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ACQUISITIONS (Tables) | 12 Months Ended
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Dec. 31, 2022
Business Combination and Asset Acquisition [Abstract] |
Schedule of business acquisitions by acquisition, equity interest issued or issuable | The following table includes a preliminary allocation of the consideration paid for the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed from Investors:
(in millions, except share and per share data) | April 6, 2022
Consideration |
CFG common shares issued | 72,148,855 |
CFG share price on April 6, 2022 | $42.08 |
Fair value of consideration for outstanding common stock | $3,036 |
Cash paid | 355 |
Consideration related to equity awards | 19 |
Fair value of merger consideration | 3,410 |
Assets acquired |
Cash and equivalents | 287 |
Investment securities | 3,826 |
Loans held for sale | 2,162 |
Net loans and leases | 20,139 |
Premises and equipment | 62 |
Core deposit intangible and other intangible assets | 119 |
Other assets | 924 |
Total assets acquired | 27,519 |
Liabilities assumed |
Deposits | 20,217 |
Borrowed funds | 4,097 |
Other liabilities | 668 |
Total liabilities assumed | 24,982 |
Less: Net assets | 2,537 |
Goodwill | $873 |
Schedule of recognized identified assets acquired and liabilities assumed | The following table includes a preliminary allocation of the consideration paid for the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed from Investors:
(in millions, except share and per share data) | April 6, 2022
Consideration |
CFG common shares issued | 72,148,855 |
CFG share price on April 6, 2022 | $42.08 |
Fair value of consideration for outstanding common stock | $3,036 |
Cash paid | 355 |
Consideration related to equity awards | 19 |
Fair value of merger consideration | 3,410 |
Assets acquired |
Cash and equivalents | 287 |
Investment securities | 3,826 |
Loans held for sale | 2,162 |
Net loans and leases | 20,139 |
Premises and equipment | 62 |
Core deposit intangible and other intangible assets | 119 |
Other assets | 924 |
Total assets acquired | 27,519 |
Liabilities assumed |
Deposits | 20,217 |
Borrowed funds | 4,097 |
Other liabilities | 668 |
Total liabilities assumed | 24,982 |
Less: Net assets | 2,537 |
Goodwill | $873 |
Schedule of business acquisition | The following table includes the fair value and unpaid principal balance of the loans acquired from Investors:
| April 6, 2022
(in millions) | Unpaid Principal Balance | Fair Value
Commercial and industrial | $3,021 |  | $2,899 |
Commercial real estate | 13,310 |  | 13,065 |
Leases | 9 |  | 9 |
Total commercial | 16,340 |  | 15,973 |
Residential mortgages | 3,949 |  | 3,889 |
Home equity | 267 |  | 273 |
Other retail | 4 |  | 4 |
Total retail | 4,220 |  | 4,166 |
Net loans and leases | $20,560 |  | $20,139 |
Business acquisition, pro forma information | The following table presents the financial results of Investors included in the Consolidated Statements of Operations from the date of acquisition through December 31, 2022:
(in millions) | April 6, 2022 through December 31, 2022
Net interest income | $627 |
Noninterest income | 37 |
Net income | 287 |
The following table presents unaudited supplemental pro forma financial information as if the Investors acquisition had occurred on January 1, 2021 and includes the impact of (i) amortizing and accreting fair value adjustments associated with loans and leases, (ii) the amortization of recognized intangible assets and the elimination of Investors’ historical amortization of these assets, (iii) the elimination of Investors’ historical accretion and amortization of deferred fees and costs on loans and leases, (iv) the elimination of Investors’ historical accretion and amortization of discounts and premiums on loans and leases, debt securities and long-term borrowed funds and (v) the related estimated income tax effects. The pro forma financial information does not necessarily reflect the results that would have occurred had Citizens acquired Investors on January 1, 2021.
| Year Ended December 31,
(in millions) | 2022 | 2021
Net interest income | $6,226 |  | $5,342 |
Noninterest income | 2,055 |  | 2,168 |
Net income(1) | 2,408 |  | 2,376 |
(1) Excludes the acceleration of one-time executive compensation and Employee Stock Ownership Plan expenses of $122 million incurred by Investors in the first quarter of 2022. In addition, the supplemental pro forma financial information includes non-recurring acquisition-related costs of $335 million incurred during the year ended December 31, 2022, as summarized in the following table. These costs, along with the $13 million incurred during 2021, are included in the first quarter of 2021 for the purpose of reporting supplemental pro forma financial information presented above.
(in millions) | Year Ended December 31, 2022
Provision for credit losses(1) | $145 |
Salaries and employee benefits(2) | 83 |
Outside services(3) | 61 |
Mark-to-market losses on LHFS portfolio(4) | 31 |
Other operating expense | 15 |
Total acquisition-related costs | $335 |
(1) Represents the initial provision for credit losses also recognized through a fair value mark as required by purchase accounting. (2) Comprised primarily of severance and employee retention costs. (3) Comprised primarily of technology, legal, advisory, and other professional related fees. (4) Represents mark-to-market losses on loans acquired from Investors classified as LHFS.
Schedule of changes in the allowance for credit losses | The following table presents PCD loan activity at the date of acquisition:
(in millions) | April 6, 2022
Principal balance | $4,685 |
ALLL at acquisition | (101) |
Non-credit discount | (72) |
Purchase price | $4,512 |
The following table presents a summary of changes in the ACL for the year ended December 31, 2022:
| Year Ended December 31, 2022
(in millions) | Commercial | Retail | Total
Allowance for loan and lease losses, beginning of period | $821 |  | $937 |  | $1,758 |
Allowance on PCD loans and leases at acquisition | 99 |  | 2 |  | 101 |
Charge-offs(1) | (70) |  | (364) |  | (434) |
Recoveries | 18 |  | 146 |  | 164 |
Net charge-offs | (52) |  | (218) |  | (270) |
Provision expense (benefit) for loans and leases(2) | 192 |  | 202 |  | 394 |
Allowance for loan and lease losses, end of period | 1,060 |  | 923 |  | 1,983 |
Allowance for unfunded lending commitments, beginning of period | 153 |  | 23 |  | 176 |
Provision expense (benefit) for unfunded lending commitments | 53 |  | 27 |  | 80 |
Allowance on PCD unfunded lending commitments at acquisition | 1 |  | — |  | 1 |
Allowance for unfunded lending commitments, end of period | 207 |  | 50 |  | 257 |
Total allowance for credit losses, end of period | $1,267 |  | $973 |  | $2,240 |
(1) Excludes $34 million of charge-offs previously taken by Investors or recognized upon completion of the Investors acquisition under purchase accounting for the year ended December 31, 2022. The initial allowance for loan and lease losses on PCD assets included these amounts and, after charging these amounts off upon acquisition, the net impact for PCD assets was $101 million of additional allowance for loan and lease losses. (2) Includes $169 million of initial provision expense related to non-PCD loans and leases acquired from HSBC and Investors for the year ended December 31, 2022. The following tables present a summary of changes in the ACL for the years ended December 31, 2021 and 2020:
| Year Ended December 31, 2021
(in millions) | Commercial | Retail | Total
Allowance for loan and lease losses, beginning of period | $1,233 |  | $1,210 |  | $2,443 |
Charge-offs | (218) |  | (321) |  | (539) |
Recoveries | 54 |  | 160 |  | 214 |
Net charge-offs | (164) |  | (161) |  | (325) |
Provision expense (benefit) for loans and leases | (248) |  | (112) |  | (360) |
Allowance for loan and lease losses, end of period | 821 |  | 937 |  | 1,758 |
Allowance for unfunded lending commitments, beginning of period | 186 |  | 41 |  | 227 |
Provision expense (benefit) for unfunded lending commitments | (33) |  | (18) |  | (51) |
Allowance for unfunded lending commitments, end of period | 153 |  | 23 |  | 176 |
Total allowance for credit losses, end of period | $974 |  | $960 |  | $1,934 |
| Year Ended December 31, 2020
(in millions) | Commercial | Retail | Total
Allowance for loan and lease losses, beginning of period | $674 |  | $578 |  | $1,252 |
Cumulative effect of change in accounting principle | (176) |  | 629 |  | 453 |
Allowance for loan and lease losses, beginning of period, adjusted | 498 |  | 1,207 |  | 1,705 |
Charge-offs | (437) |  | (406) |  | (843) |
Recoveries | 12 |  | 138 |  | 150 |
Net charge-offs | (425) |  | (268) |  | (693) |
Provision expense (benefit) for loans and leases | 1,160 |  | 271 |  | 1,431 |
Allowance for loan and lease losses, end of period | 1,233 |  | 1,210 |  | 2,443 |
Allowance for unfunded lending commitments, beginning of period | 44 |  | — |  | 44 |
Cumulative effect of change in accounting principle | (3) |  | 1 |  | (2) |
Allowance for unfunded lending commitments, beginning of period, adjusted | 41 |  | 1 |  | 42 |
Provision expense (benefit) for unfunded lending commitments | 145 |  | 40 |  | 185 |
Allowance for unfunded lending commitments, end of period | 186 |  | 41 |  | 227 |
Total allowance for credit losses, end of period | $1,419 |  | $1,251 |  | $2,670 |

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