0.36% of average loans in 2014 compared to 0.59% of average loans in 2013; and


  ROTCE improved to 6.71% from (25.91%) in 2013.

Adjusted ROTCE (excluding the impact of the goodwill impairment, restructuring charges and special items previously mentioned) of 6.13% in 2014 improved 105 basis points from 5.08% in 2013.

The adjusted results above are not recognized under GAAP.

For more information on the computation of these non-GAAP financial measures, see “Summary Consolidated Financial and Other Data.”


Recent Developments

On March 11, 2015, we received no objection from the Board of Governors of the Federal Reserve System (“Federal Reserve Board”) to our 2015 capital plan that was submitted to the Federal Reserve Board on January 5, 2015 (the “Capital Plan”) as part of the Comprehensive Capital Analysis and Review (“CCAR”) process.

The Capital Plan was designed to ensure a strong capital position, provide adequate returns to our shareholders and normalize our capital structure. The Capital Plan includes a proposed quarterly dividend rate of $0.10 per share, or $0.40 per share on an annualized basis, for 2015, subject to consideration and approval by our board of directors. The Capital Plan also includes capital distributions of $250 million in each of the second and third quarters of 2015 in the form of share repurchase transactions to be funded by issuances in the capital markets.

We intend to repurchase $250 million of our common stock on or around April 1 directly from the RBS Group at a purchase price per share reflecting the average of the daily volume-weighted average price per share of our common stock as reported by the NYSE over the five trading days preceding the purchase date, subject to certain limits.

The completion of the repurchase transactions remains subject to various conditions, including general market conditions and our ability to complete capital markets offerings on terms acceptable to us and, in the case of our intended repurchase from the RBS Group, the further evaluation and approval of the repurchase transaction by a special committee of our independent directors.

On March 9, 2015, we announced that John Fawcett will retire from his role as Executive Vice President and Chief Financial Officer of the Company effective April 6, 2015 and will retire from the Company on April 30, 2015.

On March 9, 2015, we appointed Eric Aboaf as Executive Vice President and Chief Financial Officer effective April 6, 2015. Mr. Fawcett’s responsibilities through his retirement date from the Company will include working with Mr. Aboaf on a smooth and effective transition.

Mr. Aboaf, 50, most recently was the Global Treasurer for Citigroup, a role he held since 2009. Prior to that, he served as Chief Financial Officer of both Citigroup’s North American Consumer Group and its Institutional Client Group. Previously, Mr. Aboaf was a partner and co-head of the U.S. financial services practice at Bain & Company.

Our Parent and Selling Stockholder

Prior to the completion of our initial public offering on September 29, 2014 (our “IPO”), we were a wholly owned subsidiary of RBS.

We became a wholly owned subsidiary of RBS in 1988. RBS is the holding company of a large global banking and financial services group. Headquartered in Edinburgh, RBS operates in the United Kingdom, the United States and internationally through its two principal subsidiaries, The Royal Bank of Scotland plc and National Westminster Bank Plc (“NatWest”), both of which are major U.K.

clearing banks. Globally, the RBS Group has a diversified customer base and provides a wide range of products and services to personal, commercial and large corporate and institutional customers.

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RBS acquired all of our outstanding common stock in 1988 and owns shares of our outstanding common stock through its wholly owned subsidiary, RBSG International Holdings Limited, a private limited company organized under the laws of Scotland, which is selling shares of our common stock in this offering or shares if the underwriters exercise their option to purchase additional shares in full.

The selling stockholder acquired all shares to be sold in this offering in the ordinary course of business and, at the time of acquisition, did not have any agreement or understanding, directly or indirectly, with any person to distribute the shares of our common stock.

RBS also holds approximately $2.0 billion of our outstanding subordinated indebtedness as of December 31, 2014. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Borrowed Funds” in our 2014 Form 10-K incorporated by reference in this prospectus.



Following completion of this offering, we expect that RBS will indirectly own, through RBSG International Holdings Limited, approximately 45.6% of our common stock, assuming no exercise by the underwriters of their option to purchase additional shares, and approximately 41.9% of our common stock if the underwriters exercise their option to purchase additional shares in full.

As part of its obligations under the European Commission’s State Aid Amendment Decision of April 9, 2014, RBS has committed to dispose of its remaining ownership of our common stock by December 31, 2016, with an automatic 12-month extension depending on market conditions.

RBS’s current intention for disposal of its remaining ownership of our common stock is to sell, over time, such remaining shares in a series of tranches, subject to market conditions and the terms of the lock-up provisions discussed under “Underwriting.”

As a result of RBS’s continued ownership of our common stock following completion of this offering, RBS will continue to have significant control of our business.

We and RBS have entered into certain agreements that provide a framework for our ongoing relationship with the RBS Group. For further information about risks relating to our separation from the RBS Group, including RBS’s influence over us, see “Risk Factors—Risks Related to Our Relationship with and Separation from the RBS Group.” For more information regarding the agreements setting out the framework for our ongoing relationship with the RBS Group, see “Our Relationship with the RBS Group and Certain Other Related Party Transactions.”