Citizens Financial Group, Inc. reported mixed Q2 earnings, with declines in deposits and loans, but slightly higher revenue and net income. Despite a focus on quality over quantity, asset quality metrics are deteriorating, with net interest margin and net loan charge-offs on the rise. Return metrics improved, with a better efficiency ratio and higher return on average assets and equity, but the inflection in performance remains uncertain.
Citizens Financial beat expectations for second-quarter profit on Wednesday, as strong capital markets softened the hit from weaker lending.
Citizens Financial Group shares have performed well, up 36% in the past year, approaching my target of $37.50, as it has weathered the regional banking crisis well. Q1 results showed stable funding but slow asset growth, given non-core run-off; reserves appear low. My Q2 earnings analysis suggests a potential in-line quarter, with questions about reserves and the pace of loan growth.
A federal judge in California has dismissed most of First Citizens BancShares' $1 billion lawsuit accusing HSBC of poaching more than 40 employees of Silicon Valley Bank after its high-profile collapse.
First Citizens BancShares made one of the most high profile transactions of 2023 when it acquired Silicon Valley Bank, but its stock remains discounted compared to other big banks.
FCNCA may have low dividend, but is looking to distribute around 190bps of CET1 ratio in share repurchase. Strong deposit, loan growth puts bank in good position to grow. FCNCA remains relatively undervalued to peers in terms of P/E and P/TB metrics.
Citizens Community Bancorp provides banking services in Wisconsin and Minnesota. The dividend yield is low, but the record depicts fast growth, and the payout ratio is low enough for the bank to continue raising the dividend at the same pace. The shares are also severely undervalued, and there is a wide margin of safety present here.