10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended

June 30, 2016

[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From

(Not Applicable)

Commission File Number 001-36636

CITIZENS FINANCIAL GROUP, INC.

(Exact name of the registrant as specified in its charter)

Delaware	05-0412693
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

One Citizens Plaza, Providence, RI 02903

(Address of principal executive offices, including zip code)

(401) 456-7000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.

[ü] Yes [] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

[ü] Yes [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer [ü] Accelerated filer [ ]

Non-accelerated filer (Do not check if a smaller reporting company) [ ] Smaller reporting company [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [ü] No

There were 519,470,882 shares of Registrant’s common stock ($0.01 par value) outstanding on August 1, 2016.

	Table of Contents
Glossary of Acronyms and Terms		3
Part I. Financial Information		5
Item 1. Financial Statements		5
Consolidated Balance Sheets as of June 30, 2016 (unaudited) and December 31, 2015 (unaudited)		6
Consolidated Statements of Operations (unaudited) for the Three and Six Months Ended June 30, 2016 and 2015		7
Consolidated Statements of Comprehensive Income (unaudited) for the Three and Six Months Ended June 30, 2016 and 2015		8
Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the Six Months Ended June 30, 2016 and 2015		9
Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2016 and 2015		10
Notes to the Consolidated Financial Statements (unaudited)		11
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		60
Item 3. Quantitative and Qualitative Disclosures about Market Risk		121
Item 4. Controls and Procedures		121
Part II. Other Information		122
Item 1. Legal Proceedings		122
Item 1A. Risk Factors		122
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		122
Item 6. Exhibits		122
Signature		123

2

CITIZENS FINANCIAL GROUP, INC.

GLOSSARY OF ACRONYMS AND TERMS

The following listing provides a comprehensive reference of common acronyms and terms we regularly use in our financial reporting:

AFS	Available for Sale
ALLL	Allowance for Loan and Lease Losses
AOCI	Accumulated Other Comprehensive Income (Loss)
ASU	Accounting Standards Update
ATM	Automated Teller Machine
BHC	Bank Holding Company
bps	Basis Points
C&I	Commercial and Industrial
Capital Plan Rule	Federal Reserve’s Regulation Y Capital Plan Rule
CBNA	Citizens Bank, N.A.
CBPA	Citizens Bank of Pennsylvania
CCAR	Comprehensive Capital Analysis and Review
CCB	Capital Conservation Buffer
CCO	Chief Credit Officer
CET1	Common Equity Tier 1
CEO	Chief Executive Officer
CFPB	Consumer Financial Protection Bureau
Citizens or CFG or the Company	Citizens Financial Group, Inc. and its Subsidiaries
CLTV	Combined Loan to Value
CMO	Collateralized Mortgage Obligation
CRE	Commercial Real Estate
CRO	Chief Risk Officer
DFAST	Dodd-Frank Act Stress Test
Dodd-Frank Act	The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
EPS	Earnings Per Share
ERISA	Employee Retirement Income Security Act of 1974
Fannie Mae (FNMA)	Federal National Mortgage Association
FASB	Financial Accounting Standards Board
FDIA	Federal Deposit Insurance Act
FDIC	Federal Deposit Insurance Corporation
FHLB	Federal Home Loan Bank
FICO	Fair Isaac Corporation (credit rating)
FRB	Federal Reserve Bank
FRBG	Federal Reserve Board of Governors
Freddie Mac (FHLMC)	Federal Home Loan Mortgage Corporation
FTP	Funds Transfer Pricing
GAAP	Accounting Principles Generally Accepted in the United States of America
GDP	Gross Domestic Product
Ginnie Mae (GNMA)	Government National Mortgage Association
HELOC	Home Equity Line of Credit
HTM	Held To Maturity
IPO	Initial Public Offering

3

CITIZENS FINANCIAL GROUP, INC.

LCR	Liquidity Coverage Ratio
LGD	Loss Given Default
LIBOR	London Interbank Offered Rate
LIHTC	Low Income Housing Tax Credit
LTV	Loan to Value
MBS	Mortgage-Backed Securities
MSR	Mortgage Servicing Right
NSFR	Net Stable Funding Ratio
OCC	Office of the Comptroller of the Currency
OCI	Other Comprehensive Income
OIS	Overnight Index Swap
PD	Probability of Default
peers or peer banks or peer regional banks	BB&T, Comerica, Fifth Third, KeyCorp, M&T, PNC, Regions, SunTrust and U.S. Bancorp
RBS	The Royal Bank of Scotland Group plc or any of its subsidiaries
ROTCE	Return on Average Tangible Common Equity
RPA	Risk Participation Agreement
SBO	Serviced by Others loan portfolio
SEC	United States Securities and Exchange Commission
SVaR	Stressed Value at Risk
TDR	Troubled Debt Restructuring
VaR	Value at Risk

4

CITIZENS FINANCIAL GROUP, INC.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

	Page
Consolidated Balance Sheets as of June 30, 2016 (unaudited) and December 31, 2015 (unaudited)	6
Consolidated Statements of Operations (unaudited) for the Three and Six Months Ended June 30, 2016 and 2015	7
Consolidated Statements of Comprehensive Income (unaudited) for the Three and Six Months Ended June 30, 2016 and 2015	8
Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the Six Months Ended June 30, 2016 and 2015	9
Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2016 and 2015	10
Notes to Consolidated Financial Statements (unaudited)	11
Note 1 - Basis of Presentation	11
Note 2 - Securities	12
Note 3 - Loans and Leases	17
Note 4 - Allowance for Credit Losses, Nonperforming Assets, and Concentrations of Credit Risk	18
Note 5 - Variable Interest Entities	31
Note 6 - Mortgage Banking	32
Note 7 - Borrowed Funds	34
Note 8 - Stockholders' Equity	36
Note 9 - Employee Benefits	37
Note 10 - Income Taxes	37
Note 11 - Derivatives	37
Note 12 - Commitments and Contingencies	41
Note 13 - Related Party Transactions and Significant Transactions With RBS	43
Note 14 - Fair Value Measurements	44
Note 15 - Regulatory Matters	51
Note 16 - Exit Costs and Restructuring Reserves	53
Note 17 - Reclassifications Out of Accumulated Other Comprehensive Income (Loss)	54
Note 18 - Business Segments	55
Note 19 - Earnings Per Share	58
Note 20 - Other Operating Expense	59
Note 21 - Subsequent Events	59

5

CITIZENS FINANCIAL GROUP, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in millions, except share data)	June 30, 2016			December 31, 2015
ASSETS:
Cash and due from banks		$976			$1,099
Interest-bearing cash and due from banks	2,679			1,986
Interest-bearing deposits in banks	727			356
Securities available for sale, at fair value (including $245 and $4,283 pledged to creditors, respectively) (a)	18,479			17,884
Securities held to maturity (including $0 and $135 pledged to creditors, respectively, and fair value of $5,136 and $5,297, respectively) (a)	4,973			5,258
Other investment securities, at fair value	73			70
Other investment securities, at cost	873			863
Loans held for sale, at fair value	478			325
Other loans held for sale	372			40
Loans and leases	103,551			99,042
Less: Allowance for loan and lease losses	1,246			1,216
Net loans and leases	102,305			97,826
Derivative assets	1,312			625
Premises and equipment, net	551			595
Bank-owned life insurance	1,587			1,564
Goodwill	6,876			6,876
Due from broker	132			—
Other assets	2,790			2,841
TOTAL ASSETS		$145,183			$138,208
LIABILITIES AND STOCKHOLDERS’ EQUITY:
LIABILITIES:
Deposits:
Noninterest-bearing		$27,108			$27,649
Interest-bearing	79,149			74,890
Total deposits	106,257			102,539
Federal funds purchased and securities sold under agreements to repurchase	717			802
Other short-term borrowed funds	2,770			2,630
Derivative liabilities	1,010			485
Deferred taxes, net	961			730
Long-term borrowed funds	11,810			9,886
Due to broker	86			—
Other liabilities	1,346			1,490
TOTAL LIABILITIES		$124,957			$118,562
Contingencies (refer to Note 12)
STOCKHOLDERS’ EQUITY:
Preferred stock, $25.00 par value, authorized 100,000,000 shares:
Series A, non-cumulative perpetual, $25.00 par value (liquidation preference $1,000), 250,000 shares authorized and issued net of issuance costs and related premium at June 30, 2016 and December 31, 2015		$247			$247
Common stock:
$0.01 par value, 1,000,000,000 shares authorized, 564,437,963 shares issued and 529,094,976 shares outstanding at June 30, 2016 and 1,000,000,000 shares authorized, 563,117,415 shares issued and 527,774,428 shares outstanding at December 31, 2015	6			6
Additional paid-in capital	18,735			18,725
Retained earnings	2,255			1,913
Treasury Stock, at cost, 35,342,987 shares at June 30, 2016 and December 31, 2015, respectively	(858		)	(858		)
Accumulated other comprehensive loss	(159		)	(387		)
TOTAL STOCKHOLDERS’ EQUITY		$20,226			$19,646
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$145,183			$138,208

(a) Includes only collateral pledged by the Company where counterparties have the right to sell or pledge the collateral.

The accompanying Notes to unaudited interim Consolidated Financial Statements are an integral part of these statements.

6

CITIZENS FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions, except share and per-share data)	2016			2015			2016			2015
INTEREST INCOME:
Interest and fees on loans and leases		$896			$790			$1,764			$1,569
Interest and fees on loans held for sale, at fair value	3			3			6			5
Interest and fees on other loans held for sale	4			3			5			4
Investment securities	141			155			286			314
Interest-bearing deposits in banks	2			1			4			2
Total interest income	1,046			952			2,065			1,894
INTEREST EXPENSE:
Deposits	63			60			123			112
Federal funds purchased and securities sold under agreements to repurchase	—			2			1			9
Other short-term borrowed funds	12			19			23			34
Long-term borrowed funds	48			31			91			63
Total interest expense	123			112			238			218
Net interest income	923			840			1,827			1,676
Provision for credit losses	90			77			181			135
Net interest income after provision for credit losses	833			763			1,646			1,541
NONINTEREST INCOME:
Service charges and fees	150			139			294			274
Card fees	51			60			101			112
Trust and investment services fees	38			41			75			77
Capital markets fees	35			30			57			52
Foreign exchange and letter of credit fees	21			22			42			45
Mortgage banking fees	25			30			43			63
Bank-owned life insurance income	13			14			26			26
Securities gains, net	4			9			13			17
Net securities impairment losses recognized in earnings	(7		)	(2		)	(8		)	(3		)
Other income	25			17			42			44
Total noninterest income	355			360			685			707
NONINTEREST EXPENSE:
Salaries and employee benefits	432			411			857			830
Outside services	86			99			177			178
Occupancy	76			90			152			170
Equipment expense	64			65			129			128
Amortization of software	41			37			80			73
Other operating expense	128			139			243			272
Total noninterest expense	827			841			1,638			1,651
Income before income tax expense	361			282			693			597
Income tax expense	118			92			227			198
NET INCOME		$243			$190			$466			$399
Net income available to common stockholders	$243			$190			$459				$399
Weighted-average common shares outstanding:
Basic	528,968,330			537,729,248			528,519,489			541,986,653
Diluted	530,365,203			539,909,366			530,396,871			544,804,268
Per common share information:
Basic earnings		$0.46			$0.35			$0.87			$0.74
Diluted earnings	0.46			0.35			0.87			0.73
Dividends declared and paid	0.12			0.10			0.22			0.20

The accompanying Notes to unaudited interim Consolidated Financial Statements are an integral part of these statements.

7

CITIZENS FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2016			2015			2016			2015
Net income		$243			$190			$466			$399
Other comprehensive income (loss):
Net unrealized derivative instrument gains (losses) arising during the periods, net of income taxes of $8, ($3), $29 and $36, respectively	13			(5		)	46			60
Reclassification adjustment for net derivative gains included in net income, net of income taxes of ($4), ($1), ($10) and ($2), respectively	(9		)	(2		)	(17		)	(4		)
Net unrealized securities available for sale gains (losses) arising during the periods, net of income taxes of $39, ($66), $131 and ($12), respectively	64			(110		)	218			(20		)
Other-than-temporary impairment not recognized in earnings on securities, net of income taxes of $2, $0, ($13) and ($11), respectively	4			1			(21		)	(18		)
Reclassification of net securities losses (gains) to net income, net of income taxes of $1, ($2), ($2) and ($5), respectively	2			(5		)	(3		)	(9		)
Defined benefit pension plans:
Amortization of actuarial loss, net of income taxes of $1, $2, $3 and $3, respectively	3			2			5			4
Total other comprehensive income (loss), net of income taxes	77			(119		)	228			13
Total comprehensive income		$320			$71			$694			$412

The accompanying Notes to unaudited interim Consolidated Financial Statements are an integral part of these statements.

8

CITIZENS FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

	Preferred Stock			Common Stock				Additional Paid-in Capital		Retained Earnings			Treasury Stock, at Cost			Accumulated Other Comprehensive Income (Loss)			Total
(in millions)	Shares	Amount		Shares		Amount
Balance at January 1, 2015	—		$—	546			$6		$18,676		$1,294			($336	)		($372	)		$19,268
Dividends to common stockholders	—	—		—		—		—		(48		)	—			—			(48		)
Dividends to RBS	—	—		—		—		—		(60		)	—			—			(60		)
Issuance of preferred stock	—	247		—		—		—		—			—			—			247
Treasury stock purchased	—	—		(10	)	—		—		—			(250		)	—			(250		)
Share-based compensation plans	—	—		1		—		34		—			(21		)	—			13
Employee stock purchase plan shares purchased	—	—		—		—		4		—			—			—			4
Total comprehensive income:
Net income	—	—		—		—		—		399			—			—			399
Other comprehensive income	—	—		—		—		—		—			—			13			13
Total comprehensive income	—	—		—		—		—		399			—			13			412
Balance at June 30, 2015	—		$247	537			$6		$18,714		$1,585			($607	)		($359	)		$19,586
Balance at January 1, 2016	—		$247	528			$6		$18,725		$1,913			($858	)		($387	)		$19,646
Dividends to common stockholders	—	—		—		—		—		(117		)	—			—			(117		)
Dividend to preferred stockholders	—	—		—		—		—		(7		)	—			—			(7		)
Share-based compensation plans	—	—		1		—		5		—			—			—			5
Employee stock purchase plan shares purchased	—	—		—		—		5		—			—			—			5
Total comprehensive income:
Net income	—	—		—		—		—		466			—			—			466
Other comprehensive income	—	—		—		—		—		—						228			228
Total comprehensive income	—	—		—		—		—		466			—			228			694
Balance at June 30, 2016	—		$247	529			$6		$18,735		$2,255			($858	)		($159	)		$20,226

The accompanying Notes to unaudited interim Consolidated Financial Statements are an integral part of these statements.

9

CITIZENS FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Six Months Ended June 30,
(in millions)	2016			2015
OPERATING ACTIVITIES
Net income		$466			$399
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	181			135
Originations of mortgage loans held for sale	(1,135		)	(1,182		)
Proceeds from sales of mortgage loans held for sale	1,022			1,111
Purchases of commercial loans held for sale	(735		)	(632		)
Proceeds from sales of commercial loans held for sale	739			594
Amortization of terminated cash flow hedges	16			9
Depreciation, amortization and accretion	245			234
Mortgage servicing rights valuation charge-off (recovery)	4			(7		)
Securities impairment	8			3
Deferred income taxes	94			56
Share-based compensation	11			15
Net gain on sales of:
Debt securities	(13		)	(17		)
Marketable equity securities available for sale	—			(3		)
Premises and equipment	(2		)	—
Increase in other assets	(450		)	(138		)
Increase (decrease) in other liabilities	253			(62		)
Net cash provided by operating activities	704			515
INVESTING ACTIVITIES
Investment securities:
Purchases of securities available for sale	(2,355		)	(4,089		)
Proceeds from maturities and paydowns of securities available for sale	1,611			1,804
Proceeds from sales of securities available for sale	375			1,251
Purchases of securities held to maturity	—			(811		)
Proceeds from maturities and paydowns of securities held to maturity	290			394
Purchases of other investment securities, at fair value	(114		)	—
Proceeds from sales of other investment securities, at fair value	109			—
Purchases of other investment securities, at cost	(62		)	(14		)
Proceeds from sales of other investment securities, at cost	52			20
Net (increase) decrease in interest-bearing deposits in banks	(371		)	184
Net increase in loans and leases	(5,045		)	(3,573		)
Net increase in bank-owned life insurance	(23		)	(16		)
Premises and equipment:
Purchases	(22		)	(43		)
Proceeds from sales	3			15
Capitalization of software	(85		)	(92		)
Net cash used in investing activities	(5,637		)	(4,970		)
FINANCING ACTIVITIES
Net increase in deposits	3,718			4,908
Net decrease in federal funds purchased and securities sold under agreements to repurchase	(85		)	(492		)
Net decrease in other short-term borrowed funds	(1,370		)	(251		)
Proceeds from issuance of long-term borrowed funds	6,995			—
Repayments of long-term borrowed funds	(3,631		)	(6		)
Treasury stock purchased	—			(250		)
Net proceeds from issuance of preferred stock	—			247
Dividends declared and paid to common stockholders	(117		)	(108		)
Dividends declared and paid to preferred stockholders	(7		)	—
Net cash provided by financing activities	5,503			4,048
Increase (decrease) in cash and cash equivalents	570			(407		)
Cash and cash equivalents at beginning of period	3,085			3,276
Cash and cash equivalents at end of period		$3,655			$2,869

The accompanying Notes to unaudited interim Consolidated Financial Statements are an integral part of these statements.

10

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

Basis of Presentation

The unaudited interim Consolidated Financial Statements, including the Notes thereto of Citizens Financial Group, Inc., have been prepared in accordance with GAAP interim reporting requirements, and therefore do not include all information and Notes included in the audited Consolidated Financial Statements in conformity with GAAP. These unaudited interim Consolidated Financial Statements and Notes thereto should be read in conjunction with the Company’s audited Consolidated Financial Statements and accompanying Notes included in the Company’s Form 10-K for the year ended December 31, 2015. The Company’s principal business activity is banking, conducted through its subsidiaries, Citizens Bank, N.A. and Citizens Bank of Pennsylvania.

The unaudited interim Consolidated Financial Statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods. The results for interim periods are not necessarily indicative of results for a full year.

Certain prior period amounts have been reclassified to conform to current period presentation. These reclassifications had no effect on net income, total comprehensive income, total assets or total stockholders’ equity as previously reported.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments.” Under current GAAP, the Company reflects credit losses on financial assets measured on an amortized cost basis only when the losses are probable or have been incurred. The ASU replaces this approach with a forward-looking methodology that reflects the expected credit losses over the lives of financial assets, starting when the assets are first acquired. Under the revised methodology, credit losses will be measured based on past events, current conditions and reasonable and supportable forecasts that affect the collectability of financial assets. The ASU also revises the approach to recognizing credit losses on securities available for sale by allowing entities to record reversals of credit losses in current-period earnings. The ASU is effective for the Company beginning on January 1, 2020. The Company is currently assessing the impact of this guidance on the Company’s unaudited interim Consolidated Financial Statements.

In May 2016, the FASB issued ASU No. 2016-12 “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.” The ASU supplements the new revenue recognition standard issued in 2014 by addressing certain issues in the guidance on assessing collectability, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications at transition. The ASU is effective for the Company beginning on January 1, 2018. The Company is currently assessing the impact of this guidance on the Company’s unaudited interim Consolidated Financial Statements.

In April 2016, the FASB issued ASU No. 2016-10 “Identifying Performance Obligations and Licensing.” The ASU supplements the new revenue recognition standard issued in 2014 by clarifying the guidance related to licensing and the identification of performance obligations. The ASU is effective for the Company beginning on January 1, 2018. The Company is currently assessing the impact of this guidance on the Company’s unaudited interim Consolidated Financial Statements.

In March 2016, the FASB issued ASU No. 2016-09 “Improvements to Employee Share-Based Payment Accounting.” The ASU modifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The ASU is effective for the Company beginning on January 1, 2017. Adoption of this guidance is not expected to have a material impact on the Company’s unaudited interim Consolidated Financial Statements.

In March 2016, the FASB issued ASU No. 2016-08 “Principal versus Agent Considerations (Reporting Revenue Gross versus Net).” The ASU supplements the new revenue recognition standard issued in 2014 by clarifying the implementation guidance on principal versus agent considerations. The ASU is effective for the Company beginning on January 1, 2018. The Company is currently assessing the impact of this guidance on the Company’s unaudited interim Consolidated Financial Statements.

In March 2016, the FASB issued ASU No. 2016-05 “Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships.” The ASU clarifies that a change in a counterparty to a derivative instrument that has been designated as a hedging instrument, in and of itself, does not result in a hedge de-designation under ASC 815. The ASU is effective for the Company beginning on January 1, 2017. Adoption of this guidance is not expected to have a material impact on the Company’s unaudited interim Consolidated Financial Statements.

In February 2016, the FASB issued ASU 2016-02 “Leases.” The ASU generally requires lessees to recognize a right-of use asset and corresponding lease liability for all leases with a lease term of greater than one year. The ASU is effective for the Company beginning on January 1, 2019. The Company is currently assessing the impact of this guidance on the Company’s unaudited interim Consolidated Financial Statements.

11

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

In January 2016, the FASB issued ASU No. 2016-01 “Recognition and Measurement of Financial Assets and Financial Liabilities.” The ASU requires equity investments (except for those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in the fair value recognized through net income. The ASU also requires separate presentation of financial assets and financial liabilities by measurement category and form of financial assets on the balance sheet or the notes to the financial statements. In addition, the ASU makes several other targeted amendments to the existing accounting and disclosure requirements for financial instruments, including revised guidance related to valuation allowance assessments when recognizing deferred tax assets on unrealized losses on debt securities available for sale. The ASU is effective for the Company beginning on January 1, 2018. The Company is currently assessing the impact of this guidance on the Company’s unaudited interim Consolidated Financial Statements.

NOTE 2 - SECURITIES

The following table provides the major components of securities at amortized cost and fair value:

	June 30, 2016									December 31, 2015
(in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities Available for Sale
U.S. Treasury and other		$15		$—		$—			$15		$16		$—		$—			$16
State and political subdivisions	9		—		—			9		9		—		—			9
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	17,588		401		(8		)	17,981		17,234		153		(67		)	17,320
Other/non-agency	489		2		(34		)	457		555		4		(37		)	522
Total mortgage-backed securities	18,077		403		(42		)	18,438		17,789		157		(104		)	17,842
Total debt securities available for sale	18,101		403		(42		)	18,462		17,814		157		(104		)	17,867
Marketable equity securities	5		—		—			5		5		—		—			5
Other equity securities	12		—		—			12		12		—		—			12
Total equity securities available for sale	17		—		—			17		17		—		—			17
Total securities available for sale		$18,118		$403		($42	)		$18,479		$17,831		$157		($104	)		$17,884
Securities Held to Maturity
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities		$3,912		$119		$—			$4,031		$4,105		$27		($11	)		$4,121
Other/non-agency	1,061		44		—			1,105		1,153		23		—			1,176
Total securities held to maturity		$4,973		$163		$—			$5,136		$5,258		$50		($11	)		$5,297
Other Investment Securities, at Fair Value
Money market mutual fund		$68		$—		$—			$68		$65		$—		$—			$65
Other investments	5		—		—			5		5		—		—			5
Total other investment securities, at fair value		$73		$—		$—			$73		$70		$—		$—			$70
Other Investment Securities, at Cost
Federal Reserve Bank stock		$463		$—		$—			$463		$468		$—		$—			$468
Federal Home Loan Bank stock	410		—		—			410		395		—		—			395
Total other investment securities, at cost		$873		$—		$—			$873		$863		$—		$—			$863

12

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The Company has reviewed its securities portfolio for other-than-temporary impairments. The following table presents the net securities impairment losses recognized in earnings:

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2016			2015			2016			2015
Other-than-temporary impairment:
Total other-than-temporary impairment losses		($1	)		($1	)		($42	)		($32	)
Portions of loss recognized in other comprehensive income (before taxes)	(6		)	(1		)	34			29
Net securities impairment losses recognized in earnings		($7	)		($2	)		($8	)		($3	)

The following tables summarize those securities whose fair values are below carrying values, segregated by those that have been in a continuous unrealized loss position for less than twelve months and those that have been in a continuous unrealized loss position for twelve months or longer:

	June 30, 2016
	Less than 12 Months					12 Months or Longer						Total
(dollars in millions)	Number of Issues	Fair Value		Gross Unrealized Losses		Number of Issues	Fair Value		Gross Unrealized Losses			Number of Issues	Fair Value		Gross Unrealized Losses
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	7		$95		$—	33		$734		($8	)	40		$829		($8	)
Other/non-agency	4	19		—		20	330		(34		)	24	349		(34		)
Total mortgage-backed securities	11	114		—		53	1,064		(42		)	64	1,178		(42		)
Total	11		$114		$—	53		$1,064		($42	)	64		$1,178		($42	)

	December 31, 2015
	Less than 12 Months						12 Months or Longer						Total
(dollars in millions)	Number of Issues	Fair Value		Gross Unrealized Losses			Number of Issues	Fair Value		Gross Unrealized Losses			Number of Issues	Fair Value		Gross Unrealized Losses
State and political subdivisions	1		$9		$—		—		$—		$—		1		$9		$—
U.S. Treasury and other	1	15		—			—	—		—			1	15		—
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	162	7,423		(51		)	36	819		(27		)	198	8,242		(78		)
Other/non-agency	2	9		—			20	361		(37		)	22	370		(37		)
Total mortgage-backed securities	164	7,432		(51		)	56	1,180		(64		)	220	8,612		(115		)
Total	166		$7,456		($51	)	56		$1,180		($64	)	222		$8,636		($115	)

For each debt security identified with an unrealized loss, the Company reviews the expected cash flows to determine if the impairment in value is temporary or other-than-temporary. If the Company has determined that the present value of the debt security’s expected cash flows is less than its amortized cost basis, an other-than-temporary impairment is deemed to have occurred. The amount of impairment loss that is recognized in current period earnings is dependent on the Company’s intent to sell (or not sell) the debt security.

13

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

If the Company intends to sell the impaired debt security, the impairment loss recognized in current period earnings equals the difference between the debt security’s fair value and its amortized cost. If the Company does not intend to sell the impaired debt security, and it is not likely that the Company will be required to sell the impaired security, the credit-related impairment loss is recognized in current period earnings and equals the difference between the amortized cost of the debt security and the present value of the expected cash flows that have currently been projected.

In addition to these cash flow projections, several other characteristics of each debt security are reviewed when determining whether a credit loss exists and the period over which the debt security is expected to recover. These characteristics include: (1) the type of investment, (2) various market factors affecting the fair value of the security (e.g., interest rates, spread levels, liquidity in the sector, etc.), (3) the length and severity of impairment, and (4) the public credit rating of the instrument.

The Company estimates the portion of loss attributable to credit using a collateral loss model and an integrated cash flow engine. The model calculates prepayment, default, and loss severity assumptions using collateral performance data. These assumptions are used to produce cash flows that generate loss projections. These loss projections are reviewed on a quarterly basis by a cross-functional governance committee. This governance committee determines whether security impairments are other-than-temporary based on this review.

The following table presents the cumulative credit-related losses recognized in earnings on debt securities held by the Company:

	Three Months Ended June 30,					Six Months Ended June 30,
(in millions)	2016		2015			2016			2015
Cumulative balance at beginning of period		$66		$62			$66			$62
Credit impairments recognized in earnings on securities that have been previously impaired	7		2			8			3
Reductions due to increases in cash flow expectations on impaired securities	—		(2		)	(1		)	(3		)
Cumulative balance at end of period		$73		$62			$73			$62

Cumulative credit losses recognized in earnings for impaired AFS debt securities held as of June 30, 2016 and 2015 were $73 million and $62 million, respectively. There were no credit losses recognized in earnings for the Company’s HTM portfolio as of June 30, 2016 and 2015. For the three months endedJune 30, 2016 and 2015, the Company recognized credit related other-than-temporary-impairment losses in earnings of $7 million and $2 million respectively, related to non-agency MBS in the AFS portfolio. The $5 millionincrease from June 30, 2015 to June 30, 2016 is primarily attributable to a one-time adjustment tied to a new model implementation. This adjustment is the result of the Company migrating in June 2016 from a proprietary internal process to a vendor-based model to estimate other-than-temporary impairment. For the six months endedJune 30, 2016 and 2015, the Company recognized credit related other-than-temporary impairment losses in earnings of $8 million and $3 million, respectively. The other-than-temporary impairment losses for the six months ended June 30, 2016 include the impact of the one-time adjustment tied to the new model implementation discussed above. There were no credit impaired debt securities sold during the three and six months endedJune 30, 2016 and 2015. Reductions in credit losses due to increases in cash flow expectations were none and $2 million for the three months endedJune 30, 2016 and 2015, respectively, and $1 million and $3 million for the six months endedJune 30, 2016 and 2015, respectively, and were presented in interest income from investment securities on the Consolidated Statements of Operations. The Company does not currently have the intent to sell these debt securities, and it is not likely that the Company will be required to sell these debt securities prior to the recovery of their amortized cost bases.

The Company has determined that credit losses are not expected to be incurred on the remaining agency and non-agency MBS identified with unrealized losses as of the current reporting date. The unrealized losses on these debt securities reflect the reduced liquidity in the MBS market and the increased risk spreads due to the uncertainty of the U.S. macroeconomic environment. Therefore, the Company has determined that these debt securities are not other-than-temporarily impaired because the Company does not currently have the intent to sell these debt securities, and it is not likely that the Company will be required to sell these debt securities prior to the recovery of their amortized cost bases. Any subsequent increases in the valuation of impaired debt securities do not impact their recorded cost bases. Additionally, $34 million and $29 million of pre-tax non-credit related losses were deferred in OCI for the six months ended June 30, 2016 and 2015, respectively.

14

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The amortized cost and fair value of debt securities by contractual maturity are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without incurring penalties.

	June 30, 2016
	Distribution of Maturities
(in millions)	1 Year or Less		1-5 Years		5-10 Years		After 10 Years		Total
Amortized Cost:
Debt securities available for sale
U.S. Treasury and other		$15		$—		$—		$—		$15
State and political subdivisions	—		—		—		9		9
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	15		36		1,668		15,869		17,588
Other/non-agency	—		50		2		437		489
Total debt securities available for sale	30		86		1,670		16,315		18,101
Debt securities held to maturity
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	—		—		—		3,912		3,912
Other/non-agency	—		—		—		1,061		1,061
Total debt securities held to maturity	—		—		—		4,973		4,973
Total amortized cost of debt securities		$30		$86		$1,670		$21,288		$23,074
Fair Value:
Debt securities available for sale
U.S. Treasury and other		$15		$—		$—		$—		$15
State and political subdivisions	—		—		—		9		9
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	15		38		1,710		16,218		17,981
Other/non-agency	—		50		3		404		457
Total debt securities available for sale	30		88		1,713		16,631		18,462
Debt securities held to maturity
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	—		—		—		4,031		4,031
Other/non-agency	—		—		—		1,105		1,105
Total debt securities held to maturity	—		—		—		5,136		5,136
Total fair value of debt securities		$30		$88		$1,713		$21,767		$23,598

The following table reports the amounts recognized in interest income from investment securities on the Consolidated Statements of Operations:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2016		2015		2016		2015
Taxable		$141		$155		$286		$314
Non-taxable	—		—		—		—
Total interest income from investment securities		$141		$155		$286		$314

15

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Realized gains and losses on securities are shown below:

	Three Months Ended June 30,					Six Months Ended June 30,
(in millions)	2016		2015			2016		2015
Gains on sale of debt securities		$4		$10			$13		$22
Losses on sale of debt securities	—		(1		)	—		(5		)
Debt securities gains, net		$4		$9			$13		$17
Equity securities gains		$—		$1			$—		$3

The amortized cost and fair value of securities pledged are shown below:

	June 30, 2016				December 31, 2015
(in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Pledged against repurchase agreements		$705		$720		$805		$808
Pledged against FHLB borrowed funds	1,070		1,114		1,163		1,186
Pledged against derivatives, to qualify for fiduciary powers, and to secure public and other deposits as required by law	4,236		4,341		3,579		3,610

The Company regularly enters into security repurchase agreements with unrelated counterparties. Repurchase agreements are financial transactions that involve the transfer of a security from one party to another and a subsequent transfer of the same (or “substantially the same”) security back to the original party. The Company’s repurchase agreements are typically short-term transactions, but they may be extended to longer terms to maturity. Such transactions are accounted for as secured borrowed funds on the Company’s financial statements. When permitted by GAAP, the Company offsets the short-term receivables associated with its reverse repurchase agreements with the short-term payables associated with its repurchase agreements.

The effects of this offsetting on the Consolidated Balance Sheets are presented in the following table:

	June 30, 2016						December 31, 2015
(in millions)	Gross Assets (Liabilities)		Gross Assets (Liabilities) Offset		Net Amounts of Assets (Liabilities)		Gross Assets (Liabilities)			Gross Assets (Liabilities) Offset			Net Amounts of Assets (Liabilities)
Securities purchased under agreements to resell		$—		$—		$—		$500			($500	)		$—
Securities sold under agreements to repurchase	—		—		—		(500		)	500			—

Note: The Company also offsets certain derivative assets and derivative liabilities on the Consolidated Balance Sheets. For further information see Note 11 “Derivatives.”

There were $5 million in securitizations of mortgage loans retained in the investment portfolio for the three and six months ended June 30, 2016 and none in 2015. These securitizations included a substantive guarantee by a third party. In 2016, the guarantors were Fannie Mae and Ginnie Mae. These securitizations were accounted for as a sale of the transferred loans and as a purchase of securities. The securities received from the guarantors are classified as AFS.

16

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 3 - LOANS AND LEASES

A summary of the loans and leases portfolio follows:

(in millions)	June 30, 2016		December 31, 2015
Commercial		$35,927		$33,264
Commercial real estate	9,825		8,971
Leases	3,805		3,979
Total commercial	49,557		46,214
Residential mortgages	13,855		13,318
Home equity loans	2,177		2,557
Home equity lines of credit	14,418		14,674
Home equity loans serviced by others (1)	860		986
Home equity lines of credit serviced by others (1)	273		389
Automobile	14,075		13,828
Student	5,516		4,359
Credit cards	1,613		1,634
Other retail	1,207		1,083
Total retail	53,994		52,828
Total loans and leases (2) (3)		$103,551		$99,042

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

⁽²⁾ Excluded from the table above are loans held for sale totaling $850 million and $365 million as of June 30, 2016 and December 31, 2015, respectively.

⁽³⁾ Mortgage loans serviced for others by the Company’s subsidiaries are not included above and amounted to $17.2 billion and $17.6 billion at June 30, 2016 and December 31, 2015, respectively.

During the three months endedJune 30, 2016, the Company purchased $348 million of student loans, $200 million of automobile loans and $63 million of residential mortgages. During the three months endedJune 30, 2015, the Company purchased $202 million of student loans, $416 million of automobile loans and $387 million of residential mortgages. During the six months endedJune 30, 2016, the Company purchased $717 million of student loans, $334 million of automobile loans and $183 million of residential mortgages. During the six months endedJune 30, 2015, the Company purchased $463 million of student loans, $809 million of automobile loans and $636 million of residential mortgages.

During the three months endedJune 30, 2016, the Company sold $108 million of residential mortgage loans and $45 million of commercial loans. During the three months endedJune 30, 2015, the Company sold $114 million of commercial loans. During the six months endedJune 30, 2016, the Company sold $281 million of residential mortgage loans and $118 million of commercial loans. During the six months endedJune 30, 2015, the Company sold $273 million of residential mortgage loans and $225 million of commercial loans.

Loans held for sale at fair value totaled $478 million and $325 million at June 30, 2016 and December 31, 2015, respectively, and consisted of residential mortgages originated for sale of $424 million and the commercial trading portfolio of $54 million as of June 30, 2016. As of December 31, 2015, residential mortgages originated for sale were $268 million and the commercial trading portfolio totaled $57 million.

Other loans held for sale, at lower of cost or market value, totaled $372 million and $40 million as of June 30, 2016 and December 31, 2015, respectively. Other loans held for sale, as of June 30, 2016, contained $322 million of TDRs, including $262 million of residential mortgages and $60 million of home equity loans. Other loans held for sale also included commercial loans associated with the Company’s syndications business of $50 million as of June 30, 2016 compared with $40 million as of December 31, 2015.

Loans pledged as collateral for FHLB borrowed funds totaled $23.2 billion at June 30, 2016 and December 31, 2015. This collateral consists primarily of residential mortgages and home equity loans. Loans pledged as collateral to support the contingent ability to borrow at the FRB discount window, if necessary, totaled $16.6 billion and $15.9 billion at June 30, 2016 and December 31, 2015, respectively.

17

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 4 - ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK

The allowance for credit losses consists of the ALLL and the reserve for unfunded commitments. It is increased through a provision for credit losses that is charged to earnings, based on the Company’s quarterly evaluation of the loan portfolio, and is reduced by net charge-offs and the ALLL associated with sold loans. See Note 1 “Significant Accounting Policies” to the Company’s audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2015, for a detailed discussion of ALLL reserve methodologies and estimation techniques.

On a quarterly basis, the Company reviews and refines its estimate of the allowance for credit losses, taking into consideration changes in portfolio size and composition, historical loss experience, internal risk ratings, current economic conditions, industry performance trends and other pertinent information.

There were no material changes in assumptions or estimation techniques compared with prior periods that impacted the determination of the current period’s ALLL and the reserve for unfunded lending commitments.

The following is a summary of changes in the allowance for credit losses:

	Three Months Ended June 30, 2016									Six Months Ended June 30, 2016
(in millions)	Commercial			Retail			Total			Commercial			Retail			Total
Allowance for loan and lease losses, beginning of period		$633			$591			$1,224			$596			$620			$1,216
Charge-offs	(7		)	(106		)	(113		)	(20		)	(219		)	(239		)
Recoveries	5			43			48			9			82			91
Net charge-offs	(2		)	(63		)	(65		)	(11		)	(137		)	(148		)
Provision charged to income	45			42			87			91			87			178
Allowance for loan and lease losses, end of period	676			570			1,246			676			570			1,246
Reserve for unfunded lending commitments, beginning of period	58			—			58			58			—			58
Credit for unfunded lending commitments	3			—			3			3			—			3
Reserve for unfunded lending commitments as of period end	61			—			61			61			—			61
Total allowance for credit losses as of period end		$737			$570			$1,307			$737			$570			$1,307

	Three Months Ended June 30, 2015									Six Months Ended June 30, 2015
(in millions)	Commercial			Retail			Total			Commercial			Retail			Total
Allowance for loan and lease losses, beginning of period		$578			$624			$1,202			$544			$651			$1,195
Charge-offs	(15		)	(106		)	(121		)	(21		)	(215		)	(236		)
Recoveries	8			35			43			36			68			104
Net recoveries (charge-offs)	(7		)	(71		)	(78		)	15			(147		)	(132		)
Sales/Other	—			—			—			—			(2		)	(2		)
Provision charged to income	(6		)	83			77			6			134			140
Allowance for loan and lease losses, end of period	565			636			1,201			565			636			1,201
Reserve for unfunded lending commitments, beginning of period	56			—			56			61			—			61
Provision for unfunded lending commitments	—			—			—			(5		)	—			(5		)
Reserve for unfunded lending commitments as of period end	56			—			56			56			—			56
Total allowance for credit losses as of period end		$621			$636			$1,257			$621			$636			$1,257

18

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The recorded investment in loans and leases based on the Company’s evaluation methodology is as follows:

	June 30, 2016						December 31, 2015
(in millions)	Commercial		Retail		Total		Commercial		Retail		Total
Individually evaluated		$408		$802		$1,210		$218		$1,165		$1,383
Formula-based evaluation	49,149		53,192		102,341		45,996		51,663		97,659
Total		$49,557		$53,994		$103,551		$46,214		$52,828		$99,042

The following is a summary of the allowance for credit losses by evaluation method:

	June 30, 2016						December 31, 2015
(in millions)	Commercial		Retail		Total		Commercial		Retail		Total
Individually evaluated		$52		$79		$131		$36		$101		$137
Formula-based evaluation	685		491		1,176		618		519		1,137
Allowance for credit losses		$737		$570		$1,307		$654		$620		$1,274

For commercial loans and leases, the Company utilizes regulatory classification ratings to monitor credit quality. Loans with a “pass” rating are those that the Company believes will be fully repaid in accordance with the contractual loan terms. Commercial loans and leases that are “criticized” are those that have some weakness that indicates an increased probability of future loss. For retail loans, the Company primarily uses the loan’s payment and delinquency status to monitor credit quality. The further a loan is past due, the greater the likelihood of future credit loss. These credit quality indicators for both commercial and retail loans are continually updated and monitored.

The recorded investment in classes of commercial loans and leases based on regulatory classification ratings is as follows:

	June 30, 2016
			Criticized
(in millions)	Pass		Special Mention		Substandard		Doubtful		Total
Commercial		$33,931		$855		$1,015		$126		$35,927
Commercial real estate	9,281		318		156		70		9,825
Leases	3,603		80		122		—		3,805
Total		$46,815		$1,253		$1,293		$196		$49,557

	December 31, 2015
			Criticized
(in millions)	Pass		Special Mention		Substandard		Doubtful		Total
Commercial		$31,276		$911		$1,002		$75		$33,264
Commercial real estate	8,450		272		171		78		8,971
Leases	3,880		55		44		—		3,979
Total		$43,606		$1,238		$1,217		$153		$46,214

19

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The recorded investment in classes of retail loans, categorized by delinquency status is as follows:

	June 30, 2016
(in millions)	Current		1-29 Days Past Due		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total
Residential mortgages		$13,571		$89		$40		$10		$145		$13,855
Home equity loans	1,937		133		20		8		79		2,177
Home equity lines of credit	13,755		388		44		24		207		14,418
Home equity loans serviced by others (1)	781		48		10		4		17		860
Home equity lines of credit serviced by others (1)	184		37		12		5		35		273
Automobile	12,959		926		122		31		37		14,075
Student	5,340		105		18		11		42		5,516
Credit cards	1,539		42		10		8		14		1,613
Other retail	1,149		44		6		4		4		1,207
Total		$51,215		$1,812		$282		$105		$580		$53,994

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

	December 31, 2015
(in millions)	Current		1-29 Days Past Due		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total
Residential mortgages		$12,905		$97		$54		$16		$246		$13,318
Home equity loans	2,245		164		32		12		104		2,557
Home equity lines of credit	13,982		407		60		20		205		14,674
Home equity loans serviced by others (1)	886		60		14		6		20		986
Home equity lines of credit serviced by others (1)	296		48		10		6		29		389
Automobile	12,670		964		127		32		35		13,828
Student	4,175		113		19		11		41		4,359
Credit cards	1,554		44		11		9		16		1,634
Other retail	1,013		53		8		4		5		1,083
Total		$49,726		$1,950		$335		$116		$701		$52,828

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

20

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Nonperforming Assets

The following table presents nonperforming loans and leases and loans accruing 90 days or more past due:

	Nonperforming (1)				Accruing and 90 days or more past due
(in millions)	June 30, 2016		December 31, 2015		June 30, 2016		December 31, 2015
Commercial		$277		$71		$—		$1
Commercial real estate	70		77		4		—
Leases	—		—		—		—
Total commercial	347		148		4		1
Residential mortgages (2) (3) (4)	174		331		15		—
Home equity loans (2)	104		135		—		—
Home equity lines of credit	251		272		—		—
Home equity loans serviced by others (5)	33		38		—		—
Home equity lines of credit serviced by others (5)	38		32		—		—
Automobile	43		42		—		—
Student	37		41		6		6
Credit card	14		16		—		—
Other retail	3		5		1		2
Total retail	697		912		22		8
Total		$1,044		$1,060		$26		$9

⁽¹⁾ Effective March 31, 2016, the Company began excluding loans 90 days or more past due and still accruing from nonperforming loans and leases. Nonperforming loans and leases as of December 31, 2015 included loans and leases on nonaccrual of $1.051 billion and loans and leases accruing and 90 days or more past due of $9 million.

⁽²⁾ Nonperforming balances at June 30, 2016 excluded $71 million of troubled debt restructured loans held for sale, including $54 million of residential mortgages and $17 million of home equity loans.

⁽³⁾ Effective March 31, 2016, the Company began excluding first lien residential mortgage loans that are 100% guaranteed by the Federal Housing Administration from nonperforming balances. As of June 30, 2016, $15 million of these loans were accruing and 90 days or more past due.

⁽⁴⁾ Effective March 31, 2016, the Company began excluding guaranteed residential mortgage loans sold to GNMA for which the Company had the right, but not the obligation, to repurchase from nonperforming balances. As of June 30, 2016 these loans totaled $34 million. These loans are consolidated on the Company’s Consolidated Balance Sheets.

⁽⁵⁾ The Company's SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

A summary of other nonperforming assets is as follows:

(in millions)	June 30, 2016		December 31, 2015
Other nonperforming assets, net of valuation allowance:
Commercial		$1		$1
Retail	47		45
Other nonperforming assets, net of valuation allowance		$48		$46

Other nonperforming assets consist primarily of other real estate owned and are presented in other assets on the Consolidated Balance Sheets.

21

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

A summary of key performance indicators is as follows:

	June 30, 2016		December 31, 2015
Nonperforming commercial loans and leases as a percentage of total loans and leases (1)	0.34	%	0.15	%
Nonperforming retail loans as a percentage of total loans and leases (1)	0.67		0.92
Total nonperforming loans and leases as a percentage of total loans and leases (1)	1.01	%	1.07	%
Nonperforming commercial assets as a percentage of total assets (1)	0.24	%	0.11	%
Nonperforming retail assets as a percentage of total assets (1)	0.51		0.69
Total nonperforming assets as a percentage of total assets (1)	0.75	%	0.80	%

⁽¹⁾ December 31, 2015 ratios included loans accruing and 90 days or more past due of $1 million and $8 million for commercial and retail, respectively.

The recorded investment in mortgage loans collateralized by residential real estate property for which formal foreclosure proceedings are in process was $211 million and $257 million as of June 30, 2016 and December 31, 2015, respectively.

The following is an analysis of the age of the past due amounts (accruing and nonaccruing):

	June 30, 2016								December 31, 2015
(in millions)	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due
Commercial		$8		$23		$277		$308		$9		$4		$71		$84
Commercial real estate	2		5		74		81		30		3		77		110
Leases	1		—		—		1		9		1		—		10
Total commercial	11		28		351		390		48		8		148		204
Residential mortgages	40		10		145		195		54		16		246		316
Home equity loans	20		8		79		107		32		12		104		148
Home equity lines of credit	44		24		207		275		60		20		205		285
Home equity loans serviced by others (1)	10		4		17		31		14		6		20		40
Home equity lines of credit serviced by others (1)	12		5		35		52		10		6		29		45
Automobile	122		31		37		190		127		32		35		194
Student	18		11		42		71		19		11		41		71
Credit cards	10		8		14		32		11		9		16		36
Other retail	6		4		4		14		8		4		5		17
Total retail	282		105		580		967		335		116		701		1,152
Total		$293		$133		$931		$1,357		$383		$124		$849		$1,356

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

22

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Impaired loans include: (1) nonaccruing larger balance commercial loans (greater than $3 million carrying value); and (2) commercial and retail TDRs (excluding loans held for sale). The following is a summary of impaired loan information by class:

	June 30, 2016
(in millions)	Impaired Loans With a Related Allowance		Allowance on Impaired Loans		Impaired Loans Without a Related Allowance		Unpaid Contractual Balance		Total Recorded Investment in Impaired Loans
Commercial		$216		$46		$139		$391		$355
Commercial real estate	42		6		11		56		53
Total commercial	258		52		150		447		408
Residential mortgages	34		4		130		214		164
Home equity loans	51		5		107		198		158
Home equity lines of credit	26		3		160		223		186
Home equity loans serviced by others (1)	45		7		21		79		66
Home equity lines of credit serviced by others (1)	3		—		7		14		10
Automobile	4		—		14		23		18
Student	161		46		1		162		162
Credit cards	26		11		—		27		26
Other retail	10		3		2		14		12
Total retail	360		79		442		954		802
Total		$618		$131		$592		$1,401		$1,210

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

	December 31, 2015
(in millions)	Impaired Loans With a Related Allowance		Allowance on Impaired Loans		Impaired Loans Without a Related Allowance		Unpaid Contractual Balance		Total Recorded Investment in Impaired Loans
Commercial		$92		$23		$58		$144		$150
Commercial real estate	56		13		12		70		68
Total commercial	148		36		70		214		218
Residential mortgages	121		16		320		608		441
Home equity loans	85		11		139		283		224
Home equity lines of credit	27		2		167		234		194
Home equity loans serviced by others (1)	50		8		24		88		74
Home equity lines of credit serviced by others (1)	3		1		7		14		10
Automobile	3		—		11		19		14
Student	163		48		2		165		165
Credit cards	28		11		—		28		28
Other retail	13		4		2		18		15
Total retail	493		101		672		1,457		1,165
Total		$641		$137		$742		$1,671		$1,383

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

23

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Additional information on impaired loans is as follows:

	Three Months Ended June 30,
	2016				2015
(in millions)	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
Commercial		$2		$324		$1		$129
Commercial real estate	—		58		—		51
Total commercial	2		382		1		180
Residential mortgages	1		160		4		436
Home equity loans	1		158		3		272
Home equity lines of credit	2		184		1		151
Home equity loans serviced by others (1)	1		66		1		84
Home equity lines of credit serviced by others (1)	—		10		—		10
Automobile	—		15		—		12
Student	2		161		2		164
Credit cards	1		26		—		30
Other retail	—		13		—		18
Total retail	8		793		11		1,177
Total		$10		$1,175		$12		$1,357

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

	Six Months Ended June 30,
	2016				2015
(in millions)	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
Commercial		$3		$248		$1		$133
Commercial real estate	—		61		1		54
Total commercial	3		309		2		187
Residential mortgages	2		156		8		433
Home equity loans	3		154		5		266
Home equity lines of credit	3		182		2		150
Home equity loans serviced by others (1)	2		67		2		84
Home equity lines of credit serviced by others (1)	—		9		—		10
Automobile	—		14		—		11
Student	4		160		4		162
Credit cards	1		26		1		29
Other retail	—		13		—		18
Total retail	15		781		22		1,163
Total		$18		$1,090		$24		$1,350

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

24

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Troubled Debt Restructurings

A loan modification is identified as a TDR when the Company or a bankruptcy court grants the borrower a concession the Company would not otherwise make in response to the borrower’s financial difficulties. TDRs typically result from the Company’s loss mitigation efforts and are undertaken in order to improve the likelihood of recovery and continuity of the relationship. The Company’s loan modifications are handled on a case-by-case basis and are negotiated to achieve mutually agreeable terms that maximize loan collectability and meet the borrower’s financial needs. Concessions granted in TDRs for all classes of loans may include lowering the interest rate, forgiving a portion of principal, extending the loan term, lowering scheduled payments for a specified period of time, principal forbearance, or capitalizing past due amounts. A rate increase can be a concession if the increased rate is lower than a market rate for debt with risk similar to that of the restructured loan. TDRs for commercial loans and leases may also involve creating a multiple note structure, accepting non-cash assets, accepting an equity interest, or receiving a performance-based fee. In some cases, a TDR may involve multiple concessions. The financial effects of TDRs for all loan classes may include lower income (either due to a lower interest rate or a delay in the timing of cash flows), larger loan loss provisions, and accelerated charge-offs if the modification renders the loan collateral-dependent. In some cases, interest income throughout the term of the loan may increase if, for example, the loan is extended or the interest rate is increased as a result of the restructuring.

Because TDRs are impaired loans, the Company measures impairment by comparing the present value of expected future cash flows, or when appropriate, the fair value of collateral, to the loan’s recorded investment. Any excess of recorded investment over the present value of expected future cash flows or collateral value is recognized by creating a valuation allowance or increasing an existing valuation allowance. Any portion of the loan’s recorded investment the Company does not expect to collect as a result of the modification is charged off at the time of modification.

Commercial TDRs were $126 million on June 30, 2016 and and $155 million on December 31, 2015. Retail TDRs totaled $802 million on June 30, 2016 and $1.2 billion on December 31, 2015. Other loans held for sale, as of June 30, 2016, contained $322 million of TDRs, including $262 million of residential mortgages and $60 million of home equity loans. Commitments to lend additional funds to debtors owing receivables which were TDRs were $30 million and $15 million on June 30, 2016 and December 31, 2015, respectively.

The following table summarizes how loans were modified during the three months endedJune 30, 2016, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances include loans that became TDRs during 2016 and were paid off in full, charged off, or sold prior to June 30, 2016.

	Primary Modification Types
	Interest Rate Reduction (1)					Maturity Extension (2)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	3		$—		$—	28		$4		$4
Commercial real estate	—	—		—		—	—		—
Total commercial	3	—		—		28	4		4
Residential mortgages	3	1		1		10	2		2
Home equity loans	15	1		1		21	2		2
Home equity lines of credit	6	—		—		8	1		1
Home equity loans serviced by others (3)	3	—		—		—	—		—
Home equity lines of credit serviced by others (3)	2	—		—		3	1		1
Automobile	30	—		—		3	—		—
Student	—	—		—		—	—		—
Credit cards	552	3		3		—	—		—
Other retail	1	—		—		—	—		—
Total retail	612	5		5		45	6		6
Total	615		$5		$5	73		$10		$10

25

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

	Primary Modification Types
	Other (4)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification			Charge-offs Resulting from Modification
Commercial	4		$20		$21		$—			$—
Commercial real estate	—	—		—		—			—
Total commercial	4	20		21		—			—
Residential mortgages	67	7		7		—			—
Home equity loans	94	5		5		(1		)	—
Home equity lines of credit	92	6		6		—			—
Home equity loans serviced by others (3)	16	—		—		—			—
Home equity lines of credit serviced by others (3)	5	1		—		—			—
Automobile	348	7		6		—			1
Student	111	2		2		1			—
Credit cards	—	—		—		1			—
Other retail	5	—		—		—			—
Total retail	738	28		26		1			1
Total	742		$48		$47		$1			$1

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

⁽³⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

⁽⁴⁾ Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forbearance, capitalizing arrearages, and principal forgiveness. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

26

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table summarizes how loans were modified during the three months endedJune 30, 2015, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances include loans that became TDRs during 2015 and were paid off in full, charged off, or sold prior to June 30, 2015.

	Primary Modification Types
	Interest Rate Reduction (1)					Maturity Extension (2)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	7		$1		$1	36		$2		$2
Commercial real estate	—	—		—		—	—		—
Total commercial	7	1		1		36	2		2
Residential mortgages	20	3		3		9	2		2
Home equity loans	26	1		1		49	11		11
Home equity lines of credit	—	—		—		—	—		—
Home equity loans serviced by others (3)	5	—		—		—	—		—
Automobile	18	1		1		1	—		—
Credit cards	630	3		3		—	—		—
Total retail	699	8		8		59	13		13
Total	706		$9		$9	95		$15		$15

	Primary Modification Types
	Other (4)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification		Charge-offs Resulting from Modification
Commercial	3		$—		$—		$—		$—
Commercial real estate	—	—		—		—		—
Total commercial	3	—		—		—		—
Residential mortgages	42	4		4		—		—
Home equity loans	97	7		7		—		—
Home equity lines of credit	78	5		5		—		1
Home equity loans serviced by others (3)	25	1		1		—		—
Home equity lines of credit serviced by others (3)	15	1		1		—		—
Automobile	172	3		2		—		—
Student	369	7		7		1		—
Credit cards	—	—		—		1		—
Other retail	4	—		—		—		—
Total retail	802	28		27		2		1
Total	805		$28		$27		$2		$1

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

⁽³⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

⁽⁴⁾ Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forbearance, capitalizing arrearages, and principal forgiveness. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

27

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table summarizes how loans were modified during the six months endedJune 30, 2016, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances include loans that became TDRs during 2016 and were paid off in full, charged off, or sold prior to June 30, 2016.

	Primary Modification Types
	Interest Rate Reduction (1)					Maturity Extension (2)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	8		$1		$1	54		$8		$8
Commercial real estate	—	—		—		—	—		—
Total commercial	8	1		1		54	8		8
Residential mortgages	25	4		4		16	3		3
Home equity loans	29	2		2		37	4		4
Home equity lines of credit	13	1		1		27	3		3
Home equity loans serviced by others (3)	6	—		—		—	—		—
Home equity lines of credit serviced by others (3)	2	—		—		4	1		1
Automobile	51	1		1		8	—		—
Student	—	—		—		—	—		—
Credit cards	1,081	6		6		—	—		—
Other retail	1	—		—		—	—		—
Total retail	1,208	14		14		92	11		11
Total	1,216		$15		$15	146		$19		$19

	Primary Modification Types
	Other (4)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification			Charge-offs Resulting from Modification
Commercial	9		$41		$41		($1	)		$—
Commercial real estate	—	—		—		—			—
Total commercial	9	41		41		(1		)	—
Residential mortgages	131	15		15		—			—
Home equity loans	181	11		11		(1		)	—
Home equity lines of credit	124	8		8		—			—
Home equity loans serviced by others (3)	34	1		1		—			—
Home equity lines of credit serviced by others (3)	13	1		—		—			—
Automobile	539	10		9		—			1
Student	297	6		6		2			—
Credit cards	—	—		—		1			—
Other retail	8	—		—		—			—
Total retail	1,327	52		50		2			1
Total	1,336		$93		$91		$1			$1

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

⁽³⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

⁽⁴⁾ Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forbearance, capitalizing arrearages, and principal forgiveness. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

28

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table summarizes how loans were modified during the six months endedJune 30, 2015, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances include loans that became TDRs during 2015 and were paid off in full, charged off, or sold prior to June 30, 2015.

	Primary Modification Types
	Interest Rate Reduction (1)					Maturity Extension (2)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	14		$3		$3	64		$12		$12
Commercial real estate	1	—		—		—	—		—
Total commercial	15	3		3		64	12		12
Residential mortgages	53	9		9		19	4		4
Home equity loans	47	2		2		86	16		16
Home equity lines of credit	—	—		—		3	—		—
Home equity loans serviced by others (3)	22	1		1		—	—		—
Home equity lines of credit serviced by others (3)	—	—		—		—	—		—
Automobile	38	1		1		2	—		—
Student	—	—		—		—	—		—
Credit cards	1,234	7		7		—	—		—
Other retail	—	—		—		—	—		—
Total retail	1,394	20		20		110	20		20
Total	1,409		$23		$23	174		$32		$32

	Primary Modification Types
	Other (4)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification			Charge-offs Resulting from Modification
Commercial	4		$2		$2		($1	)		$—
Commercial real estate	1	4		4		—			—
Total commercial	5	6		6		(1		)	—
Residential mortgages	106	10		10		(1		)	—
Home equity loans	294	17		17		—			—
Home equity lines of credit	213	14		12		—			2
Home equity loans serviced by others (3)	71	3		3		—			1
Home equity lines of credit serviced by others (3)	22	1		1		—			—
Automobile	469	8		6		—			1
Student	750	14		14		3			—
Credit cards	—	—		—		1			—
Other retail	15	—		—		—			—
Total retail	1,940	67		63		3			4
Total	1,945		$73		$69		$2			$4

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

⁽³⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

⁽⁴⁾ Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forbearance, capitalizing arrearages, and principal forgiveness. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

29

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The table below summarizes TDRs that defaulted during the three months endedJune 30, 2016 and 2015 within 12 months of their modification date. For purposes of this table, a payment default is defined as being past due 90 days or more under the modified terms. Amounts represent the loan’s recorded investment at the time of payment default. Loan data includes loans meeting the criteria that were paid off in full, charged off, or sold prior to June 30, 2016 and 2015. If a TDR of any loan type becomes 90 days past due after being modified, the loan is written down to the fair value of collateral less cost to sell. The amount written off is charged to the ALLL.

	Three Months Ended June 30,
	2016			2015
(dollars in millions)	Number of Contracts	Balance Defaulted		Number of Contracts	Balance Defaulted
Commercial	8		$3	8		$1
Commercial real estate	1	—		—	—
Total commercial	9	3		8	1
Residential mortgages	35	4		34	5
Home equity loans	32	2		32	2
Home equity lines of credit	20	1		32	1
Home equity loans serviced by others (1)	11	—		7	—
Home equity lines of credit serviced by others (1)	6	—		6	—
Automobile	22	1		19	—
Student	18	1		44	1
Credit cards	85	—		100	1
Other retail	—	—		1	—
Total retail	229	9		275	10
Total	238		$12	283		$11

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

The table below summarizes TDRs that defaulted during the six months endedJune 30, 2016 and 2015 within 12 months of their modification date.

	Six Months Ended June 30,
	2016			2015
(dollars in millions)	Number of Contracts	Balance Defaulted		Number of Contracts	Balance Defaulted
Commercial	11		$3	14		$1
Commercial real estate	1	—		—	—
Total commercial	12	3		14	1
Residential mortgages	89	12		83	11
Home equity loans	50	3		83	6
Home equity lines of credit	45	4		72	3
Home equity loans serviced by others (1)	21	1		23	1
Home equity lines of credit serviced by others (1)	11	—		7	—
Automobile	37	1		42	1
Student	31	1		109	2
Credit cards	206	1		202	1
Other retail	—	—		3	—
Total retail	490	23		624	25
Total	502		$26	638		$26

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

30

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Concentrations of Credit Risk

Most of the Company’s business activity is with customers located in the New England, Mid-Atlantic and Midwest regions. Generally, loans are collateralized by assets including real estate, inventory, accounts receivable, other personal property and investment securities. As of June 30, 2016 and December 31, 2015, the Company had a significant amount of loans collateralized by residential and commercial real estate. There are no significant concentrations within the commercial loan or retail loan portfolios. Exposure to credit losses arising from lending transactions may fluctuate with fair values of collateral supporting loans, which may not perform according to contractual agreements. The Company’s policy is to collateralize loans to the extent necessary; however, unsecured loans are also granted on the basis of the financial strength of the applicant and the facts surrounding the transaction.

Certain loan products, including residential mortgages, home equity loans and lines of credit, and credit cards, have contractual features that may increase credit exposure to the Company in the event of an increase in interest rates or a decline in housing values. These products include loans that exceed 90% of the value of the underlying collateral (high LTV loans), interest-only and negative amortization residential mortgages, and loans with low introductory rates. Certain loans have more than one of these characteristics.

The following table presents balances of loans with these characteristics:

	June 30, 2016
(in millions)	Residential Mortgages		Home Equity Loans and Lines of Credit		Home Equity Products Serviced by Others		Credit Cards		Student		Total
High loan-to-value		$595		$782		$621		$—		$—		$1,998
Interest only/negative amortization	1,369		—		—		—		1		1,370
Low introductory rate	—		—		—		94		—		94
Multiple characteristics and other	4		—		—		—		—		4
Total		$1,968		$782		$621		$94		$1		$3,466

	December 31, 2015
(in millions)	Residential Mortgages		Home Equity Loans and Lines of Credit		Home Equity Products Serviced by Others		Credit Cards		Student		Total
High loan-to-value		$649		$1,038		$785		$—		$—		$2,472
Interest only/negative amortization	1,110		—		—		—		—		1,110
Low introductory rate	—		3		—		96		—		99
Multiple characteristics and other	14		—		—		—		—		14
Total		$1,773		$1,041		$785		$96		$—		$3,695

NOTE 5 - VARIABLE INTEREST ENTITIES

The Company makes equity investments in various entities that are considered VIEs, as defined by GAAP. These investments primarily include ownership interests in limited partnerships that sponsor affordable housing projects and ownership interests in limited liability companies that sponsor renewable energy projects. A summary of these investments is as follows:

(in millions)	June 30, 2016		December 31, 2015
LIHTC investment included in other assets		$660		$598
LIHTC unfunded commitments included in other liabilities	365		365
Renewable energy investments included in other assets	117		118

31

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Low Income Housing Tax Credit Partnerships

The purpose of the Company’s equity investments is to assist in achieving goals of the Community Reinvestment Act and to earn an adequate return of capital. The LIHTC partnerships are managed by general partners that have the power to direct the activities which most significantly affect the performance of the partnerships. The Company is therefore not the primary beneficiary of any LIHTC partnerships. Accordingly, the Company does not consolidate these VIEs and accounts for these investments in other assets on the Consolidated Balance Sheets.

The Company applies the proportional amortization method to account for its LIHTC investments. Under the proportional amortization method, the initial investment is amortized in proportion to the actual tax credits and other tax benefits to be received in the current period as compared to the total tax credits and other tax benefits expected to be received over the life of the investment. The amortization and tax benefits are included as a component of income tax expense. The Company reports its equity share of affordable housing partnership gains and losses as an adjustment to non-interest income. The Company reports its commitments to make future investments in other liabilities on the Consolidated Balance Sheets. The Company also receives tax credits, which are reported as a reduction of income tax expense (or increase to income tax benefit) related to these transactions.

    For the three months endedJune 30, 2016, the Company recognized $16 million of amortization expense, $14 million of tax credits and $7 million of other tax benefits associated with these investments in the provision for income taxes. For the six months endedJune 30, 2016, the Company recognized $31 million of amortization expense, $29 million of tax credits and $13 million of other tax benefits associated with these investments in the provision for income taxes. For the three months endedJune 30, 2015, the Company recognized $12 million of amortization expense, $12 million of tax credits and $5 million of other tax benefits associated with these investments in the provision for income taxes. For the six months endedJune 30, 2015, the Company recognized $24 million of amortization expense, $23 million of tax credits and $9 million of other tax benefits associated with these investments in the provision for income taxes. No LIHTC investment impairment losses were recognized during the three and six months ended June 30, 2016 and 2015, respectively

Renewable Energy Entities

The Company’s investments in renewable energy entities provide benefits from a return generated by government incentives plus other tax attributes that are associated with tax ownership (e.g., tax depreciation). As a tax equity investor, the Company does not have the power to direct the activities which most significantly affect the performance of these entities and therefore is not the primary beneficiary of any renewable energy entities. Accordingly, the Company does not consolidate these VIEs.

NOTE 6 - MORTGAGE BANKING

In its mortgage banking business, the Company sells residential mortgages to government-sponsored entities and other parties, who may issue securities backed by pools of such loans. The Company retains no beneficial interests in these sales, but may retain the servicing rights of the loans sold. The Company is obligated to subsequently repurchase a loan if the purchaser discovers a standard representation or warranty violation such as noncompliance with eligibility requirements, customer fraud, or servicing violations. This primarily occurs during a loan file review.

The Company received proceeds from the sale of residential mortgages held for sale of $543 million and $649 million for the three months endedJune 30, 2016 and 2015, respectively, and $1.0 billion and $1.1 billion for the six months endedJune 30, 2016 and 2015, respectively.

The Company recognized gains on sales of residential mortgages held for sale of $16 million and $11 million for the three months endedJune 30, 2016 and 2015, respectively, and $30 million and $32 million for the six months endedJune 30, 2016 and 2015, respectively.

Pursuant to the standard representations and warranties obligations discussed above the Company repurchased residential mortgages totaling $2 million and $3 million for the three months endedJune 30, 2016 and 2015, respectively, and $4 million and $7 million for the six months endedJune 30, 2016 and 2015, respectively.

Mortgage servicing fees, a component of mortgage banking fees, were $13 million and $14 million for the three months endedJune 30, 2016 and 2015, respectively, and $26 million and $28 million for the six months endedJune 30, 2016 and 2015, respectively.

The Company recorded valuation recoveries of $1 million and $6 million for its MSRs for the three months endedJune 30, 2016 and 2015, respectively, and valuation charge-offs of $4 million and recoveries of $7 million for its MSRs for the six months endedJune 30, 2016 and 2015, respectively.

32

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Changes related to MSRs were as follows:

	As of and for the Three Months Ended June 30,						As of and for the Six Months Ended June 30,
(in millions)	2016			2015			2016			2015
MSRs:
Balance as of beginning of period		$169			$180			$173			$184
Amount capitalized	5			7			10			13
Amortization	(8		)	(10		)	(17		)	(20		)
Carrying amount before valuation allowance	166			177			166			177
Valuation allowance for servicing assets:
Balance as of beginning of period	14			17			9			18
Valuation charge-offs (recoveries)	(1		)	(6		)	4			(7		)
Balance at end of period	13			11			13			11
Net carrying value of MSRs		$153			$166			$153			$166

MSRs are presented in other assets on the Consolidated Balance Sheets.

The fair value of MSRs is estimated using a valuation model that calculates the present value of estimated future net servicing cash flows, taking into consideration actual and expected mortgage loan prepayment rates, discount rates, contractual servicing fee income, servicing costs, default rates, ancillary income, and other economic factors, which are determined based on current market conditions. The valuation model uses a static discounted cash flow methodology incorporating current market interest rates. A static model does not attempt to forecast or predict the future direction of interest rates; rather it estimates the amount and timing of future servicing cash flows using current market interest rates. The current mortgage interest rate influences the expected prepayment rate and therefore, the length of the cash flows associated with the servicing asset, while the discount rate determines the present value of those cash flows. Expected mortgage loan prepayment assumptions are obtained using the QRM Multi Component prepayment model. The Company periodically obtains third-party valuations of its MSRs to assess the reasonableness of the fair value calculated by the valuation model.

The key economic assumptions used to estimate the value of MSRs are presented in the following table:

(dollars in millions)	June 30, 2016	December 31, 2015
Fair value	$165	$178
Weighted average life (in years)	4.9	5.4
Weighted average constant prepayment rate	13.5%	11.6%
Weighted average discount rate	9.7%	9.7%

The key economic assumptions used in estimating the fair value of MSRs capitalized during the period were as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2016	2015	2016	2015
Weighted average life (in years)	5.9	6.3	6.0	5.4
Weighted average constant prepayment rate	11.3%	9.8%	11.1%	11.1%
Weighted average discount rate	9.7%	9.7%	9.7%	9.6%

33

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The sensitivity analysis below as of June 30, 2016 and December 31, 2015 presents the impact to current fair value of an immediate 50 basis points and 100 basis points adverse change in the key economic assumptions and presents the decline in fair value that would occur if the adverse change were realized. These sensitivities are hypothetical. The effect of a variation in a particular assumption on the fair value of the mortgage servicing rights is calculated independently without changing any other assumption. In reality, changes in one factor may result in changes in another (e.g., changes in interest rates, which drive changes in prepayment speeds, could result in changes in the discount rates), which might amplify or counteract the sensitivities. The primary risk inherent in the Company’s MSRs is an increase in prepayments of the underlying mortgage loans serviced, which is dependent upon market movements of interest rates.

(in millions)	June 30, 2016		December 31, 2015
Prepayment rate:
Decline in fair value from a 50 basis point decrease in interest rates		$6		$5
Decline in fair value from a 100 basis point decrease in interest rates		$17		$11
Weighted average discount rate:
Decline in fair value from a 50 basis point increase in weighted average discount rate		$3		$3
Decline in fair value from a 100 basis point increase in weighted average discount rate		$5		$6

NOTE 7 - BORROWED FUNDS

The following is a summary of the Company’s short-term borrowed funds:

(in millions)	June 30, 2016		December 31, 2015
Securities sold under agreements to repurchase		$717		$802
Other short-term borrowed funds (primarily current portion of FHLB advances)	2,770		2,630
Total short-term borrowed funds		$3,487		$3,432

Key data related to short-term borrowed funds is presented in the following table:

(dollars in millions)	As of and for the Six Months Ended June 30, 2016			As of and for the Year Ended December 31, 2015
Weighted-average interest rate at period-end:
Federal funds purchased and securities sold under agreements to repurchase	0.00		%	0.15		%
Other short-term borrowed funds (primarily current portion of FHLB advances)	0.65			0.44
Maximum amount outstanding at month-end during the period:
Federal funds purchased and securities sold under agreements to repurchase		$1,274			$5,375
Other short-term borrowed funds (primarily current portion of FHLB advances)	4,764			7,004
Average amount outstanding during the period:
Federal funds purchased and securities sold under agreements to repurchase		$927			$3,364
Other short-term borrowed funds (primarily current portion of FHLB advances)	3,421			5,865
Weighted-average interest rate during the period:
Federal funds purchased and securities sold under agreements to repurchase	0.07		%	0.22		%
Other short-term borrowed funds (primarily current portion of FHLB advances)	0.60			0.28

Note: Balances are net of certain short-term receivables associated with reverse repurchase agreements. Interest expense includes the full cost of the repurchase agreements, but excludes certain hedging costs and broker fees.

34

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following is a summary of the Company’s long-term borrowed funds:

(in millions)	June 30, 2016		December 31, 2015
Citizens Financial Group, Inc.:
4.150% fixed rate subordinated debt, due 2022 (1)		$347		$350
5.158% fixed-to-floating rate subordinated debt, (LIBOR + 3.56%) callable, due 2023 (2)	333		333
3.750% fixed rate subordinated debt, due 2024 (2) (3)	250		250
4.023% fixed rate subordinated debt, due 2024 (2) (4)	218		331
4.082% fixed rate subordinated debt, due 2025 (2) (5)	355		331
4.350% fixed rate subordinated debt, due 2025 (6)	249		250
4.300% fixed rate subordinated debt, due 2025 (7)	749		750
Banking Subsidiaries:
1.600% senior unsecured notes, due 2017 (8) (9)	753		749
2.300% senior unsecured notes, due 2018 (8) (10)	756		747
2.450% senior unsecured notes, due 2019 (8) (11)	767		752
2.500% senior unsecured notes, due 2019 (8)(12)	753		—
2.550% senior unsecured notes, due 2021(8)(13)	1,004		—
Federal Home Loan advances due through 2033	5,264		5,018
Other	12		25
Total long-term borrowed funds		$11,810		$9,886

⁽¹⁾ These balances are comprised of: principal balances of $350 million at June 30, 2016 and December 31, 2015, as well as the impact of ($3) million of unamortized deferred issuance costs and discount at June 30, 2016.

⁽²⁾ Borrowed funds with RBS as of December 31, 2015. See Note 13 “Related Party Transactions and Significant Transactions with RBS” for further information.

⁽³⁾ Prior to January 1, 2016, interest was payable at a fixed rate per annum of 4.153%.

⁽⁴⁾ These balances are comprised of: principal balance of $208 million and $333 million at June 30, 2016 and December 31, 2015, respectively, as well as the impact from interest rate swaps of $10 million and ($2) million at June 30, 2016 and December 31, 2015, respectively. See Note 11 “Derivatives” for further information. In addition, on March 7, 2016, the Company repurchased $125 million of these securities from RBS. See Note 13 “Related Party Transactions and Significant Transactions with RBS” for further information.

⁽⁵⁾ These balances are comprised of: principal balance of $334 million at June 30, 2016 and December 31, 2015; impact from interest rate swaps of $21 million and ($3) million at June 30, 2016 and December 31, 2015, respectively. See Note 11 “Derivatives” for further information.

⁽⁶⁾ These balances are comprised of: principal balances of $250 million at June 30, 2016 and December 31, 2015, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2016.

⁽⁷⁾ These balances are comprised of: principal balances of $750 million at June 30, 2016 and December 31, 2015, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2016.

⁽⁸⁾ These securities were offered under CBNA’s Global Bank Note Program dated December 1, 2014.

⁽⁹⁾ These balances are comprised of: principal balances of $750 million at June 30, 2016 and December 31, 2015; impact from interest rate swaps of $4 million and ($1) million at June 30, 2016 and December 31, 2015, respectively; and ($1) million of unamortized deferred issuance costs and discount at June 30, 2016. See Note 11 “Derivatives” for further information.

⁽¹⁰⁾ These balances are comprised of: principal balances of $750 million at June 30, 2016 and December 31, 2015; impact from interest rate swaps of $8 million and ($3) million at June 30, 2016 and December 31, 2015, respectively; and ($2) million of unamortized deferred issuance costs and discount at June 30, 2016. See Note 11 “Derivatives” for further information.

⁽¹¹⁾ These balances are comprised of: principal balances of $750 million at June 30, 2016 and December 31, 2015; impact from interest rate swaps of $20 million and $2 million at June 30, 2016 and December 31, 2015, respectively; and ($3) million of unamortized deferred issuance costs and discount at June 30, 2016. See Note 11 “Derivatives” for further information.

⁽¹²⁾ The balance is comprised of: principal balance of $750 million at June 30, 2016; impact from interest rate swaps of $5 million and ($2) million of unamortized deferred issuance costs and discount at June 30, 2016. See Note 11 “Derivatives” for further information.

⁽¹³⁾ The balance is comprised of: principal balance of $1.0 billion at June 30, 2016; impact from interest rate swaps of $9 million and ($5) million of unamortized deferred issuance costs and discount at June 30, 2016. See Note 11 “Derivatives” for further information.

Advances, lines of credit, and letters of credit from the FHLB are collateralized by pledged mortgages and pledged securities at least sufficient to satisfy the collateral maintenance level established by the FHLB. The utilized borrowing capacity for FHLB advances and letters of credit was $12.0 billion and $11.3 billion at June 30, 2016 and December 31, 2015, respectively. The Company’s available FHLB borrowing capacity was $3.5 billionand $4.1 billion at June 30, 2016 and December 31, 2015, respectively. The Company can also borrow from the FRB discount window to meet short-term liquidity requirements. Collateral, such as investment securities and loans, was pledged to provide borrowing capacity at the FRB. At June 30, 2016, the Company’s unused secured borrowing capacity was approximately $32.2 billion, which includes unencumbered securities, FHLB borrowing capacity, and FRB discount window capacity.

35

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following is a summary of maturities for the Company’s long-term borrowed funds at June 30, 2016:

Year (in millions)	CFG Parent Company		Banking Subsidiaries		Consolidated
2017 or on demand		$—		$6,004		$6,004
2018	—		761		761
2019	—		1,521		1,521
2020	—		2		2
2021	—		1,009		1,009
2022 and thereafter	2,501		12		2,513
Total		$2,501		$9,309		$11,810

NOTE 8 - STOCKHOLDERS’ EQUITY

Preferred Stock

The Company had 100,000,000 shares authorized and 250,000 shares outstanding of $25.00 par value undesignated preferred stock as of June 30, 2016 and December 31, 2015, respectively. The Board of Directors or any authorized committee thereof are authorized to provide for the issuance of these shares in one or more series, and by filing a certificate pursuant to applicable law of the State of Delaware, to establish or change from time to time the number of shares of each such series, and to fix the designations, powers, including voting powers, full or limited, or no voting powers, preferences and the relative, participating, optional or other special rights of the shares of each series and any qualifications, limitations and restrictions thereof.

On April 6, 2015, the Company issued $250 million, or 250,000 shares, of 5.500% fixed-to-floating rate non-cumulative perpetual Series A Preferred Stock, par value of $25.00 per share with a liquidation preference $1,000 per share (the “Series A Preferred Stock”) to the initial purchasers in reliance on the exemption from registration provided by Section (4)(a)(2) of the Securities Act of 1933, as amended, for resale pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. As a result of this issuance, the Company received net proceeds of $247 million after underwriting discount.

The Series A Preferred Stock has no stated maturity and is not subject to any sinking fund or other obligation of the Company. Holders of the Series A Preferred Stock will be entitled to receive dividend payments when, and if, declared by the Company’s Board of Directors or a duly authorized committee thereof. Any such dividends will be payable on a semi-annual basis at an annual rate equal to 5.500%. On April 6, 2020, the Series A Preferred Stock converts to a quarterly floating-rate basis equal to three-month U.S. dollar LIBOR on the related dividend determination date plus 3.960%.

Citizens may redeem the Series A Preferred Stock, in whole or in part on any dividend payment date, on or after April 6, 2020 or, in whole but not in part, at any time within 90 days following a regulatory capital treatment event at a redemption price equal to $1,000 per share, plus any declared and unpaid dividends, without accumulation of any undeclared dividends. Citizens may not redeem shares of the Series A Preferred Stock without obtaining the prior approval of the FRBG if then required under applicable capital guidelines.

Shares of the Series A Preferred Stock have priority over the Company's common stock with regard to the payment of dividends and, as such, the Company may not pay dividends on or repurchase, redeem, or otherwise acquire for consideration shares of its common stock unless dividends for the Series A Preferred Stock have been declared for that period and sufficient funds have been set aside to make payment.

Except in certain limited circumstances, the Series A Preferred Stock does not have any voting rights.

Treasury Stock

On August 3, 2015, CFG used the net proceeds of its public offering of $250 million aggregate principal amount 4.350% Subordinated Notes due 2025 issued on July 31, 2015, to repurchase 9,615,384 shares of its outstanding common stock directly from RBS at a public offering price of $26.00 per share. The repurchased shares are held in treasury.

On April 7, 2015, the Company used the net proceeds of the Series A Preferred Stock offering to repurchase 10,473,397 shares of its common stock from RBS at a total cost of approximately $250 million and a price per share of $23.87, which equaled the volume-weighted average price of the Company’s common stock for all traded volume over the five trading days preceding the repurchase agreement date of April 1, 2015. The repurchased shares are held in treasury.

36

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

No treasury stock activity was recorded during the six months endedJune 30, 2016. During the year ended December 31, 2015, the Company recorded an additional 876,087 shares of treasury stock associated with share-based compensation plan activity for a total cost of $22 million at a weighted-average price per share of $25.50.

NOTE 9 - EMPLOYEE BENEFITS

The Company maintains a non-contributory pension plan (the “Plan” or “qualified plan”) that was closed to new hires and re-hires effective January 1, 2009, and frozen to all participants effective December 31, 2012. Benefits under the Plan are based on employees’ years of service and highest five-year average of eligible compensation. The Plan is funded on a current basis, in compliance with the requirements of ERISA. The Company also provides an unfunded, non-qualified supplemental retirement plan (the “non-qualified plan”), which was closed and frozen effective December 12, 2012.

The following table presents the components of net periodic (income) cost for the Company’s qualified and non-qualified plans:

	Six Months Ended June 30,
	Qualified Plan						Non-Qualified Plan				Total
(in millions)	2016			2015			2016		2015		2016			2015
Service cost		$2			$2			$—		$—		$2			$2
Interest cost	22			22			2		2		24			24
Expected return on plan assets	(34		)	(37		)	—		—		(34		)	(37		)
Amortization of actuarial loss	7			6			1		1		8			7
Net periodic pension (income) cost		($3	)		($7	)		$3		$3		$—			($4	)

NOTE 10 - INCOME TAXES

Income Tax Provision

The provision for income taxes was $118 million and $92 million for the three months ended June 30, 2016 and 2015, respectively, resulting in effective tax rates of 32.6% and 32.7%, respectively. The provision for income taxes was $227 million and $198 million for the six months ended June 30, 2016 and 2015, respectively, resulting in effective tax rates of 32.7% and 33.2%, respectively. For the six months ended June 30, 2016 and 2015, the effective tax rate compared favorably to the statutory rate of 35% primarily as a result of the permanent benefits of tax credits and tax-exempt income.

Deferred Tax Liability

At June 30, 2016, the Company reported a net deferred tax liability of $961 million, compared to a $730 million liability as of December 31, 2015. The increase in the net deferred tax liability is primarily attributable to the tax effect of net unrealized gains on securities and derivatives arising during the period and the tax effect of current year timing adjustments.

NOTE 11 - DERIVATIVES

In the normal course of business, the Company enters into a variety of derivative transactions in order to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates and foreign currency exchange rates. The Company does not use derivatives for speculative purposes.

The Company’s derivative instruments are recognized on the Consolidated Balance Sheets at fair value. Information regarding the valuation methodology and inputs used to estimate the fair value of the Company’s derivative instruments is described in Note 14 “Fair Value Measurements.”

37

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table identifies derivative instruments included on the Consolidated Balance Sheets in derivative assets and derivative liabilities:

	June 30, 2016								December 31, 2015
(in millions)	Notional Amount (1)		Derivative Assets			Derivative Liabilities			Notional Amount (1)		Derivative Assets			Derivative Liabilities
Derivatives designated as hedging instruments:
Interest rate contracts		$15,500		$425			$255			$16,750		$96			$50
Derivatives not designated as hedging instruments:
Interest rate contracts	39,606		810			723			33,719		540			455
Foreign exchange contracts	9,490		193			185			8,366		163			156
Other contracts	1,491		15			14			981		8			5
Total derivatives not designated as hedging instruments			1,018			922					711			616
Gross derivative fair values			1,443			1,177					807			666
Less: Gross amounts offset in the Consolidated Balance Sheets (2)			(130		)	(130		)			(178		)	(178		)
Less: Cash collateral applied (2)			(1		)	(37		)			(4		)	(3		)
Total net derivative fair values presented in the Consolidated Balance Sheets (3)				$1,312			$1,010					$625			$485

⁽¹⁾ The notional or contractual amount of interest rate derivatives and foreign exchange contracts is the amount upon which interest and other payments under the contract are based. Notional amounts are typically not exchanged. Therefore, notional amounts should not be taken as the measure of credit or market risk, as they do not measure the true economic risk of these contracts.

⁽²⁾ Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle positive and negative positions.

⁽³⁾ The Company also offsets assets and liabilities associated with repurchase agreements on the Consolidated Balance Sheets. See Note 2 “Securities” for further information.

The Company’s derivative transactions are internally divided into three sub-groups: institutional, customer and residential loan.

Institutional derivatives

The institutional derivatives portfolio primarily consists of interest rate swap agreements that are used to hedge the interest rate risk associated with the Company’s loans and financing liabilities (i.e., borrowed funds, deposits, etc.). The goal of the Company’s interest rate hedging activities is to manage interest rate sensitivity so that movements in interest rates do not significantly adversely affect net interest income.

The Company enters into certain interest rate swap agreements to hedge the risk associated with floating rate loans. By entering into pay-floating/receive-fixed interest rate swaps, the Company was able to minimize the variability in the cash flows of these assets due to changes in interest rates. The Company has outstanding interest rate swap agreements designed to hedge a portion of the Company’s borrowed funds and deposit liabilities. By entering into a pay-fixed/receive-floating interest rate swap, a portion of these liabilities has been effectively converted to a fixed-rate liability for the term of the interest rate swap agreement. The Company has also entered into a forward-starting interest rate swap to minimize the exposure to variability in the interest cash flows on a forecasted fixed rate debt issuance.

The Company also uses receive-fixed/pay-floating interest rate swaps to manage the interest rate exposure on its medium term borrowings.

Customer derivatives

The customer derivatives portfolio consists of interest rate swap agreements and option contracts that are transacted to meet the financing needs of the Company’s customers. Swap agreements and interest rate option agreements are transacted to effectively minimize the Company’s market risk associated with the customer derivative products. The customer derivatives portfolio also includes foreign exchange contracts that are entered into on behalf of customers for the purpose of hedging exposure related to cash orders and loans and deposits denominated in foreign currency. The primary risks associated with these transactions arise from exposure to changes in foreign currency exchange rates and the ability of the counterparties to meet the terms of the contract. To manage this market risk, the Company simultaneously enters into offsetting foreign exchange contracts.

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CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Residential loan derivatives

The Company enters into residential loan commitments that allow residential mortgage customers to lock in the interest rate on a residential mortgage while the loan undergoes the underwriting process. The Company also uses forward sales contracts to protect the value of residential mortgage loans and loan commitments that are being underwritten for future sale to investors in the secondary market.

The Company has certain derivative transactions that are designated as hedging instruments described as follows:

Derivatives designated as hedging instruments

The Company’s institutional hedging portfolio qualifies for hedge accounting. This includes interest rate swaps that are designated in highly effective fair value and cash flow hedging relationships. The Company formally documents at inception all hedging relationships, as well as risk management objectives and strategies for undertaking various accounting hedges. Additionally, the Company uses dollar offset or regression analysis at the hedge’s inception, and monthly thereafter to assess whether the derivatives are expected to be, or have been, highly effective in offsetting changes in the hedged item’s expected cash flows. The Company discontinues hedge accounting when it is determined that a derivative is not expected to be or has ceased to be effective as a hedge, and then reflects changes in fair value in earnings after termination of the hedge relationship.

Fair value hedges

The Company entered into interest rate swap agreements to manage the interest rate exposure on its medium term borrowings. The changes in fair value of the fair value hedges, to the extent that the hedging relationship is effective, are recorded through earnings and offset against changes in the fair value of the hedged item.

The following tables summarize certain information related to the Company’s fair value hedges:

	The Effect of Fair Value Hedges on Net Income
	Amounts Recognized in Other Income for the
	Three Months Ended June 30, 2016							Three Months Ended June 30, 2015
(in millions)	Derivative		Hedged Item			Hedge Ineffectiveness		Derivative			Hedged Item		Hedge Ineffectiveness
Hedges of interest rate risk on borrowings using interest rate swaps		$32		($31	)		$1		($3	)		$3		$—

	The Effect of Fair Value Hedges on Net Income
	Amounts Recognized in Other Income for the
	Six Months Ended June 30, 2016							Six Months Ended June 30, 2015
(in millions)	Derivative		Hedged Item			Hedge Ineffectiveness		Derivative		Hedged Item			Hedge Ineffectiveness
Hedges of interest rate risk on borrowings using interest rate swaps		$84		($83	)		$1		$6		($6	)		$—

Cash flow hedges

The Company has outstanding interest rate swap agreements designed to hedge a portion of the Company’s floating rate assets, financing liabilities (including its borrowed funds), and a forecasted debt issuance. All of these swaps have been deemed as highly effective cash flow hedges. The effective portion of the hedging gains and losses associated with these hedges are recorded in OCI; the ineffective portion of the hedging gains and losses is recorded in earnings (other income). Hedging gains and losses on derivative contracts reclassified from OCI to current period earnings are included in the line item in the accompanying Consolidated Statements of Operations in which the hedged item is recorded and in the same period that the hedged item affects earnings. During the next 12 months, approximately $4 million of net gain (pre-tax) on derivative instruments included in OCI is expected to be reclassified to net interest income in the Consolidated Statements of Operations.

Hedging gains and losses associated with the Company’s cash flow hedges are immediately reclassified from OCI to current period earnings (other income) if it becomes probable that the hedged forecasted transactions will not occur during the originally specified time period.

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CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table summarizes certain information related to the Company’s cash flow hedges:

The Effect of Cash Flow Hedges on Net Income and Stockholders' Equity
	Amounts Recognized for the
	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2016			2015			2016			2015
Effective portion of gain (loss) recognized in OCI (1)		$21			($8	)		$75			$96
Amounts reclassified from OCI to interest income (2)	21			17			43			35
Amounts reclassified from OCI to interest expense (2)	(8		)	(14		)	(16		)	(29		)

⁽¹⁾ The cumulative effective gains and losses on the Company’s cash flow hedging activities are included on the accumulated other comprehensive loss line item on the Consolidated Balance Sheets.

⁽²⁾ This amount includes both (a) the amortization of effective gains and losses associated with the Company’s terminated cash flow hedges and (b) the current reporting period’s interest settlements realized on the Company’s active cash flow hedges. Both (a) and (b) were previously included on the accumulated other comprehensive loss line item on the Consolidated Balance Sheets and were subsequently recorded as adjustments to the interest expense of the underlying hedged item.

Economic hedges

The Company’s customer derivatives are recorded on the Consolidated Balance Sheets at fair value. These include interest rate and foreign exchange derivative contracts that are transacted to meet the hedging and financing needs of the Company’s customers. Mark-to-market adjustments to the fair value of customer related interest rate contracts are included in other income in the accompanying Consolidated Statements of Operations. Mark-to-market adjustments to the fair value of foreign exchange contracts relating to foreign currency loans are included in interest and fees on loans and leases in the accompanying Consolidated Statements of Operations, while all other foreign currency contract fair value changes are included in foreign exchange and letter of credit fees. In both cases, the mark-to-market gains and losses associated with the customer derivatives are mitigated by the mark-to-market gains and losses on the offsetting interest rate and foreign exchange derivative contracts transacted.

The Company’s residential loan derivatives (including residential loan commitments and forward sales contracts) are recorded on the Consolidated Balance Sheets at fair value. Mark-to-market adjustments to the fair value of residential loan commitments and forward sale contracts are included in noninterest income under mortgage banking fees.

The following table summarizes certain information related to the Company’s customer derivatives and economic hedges:

The Effect of Customer Derivatives and Economic Hedges on Net Income
	Amounts Recognized in Noninterest Income for the
	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2016			2015			2016			2015
Customer derivative contracts
Customer interest rate contracts (1)		($2	)		($9	)		$95			$64
Customer foreign exchange contracts (1)	(23		)	18			28			(17		)
Residential loan commitments (2)	3			(7		)	7			(7		)
Economic hedges
Offsetting derivatives transactions to hedge interest rate risk on customer interest rate contracts (1)	15			17			(76		)	(51		)
Offsetting derivatives transactions to hedge foreign exchange risk on customer foreign exchange contracts (3)	23			(19		)	(27		)	16
Forward sale contracts (2)	(5		)	3			(10		)	2
Total		$11			$3			$17			$7

⁽¹⁾ Reported in other income on the Consolidated Statements of Operations.

⁽²⁾ Reported in mortgage banking fees on the Consolidated Statements of Operations.

⁽³⁾ Reported in foreign exchange and letter of credit fees on the Consolidated Statements of Operations.

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CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 12 - COMMITMENTS AND CONTINGENCIES

The following is a summary of outstanding off-balance sheet arrangements:

(in millions)	June 30, 2016		December 31, 2015
Commitment amount:
Undrawn commitments to extend credit		$58,622		$56,524
Financial standby letters of credit	1,946		2,010
Performance letters of credit	37		42
Commercial letters of credit	70		87
Marketing rights	46		47
Risk participation agreements	64		26
Residential mortgage loans sold with recourse	9		10
Total		$60,794		$58,746

Commitments to Extend Credit

Commitments to extend credit are agreements to lend to customers in accordance with conditions contractually agreed upon in advance. Generally, the commitments have fixed expiration dates or termination clauses and may require payment of a fee. Since many of these commitments are expected to expire without being drawn upon, the contract amounts are not necessarily indicative of future cash requirements.

Letters of Credit

Standby letters of credit, both financial and performance, are issued by the Company for its customers. They are used as conditional guarantees of payment to a third party in the event the customer either fails to make specific payments (financial) or fails to complete a specific project (performance). Commercial letters of credit are used to facilitate the import of goods. The commercial letter of credit is used as the method of payment to the Company’s customers’ suppliers. The Company’s exposure to credit loss in the event of counterparty nonperformance in connection with the above instruments is represented by the contractual amount of those instruments, net of the value of collateral held. Standby letters of credit and commercial letters of credit are issued for terms of up to ten years and one year, respectively.

Generally, letters of credit are collateralized by cash, accounts receivable, inventory or investment securities. Credit risk associated with letters of credit is considered in determining the appropriate amounts of reserves for unfunded commitments.

The Company recognizes a liability on the Consolidated Balance Sheets representing its obligation to stand ready to perform over the term of the standby letters of credit in the event that the specified triggering events occur. The liability for these guarantees was $3 million at June 30, 2016 and December 31, 2015.

Marketing Rights

During 2003, the Company entered into a 25-year agreement to acquire the naming and marketing rights of a baseball stadium in Pennsylvania. The Company paid $1 million for the six months ended June 30, 2016 and $3 million for the year ended December 31, 2015, and is obligated to pay $46 million over the remainder of the contract.

Risk Participation Agreements

RPAs are guarantees issued by the Company to other parties for a fee, whereby the Company agrees to participate in the credit risk of a derivative customer of the other party. Under the terms of these agreements, the “participating bank” receives a fee from the “lead bank” in exchange for the guarantee of reimbursement if the customer defaults on an interest rate swap. The interest rate swap is transacted such that any and all exchanges of interest payments (favorable and unfavorable) are made between the lead bank and the customer. In the event that an early termination of the swap occurs and the customer is unable to make a required close out payment, the participating bank assumes that obligation and is required to make this payment.

RPAs where the Company acts as the lead bank are referred to as “participations-out,” in reference to the credit risk associated with the customer derivatives being transferred out of the Company. Participations-out generally occur concurrently with the sale of new customer derivatives. RPAs where the Company acts as the participating bank are referred to as “participations-in,” in reference to the credit risk associated with the counterparty’s derivatives being assumed by the Company. The Company’s maximum credit exposure is based on its proportionate share of the settlement amount of the referenced interest rate swap. Settlement amounts are generally calculated based on the fair value of the swap plus outstanding accrued interest receivables from the customer. The Company’s estimate of the credit exposure associated with its risk participations-in as of June 30, 2016 and December 31,

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CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

2015 is $64 million and $26 million, respectively. The current amount of credit exposure is spread out over 89 counterparties. RPAs generally have terms ranging from 1-5 years; however, certain outstanding agreements have terms as long as 10 years.

Other Commitments

On January 7, 2016, the Company entered into an agreement to purchase student loans on a quarterly basis beginning with the first calendar quarter in 2016 and ending with the fourth calendar quarter in 2016. Under the terms of the agreement, the Company committed to purchase a minimum of $125 million of loans per quarter. The minimum and maximum amount of the aggregate purchase principal balance of loans under the terms of the agreement are $500 million and $1 billion, respectively. The agreement will terminate immediately if at any time during its term the aggregate purchase principal balance of loans equals the maximum amount. The agreement may be extended by written agreement of the parties for an additional four quarters. The Company may terminate the agreement at will with payment of a termination fee equal to the product of $1 million times the number of calendar quarters remaining in the term.

The Company’s agreement to purchase automobile loans, originally entered into in May 2014, was most recently amended on February 18, 2016. For quarterly periods on or after August 1, 2015, the minimum and maximum purchases are $50 million and $200 million, respectively. The agreement automatically renews until terminated by either party. The Company may cancel the agreement at will with payment of a variable termination fee. There is no termination fee after May 2017.

The Company’s commercial loan trading desk provides ongoing secondary market support and liquidity to its clients. Unsettled loan trades (i.e., loan purchase contracts) represent firm commitments to purchase loans from a third party at an agreed-upon price. Principal amounts associated with unsettled commercial loan trades are off-balance sheet commitments until delivery of the loans has taken place. Fair value adjustments associated with each unsettled loan trade are recognized on the Consolidated Balance Sheets and classified within other assets or other liabilities, depending on whether the fair value of the unsettled trade represents an unrealized gain or unrealized loss. The principal balance of unsettled commercial loan trade purchases and sales were $111 million and $108 million, respectively, at June 30, 2016. Settled loans purchased by the trading desk are classified as loans held for sale, at fair value on the Consolidated Balance Sheets. Refer to Note 14 “Fair Value Measurements” for further information.

Contingencies

The Company operates in a legal and regulatory environment that exposes it to potentially significant risks. A certain amount of litigation ordinarily results from the nature of the Company’s banking and other businesses. The Company is a party to legal proceedings, including class actions. The Company is also the subject of investigations, reviews, subpoenas, and regulatory matters arising out of its normal business operations, which, in some instances, relate to concerns about fair lending, unfair and/or deceptive practices, mortgage-related issues, and mis-selling of certain products. In addition, the Company engages in discussions with relevant governmental and regulatory authorities on a regular and ongoing basis regarding various issues, and any issues discussed or identified may result in investigatory or other action being taken. Litigation and regulatory matters may result in settlements, damages, fines, penalties, public or private censure, increased costs, required remediation, restrictions on business activities, or other impacts on the Company.

In these disputes and proceedings, the Company contests liability and the amount of damages as appropriate. Given their complex nature, it may be years before some of these matters are finally resolved. Moreover, before liability can be reasonably estimated for a claim, numerous legal and factual issues may need to be examined, including through potentially lengthy discovery and determination of important factual matters, and by addressing novel or unsettled legal issues relevant to the proceedings in question.

The Company cannot predict with certainty if, how, or when such claims will be resolved or what the eventual settlement, fine, penalty or other relief, if any, may be, particularly for claims that are at an early stage in their development or where claimants seek substantial or indeterminate damages. The Company recognizes a provision for a claim when, in the opinion of management after seeking legal advice, it is probable that a liability exists and the amount of loss can be reasonably estimated. In many proceedings, however, it is not possible to determine whether any loss is probable or to estimate the amount of any loss. In each of the matters described below, the Company is unable to estimate the liability in excess of any provision accrued, if any, that might arise or its effects on the Company’s Consolidated Statements of Operations or Consolidated Statements of Cash Flows in any particular period.

Set out below is a description of significant legal matters involving the Company and its banking subsidiaries. Based on information currently available, the advice of legal counsel and other advisers, and established reserves, management believes that the aggregate liabilities, if any, potentially arising from these proceedings will not have a materially adverse effect on the Company’s unaudited interim Consolidated Financial Statements.

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CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Consumer Products Matters

The activities of the Company’s banking subsidiaries are subject to extensive laws and regulations concerning unfair or deceptive acts or practices in connection with customer products. Certain of the banking subsidiaries’ past practices have not met applicable standards, and they have implemented and are continuing to implement changes to improve and bring their practices in accordance with regulatory guidance. The Company and its banking subsidiaries have actively pursued resolution of the legacy regulatory enforcement matters set forth below.

As previously reported, CBNA is currently subject to a consent order issued in 2013 by the OCC in connection with its findings of deceptive marketing and implementation of some of our checking account and funds transfer products and services. Among other things, the consent order requires us to remedy deficiencies and develop stronger compliance controls, policies and procedures. The Company and its banking subsidiaries are also currently subject to consent orders issued in August 2015 by the CFPB, the OCC and the FDIC in connection with past deposit reconciliation practices, and CBNA is subject to a consent order issued in November 2015 by the OCC in connection with past billing and sales practices pertaining to identity theft and debt cancellation products, under which the applicable regulators have provided non-objections to, among other things, restitution plans for affected customers.

All financial penalties associated with these legacy regulatory enforcement matters have been paid, and substantially all remediation related to such legacy matters is expected to be resolved by the end of 2016.

NOTE 13 - RELATED PARTY TRANSACTIONS AND SIGNIFICANT TRANSACTIONS WITH RBS

On November 3, 2015, RBS completed the sale of all of its remaining shares of CFG’s common stock. The parenthetical disclosures related to long-term borrowed funds on the Consolidated Balance Sheets, Consolidated Statements of Operations, and Consolidated Statements of Cash Flows as well as the tables and discussions below include significant related party transactions with RBS prior to the Company’s separation from RBS and significant transactions subsequent to the separation.    

In September 2014, the Company entered into certain agreements that established a framework for its ongoing relationship with RBS. Specifically, the Company entered into the following agreements with RBS: Separation and Shareholder Agreement, Registration Rights Agreement, Trade Mark License Agreement, Amended and Restated Master Services Agreement, and Transitional Services Agreements. In connection with RBS’s exit of its ownership in our common stock in 2015, the Separation and Shareholder Agreement and the Registration Rights Agreement were terminated and the Trademark License Agreement was partially terminated.

The following is a summary of borrowed funds originally issued to RBS:

	Interest Rate			Maturity Date	June 30, 2016	December 31, 2015
(dollars in millions)
Subordinated debt	5.158	%		June 2023	$333		$333
	3.750	%	(1)	July 2024	250	250
	4.023	%	(2) (3)	October 2024	208	333
	4.082	%	(3)	January 2025	334	334

⁽¹⁾ Prior to January 1, 2016, interest was payable at a fixed rate per annum of 4.153%.

⁽²⁾ On March 7, 2016, the Company repurchased $125 million of these securities from RBS.

⁽³⁾ On July 28, 2016, the Company repurchased $500 million of its subordinated notes held by RBS, including $166 million of its 4.023% subordinated notes due 2024 and $334 million of its 4.082% subordinated notes due 2025. Refer to Note 21 “Subsequent Events” for further information.

The following table presents total interest expense recorded on the subordinated debt presented above:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2016		2015		2016		2015
Interest expense on subordinated debt		$10		$20		$21		$40

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CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

On March 7, 2016, the Company repurchased $125 million of its subordinated notes held by RBS. On December 3, 2015, the Company repurchased $750 million of outstanding subordinated debt instruments held by RBS. The $3 million difference between the reacquisition price and the net carrying amount of the repurchased debt was recognized as a gain on extinguishment of the debt and is presented in other income in the Consolidated Statement of Operations. On July 28, 2016, the Company repurchased $500 million of the subordinated notes held by RBS pursuant to an agreement entered into in November 2015. Refer to Note 21 “Subsequent Events” for further information.

The Company paid no dividends to RBS for the three or six months ended June 30, 2016. For the three and six months ended June 30, 2015, the Company paid $21 million and $60 million in regular common stock dividends to RBS, respectively.

Additionally, during 2015 the Company engaged in repurchases of its common stock directly from RBS. Refer to Note 8 “Stockholders’ Equity” for further information.

The Company, as a matter of policy and during the ordinary course of business with underwriting terms similar to those offered to the public, has entered into credit facilities with directors and executive officers and their immediate families, as well as their affiliated companies. Extensions of credit amounted to $141 million and $136 million at June 30, 2016 and December 31, 2015, respectively.

NOTE 14 - FAIR VALUE MEASUREMENTS

As discussed in Note 1 “Significant Accounting Policies,” to the Company’s audited Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2015, the Company measures or monitors many of its assets and liabilities on a fair value basis. Fair value is used on a recurring basis for assets and liabilities for which fair value is the required or elected measurement basis of accounting. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or for disclosure purposes. Nonrecurring fair value adjustments typically involve the application of lower of cost or market accounting or write-downs of individual assets. The Company also applies the fair value measurement guidance to determine amounts reported for certain disclosures in this Note for assets and liabilities not required to be reported at fair value in the financial statements.

The Company elected to account for residential mortgage loans held for sale and certain commercial and commercial real estate loans held for sale at fair value. Applying fair value accounting to the residential mortgage loans held for sale better aligns the reported results of the economic changes in the value of these loans and their related hedge instruments. Certain commercial and commercial real estate held for sale loans are managed by a commercial secondary loan desk that provides liquidity to banks, finance companies and institutional investors. Applying fair value accounting to this portfolio is appropriate because the Company holds these loans with the intent to sell within short term periods.

Fair Value Option

Residential Mortgage Loans Held for Sale

The fair value of residential mortgage loans held for sale is derived from observable mortgage security prices and includes adjustments for loan servicing value, agency guarantee fees, and other loan level attributes which are mostly observable in the marketplace. Credit risk does not significantly impact the valuation since these loans are sold shortly after origination. Therefore, the Company classifies the residential mortgage loans held for sale in Level 2 of the fair value hierarchy.

The election of the fair value option for financial assets and financial liabilities is optional and irrevocable. The loans accounted for under the fair value option are initially measured at fair value (i.e., acquisition cost) when the financial asset is acquired. Subsequent changes in fair value are recognized in mortgage banking fees on the Consolidated Statements of Operations. The Company recognized mortgage banking income (expense) of $6 million and ($3) million for the three months ended June 30, 2016 and 2015, respectively. The Company recognized mortgage banking income (expense) of $12 million and ($2) million for the six months ended June 30, 2016 and 2015, respectively.

Interest income on residential mortgage loans held for sale is calculated based on the contractual interest rate of the loan and is recorded in interest income.

Commercial and Commercial Real Estate Loans Held for Sale

The fair value of commercial and commercial real estate loans held for sale is estimated using observable prices of identical or similar loans that transact in the marketplace. In addition, the Company uses external pricing services that provide estimates of fair values based on quotes from various dealers transacting in the market, sector curves or benchmarking techniques. Therefore, the Company classifies the commercial and commercial real estate loans managed by the commercial secondary loan desk in Level 2 of the fair value hierarchy given the observable market inputs.

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CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

There were no loans in this portfolio that were 90 days or more past due or nonaccruing as of June 30, 2016. The loans accounted for under the fair value option are initially measured at fair value when the financial asset is recognized. Subsequent changes in fair value are recognized in current earnings. Since all loans in the Company’s commercial trading portfolio consist of floating rate obligations, all changes in fair value are due to changes in credit risk. Such credit-related fair value changes may include observed changes in overall credit spreads and/or changes to the creditworthiness of an individual borrower. Unsettled trades within the commercial trading portfolio are not recognized on the Consolidated Balance Sheets and represent off-balance sheet commitments. Refer to Note 12 “Commitments and Contingencies” for further information.

Interest income on commercial and commercial real estate loans held for sale is calculated based on the contractual interest rate of the loan and is recorded in interest income. The Company recognized $2 million income in other noninterest income related to its commercial trading portfolio for the three months ended June 30, 2016 and $1 million for the three months ended June 30, 2015. The Company recognized $2 million income in other noninterest income related to its commercial trading portfolio for the six months ended June 30, 2016 and $3 million for the six months ended June 30, 2015.

The following table summarizes the difference between the aggregate fair value and the aggregate unpaid principal balance loans held for sale measured at fair value:

	June 30, 2016						December 31, 2015
(in millions)	Aggregate Fair Value		Aggregate Unpaid Principal		Aggregate Fair Value Less Aggregate Unpaid Principal		Aggregate Fair Value		Aggregate Unpaid Principal		Aggregate Fair Value Less Aggregate Unpaid Principal
Residential mortgage loans held for sale, at fair value		$424		$408		$16		$268		$263		$5
Commercial and commercial real estate loans held for sale, at fair value	54		54		—		57		57		—

Recurring Fair Value Measurements

The Company utilizes a variety of valuation techniques to measure its assets and liabilities at fair value. Following is a description of valuation methodologies used for significant assets and liabilities carried on the balance sheet at fair value on a recurring basis:

Securities available for sale

The fair value of securities classified as AFS is based upon quoted prices, if available. Where observable quoted prices are available in an active market, securities are classified as Level 1 in the fair value hierarchy. Classes of instruments that are valued using this market approach include debt securities issued by the U.S. Treasury. If quoted market prices are not available, the fair value for the security is estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. These instruments are classified as Level 2 because they currently trade in active markets and the inputs to the valuations are observable. The pricing models used to value securities generally begin with market prices (or rates) for similar instruments and make adjustments based on the unique characteristics of the instrument being valued. These adjustments reflect assumptions made regarding the sensitivity of each security’s value to changes in interest rates and prepayment speeds. Classes of instruments that are valued using this market approach include residential and commercial CMOs, specified pool mortgage “pass-through” securities and other debt securities issued by U.S. government-sponsored entities and state and political subdivisions.

A significant majority of the Company’s Level 1 and 2 securities are priced using an external pricing service. The Company verifies the accuracy of the pricing provided by its primary outside pricing service on a quarterly basis. This process involves using a secondary external vendor to provide valuations for the Company’s securities portfolio for comparison purposes. Any securities with discrepancies beyond a certain threshold are researched and, if necessary, valued by an independent outside broker.

In certain cases where there is limited activity or less transparency around inputs to the valuation model, securities are classified as Level 3.

Residential loans held for sale

See the “Fair Value Option, Residential Mortgage Loans Held for Sale” discussion above.

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CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Commercial loans held for sale

See the “Fair Value Option, Commercial and Commercial Real Estate Loans Held for Sale” discussion above.

Derivatives

The vast majority of the Company’s derivatives portfolio is composed of “plain vanilla” interest rate swaps, which are traded in over-the-counter markets where quoted market prices are not readily available. For these interest rate derivatives, fair value is determined utilizing models that use primarily market observable inputs, such as swap rates and yield curves. The pricing models used to value interest rate swaps calculate the sum of each instrument’s fixed and variable cash flows, which are then discounted using an appropriate yield curve (i.e., LIBOR or OIS curve) to arrive at the fair value of each swap. The pricing models do not contain a high level of subjectivity as the methodologies used do not require significant judgment. The Company also considers certain adjustments to the modeled price which market participants would make when pricing each instrument, including a credit valuation adjustment that reflects the credit quality of the swap counterparty. The Company incorporates the effect of exposure to a particular counterparty’s credit by netting its derivative contracts with the collateral available and calculating a credit valuation adjustment on the basis of the net position with the counterparty where permitted. The determination of this adjustment requires judgment on behalf of Company management; however, the total amount of this portfolio-level adjustment is not material to the total fair value of the interest rate swaps in their entirety. Therefore, interest rate swaps are classified as Level 2 in the valuation hierarchy.

The Company’s other derivatives include foreign exchange contracts. Fair value of foreign exchange derivatives uses the mid-point of daily quoted currency spot prices. A valuation model estimates fair value based on the quoted spot rates together with interest rate yield curves and forward currency rates. Since all of these inputs are observable in the market, foreign exchange derivatives are classified as Level 2 in the fair value hierarchy.

Money Market Mutual Fund

Fair value is determined based upon unadjusted quoted market prices and is considered a Level 1 fair value measurement.

Other investments

The fair values of the Company’s other investments are based on security prices in the market that are not active; therefore, these investments are classified as Level 2 in the fair value hierarchy.

46

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table presents assets and liabilities measured at fair value, including gross derivative assets and liabilities on a recurring basis at June 30, 2016:

(in millions)	Total		Level 1		Level 2		Level 3
Securities available for sale:
Mortgage-backed securities		$18,438		$—		$18,438		$—
State and political subdivisions	9		—		9		—
Equity securities	17		—		17		—
U.S. Treasury and other	15		15		—		—
Total securities available for sale	18,479		15		18,464		—
Loans held for sale, at fair value:
Residential loans held for sale	424		—		424		—
Commercial loans held for sale	54		—		54		—
Total loans held for sale, at fair value	478		—		478		—
Derivative assets:
Interest rate swaps	1,235		—		1,235		—
Foreign exchange contracts	193		—		193		—
Other contracts	15		—		15		—
Total derivative assets	1,443		—		1,443		—
Other investment securities, at fair value:
Money market mutual fund	68		68		—		—
Other investments	5		—		5		—
Total other investment securities, at fair value	73		68		5		—
Total assets		$20,473		$83		$20,390		$—
Derivative liabilities:
Interest rate swaps		$978		$—		$978		$—
Foreign exchange contracts	185		—		185		—
Other contracts	14		—		14		—
Total derivative liabilities	1,177		—		1,177		—
Total liabilities		$1,177		$—		$1,177		$—

47

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table presents assets and liabilities measured at fair value including gross derivative assets and liabilities on a recurring basis at December 31, 2015:

(in millions)	Total		Level 1		Level 2		Level 3
Securities available for sale:
Mortgage-backed securities		$17,842		$—		$17,842		$—
State and political subdivisions	9		—		9		—
Equity securities	17		—		17		—
U.S. Treasury	16		15		1		—
Total securities available for sale	17,884		15		17,869		—
Loans held for sale, at fair value:
Residential loans held for sale	268		—		268		—
Commercial loans held for sale	57		—		57		—
Total loans held for sale, at fair value	325		—		325		—
Derivative assets:
Interest rate swaps	636		—		636		—
Foreign exchange contracts	163		—		163		—
Other contracts	8		—		8		—
Total derivative assets	807		—		807		—
Other investment securities, at fair value:
Money market mutual fund	65		65		—		—
Other investments	5		—		5		—
Total other investment securities, at fair value	70		65		5		—
Total assets		$19,086		$80		$19,006		$—
Derivative liabilities:
Interest rate swaps		$505		$—		$505		$—
Foreign exchange contracts	156		—		156		—
Other contracts	5		—		5		—
Total derivative liabilities	666		—		666		—
Total liabilities		$666		$—		$666		$—

The changes in Level 3 assets measured at fair value on a recurring basis are summarized as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2016		2015		2016		2015
Beginning of period balance		$—		$1		$—		$5
Purchases, issuances, sales and settlements:
Purchases	—		—		—		1
Sales	—		—		—		—
Settlements	—		—		—		—
Net (losses) gains	—		—		—		—
Transfers from Level 3 to Level 2	—		—		—		(5		)
Balance as of June 30		$—		$1		$—		$1
Net unrealized gain (loss) included in net income for the year relating to assets held at period end		$—		$—		$—		$1

In March 2015, the Company transferred $5 million of securities from Level 3 to Level 2. The fair values of these securities are based on security prices in the market that are not active.

48

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Nonrecurring Fair Value Measurements

The following valuation techniques are utilized to measure significant assets for which the Company utilizes fair value on a nonrecurring basis:

Impaired Loans

The carrying amount of collateral-dependent impaired loans is compared to the appraised value of the collateral less costs to dispose and is classified as Level 2. Any excess of carrying amount over the appraised value is charged to the ALLL.

Mortgage Servicing Rights

MSRs do not trade in an active market with readily observable prices. MSRs are classified as Level 3 since the valuation methodology utilizes significant unobservable inputs. At June 30, 2016, the fair value was calculated using a discounted cash flow model, which used assumptions, including weighted-average life of 4.9 years (range of 2.5 - 5.3 years), weighted-average constant prepayment rate of 13.5% (range of 13.2% - 24.3%) and weighted-average discount rate of 9.7% (range of 9.1% - 12.1%). At December 31, 2015, the fair value was calculated using a discounted cash flow model, which used assumptions, including weighted-average life of 5.4 years (range of 2.8 - 6.2 years), weighted-average constant prepayment rate of 11.6% (range of 10.7% - 22.2%) and weighted-average discount rate of 9.7% (range of 9.1% - 12.1%). Refer to Note 1 “Significant Accounting Policies” to the Company’s audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2015 and Note 6 “Mortgage Banking” for more information.

Foreclosed assets

Foreclosed assets consist primarily of residential properties. Foreclosed assets are carried at the lower of carrying value or fair value less costs to dispose. Fair value is based upon independent market prices or appraised values of the collateral and is classified as Level 2.

The following table presents gains (losses) on assets and liabilities measured at fair value on a nonrecurring basis and recorded in earnings:

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2016			2015			2016			2015
Impaired collateral-dependent loans		($6	)		($10	)		($11	)		($13	)
MSRs	1			6			(4		)	7
Foreclosed assets	(1		)	(1		)	(2		)	(2		)

The following table present assets and liabilities measured at fair value on a nonrecurring basis:

	June 30, 2016								December 31, 2015
(in millions)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Impaired collateral-dependent loans		$55		$—		$55		$—		$60		$—		$60		$—
MSRs	165		—		—		165		178		—		—		178
Foreclosed assets	46		—		46		—		42		—		42		—

Disclosures about Fair Value of Financial Instruments

Following is a description of valuation methodologies used to estimate the fair value of financial instruments for disclosure purposes (these instruments are not recorded in the financial statements at fair value):

Securities held to maturity

The fair value of securities classified as HTM is estimated using pricing models, quoted prices of securities with similar characteristics or discounted cash flow. The pricing models used to value these securities generally begin with market prices (or rates) for similar instruments and make adjustments based on the unique characteristics of the instrument being valued. These adjustments reflect assumptions made regarding the sensitivity of each security’s value to changes in interest rates and prepayment speeds.

49

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Other investment securities, at cost

The fair value of other investment securities, at cost, such as FHLB stock and FRB stock, is assumed to approximate the cost basis of the securities. As a member of the FHLB and FRB, the Company is required to hold FHLB and FRB stock. The stock can be sold only to the FHLB and FRB upon termination of membership, or redeemed at the FHLB’s or FRB’s sole discretion.

Loans and leases

For loans and leases not recorded at fair value on a recurring basis that are not accounted for as collateral-dependent impaired loans, fair value is estimated by using one of two methods: a discounted cash flow method or a securitization method. The discounted cash flow method involves discounting the expected future cash flows using current rates which a market participant would likely use to value similar pools of loans. Inputs used in this method include observable information such as contractual cash flows (net of servicing cost) and unobservable information such as estimated prepayment speeds, credit loss exposures, and discount rates. The securitization method involves utilizing market securitization data to value the assets as if a securitization transaction had been executed. Inputs used include observable market-based MBS data and pricing adjustments based on unobservable data reflecting the liquidity risk, credit loss exposure and other characteristics of the underlying loans. The internal risk-weighted balances of loans are grouped by product type for purposes of these estimated valuations. For nonaccruing loans, fair value is estimated by discounting management’s estimate of future cash flows with a discount rate commensurate with the risk associated with such assets. Fair value of collateral-dependent loans is primarily based on the appraised value of the collateral.

Other loans held for sale

Balances are loans that were transferred to loans held for sale that are reported at the lower of cost or fair value.

Deposits

The fair value of demand deposits, checking with interest accounts, regular savings and money market accounts is the amount payable on demand at the balance sheet date. The fair value of term deposits is estimated by discounting the expected future cash flows using rates currently offered for deposits of similar remaining maturities.

Federal funds purchased and securities sold under agreements to repurchase, other short-term borrowed funds, and long-term borrowed funds

Rates currently available to the Company for debt of similar terms and remaining maturities are used to discount the expected cash flows of existing debt.

The following table is a summary of fair value for financial instruments not recorded at fair value in the unaudited interim Consolidated Financial Statements. The carrying amounts in the following table are recorded in the Consolidated Balance Sheets under the indicated captions:

	June 30, 2016
	Total				Level 1				Level 2				Level 3
(in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets:
Securities held to maturity		$4,973		$5,136		$—		$—		$4,973		$5,136		$—		$—
Other investment securities, at cost	873		873		—		—		873		873		—		—
Other loans held for sale	372		372		—		—		—		—		372		372
Loans and leases	103,551		104,381		—		—		55		55		103,496		104,326
Financial Liabilities:
Deposits	106,257		106,260		—		—		106,257		106,260		—		—
Federal funds purchased and securities sold under agreements to repurchase	717		717		—		—		717		717		—		—
Other short-term borrowed funds	2,770		2,770		—		—		2,770		2,770		—		—
Long-term borrowed funds	11,810		11,968		—		—		11,810		11,968		—		—

50

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

	December 31, 2015
	Total				Level 1				Level 2				Level 3
(in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets:
Securities held to maturity		$5,258		$5,297		$—		$—		$5,258		$5,297		$—		$—
Other investment securities, at cost	863		863		—		—		863		863		—		—
Other loans held for sale	40		40		—		—		—		—		40		40
Loans and leases	99,042		99,026		—		—		60		60		98,982		98,966
Financial Liabilities:
Deposits	102,539		102,528		—		—		102,539		102,528		—		—
Federal funds purchased and securities sold under agreements to repurchase	802		802		—		—		802		802		—		—
Other short-term borrowed funds	2,630		2,630		—		—		2,630		2,630		—		—
Long-term borrowed funds	9,886		9,837		—		—		9,886		9,837		—		—

NOTE 15 - REGULATORY MATTERS

As a BHC, the Company is subject to regulation and supervision by the FRB. The primary subsidiaries of the Company are its two insured depository institutions CBNA, a national banking association whose primary federal regulator is the OCC, and CBPA, a Pennsylvania-chartered savings bank regulated by the Department of Banking of the Commonwealth of Pennsylvania and supervised by the FDIC as its primary federal regulator. Under the Basel III capital framework that took effect on January 1, 2015, the Company and its banking subsidiaries must meet specific capital requirements. Basel III requirements are expressed in terms of the following ratios: (1) common equity tier 1 capital (common equity tier 1 capital/risk-weighted on- and off-balance sheet assets); (2) tier 1 capital (tier 1 capital/risk-weighted on- and off-balance sheet assets); (3) total capital (total capital/risk-weighted on- and off-balance sheet assets); and (4) tier 1 leverage (tier 1 capital/adjusted average quarterly assets). To meet the regulatory capital requirements, the Company and its banking subsidiaries must maintain minimum regulatory levels for each ratio. In addition, the Company must not be subject to a written agreement, order or capital directive with any of its regulators. Failure to meet minimum capital requirements can result in the initiation of certain actions that, if undertaken, could have a material effect on the Company’s Consolidated Financial Statements.

51

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table presents the Company’s capital and capital ratios under Basel III Transitional rules as of June 30, 2016 and December 31, 2015. Certain Basel III requirements are subject to phase-in through 2019, and these phase-in rules are used in this report of actual regulatory ratios. In addition, the Company has declared itself as an “AOCI opt-out” institution, which means that the Company will not be required to change its methodology for recognizing in regulatory capital only a subset of unrealized gains and losses that are classified as AOCI. As an AOCI opt-out institution, the Company is not required to recognize within regulatory capital the impacts of net unrealized gains and losses on securities AFS, accumulated net gains and losses on cash-flow hedges included in AOCI, net gains and losses on certain defined benefit pension plan assets, and net unrealized gains and losses on securities held to maturity that are included in AOCI.

	Transitional Basel III
									FDIA Requirements
	Actual				Minimum Capital Adequacy				Classification as Well-capitalized
(dollars in millions)	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of June 30, 2016
Common equity tier 1 capital (1) (5)		$13,768	11.5	%		$6,124	5.125	%		$7,767	6.5	%
Tier 1 capital (2) (5)	14,015		11.7		7,916		6.625		9,559		8.0
Total capital (3)(5)	17,823		14.9		10,306		8.625		11,949		10.0
Tier 1 leverage (4)	14,015		10.3		5,452		4.000		6,815		5.0
As of December 31, 2015
Common equity tier 1 capital (1)		$13,389	11.7	%		$5,134	4.5	%		$7,415	6.5	%
Tier 1 capital (2)	13,636		12.0		6,845		6.0		9,127		8.0
Total capital (3)	17,505		15.3		9,127		8.0		11,408		10.0
Tier 1 leverage (4)	13,636		10.5		5,218		4.0		6,523		5.0

⁽¹⁾ “Common equity tier 1 capital ratio” represents CET1 divided by total risk-weighted assets as defined under Basel III Standardized approach.

⁽²⁾ “Tier 1 capital ratio” is tier 1 capital, which includes CET1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital, divided by total risk-weighted assets as defined under Basel III Standardized approach.

⁽³⁾ “Total capital ratio” is total capital divided by total risk-weighted assets as defined under Basel III Standardized approach.

⁽⁴⁾ “Tier 1 leverage ratio” is tier 1 capital divided by quarterly average total assets as defined under Basel III Standardized approach.

⁽⁵⁾ “Minimum Capital ratio” for 2016 includes capital conservation buffer of 0.625%.

Under the Capital Plan Rule, the Company may only make capital distributions, including payment of dividends, in accordance with a capital plan that has been reviewed by the Federal Reserve and to which the Federal Reserve has not objected. In the three and six months ended June 30, 2016, the Company paid total common dividends of approximately $64 million and $117 million, respectively.

In April 2016, the Company submitted its 2016 Capital Plan to the Federal Reserve under the annual CCAR process. On June 29, 2016, the FRBG indicated that it did not object to the Company’s 2016 Capital Plan or to its proposed capital actions in the period beginning July 1, 2016 and ending June 30, 2017. The Company’s 2016 Capital Plan includes proposed quarterly common dividends of $0.12 per share through the end of 2016, a potential 17% increase to quarterly common dividends to $0.14 per share in 2017, and a share repurchase plan of up to $690 million through the second quarter of 2017.

All proposed distributions are subject to consideration and approval by CFG’s Board of Directors prior to execution. The timing and exact amount of dividends and share repurchases will depend on various factors, including CFG’s capital position, financial performance and market conditions. All of these actions were part of the Company’s 2016 Capital Plan to which the Federal Reserve indicated no objection.

In accordance with federal and state banking regulations, dividends paid by the Company’s banking subsidiaries to the Company itself are generally limited to the retained earnings of the respective banking subsidiaries unless specifically approved by the appropriate bank regulator.

On March 13, 2014, the OCC determined that CBNA no longer meets the condition to own a financial subsidiary — namely that CBNA must be both well capitalized and well managed. A financial subsidiary is permitted to engage in a broader range of activities, similar to those of a financial holding company, than those permissible for a national bank itself. CBNA has two financial subsidiaries, Citizens Securities, Inc., a registered broker-dealer, and RBS Citizens Insurance Agency, Inc., a dormant entity. CBNA has entered into an agreement with the OCC pursuant to which the Company has developed and submitted to the OCC a remediation plan, that sets forth the specific actions it will take to bring itself back into compliance with the conditions to own a financial subsidiary. CBNA has made substantial progress toward completing those actions. However, until the plan has been completed to the OCC’s satisfaction, CBNA will be subject to restrictions on its ability to acquire control or hold an interest

52

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

in any new financial subsidiary and to commence new activities in any existing financial subsidiary without the prior consent of the OCC.

NOTE 16 - EXIT COSTS AND RESTRUCTURING RESERVES

The Company incurred no restructuring costs for the three and six months endedJune 30, 2016. For the three months ended June 30, 2015, the Company incurred $25 million of restructuring costs, consisting of $15 million of facilities costs in occupancy, $5 million in outside services, and $5 million in salaries and employee benefits, relating to restructuring initiatives designed to enhance operating efficiencies and reduce expense growth. For the six months ended June 30, 2015, the Company incurred $26 million of restructuring costs, consisting of $17 million of facilities costs in occupancy, $6 million in outside services, and $3 million in salaries and employee benefits, substantially completing the restructuring initiatives designed to enhance operating efficiencies and reduce expense growth.

For segment reporting, all of these restructuring costs are reported within Other. See Note 18 “Business Segments” for further information.

The following tables include the activity in the exit costs and restructuring reserves:

	As of and for the Three Months Ended June 30,
	2016											2015
(in millions)	Salaries & Employee Benefits			Occupancy & Equipment			Other		Total			Salaries & Employee Benefits			Occupancy & Equipment			Other			Total
Beginning of period balance		$10			$14			$—		$24			$18			$17			$—			$35
Additions	—			—			—		—			5			15			5			25
Reversals	—			—			—		—			—			—			—			—
Utilization	(2		)	(2		)	—		(4		)	(2		)	(5		)	(1		)	(8		)
Balance as of June 30,		$8			$12			$—		$20			$21			$27			$4			$52

	As of and for the Six Months Ended June 30,
	2016												2015
(in millions)	Salaries & Employee Benefits			Occupancy & Equipment			Other			Total			Salaries & Employee Benefits			Occupancy & Equipment			Other			Total
Beginning of period balance		$12			$16			$5			$33			$23			$18			$3			$44
Additions	—			—			—			—			5			17			6			28
Reversals	—			—			—			—			(2		)	—			—			(2		)
Utilization	(4		)	(4		)	(5		)	(13		)	(5		)	(8		)	(5		)	(18		)
Balance as of June 30,		$8			$12			$—			$20			$21			$27			$4			$52

53

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 17 - RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables present the changes in the balances, net of income taxes, of each component of AOCI:

	As of and for the three months ended June 30,
(in millions)	Net Unrealized Gains (Losses) on Derivatives			Net Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Total AOCI
Balance at beginning of period April 1, 2015		($6	)		$141			($375	)		($240	)
Other comprehensive income (loss) before reclassifications	(5		)	(110		)	—			(115		)
Other-than-temporary impairment not recognized in earnings on securities	—			1			—			1
Amounts reclassified from other comprehensive (loss) income	(2		)	(5		)	2			(5		)
Net other comprehensive income (loss)	(7		)	(114		)	2			(119		)
Balance at end of period June 30, 2015		($13	)		$27			($373	)		($359	)
Balance at beginning of period April 1, 2016		$35			$96			($367	)		($236	)
Other comprehensive income before reclassifications	13			64			—			77
Other-than-temporary impairment not recognized in earnings on securities	—			4			—			4
Amounts reclassified from other comprehensive (loss) income	(9		)	2			3			(4		)
Net other comprehensive income	4			70			3			77
Balance at end of period June 30, 2016		$39			$166			($364	)		($159	)

	As of and for the six month ended June 30,
(in millions)	Net Unrealized Gains (Losses) on Derivatives			Net Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Total AOCI
Balance at beginning of period January 1, 2015		($69	)		$74			($377	)		($372	)
Other comprehensive income (loss) before reclassifications	60			(20		)	—			40
Other-than-temporary impairment not recognized in earnings on securities	—			(18		)	—			(18		)
Amounts reclassified from other comprehensive (loss) income	(4		)	(9		)	4			(9		)
Net other comprehensive income	56			(47		)	4			13
Balance at end of period June 30, 2015		($13	)		$27			($373	)		($359	)
Balance at beginning of period January 1, 2016		$10			($28	)		($369	)		($387	)
Other comprehensive income before reclassifications	46			218			—			264
Other-than-temporary impairment not recognized in earnings on securities	—			(21		)	—			(21		)
Amounts reclassified from other comprehensive (loss) income	(17		)	(3		)	5			(15		)
Net other comprehensive income	29			194			5			228
Balance at end of period June 30, 2016		$39			$166			($364	)		($159	)

54

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table reports the amounts reclassified out of each component of AOCI and into the Consolidated Statements of Operations:

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2016			2015			2016			2015
Details about AOCI Components													Affected Line Item in the Consolidated Statements of Operations
Reclassification adjustment for net derivative gains (losses) included in net income:		$21			$17			$43			$35		Interest income
	(8		)	(14		)	(16		)	(29		)	Interest expense
	13			3			27			6			Income before income tax expense
	4			1			10			2			Income tax expense
		$9			$2			$17			$4		Net income
Reclassification of net securities gains (losses) to net income:		$4			$9			$13			$17		Securities gains, net
	(7		)	(2		)	(8		)	(3		)	Net securities impairment losses recognized in earnings
	(3		)	7			5			14			Income before income tax expense
	(1		)	2			2			5			Income tax expense
		($2	)		$5			$3			$9		Net income
Reclassification of changes related to defined benefit pension plans:		($4	)		($4	)		($8	)		($7	)	Salaries and employee benefits
	(4		)	(4		)	(8		)	(7		)	Income before income tax expense
	(1		)	(2		)	(3		)	(3		)	Income tax expense
		($3	)		($2	)		($5	)		($4	)	Net income
Total reclassification gains (losses)		$4			$5			$15			$9		Net income

The following table presents the effects to net income of the amounts reclassified out of AOCI:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2016		2015		2016		2015
Net interest income (includes $13, $3, $27 and $6 of AOCI reclassifications, respectively)		$923		$840		$1,827		$1,676
Provision for credit losses	90		77		181		135
Noninterest income (includes ($3), $7, $5 and $14 of AOCI reclassifications, respectively)	355		360		685		707
Noninterest expense (includes $4, $4, $8 and $7 of AOCI reclassifications, respectively)	827		841		1,638		1,651
Income before income tax expense	361		282		693		597
Income tax expense (includes $2, $1, $9 and $4 income tax net expense (benefit) from reclassification items, respectively)	118		92		227		198
Net income		$243		$190		$466		$399

NOTE 18 - BUSINESS SEGMENTS

The Company is managed by its CEO on a segment basis. The Company’s two business segments are Consumer Banking and Commercial Banking. The business segments are determined based on the products and services provided, or the type of customer served. Each segment has one or more segment heads who report directly to the CEO. The CEO has final authority over resource allocation decisions and performance assessment. The business segments reflect this management structure and the manner in which financial information is currently evaluated by the CEO. Non-segment operations are classified as Other, which includes corporate functions, the Treasury function, the securities portfolio, wholesale funding activities, intangible assets, community development, non-core assets, and other unallocated assets, liabilities, capital, revenues, provision for credit losses and expenses.

55

CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Reportable Segments

Segment results are determined based upon the Company’s management reporting system, which assigns balance sheet and income statement items to each of the business segments. The process is designed around the Company’s organizational and management structure and, accordingly, the results derived are not necessarily comparable with similar information published by other financial institutions. A description of each reportable segment and table of financial results is presented below:

Consumer Banking

The Consumer Banking segment focuses on retail customers and small businesses with annual revenues of up to $25 million. It offers traditional banking products and services, including checking, savings, home loans, student loans, credit cards, business loans and financial management services. It also operates an indirect auto financing business, providing financing for both new and used vehicles through auto dealerships. The segment’s distribution channels include a branch network, ATMs and a work force of experienced specialists ranging from financial consultants, mortgage loan officers and business banking officers to private bankers. Our Consumer Banking value proposition is based on providing simple, easy to understand product offerings and a convenient banking experience with a more personalized approach.

Commercial Banking

The Commercial Banking segment primarily targets companies with annual revenues from $25 million to $2.5 billion and provides a full complement of financial products and solutions, including loans, leases, trade financing, deposits, cash management, commercial cards, foreign exchange, interest rate risk management, corporate finance and capital markets advisory capabilities. It focuses on middle-market companies, large corporations and institutions and has dedicated teams with industry expertise in government banking, not-for-profit, healthcare, technology, professionals, oil & gas, asset finance, franchise finance, asset-based lending, commercial real estate, private equity and sponsor finance. While the segment’s business development efforts are predominantly focused in the Company’s footprint, some of its specialized industry businesses also operate selectively on a national basis (such as healthcare, asset finance and franchise finance). A key component of Commercial Banking’s growth strategy is to bring ideas to clients that help their businesses thrive, and in doing so, expand the loan portfolio and ancillary product sales.

Non-segment Operations

Other

In addition to non-segment operations, Other includes certain reconciling items in order to translate the segment results that are based on management accounting practices into consolidated results. For example, Other includes goodwill and any associated goodwill impairment charges.

	As of and for the Three Months Ended June 30, 2016
(in millions)	Consumer Banking		Commercial Banking			Other			Consolidated
Net interest income		$602		$314			$7			$923
Noninterest income	219		122			14			355
Total revenue	821		436			21			1,278
Noninterest expense	632		186			9			827
Profit before provision for credit losses	189		250			12			451
Provision for credit losses	49		(1		)	42			90
Income (loss) before income tax expense (benefit)	140		251			(30		)	361
Income tax expense (benefit)	50		87			(19		)	118
Net income (loss)		$90		$164			($11	)		$243
Total average assets		$55,660		$47,388			$39,131			$142,179

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CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

	As of and for the Three Months Ended June 30, 2015
(in millions)	Consumer Banking		Commercial Banking		Other			Consolidated
Net interest income		$544		$286		$10			$840
Noninterest income	230		108		22			360
Total revenue	774		394		32			1,200
Noninterest expense	613		181		47			841
Profit (loss) before provision for credit losses	161		213		(15		)	359
Provision for credit losses	60		7		10			77
Income (loss) before income tax expense (benefit)	101		206		(25		)	282
Income tax expense (benefit)	35		71		(14		)	92
Net income (loss)		$66		$135		($11	)		$190
Total average assets		$52,489		$42,617		$40,415			$135,521

	As of and for the Six Months Ended June 30, 2016
(in millions)	Consumer Banking		Commercial Banking		Other			Consolidated
Net interest income		$1,183		$614		$30			$1,827
Noninterest income	427		221		37			685
Total revenue	1,610		835		67			2,512
Noninterest expense	1,248		373		17			1,638
Profit before provision for credit losses	362		462		50			874
Provision for credit losses	112		8		61			181
Income (loss) before income tax expense (benefit)	250		454		(11		)	693
Income tax expense (benefit)	89		157		(19		)	227
Net income		$161		$297		$8			$466
Total average assets		$55,388		$46,346		$38,745			$140,479

	As of and for the Six Months Ended June 30, 2015
(in millions)	Consumer Banking		Commercial Banking			Other			Consolidated
Net interest income		$1,077		$562			$37			$1,676
Noninterest income	449		208			50			707
Total revenue	1,526		770			87			2,383
Noninterest expense	1,209		354			88			1,651
Profit (loss) before provision for credit losses	317		416			(1		)	732
Provision for credit losses	123		(14		)	26			135
Income (loss) before income tax expense (benefit)	194		430			(27		)	597
Income tax expense (benefit)	67		148			(17		)	198
Net income (loss)		$127		$282			($10	)		$399
Total average assets		$52,048		$42,114			$40,267			$134,429

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CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Management accounting practices utilized by the Company as the basis for presentation for segment results include the following:

FTP adjustments

The Company utilizes an FTP system to eliminate the effect of interest rate risk from the segments’ net interest income because such risk is centrally managed within the Treasury function. The FTP system credits (or charges) the segments with the economic value of the funds created (or used) by the segments. The FTP system provides a funds credit for sources of funds and a funds charge for the use of funds by each segment. The sum of the interest income/expense and FTP charges/credits for each segment is its designated net interest income. The variance between the Company’s cumulative FTP charges and cumulative FTP credits is offset in Other.

Provision for credit losses allocations

Provision for credit losses is allocated to each business segment based on actual net charge-offs that have been recognized by the business segment. The difference between the consolidated provision for credit losses and the business segments’ net charge-offs is reflected in Other.

Income tax allocations

Income taxes are assessed to each line of business at a standard tax rate with the residual tax expense or benefit to arrive at the consolidated effective tax rate included in Other.

Expense allocations

Noninterest expenses incurred by centrally managed operations or business lines that directly support another business line’s operations are charged to the applicable business line based on its utilization of those services.

Goodwill

For impairment testing purposes, the Company allocates goodwill to its Consumer Banking and Commercial Banking reporting units. For management reporting purposes, the Company presents the goodwill balance (and any related impairment charges) in Other.

Substantially all revenues generated and long-lived assets held by the Company’s business segments are derived from clients that reside in the United States. Neither business segment earns revenue from a single external customer that represents 10 percent or more of the Company’s total revenues.

NOTE 19 - EARNINGS PER SHARE

	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in millions, except share and per-share data)	2016		2015		2016		2015
Numerator (basic and diluted):
Net income		$243		$190		$466		$399
Less: Preferred stock dividends	—		—		7		—
Net income available to common stockholders		$243		$190		$459		$399
Denominator:
Weighted-average common shares outstanding - basic	528,968,330		537,729,248		528,519,489		541,986,653
Dilutive common shares: share-based awards	1,396,873		2,180,118		1,877,382		2,817,615
Weighted-average common shares outstanding - diluted	530,365,203		539,909,366		530,396,871		544,804,268
Earnings per common share:
Basic		$0.46		$0.35		$0.87		$0.74
Diluted	0.46		0.35		0.87		0.73

Basic EPS is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during each period. Diluted EPS is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during each period, plus the effect of potential dilutive common shares such as share-based awards, using the treasury stock method. Potential dilutive common shares are excluded from the computation of diluted EPS in the periods where the effect would be antidilutive.

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CITIZENS FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 20 - OTHER OPERATING EXPENSE

The following table presents the details of other operating expense:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2016		2015		2016		2015
Deposit insurance		$29		$26		$55		$60
Promotional expense	25		29		49		51
Other	74		84		139		161
Other operating expense		$128		$139		$243		$272

NOTE 21 - SUBSEQUENT EVENTS

The Company has evaluated the impacts of events that have occurred subsequent to June 30, 2016 through the date the Consolidated Financial Statements were filed with the SEC. Based on this evaluation, the Company has determined none of these events were required to be recognized or disclosed in the Consolidated Financial Statements and related Notes, except as follows:

On July 19, 2016, the Company completed the sale of consumer real estate-secured loans classified as TDRs (the “TDR Transaction”). The TDR Transaction will result in a third quarter 2016 pre-tax gain of approximately $70 million on the sale of $310 million of loans held for sale.

On July 20, 2016, the Company declared a quarterly common stock dividend of $0.12 per share, or $63 million, payable on August 17, 2016 to stockholders of record at the close of business on August 3, 2016.

On July 28, 2016, the Company issued $350 million of 2.375% fixed-rate senior notes due 2021, and used the net proceeds and available cash to repurchase $500 million of its subordinated notes held by RBS. Specifically, the Company retired $334 million of its 4.082% subordinated notes due 2025 and $166 million of its 4.023% subordinated notes due 2024 that were held by RBS.

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

	Page
Forward-Looking Statements	61
Selected Consolidated Financial Data	62
Overview	64
Recent Events	64
Key Factors Affecting Our Business	64
Factors Affecting Comparability of Our Results	67
Principal Components of Operations and Key Performance Metrics Used By Management	67
Results of Operations — Three and Six Months Ended June 30, 2016 Compared with Three and Six Months Ended June 30, 2015	74
Highlights	74
Net Income	76
Net Interest Income	77
Noninterest Income	80
Provision for Credit Losses	81
Noninterest Expense	81
Provision for Income Taxes	81
Business Segments	82
Analysis of Financial Condition — June 30, 2016 Compared with December 31, 2015	88
Loans and Leases	88
Non-Core Assets	89
Allowance for Credit Losses and Nonperforming Assets	89
Securities	93
Deposits	94
Borrowed Funds	94
Derivatives	95
Capital	96
Liquidity	102
Off-Balance Sheet Commitments	106
Critical Accounting Estimates	106
Risk Governance	112
Market Risk	115

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CITIZENS FINANCIAL GROUP, INC.

FORWARD-LOOKING STATEMENTS

Forward-Looking Statements

This document contains forward-looking statements within the Private Securities Litigation Reform Act of 1995. Statements regarding potential future share repurchases and future dividends are forward-looking statements. Also, any statement that does not describe historical or current facts is a forward-looking statement. These statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “goals,” “targets,” “initiatives,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would,” and “could.”

Forward-looking statements are based upon the current beliefs and expectations of management, and on information currently available to management. Our statements speak as of the date hereof, and we do not assume any obligation to update these statements or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events. We caution you, therefore, against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. While there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation:

• Negative economic conditions that adversely affect the general economy, housing prices, the job market, consumer confidence and spending habits which may affect, among other things, the level of nonperforming assets, charge-offs and provision expense;

• The rate of growth in the economy and employment levels, as well as general business and economic conditions;

• Our ability to implement our strategic plan, including the cost savings and efficiency components, and achieve our indicative performance targets;

• Our ability to remedy regulatory deficiencies and meet supervisory requirements and expectations;

• Liabilities and business restrictions resulting from litigation and regulatory investigations;

• Our capital and liquidity requirements (including under regulatory capital standards, such as the Basel III capital standards) and our ability to generate capital internally or raise capital on favorable terms;

• The effect of the current low interest rate environment or changes in interest rates on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgages held for sale;

• Changes in interest rates and market liquidity, as well as the magnitude of such changes, which may reduce interest margins, impact funding sources and affect the ability to originate and distribute financial products in the primary and secondary markets;

• The effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin;

• Financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including the Dodd-Frank Act and other legislation and regulation relating to bank products and services;

• A failure in or breach of our operational or security systems or infrastructure, or those of our third party vendors or other service providers, including as a result of cyber-attacks; and

• Management’s ability to identify and manage these and other risks.

In addition to the above factors, we also caution that the amount and timing of any future common stock dividends or share repurchases will depend on our financial condition, earnings, cash needs, regulatory constraints, capital requirements (including requirements of our subsidiaries), and any other factors that our Board of Directors deems relevant in making such a determination. Therefore, there can be no assurance that we will pay any dividends to holders of our common stock, or as to the amount of any such dividends.

More information about factors that could cause actual results to differ materially from those described in the forward-looking statements can be found under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2015.

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CITIZENS FINANCIAL GROUP, INC.

SELECTED CONSOLIDATED FINANCIAL DATA

Selected Consolidated Financial Data

We derived the summary Consolidated Operating Data for the three and six months ended June 30, 2016 and 2015 and the summary Consolidated Balance Sheet data as of June 30, 2016 from our unaudited interim Consolidated Financial Statements included in Part I, Item 1 — Financial Statements, included elsewhere in this report. Our historical results are not necessarily indicative of the results expected for any future period.

In our opinion, the unaudited interim Consolidated Financial Statements have been prepared on the same basis as the audited Consolidated Financial Statements and include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the information set forth herein. Our operating results for the three and six months ended June 30, 2016 are not necessarily indicative of those to be expected for the year ending December 31, 2016 or for any future period. You should read the following selected consolidated financial data in conjunction with our unaudited interim Consolidated Financial Statements and the Notes thereto.

	Three Months Ended June 30,						Six Months Ended June 30,
(dollars in millions, except per share amounts)	2016			2015			2016			2015
OPERATING DATA:
Net interest income		$923			$840			$1,827			$1,676
Noninterest income	355			360			685			707
Total revenue	1,278			1,200			2,512			2,383
Provision for credit losses	90			77			181			135
Noninterest expense	827			841			1,638			1,651
Income before income tax expense	361			282			693			597
Income tax expense	118			92			227			198
Net income		$243			$190			$466			$399
Net income available to common stockholders		$243			$190			$459			$399
Net income per common share - basic	0.46			0.35			0.87			0.74
Net income per common share - diluted	0.46			0.35			0.87			0.73
OTHER OPERATING DATA:
Return on average common equity (2)	4.94		%	3.94		%	4.70		%	4.15		%
Return on average tangible common equity (1)	7.30			5.90			6.96			6.21
Return on average total assets (3)	0.69			0.56			0.67			0.60
Return on average total tangible assets (1)	0.72			0.59			0.70			0.63
Efficiency ratio (1)	64.71			70.02			65.18			69.27
Net interest margin (4)	2.84			2.72			2.85			2.74

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CITIZENS FINANCIAL GROUP, INC.

SELECTED CONSOLIDATED FINANCIAL DATA

(in millions)	June 30, 2016			December 31, 2015
BALANCE SHEET DATA:
Total assets		$145,183			$138,208
Loans and leases (5)	103,551			99,042
Allowance for loan and lease losses	1,246			1,216
Total securities	24,398			24,075
Goodwill	6,876			6,876
Total liabilities	124,957			118,562
Total deposits	106,257			102,539
Federal funds purchased and securities sold under agreements to repurchase	717			802
Other short-term borrowed funds	2,770			2,630
Long-term borrowed funds	11,810			9,886
Total stockholders’ equity	20,226			19,646
OTHER BALANCE SHEET DATA:
Asset Quality Ratios:
Allowance for loan and lease losses as a percentage of total loans and leases	1.20		%	1.23		%
Allowance for loan and lease losses as a percentage of nonperforming loans and leases	119			115
Nonperforming loans and leases as a percentage of total loans and leases	1.01			1.07
Capital Ratios:(6)
CET1 capital ratio (7)	11.5			11.7
Tier 1 capital ratio (8)	11.7			12.0
Total capital ratio (9)	14.9			15.3
Tier 1 leverage ratio (10)	10.3			10.5

⁽¹⁾ These measures are non-GAAP financial measures. For more information on the computation of these non-GAAP financial measures, see “ —Principal Components of Operations and Key Performance Metrics Used By Management — Key Performance Metrics and Non-GAAP Financial Measures.”

⁽²⁾ “Return on average common equity” is defined as annualized net income available to common stockholders divided by average common equity.

⁽³⁾ “Return on average total assets” is defined as annualized net income divided by average total assets.

⁽⁴⁾ “Net interest margin” is defined as annualized net interest income divided by average total interest-earning assets.

⁽⁵⁾ Excludes loans held for sale of $850 million and $365 million as of June 30, 2016 and December 31, 2015, respectively.

⁽⁶⁾ Basel III transitional rules for institutions applying the Standardized approach to calculating risk-weighted assets became effective January 1, 2015. The capital ratios and associated components as of June 30, 2016 and December 31, 2015 are prepared using the Basel III Standardized transitional approach.

⁽⁷⁾ “Common equity tier 1 capital ratio” represents CET1 divided by total risk-weighted assets as defined under Basel III Standardized approach.

⁽⁸⁾ “Tier 1 capital ratio” is tier 1 capital, which includes CET1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital, divided by total risk-weighted assets as defined under Basel III Standardized approach.

⁽⁹⁾ “Total capital ratio” is total capital divided by total risk-weighted assets as defined under Basel III Standardized approach.

⁽¹⁰⁾ “Tier 1 leverage ratio” is tier 1 capital divided by quarterly average total assets as defined under Basel III Standardized approach.

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Overview

We are one of the nation’s oldest and largest financial institutions, with $145.2 billion of total assets as of June 30, 2016. Headquartered in Providence, Rhode Island, we deliver a broad range of retail and commercial banking products and services to individuals, institutions and companies. Our approximately 17,800 colleagues strive to meet the financial needs of customers and prospects through approximately 1,200 branches and approximately 3,200 ATMs operated in 11 states in the New England, Mid-Atlantic and Midwest regions and through our online, telephone and mobile banking platforms. We conduct our banking operations through two wholly-owned banking subsidiaries, Citizens Bank, N.A. and Citizens Bank of Pennsylvania, and we operate our businesses through two operating segments, Consumer Banking and Commercial Banking.

Consumer Banking serves retail customers and small businesses with annual revenues of up to $25 million with products and services that include deposit products, mortgage and home equity lending, student loans, auto financing, credit cards, business loans and wealth management and investment services. Consumer Banking average loans and leases totaled $54.0 billion and $50.6 billion, or 53% of average loan and leases (including loans held for sale) for first half 2016 and 2015, respectively.

Commercial Banking offers corporate, institutional and not-for-profit clients a full range of wholesale banking products and services including lending and deposits, capital markets, treasury services, foreign exchange and interest hedging, leasing and asset finance, specialty finance and trade finance. Commercial Banking average loans and leases totaled $45.0 billion compared with $40.9 billion, or 44% and 43% of average loan and leases (including loans held for sale) for first half 2016 and 2015, respectively.

Non-core assets totaled $2.0 billion as of June 30, 2016 compared with $2.3 billion as of December 31, 2015, down 14%. Non-core assets are primarily loans that are not aligned to our strategic priorities, generally as a result of geographic location, industry, product type, or risk level. We have actively managed these assets down since they were designated as non-core on June 30, 2009. The largest component of our non-core portfolio is our home equity products serviced by others (a portion of which we now service internally). Our non-core assets are included in Other along with our treasury function, securities portfolio, wholesale funding activities, goodwill, community development assets and other unallocated assets, liabilities, capital, revenues, provision for credit losses and expenses not attributed to the Consumer Banking or Commercial Banking segments.

Recent Events

On July 28, 2016, we issued $350 million of 2.375% fixed-rate senior notes due 2021, and used the net proceeds and available cash to repurchase $500 million of our subordinated debt held by RBS. Specifically, we retired $334 million of our 4.082% subordinated notes due 2025 and $166 million of our 4.023% subordinated notes due 2024 that were held by RBS.

On July 19, 2016, we completed the sale of consumer real estate-secured loans classified as TDRs (the “TDR Transaction”). The TDR Transaction will result in a third quarter 2016 pre-tax gain of approximately $70 million on the sale of $310 million of loans held for sale. We plan to utilize approximately 30% to 40% of the TDR Transaction gain to fund costs associated with our efficiency and balance sheet optimization initiatives in third quarter 2016.

In April 2016, we submitted our 2016 Capital Plan to the Federal Reserve under the annual CCAR process. On June 29, 2016, the FRBG indicated that it did not object to our 2016 Capital Plan or to our proposed capital actions in the period beginning July 1, 2016 and ending June 30, 2017. Our 2016 Capital Plan includes proposed quarterly common dividends of $0.12 per share through the end of 2016, a potential 17% increase to quarterly common dividends to $0.14 per share in 2017, and a share repurchase plan of up to $690 million through the second quarter of 2017.

In second quarter 2016, our commercial broker-dealer, Citizens Capital Markets, Inc. (“CCMI”) commenced operations.  CCMI was formed to serve customer needs by providing strategic advice on merger and acquisition transactions, capital structure, valuation and general corporate advisory services, and to assist in capital raising via public securities offerings and private placements.

Key Factors Affecting Our Business

Macro-economic conditions

Our business is affected by national and regional economic conditions, as well as the perception of future conditions and economic prospects. The significant macro-economic factors that impact our business include interest rates, the health of the housing market, the rate of the U.S.’s economic expansion, and unemployment levels.

The U.S. economy continued to expand at a slow pace, with real GDP rising by 1.2% in second quarter 2016, following 2.4% growth in 2015. Economists forecast that ‘Brexit’ will not materially impact 2016 and 2017 U.S. GDP.Growth in household spending has declined since 2014 but the housing sector has improved with the three month average of existing home sales rising to 5.5 million units from 5.3 million units in the previous quarter.

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

The labor market continued to improve, with moderate job gains and lower levels of unemployment. The U.S. unemployment rate was 4.9% at June 30, 2016 and 5.0% at December 31, 2015. Average monthly nonfarm employment increased by 147,000 in second quarter 2016, after an increase of 196,000 in first quarter 2016.

The FRB maintained very accommodative monetary policy conditions during second quarter 2016, notwithstanding the 25 bps rate increase in December, and continues to target a 0.25% to 0.50% federal funds rate range at the short end of the yield curve. Interest rates remain relatively low. See “—Interest rates” below for further discussion of the impact of interest rates on our results. Observable inflation levels remain below the FRB’s longer-term objective of 2.0%. Further labor market improvement and the dissipation of the effects of a decline in energy and import prices are expected to bring inflation closer to the FRB’s inflation objective.

Credit trends

Credit metrics and asset quality improved in second quarter 2016. Nonperforming loans of $1.0 billion as of June 30, 2016 decreased $6 million from June 30, 2015, reflecting improvement in commercial and retail products. Net charge-offs of $65 million decreased $13 million from $78 million in second quarter 2015, and included $48 million in recoveries of prior period charge-offs, compared with $43 million in second quarter 2015. Annualized net charge-offs as a percentage of total average loans decreased to 0.25%, compared to 0.33% in second quarter 2015.

Credit metrics and asset quality remained relatively stable in first half 2016. Net charge-offs of $148 millionincreased$16 million from $132 million in first half 2015, which included $91 million in recoveries of prior period charge-offs. Annualized net charge-offs as a percentage of total average loans increased to 0.29%, which is comparable to 0.28% in first half 2015.

Interest rates

Net interest income is our largest source of revenue and is the difference between the interest earned on interest-earning assets (usually loans and investment securities) and the interest expense incurred in connection with interest-bearing liabilities (usually deposits and borrowings). The level of net interest income is primarily a function of the average balance of interest-earning assets, the average balance of interest-bearing liabilities and the spread between the contractual yield on such assets and the contractual cost of such liabilities. These factors are influenced by the pricing and mix of interest-earning assets and interest-bearing liabilities which, in turn, are impacted by external factors such as local economic conditions, competition for loans and deposits, the monetary policy of the FRB and market interest rates. For further discussion, refer to “—Risk Governance” and “—Market Risk — Non-Trading Risk”, included elsewhere in this report.

The cost of our deposits and short-term wholesale borrowings is largely based on short-term interest rates, which are primarily driven by the FRB’s actions. However, the yields generated by our loans and securities are typically driven by both short-term and long-term interest rates, which are set by the market or, at times, by the FRB’s actions. The level of net interest income is therefore influenced by movements in such interest rates and the pace at which such movements occur. In 2015 and through second quarter 2016, short-term and long-term interest rates remained at very low levels by historical standards, with many benchmark rates, such as the federal funds rate and one- and three-month LIBOR, near zero. Further declines in the yield curve or a decline in longer-term yields relative to short-term yields (a flatter yield curve) would have an adverse impact on our net interest margin and net interest income.

In 2015 and through second quarter 2016, the FRB maintained a highly accommodative monetary policy, and indicated that this policy would remain in effect for a considerable time after its asset purchase program ended on October 29, 2014 and the economic recovery strengthens in the United States. More recently, the FRB has started to move down the path of interest rate normalization by raising the federal funds rate by 25 basis points. However, the FRB will likely continue to target a highly accommodative monetary policy for some time to come.

Regulatory trends

We are subject to extensive regulation and supervision, which continue to evolve as the legal and regulatory framework governing our operations continues to change. The current operating environment also has heightened regulatory expectations around many regulations including consumer compliance, the Bank Secrecy Act, anti-money laundering compliance, and increased internal audit activities. As a result of these heightened expectations, we expect to incur additional costs for additional compliance personnel and/or professional fees associated with advisors and consultants.

Dodd-Frank regulation

As described under “Regulation and Supervision” in Part I, Item 1 — Business included in our Annual Report on Form 10-K for the year ended December 31, 2015, we are subject to a variety of laws and regulations, including the Dodd-Frank Act. The Dodd-Frank Act is complex, and many aspects of the Dodd-Frank Act are subject to final rulemaking or phased implementation that will take effect over several years. The Dodd-Frank Act will continue to impact our earnings through fee reductions, higher

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

costs and imposition of new restrictions on us. The Dodd-Frank Act may also continue to have a material adverse impact on the value of certain assets and liabilities held on our balance sheet. The ultimate impact of the Dodd-Frank Act on our business will depend on regulatory interpretation and rulemaking as well as the success of any of our actions to mitigate the negative impacts of certain provisions. Key parts of the Dodd-Frank Act that specifically impact our business are the repeal of a previous prohibition against payment of interest on demand deposits, which became effective in July 2011, and the introduction of a capital planning and stress-testing framework developed by the FRBG, known as CCAR and DFAST. Under this supervisory framework, we are required to submit annual capital plans to the FRB and are subject to annual supervisory and semiannual internal stress tests requirements.

Consistent with these requirements, we must submit our annual capital plan and the results of our annual company-run stress tests to the FRB by April 5 of each year and disclose certain results within 15 days of the date on which the FRB discloses the results of its supervisory-run tests. We submitted our 2016 capital plan and related annual stress test results to the Federal Reserve on April 5, 2016. We published our estimated results under the supervisory severely adverse scenario on the Investor Relations regulatory filings and disclosures page of our corporate website on June 23, 2016. The annual DFAST process projects net income, loan losses and capital ratios during a nine-quarter horizon under hypothetical, stressful macroeconomic and financial market scenarios developed by the FRBG as well as certain mandated assumptions about capital distributions prescribed in the DFAST rule. Consistent with the purpose of these exercises and the assumptions used to assess our performance during hypothetical economic conditions, the projected results under the required stress scenarios show severe negative impacts on earnings and decline in capital ratios. However, these pro forma results should not be interpreted as management expectations but rather as a possible result under hypothetical, severely adverse economic conditions that do not take into account capital conservation actions that would be mandated by internal policy if such conditions were actually to occur.

Similarly, we are required to submit the results of our CFG mid-cycle company-run DFAST stress tests by October 5 of each year and to disclose the results under an internally developed severely adverse scenario between October 5 and November 4.

The Dodd-Frank Act also requires each of our bank subsidiaries to conduct stress tests on an annual basis and to disclose the stress test results. CBNA submitted its 2016 annual stress tests to the OCC on April 5, 2016 and published a summary of the results along with the stress test result of the bank holding company parent in June 2016. CBPA submitted its 2016 annual stress tests to the FDIC on April 5, 2016 and will publish the results by October 31, 2016, in accordance with FDIC DFAST disclosure requirements.

Comprehensive Capital Analysis and Review

CCAR is an annual exercise by the FRBG to ensure that the largest bank holding companies have sufficient capital to continue operations throughout times of economic and financial stress and robust forward-looking capital planning processes that account for their unique risks.

As part of CCAR, the FRBG evaluates institutions’ capital adequacy, internal capital adequacy assessment processes and their plans to make capital distributions, such as dividend payments or stock repurchases. The FRBG may either object to our capital plan, in whole or in part, or provide a notice of non-objection. If the FRBG objects to our capital plan, we may not make any capital distribution other than those with respect to which the FRBG has indicated its non-objection.

In April 2016, we submitted our 2016 Capital Plan to the Federal Reserve under the annual CCAR process. On June 29, 2016, the FRBG indicated that it did not object to our 2016 Capital Plan or to our proposed capital actions in the period beginning July 1, 2016 and ending June 30, 2017. Our 2016 Capital Plan includes proposed quarterly common dividends of $0.12 per share through the end of 2016, a potential 17% increase to quarterly common dividends to $0.14 per share in 2017, and a share repurchase plan of up to $690 million through the second quarter of 2017.

All proposed capital distributions are subject to consideration and approval by CFG’s Board of Directors prior to execution. The timing and exact amount of dividends and share repurchases will depend on various factors, including our capital position, financial performance and market conditions. The CFG Board has approved a broad-based share repurchase program that may be executed in the open market or in privately negotiated transactions, including under Rule 10b5-1 plans.

Further, on July 28, 2016, we repurchased $500 million of subordinated notes from RBS as non-objected by the Federal Reserve when requested in the our 2016 capital plan. See Note 21 “Subsequent Events” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included elsewhere in this report.

Repeal of the prohibition on depository institutions paying interest on demand deposits

We began offering interest-bearing corporate checking accounts after the 2011 repeal of the prohibition on depository institutions paying interest on demand deposits. Currently, industry wide interest rates for this product are very low and thus far

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the impact of the repeal has not had a significant effect on our results. However, market rates could increase more significantly in the future. If we need to pay higher interest rates on checking accounts to maintain current clients or attract new clients, our interest expense would increase, perhaps materially. Furthermore, if we fail to offer interest rates at a sufficient level to retain demand deposits, our core deposits may be reduced, which would require us to obtain funding in other ways or limit potential future asset growth.

Basel III final rules applicable to us and our banking subsidiaries

In July 2013, the FRB, OCC, and FDIC issued the U.S. Basel III final rules. The rules implement the Committee on Banking Supervision’s Basel III capital framework and certain provisions of the Dodd-Frank Act, including the Collins Amendment. The U.S. Basel III final rules substantially revised the risked-based capital and leverage requirements applicable to bank holding companies and their insured depository institution subsidiaries, including CBNA and CBPA. The U.S. Basel III final rules became effective for CFG and its depository institution subsidiaries, including CBNA and CBPA, on January 1, 2015 (subject to a phase-in period for certain provisions). In order to comply with the new capital requirements, we established internal capital ratio targets that meet or exceed U.S. regulatory expectations under fully phased-in Basel III rules, and increased our capital requirements in anticipation of the transition that is underway.

HELOC payment shock

Attention has been given by regulators, rating agencies, and the general press regarding the potential for increased exposure to credit losses associated with HELOCs that were originated during the period of rapid home price appreciation between 2003 and 2007. Industry wide, many of the HELOCs originated during this timeframe were structured with an extended interest-only payment period followed by a requirement to convert to a higher payment amount that would begin fully amortizing both principal and interest beginning at a certain date in the future. As of June 30, 2016, approximately 23% of our $14.7 billion HELOC portfolio, or $3.4 billion in drawn balances were subject to a payment reset or balloon payment between July 1, 2016 and December 31, 2018, including $36 million in balloon balances where full payment is due at the end of a ten-year interest only draw period.

To help manage this exposure, in September 2013, we launched a comprehensive program designed to provide heightened customer outreach to inform, educate and assist customers through the reset process as well as to offer alternative financing and forbearance options. Results of this program indicate that our efforts to assist customers at risk of default have successfully reduced delinquency and charge-off rates compared to our original expectations.

As of June 30, 2016, for the $1.6 billion of our HELOC portfolio that was originally structured with a reset period in 2014 and 2013, 94% of the balances were refinanced, paid off or were current on payments, 3% were past due and 3% had been charged off. As of June 30, 2016, for the $1.3 billion in balances originally structured with a reset period in 2015, 94% of the balances were refinanced, paid off or were current on payments, 4% were past due and 2% had been charged off. A total of $995 million in balances were originally structured with a reset period in 2016, with $376 million scheduled to reset for the remainder of 2016. Factors that affect our future expectations for charge-off risk for the portion of our HELOC portfolio subject to reset periods in the future include improved loan-to-value ratios resulting from continued home price appreciation, stable portfolio credit score profiles and more robust loss mitigation efforts.

Factors Affecting Comparability of Our Results

Investment in our business

We regularly incur expenses associated with investments in our infrastructure. For example, from 2011 to 2015 we invested $1.3 billion in infrastructure and technology, and plan to invest a total of $220 million in 2016 and about $190 million in 2017. We invested $90 million in our infrastructure in first half 2016. These investments, which are designed to lower our operating costs and improve our customer experience, include significant programs to enhance our resiliency, upgrade customer-facing technology and streamline operations. Recent significant investments included the 2013 launch of our new teller system, new commercial loan platform and new auto loan platform and the 2013 upgrade of the majority of our ATM network, including equipping more than 1,450 ATMs with advanced deposit-taking functionality as well as additional investment in our Treasury Solutions platform in 2014. In 2015 we enhanced our data resiliency via a new back up data center and began rolling out a new mortgage platform. We expect that these investments will increase our long-term overall efficiency and add to our capacity to increase revenue.

Principal Components of Operations and Key Performance Metrics Used by Management

As a banking institution, we manage and evaluate various aspects of our results of operations and our financial condition. We evaluate the levels and trends of the line items included in our balance sheet and statement of operations, as well as various financial ratios that are commonly used in our industry. We analyze these ratios and financial trends against our own historical

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performance, our budgeted performance and the financial condition and performance of comparable banking institutions in our region and nationally.

The primary line items we use in our key performance metrics to manage and evaluate our statement of operations include net interest income, noninterest income, total revenue, provision for credit losses, noninterest expense and net income. The primary line items we use in our key performance metrics to manage and evaluate our balance sheet data include loans and leases, securities, allowance for credit losses, deposits, borrowed funds and derivatives.

Net interest income

Net interest income is the difference between the interest earned on interest-earning assets (usually loans and investment securities) and the interest expense incurred in connection with interest-bearing liabilities (usually deposits and borrowings). The level of net interest income is primarily a function of the average balance of interest-earning assets, the average balance of interest-bearing liabilities and the spread between the contractual yield on such assets and the cost of such liabilities. Net interest income is impacted by the relative mix of interest-earning assets and interest-bearing liabilities, movements in market interest rates, levels of nonperforming assets and pricing pressure from competitors. The mix of interest-earning assets is influenced by loan demand and by management’s continual assessment of the rate of return and relative risk associated with various classes of interest-earning assets.

The mix of interest-bearing liabilities is influenced by management’s assessment of the need for lower cost funding sources weighed against relationships with customers and growth requirements and is impacted by competition for deposits in our market and the availability and pricing of other sources of funds.

Noninterest income

The primary components of our noninterest income are service charges and fees, card fees, trust and investment services fees and mortgage banking fees.

Total revenue

Total revenue is the sum of our net interest income and our noninterest income.

Provision for credit losses

The provision for credit losses is the amount of expense that, based on our judgment, is required to maintain the allowance for credit losses at an amount that reflects probable losses inherent in the loan portfolio at the balance sheet date and that, in management’s judgment, is appropriate under relevant accounting guidance. The provision for credit losses includes the provision for loan and lease losses as well as the provision for unfunded commitments. The determination of the amount of the allowance for credit losses is complex and involves a high degree of judgment and subjectivity. For additional information regarding the provision for credit losses, see “—Critical Accounting Estimates — Allowance for Credit Losses,” Note 1 “Significant Accounting Policies” to the audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2015 and Note 4 “Allowance for Credit Losses, Nonperforming Assets, and Concentrations of Credit Risk” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included elsewhere in this report.

Noninterest expense

Noninterest expense includes salaries and employee benefits, outside services, occupancy expense, equipment expense, amortization of software, goodwill impairment, and other operating expenses.

Net income

We evaluate our net income based on measures including return on average common equity, return on average total assets and return on average tangible common equity.

Loans and leases

We classify our loans and leases pursuant to the following classes: commercial, commercial real estate, leases, residential mortgages, home equity loans, home equity lines of credit, home equity loans serviced by others, home equity lines of credit serviced by others, automobile, student, credit cards and other retail.

Loans are reported at the amount of their outstanding principal, net of charge-offs, unearned income, deferred loan origination fees and costs and unamortized premiums or discounts (on purchased loans). Deferred loan origination fees and costs and purchase discounts and premiums are amortized as an adjustment of yield over the life of the loan, using the level yield interest method. Unamortized amounts remaining upon prepayment or sale are recorded as interest income or gain (loss) on sale, respectively. Credit card receivables include billed and uncollected interest and fees.

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Leases are classified at the inception of the lease by type. Lease receivables, including leveraged leases, are reported at the aggregate of lease payments receivable and estimated residual values, net of unearned and deferred income, including unamortized investment credits. Lease residual values are reviewed at least annually for other-than-temporary impairment, with valuation adjustments recognized currently against noninterest income. Leveraged leases are reported net of non-recourse debt. Unearned income is recognized to yield a level rate of return on the net investment in the leases.

Loans held for sale, at fair value

Mortgage loans and commercial loans held for sale are carried at fair value.

Other loans held for sale

Balances are loans that were transferred to loans held for sale that are reported at the lower of cost or fair value.

Securities

Our securities portfolio is managed to seek return while maintaining prudent levels of quality, market risk and liquidity. Investments in debt and equity securities are carried in four portfolios: AFS, HTM, trading securities and other investment securities. We determine the appropriate classification at the time of purchase. Securities in our AFS portfolio will be held for indefinite periods of time and may be sold in response to changes in interest rates, changes in prepayment risk or other factors relevant to our asset and liability strategy. Securities in our AFS portfolio are carried at fair value, with unrealized gains and losses reported in OCI, as a separate component of stockholders’ equity, net of taxes. Securities are classified as HTM because we have the ability and intent to hold the securities to maturity, and securities in our HTM portfolio are carried at amortized cost. Other investment securities are composed mainly of FHLB stock and FRB stock (which are carried at cost), and money market mutual fund investments held by our broker-dealer (which are carried at fair value, with changes in fair value recognized in noninterest income).

Allowance for credit losses

Our estimate of probable losses in the loan and lease portfolios is recorded in the ALLL and the reserve for unfunded lending commitments. Together these are referred to as the allowance for credit losses. We evaluate the adequacy of the allowance for credit losses using the following ratios: ALLL as a percentage of total loans and leases; ALLL as a percentage of nonperforming loans and leases; and nonperforming loans and leases as a percentage of total loans and leases. For additional information, see “—Critical Accounting Estimates — Allowance for Credit Losses,” and Note 1 “Significant Accounting Policies” to the audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2015 and Note 4 “Allowance for Credit Losses, Nonperforming Assets, and Concentrations of Credit Risk” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included elsewhere in this report.

Deposits

Our deposits include: on demand checking, checking with interest, regular savings accounts, money market accounts and term deposits.

Borrowed funds

As of June 30, 2016, our total short-term borrowed funds included federal funds purchased, securities sold under agreement to repurchase, the current portion of FHLB advances and other short-term borrowed funds. As of June 30, 2016, our long-term borrowed funds included subordinated debt, unsecured notes, Federal Home loan advances and other long-term borrowed funds. For additional information, see “—Analysis of Financial Condition — Borrowed Funds,” and Note 7 “Borrowed Funds” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included elsewhere in this report.

Derivatives

We use pay-fixed swaps to lengthen liabilities synthetically and offset duration in fixed-rate assets. We also use pay-fixed swaps to hedge floating-rate wholesale funding.

We use receive-fixed interest rate swaps to manage the interest rate exposure on our medium term borrowings. We also use receive-fixed swaps to minimize the exposure to variability in the interest cash flows on our floating rate assets. The assets and liabilities recorded for derivatives designated as hedges reflect the market value of these hedge instruments.

We sell interest rate swaps and foreign exchange forwards to commercial customers. Interest rate and foreign exchange derivative contracts are transacted to effectively minimize our market risk associated with the customer derivative contracts. The assets and liabilities recorded for derivatives not designated as hedges reflect the market value of these transactions. For additional information, see “—Analysis of Financial Condition — Derivatives,” and Note 11 “Derivatives” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included elsewhere in this report.

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Key performance metrics and non-GAAP financial measures

We consider various measures when evaluating our performance and making day-to-day operating decisions, as well as evaluating capital utilization and adequacy, including:

• Return on average common equity, which we define as net income available to common stockholders divided by average common equity;

• Return on average tangible common equity, which we define as net income available to common stockholders divided by average common equity excluding average goodwill (net of related deferred tax liability) and average other intangibles;

• Return on average total assets, which we define as net income divided by average total assets;

• Return on average total tangible assets, which we define as net income divided by average total assets excluding average goodwill (net of related deferred tax liability) and average other intangibles;

• Efficiency ratio, which we define as the ratio of our total noninterest expense to the sum of net interest income and total noninterest income. We measure our efficiency ratio to evaluate the efficiency of our operations as it helps us monitor how costs are changing compared to our income. A decrease in our efficiency ratio represents improvement; and

• Net interest margin, which we calculate by dividing annualized net interest income for the period by average total interest-earning assets, is a key measure that we use to evaluate our net interest income.

Certain of the above financial measures, including return on average tangible common equity, return on average total tangible assets and the efficiency ratio are not recognized under GAAP. In addition, we present noninterest expense, net income, net income available to common stockholders, and return on average tangible common equity net of restructuring charges and special items. We believe these non-GAAP measures provide useful information to investors because these are among the measures used by our management team to evaluate our operating performance and make day-to-day operating decisions. In addition, we believe restructuring charges and special items in any period do not reflect the operational performance of the business in that period and, accordingly, it is useful to consider these line items with and without restructuring charges and special items. We believe this presentation also increases comparability of period-to-period results.

We consider pro forma capital ratios defined by banking regulators but not effective at each period end to be non-GAAP financial measures. As analysts and banking regulators may evaluate our capital adequacy using these pro forma ratios, we believe they are useful to provide investors the ability to evaluate our capital adequacy on the same basis.

Other companies may use similarly titled non-GAAP financial measures that are calculated differently from the way we calculate such measures. Accordingly, our non-GAAP financial measures may not be comparable to similar measures used by other companies. We caution investors not to place undue reliance on such non-GAAP measures, but instead to consider them with the most directly comparable GAAP measure. Non-GAAP financial measures have limitations as analytical tools, and should not be considered in isolation or as a substitute for our results reported under GAAP.

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The following table reconciles non-GAAP financial measures to GAAP:

		As of and for the Three Months Ended June 30, 2016						As of and for the Six Months Ended June 30,
(dollars in millions, except per-share amounts)	Ref.	2016			2015			2016			2015
Net income (GAAP)	A		$243			$190			$466			$399
Net income available to common stockholders (GAAP)	B		$243			$190			$459			$399
Return on average tangible common equity
Average common equity (GAAP)			$19,768			$19,391			$19,667			$19,399
Less: Average goodwill (GAAP)		6,876			6,876			6,876			6,876
Less: Average other intangibles (GAAP)		2			5			2			5
Add: Average deferred tax liabilities related to goodwill (GAAP)		496			437			488			430
Average tangible common equity (non-GAAP)	C		$13,386			$12,947			$13,277			$12,948
Return on average tangible common equity (non-GAAP)	B/C	7.30		%	5.90		%	6.96		%	6.21		%
Return on average total tangible assets:
Average total assets (GAAP)			$142,179			$135,521			$140,479			$134,429
Less: Average goodwill (GAAP)		6,876			6,876			6,876			6,876
Less: Average other intangibles (GAAP)		2			5			2			5
Add: Average deferred tax liabilities related to goodwill (GAAP)		496			437			488			430
Average tangible assets (non-GAAP)	D		$135,797			$129,077			$134,089			$127,978
Return on average total tangible assets (non-GAAP)	A/D	0.72		%	0.59		%	0.70		%	0.63		%
Efficiency ratio
Noninterest expense (GAAP)	E		$827			$841			$1,638			$1,651
Net interest income (GAAP)		923			840			1,827			1,676
Noninterest income (GAAP)		355			360			685			707
Total revenue (GAAP)	F		$1,278			$1,200			$2,512			$2,383
Efficiency ratio (non-GAAP)	E/F	64.71		%	70.02		%	65.18		%	69.27		%
Noninterest expense excluding restructuring charges and special items:
Noninterest expense (GAAP)	E		$827			$841			$1,638			$1,651
Less: Restructuring charges (GAAP)		—			25			—			26
Less: Special items (1)		—			15			—			24
Noninterest expense, excluding restructuring charges and special items (non-GAAP)			$827			$801			$1,638			$1,601
Net income, excluding restructuring charges and special items:
Net income (GAAP)	A		$243			$190			$466			$399
Add: Restructuring charges, net of tax expense (GAAP)		—			15			—			16
Add: Special items, net of tax expense (1)		—			10			—			15
Net income, excluding restructuring charges and special items (non-GAAP)			$243			$215			$466			$430
Net income available to common stockholders, excluding restructuring charges and special items:
Net income available to common stockholders (GAAP)	B		$243			$190			$459			$399
Add: Restructuring charges, net of tax expense (GAAP)		—			15			—			16
Add: Special items, net of tax expense (1)		—			10			—			15
Net income available to common shareholders, excluding restructuring charges and special items (non-GAAP)	G		$243			$215			$459			$430
Return on average tangible common equity, excluding restructuring charges and special items (non-GAAP)	G/C	7.30		%	6.67		%	6.96		%	6.70		%

⁽¹⁾ Special items include the following: regulatory charges and separation items.

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		As of and for the Three Months Ended June 30,
		2016												2015
(dollars in millions)	Ref.	Consumer Banking			Commercial Banking			Other			Consolidated			Consumer Banking			Commercial Banking			Other			Consolidated
Net income (GAAP)	H		$90			$164			($11	)		$243			$66			$135			($11	)		$190
Less: Preferred stock dividends		—			—			—			—			—			—			—			—
Net income available to common stockholders (GAAP)	I		$90			$164			($11	)		$243			$66			$135			($11	)		$190
Efficiency ratio:
Total revenue (GAAP)	J		$821			$436			$21			$1,278			$774			$394			$32			$1,200
Noninterest expense (GAAP)	K	632			186			9			827			613			181			47			841
Efficiency ratio (non-GAAP)	K/J	76.98		%	42.88		%	NM			64.71		%	79.25		%	46.07		%	NM			70.02		%
Return on average total tangible assets:
Average total assets (GAAP)			$55,660			$47,388			$39,131			$142,179			$52,489			$42,617			$40,415			$135,521
Less: Average goodwill (GAAP)		—			—			6,876			6,876			—			—			6,876			6,876
Less: Average other intangibles (GAAP)		—			—			2			2			—			—			5			5
Add: Average deferred tax liabilities related to goodwill (GAAP)		—			—			496			496			—			—			437			437
Average total tangible assets (non-GAAP)	L		$55,660			$47,388			$32,749			$135,797			$52,489			$42,617			$33,971			$129,077
Return on average total tangible assets (non-GAAP)	H/L	0.65		%	1.39		%	NM			0.72		%	0.51		%	1.27		%	NM			0.59		%
Return on average tangible common equity:
Average common equity (GAAP)(2)			$5,110			$5,040			$9,618			$19,768			$4,681			$4,625			$10,085			$19,391
Less: Average goodwill (GAAP)		—			—			6,876			6,876			—			—			6,876			6,876
Less: Average other intangibles (GAAP)		—			—			2			2			—			—			5			5
Add: Average deferred tax liabilities related to goodwill (GAAP)		—			—			496			496			—			—			437			437
Average tangible common equity (non-GAAP)(2)	M		$5,110			$5,040			$3,236			$13,386			$4,681			$4,625			$3,641			$12,947
Return on average tangible common equity (non-GAAP)(2)	I/M	7.09		%	13.04		%	NM			7.30		%	5.66		%	11.69		%	NM			5.90		%

⁽²⁾ Operating segments are allocated capital on a risk-adjusted basis considering economic and regulatory capital requirements. We approximate that regulatory capital is equivalent to

a sustainable target level for common equity tier 1 and then allocate that approximation to the segments based on economic capital.

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		As of and for the Six Months Ended June 30,
		2016											2015
(dollars in millions)	Ref.	Consumer Banking			Commercial Banking			Other		Consolidated			Consumer Banking			Commercial Banking			Other			Consolidated
Net income (GAAP)	N		$161			$297			$8		$466			$127			$282			($10	)		$399
Less: Preferred stock dividends		—			—			7		7			—			—			—			—
Net income available to common stockholders (GAAP)	O		$161			$297			$1		$459			$127			$282			($10	)		$399
Efficiency ratio:
Total revenue (GAAP)	P		$1,610			$835			$67		$2,512			$1,526			$770			$87			$2,383
Noninterest expense (GAAP)	Q	1,248			373			17		1,638			1,209			354			88			1,651
Efficiency ratio (non-GAAP)	Q/P	77.52		%	44.73		%	NM		65.18		%	79.25		%	46.04		%	NM			69.27		%
Return on average total tangible assets:
Average total assets (GAAP)			$55,388			$46,346			$38,745		$140,479			$52,048			$42,114			$40,267			$134,429
Less: Average goodwill (GAAP)		—			—			6,876		6,876			—			—			6,876			6,876
Less: Average other intangibles (GAAP)		—			—			2		2			—			—			5			5
Add: Average deferred tax liabilities related to goodwill (GAAP)		—			—			488		488			—			—			430			430
Average total tangible assets (non-GAAP)	R		$55,388			$46,346			$32,355		$134,089			$52,048			$42,114			$33,816			$127,978
Return on average total tangible assets (non-GAAP)	N/R	0.58		%	1.29		%	NM		0.70		%	0.49		%	1.35		%	NM			0.63		%
Return on average tangible common equity:
Average common equity (GAAP)(2)			$5,099			$4,915			$9,653		$19,667			$4,665			$4,576			$10,158			$19,399
Less: Average goodwill (GAAP)		—			—			6,876		6,876			—			—			6,876			6,876
Less: Average other intangibles (GAAP)		—			—			2		2			—			—			5			5
Add: Average deferred tax liabilities related to goodwill (GAAP)		—			—			488		488			—			—			430			430
Average tangible common equity (non-GAAP)(2)	S		$5,099			$4,915			$3,263		$13,277			$4,665			$4,576			$3,707			$12,948
Return on average tangible common equity (non-GAAP)(2)	O/S	6.34		%	12.14		%	NM		6.96		%	5.48		%	12.41		%	NM			6.21		%

⁽²⁾ Operating segments are allocated capital on a risk-adjusted basis considering economic and regulatory capital requirements. We approximate that regulatory capital is equivalent to

a sustainable target level for common equity tier 1 and then allocate that approximation to the segments based on economic capital.

73

CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Results of Operations — Three Months Ended June 30, 2016 Compared with Three Months Ended June 30, 2015

Highlights

For second quarter 2016:

• Net income of $243 million increased $53 million from $190 million in second quarter 2015;

• Net income available to common stockholders of $243 million increased $53 million, or 28%, from $190 million in second quarter 2015;

• Net interest income of $923 million increased $83 million, or 10%, from $840 million in second quarter 2015 driven by 7% average loan growth, 6% average deposit growth and a 12 basis point improvement in net interest margin;

• Net interest margin of 2.84% increased 12 basis points, compared to 2.72% in second quarter 2015. Results were driven by improved loan yields given higher short-term interest rates and continued pricing and portfolio optimization initiatives, partially offset by a reduction in investment portfolio yield driven by lower long-term rates and increased borrowing costs related to senior bank debt issuance. Deposit costs were stable with second quarter 2015, with continued pricing discipline despite higher rates;

• Noninterest income of $355 million decreased $5 million, or 1%, from second quarter 2015 levels that exclude the negative impact of $7 million of card reward costs. Excluding this impact, strength in service charges and fees and capital markets fees was offset by lower mortgage banking and trust and investment services fees;

• Noninterest expense of $827 million decreased $14 million, or 2%, compared to $841 million in second quarter 2015 driven by a $40 million decrease in restructuring charges and special items. Excluding the restructuring charges and special items, noninterest expense increased $26 million reflecting an increase in salaries and employee benefits, largely reflecting a change in the timing of merit increases and incentive payments that drove higher payroll taxes and retirement plan contributions, as well as increased software amortization and equipment expense, partially offset by the card reward accounting change impact;

• Provision for credit losses of $90 million increased $13 million, or 17%, from $77 million in second quarter of 2015. Second quarter 2016 results included a $25 million reserve build, compared with a $1 million reserve release in second quarter 2015;

• Return on average common equity ratio of 4.94% compared to 3.94% in second quarter 2015.

• Return on average tangible common equity ratio of 7.30%⁽¹⁾ compared to 5.90%⁽¹⁾ in second quarter 2015.

• Average loans and leases of $102.7 billion increased $7.1 billion, or 7%, from $95.6 billion in second quarter 2015 reflecting a $4.4 billion increase in commercial and a $2.6 billion increase in retail;

• Average interest-bearing deposits of $76.5 billion increased $4.4 billion, or 6%, from $72.1 billion in second quarter 2015, driven by growth in every deposit category;

• Net charge-offs of $65 million decreased $13 million, or 17%, from $78 million in second quarter 2015. The ALLL of $1.2 billion increased $30 million compared to fourth quarter 2015. ALLL to total loans and leases ratio of 1.20% as of June 30, 2016, compared with 1.23% as of December 31, 2015. ALLL to non-performing loans and leases ratio of 119% as of June 30, 2016, compared with 115% as of December 31, 2015; and

• Net income per average common share, basic and diluted, was $0.46, compared to $0.35 per average common share, basic and diluted, in second quarter 2015.

⁽¹⁾ These measures are non-GAAP financial measures. For more information on the computation of these non-GAAP financial measures, see “—Principal Components of Operations and Key Performance Metrics Used By Management — Key Performance Metrics and Non-GAAP Financial Measures.”

74

Results of Operations — Six Months Ended June 30, 2016 Compared with Six Months Ended June 30, 2015

Highlights

For first half 2016:

• Net income of $466 million increased $67 million, compared to $399 million in first half 2015;

• Net income available to common stockholders of $459 million increased $60 million, compared to $399 million in first half 2015;

• Net interest income of $1.8 billion increased $151 million, or 9%, compared to $1.7 billion in first half 2015, reflecting 7% average loan growth, 6% average deposit growth and an 11 basis point improvement in net interest margin;

• Net interest margin of 2.85% increased 11 basis points, compared to 2.74% in first half 2015 driven by improved loan yields reflecting higher interest rates and continued improvement in loan mix as well as flat deposit costs;

• Noninterest income of $685 million decreased $22 million, or 3%, from first half 2015 levels that exclude the negative impact of $12 million of card reward costs. Lower mortgage banking fees, card fees, other income, and foreign exchange and letter of credit fees were partially offset by an increase in service charges;

• Noninterest expense of $1.6 billion was down $13 million, or 1%, compared to $1.7 billion in first half 2015; driven by a $50 million decrease in restructuring charges and special items. Excluding the restructuring charges and special items, noninterest expense increased $37 million reflecting an increase in salaries and employee benefits and outside services, as well as increased software amortization and equipment expense, partially offset by the card reward accounting change impact;

• Provision for credit losses totaled $181 million, down $46 million, or 34%, from $135 million in first half 2015, reflecting continued improvement in credit quality and an improvement in retail net charge-offs. First half 2016 included a $33 million reserve build compared to a $3 million reserve build in first half 2015;

• Return on average common equity ratio was 4.70%, compared to 4.15% for first half 2015.

• Return on average tangible common equity ratio was 6.96%⁽¹⁾,compared to 6.21%⁽¹⁾ for first half 2015. Excluding the impact of restructuring charges and special items mentioned above, our return on average tangible common equity improved to 6.96% ⁽¹⁾ from 6.70%⁽¹⁾ from first half 2015;

• Average loans and leases of $101.5 billion increased $6.7 billion, or 7%, from $94.8 billion in first half 2015, driven by commercial loan growth across most products, and an increase in student, residential mortgage, and auto loans, partially offset by a decrease in home equity outstandings and a reduction in the non-core loan portfolio;

• Average interest-bearing deposits of $75.7 billion increased $4.7 billion, or 7%, from $71.0 billion in first half 2015, driven by growth in all deposit products;

• Net charge-offs of $148 million increased $16 million, or 12%, from $132 million in first half 2015. The ALLL of $1.2 billion increased $30 million compared to fourth quarter 2015. ALLL to total loans and leases was 1.20% as of June 30, 2016, compared with 1.23% as of December 31, 2015. ALLL to non-performing loans and leases ratio was 119% as of June 30, 2016, compared with 115% as of December 31, 2015; and

• Net income per average common share, basic and diluted was $0.87, compared to $0.74 and $0.73, per average common share, basic and diluted, respectively, in first half 2015.

⁽¹⁾ These measures are non-GAAP financial measures. For more information on the computation of these non-GAAP financial measures, see “—Principal Components of Operations and Key Performance Metrics Used By Management — Key Performance Metrics and Non-GAAP Financial Measures.”

75

CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Net Income

Net income totaled $243 million, up $53 million, or 28%, from $190 million in second quarter 2015. Second quarter 2015 results were reduced by $25 million of after-tax restructuring charges and special items, largely related to efforts to improve processes and enhance efficiencies, as well as rebranding and separating from RBS. Excluding the restructuring charges and special items, net income increased $28 million, or 13%, from second quarter 2015.

Net income totaled $466 million, up $67 million, or 17%, from $399 million in first half 2015. First half 2015 results were reduced by $31 million of after-tax restructuring charges and special item, largely related to efforts to improve processes and enhance efficiencies, as well as rebranding and separating from RBS. Excluding the restructuring charges and special items, net income increased $36 million from first half 2015.

The following table details the significant components of our net income for the periods indicated:

	Three Months Ended June 30,										Six Months Ended June 30,
(dollars in millions)	2016			2015			Change			Percent	2016			2015			Change			Percent
Operating Data:
Net interest income		$923			$840			$83		10%		$1,827			$1,676			$151		9%
Noninterest income	355			360			(5		)	(1)	685			707			(22		)	(3)
Total revenue	1,278			1,200			78			7	2,512			2,383			129			5
Provision for credit losses	90			77			13			17	181			135			46			34
Noninterest expense	827			841			(14		)	(2)	1,638			1,651			(13		)	(1)
Noninterest expense, excluding restructuring charges and special items (1)	827			801			26			3	1,638			1,601			37			2
Income before income tax expense	361			282			79			28	693			597			96			16
Income tax expense	118			92			26			28	227			198			29			15
Net income	243			190			53			28	466			399			67			17
Net income, excluding restructuring charges and special items (1)	243			215			28			13	466			430			36			8
Net income available to common stockholders	243			190			53			28	459			399			60			15
Net income available to common stockholders, excluding restructuring charges and special items (1)	243			215			28			13	459			430			29			7
Return on average tangible common equity (1)	7.30		%	5.90		%	140		bps	—	6.96		%	6.21		%	75		bps	—
Return on average tangible common equity, excluding restructuring charges and special items (1)	7.30		%	6.67		%	63		bps	—	6.96		%	6.70		%	26		bps	—

⁽¹⁾ These are non-GAAP financial measures. For more information on the computation of this non-GAAP financial measure, see “—Principal Components of Operations and Key Performance Metrics Used By Management — Key Performance Metrics and Non-GAAP Financial Measures.”

76

CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Net Interest Income

The following table shows the major components of net interest income and net interest margin:

	Three Months Ended June 30,
	2016							2015							Change
(dollars in millions)	Average Balances			Income/ Expense		Yields/ Rates		Average Balances			Income/ Expense		Yields/ Rates		Average Balances			Yields/ Rates
Assets
Interest-bearing cash and due from banks and deposits in banks		$1,948			$2	0.39	%		$2,054			$1	0.22	%		($106	)	17 bps
Taxable investment securities	24,050			141		2.35		25,081			155		2.47		(1,031		)	(12)
Non-taxable investment securities	9			—		2.60		10			—		2.60		(1		)	—
Total investment securities	24,059			141		2.35		25,091			155		2.47		(1,032		)	(12)
Commercial	35,622			278		3.09		32,855			235		2.83		2,767			26
Commercial real estate	9,649			67		2.74		7,947			51		2.55		1,702			19
Leases	3,863			24		2.45		3,894			25		2.56		(31		)	(11)
Total commercial	49,134			369		2.97		44,696			311		2.75		4,438			22
Residential mortgages	13,491			122		3.61		11,980			113		3.76		1,511			(15)
Home equity loans	2,231			31		5.64		3,138			42		5.43		(907		)	21
Home equity lines of credit	14,477			115		3.18		15,084			110		2.94		(607		)	24
Home equity loans serviced by others (1)	899			16		7.11		1,134			20		7.04		(235		)	7
Home equity lines of credit serviced by others (1)	299			1		2.02		469			3		2.56		(170		)	(54)
Automobile	13,972			103		2.95		13,484			90		2.68		488			27
Student	5,407			69		5.07		3,029			38		5.05		2,378			2
Credit cards	1,600			44		11.18		1,606			44		10.92		(6		)	26
Other retail	1,167			26		8.94		986			19		7.61		181			133
Total retail	53,543			527		3.95		50,910			479		3.77		2,633			18
Total loans and leases	102,677			896		3.48		95,606			790		3.30		7,071			18
Loans held for sale, at fair value	368			3		3.41		308			3		3.41		60			—
Other loans held for sale	440			4		4.00		146			3		7.79		294			(379)
Interest-earning assets	129,492			1,046		3.22		123,205			952		3.08		6,287			14
Allowance for loan and lease losses	(1,219		)					(1,198		)					(21		)
Goodwill	6,876							6,876							—
Other noninterest-earning assets	7,030							6,638							392
Total noninterest-earning assets	12,687							12,316							371
Total assets		$142,179							$135,521							$6,658
Liabilities and Stockholders’ Equity
Checking with interest		$19,003			$8	0.16	%		$16,561			$5	0.11	%		$2,442		5 bps
Money market and savings	44,949			32		0.29		42,977			29		0.27		1,972			2
Term deposits	12,581			23		0.74		12,576			26		0.81		5			(7)
Total interest-bearing deposits	76,533			63		0.33		72,114			60		0.33		4,419			—
Federal funds purchased and securities sold under agreements to repurchase (2)	974			—		0.19		4,372			2		0.22		(3,398		)	(3)
Other short-term borrowed funds	3,743			12		1.25		6,498			19		1.18		(2,755		)	7
Long-term borrowed funds	10,321			48		1.87		3,902			31		3.19		6,419			(132)
Total borrowed funds	15,038			60		1.60		14,772			52		1.43		266			17
Total interest-bearing liabilities	91,571			123		0.54		86,886			112		0.52		4,685			2
Demand deposits	27,448							26,419							1,029
Other liabilities	3,145							2,592							553
Total liabilities	122,164							115,897							6,267
Stockholders’ equity	20,015							19,624							391
Total liabilities and stockholders’ equity		$142,179							$135,521							$6,658
Interest rate spread						2.68	%						2.56	%				12
Net interest income					$923							$840
Net interest margin						2.84	%						2.72	%				12 bps
Memo: Total deposits (interest-bearing and demand)		$103,981			$63	0.24			$98,533			$60	0.24			$5,448		—

⁽¹⁾ Our SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. We now service a portion of this portfolio internally.

⁽²⁾ Balances are net of certain short-term receivables associated with reverse repurchase agreements. Interest expense includes the full cost of the repurchase agreements and certain hedging costs. The rate on federal funds purchased is elevated due to the impact from pay-fixed interest rate swaps that are scheduled to run off by the end of 2017. See “—Analysis of Financial Condition — June 30, 2016 Compared with December 31, 2015 — Derivatives” for further information.

77

CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Net interest income of $923 million increased $83 million, or 10%, compared to $840 million in second quarter 2015, driven by 7% average loan growth and a 12 basis point improvement in net interest margin.

Compared to second quarter 2015, average interest-earning assets of $129.5 billion increased $6.3 billion, or 5%, from second quarter 2015, driven by a $4.4 billion increase in average commercial loans and leases and a $2.6 billion increase in average retail loans, partially offset by a $1.1 billion decrease in average investments and interest-bearing deposits. Commercial loan growth was driven by strength in commercial and commercial real estate. Retail loan growth was driven by strength in student, residential mortgage, and automobile balances.

Average deposits of $104.0 billion increased $5.4 billion from second quarter 2015 with particular strength in savings, checking with interest and demand deposits. Total interest-bearing deposit costs were stable with second quarter 2015, with continued pricing discipline despite higher rates. Checking with interest costs of 0.16% in 2016 compared with 0.11% in 2015, term deposit costs decreased to 0.74% in 2016 from 0.81% in 2015, and money market account and savings account costs increased to 0.29% from 0.27% in 2015.

Total borrowed funds of $15.0 billion increased $266 million, or 2%, from second quarter 2015, reflecting continued earning asset growth. Total borrowed funds costs of $60 million increased $8 million from second quarter 2015 primarily due to issuance of long-term senior term debt.

Net interest margin of 2.84% increased 12 basis points compared to 2.72% in second quarter 2015 driven by improved loan yields reflecting both higher interest rates and continued improvement in loan mix. Margin results also reflected the benefit of flat deposit costs and lower legacy swap expense.  These benefits were partially offset by increased long-term borrowing costs, including the effect of additional senior debt issuances and a decline from investment securities yield tied to the drop in long-term interest rates. Average interest-earning asset yields of 3.22% increased 14 basis points from 3.08% in second quarter 2015.

78

CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

	Six Months Ended June 30,
	2016							2015							Change
(dollars in millions)	Average Balances			Income/ Expense		Yields/ Rates		Average Balances			Income/ Expense		Yields/ Rates		Average Balances			Yields/ Rates
Assets
Interest-bearing cash and due from banks and deposits in banks		$1,811			$4	0.40	%		$2,073			$2	0.20	%		($262	)	20 bps
Taxable investment securities	23,957			286		2.39		25,019			314		2.51		(1,062		)	(12)
Non-taxable investment securities	9			—		2.60		10			—		2.60		(1		)	—
Total investment securities	23,966			286		2.39		25,029			314		2.51		(1,063		)	(12)
Commercial	34,820			542		3.08		32,386			461		2.83		2,434			25
Commercial real estate	9,379			129		2.71		7,824			101		2.57		1,555			14
Leases	3,890			48		2.45		3,895			50		2.55		(5		)	(10)
Total commercial	48,089			719		2.96		44,105			612		2.76		3,984			20
Residential mortgages	13,478			248		3.68		11,918			225		3.77		1,560			(9)
Home equity loans	2,351			65		5.57		3,234			87		5.41		(883		)	16
Home equity lines of credit	14,554			228		3.15		15,196			221		2.94		(642		)	21
Home equity loans serviced by others (1)	929			33		7.02		1,164			41		7.06		(235		)	(4)
Home equity lines of credit serviced by others (1)	320			3		2.11		495			6		2.57		(175		)	(46)
Automobile	13,882			200		2.89		13,210			179		2.73		672			16
Student	5,130			129		5.05		2,827			71		5.09		2,303			(4)
Credit cards	1,600			89		11.24		1,621			88		11.01		(21		)	23
Other retail	1,137			50		8.80		1,013			39		7.60		124			120
Total retail	53,381			1,045		3.93		50,678			957		3.80		2,703			13
Total loans and leases	101,470			1,764		3.47		94,783			1,569		3.32		6,687			15
Loans held for sale, at fair value	337			6		3.54		275			5		3.36		62			18
Other loans held for sale	245			5		4.26		119			4		7.43		126			(317)
Interest-earning assets	127,829			2,065		3.23		122,279			1,894		3.10		5,550			13
Allowance for loan and lease losses	(1,216		)					(1,195		)					(21		)
Goodwill	6,876							6,876							—
Other noninterest-earning assets	6,990							6,469							521
Total noninterest-earning assets	12,650							12,150							500
Total assets		$140,479							$134,429							$6,050
Liabilities and Stockholders’ Equity
Checking with interest		$18,498			$15	0.15	%		$16,302			$9	0.11	%		$2,196		4 bps
Money market and savings	44,784			61		0.28		42,325			54		0.26		2,459			2
Term deposits	12,390			47		0.77		12,381			49		0.79		9			(2)
Total interest-bearing deposits	75,672			123		0.33		71,008			112		0.32		4,664			1
Federal funds purchased and securities sold under agreements to repurchase (2)	927			1		0.21		4,489			9		0.41		(3,562		)	(20)
Other short-term borrowed funds	3,421			23		1.32		6,732			34		1.00		(3,311		)	32
Long-term borrowed funds	10,108			91		1.81		3,916			63		3.21		6,192			(140)
Total borrowed funds	14,456			115		1.59		15,137			106		1.40		(681		)	19
Total interest-bearing liabilities	90,128			238		0.53		86,145			218		0.51		3,983			2
Demand deposits	27,309							26,089							1,220
Other liabilities	3,128							2,679							449
Total liabilities	120,565							114,913							5,652
Stockholders’ equity	19,914							19,516							398
Total liabilities and stockholders’ equity		$140,479							$134,429							$6,050
Interest rate spread						2.70	%						2.56	%
Net interest income					$1,827							$1,676
Net interest margin						2.85	%						2.74	%				11 bps
Memo: Total deposits (interest-bearing and demand)		$102,981			$123	0.24	%		$97,097			$112	0.23	%		$5,884		1 bps

⁽¹⁾ Our SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. We now service a portion of this portfolio internally.

⁽²⁾ Balances are net of certain short-term receivables associated with reverse repurchase agreements. Interest expense includes the full cost of the repurchase agreements and certain hedging costs. The rate on federal funds purchased is elevated due to the impact from pay-fixed interest rate swaps that are scheduled to run off by the end of 2017. See “—Analysis of Financial Condition — June 30, 2016 Compared with December 31, 2015 — Derivatives” for further information.

79

CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Net interest income of $1.8 billion increased $151 million, or 9%, compared to $1.7 billion in first half 2015, reflecting 7% average loan growth and an 11 basis point improvement in net interest margin.

Average interest-earning assets of $127.8 billion increased $5.6 billion, or 5%, from first half 2015, driven by a $4.0 billion increase in average commercial loans and leases and a $2.7 billion increase in average retail loans, partially offset by a $1.3 billion decrease in average investments and interest-bearing deposits. Commercial loan growth was driven by strength in commercial and commercial real estate. Retail loan growth was driven by strength in student, residential mortgage, and automobile loan balances.

Average deposits of $103.0 billion increased $5.9 billion from first half 2015 with particular strength in savings, checking with interest and demand deposits. Total interest-bearing deposit costs of $123 million increased $11 million, or 10%, from $112 million in first half 2015 and reflected a one basis point increase in interest-bearing deposit costs to 0.33%. Checking with interest costs of 0.15% in first half 2016 compared with 0.11% in first half 2015, term deposit costs decreased to 0.77% in first half 2016 from 0.79% in first half 2015, and money market account and savings account costs increased to 0.28% from 0.26% in first half 2015.

Total borrowed funds of $14.5 billion decreased $681 million from first half 2015 as continued growth in deposits reduced the need for borrowings. Total borrowed funds costs of $115 million increased $9 million from first half 2015.

Net interest margin of 2.85% increased 11 basis points compared to 2.74% in first half 2015 driven by improved loan yields reflecting both higher interest rates and continued improvement in loan mix. Results also reflected the benefit of relatively flat deposit costs. Average interest-earning asset yields of 3.23% increased 13 basis points from 3.10% in first half 2015.

Noninterest Income

The following table details the significant components of our noninterest income:

	Three Months Ended June 30,									Six Months Ended June 30,
(dollars in millions)	2016		2015		Change			Percent		2016		2015		Change			Percent
Service charges and fees		$150		$139		$11		8	%		$294		$274		$20		7	%
Card fees	51		60		(9		)	(15	)	101		112		(11		)	(10	)
Trust and investment services fees	38		41		(3		)	(7	)	75		77		(2		)	(3	)
Capital markets fees	35		30		5			17		57		52		5			10
Foreign exchange and letter of credit fees	21		22		(1		)	(5	)	42		45		(3		)	(7	)
Mortgage banking fees	25		30		(5		)	(17	)	43		63		(20		)	(32	)
Bank-owned life insurance income	13		14		(1		)	(7	)	26		26		—			—
Securities gains, net	4		9		(5		)	(56	)	13		17		(4		)	(24	)
Other income (1)	18		15		3			20		34		41		(7		)	(17	)
Noninterest income		$355		$360		($5	)	(1	%)		$685		$707		($22	)	(3	%)

⁽¹⁾ Includes net securities impairment losses on securities available for sale recognized in earnings and other income.

Noninterest income of $355 milliondecreased$5 million, or 1%, compared to $360 million in second quarter 2015 that excluded the negative impact of $7 million of card reward costs. Excluding this impact, noninterest income increased $2 million. Service charges and fees increased$11 million, driven by both improved pricing and volume. Capital markets fees increased $5 million, to a quarterly record high, reflecting continued broadening of our capabilities and cross sell, as well as strong market deal volume. Mortgage banking fees declined $5 million from second quarter 2015 levels, as the benefit of higher application volumes and sale gains and spreads were more than offset by a reduction tied to a higher second quarter 2015 MSR valuation gain reflecting the impact of lower long-term rates.

Noninterest income of $685 milliondecreased$22 million, or 3%, compared to $707 million in first half 2015 that excluded the negative impact of $12 million of card reward costs. Lower mortgage banking fees, securities gains, card fees, other income, and foreign exchange and letter of credit fees were partially offset by increases in service charges and capital market fees. Service charges increased$20 million from first half 2015, driven by both improved pricing and volume. Mortgage banking fees decreased $20 million from first half 2015 levels, largely reflecting the significant second quarter 2015 MSR valuation gain. Other income decreased $7 million, or 17%, from first half 2015, primarily as a result of our June 2016 migration from a proprietary internal process to a vendor-based model to estimate other-than-temporary impairment. See Note 2 “Securities” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included elsewhere in this report.

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Provision for Credit Losses

Provision for credit losses of $90 millionincreased$13 million, or 17%, from $77 million in second quarter 2015. Second quarter 2016 results reflected a $25 million reserve build, compared to a $1 million reserve release in second quarter 2015. Results also reflected a $13 million decrease in net charge-offs, driven by improved credit quality across both commercial and retail loan products.

Provision for credit losses increased by $46 million to $181 million, compared to $135 million for first half 2015. The increase was attributable to an increase in net charge-offs of $16 million in first half 2016, primarily due to higher commercial losses, partially offset by lower retail losses. First half 2016 experienced a $33 million reserve build; whereas, first half 2015 experienced a $3 million reserve build.

The provision for loan and lease losses is the result of a detailed analysis performed to estimate an appropriate and adequate ALLL. The total provision for credit losses included the provision for loan and lease losses as well as the provision for unfunded commitments. Refer to “—Analysis of Financial Condition — Allowance for Credit Losses and Nonperforming Assets” for more information.

Noninterest Expense

The following table displays the significant components of our noninterest expense for the periods indicated:

	Three Months Ended June 30,									Six Months Ended June 30,
(dollars in millions)	2016		2015		Change			Percent		2016		2015		Change			Percent
Salaries and employee benefits		$432		$411		$21		5	%		$857		$830		$27		3	%
Outside services	86		99		(13		)	(13	)	177		178		(1		)	(1	)
Occupancy	76		90		(14		)	(16	)	152		170		(18		)	(11	)
Equipment expense	64		65		(1		)	(2	)	129		128		1			1
Amortization of software	41		37		4			11		80		73		7			10
Other operating expense	128		139		(11		)	(8	)	243		272		(29		)	(11	)
Noninterest expense		$827		$841		($14	)	(2	%)		$1,638		$1,651		($13	)	(1	%)

Noninterest expense of $827 million decreased $14 million, or 2%, compared to $841 million in second quarter 2015 driven by a $40 million decrease in restructuring charges and special items. Excluding this impact, results reflect higher salaries and employee benefits and amortization of software, partially offset by lower outside services, occupancy, other operating expense and the card reward accounting change impact.

Noninterest expense of $1.6 billion decreased $13 million, or 1%, compared to first half 2015 as the impact of higher salaries and employee benefits and amortization of software were more than offset by lower occupancy and other operating expense and the card reward accounting change impact. First half 2015 results also reflected $50 million of pre-tax restructuring charges and special items. Excluding the impact of the restructuring charges and special items, noninterest expense increased $37 million.

Provision for Income Taxes

The provision for income taxes was $118 million and $92 million in the second quarter of 2016 and 2015, respectively. This resulted in an effective tax rate of 32.6% and 32.7% in the second quarter of 2016 and 2015, respectively. The effective income tax rate was substantially the same in the second quarter of 2016 as it was in the second quarter of 2015.

The provision for income taxes was $227 million and $198 million in first half 2016 and 2015, respectively. This resulted in an effective tax rate of 32.7% and 33.2% in first half 2016 and 2015, respectively. The decrease in the effective rate from 2015 to 2016 was primarily attributable to an increase in tax advantaged investing.

At June 30, 2016, we reported a net deferred tax liability of $961 million, compared to a $730 million liability at December 31, 2015. The increase in the net deferred tax liability was primarily attributable to the tax effect of net unrealized gains on securities and derivatives arising during the period and the tax effect of current year timing adjustments. For further discussion, see Note 10 “Income Taxes” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included elsewhere in this report.

81

CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Business Segments

The following tables present certain financial data of our business segments:

	As of and for the Three Months Ended June 30, 2016
(dollars in millions)	Consumer Banking			Commercial Banking			Other(6)			Consolidated
Net interest income		$602			$314			$7			$923
Noninterest income	219			122			14			355
Total revenue	821			436			21			1,278
Noninterest expense	632			186			9			827
Profit before provision for credit losses	189			250			12			451
Provision for credit losses	49			(1		)	42			90
Income (loss) before income tax expense (benefit)	140			251			(30		)	361
Income tax expense (benefit)	50			87			(19		)	118
Net income (loss)		$90			$164			($11	)		$243
Loans and leases and loans held for sale (period-end) (1)		$54,999			$46,455			$2,947			$104,401
Average Balances:
Total assets		$55,660			$47,388			$39,131			$142,179
Loans and leases and loans held for sale (1)	54,353			46,073			3,059			103,485
Deposits	71,863			25,113			7,005			103,981
Interest-earning assets	54,400			46,170			28,922			129,492
Key Metrics
Net interest margin (2)	4.45		%	2.74		%	NM			2.84		%
Efficiency ratio (3)	76.98			42.88			NM			64.71
Average loans to average deposits ratio (4)	75.63			183.46			NM			99.52
Return on average total tangible assets (2) (3)	0.65			1.39			NM			0.72
Return on average tangible common equity (2) (3) (5)	7.09			13.04			NM			7.30

⁽¹⁾ Includes loans and leases held for sale.

⁽²⁾ Ratios for the period ended June 30, 2016 are presented on an annualized basis.

⁽³⁾  These are non-GAAP financial measures. For more information on the computation of these non-GAAP financial measures, see “—Principal Components of Operations and Key Performance Metrics Used By Management — Key Performance Metrics and Non-GAAP Financial Measures.”

⁽⁴⁾ Ratios include loans and leases held for sale.

⁽⁵⁾  Operating segments are allocated capital on a risk-adjusted basis considering economic and regulatory capital requirements. We approximate that regulatory capital is equivalent to a sustainable target level for CET1 and then allocate that approximation to the segments based on economic capital.

⁽⁶⁾ 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, capital, 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 “—Analysis of Financial Condition — June 30, 2016 Compared with December 31, 2015 — Loans and Leases-Non-Core Assets.”

82

CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

	As of and for the Six Months Ended June 30, 2016
(dollars in millions)	Consumer Banking				Commercial Banking			Other(6)			Consolidated
Net interest income		$1,183				$614			$30			$1,827
Noninterest income	427				221			37			685
Total revenue	1,610				835			67			2,512
Noninterest expense	1,248				373			17			1,638
Profit before provision for credit losses	362				462			50			874
Provision for credit losses	112				8			61			181
Income (loss) before income tax expense (benefit)	250				454			(11		)	693
Income tax expense (benefit)	89				157			(19		)	227
Net income		$161				$297			$8			$466
Loans and leases and loans held for sale (period-end) (1)		$54,999				$46,455			$2,947			$104,401
Average Balances:
Total assets		$55,388				$46,346			$38,745			$140,479
Loans and leases and loans held for sale (1)	54,049			—	44,986			3,017			102,052
Deposits	71,367				24,973			6,641			102,981
Interest-earning assets	54,097				45,078			28,654			127,829
Key Metrics
Net interest margin (2)	4.40		%		2.74		%	NM			2.85		%
Efficiency ratio (3)	77.52				44.73			NM			65.18
Average loans to average deposits ratio (4)	75.73				180.14			NM			99.10
Return on average total tangible assets (2) (3)	0.58				1.29			NM			0.70
Return on average tangible common equity (2) (3) (5)	6.34				12.14			NM			6.96

⁽¹⁾ Includes loans and leases held for sale.

⁽²⁾ Ratios for the period ended June 30, 2015 are presented on an annualized basis.

⁽³⁾  These are non-GAAP financial measures. For more information on the computation of these non-GAAP financial measures, see “—Principal Components of Operations and Key Performance Metrics Used By Management — Key Performance Metrics and Non-GAAP Financial Measures.”

⁽⁴⁾ Ratios include loans and leases held for sale.

⁽⁵⁾  Operating segments are allocated capital on a risk-adjusted basis considering economic and regulatory capital requirements. We approximate that regulatory capital is equivalent to a sustainable target level for CET1 and then allocate that approximation to the segments based on economic capital.

⁽⁶⁾ 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, capital, 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 “—Analysis of Financial Condition — June 30, 2016 Compared with December 31, 2015 — Loans and Leases-Non-Core Assets.”

We operate our business through two operating segments: Consumer Banking and Commercial Banking. Segment results are derived from our business-line profitability reporting systems by specifically attributing managed assets, liabilities, capital and their related revenues, provision for credit losses and expenses. Residual assets, liabilities, capital and their related revenues, provision for credit losses and expenses are attributed to Other.

Other includes our treasury function, securities portfolio, wholesale funding activities, goodwill and goodwill impairment, community development assets and other unallocated assets, liabilities, capital, revenues, provision for credit losses and expenses not attributed to Consumer Banking or Commercial Banking. Other also includes our non-core assets. Non-core assets are primarily loans inconsistent with our strategic goals, generally as a result of geographic location, industry, product type or risk level. The non-core portfolio totaled $2.0 billion as of June 30, 2016, down 14% from December 31, 2015. The largest component of our non-core portfolio is our home equity products currently or formerly serviced by others portfolio.

Our capital levels are evaluated and managed centrally, however, capital is allocated to the operating segments to support evaluation of business performance. Operating segments are allocated capital on a risk-adjusted basis considering economic and regulatory capital requirements. We approximate that regulatory capital is equivalent to a sustainable target level for common equity tier 1 and then allocate that approximation to the segments based on economic capital. Interest income and expense is determined based on the assets and liabilities managed by the business segment. Because funding and asset liability management is a central function, funds transfer-pricing methodologies are utilized to allocate a cost of funds used, or credit for the funds provided, to all business segment assets, liabilities and capital, respectively, using a matched-funding concept. The residual effect on net interest income of asset/liability management, including the residual net interest income related to the funds transfer pricing process, is included in Other.

83

CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Provision for credit losses is allocated to each business segment based on actual net charge-offs that have been recognized by the business segment. The difference between the consolidated provision for credit losses and the business segments’ net charge-offs is reflected in Other.

Noninterest income and expense directly managed by each business segment, including fees, service charges, salaries and benefits, and other direct revenues and costs are accounted for within each segment’s financial results in a manner similar to our unaudited interim Consolidated Financial Statements. Occupancy costs are allocated based on utilization of facilities by the business segment. Noninterest expenses incurred by centrally managed operations or business segments that directly support another business segment’s operations are charged to the applicable business segment based on its utilization of those services.

Income taxes are assessed to each business segment at a standard tax rate with the residual tax expense or benefit to arrive at the consolidated effective tax rate included in Other.

Developing and applying methodologies used to allocate items among the business segments is a dynamic process. Accordingly, financial results may be revised periodically as management systems are enhanced, methods of evaluating performance or product lines change, or our organizational structure changes.

Consumer Banking

	As of and for the Three Months Ended June 30,											As of and for the Six Months Ended June 30,
(dollars in millions)	2016			2015			Change			Percent		2016			2015			Change			Percent
Net interest income		$602			$544			$58		11	%		$1,183			$1,077			$106		10	%
Noninterest income	219			230			(11		)	(5	)	427			449			(22		)	(5	)
Total revenue	821			774			47			6		1,610			1,526			84			6
Noninterest expense	632			613			19			3		1,248			1,209			39			3
Profit before provision for credit losses	189			161			28			17		362			317			45			14
Provision for credit losses	49			60			(11		)	(18	)	112			123			(11		)	(9	)
Income before income tax expense	140			101			39			39		250			194			56			29
Income tax expense	50			35			15			43		89			67			22			33
Net income		$90			$66			$24		36			$161			$127			$34		27
Loans and leases and loans held for sale (period-end) (1)		$54,999			$51,758			$3,241		6			$54,999			$51,758			$3,241		6
Average Balances:
Total assets		$55,660			$52,489			$3,171		6			$55,388			$52,048			$3,340		6
Loans and leases and loans held for sale (1)	54,353			51,024			3,329			7		54,049			50,644			3,405			7
Deposits	71,863			69,963			1,900			3		71,367			68,747			2,620			4
Interest-earning assets	54,400			51,061			3,339			7	%	54,097			50,679			3,418			7
Key Metrics
Net interest margin (2)	4.45		%	4.28		%	17 bps			—		4.40		%	4.29		%	11		bps	—
Efficiency ratio (3)	76.98			79.25			(227) bps			—		77.52			79.25			(173		) bps	—
Average loans to average deposits ratio (4)	75.63			72.93			270 bps			—		75.73			73.67			206		bps	—
Return on average total tangible assets (2) (3)	0.65			0.51			14 bps			—		0.58			0.49			9		bps	—
Return on average tangible common equity (2) (3) (5)	7.09			5.66			143 bps			—		6.34			5.48			86		bps	—

⁽¹⁾ Includes loans and leases held for sale.

⁽²⁾  Ratios for the periods ended June 30, 2016 and 2015 are presented on an annualized basis.

⁽³⁾  These are non-GAAP financial measures. For more information on the computation of these non-GAAP financial measures, see “—Principal Components of Operations and Key Performance Metrics Used By Management — Key Performance Metrics and Non-GAAP Financial Measures.”

⁽⁴⁾ Ratios include loans and leases held for sale.

⁽⁵⁾  Operating segments are allocated capital on a risk-adjusted basis considering economic and regulatory capital requirements. We approximate that regulatory capital is equivalent to a sustainable target level for CET1 and then allocate that approximation to the segments based on economic capital.

Consumer Banking net income of $90 million increased $24 million, or 36%, from $66 million in second quarter 2015, as the benefit of a $47 million increase in revenue and an $11 million decrease in provision was partially offset by a $19 million increase in noninterest expense.

Net interest income of $602 million increased $58 million, or 11%, from second quarter 2015, driven by the benefit of a $3.3 billion increase in average loans, reflecting growth in student, mortgage, auto and consumer unsecured loans and improved deposit spreads.

84

CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Noninterest income decreased $11 million, or 5%, from second quarter 2015, as an increase in service charges and fees was more than offset by a reduction in card fees tied to the card reward accounting change. Results also reflect lower mortgage banking fees, which declined from second quarter 2015 levels, largely as the benefit of higher application volumes and sale gains and spreads was more than offset by a reduction in MSR valuations from higher first quarter 2015 levels reflecting the reduction in long-term rates.

Noninterest expense of $632 millionincreased$19 million, or 3%, from $613 million in second quarter 2015, driven by higher salaries and benefits largely related to the timing of merit increases and incentive payments. Results also reflect an increase in outside services expense and equipment expense, largely offset by the card reward accounting change impact.

Provision for credit losses of $49 million decreased $11 million, or 18%, from $60 million in second quarter 2015, driven by lower net charge-offs in home equity.

Consumer Banking net income of $161 million increased $34 million, or 27%, from $127 million in first half 2015, as the benefit of a $84 million increase in revenue was partially offset by a $39 million increase in noninterest expense.

Net interest income of $1.2 billion increased 10% from first half 2015, driven by growth in student, mortgage and auto loans, improved loan yields which reflected the benefit of higher rates and improved mix as well as the benefit of growth in lower cost deposits.

Noninterest income decreased $22 million, or 5%, from first half 2015, driven by lower mortgage banking fees and a reduction in card fees tied to the card reward accounting change, partially offset by higher service charges and fees.

Noninterest expense of $1.2 billionincreased$39 million, or 3%, from first half 2015, driven by higher salaries and benefits, outside services expense and equipment expense, partially offset by the card reward accounting change impact.

Provision for credit losses of $112 million decreased $11 million, or 9%, from $123 million in first half 2015, driven by lower net charge-offs in home equity.

85

CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Commercial Banking

	As of and for the Three Months Ended June 30,											As of and for the Six Months Ended June 30,
(dollars in millions)	2016			2015			Change			Percent		2016			2015			Change		Percent
Net interest income		$314			$286			$28		10	%		$614			$562			$52	9	%
Noninterest income	122			108			14			13		221			208			13		6
Total revenue	436			394			42			11		835			770			65		8
Noninterest expense	186			181			5			3		373			354			19		5
Profit before provision for credit losses	250			213			37			17		462			416			46		11
Provision for credit losses	(1		)	7			(8		)	(114	)	8			(14		)	22		157
Income before income tax expense	251			206			45			22		454			430			24		6
Income tax expense	87			71			16			23		157			148			9		6
Net income		$164			$135			$29		21			$297			$282			$15	5
Loans and leases and loans held for sale (period-end) (1)		$46,455			$41,999			$4,456		11			$46,455			$41,999			$4,456	11
Average Balances:
Total assets		$47,388			$42,617			$4,771		11			$46,346			$42,114			$4,232	10
Loans and leases and loans held for sale (1)	46,073			41,467			4,606			11		44,986			40,857			4,129		10
Deposits	25,113			22,717			2,396			11		24,973			22,326			2,647		12
Interest-earning assets	46,170			41,535			4,635			11		45,078			40,943			4,135		10
Key Metrics
Net interest margin (2)	2.74		%	2.76		%	(2) bps			—		2.74		%	2.77		%	(3) bps		—
Efficiency ratio (3)	42.88			46.07			(319) bps			—		44.73			46.04			(131) bps		—
Average loans to average deposits ratio (4)	183.46			182.54			92 bps			—		180.14			183.00			(286) bps		—
Return on average total tangible assets (2)(3)	1.39			1.27			12 bps			—		1.29			1.35			(6) bps		—
Return on average tangible common equity (2) (3) (5)	13.04			11.69			135 bps			—		12.14			12.41			(27) bps		—

⁽¹⁾ Includes loans and leases held for sale.

⁽²⁾  Ratios for the periods ended June 30, 2016 and 2015 are presented on an annualized basis.

⁽³⁾  These are non-GAAP financial measures. For more information on the computation of these non-GAAP financial measures, see “—Principal Components of Operations and Key Performance Metrics Used By Management — Key Performance Metrics and Non-GAAP Financial Measures.”

⁽⁴⁾ Ratios include loans and leases held for sale.

⁽⁵⁾  Operating segments are allocated capital on a risk-adjusted basis considering economic and regulatory capital requirements. We approximate that regulatory capital is equivalent to a sustainable target level for CET1 and then allocate that approximation to the segments based on economic capital.

Commercial Banking net income of $164 millionincreased$29 million, or 21%, from $135 million in second quarter 2015, as a $42 million increase in total revenue and lower provision was partially offset by a $5 million increase in noninterest expense.

Net interest income of $314 millionincreased$28 million, or 10%, from $286 million in second quarter 2015, reflecting the benefit of a $4.6 billion increase in average loans and leases, improved deposit spreads and a $2.4 billion increase in average deposits.

Noninterest income of $122 million increased $14 million, or 13%, from $108 million in second quarter 2015, reflecting strength in service charges and fees, interest rate products (presented in other income) and capital market fees. Improved conditions in both the loan and bond markets, as well as the launch of our broker-dealer were drivers of the strength in capital markets fees.

Noninterest expense of $186 millionincreased $5 million, or 3%, from $181 million in second quarter 2015, as increased salaries and employee benefits related to the timing of merit increases and incentive payments and higher insurance costs were partially offset by lower outside services.

Provision for credit losses of ($1) million decreased $8 million from second quarter 2015 levels, reflecting lower charge-offs.

Commercial Banking net income of $297 millionincreased$15 million, or 5%, from $282 million in first half 2015, as the benefit of a $65 million increase in total revenue was partially offset by a $19 million increase in noninterest expense and $22 million increase in provision for credit losses.

Net interest income of $614 millionincreased$52 million, or 9%, from $562 million in first half 2015, reflecting a $4.1 billion increase in average loans and leases, improved deposit spreads, and a $2.6 billion increase in deposits.

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Noninterest income of $221 million increased $13 million, or 6%, from first half 2015, reflecting strength in service charges and fees, interest rate products (presented in other income) and capital market fees. Improved conditions in both the loan and bond markets, as well as the launch of our broker-dealer were drivers of the strength in capital markets fees.

Noninterest expense of $373 millionincreased $19 million, or 5%, from $354 million in first half 2015, reflecting increased salaries and employee benefits and outside services.

Provision for credit losses of $8 million increased $22 million from first half 2015.

Other

	As of and for the Three Months Ended June 30,											As of and for the Six Months Ended June 30,
(dollars in millions)	2016			2015			Change			Percent		2016			2015			Change			Percent
Net interest income		$7			$10			($3	)	(30	%)		$30			$37			($7	)	(19	%)
Noninterest income	14			22			(8		)	(36	)	37			50			(13		)	(26	)
Total revenue	21			32			(11		)	(34	)	67			87			(20		)	(23	)
Noninterest expense	9			47			(38		)	(81	)	17			88			(71		)	(81	)
Profit (loss) before provision for credit losses	12			(15		)	27			180		50			(1		)	51			NM
Provision for credit losses	42			10			32			NM		61			26			35			135
Income (loss) before income tax expense (benefit)	(30		)	(25		)	(5		)	(20	)	(11		)	(27		)	16			59
Income tax expense (benefit)	(19		)	(14		)	(5		)	(36	)	(19		)	(17		)	(2		)	(12	)
Net income (loss)		($11	)		($11	)		$—		—			$8			($10	)		$18		180
Loans and leases and loans held for sale (period-end) (1)		$2,947			$3,478			($531	)	(15	)		$2,947			$3,478			($531	)	(15	)
Average Balances:
Total assets		$39,131			$40,415			($1,284	)	(3	)		$38,745			$40,267			($1,522	)	(4	)
Loans and leases and loans held for sale (1)	3,059			3,569			(510		)	(14	)	3,017			3,676			(659		)	(18	)
Deposits	7,005			5,853			1,152			20		6,641			6,024			617			10
Interest-earning assets	28,922			30,609			(1,687		)	(6	)	28,654			30,657			(2,003		)	(7	)

⁽¹⁾ Includes loans and leases held for sale.

Other net loss of $11 million was flat with second quarter 2015, reflecting the lack of restructuring charges and special items, offset by lower revenue and an increase in provision for credit losses, which reflects a $25 million reserve build compared to a $1 million reserve release in second quarter 2015.

Other net income of $8 million increased from a $10 million net loss in first half 2015, reflecting the lack of restructuring charges and special items and lower noninterest expense, offset by lower revenue and an increase in provision for credit losses.

87

CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Analysis of Financial Condition — June 30, 2016 Compared with December 31, 2015

Loans and Leases

The following table shows the composition of loans and leases, including non-core loans, as of:

(dollars in millions)	June 30, 2016		December 31, 2015		Change			Percent
Commercial		$35,927		$33,264		$2,663		8	%
Commercial real estate	9,825		8,971		854			10
Leases	3,805		3,979		(174		)	(4	)
Total commercial	49,557		46,214		3,343			7
Residential mortgages	13,855		13,318		537			4
Home equity loans	2,177		2,557		(380		)	(15	)
Home equity lines of credit	14,418		14,674		(256		)	(2	)
Home equity loans serviced by others (1)	860		986		(126		)	(13	)
Home equity lines of credit serviced by others (1)	273		389		(116		)	(30	)
Automobile	14,075		13,828		247			2
Student	5,516		4,359		1,157			27
Credit cards	1,613		1,634		(21		)	(1	)
Other retail	1,207		1,083		124			11
Total retail	53,994		52,828		1,166			2
Total loans and leases (2) (3)		$103,551		$99,042		$4,509		5	%

⁽¹⁾ Our SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. We now service a portion of this portfolio internally.

⁽²⁾ Excluded from the table above are loans held for sale totaling $850 million and $365 million as of June 30, 2016 and December 31, 2015, respectively.

⁽³⁾ Mortgage loans serviced for others by our subsidiaries are not included above, and amounted to $17.2 billion and $17.6 billion at June 30, 2016 and December 31, 2015, respectively.

Our loans and leases are disclosed in portfolio segments and classes. Our loan and lease portfolio segments are commercial and retail. The classes of loans and leases are: commercial, commercial real estate, leases, residential mortgages, home equity loans, home equity lines of credit, home equity loans serviced by others, home equity lines of credit serviced by others, automobile, student, credit cards and other retail.

Total loans and leases of $103.6 billion as of June 30, 2016, increased$4.5 billion, or 5%, from $99.0 billion as of December 31, 2015, reflecting growth in both commercial and retail products. Total commercial loans and leases of $49.6 billiongrew$3.3 billion, or 7%, from $46.2 billion as of December 31, 2015, reflecting commercial loan growth of $2.7 billion and commercial real estate loan growth of $854 million. Total retail loans of $54.0 billionincreased by $1.2 billion, or 2%, from $52.8 billion as of December 31, 2015, largely driven by a $1.2 billionincrease in student loans and a $537 millionincrease in residential mortgages, partially offset by lower home equity balances.

Loan purchases and sales in first half 2016, net of runoff of previously purchased loans, reduced loan growth in first half 2016 by $552 million. See Note 3 “Loans and Leases” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included elsewhere in this report, for further information.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

Non-Core Assets    

The table below shows the composition of our non-core assets as of the dates indicated:

(dollars in millions)	June 30, 2016		December 31, 2015		(Date of Designation) June 30, 2009		Change from 2016-2015		Change from 2016-2009
Commercial		$34		$38		$1,900	(11	%)	(98	%)
Commercial real estate	102		130		3,412		(22	)	(97	)
Total commercial	136		168		5,312		(19	)	(97	)
Residential mortgages	266		297		1,467		(10	)	(82	)
Home equity loans	68		69		384		(1	)	(82	)
Home equity lines of credit	68		74		231		(8	)	(71	)
Home equity loans serviced by others (1)	860		986		4,591		(13	)	(81	)
Home equity lines of credit serviced by others (1)	273		389		1,589		(30	)	(83	)
Automobile	—		—		769		—		(100	)
Student	310		329		1,495		(6	)	(79	)
Credit cards	—		—		995		—		(100	)
Other retail	—		—		3,268		—		(100	)
Total retail	1,845		2,144		14,789		(14	)	(88	)
Total non-core loans	1,981		2,312		20,101		(14	)	(90	)
Other assets	23		26		378		(12	)	(94	)
Total non-core assets		$2,004		$2,338		$20,479	(14	%)	(90	%)

⁽¹⁾ Our SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. We now service a portion of this portfolio internally.

Non-core assets are primarily loans inconsistent with our strategic goals, generally as a result of geographic location, industry, product type or risk level. Non-core assets totaled $2.0 billion as of June 30, 2016. We have actively managed these loans down since they were designated as non-core on June 30, 2009. Between that date and June 30, 2016, the portfolio decreased$18.5 billion, or 90%, including principal repayments of $10.5 billion; charge-offs of $3.9 billion; transfers back to the core portfolio of $2.8 billion; and sales of $1.3 billion.

Non-core assets totaled $2.0 billion as of June 30, 2016, a decrease of $334 million from December 31, 2015, driven by principal repayments of $308 million. Commercial non-core loans of $136 milliondeclined19% compared to December 31, 2015. Retail non-core loan balances of $1.8 billiondecreased$299 million, or 14%, compared to December 31, 2015.

The largest component of our non-core portfolio is the home equity SBO portfolio. The SBO portfolio is a liquidating portfolio consisting of pools of home equity loans and lines of credit purchased between 2003 and 2007. Although our SBO portfolio consists of loans that were initially serviced by others, we now service a portion of this portfolio internally. SBO balances serviced externally totaled $609 million and $763 million as of June 30, 2016 and December 31, 2015, respectively. The SBO portfolio has been closed to new purchases since the third quarter of 2007, with exposure down to $1.1 billion as of June 30, 2016, compared to $1.4 billion as of December 31, 2015. The SBO portfolio represented 4% of the retail real estate secured portfolio and 2% of the overall retail loan portfolio as of June 30, 2016.

The credit profile of the SBO portfolio was weaker than the core real estate portfolio, with a weighted-average refreshed FICO score of 709 and CLTV of 89% as of June 30, 2016. The proportion of the portfolio in a second lien position was 96% with 72% of the portfolio in out-of-footprint geographies including 27% in California, Nevada, Arizona and Florida.

SBO net charge-offs of $7 million remained relatively stable with fourth quarter 2015 levels. The SBO portfolio annualized net charge-off rate increased 58 basis points to 2.44%, compared to 1.86% in fourth quarter 2015, driven by balance liquidation.

Allowance for Credit Losses and Nonperforming Assets

We and our banking subsidiaries, CBNA and CBPA, maintain an allowance for credit losses, consisting of an ALLL and a reserve for unfunded lending commitments. This allowance is created through charges to income, or provision for credit losses, and is maintained at an appropriate level adequate to absorb anticipated losses and is determined in accordance with GAAP. For further information on our processes to determine our allowance for credit losses, see “—Critical Accounting Estimates — Allowance for Credit Losses,” Note 1 “Significant Accounting Policies” to the audited Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2015 and Note 4 “Allowance for Credit Losses, Nonperforming

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MANAGEMENT’S DISCUSSION AND ANALYSIS

Assets, and Concentrations of Credit Risk” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included elsewhere in this report.

The allowance for credit losses totaled $1.3 billion at June 30, 2016 and December 31, 2015. Our ALLL was 1.20% of total loans and leases and 119% of nonperforming loans and leases as of June 30, 2016 compared with 1.23% and 115%, respectively, as of December 31, 2015.

Overall, loan portfolio credit quality remained strong in the six months ended June 30, 2016. Net charge-offs of $148 millionincreased$16 million, or 12%, from $132 million for the six months ended June 30, 2015, primarily driven by higher losses in the commercial loan portfolio. Annualized net charge-offs of 0.29% of average total loans and leases was relatively stable as compared to 0.28% for the six months ended June 30, 2015. The 90 day or more past due delinquency rate was 0.9% as of June 30, 2016 and December 31, 2015. Nonperforming loans and leases totaled $1.0 billion, or 1.01%, of the total portfolio as of June 30, 2016 as compared to $1.1 billion, or 1.07%, of the total loan portfolio as of December 31, 2015.

Commercial Loan Asset Quality

Our commercial loan and lease portfolio consists of traditional commercial loans, commercial real estate loans and leases. The portfolio is predominantly focused on customers in our footprint and adjacent states in which we have a physical presence where our local delivery model provides for strong client connectivity. However, we also do business in certain specialized industry sectors on a national basis.

For commercial loans and leases, we use regulatory classification ratings to monitor credit quality. Loans with a “pass” rating are those that we believe will be fully repaid in accordance with the contractual loan terms. Commercial loans and leases that are “criticized” are those that have some weakness that indicates an increased probability of future loss. See Note 4 “Allowance for Credit Losses, Nonperforming Assets, and Concentrations of Credit Risk” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included elsewhere in this report.

As of June 30, 2016, nonperforming commercial loans and leases increased$199 million to $347 million, compared to $148 million as of December 31, 2015, driven by a $195 million increase in nonperforming oil and gas industry loans following new negative guidance related to multi-tiered debt structures. As of June 30, 2016, total commercial nonperforming loans stood at 0.7% of the commercial loan portfolio, compared to 0.3% as of December 31, 2015. Total commercial loan and lease portfolio net charge-offs of $2 million compared to net charge-offs of $7 million in second quarter 2015.

Total commercial criticized loans and leases portfolio of $2.7 billion, or 5.5% of the portfolio compared to $2.6 billion, or 5.6% at December 31, 2015. Commercial criticized balances remain unchanged at $2.0 billion, or 5.6%, of commercial loans as of June 30, 2016, compared to $2.0 billion, or 6.0%, as of December 31, 2015. Commercial real estate criticized balances of $544 million, or 5.5%, of the commercial real estate portfolio compared to $521 million, or 5.8%, as of December 31, 2015. Commercial criticized loans to total criticized loans of 73% as of June 30, 2016 compared to 76% as of December 31, 2015. Commercial real estate accounted for 20% of criticized loans as of June 30, 2016 and December 31, 2015.

Retail Loan Asset Quality

For retail loans, we primarily use the loan’s payment and delinquency status to monitor credit quality. The longer a loan is past due, the greater the likelihood of future credit loss. These credit quality indicators are continually updated and monitored. Our retail loan portfolio remains focused on lending across the New England, Mid-Atlantic and Midwest regions, with continued geographic expansion outside the footprint primarily in the auto finance, student lending and unsecured portfolios. Retail assets increased $1.2 billion to $54.0 billion as of June 30, 2016, a 2.2%increase from December 31, 2015, driven by growth in the student lending, other unsecured and residential mortgage portfolios, offset by a reduction in home equity.

The credit composition of our retail loan portfolio at June 30, 2016 remained favorable and well-positioned across all product lines with an average refreshed FICO score of 757, which was stable with December 31, 2015 levels. The real estate secured portfolio CLTV ratio is calculated as the mortgage and second lien loan balance divided by the appraised value of the property and was 62.7% as of June 30, 2016 compared to 63.6% as of December 31, 2015. Excluding the SBO portfolio, the real estate CLTV was 61.6% as of June 30, 2016 compared to 62.3% as of December 31, 2015. Retail asset quality continued to improve with an annualized net charge-off rate (core and non-core) of 0.48% in second quarter 2016, a decrease of twelve basis points from fourth quarter 2015, driven by improvement in home equity and auto portfolios.

Nonperforming retail loans as a percentage of total retail loans were 1.3% as of June 30, 2016, a 40 basis point decrease from December 31, 2015, driven primarily by the first quarter 2016 transfer of non-performing retail TDRs to held for sale and the reclassification of residential mortgage loans guaranteed by government entities to performing in keeping with industry practice. Nonperforming balances at June 30, 2016 excluded $71 million of troubled debt restructured loans held for sale, including $54 million of residential mortgages and $17 million of home equity loans, and $49 million of government guaranteed loans.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

Special Topics-HELOC Payment Shock

For further information regarding the possible HELOC payment shock, see “—Key Factors Affecting Our Business — HELOC Payment Shock.”

Troubled Debt Restructurings

TDR is the classification given to a loan that has been restructured in a manner that grants a concession to a borrower that is experiencing financial hardship that we would not otherwise make. TDRs typically result from our loss mitigation efforts and are undertaken in order to improve the likelihood of recovery and continuity of the relationship. Our loan modifications are handled on a case by case basis and are negotiated to achieve mutually agreeable terms that maximize loan collectability and meet our borrower’s financial needs. The types of concessions include interest rate reductions, term extensions, principal forgiveness and other modifications to the structure of the loan that fall outside our lending policy. Depending on the specific facts and circumstances of the customer, restructuring can involve loans moving to nonaccrual, remaining on nonaccrual or continuing on accrual status.As of June 30, 2016, $802 million of retail loans were classified as retail TDRs, compared with $1.2 billion as of December 31, 2015. Other loans held for sale, as of June 30, 2016, contained $322 million of TDRs, including $262 million of residential mortgages and $60 million of home equity loans. In July 2016, we completed the TDR sale. See Note 21 “Subsequent Events” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included elsewhere in this report.

In the retail TDR population, $252 million were in nonaccrual status of which 59% were current in payment. TDRs generally return to accrual status once repayment capacity and appropriate payment history can be established. TDRs are evaluated for impairment individually. Loans are classified as TDRs until paid off, sold or refinanced at market terms.

For additional information regarding TDRs, see “—Critical Accounting Estimates — Allowance for Credit Losses,” and Note 1 “Significant Accounting Policies” to the audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2015 and Note 4 “Allowance for Credit Losses, Nonperforming Assets, and Concentrations of Credit Risk” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included elsewhere in this report.

The tables that follow present an aging of our retail TDRs:

	June 30, 2016
(in millions)	Current		30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total
Recorded Investment:
Residential mortgages		$110	3			$7		$44		$164
Home equity loans	125		3		4		26		158
Home equity lines of credit	161		5		5		15		186
Home equity loans serviced by others (1)	60		3		1		2		66
Home equity lines of credit serviced by others (1)	7		—		—		3		10
Automobile	15		1		1		1		18
Student	156		3		2		1		162
Credit cards	24		1		1		—		26
Other retail	12		—		—		—		12
Total		$670		$19		$21		$92		$802

⁽¹⁾ Our SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. We now service a portion of this portfolio internally.

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

	December 31, 2015
(in millions)	Current		30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total
Recorded Investment:
Residential mortgages		$327		$25		$12		$77		$441
Home equity loans	170		13		6		35		224
Home equity lines of credit	163		7		4		20		194
Home equity loans serviced by others (1)	67		2		1		4		74
Home equity lines of credit serviced by others (1)	6		1		—		3		10
Automobile	13		1		—		—		14
Student	157		4		2		2		165
Credit cards	25		1		1		1		28
Other retail	14		1		—		—		15
Total		$942		$55		$26		$142		$1,165

⁽¹⁾ Our SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. We now service a portion of this portfolio internally.

The tables that follow present the accrual status of our retail TDRs:

	June 30, 2016
(in millions)	Accruing		Nonaccruing		Total
Recorded Investment:
Residential mortgages		$84		$80		$164
Home equity loans	107		51		158
Home equity lines of credit	126		60		186
Home equity loans serviced by others (1)	48		18		66
Home equity lines of credit serviced by others (1)	4		6		10
Automobile	11		7		18
Student	133		29		162
Credit cards	25		1		26
Other retail	12		—		12
Total		$550		$252		$802

⁽¹⁾ Our SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. We now service a portion of this portfolio internally.

	December 31, 2015
(in millions)	Accruing		Nonaccruing		Total
Recorded Investment:
Residential mortgages		$279		$162		$441
Home equity loans	158		66		224
Home equity lines of credit	107		87		194
Home equity loans serviced by others (1)	52		22		74
Home equity lines of credit serviced by others (1)	4		6		10
Automobile	6		8		14
Student	138		27		165
Credit cards	27		1		28
Other retail	15		—		15
Total		$786		$379		$1,165

⁽¹⁾ Our SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. We now service a portion of this portfolio internally.

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Securities

Our securities portfolio is managed to seek return while maintaining prudent levels of credit quality, market risk and liquidity. The following table presents our securities AFS and HTM:

	June 30, 2016				December 31, 2015
(dollars in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Change in Fair Value
Securities Available for Sale:
U.S. Treasury and other		$15		$15		$16		$16		($1	)	(6	%)
State and political subdivisions	9		9		9		9		—			—
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	17,588		17,981		17,234		17,320		661			4
Other/non-agency	489		457		555		522		(65		)	(12	)
Total mortgage-backed securities	18,077		18,438		17,789		17,842		596			3
Total debt securities	18,101		18,462		17,814		17,867		595			3
Marketable equity securities	5		5		5		5		—			—
Other equity securities	12		12		12		12		—			—
Total equity securities	17		17		17		17		—			—
Total securities available for sale		$18,118		$18,479		$17,831		$17,884		$595		3	%
Securities Held to Maturity:
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities		$3,912		$4,031		$4,105		$4,121		($90	)	(2	%)
Other/non-agency	1,061		1,105		1,153		1,176		(71		)	(6	)
Total securities held to maturity		$4,973		$5,136		$5,258		$5,297		($161	)	(3	)
Total securities available for sale and held to maturity		$23,091		$23,615		$23,089		$23,181		$434		2	%

As of June 30, 2016, the fair value of the AFS and HTM securities portfolio increased $434 million to $23.6 billion, compared with $23.2 billion as of December 31, 2015, driven by an increase in the market value of the securities portfolio due to a decline in interest rates, which was partially offset by cash flow runoff in excess of reinvestment. During second quarter 2016, $126 million in mortgage-backed securities were sold and the proceeds were reinvested into lower coupon securities for risk management purposes.

As of June 30, 2016, the portfolio’s average effective duration was 2.4 years compared with 3.5 years as of December 31, 2015, reflecting an increase in prepayment speeds due to lower long term rates. This change in securities duration reduced overall asset sensitivity through first quarter, but had no net impact on overall asset sensitivity during the second quarter. The combination of securities duration, swap positions, and borrowed funds are proactively managed by the Company.

In June 2016, we migrated from a proprietary internal process to a vendor-based model to estimate other-than-temporary impairment. See Note 2 “Securities” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included elsewhere in this report.

The securities portfolio included high-quality, highly-liquid investments reflecting our ongoing commitment to maintaining appropriate contingent liquidity levels and pledging capacity. U.S. government-guaranteed notes and government-sponsored entity-issued mortgage-backed securities represented the vast majority of the securities portfolio holdings. The portfolio composition has also been dominated by holdings backed by mortgages so that they may be pledged to the FHLBs. This has become increasingly important due to the enhanced liquidity requirements of the liquidity coverage ratio. For further discussion of the liquidity coverage ratios, see “Regulation and Supervision — Liquidity Standards” in Part I — Business, included in the Annual Report on Form 10-K for the year ended December 31, 2015.

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Deposits

The table below represents the major components of our deposits:

(dollars in millions)	June 30, 2016		December 31, 2015		Change			Percent
Demand		$27,108		$27,649		($541	)	(2	%)
Checking with interest	19,838		17,921		1,917			11
Regular savings	8,841		8,218		623			8
Money market accounts	37,503		36,727		776			2
Term deposits	12,967		12,024		943			8
Total deposits		$106,257		$102,539		$3,718		4	%

Total deposits as of June 30, 2016increased$3.7 billion to $106.3 billion, compared to $102.5 billion, as growth in checking with interest, term deposits, savings, and money market products was partially offset by a decrease in demand deposits.

Borrowed Funds

Short-term borrowed funds

The following is a summary of our short-term borrowed funds:

(dollars in millions)	June 30, 2016		December 31, 2015		Change			Percent
Securities sold under agreements to repurchase		$717		$802		($85	)	(11	%)
Other short-term borrowed funds (primarily current portion of FHLB advances)	2,770		2,630		140			5
Total short-term borrowed funds		$3,487		$3,432		$55		2	%

Short-term borrowed funds of $3.5 billion as of June 30, 2016, increased $55 million from December 31, 2015, reflecting a decrease of $85 million in customer repurchase agreements and an increase of $140 million in other short-term borrowed funds (primarily short-term FHLB advances).

    As of June 30, 2016, our total contingent liquidity was $23.2 billion, consisting of $2.7 billion in net cash at the FRB (which is defined as excess cash balances held at the FRBs), $17.0 billion in unencumbered high-quality and liquid securities, and $3.5 billion in unused FHLB borrowing capacity. Asset liquidity, a component of contingent liquidity, consisting of excess cash balances at the FRB and unencumbered high-quality and liquid securities, was $19.7 billion. Additionally, $11.7 billion in secured Discount Window capacity from the FRBs created total available liquidity of approximately $34.9 billion.

Key data related to short-term borrowed funds is presented in the following table:

(dollars in millions)	As of and for the Six Months Ended June 30, 2016			As of and for the Year Ended Dec. 31, 2015			As of and for the Six Months Ended June 30, 2015
Weighted-average interest rate at period-end:
Federal funds purchased and securities sold under agreements to repurchase	0.00		%	0.15		%	0.27		%
Other short-term borrowed funds (primarily current portion of FHLB advances)	0.65			0.44			0.26
Maximum amount outstanding at month-end during the period:
Federal funds purchased and securities sold under agreements to repurchase		$1,274			$5,375			$5,375
Other short-term borrowed funds (primarily current portion of FHLB advances)	4,764			7,004			7,004
Average amount outstanding during the period:
Federal funds purchased and securities sold under agreements to repurchase		$927			$3,364			$4,489
Other short-term borrowed funds (primarily current portion of FHLB advances)	3,421			5,865			6,732
Weighted-average interest rate during the period:
Federal funds purchased and securities sold under agreements to repurchase	0.07		%	0.22		%	0.21		%
Other short-term borrowed funds (primarily current portion of FHLB advances)	0.60			0.28			0.26

Note: Balances are net of certain short-term receivables associated with reverse repurchase agreements. Interest expense includes the full cost of the repurchase agreements, but excludes certain hedging costs and broker fees.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

Long-term borrowed funds

The following is a summary of our long-term borrowed funds:

(in millions)	June 30, 2016		December 31, 2015
Citizens Financial Group, Inc.:
4.150% fixed rate subordinated debt, due 2022		$347		$350
5.158% fixed-to-floating rate subordinated debt, (LIBOR + 3.56%) callable, due 2023	333		333
3.750% fixed rate subordinated debt, due 2024	250		250
4.023% fixed rate subordinated debt, due 2024	218		331
4.082% fixed rate subordinated debt, due 2025	355		331
4.350% fixed rate subordinated debt, due 2025	249		250
4.300% fixed rate subordinated debt, due 2025	749		750
Banking Subsidiaries:
1.600% senior unsecured notes, due 2017	753		749
2.300% senior unsecured notes, due 2018	756		747
2.450% senior unsecured notes, due 2019	767		752
2.500% senior unsecured notes, due 2019	753		—
2.550% senior unsecured notes, due 2021	1,004		—
Federal Home Loan advances due through 2033	5,264		5,018
Other	12		25
Total long-term borrowed funds		$11,810		$9,886

Note: The June 30, 2016 balances above reflect the impact of unamortized deferred issuance costs and discounts. See Note 7 “Borrowed Funds” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included elsewhere in this report.

On July 28, 2016, we issued $350 million of 2.375% fixed-rate senior notes due 2021, and used the net proceeds and available cash to repurchase $500 million of our subordinated notes held by RBS. Specifically, we retired $334 million of our 4.082% subordinated notes due 2025 and $166 million of our 4.023% subordinated notes due 2024 that were held by RBS. See Note 21 “Subsequent Events” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included elsewhere in this report.

On December 3, 2015, we repurchased $750 million of outstanding subordinated debt instruments held by RBS. The $3 million difference between the repurchase price and the net carrying amount of the subordinated debt was recognized as a gain on extinguishment of the debt. To fund the repurchase, we issued $750 million of new subordinated debt with a 4.300% fixed rate and a ten year maturity.

On July 31, 2015, we issued $250 million of subordinated debt with a 4.350% fixed rate and a ten year maturity. On August 3, 2015, we used the net proceeds of this issuance to repurchase 9,615,384 shares of our common stock directly from RBS.

Long-term borrowed funds of $11.8 billion as of June 30, 2016increased$1.9 billion from December 31, 2015, primarily driven by a $1.8 billion increase in senior bank debt. Access to additional funding through repurchase agreements, collateralized borrowed funds or asset sales is available. Additionally, there is capacity to grow deposits or issue senior or subordinated notes.

Derivatives

We use pay-fixed swaps to hedge floating rate wholesale funding and to offset duration in fixed-rate assets. Notional balances totaled $5.0 billion as of June 30, 2016 and December 31, 2015. Pay-fixed rates on the swaps ranged from 1.82% to 4.30% as of June 30, 2016, compared to 1.96% to 4.30% as of December 31, 2015. We received the daily federal funds effective rate on the legacy $500 million notional position, while the remaining $4.5 billion are forward starting positions which begin accruing interest starting in July 2016 and later periods.

We use receive-fixed swaps to minimize the exposure to variability in the interest cash flows on our floating rate assets, and to hedge market risk on fixed rate capital markets debt issuances. At June 30, 2016 and December 31, 2015, the notional amount of receive-fixed swap hedges totaled $10.5 billion and $8.5 billion, respectively. The fixed-rate ranges were 1.06% to 2.05% and 0.77% to 2.04%, respectively. We paid one-month and three-month LIBOR on these swaps.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

In February 2016, we terminated $3.0 billion of two-year original term receive-fixed interest rate swaps that hedged the interest rate exposure on floating rate commercial loans. The transaction resulted in a $12.5 million gain which will be amortized over the remaining life of the swap.

In March and May 2016, we entered into receive-fixed interest-rate swaps totaling $750 million and $1.0 billion, respectively, to manage the interest rate exposure on a medium term debt issued in the same months. These agreements converted the fixed-rate debt coupon to three-month LIBOR based floating funding. We receive a fixed rate of 1.06% and 1.17%, respectively, on the swap agreements and pay three month LIBOR.

In June 2016, we entered into a $500 million five-year receive-fixed interest rate swap designed to hedge the interest-rate exposure on floating rate commercial loans and reduce longer-term net interest income sensitivity. We receive a fixed rate of 1.09% on the agreement and pay one month LIBOR.

We also sell interest rate swaps and foreign exchange forwards to commercial customers. Interest rate and foreign exchange derivative contracts are transacted to effectively minimize our market risk associated with the customer derivative contracts. The assets and liabilities recorded for derivatives not designated as hedges reflect the market value of these transactions.

The table below presents our derivative assets and liabilities. For additional information regarding our derivative instruments, see Note 11 “Derivatives” in our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included elsewhere in this report.

	June 30, 2016								December 31, 2015
(dollars in millions)	Notional Amount (1)		Derivative Assets			Derivative Liabilities			Notional Amount (1)		Derivative Assets			Derivative Liabilities
Derivatives designated as hedging instruments:
Interest rate contracts		$15,500		$425			$255			$16,750		$96			$50
Derivatives not designated as hedging instruments:
Interest rate contracts	39,606		810			723			33,719		540			455
Foreign exchange contracts	9,490		193			185			8,366		163			156
Other contracts	1,491		15			14			981		8			5
Total derivatives not designated as hedging instruments			1,018			922					711			616
Gross derivative fair values			1,443			1,177					807			666
Less: Gross amounts offset in the Consolidated Balance Sheets (2)			(130		)	(130		)			(178		)	(178		)
Less: Cash collateral applied (2)			(1		)	(37		)			(4		)	(3		)
Total net derivative fair values presented in the Consolidated Balance Sheets (3)				$1,312			$1,010					$625			$485

⁽¹⁾ The notional or contractual amount of interest rate derivatives and foreign exchange contracts is the amount upon which interest and other payments under the contract are based. For interest rate derivatives, the notional amount is typically not exchanged. Therefore, notional amounts should not be taken as the measure of credit or market risk as they do not measure the true economic risk of these contracts.

⁽²⁾ Amounts represent the impact of legally enforceable master netting agreements that allow us to settle positive and negative positions.

⁽³⁾ We also offset assets and liabilities associated with repurchase agreements on our Consolidated Balance Sheets. See Note 2 “Securities” in our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included elsewhere in this report.

At June 30, 2016, the overall derivative asset value increased $687 million and the liability balance increased by $525 million from December 31, 2015, primarily due to decreased fixed interest rates at June 30, 2016, compared to December 31, 2015.

Capital

As a bank holding company and a financial holding company, we are subject to regulation and supervision by the FRBG. Our primary subsidiaries are our two insured depository institutions, CBNA, a national banking association whose primary federal regulator is the OCC, and CBPA, a Pennsylvania-charted savings bank regulated by the Department of Banking of the Commonwealth of Pennsylvania and supervised by the FDIC as its primary federal regulator.

In July 2013, the FRB, OCC and FDIC issued the U.S. Basel III final rules. The rules implement the Basel Committee on Banking Supervision’s Basel III capital framework and certain provisions of the Dodd-Frank Act, including the Collins Amendment. The U.S. Basel III final rules substantially revised the risk-based capital and leverage requirements applicable to bank holding companies and their insured depository institution subsidiaries, including CBNA and CBPA. The U.S. Basel III final rules became effective for CFG and its depository institution subsidiaries, including CBNA and CBPA, on January 1, 2015 (subject to a phase-in period for certain provisions).

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MANAGEMENT’S DISCUSSION AND ANALYSIS

The U.S. Basel III final rules, among other things, (i) introduced a new capital measure called CET1, (ii) specified that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting certain revised requirements, (iii) defined CET1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital, and (iv) expanded the scope of the deductions/adjustments to capital as compared to existing regulations.

The U.S. Basel III final rules also introduced a new capital conservation buffer (“CCB”), composed entirely of CET1, on top of these three minimum risk-weighted asset ratios. The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and will increase by 0.625% on each subsequent January 1, until the buffer reaches its fully phased in level of 2.5% on January 1, 2019. Banking institutions with a ratio of CET1 to risk-weighted assets below the effective minimum (4.5% plus the applicable capital conservation buffer) will be subject to constraints on capital distributions, including dividends, repurchases and certain executive compensation based on the amount of the shortfall. Under the U.S. Basel III final rules, the effective minimum capital ratios as of January 1, 2016 were:

• 5.125% CET1 to risk-weighted assets (minimum of 4.5% plus 0.625% CCB);

• 6.625% Tier 1 capital (CET1 plus Additional Tier 1 capital) to risk-weighted assets (minimum of 6% plus 0.625% CCB);

• 8.625% Total capital (Tier 1 capital plus Tier 2 capital) to risk-weighted assets (minimum of 8% plus 0.625% CCB); and

• 4.000% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (known as the “leverage ratio”). The minimum leverage ratio of 4% is not impacted by the capital conservation buffer.

When fully phased in on January 1, 2019, the U.S. Basel III final rules will require CFG, CBNA and CBPA to maintain an additional capital conservation buffer of 2.5% of CET1, effectively resulting in minimum ratios of (i) CET1 to risk-weighted assets of at least 7%, (ii) Tier 1 capital to risk-weighted assets of at least 8.5%, (iii) a minimum ratio of Total capital to risk-weighted assets of at least 10.5%.

The U.S. Basel III final rules also provide for a number of deductions from and adjustments to CET1. These include, for example, the requirement that certain deferred tax assets and significant investments in non-consolidated financial entities be deducted from CET1 to the extent that any one such category exceeds 10% of CET1 or all such items, in the aggregate, exceed 15% of CET1. Implementation of the deductions and other adjustments to CET1 began on January 1, 2015 and will be phased-in over a 4-year period (beginning at 40% on January 1, 2015 and an additional 20% per year thereafter).

The U.S. Basel III final rules prescribe a standardized approach for risk weightings that expanded the risk-weighting categories from the general risk-based capital rules to a much larger and more risk-sensitive number of categories, depending on the nature of the assets, generally ranging from 0% for U.S. government and agency securities, to 600% for certain equity exposures, and resulting in higher risk weights for a variety of asset categories.

With respect to CBNA and CBPA, the U.S. Basel III final rules also revise the “prompt corrective action” regulations pursuant to Section 38 of the Federal Deposit Insurance Act.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

The table below presents our actual regulatory capital ratios under Basel III Transitional rules as of June 30, 2016 and December 31, 2015. In addition, the table includes pro forma Basel III ratios as of June 30, 2016 and December 31, 2015, after full phase-in of all requirements to which we will be subject by January 1, 2019. Based on both current and fully phased-in Basel III requirements, all ratios remain well above current and future Basel III minima:

	Transitional Basel III								Pro Forma Basel III Assuming Full Phase-in
(dollars in millions)	Actual Amount		Actual Ratio		Required Minimum		Well-Capitalized Minimum for Purposes of Prompt Corrective Action		Actual Ratio(1)		Required Minimum + Required Capital Conservation Buffer for Non-Leverage Ratios		FDIA Required Well-Capitalized Minimum for Purposes of Prompt Corrective Action
Basel III Transitional as of June 30, 2016
Common equity tier 1 capital(2)(6)		$13,768	11.5	%	5.125	%	6.5	%	11.5	%	7.0	%	6.5	%
Tier 1 capital(3)(6)	14,015		11.7		6.625		8.0		11.7		8.5		8.0
Total capital(4)(6)	17,823		14.9		8.625		10.0		14.9		10.5		10.0
Tier 1 leverage(5)	14,015		10.3		4.000		5.0		10.3		4.0		5.0
Basel III Transitional as of December 31, 2015
Common equity tier 1 capital(2)		$13,389	11.7	%	4.5	%	6.5	%	11.7	%	7.0	%	6.5	%
Tier 1 capital(3)	13,636		12.0		6.0		8.0		11.9		8.5		8.0
Total capital(4)	17,505		15.3		8.0		10.0		15.3		10.5		10.0
Tier 1 leverage(5)	13,636		10.5		4.0		5.0		10.5		4.0		5.0

⁽¹⁾ These are non-GAAP financial measures. For more information on the computation of these non-GAAP financial measures, see “—Principal Components of Operations and Key Performance Metrics Used By Management - Key Performance Metrics and Non-GAAP Financial Measures.”

⁽²⁾ “Common equity tier 1 capital ratio” as of June 30, 2016 represents CET1 divided by total risk-weighted assets as defined under Basel III Standardized approach.

⁽³⁾ “Tier 1 capital ratio” is tier 1 capital, which includes CET1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital, divided by total risk-weighted assets as defined under Basel III Standardized approach.

⁽⁴⁾ “Total capital ratio” is total capital divided by total risk-weighted assets as defined under Basel III Standardized approach.

⁽⁵⁾ “Tier 1 leverage ratio” is tier 1 capital divided by quarterly average total assets as defined under Basel III Standardized approach.

⁽⁶⁾ “Minimum Capital ratio” for 2016 includes capital conservation buffer of 0.625%.

Standardized Approach

The Basel III Standardized approach measures risk-weighted assets primarily for market risk and credit risk exposures. Exposures subject to market risk are measured on a basis generally consistent with how market risk-weighted assets were measured using the Basel 2.5 market risk rules. Refer to “—Market Risk — Market Risk Regulatory Capital,” for further information. CFG applies the Basel III standardized approach, as defined by the U.S. regulators, for determining the assignment of risk-weighted assets. Under the Standardized approach no distinction is made for variations in credit quality for corporate exposures. Additionally, the economic benefit of collateral is restricted to a limited list of eligible securities and cash. We estimate our common equity tier 1 capital ratio under the Basel III Standardized approach, on a fully phased-in basis, to be 11.5% at June 30, 2016. As of June 30, 2016, we estimated that our Basel III Standardized common equity tier 1 capital would be $13.8 billion and total risk-weighted assets would be $119.7 billion, on a fully-phased in basis. Our estimates under the Basel III Standardized approach may be refined over time because of further rulemaking or clarification by U.S. banking regulators or as our understanding and interpretation of the rules evolve. Actual results could differ from those estimates and assumptions.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

A reconciliation of Basel III Standardized Transitional approach to Basel III Standardized estimates on a fully-phased in basis for common equity tier 1 capital, total capital and risk-weighted assets, see the following table.

(dollars in millions)	June 30, 2016			December 31, 2015
Common equity tier 1 capital		$13,768			$13,389
Impact of intangibles at 100%	(1		)	(2		)
Fully phased-in common equity tier 1 capital(1)		$13,767			$13,387
Total capital		$17,823			$17,505
Impact of intangibles at 100%	(1		)	(2		)
Fully phased in common total capital(1)		$17,822			$17,503
Risk-weighted assets		$119,492			$114,084
Impact of intangibles - 100% capital deduction	(1		)	(2		)
Impact of mortgage servicing assets at 250% risk weight	229			246
Fully phased-in risk-weighted assets(1)		$119,720			$114,328
Transitional common equity tier 1 ratio(2)	11.5		%	11.7		%
Fully phased-in common equity tier 1 ratio(1)(2)	11.5			11.7
Transitional total capital ratio(3)	14.9			15.3
Fully phased-in total capital ratio(1)(3)	14.9			15.3

⁽¹⁾ These are non-GAAP financial measures.

⁽²⁾ “Common equity tier 1 capital ratio” as of June 30, 2016 represents CET1 divided by total risk-weighted assets as defined under Basel III Standardized approach.

⁽³⁾ “Total capital ratio” is total capital divided by total risk-weighted assets as defined under Basel III Standardized approach.

Regulatory Capital Ratios and Capital Composition

The following table presents capital and capital ratio information under Basel III Standardized approach as of June 30, 2016 and December 31, 2015:

									FDIA Requirements
	Actual				Minimum Capital Adequacy				Classification as “Well Capitalized”
(dollars in millions)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Basel III Transitional as of June 30, 2016
Common equity tier 1 capital(1)(5)		$13,768	11.5	%		$6,124	5.125	%		$7,767	6.5	%
Tier 1 capital(2)(5)	14,015		11.7		7,916		6.625		9,559		8.0
Total capital(3)(5)	17,823		14.9		10,306		8.625		11,949		10.0
Tier 1 leverage(4)	14,015		10.3		5,452		4.000		6,815		5.0
Risk-weighted assets	119,492
Quarterly adjusted average assets	136,301
Basel III Transitional as of December 31, 2015
Common equity tier 1 capital(1)		$13,389	11.7	%		$5,134	4.5	%		$7,415	6.5	%
Tier 1 capital(2)	13,636		12.0		6,845		6.0		9,127		8.0
Total capital(3)	17,505		15.3		9,127		8.0		11,408		10.0
Tier 1 leverage(4)	13,636		10.5		5,218		4.0		6,523		5.0
Risk-weighted assets	114,084
Quarterly adjusted average assets	130,455

⁽¹⁾ “Common equity tier 1 capital ratio” as of June 30, 2016 represents CET1 divided by total risk-weighted assets as defined under Basel III Standardized approach.

⁽²⁾ “Tier 1 capital ratio” is tier 1 capital, which includes CET1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital, divided by total risk-weighted assets as defined under Basel III Standardized approach.

⁽³⁾ “Total capital ratio” is total capital divided by total risk-weighted assets as defined under Basel III Standardized approach.

⁽⁴⁾ “Tier 1 leverage ratio” is tier 1 capital divided by quarterly average total assets as defined under Basel III Standardized approach.

⁽⁵⁾ “Minimum Capital ratio” for 2016 includes capital conservation buffer of 0.625%.

CET1 capital under Basel III Standardized Transitional rules was $13.8 billion at June 30, 2016, an increase of $379 million from $13.4 billion at December 31, 2015. The increase was primarily attributable to net income and amortization of deferred tax related to goodwill for six months endedJune 30, 2016, net of dividends paid to stockholders. At June 30, 2016, there was

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MANAGEMENT’S DISCUSSION AND ANALYSIS

approximately $247 million of additional tier 1 capital, reflecting the capital value after issuance costs of the 5.500% Fixed-to-Floating Non-Cumulative Perpetual Preferred Stock, Series A, issued on April 6, 2015. Tier 1 capital at June 30, 2016 was $14.0 billion, an increase of $379 million from $13.6 billion at December 31, 2015. Total capital was $17.8 billion at June 30, 2016, an increase of $318 million from December 31, 2015 driven primarily by net income, net of dividends paid to stockholders and the repurchase of subordinated debt.

Risk-weighted assets based on Basel III Standardized Transitional rules at June 30, 2016 were $119.5 billion, an increase of $5.4 billion as compared to December 31, 2015. The primary drivers for this change were growth in commercial and student loan exposures.

As of June 30, 2016, the tier 1 leverage ratio decreased approximately 17 basis points to 10.3% from 10.5% as of December 31, 2015. This decline reflected the net impact of a $5.8 billion increase in adjusted quarterly average total assets, which drove a 45 basis point decline in the ratio, and the previously noted increase in tier 1 capital, which added 28 basis points to the ratio.

The following table presents our capital composition under the Basel III capital framework in effect for us at June 30, 2016 and at December 31, 2015:

	Transitional Basel III
(dollars in millions)	June 30, 2016			December 31, 2015
Total common stockholders’ equity		$19,979			$19,399
Exclusions(1):
Net unrealized (gains) losses recorded in accumulated other comprehensive income, net of tax:
Debt and marketable equity securities available for sale	(166		)	28
Derivatives	(39		)	(10		)
Unamortized net periodic benefit costs	364			369
Deductions:
Goodwill	(6,876		)	(6,876		)
Deferred tax liability associated with goodwill	507			480
Other intangible assets	(1		)	(1		)
Total Common Equity Tier 1	13,768			13,389
Qualifying preferred stock	247			247
Total Tier 1 Capital	14,015			13,636
Qualifying long-term debt securities as tier 2	2,501			2,595
Allowance for loan and lease losses	1,246			1,216
Allowance for credit losses for off-balance sheet exposure	61			58
Total capital		$17,823			$17,505

⁽¹⁾ As a Basel III Standardized approach institution, we selected the one-time election to opt out of the requirements to include all the components of AOCI.

Capital Adequacy Process

Our assessment of capital adequacy begins with our risk appetite and risk management framework. This framework provides for the identification, measurement and management of material risks. Capital requirements are determined for actual and forecasted risk portfolios using applicable regulatory capital methodologies. The assessment also considers the possible impacts of approved and proposed regulatory changes that will or may apply to future periods. Key analytical frameworks, which enable the comprehensive assessment of capital adequacy versus unexpected loss, supplement our base case forecast. These supplemental frameworks include integrated stress testing, as well as an internal capital adequacy requirement that builds on internally assessed economic capital requirements. A robust governance framework supports our capital planning process. This process includes capital management policies and procedures that document capital adequacy metrics and limits, as well as our comprehensive capital contingency plan and the active engagement of both the legal-entity boards and senior management in oversight and decision-making.

Forward-looking assessments of capital adequacy for us and for our banking subsidiaries feed development of capital plans that are submitted to the FRBG and other bank regulators. We prepare these plans in full compliance with the FRBG’s Capital Plan Rule and we participate annually in the FRBG’s extensive CCAR review process. In addition to the stress test requirements under CCAR, we also participate in semiannual stress tests required by the Dodd-Frank Act.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

In April 2016, we submitted our 2016 Capital Plan to the Federal Reserve under the annual CCAR process. On June 29, 2016, the FRBG indicated that it did not object to our 2016 Capital Plan or to our proposed capital actions in the period beginning July 1, 2016 and ending June 30, 2017. Our 2016 Capital Plan includes proposed quarterly common dividends of $0.12 per share through the end of 2016, a potential 17% increase to quarterly common dividends to $0.14 per share in 2017, and a share repurchase plan of up to $690 million through the second quarter of 2017.

All distributions proposed under our 2016 Capital Plan are subject to consideration and approval by the CFG’s Board of Directors prior to execution. The timing and exact amount of dividends and share repurchases will depend on various factors, including our capital position, financial performance and market conditions. For third quarter 2016, CFG’s Board of Directors has approved a common dividend of $0.12 per share, a share repurchase plan, and the repurchase of $500 million of subordinated notes from RBS. All of these actions were included in our 2016 Capital Plan to which the Federal Reserve indicated no objection.

Capital Transactions

During the six months endedJune 30, 2016, we completed the following capital actions:

• Repurchased $125 million aggregate principal amount of our 4.023% subordinated notes due 2024 on March 7, 2016;

• Declared quarterly common stock dividends of $0.10 per share for first quarter 2016 and of $0.12 per share for second quarter 2016, aggregating to dividend payments of approximately $53 million on February 18, 2016 and $64 million on May 18, 2016, respectively; and

• Declared a semi-annual dividend of $27.50 per share on the 5.500% fixed-to-floating rate non-cumulative perpetual Series A Preferred Stock, aggregating to a dividend payment of approximately $7 million on April 6, 2016.

At June 30, 2016, all regulatory ratios remained well above their respective fully phased-in Basel III minimum plus the capital conservation buffer for the risk-based ratios. Fully phased-in regulatory ratios are non-GAAP financial measures. For more information on computation of these non-GAAP financial measures, see “—Principal Components of Operations and Key Performance Metrics Used By Management — Key Performance Metrics and Non-GAAP Financial Measures”.

Banking Subsidiaries’ Capital

The following table presents our banking subsidiaries’ capital ratios under Basel III Standardized Transitional rules as of June 30, 2016 and December 31, 2015:

	Transitional Basel III
	June 30, 2016				December 31, 2015
(dollars in millions)	Amount		Ratio		Amount		Ratio
Citizens Bank, N.A.
Common equity tier 1 capital (1)		$11,039	11.5	%		$10,754	11.7	%
Tier 1 capital(2)	11,039		11.5		10,754		11.7
Total capital(3)	13,428		14.0		13,132		14.3
Tier 1 leverage(4)	11,039		10.5		10,754		10.7
Risk-weighted assets	96,032				91,625
Quarterly adjusted average assets	105,201				100,504
Citizens Bank of Pennsylvania
Common equity tier 1 capital(1)		$3,068	12.8	%		$3,017	13.0	%
Tier 1 capital(2)	3,068		12.8		3,017		13.0
Total capital(3)	3,631		15.2		3,559		15.4
Tier 1 leverage(4)	3,068		8.7		3,017		9.1
Risk-weighted assets	23,959				23,179
Quarterly adjusted average assets	35,352				33,045

⁽¹⁾ “Common equity tier 1 capital ratio” as of June 30, 2016 represents CET1 divided by total risk-weighted assets as defined under Basel III Standardized approach.

⁽²⁾ “Tier 1 capital ratio” is tier 1 capital, which includes CET1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital, divided by total risk-weighted assets as defined under Basel III Standardized approach.

⁽³⁾ “Total capital ratio” is total capital divided by total risk-weighted assets as defined under Basel III Standardized approach.

⁽⁴⁾ “Tier 1 leverage ratio” is tier 1 capital divided by quarterly average total assets as defined under Basel III Standardized approach.

CBNA CET1 capital under Basel III Standardized Transitional rules was $11.0 billion at June 30, 2016, an increase of $285 million from $10.8 billion at December 31, 2015. The increase was primarily attributable to net income for the six months endedJune 30, 2016, net of dividends paid to CFG. At June 30, 2016, CBNA held minimal additional tier 1 capital. Total capital was $13.4 billion at June 30, 2016, an increase of $296 million driven primarily by the increase in CET1 capital.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

CBNA risk-weighted assets based on Basel III Standardized Transitional rules at June 30, 2016 were $96.0 billion, an increase of $4.4 billion as compared to December 31, 2015. The primary drivers for this change were the growth in commercial, student, auto and residential mortgage loan exposures.

As of June 30, 2016, the CBNA tier 1 leverage ratio decreased approximately 21 basis points to 10.5% from 10.7% as of December 31, 2015, driven by an increase in adjusted quarterly average total assets of $4.7 billion resulting in a 49 basis point decline in the ratio, partially offset by a 28 basis point increase for higher CET1 capital described above.

CBPA CET1 capital under Basel III Standardized Transitional rules was $3.1 billion at June 30, 2016, an increase of $51 million from $3.0 billion at December 31, 2015. The increase was primarily attributable to net income for the six months ended June 30, 2016 and amortization of deferred tax assets related to goodwill, net of dividends paid to CFG.

At June 30, 2016, there was no additional tier 1 capital. Total capital was $3.6 billion at June 30, 2016, an increase of $72 million driven primarily by the increase in CET1 capital and an increase in allowance for credit losses.

CBPA risk-weighted assets based on Basel III Standardized Transitional rules at June 30, 2016 were $24.0 billion, an increase of $780 million as compared to December 31, 2015. The primary drivers for this change were growth in commercial and student loan exposures. These increases were partially offset by decreases in both the residential mortgage and home equity loans.

As of June 30, 2016, the CBPA tier 1 leverage ratio decreased approximately 45 basis points to 8.7% from 9.1% as of December 31, 2015, driven by an increase in adjusted quarterly average total assets of $2.3 billion resulting in a 60 basis point decline in the ratio, partially offset by a 15 basis point increase resulting from higher CET1 capital described above.

Liquidity

We define liquidity as an institution’s ability to meet its cash-flow and collateral obligations in a timely manner, at a reasonable cost. An institution must maintain current liquidity to meet its expected daily and forecasted cash-flow requirements, as well as contingent liquidity to meet unexpected (stress scenario) funding requirements. As noted earlier, reflecting the importance of meeting all unexpected and stress-scenario funding requirements, we separately identify and manage contingent liquidity (consisting of excess cash balances at the FRB, unencumbered high-quality and liquid securities, and unused FHLB borrowing capacity) and asset liquidity (a component of contingent liquidity, consisting of excess cash balances at the FRB and unencumbered high-quality securities). We consider the effective and prudent management of liquidity to be fundamental to our health and strength.

We manage liquidity at the consolidated enterprise level and at each material legal entity, including us, CBNA and CBPA.

CFG Liquidity

Our primary sources of cash are (i) dividends and interest received from our banking subsidiaries as a result of investing in bank equity and subordinated debt and (ii) externally issued subordinated debt. Our uses of liquidity include the following: (i) routine cash flow requirements as a bank holding company, including payments of dividends, interest and expenses; (ii) needs of subsidiaries, including our banking subsidiaries, for additional equity and, as required, their needs for debt financing; and (iii) extraordinary requirements for cash.

On March 7, 2016, we utilized excess cash to repurchase $125 million of 4.023% Subordinated Notes due 2024 from RBS.

Our cash and cash equivalents represent a source of liquidity that can be used to meet various needs. As of June 30, 2016, we held cash and cash equivalents of approximately $381 million, which should be viewed as a liquidity reserve.

Our liquidity risk is low for the following reasons: (i) we have no material non-banking subsidiaries, and our banking subsidiaries are self-funding; (ii) the capital structures of our banking subsidiaries are similar to our capital structure. As of June 30, 2016, our double leverage ratio (the combined equity of our subsidiaries divided by our equity) was 101.2%; and, (iii) our other cash flow requirements, such as operating expenses, are relatively small.

Banking Subsidiaries’ Liquidity

In the ordinary course of business, the liquidity of CBNA and CBPA is managed by matching sources and uses of cash. The primary sources of bank liquidity include (i) deposits from our consumer and commercial franchise customers; (ii) payments of principal and interest on loans and debt securities; and (iii) wholesale borrowings, as needed, and as described under “—Liquidity Risk Management and Governance.” The primary uses of bank liquidity include (i) withdrawals and maturities of deposits; (ii) payment of interest on deposits; (iii) funding of loan commitments; and (iv) funding of securities purchases. To the extent that the banks have relied on wholesale borrowings, uses also include payments of related principal and interest.

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Our banking subsidiaries’ major businesses involve taking deposits and making loans. Hence, a key role of liquidity management is to ensure that customers have timely access to funds from deposits and loans. Liquidity management also involves maintaining sufficient liquidity to repay wholesale borrowings, pay operating expenses and support extraordinary funding requirements when necessary.

From an external issuance perspective, during 2014, we created a $3.0 billion Global Note Program for CBNA. This debt represents a key source of unsecured, term, and stable funding, further diversifies the funding sources of CBNA, and creates a more peer-like funding structure for the consolidated enterprise. On March 14, 2016, we increased the size of this program from $3.0 billion to $5.0 billion. Also on March 14, 2016, CBNA issued $750 million in three-year fixed-rate senior notes, and on May 13, 2016, CBNA issued $1.0 billion in five-year fixed-rate senior notes. Preceding this issuance, on December 3, 2015, CBNA issued $750 million in three-year fixed-rate senior notes, and on December 4, 2014, CBNA issued $1.5 billion in fixed-rate senior notes, consisting of $750 million of three-year notes and $750 million in five-year notes.

Liquidity Risk

We define liquidity risk as the risk that an entity will be unable to meet its payment obligations in a timely manner. We manage liquidity risk at the consolidated enterprise level, and for each material legal entity including us, CBNA and CBPA. Liquidity risk can arise due to contingent liquidity risk and/or funding liquidity risk.

Contingent liquidity risk is the risk that market conditions may reduce an entity’s ability to liquidate, pledge and/or finance certain assets and thereby substantially reduce the liquidity value of such assets. Drivers of contingent liquidity risk include general market disruptions as well as specific issues regarding the credit quality and/or valuation of a security or loan, issuer or borrower and/or asset class.

Funding liquidity risk is the risk that market conditions and/or entity-specific events may reduce an entity’s ability to raise funds from depositors and/or wholesale market counterparties. Drivers of funding liquidity risk may be idiosyncratic or systemic, reflecting impediments to operations and/or undermining of market confidence.

Factors Affecting Liquidity

Given the composition of their assets and borrowing sources, contingent liquidity risk at both CBNA and CBPA would be materially affected by such events as deterioration of financing markets for high-quality securities (e.g., mortgage-backed securities and other instruments issued by the GNMA, FNMA and the FHLMC), by any inability of the FHLBs to provide collateralized advances, and/or by a refusal of the FRB to act as lender of last resort in systemic stress. Similarly, given the structure of their balance sheets, the funding liquidity risk of CBNA and CBPA would be materially affected by an adverse idiosyncratic event (e.g., a major loss, causing a perceived or actual deterioration in its financial condition), an adverse systemic event (e.g., default or bankruptcy of a significant capital markets participant), or a combination of both (e.g., the financial crisis of 2008-2010). However, during the financial crisis, our banking subsidiaries reduced their dependence on unsecured wholesale funding to virtually zero. Consequently, and despite ongoing exposure to a variety of idiosyncratic and systemic events, we view our contingent liquidity risk and our funding liquidity risk to be relatively modest.

On June 23, 2016, Britain, via public referendum, voted to exit the European Union.  With neither the execution timing nor the impact of this decision clear, volatility increased significantly across the equity, currency, and debt markets.  Further, as part of our normal liquidity risk management practices, we continued to monitor access, volumes, and pricing levels across both the short-term and long-term wholesale funding markets, including maintaining a higher than normal cash balance at June 30, 2016. 

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An additional variable affecting our access, and the access of our banking subsidiaries, to unsecured wholesale market funds and to large denomination (i.e., uninsured) customer deposits is the credit ratings assigned by such agencies as Moody’s, Standard & Poor’s and Fitch. The following table presents our credit ratings:

	June 30, 2016
	Moody’s	Standard and Poor’s	Fitch
Citizens Financial Group, Inc.:
Long-term issuer	NR	BBB+	BBB+
Short-term issuer	NR	A-2	F2
Subordinated debt	NR	BBB	BBB
Preferred Stock	NR	BB+	BB-
Citizens Bank, N.A.:
Long-term issuer	Baa1	A-	BBB+
Short-term issuer	P-2	A-2	F2
Long-term deposits	A1	NR	A-
Short-term deposits	P-1	NR	F2
Citizens Bank of Pennsylvania:
Long-term issuer	Baa1	A-	BBB+
Short-term issuer	P-2	A-2	F2
Long-term deposits	A1	NR	A-
Short-term deposits	P-1	NR	F2
NR = Not rated

Changes in our public credit ratings could affect both the cost and availability of our wholesale funding. As a result and in order to maintain a conservative funding profile, our banking subsidiaries continue to minimize reliance on unsecured wholesale funding. At June 30, 2016, the majority of wholesale funding consisted of secured borrowings from the FHLBs collateralized by high-quality residential mortgage collateral.

Existing and evolving regulatory liquidity requirements represent another key driver of systemic liquidity conditions and liquidity management practices. The FRBG, the OCC, and the FDIC regularly evaluate our liquidity as part of the overall supervisory process, and the U.S. version of the LCR was effective for CFG beginning January 2016.

The LCR was developed to ensure banks have sufficient high-quality liquid assets to cover expected net cash outflows over a 30-day liquidity stress period. In September 2014, the U.S. federal banking regulators published the final rule to implement the LCR. This rule also introduced a modified version of the LCR in the United States, which generally applies to BHCs not active internationally (institutions with less than $10 billion of on-balance sheet foreign exposure), with total assets of greater than $50 billion but less than $250 billion. Under this definition, we are designated as a modified LCR company. As compared to the Basel Committee’s version of the LCR, the version of the LCR issued by the U.S. federal banking regulators includes a narrower definition of high-quality liquid assets, different prescribed cash inflow and outflow assumptions for certain types of instruments and transactions and a shorter phase-in schedule that began on January 1, 2015 and ends on January 1, 2017. Notably, as a modified LCR company, we were required to be 90% compliant beginning in January 2016, and 100% compliant beginning in January 2017. Achieving sustainable LCR compliance may require changes in the size and/or composition of our investment portfolio, the configuration of our discretionary wholesale funding portfolio, and our average cash position. We have been fully compliant with the LCR since its January 2016 effective date, up through and including June 30, 2016.

The U.S. federal bank regulatory agencies have issued a notice of proposed rulemaking to implement a modified NSFR for certain bank holding companies with more than $50 billion but less than $250 billion in assets and with less than $10 billion in on-balance sheet foreign exposures. Under this definition, we would be designated as a modified NSFR company. The NSFR is one of the two Basel III-based liquidity measures, along with the LCR, and is designed to promote medium- and long-term stable funding of the assets and off-balance sheet activities of banks and bank holding companies over a one-year time horizon. Generally consistent with the Basel Committee’s framework, under the proposed rule banking organizations would be required to hold an amount of available stable funding (“ASF”) over a one-year time horizon that equals or exceeds the institution’s amount of required stable funding (“RSF”), with the ASF representing the numerator and the RSF representing the denominator of the NSFR. Banking organizations subject to the modified NSFR would multiply the RSF amount by 70%, such that the RSF amount required for these companies would be equivalent to 70% of the RSF amount that would be required pursuant to the full NSFR generally applicable to institutions with more than $250 billion in total assets or $10 billion or more in on-balance sheet foreign exposures under the proposed rule. The proposed rule includes detailed descriptions of the items that would comprise ASF and

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RSF and standardized factors that would apply to ASF and RSF items, and would require any institution whose applicable modified NSFR falls under 100% to notify the appropriate federal regulator and develop a remediation plan.

We are currently evaluating the impact of the U.S. federal bank regulatory agencies’ NSFR framework. If ultimately adopted as currently proposed, the implementation of the NSFR could impact our liquidity and funding requirements and practices in the future.

We continue to review and monitor these liquidity requirements to develop appropriate implementation plans and liquidity strategies. We expect to be fully compliant with the final rules on or prior to the applicable effective date.

Liquidity Risk Management and Governance

Liquidity risk is measured and managed by the Funding and Liquidity Unit within our Treasury unit in accordance with policy guidelines promulgated by our Board and the Asset and Liability Management Committee. In managing liquidity risk, the Funding and Liquidity Unit delivers regular and comprehensive reporting, including current levels versus threshold limits for a broad set of liquidity metrics and early warning indicators, explanatory commentary relating to emerging risk trends and, as appropriate, recommended remedial strategies.

The mission of our Funding and Liquidity Unit is to deliver and otherwise maintain prudent levels of operating liquidity (to support expected and projected funding requirements), contingent liquidity (to support unexpected funding requirements resulting from idiosyncratic, systemic, and combination stress events), and regulatory liquidity (to address current and emerging requirements such as the LCR and the NSFR). Additionally, we will deliver this liquidity from stable funding sources, in a timely manner and at a reasonable cost, without significant adverse consequences.

We seek to accomplish this mission by funding loans with stable deposits; by prudently controlling dependence on wholesale funding, particularly short-term unsecured funding; and by maintaining ample available liquidity, including a sufficient liquidity buffer of unencumbered high-quality loans and securities.

As of June 30, 2016:

• Core deposits, including loans and deposits held for sale, continued to be our primary source of funding and our consolidated period end loan-to-deposit ratio was 98.3%;

• Our net overnight position (which is defined as excess cash balances held at the Federal Reserve Banks plus federal funds sold minus federal funds purchased) totaled $2.7 billion;

• Contingent liquidity was $23.2 billion, consisting of our net overnight position (defined above) of $2.7 billion, unencumbered high-quality and liquid securities of $17.0 billion, and unused FHLB capacity of $3.5 billion. Asset liquidity (a component of contingent liquidity) was $19.7 billion consisting of our net overnight position of $2.7 billion and unencumbered high-quality and liquid securities of $17.0 billion; and

• Available discount window capacity, defined as available total borrowing capacity from the Federal Reserve based on identified collateral, is secured by non-mortgage commercial and consumer loans and totaled $11.7 billion. Use of this borrowing capacity would likely be considered only during exigent circumstances.

The Funding and Liquidity Unit monitors a variety of liquidity and funding early warning indicators and metrics, including specific risk thresholds and limits. The early warning indicators include both the internal and external environment, providing both an inside-out and an outside-in risk perspective. The metrics are broadly classified as follows:

• Current liquidity sources and capacities, including excess cash at the Federal Reserve Banks, free and liquid securities and available and secured FHLB borrowing capacity;

• Contingent or stressed liquidity, including idiosyncratic, systemic and combined stress scenarios, in addition to evolving regulatory requirements such as the LCR and the NSFR; and

• Current and prospective exposures, including secured and unsecured wholesale funding and spot and cumulative cash-flow gaps across a variety of horizons.

Further, certain of these metrics are monitored for each of us, our banking subsidiaries, and for our consolidated enterprise on a daily basis, including net overnight position, unencumbered securities, internal liquidity, and available FHLB borrowing capacity. In order to identify emerging trends and risks and inform funding decisions, specific metrics are also forecasted over a one-year horizon.

Cash flows from operating activities contributed $704 million in first half 2016. Net cash used by investing activities was $5.6 billion, primarily reflecting a net increase in loans and leases of $5.0 billion and securities available for sale portfolio purchases

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of $2.4 billion, partially offset by proceeds from maturities, paydowns and sales of securities available for sale of $2.0 billion. Cash provided by financing activities was $5.5 billion, driven by net increase in deposits of $3.7 billion, and proceeds from issuance of long-term borrowed funds of $7.0 billion, partially offset by a net decrease in other short-term borrowed funds of $1.4 billion, and repayments of long-term borrowed funds of $3.6 billion. The $7.0 billion proceeds included $1.74 billion from issuances of medium term debt and $5.25 billion in FHLB advances. The $3.6 billion of repayments includes $3.5 billion repayments of FHLB advances and $125 million paid to repurchase subordinated debt from RBS. These activities represented a cumulative increase in cash and cash equivalents of $570 million, which, when added to the cash and cash equivalents balance of $3.1 billion at the beginning of the year, resulted in an ending balance of cash and cash equivalents of $3.7 billion as of June 30, 2016.

In first half 2015, our operating activities contributed $515 million in net cash. Net cash used by investing activities was $5.0 billion, primarily reflecting net securities available for sale portfolio purchases of $4.1 billion and a net increase in loans and leases of $3.6 billion, partially offset by proceeds from maturities, paydowns and sales of securities available for sale of $3.1 billion. Cash provided by financing activities was $4.0 billion, driven by a net increase in deposits of $4.9 billion. These activities represented a cumulative decrease in cash and cash equivalents of $407 million, which, when added to the cash and cash equivalents balance of $3.3 billion at the beginning of 2015, resulted in an ending balance of cash and cash equivalents of $2.9 billion as of June 30, 2015.

Off-Balance Sheet Commitments

The following table presents our outstanding off-balance sheet commitments. See Note 12 “Commitments and Contingencies” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included elsewhere in this report.

(dollars in millions)	June 30, 2016		December 31, 2015		Change			Percent
Commitment amount:
Undrawn commitments to extend credit		$58,622		$56,524		$2,098		4	%
Financial standby letters of credit	1,946		2,010		(64		)	(3	)
Performance letters of credit	37		42		(5		)	(12	)
Commercial letters of credit	70		87		(17		)	(20	)
Marketing rights	46		47		(1		)	(2	)
Risk participation agreements	64		26		38			146
Residential mortgage loans sold with recourse	9		10		(1		)	(10	)
Total		$60,794		$58,746		$2,048		3	%

On January 7, 2016, we entered into an agreement to purchase student loans on a quarterly basis beginning with the first calendar quarter in 2016 and ending with the fourth calendar quarter in 2016. Under the terms of the agreement, we committed to purchase a minimum of $125 million of loans per quarter. The minimum and maximum amount of the aggregate purchase principal balance of loans under the terms of the agreement are $500 million and $1.0 billion, respectively. The agreement will terminate immediately if at any time during its term the aggregate purchase principal balance of loans equals the maximum amount. The agreement may be extended by written agreement of the parties for an additional four quarters. We may terminate the agreement at will with payment of a termination fee equal to the product of $1 million times the number of calendar quarters remaining in the term.

Our agreement to purchase automobile loans, originally entered into in May 2014, was most recently amended on February 18, 2016. For quarterly periods on or after August 1, 2015, the minimum and maximum purchases are $50 million and $200 million, respectively. The agreement automatically renews until terminated by either party. We may cancel the agreement at will with payment of a variable termination fee. There is no termination fee after May 2017.

Critical Accounting Estimates

Our unaudited interim Consolidated Financial Statements, which are included elsewhere in this report, are prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires us to establish accounting policies and make estimates that affect amounts reported in our audited Consolidated Financial Statements.

An accounting estimate requires assumptions and judgments about uncertain matters that could have a material effect on our unaudited interim Consolidated Financial Statements. Estimates are made using facts and circumstances known at a point in time. Changes in those facts and circumstances could produce results substantially different from those estimates. The most significant accounting policies and estimates and their related application are discussed below.

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See Note 1 “Significant Accounting Policies” to our audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2015, for further discussion of our significant accounting policies.

Allowance for Credit Losses

Management’s estimate of probable losses in our loan and lease portfolios including unfunded lending commitments is recorded in the ALLL and the reserve for unfunded lending commitments, at levels that we believe to be appropriate as of the balance sheet date. Our determination of such estimates is based on a periodic evaluation of the loan and lease portfolios and unfunded credit facilities, as well as other relevant factors. This evaluation is inherently subjective and requires significant estimates and judgments of underlying factors, all of which are susceptible to change.

The ALLL and reserve for unfunded lending commitments could be affected by a variety of internal and external factors. Internal factors include portfolio performance such as delinquency levels, assigned risk ratings, the mix and level of loan balances, differing economic risks associated with each loan category and the financial condition of specific borrowers. External factors include fluctuations in the general economy, unemployment rates, bankruptcy filings, developments within a particular industry, changes in collateral values and factors particular to a specific commercial credit such as competition, business and management performance. The ALLL may be adjusted to reflect our current assessment of various qualitative risks, factors and events that may not be measured in our statistical procedures. There is no certainty that the ALLL and reserve for unfunded lending commitments will be appropriate over time to cover losses because of unanticipated adverse changes in any of these internal, external or qualitative factors.

The evaluation of the adequacy of the commercial, commercial real estate, and lease ALLL and reserve for unfunded lending commitments is primarily based on risk rating models that assess probability of default, loss given default and exposure at default on an individual loan basis. The models are primarily driven by individual customer financial characteristics and are validated against historical experience. Additionally, qualitative factors may be included in the risk rating models. After the aggregation of individual borrower incurred loss, additional overlays can be made based on back-testing against historical losses and forward loss curve ratios.

For nonaccruing commercial and commercial real estate loans with an outstanding balance of $3 million or greater and for all commercial and commercial real estate TDRs (regardless of size), we conduct specific analysis on a loan level basis to determine the probable amount of credit loss. If appropriate, a specific ALLL is established for the loan through a charge to the provision for credit losses. For all classes of impaired loans, individual loan measures of impairment may result in a charge-off to the ALLL, if deemed appropriate. In such cases, the provision for credit losses is not affected when a specific reserve for at least that amount already exists. Techniques utilized include comparing the loan’s carrying amount to the estimated present value of its future cash flows, the fair value of its underlying collateral, or the loan’s observable market price. The technique applied to each impaired loan is based on the workout officer’s opinion of the most probable workout scenario. Historically, this has generally led to the use of the estimated present value of future cash flows approach. The fair value of underlying collateral will be used if the loan is deemed collateral dependent. For loans that use the fair value of underlying collateral approach, a charge-off assessment is performed quarterly to write the loans down to fair value.

For most non-impaired retail loan portfolio types, the ALLL is based upon the incurred loss model utilizing the PD, LGD and exposure at default on an individual loan basis. When developing these factors, we may consider the loan product and collateral type, LTV ratio, lien position, borrower’s credit, time outstanding, geographic location, delinquency status and incurred loss period. Incurred loss periods are reviewed and updated at least annually, and potentially more frequently when economic situations change rapidly, as they tend to fluctuate with economic cycles. Incurred loss periods are generally longer in good economic times and shorter in bad times. Certain retail portfolios, including SBO home equity loans, student loans, and credit card receivables utilize roll rate models to estimate the ALLL. For the portfolios measured using the incurred loss model, roll rate models are also used to support management overlays if deemed necessary.

For home equity lines and loans, a number of factors impact the PD. Specifically, the borrower’s current FICO score, the utilization rate, delinquency statistics, borrower income, current CLTV ratio and months on books are all used to assess the borrower’s creditworthiness. Similarly, the loss severity is also impacted by various factors, including the utilization rate, the CLTV ratio, the lien position, the Housing Price Index change for the location (as measured by the Case-Shiller index), months on books and current loan balance.

When we are not in a first lien position, we use delinquency information on the first lien exposures obtained from third-party credit information providers in the credit assessment. For all first liens, whether owned by a third party or by us, an additional assessment is performed on a quarterly basis. In this assessment, the most recent three months’ performance of the senior liens is reviewed for delinquency (90 days or more past due), modification, foreclosure and/or bankruptcy statuses. If any derogatory status is present, the junior lien will be placed on nonaccrual status regardless of its delinquency status on our books. This subsequent change to nonaccrual status will alter the treatment in the PD model, thus affecting the reserve calculation.

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In addition, the first lien exposure is combined with the second lien exposure to generate a CLTV. The CLTV is a more accurate reflection of the leverage of the borrower against the property value, as compared to the LTV from just the junior lien(s). The CLTV is used for modeling both the junior lien PD and LGD. This also impacts the ALLL rates for the junior lien HELOCs.

The above measures are all used to assess the PD and LGD for HELOC borrowers for whom we originated the loans. There is also a portfolio of home equity products that were originated and serviced by others; however, we currently service some of the loans in this portfolio. The SBO portfolio is modeled as a separate class and the reserves for this class are generated by using the delinquency roll rate models as described below.

For retail TDRs that are not collateral-dependent, allowances are developed using the present value of expected future cash flows, compared to the recorded investment in the loans. Expected re-default factors are considered in this analysis. Retail TDRs that are deemed collateral-dependent are written down to the fair market value of the collateral less costs to sell. The fair value of collateral is periodically monitored subsequent to the modification.

Changes in the levels of estimated losses, even if minor, can significantly affect management’s determination of an appropriate ALLL. For consumer loans, losses are affected by such factors as loss severity, collateral values, economic conditions, and other factors. A 1% and 5% increase in the estimated loss rate for consumer loans at December 31, 2015 would have increased the ALLL by $5 million and $26 million, respectively. The ALLL for our Commercial Banking segment is sensitive to assigned credit risk ratings and inherent loss rates. If 10% and 20% of the December 31, 2015 year end loan balances (including unfunded commitments) within each risk rating category of our Commercial Banking segment had experienced downgrades of two risk categories, the ALLL would have increased by $36 million and $72 million, respectively.

Commercial loans and leases are charged off to the ALLL when there is little prospect of collecting either principal or interest. Charge-offs of commercial loans and leases usually involve receipt of borrower-specific adverse information. For commercial collateral-dependent loans, an appraisal or other valuation is used to quantify a shortfall between the fair value of the collateral less costs to sell and the recorded investment in the commercial loan. Retail loan charge-offs are generally based on established delinquency thresholds rather than borrower-specific adverse information. When a loan is collateral-dependent, any shortfalls between the fair value of the collateral less costs to sell and the recorded investment is promptly charged off. Placing any loan or lease on nonaccrual status does not by itself require a partial or total charge-off; however, any identified losses are charged off at that time.

For additional information regarding the ALLL and reserve for unfunded lending commitments, see Note 1 “Significant Accounting Policies,” to our audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2015 and Note 4 “Allowance for Credit Losses, Nonperforming Assets and Concentrations of Credit Risk,” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included elsewhere in this report.

Fair Value

We measure fair value using the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is based upon quoted market prices in an active market, where available. If quoted prices are not available, observable market-based inputs or independently sourced parameters are used to develop fair value, whenever possible. Such inputs may include prices of similar assets or liabilities, yield curves, interest rates, prepayment speeds and foreign exchange rates.

We classify our assets and liabilities that are carried at fair value in accordance with the three-level valuation hierarchy:

• Level 1. Quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2. Observable inputs other than Level 1 prices, such as quoted prices for similar instruments; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by market data for substantially the full term of the asset or liability; and

• Level 3. Unobservable inputs that are supported by little or no market information and that are significant to the fair value measurement.

Classification in the hierarchy is based upon the lowest level input that is significant to the fair value measurement of the asset or liability. For instruments classified in Level 1 and 2 where inputs are primarily based upon observable market data, there is less judgment applied in arriving at the fair value. For instruments classified in Level 3, management judgment is more significant due to the lack of observable market data.

Significant assets measured at fair value on a recurring basis include our mortgage-backed securities available for sale. These instruments are priced using an external pricing service and are classified as Level 2 within the fair value hierarchy. The service’s pricing models use predominantly observable valuation inputs to measure the fair value of these securities under both the market and income approaches. The pricing service utilizes a matrix pricing methodology to price our U.S. agency pass-through securities, which involves making adjustments to to-be-announced security prices based on a matrix of various mortgage-backed

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securities characteristics such as weighted-average maturities, indices and other pool-level information. Other agency and non-agency mortgage-backed securities are priced using a discounted cash flow methodology. This methodology includes estimating the cash flows expected to be received for each security using projected prepayment speeds and default rates based on historical statistics of the underlying collateral and current market conventions. These estimated cash flows are then discounted using market-based discount rates that incorporate characteristics such as average life, volatility, ratings, performance of the underlying collateral, and prevailing market conditions.

We review and update the fair value hierarchy classifications on a quarterly basis. Changes from one quarter to the next related to the observability of inputs in fair value measurements may result in a reclassification between the fair value hierarchy levels and are recognized based on year-end balances. We also verify the accuracy of the pricing provided by our primary external pricing service on a quarterly basis. This process involves using a secondary external vendor to provide valuations for our securities portfolio for comparison purposes. Any securities with discrepancies beyond a certain threshold are researched and, if necessary, valued by an independent outside broker.

Fair value is also used on a nonrecurring basis to evaluate certain assets for impairment or for disclosure purposes. Examples of nonrecurring uses of fair value include mortgage servicing rights accounted for by the amortization method, loan impairments for certain loans and goodwill.

For additional information regarding our fair value measurements, see Note 1 “Significant Accounting Policies,” our audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2015 and Note 2 “Securities,” Note 6 “Mortgage Banking,” and Note 11 “Derivatives” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included elsewhere in this report.

Goodwill

Goodwill is an asset that represents the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Goodwill is not amortized, but is subject to annual impairment tests. Goodwill is assigned to reporting units at the date the goodwill is initially recorded. A reporting unit is a business operating segment or a component of a business operating segment. Citizens has two reporting units with assigned goodwill; the Consumer segment and the Commercial segment. Once goodwill has been assigned to reporting units, it no longer retains its association with a particular acquisition, and all of the activities within a reporting unit, whether acquired or organically grown, are available to support the value of the goodwill.

The goodwill impairment analysis is a two-step test. The first step, used to identify potential impairment, involves comparing each reporting unit’s fair value to its carrying value including goodwill. If the fair value of a reporting unit exceeds its carrying value, applicable goodwill is deemed to be not impaired. If the carrying value exceeds fair value, there is an indication of impairment and the second step is performed to measure the amount of impairment.

The second step involves calculating an implied fair value of goodwill for each reporting unit for which the first step indicated impairment. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination, which is the excess of the fair value of the reporting unit, as determined in the first step, over the aggregate fair values of the individual assets, liabilities and identifiable intangible assets as if the reporting unit were being acquired in a business combination. If the implied fair value of goodwill exceeds the carrying value of goodwill assigned to the reporting unit, there is no impairment. If the carrying value of goodwill assigned to a reporting unit exceeds the implied fair value of the goodwill, an impairment charge is recorded for the excess. An impairment loss recognized cannot exceed the amount of goodwill assigned to a reporting unit, and the loss establishes a new basis in the goodwill. Subsequent reversal of goodwill impairment losses is not permitted.

We review goodwill for impairment annually as of October 31 or more often if events or circumstances indicate that it is more likely than not that the fair value of one or more reporting units is below its carrying value. We rely on the income approach (discounted cash flow method) as the primary method for determining fair value. Market-based methods are used as benchmarks to corroborate the value determined by the discounted cash flow method.

We rely on several assumptions when estimating the fair value of our reporting units using the discounted cash flow method. These assumptions include the current discount rate, loan loss provision rates, tax rates, earnings and balance sheet growth rates, terminal value growth rate, capital levels, and a terminal value multiple. Discount rates are estimated based on the Capital Asset Pricing Model, which considers the risk-free interest rate, market risk premium, and beta for the reporting units. The discount rates are also calibrated on the assessment of the risks related to the projected cash flows of each reporting unit. Multi-year financial forecasts are developed for each reporting unit by considering several key business drivers such as new business initiatives, customer retention standards, market share changes, anticipated loan and deposit growth, forward interest rates, historical performance and industry and economic trends, among other considerations. The long-term growth rate used in determining the terminal value of each reporting unit was estimated based on management’s assessment of the minimum expected terminal growth rate of each reporting unit, as well as broader economic considerations such as gross domestic product and inflation.

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We corroborate the fair value of our reporting units determined by the discounted cash flow method using market-based methods: a comparable company method and a comparable transaction method. The comparable company method measures the fair value of a business by comparing it to publicly traded companies in similar lines of business. This involves identifying and selecting the comparable companies based on a number of factors (i.e., size, growth, profitability, risk and return on investment), calculating the market multiples (i.e., price-to-tangible book value, price-to-cash earnings and price-to-net income) of these comparable companies and then applying these multiples to our operating results to estimate the value of the reporting unit’s equity on a marketable, minority basis. A control premium is then applied to this value to estimate the fair value of the reporting unit on a marketable, controlling basis. The comparable transaction method measures fair value of a business based on exchange prices in actual transactions that have comparable factors to the reporting units. Adjustments for differences in factors described earlier (i.e., size, growth, profitability, risk and return on investment) are also considered.

We also corroborate the fair value of our reporting units determined by the discounted cash flow method by adding the aggregated sum of these fair value measurements to the fair value of our other segment operations and comparing this total to our observed market capitalization. As part of this process, we analyze the implied control premium to evaluate its reasonableness. Both positive and negative facts and circumstances are considered when completing this analysis, including company and market-specific factors, observed transaction data and any additional external evidence supporting the implied control premium. Since none of our reporting units are publicly traded, individual reporting unit fair value determinations cannot be directly correlated to CFG’s common stock price. The sum of the fair values of the reporting units at October 31, 2015 exceeded the overall market capitalization of CFG as of October 31, 2015.

During the first half of 2016, we observed significant volatility in the overall market capitalization of CFG. Given this market volatility, we reviewed our market capitalization implied control premium based on end of period, average, median, and high and low stock prices during the second quarter. We also considered the various systematic and cyclical factors affecting bank stocks, as well as idiosyncratic factors such as our above-average capital position and attractive franchise value given our size, footprint, and customer base to evaluate the implied control premium. We will continue to monitor the volatility of our market capitalization. Although we believe it is reasonable to conclude that market capitalization could be an indicator of fair value over time, we do not believe that our current market capitalization reflects the aggregate fair value of our individual reporting units.

The valuation of goodwill is dependent on forward-looking expectations related to the performance of the U.S. economy and our associated financial performance. The prolonged delay in the full recovery of the U.S. economy, and the impact of that delay on earnings expectations, prompted a goodwill impairment test as of June 30, 2013. Although the U.S. economy had demonstrated signs of recovery, notably improvements in unemployment and housing, the pace and extent of recovery in these indicators, as well as in overall gross domestic product, lagged previous expectations. The impact of the slow recovery was most evident in our Consumer Banking reporting unit. Accordingly, the percentage by which the estimated fair value of our Consumer Banking reporting unit exceeded its carrying value declined from 7% at December 31, 2011 to 5% at December 31, 2012.

During the first half of 2013, we observed further deceleration of expected growth for our Consumer Banking reporting unit’s future profits based on forecasted economic growth for the U.S. economy and the continuing impact of the new regulatory framework in the financial industry. This deceleration was incorporated into our revised earnings forecast in the second quarter of 2013, and we subsequently concluded that there was a likelihood of greater than 50% that goodwill impairment had occurred as of June 30, 2013.

An interim goodwill impairment test was subsequently performed for our Consumer Banking and Commercial Banking reporting units. Step One of these tests indicated that (1) the fair value of our Consumer Banking reporting unit was less than its carrying value by 19% and (2) the fair value of our Commercial Banking reporting unit exceeded its carrying value by 27%. Step Two of the goodwill impairment test was subsequently performed for our Consumer Banking reporting unit, which resulted in the recognition of a pre-tax $4.4 billion impairment charge in our Consolidated Statement of Operations for the period ending June 30, 2013. The impairment charge, which was a non-cash item, had minimal impact on our tier 1 risk-based and total risk-based capital ratios. The impairment charge had no impact on our liquidity position or tangible common equity.

We performed an annual test for impairment of goodwill for both reporting units as of October 31, 2015. As of this testing date, the percentage by which the fair value of our Consumer Banking reporting unit exceeded its carrying value was 6%, and the percentage by which the fair value of our Commercial Banking reporting unit exceeded its carrying value was 8%.

We based the fair value estimates used in our annual goodwill impairment testing on assumptions we believe to be representative of assumptions that a market participant would use in valuing the reporting units but that are unpredictable and inherently uncertain, including estimates of future growth rates and operating margins and assumptions about the overall economic climate and the competitive environment for our reporting units. There can be no assurances that future estimates and assumptions made for purposes of goodwill testing will prove accurate predictions of the future. If the assumptions regarding business plans, competitive environments, market conditions or anticipated growth rates are not achieved, or a market participant view of our total fair value declines, we may be required to record goodwill impairment charges in future periods.

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For additional information regarding our goodwill impairment testing, see Note 1 “Significant Accounting Policies” and Note 9 “Goodwill,” to our audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2015.

Income Taxes

Accrued income taxes are reported as a component of either other assets or other liabilities, as appropriate, in the Consolidated Balance Sheets and reflect our estimate of income taxes to be paid or that effectively have been prepaid. Deferred income tax assets and liabilities represent the amount of future income taxes to be paid or that effectively have been prepaid, and the net balance is reported as an asset or liability in the Consolidated Balance Sheets. We determine the realization of the deferred tax asset based upon an evaluation of the four possible sources of taxable income: (1) the future reversals of taxable temporary differences; (2) future taxable income exclusive of reversing temporary differences and carryforwards; (3) taxable income in prior carryback years; and (4) tax planning strategies. In projecting future taxable income, we utilize forecasted pre-tax earnings, adjust for the estimated book tax differences and incorporate assumptions, including the amount of income allocable to taxing jurisdictions. These assumptions require significant judgment and are consistent with the plans and estimates that we use to manage the underlying businesses. The realization of the deferred tax assets could be reduced in the future if these estimates are significantly different than forecasted.

We are subject to income tax in the United States and multiple state and local jurisdictions. The tax laws and regulations in each jurisdiction may be interpreted differently in certain situations, which could result in a range of outcomes. Thus, we are required to exercise judgment regarding the application of these tax laws and regulations. We evaluate and recognize tax liabilities related to any tax uncertainties. Due to the complexity of some of these uncertainties, the ultimate resolution may differ from the current estimate of tax liabilities or refunds.

Our estimate of accrued income taxes, deferred income taxes and income tax expense can also change in any period as a result of new legislative or judicial guidance impacting tax positions, as well as changes in income tax rates. Any changes, if they occur, can be significant to our consolidated financial position, results of operations or cash flows.

For additional information regarding income taxes, see Note 1 “Significant Accounting Policies,” to our audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2015 and Note 10 “Income Taxes,” to our unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements, included elsewhere in this report.

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Risk Governance

We are committed to maintaining a strong, integrated and proactive approach to the management of all risks to which we are exposed in pursuit of our business objectives. A key aspect of our Board’s responsibility as the main decision making body is setting our risk appetite to ensure that the levels of risk that we are willing to accept in the attainment of our strategic business and financial objectives are clearly understood.

To enable the Board to carry out its objectives, it has delegated authority for risk management activities, as well as governance and oversight of those activities, to a number of Board and executive management level risk committees. The key committees that specifically consider risk across the enterprise are set out in the diagram below.

Chief Risk Officer

The CRO directs our overall risk management function overseeing the credit, interest rate, market, liquidity, operational, compliance, strategic and reputational risk management. The CRO reports to our CEO and to the Board Risk Committee.

Risk Framework

Our risk management framework is embedded in our business through a “Three Lines of Defense” model which defines responsibilities and accountabilities.

First Line of Defense

The business lines (including their associated support functions) are the First Line of Defense and are accountable for owning and managing, within our defined risk appetite, the risks which exist in their respective business areas. The business lines are responsible for performing regular risk assessments to identify and assess the material risks that arise in their area of responsibility, complying with relevant risk policies, testing and certifying the adequacy and effectiveness of their controls on a regular basis, establishing and documenting operating procedures and establishing and owning a governance structure for identifying and managing risk.

Second Line of Defense

The Second Line of Defense includes independent monitoring and control functions accountable for developing and ensuring implementation of risk and control frameworks and related policies. This centralized risk function is appropriately independent from the business and is accountable for overseeing and challenging our business lines on the effective management of their risks. This risk function utilizes training, communications and awareness to provide expert support and advice to the business lines. This includes interpreting the risk policy standards and risk management framework, overseeing compliance by the businesses with policies and responsibilities, including providing relevant management information and escalating concerns where appropriate.

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The Executive Risk Committee, chaired by the CRO, actively considers our inherent material risks, analyzes our overall risk profile and seeks confirmation that the risks are being appropriately identified, assessed and mitigated.

Third Line of Defense

Our Internal Audit function is the Third Line of Defense providing independent assurance with a view of the effectiveness of Citizens’ internal controls, governance practices, and culture so that risk is managed appropriately for the size, complexity, and risk profile of the organization. Internal Audit has complete and unrestricted access to any and all Bank records, physical properties, and personnel. Internal Audit issues a report following each internal review and provides an audit opinion to Citizens’ Audit Committees on a quarterly basis.

Credit Quality Assurance also reports to the Chief Audit Executive and also provides the Boards, senior management and other stakeholders with independent assurance on the quality of credit portfolios and adherence to agreed Credit Risk Appetite and Credit Policies and processes. In line with its procedures and regulatory expectations, the Credit Quality Assurance function undertakes a program of portfolio testing, assessing and reporting through four Risk Pillars of Asset Quality, Rating and Data Integrity, Risk Management and Credit Risk Appetite.

Risk Appetite

Risk appetite is a strategic business and risk management tool. We define our risk appetite as the maximum limit of acceptable risk beyond which we would either be unable to achieve our strategic objectives and capital adequacy obligations or would assume an unacceptable amount of risk to do so. The Board Risk Committee advises our Board of Directors in relation to current and potential future risk strategies, including determination of risk appetite and tolerance.

The principal non-market risks to which we are subject are: credit risk, operational risk, liquidity risk, strategic risk and reputational risk. We are also subject to market risks. Market risk refers to potential losses arising from changes in interest rates, foreign exchange rates, equity prices, commodity prices and/or other relevant market rates or prices. Modest market risk arises from trading activities that serve customer needs, including hedging of interest rate and foreign exchange risk. As described below, more material market risk arises from our non-trading banking activities, such as loan origination and deposit gathering. We have established enterprise-wide policies and methodologies to identify, measure, monitor and report market risk. We actively manage both trading and non-trading market risks. We are also subject to liquidity risk, discussed under “—Liquidity.”

Our risk appetite framework and risk limit structure establishes guidelines to determine the balance between existing and desired levels of risk and supports the implementation, measurement and management of our risk appetite.

Credit Risk

Overview

Credit risk represents the potential for loss arising from a customer, counterparty, or issuer failing to perform in accordance with the contractual terms of the obligation. While the majority of our credit risk is associated with lending activities, we do engage with other financial counterparties for a variety of purposes including investing, asset and liability management, and trading activities. Given the financial impact of credit risk on our earnings and balance sheet, the assessment, approval, and management of credit risk represents a major part of our overall risk-management responsibility.

Objective

The credit risk management organization is responsible for approving credit transactions, monitoring portfolio performance, identifying problem loans, and ensuring remedial management.

Organizational Structure

Management and oversight of credit risk is the responsibility of both the line of business and the second line of defense. The second line of defense, the independent Credit Risk Function, is led by the Chief Credit Officer who oversees all of our credit risk. The CCO reports to the Chief Risk Officer. The CCO, acting in a manner consistent with Board policies, has responsibility for, among other things, the governance process around policies, procedures, risk acceptance criteria, credit risk appetite, limits, and authority delegation. The CCO and his team also have responsibility for credit approvals for larger and higher risk transactions and oversight of line of business credit risk activities. Reporting to the CCO are the heads of the second line of defense credit functions specializing in: Consumer Banking; Business Banking; Commercial Banking; Citizens Restructuring Management; Portfolio Analytics and Reporting; ALLL Analytics; and Credit Policy and Administration. Each team under these leaders is composed of highly experienced credit professionals.

The credit risk teams operate independently from the business lines to ensure decisions are not influenced by unbalanced objectives.

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Governance

The primary mechanisms used to govern our credit risk function are our consumer and commercial credit policies. These policies outline the minimum acceptable lending standards that align with our desired risk appetite. Material issues or changes are identified by the individual committees and presented to the Credit Policy Committee, Executive Risk Committee and the Board Risk Committee for approval as appropriate.

Key Management Processes

To ensure credit risks are managed within our risk appetite and business and risk strategies are achieved, we employ a comprehensive and integrated control program. The program’s objective is to proactively (1) identify, (2) measure, (3) monitor, and (4) mitigate existing and emerging credit risks across the credit lifecycle (origination, account management/portfolio management, and loss mitigation and recovery).

Consumer

On the consumer banking side of credit risk, our teams use models to evaluate consumer loans across the lifecycle of the loan. Starting at origination, credit scoring models are used to forecast the probability of default of an applicant. These models are embedded in the loan origination system, which allows for real-time scoring and automated decisions for many of our products. Periodic validations are performed on our purchased and proprietary scores to ensure fit for purpose. When approving customers for a new loan or extension of an existing credit line, credit scores are used in conjunction with other credit risk variables such as affordability, length of term, collateral value, collateral type, and lien subordination.

The origination process is supported by dedicated underwriting teams that reside in the business line. The size of each team depends on the intensity of the approval process as the number of handoffs, documentation, and verification requirements differ substantially depending on the loan product.

To ensure proper oversight of the underwriting teams, lending authority is granted by the second line of defense credit risk function to each underwriter. The amount of delegated authority depends on the experience of the individual. We periodically evaluate the performance of each underwriter and annually reauthorize their delegated authority. Only senior members of the second line of defense credit risk team are authorized to approve significant exceptions to credit policies. It is not uncommon to make exceptions to established policies when compensating factors are present. There are exception limits which, when reached, trigger a comprehensive analysis.

Once an account is established, credit scores and collateral values are refreshed at regular intervals to allow for proactive identification of increasing or decreasing levels of credit risk. For accounts with contingent liability (revolving feature), credit policies have been developed that leverage the refreshed customer data to determine if a credit line should be increased, decreased, frozen, or closed. Lastly, behavioral modeling, segmentation, and loan modifications are used to cure delinquency, reduce the severity of loss, and maximize recoveries. Our approach to managing credit risk is highly analytical and, where appropriate, is automated, to ensure consistency and efficiency.

The credit risk team is constantly evaluating current and projected economic conditions, internal credit performance in relation to budget and predefined risk tolerances, and current and expected regulatory guidance to determine the optimal balance of expansion and contraction policies. All policy change proposals receive intense scrutiny and discussion prior to approval and implementation. This process ensures decisions are made based on risk-based analytics with full adherence to regulatory requirements.

Commercial

On the commercial banking side of credit risk, the structure is broken into C&I loans and leases and CRE. Within C&I there are separate verticals established for certain specialty products (e.g., asset-based lending, leasing, franchise finance, health care, technology, mid-corporate). A “specialty vertical” is a stand-alone team of industry or product specialists. Substantially all activity that falls under the ambit of the defined industry or product is managed through a specialty vertical when one exists. CRE also operates as a specialty vertical.

Commercial credit risk management begins with defined credit products and policies.

Commercial transactions are subject to individual analysis and approval at origination and, with few exceptions, are subject to a formal annual review requirement. The underwriting process includes the establishment and approval of Credit Grades that confirm the Probability of Default (“PD”) and Loss Given Default (“LGD”). Approval then requires both a business line approver and an independent Credit Approver with the requisite level of delegated authority. The approval level of a particular credit facility is determined by the size of the credit relationship as well as the PD. The checks and balances in the credit process and the independence of the credit approver function are designed to appropriately assess and sanction the level of credit risk being accepted, facilitate the early recognition of credit problems when they occur, and to provide for effective problem asset management

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and resolution. All authority to grant credit is delegated through the independent Credit Risk function and is closely monitored and regularly updated.

The primary factors considered in commercial credit approvals are the financial strength of the borrower, assessment of the borrower’s management capabilities, cash flows from operations, industry sector trends, type and sufficiency of collateral, type of exposure, transaction structure, and the general economic outlook. While these are the primary factors considered, there are a number of other factors that may be considered in the decision process. In addition to the credit analysis conducted during the approval process at origination and annual review, our Credit Quality Assurance group performs testing to provide an independent review and assessment of the quality of the portfolio and new originations. This group conducts portfolio reviews on a risk-based cycle to evaluate individual loans, validate risk ratings, as well as test the consistency of the credit processes and the effectiveness of credit risk management.

The maximum level of credit exposure to individual credit borrowers is limited by policy guidelines based on the perceived risk of each borrower or related group of borrowers. Concentration risk is managed through limits on industry (sector), loan type (asset class), and loan quality factors. We focus predominantly on extending credit to commercial customers with existing or expandable relationships within our primary markets (for this purpose defined as our 11 state footprint plus contiguous states), although we do engage in lending opportunities outside our primary markets if we believe that the associated risks are acceptable and aligned with strategic initiatives.

Apart from Industrials and CRE (which together make up 30% of the commercial outstandings as of June 30, 2016), there are no material sector concentrations. As of June 30, 2016, our CRE outstandings amounted to 9% of total loans and leases. The Industrial sector includes basic C&I lending focused on general manufacturing. The sector is diversified and not managed as a specialized vertical. Our customers are local to our market and present no significant concentration.

Our credit grading system considers many components that directly correlate to loan quality and likelihood of repayment. Our assessment of a borrower’s credit strength is reflected in our risk ratings for such loans, which are also an integral component of our ALLL methodology. When deterioration in credit strength is noted, a loan becomes subject to Watch Review. The Watch Review process involves senior representatives from the business line portfolio management team, the independent Credit Risk team, and our Citizens Restructuring Management group. As appropriate and consistent with regulatory definitions, the credit may be subject to classification as either Criticized or Classified, which would also trigger a credit rating downgrade. As such, the loan and relationship would be subject to more frequent review.

Substantially all loans categorized as Classified are managed by Citizens Restructuring Management, a specialized group of credit professionals that handles the day-to-day management of workouts, commercial recoveries, and problem loan sales. Its responsibilities include developing and implementing action plans, assessing risk ratings, determining the appropriateness of specific reserves relating to the loan, accrual status of the loan, and the ultimate collectability of loans in their portfolio.

Market Risk

Market risk refers to potential losses arising from changes in interest rates, foreign exchange rates, equity prices, commodity prices and/or other relevant market rates or prices. Modest market risk arises from trading activities that serve customer needs, including hedging of interest rate and foreign exchange risk. As described below, more material market risk arises from our non-trading banking activities, such as loan origination and deposit-gathering. We have established enterprise-wide policies and methodologies to identify, measure, monitor and report market risk. We actively manage both trading and non-trading market risks.

Non-Trading Risk

We are exposed to market risk as a result of non-trading banking activities. This market risk is composed entirely of interest rate risk, as we have no direct currency or commodity risk and de minimis equity risk. This interest rate risk emerges from the balance sheet after the aggregation of our assets, liabilities and equity. We refer to this non-trading risk embedded in the balance sheet as “structural interest rate risk” or “interest rate risk in the banking book.” Our mortgage servicing rights assets also contain interest rate risk as the value of the fee stream is impacted by the level of long-term interest rates.

A major source of structural interest rate risk is a difference in the repricing of assets, on the one hand, and liabilities and equity, on the other. First, there are differences in the timing of rate changes reflecting the maturity and/or repricing of assets and liabilities. For example, the rate earned on a residential mortgage may be fixed for 30 years; the rate paid on a certificate of deposit may be fixed only for a few months. Due to these timing differences, net interest income is sensitive to changes in the level and shape of the yield curve. Second, there are differences in the drivers of rate changes of various assets and liabilities. For example, commercial loans may reprice based on one-month LIBOR or prime; the rate paid on retail money market demand accounts may be only loosely correlated with LIBOR and depend on competitive demand for funds. Due to these basis differences, net interest income is sensitive to changes in spreads between certain indices or repricing rates.

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Another important source of structural interest rate risk relates to the potential exercise of explicit or embedded options. For example, most consumer loans can be prepaid without penalty; and most consumer deposits can be withdrawn without penalty. The exercise of such options by customers can exacerbate the timing differences discussed above.

A primary source of our structural interest rate risk relates to faster repricing of floating rate loans relative to the retail deposit funding. This source of asset sensitivity is concentrated at the short end of the yield curve. For the past seven years with the Federal Funds rate near zero, this risk has been asymmetrical with significantly more upside benefit than potential exposure. Exposure to declining rates has lessened modestly in the second quarter given decreased market expectations for additional FOMC actions. The secondary source of our interest rate risk is driven by longer term rates comprising the rollover or reinvestment risk on fixed rate loans as well as the prepayment risk on mortgage related loans and securities funded by non-rate sensitive deposits and equity.

The primary goal of interest rate risk management is to control exposure to interest rate risk within policy limits approved by the Board. These limits and guidelines reflect our tolerance for interest rate risk over both short-term and long-term horizons. To ensure that exposure to interest rate risk is managed within this risk appetite, we must both measure the exposure and, as necessary, hedge it. The Treasury Asset and Liability Management team is responsible for measuring, monitoring and reporting on the structural interest rate risk position. These exposures are reported on a monthly basis to the Asset and Liability Committee (ALCO) and at Board meetings.

We measure structural interest rate risk through a variety of metrics intended to quantify both short-term and long-term exposures. The primary method that we use to quantify interest rate risk is simulation analysis in which we model net interest income from assets, liabilities and hedge derivative positions under various interest rate scenarios over a three-year horizon. Exposure to interest rate risk is reflected in the variation of forecasted net interest income across scenarios.

Key assumptions in this simulation analysis relate to the behavior of interest rates and spreads, the changes in product balances and the behavior of loan and deposit clients in different rate environments. The most material of these behavioral assumptions relate to the repricing characteristics and balance fluctuations of deposits with indeterminate (i.e., non-contractual) maturities as well as the pace of mortgage prepayments. Assessments are periodically made by running sensitivity analysis of the impact of key assumptions. The results of these analyses are reported to ALCO.

As the future path of interest rates cannot be known in advance, we use simulation analysis to project net interest income under various interest rate scenarios including a “most likely” (implied forward) scenario as well as a variety of deliberately extreme and perhaps unlikely scenarios. These scenarios may assume gradual ramping of the overall level of interest rates, immediate shocks to the level of rates and various yield curve twists in which movements in short- or long-term rates predominate. Generally, projected net interest income in any interest rate scenario is compared to net interest income in a base case where market forward rates are realized.

The table below reports net interest income exposures against a variety of interest rate scenarios. Exposures are measured as a percentage change in net interest income over the next year due to either instantaneous or gradual parallel +/- 200 basis point moves in benchmark interest rates. The net interest income simulation analyses do not include possible future actions that management might undertake to mitigate this risk. The current limit is a decrease in net interest income of 10% related to an instantaneous +/- 200 basis point move. As the table illustrates, our balance sheet is asset-sensitive: net interest income would benefit from an increase in interest rates. Exposure to a decline in interest rates is well within limit. It should be noted that the magnitude of any possible decline in interest rates is constrained by the low absolute starting levels of rates. While an instantaneous and severe shift in interest rates was used in this analysis, we believe that any actual shift in interest rates would likely be more gradual and would therefore have a more modest impact.

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The table below summarizes our positioning in various parallel yield curve shifts:

	Estimated % Change in Net Interest Income over 12 Months
Basis points	June 30, 2016		December 31, 2015
Instantaneous Change in Interest Rates
+200	14.0	%	10.6	%
+100	7.1		5.8
-100	(4.7	)	(5.8	)
-200	(4.8	)	(6.4	)
Gradual Change in Interest Rates
+200	6.8		6.1
+100	3.5		3.2
-100	(3.0	)	(3.1	)
-200	(4.0	)	(4.6	)

We use a valuation measure of exposure to structural interest rate risk, Economic Value of Equity (“EVE”), as a supplement to net interest income simulations. EVE complements net interest income simulation analysis as it estimates risk exposure over a long-term horizon. EVE measures the extent to which the economic value of assets, liabilities and off-balance sheet instruments may change in response to fluctuation in interest rates. This analysis is highly dependent upon assumptions applied to assets and liabilities with non-contractual maturities. The change in value is expressed as a percentage of regulatory capital. The current risk limit is set at a decrease of 20% of regulatory capital given an instantaneous +/- 200 basis point change in interest rates. We are operating within that limit as of June 30, 2016.

Asset sensitivity increased to 6.9% at March 31, 2016, as long term interest rates fell, and then remained relatively stable at 6.8% at June 30, 2016. We proactively manage the asset sensitive position of the balance sheet by adjusting the combination of securities investments, interest rate swaps and the wholesale funding position. For example, earlier in the year we adjusted swap positions to take advantage of market conditions.

We also had market risk associated with the value of the mortgage servicing right assets, which are impacted by the level of interest rates. As of June 30, 2016 and December 31, 2015, our mortgage servicing rights had a book value of $153 million and $164 million, respectively, and were carried at the lower of cost or fair value. As of June 30, 2016, and December 31, 2015, the fair value of the mortgage servicing rights was $165 million and $178 million, respectively. Given low interest rates over recent years, there is a valuation allowance of $13 million and $9 million on the asset as of June 30, 2016 and December 31, 2015, respectively. Depending on the interest rate environment, hedges may be used to stabilize the market value of the mortgage servicing right asset.

Trading Risk

We are exposed to market risk primarily through client facilitation activities including derivatives and foreign exchange products. Exposure is created as a result of changes in interest rates and related basis spreads and volatility, foreign exchange rates, and credit spreads on a select range of interest rates, foreign exchange and secondary loans instruments. These trading activities are conducted through our two banking subsidiaries, CBNA and CBPA.

Client facilitation activities consist primarily of interest rate derivatives and foreign exchange contracts where we enter into offsetting trades with a separate counterparty or exchange to manage our market risk exposure. In addition to the aforementioned activities, we operate a secondary loan trading desk with the objective to meet secondary liquidity needs of our issuing clients’ transactions and investor clients. We do not engage in any trading activities with the intent to benefit from short term price differences.

We record interest rate derivatives and foreign exchange contracts as derivative assets and liabilities on our Consolidated Balance Sheets. Trading assets and liabilities are carried at fair value with income earned related to these activities included in net interest income. Changes in fair value of trading assets and liabilities are reflected in other income, a component of noninterest income on the unaudited interim Consolidated Statements of Operations.

Market Risk Governance

As part of separation from RBS and during the term of the Transitional Services Agreement with RBS, we built out our own market risk organization, framework, and technology platform in order to migrate away from services provided by RBS. In

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second quarter 2016, we began use of our market risk technology platform for books and records following approval from the relevant banking regulators. Upon our migration to the new platform, we terminated the Transitional Service Agreement with RBS. Our market risk framework continues to aggregate, measure and monitor exposure against market risk limits.

In managing our market risk, dealing authorities represent a key control in the management of market risk by setting the scope within which the business is permitted to operate. Dealing authorities are established jointly by designated senior business line and senior risk managers and are reviewed at least annually. Dealing authorities are structured to accommodate the client facing trades and hedges needed to maintain a low risk profile. Primary responsibility for keeping within established tolerances resides with the business. Key risk indicators, including a combined VaR for interest rate and foreign exchange rate risk, are monitored on a daily basis and reported against tolerances consistent with our risk appetite and business strategy to relevant business line management and risk counterparts.

Market Risk Measurement

We use VaR as a statistical measure for estimating potential exposure of our traded market risk in normal market conditions. Our VaR framework for risk management and regulatory reporting is the same. Risk management VaR is based on a one day holding period to a 99% confidence level, whereas regulatory VaR is based on a ten day holding period to the same confidence level. Additional to VaR, non-statistical measurements for measuring risk are employed, such as sensitivity analysis, market value and stress testing.

Our market risk platform and associated market risk and valuation models for our foreign exchange, interest rate products, and traded loans capture correlation effects and allow for aggregation of market risk across risk types, business lines and legal entities. We measure, monitor and report market risk for both management and regulatory capital purposes.

Value-at-Risk Overview

    The market risk measurement model is based on historical simulation. The VaR measure estimates the extent of any fair value losses on trading positions that may occur due to broad market movements (General VaR) such as changes in the level of interest rates, foreign exchange rates, equity prices and commodity prices. It is calculated on the basis that current positions remain broadly unaltered over the course of a given holding period. It is assumed that markets are sufficiently liquid to allow the business to close its positions, if required, within this holding period. VaR’s benefit is that it captures the historic correlations of a portfolio. Based on the composition of our “covered positions,” we also use a standardized add-on approach for the loan trading desk’s Specific Risk capital which estimates the extent of any losses that may occur from factors other than broad market movements. In addition, for our secondary traded loans we calculate the VaR on the general interest rate risk embedded within the loans using a standalone model that replicates the general VaR methodology (the related capital is reflected on the “de minimis” line in the following section). The General VaR approach is expressed in terms of a confidence level over the past 500 trading days. The internal VaR measure (used as the basis of the main VaR trading limits) is a 99% confidence level with a one day holding period, meaning that a loss greater than the VaR is expected to occur, on average, on only one day in 100 trading days (i.e., 1% of the time). Theoretically, there should be a loss event greater than VaR two to three times per year. The regulatory measure of VaR is done at a 99% confidence level with a 10-day holding period. The historical market data applied to calculate the VaR is updated on a 10 business day lag. Refer to “Market Risk Regulatory Capital” below for details of our 10-day VaR metrics for the quarters ended June 30, 2016 and 2015, including high, low, average and period end Value-at-Risk for interest rate and foreign exchange rate risks, as well as total VaR.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

Market Risk Regulatory Capital

Effective January 1, 2013, the U.S. banking regulators adopted “Risk-Based Capital Guidelines: Market Risk” as the regulations covering the calculation of market risk capital (the “Market Risk Rule”). The Market Risk Rule, commonly known as Basel 2.5, substantially modified the determination of market risk-weighted assets and implemented a more risk sensitive methodology for the risk inherent in certain trading positions categorized as “covered positions.” For the purposes of the market risk rule, all of our client facing trades, and associated hedges needed to maintain a low risk profile qualify as “covered positions.” The internal, management VaR measure is calculated based on the same population of trades that is utilized for regulatory VaR. The following table shows the results of our modeled and non-modeled measures for regulatory capital calculations:

(in millions)	For the Quarter Ended June 30, 2016(1)								For the Quarter Ended June 30, 2015
Market Risk Category	Period End		Average		High		Low		Period End		Average		High		Low
Interest Rate		$—		$—		$1		$—		$—		$—		$—		$—
Foreign Exchange Currency Rate	—		—		1		—		—		—		2		—
Diversification Benefit	—		—		NM(2)		NM(2)		—		—		NM(2)		NM(2)
General VaR	—		1		1		—		—		—		2		—
Specific Risk VaR	—		—		—		—		—		—		—		—
Total VaR		$—		$—		$—		$—		$—		$—		$2		$—
Stressed General VaR		$1		$1		$3		$1		$2		$2		$4		$2
Stressed Specific Risk VaR	—		—		—		—		—		—		—		—
Total Stressed VaR		$1		$1		$3		$1		$2		$2		$4		$2
Market Risk Regulatory Capital		$7								$8
Specific Risk Not Modeled Add-on	6								5
de Minimis Exposure Add-on	14								10
Total Market Risk Regulatory Capital		$27								$23
Market Risk-Weighted Assets		$336								$289

⁽¹⁾ The regulatory capital table and back testing graphs reflect seven daily adjustments made during the reported second quarter 2016 to compensate for a risk feed that overstated VaR/SVaR for those days.

⁽²⁾ The high and low for the portfolio may have occurred on different trading days than the high and low for the components. Therefore, there is no diversification benefit shown for the high and low columns.

Stressed VaR

SVaR is an extension of VaR, but uses a longer historical look back horizon that is fixed from January 3, 2005. This is done not only to identify headline risks from more volatile periods, but also to provide a counter balance to VaR which may be low during periods of low volatility. The holding period for profit and loss determination is 10 days. SVaR is also a component of market risk regulatory capital. SVaR for us is calculated daily under its own dynamic window regime. In a dynamic window regime, values of the 10-day, 99% VaR are calculated over all possible 260-day periods that can be obtained from the complete historical data set. Refer to “Market Risk Regulatory Capital” above for details of SVaR metrics, including high, low, average and period end SVaR for the combined portfolio.

Sensitivity Analysis

Sensitivity analysis is the measure of exposure to a single risk factor, such as a one basis point change in rates or credit spread. We conduct and monitor sensitivity on interest rates, basis spreads, foreign exchange exposures, option prices, and credit spreads. Whereas VaR is based on previous moves in market risk factors over recent periods, it may not be an accurate predictor of future market moves. Sensitivity analysis complements VaR as it provides an indication of risk relative to each factor irrespective of historical market moves and is an effective tool in evaluating the appropriateness of hedging strategies.

Stress Testing

Conducting a stress test of a portfolio consists of running risk models with the inclusion of key variables that simulate various historical or hypothetical scenarios. For historical stress tests, profit and loss results are simulated for selected time periods corresponding to the most volatile underlying returns while hypothetical stress tests aim to consider concentration risk, illiquidity under stressed market conditions and risk arising from the bank’s trading activities that may not be fully captured by its other models. Hypothetical scenarios also assume that the market moves happen simultaneously and that no repositioning or hedging activity takes place to mitigate losses as events unfold. We generate stress tests of our trading positions on a daily basis. For example, we currently include a stress test that simulates a Lehman-type crisis scenario by taking the worst 20-trading day peak to trough moves for the various risk factors that go into VaR from that period, and assumes they occurred simultaneously.

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CITIZENS FINANCIAL GROUP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS

VaR Model Review and Validation

Market risk measurement models used are independently reviewed and subject to ongoing performance analysis by the model owner. The independent review and validation focuses on the model methodology and performance. Independent review of market risk measurement models is the responsibility of CFG’s Model Risk Management and Validation team. Aspects covered include challenging the assumptions used, the quantitative techniques employed and the theoretical justification underpinning them, and an assessment of the soundness of the required data over time. Where possible, the quantitative impact of the major underlying modeling assumptions will be estimated (e.g., through developing alternative models). Results of such reviews are shared with U.S. banking regulators. The market risk models may be periodically enhanced due to changes in market price levels and price action regime behavior. The Market Risk Management and Validation team will conduct internal validation before a new or changed model element is implemented and before a change is made to a market data mapping.

VaR Backtesting

Backtesting is one form of validation of the VaR model. The Market Risk Rule requires a comparison of our internal VaR measure to the actual net trading revenue (excluding fees, commissions, reserves, intra-day trading and net interest income) for each day over the preceding year (the most recent 250 business days). Any observed loss in excess of the VaR number is taken as an exception. The level of exceptions determines the multiplication factor used to derive the VaR and SVaR-based capital requirement for regulatory reporting purposes. We perform sub-portfolio backtesting as required under the Market Risk Rule, and as approved by our banking regulators, for interest rate and foreign exchange positions. The following graph shows our daily net trading revenue and total internal, modeled VaR for the quarters ended June 30, 2016, March 31, 2016, December 31, 2015 and September 30, 2015.

Daily VaR Backtesting: Sub-portfolio Level Backtesting⁽¹⁾ 

⁽¹⁾ The regulatory capital table and back testing graphs reflect seven daily adjustments made during the reported second quarter 2016 to compensate for a risk feed that overstated VaR/SVaR for those days.

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CITIZENS FINANCIAL GROUP, INC.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information presented in the “Market Risk” section of Part I, Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations and is incorporated herein by reference.

ITEM 4. CONTROLS AND PROCEDURES

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. The design of any disclosure controls and procedures is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. In accordance with Rule 13a-15(b) of the Exchange Act, as of the end of the period covered by this quarterly report, an evaluation was carried out under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this quarterly report, were effective to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting identified in management's evaluation pursuant to Rules13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this quarterly report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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CITIZENS FINANCIAL GROUP, INC.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In addition to the matters described in the Company's Form 10-K for the year ended December 31, 2015, information required by this item is set forth in Note 12 “Commitments and Contingencies” in the Notes to the unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements of this report, which is incorporated herein by reference.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should consider the risks described under the caption “Risk Factors” in the Company’s Form 10-K for the year ended December 31, 2015.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None during the six month period ended June 30, 2016.

ITEM 6. EXHIBITS

3.1 Amended and Restated Certificate of Incorporation of the Registrant as in effect on the date hereof (incorporated herein by reference to Exhibit 3.1 of the Quarterly Report on Form 10-Q, filed November 14, 2014)

3.2 Bylaws of the Registrant (as amended and restated on February 13, 2015) (incorporated herein by reference to Exhibit 3.1 of the Current Report on Form 8-K, filed February 17, 2015)

10.1 Amended and Restated Citizens Financial Group, Inc. 2014 Non-Employee Directors Compensation Plan as of June 23, 2016 †*

10.2 Amended and Restated Citizens Financial Group, Inc. 2014 Omnibus Incentive Plan as of June 23, 2016 †*

11.1 Statement re computation of earnings per share (filed herewith as Note 19 to the unaudited interim Consolidated Financial Statements in Part I, Item 1 — Financial Statements of this report, which is incorporated herein by reference)

12.1 Computation of Ratio of Earnings to Fixed Charges*

12.2 Computation of Ratio of Earnings to Fixed Charges and Preferred Dividends*

31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

101 The following materials from the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2016, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements*

† Indicates management contract or compensatory plan or arrangement.

* Filed herewith.

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CITIZENS FINANCIAL GROUP, INC.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on August 5, 2016.

CITIZENS FINANCIAL GROUP, INC.
(Registrant)
By:	/s/ Randall J. Black
	Name: Randall J. Black
	Title: Executive Vice President and Controller
	(Principal Accounting Officer and Authorized Officer)

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EX-10.1

AMENDED AND RESTATED

CITIZENS FINANCIAL GROUP, INC.
2014 NON-EMPLOYEE DIRECTORS COMPENSATION PLAN

AS OF JUNE 23, 2016

Section 1.Purpose. The purpose of the Citizens Financial Group, Inc. 2014 Non-Employee Directors Compensation Plan (the “Plan”) is to attract and retain the services of experienced non-employee directors for Citizens Financial Group, Inc. (together with its subsidiaries and any and all successor entities, the “Company”) by providing them with compensation for their services in the form of cash and/or shares of the Company’s common stock, thereby promoting the long-term growth and financial success of the Company and furthering the best interests of its shareholders.

Section 2.Definitions. As used in the Plan, the following terms shall have the meanings set forth below:

(a)“Affiliate” means (i) any entity that, directly or indirectly, is controlled by the Company, (ii) any entity in which the Company, directly or indirectly, has a significant equity interest, in each case as determined by the Board and (iii) any other company which the Board determines should be treated as an “Affiliate.”

(b)“Applicable Laws” means the laws, rules, regulations and other requirements related to or implicated by the administration of the Plan under applicable state corporate law; United States federal and state securities laws, including the Exchange Act; the Code; the Dodd-Frank Act; United States federal and state banking laws, including the Bank Holding Company Act; any rules of stock exchange or quotation system on which the Shares are listed or quoted; any banking law regulations, including rules, regulations and guidance from the Federal Reserve Board; any other applicable rules, regulations or guidance promulgated by an administrative agency or commission or other governmental authority; and the applicable laws and regulations of any foreign country or jurisdiction where Participants provide services or where Awards are granted under the Plan.

(c)“Award” means any Option, Restricted Stock, RSU, Other Share-Based Award or Retainer granted under the Plan.

(d)“Award Agreement” means any agreement, contract or other instrument or document evidencing any Award granted under the Plan, which may, but need not, be executed or acknowledged by a Participant.

(e)“Beneficial Owner” has the meaning ascribed to such term in Rule 13d-3 under the Exchange Act.

(f)“Beneficiary” means a Person entitled to receive payments or other benefits or exercise rights that are available under the Plan in the event of the Participant’s death. If no such Person can be named or is named by the Participant, or if no Beneficiary designated by such Participant is eligible to receive payments or other benefits or exercise rights that are available under the Plan at the Participant’s death, such Participant’s Beneficiary shall be such Participant’s estate.

(g)“Board” means the board of directors of the Company.

(h) “Change of Control” means the occurrence of any one or more of the following events, except as otherwise provided in the Participant’s Award Agreement:

(i)any Person, other than an employee benefit plan or trust maintained by the Company, becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s outstanding securities entitled to vote generally in the election of directors;

(ii)at any time during a period of 12 consecutive months, individuals who at the beginning of such period constituted the Board and any new member of the Board whose election or nomination for election was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was so approved, cease for any reason to constitute a majority of members of the Board; or

(iii)the consummation of (A) a merger or consolidation of the Company with any other corporation or entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or being converted into voting securities of the surviving entity or, if applicable, the ultimate parent thereof) at least 50% of the combined voting power and total fair market value of the securities of the Company or such surviving entity or parent outstanding immediately after such merger or consolidation, or (B) any sale, lease, exchange or other transfer to any Person of assets of the Company, in one transaction or a series of related transactions, having an aggregate fair market value of more than 50% of the fair market value of the Company and its subsidiaries (the “Company Value”) immediately prior to such transaction(s), but only to the extent that, in connection with such transaction(s) or within a reasonable period thereafter, the Company’s shareholders receive distributions of cash and/or assets having a fair market value that is greater than 50% of the Company Value immediately prior to such transaction(s).

Notwithstanding the foregoing or any provision of any Award Agreement to the contrary, for any Award that provides for accelerated distribution on a Change of Control of amounts that constitute “deferred compensation” (as defined in Section 409A of the Code and the regulations thereunder), if the event that constitutes such Change of Control does not also constitute a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the Company’s assets (in either case, as defined in Section 409A of the Code), such amount shall not be distributed on such Change of Control but instead shall vest as of the date of such Change of Control and shall be paid on the scheduled payment date specified in the applicable Award Agreement, except to the extent that earlier distribution would not result in the Participant who holds such Award incurring interest or additional tax under Section 409A of the Code.

(i) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rules, regulations and guidance thereunder. Any reference to a provision in the Code shall include any successor provision thereto.

(j)“Dodd-Frank Act” means the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as amended from time to time, and the rules, regulations and guidance thereunder.

(k)“Effective Date” means the effective date of the Company’s initial public offering.

(l)“Employee” means any individual, including any officer, employed by the Company or any Affiliate or any prospective employee or officer who has accepted an offer of employment from the Company or any Affiliate, with the status of employment determined based

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upon such factors as are deemed appropriate by the Board (or a committee thereof, as applicable) in its discretion, subject to any requirements of the Code or the Applicable Laws.

(m)“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the rules, regulations and guidance thereunder. Any reference to a provision in the Exchange Act shall include any successor provision thereto.

(n)“Fair Market Value” means (i) with respect to Shares, the closing price of a Share on the day prior to the grant date or vesting, settlement or exercise date, as applicable (or, if there is no reported sale on such prior day, on the last preceding date on which any reported sale occurred) on the principal stock market or exchange on which the Shares are quoted or traded, or if Shares are not so quoted or traded, fair market value of a Share as determined by the Board or a committee of the Board, and (ii) with respect to any property other than Shares, the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Board or a committee of the Board.

(o) “Intrinsic Value” with respect to an Option Award means (i) the excess, if any, of the price or implied price per Share in a Change of Control or other event over (ii) the exercise or hurdle price of such Award multiplied by (iii) the number of Shares covered by such Award.

(p)“Non-Employee Director”means a regular, active director or a prospective director of the Company, in either case who is not an Employee of the Company or any Affiliate, as determined by the Board, in its sole discretion.

(q) “Option” means an option representing the right to purchase Shares from the Company, granted pursuant to Section 6.

(r)“Other Share-Based Award” means an Award granted pursuant to Section 8.

(s)“Participant” means the recipient of an Award granted under the Plan.

(t)“Person” has the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including “group” as defined in Section 13(d) thereof.

(u)“Restricted Stock” means any Share granted pursuant to Section 7.

(v)“Retainer” means an annual cash retainer payable pursuant to Section 10 for service as (%3) a member of the Board or a committee of the Board or (%3) chair or lead director of the Board or chair of any such committee.

(w)“RSU” means a contractual right granted pursuant to Section 7 that is denominated in Shares. Each RSU represents a right to receive the value of one Share (or a percentage of such value) in cash, Shares or a combination thereof. Awards of RSUs may include the right to receive dividend equivalents.

(x)“Shares” means shares of the Company’s common stock, $0.01 par value per Share.

(y)“Substitute Award” means an Award granted in assumption of, or in substitution for, an outstanding award previously granted by a company or other business acquired by the Company or with which the Company combines.

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Section 3.Eligibility. (a) Each Non-Employee Director shall be eligible to be selected to receive an Award under the Plan, to the extent an offer of an Award or a receipt of such Award is permitted by Applicable Laws or accounting rules and regulations.

(b) Holders of options and other types of awards granted by a company acquired by the Company or with which the Company combines are eligible for grants of Substitute Awards under the Plan to the extent permitted under applicable regulations of any stock exchange on which the Company is listed.

Section 4.Administration. (a) The Plan shall be administered by the Board. The Board may issue rules and regulations for administration of the Plan. All decisions of the Board shall be final, conclusive and binding upon all parties, including the Company, its shareholders, Participants and any Beneficiaries thereof. The Board shall meet at such times and places as it may determine.

(b)Subject to the terms of the Plan and Applicable Laws, the Board (or its delegate) shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards (including Substitute Awards) to be granted to each Participant under the Plan; (iii) determine the number of Shares to be covered by (or with respect to which payments, rights or other matters are to be calculated in connection with) Awards; (iv) determine the terms and conditions of any Award; (v) determine whether, to what extent and under what circumstances Awards may be settled or exercised in cash, Shares, other Awards, other property, net settlement, or any combination thereof, or canceled, forfeited or suspended, and the method or methods by which Awards may be settled, exercised, canceled, forfeited or suspended; (vi) determine whether, to what extent and under what circumstances cash, Shares, other Awards, other property and other amounts payable with respect to an Award under the Plan shall be deferred either automatically or at the election of the holder thereof or of the Board; (vii) amend terms or conditions of any outstanding Awards or portion thereof, including without limitation, to accelerate the time or times at which the Award becomes vested, unrestricted or may be exercised; (viii) correct any defect, supply any omission and reconcile any inconsistency in the Plan or any Award, in the manner and to the extent it shall deem desirable to carry the Plan into effect; (ix) interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan; (x) establish, amend, suspend or waive such rules and regulations and appoint such agents, trustees, brokers, depositories and advisors and determine such terms of their engagement as it shall deem appropriate for the proper administration of the Plan and due compliance with Applicable Laws or accounting rules and regulations; and (xi) make any other determination and take any other action that the Board deems necessary or desirable for the administration of the Plan and due compliance with Applicable Laws or accounting rules and regulations.

Section 5.Shares Available for Awards. (a) Subject to adjustment as provided in Section 5(c) and except for Substitute Awards, the maximum number of Shares available for issuance under the Plan shall not exceed in the aggregate 1,679,995 Shares.

(b)If any Award is forfeited, expires, terminates, otherwise lapses or is settled for cash, in whole or in part, without the delivery of Shares, then the Shares covered by such forfeited, expired, terminated or lapsed Award shall again be available for grant under the Plan. For the avoidance of doubt, the following will not again become available for issuance under the Plan: (i) any Shares withheld in respect of taxes and (ii) any Shares tendered or withheld to pay the exercise price of Options.

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(c)In the event that the Board determines that, as a result of any dividend or other distribution (whether in the form of cash, Shares or other securities), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, separation, rights offering, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, issuance of Shares pursuant to the anti-dilution provisions of securities of the Company, or other similar corporate transaction or event affecting the Shares, or of changes in Applicable Laws or accounting principles, an adjustment is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Board shall, subject to compliance with Section 409A of the Code, adjust equitably (including without limitation, by payment of cash) any or all of:

(i)the number and type of Shares (or other securities) which thereafter may be made the subject of Awards, including the aggregate limit specified in Section 5(a);

(ii)the number and type of Shares (or other securities) subject to outstanding Awards; and

(iii)the grant, purchase, exercise or hurdle price with respect to any Award or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award;

provided, however, that the number of Shares subject to any Award denominated in Shares shall always be a whole number.

(d)Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or Shares acquired by the Company.

Section 6.Options. The Board is authorized to grant Options to Participants with the following terms and conditions and with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Board shall determine:

(a)The exercise price per Share under an Option shall be determined by the Board at the time of grant; provided, however, that, except in the case of Substitute Awards, such exercise price shall not be less than the Fair Market Value of a Share on the date of grant of such Option;

(b)The term of each Option shall be fixed by the Board but shall not exceed 10 years from the date of grant of such Option; provided that the Board may (but shall not be required to) provide in an Award Agreement for an extension of such 10-year term, in the event the exercise of the Option would be prohibited by law on the expiration date;

(c)The Board shall determine the time or times at which an Option becomes vested and exercisable, in whole or in part. Except as otherwise provided herein, any Option shall have a minimum vesting period, as applicable, of one year from the date of grant; provided, however, that the Board may provide for earlier vesting upon a Participant’s termination of employment or service by reason of death or disability, or a Change of Control (as defined in Section 1(h)).  Notwithstanding any provision herein to the contrary, 5% of the total number of Shares available for issuance under the Plan (the “Excepted Shares”) shall not be subject to the minimum vesting period described in the preceding sentence, it being understood that the Board may, in its discretion, and at the time an Option is granted, designate any Shares that are subject to such Option as Excepted Shares.

(d)The Board shall determine the method or methods by which, and the form or forms, including cash, Shares, other Awards, other property, net settlement, broker assisted

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cashless exercise or any combination thereof, having a Fair Market Value on the exercise date equal to the exercise price of the Shares as to which the Option shall be exercised, in which payment of the exercise price with respect thereto may be made or deemed to have been made.

Section 7.Restricted Stock and RSUs. The Board is authorized to grant Awards of Restricted Stock and RSUs to Participants with the following terms and conditions and with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Board shall determine:

(a)The Award Agreement shall specify the vesting schedule and, with respect to RSUs, the delivery schedule (which may include deferred delivery later than the vesting date) and whether the Award of Restricted Stock or RSUs is entitled to dividends or dividend equivalents, voting rights or any other rights.

(b)Shares of Restricted Stock and RSUs shall be subject to such restrictions as the Board may impose (including any limitation on the right to vote a Share of Restricted Stock or the right to receive any dividend, dividend equivalent or other right), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise, as the Board may deem appropriate.

(c)Any share of Restricted Stock granted under the Plan may be evidenced in such manner as the Board may deem appropriate, including book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate is issued in respect of shares of Restricted Stock granted under the Plan, such certificate shall be registered in the name of the Participant and shall bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Stock.

(d)The Board may provide in an Award Agreement that an Award of Restricted Stock is conditioned upon the Participant making or refraining from making an election with respect to the Award under Section 83(b) of the Code. If the Participant makes an election pursuant to Section 83(b) of the Code with respect to an Award of Restricted Stock, the Participant shall be required to file promptly a copy of such election with the Company and the applicable Internal Revenue Service office.

(e)The Board may determine the form or forms (including cash, Shares, other Awards, other property or any combination thereof) in which payment of the amount owing upon settlement of any RSU Award may be made.

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Section 8.Other Share-Based Awards. The Board is authorized, subject to limitations under Applicable Laws, to grant to Participants such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares or factors that may influence the value of Shares, including convertible or exchangeable debt securities, other rights convertible or exchangeable into Shares, purchase rights for Shares, Awards with value and payment contingent upon performance of the Company or business units thereof or any other factors designated by the Board or a committee of the Board. The Board shall determine the terms and conditions of such Awards. Shares delivered pursuant to an Award in the nature of a purchase right granted under this Section 8 shall be purchased for such consideration, paid for at such times, by such methods and in such forms, including cash, Shares, other Awards, other property, net settlement, broker-assisted cashless exercise or any combination thereof, as the Board shall determine; provided that the purchase price therefore shall not be less than the Fair Market Value of such Shares on the date of grant of such right. Cash awards, as an element of or supplement to any other Award under the Plan, may also be granted pursuant to this Section 8.

Section 9.Automatic Grants. The Board or a committee of the Board may institute, by resolution, automatic Award grants to new and to continuing members of the Board, with the number and type of such Awards, the terms and conditions of such Awards, and the criteria for the grant of such Awards, as is determined by the Board or a committee of the Board, in its sole discretion.

Section 10.Retainers. The Board is authorized, subject to limitations under Applicable Laws, to grant Retainers to Participants. The Board shall determine the terms and conditions of such Retainers, including without limitation (i) the amounts payable, (ii) the payment dates (including whether payment is made in a lump sum or installments and whether payment is made in advance or arrears), (iii) whether such Retainers may be electively received in Shares and (iv) whether such Retainers may be electively deferred, subject to such rules and procedures as it may establish in accordance with Section 409A of the Code, and, if so, whether such deferred Retainers may be distributed in cash and/or Shares. Shares issued to Participants pursuant to (iii) or (iv) above shall not count against the aggregate Share limit specified in Section 5(a). The number of Shares that shall be issued to the Participant who elects to receive a Retainer in Shares shall equal the amount of cash that otherwise would have been paid to such Participant on the payment date of such Retainer divided by the Fair Market Value of a Share as of such payment date.

Section 11.Effect of Separation From Service or a Change of Control on Awards.

(a)The Board may provide, by rule or regulation or in any applicable Award Agreement, or may determine in any individual case, the circumstances in which, and the extent to which, an Award may be exercised, settled, vested, paid or forfeited in the event of the Participant’s separation from service from the Board prior to vesting, exercise or settlement of such Award.

(b)In the event of a Change of Control, except as otherwise provided in an Award Agreement, the Board may provide for: (i) continuation or assumption of such outstanding Awards under the Plan by the Company (if it is the surviving corporation) or by the surviving corporation or its parent; (ii) substitution by the surviving corporation or its parent of awards with substantially the same terms and value for such outstanding Awards (in the case of an Option Award, the Intrinsic Value at grant of such Substitute Award shall equal the Intrinsic Value of the Award); (iii) acceleration of the vesting (including the lapse of any restrictions) or right to exercise such outstanding Awards immediately prior to or as of the date of the Change of Control, and the expiration of such outstanding Awards to the extent not timely exercised by the date of the Change of Control or other date thereafter designated by the Board; or (iv) in the case of an

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Option Award, cancelation in consideration of a payment in cash or other consideration to the Participant who holds such Award in an amount equal to the Intrinsic Value of such Award (which may be equal to but not less than zero), which, if in excess of zero, shall be payable upon the effective date of such Change of Control. For the avoidance of doubt, in the event of a Change of Control, the Board may, in its sole discretion, terminate any Option Awards for which the exercise or hurdle price is equal to or exceeds the per Share value of the consideration to be paid in the Change of Control transaction without payment of consideration therefor.

Section 12.General Provisions Applicable to Awards. (a) Awards shall be granted for such cash or other consideration, if any, as the Board determines; provided that in no event shall Awards be issued for less than such minimal consideration as may be required by Applicable Laws.

(b)Awards may, in the discretion of the Board, be granted either alone or in addition to or in tandem with any other Award or any award granted under any other plan of the Company. Awards granted in addition to or in tandem with other Awards, or in addition to or in tandem with awards granted under any other plan of the Company, may be granted either at the same time as or at a different time from the grant of such other Awards or awards.

(c)Subject to the terms of the Plan, payments or transfers to be made by the Company upon the grant, exercise or settlement of an Award may be made in the form of cash, Shares, other Awards, other property, net settlement, or any combination thereof, as determined by the Board in its discretion at the time of grant, and may be made in a single payment or transfer, in installments or on a deferred basis, in each case in accordance with rules and procedures established by the Board. Such rules and procedures may include provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of dividend equivalents in respect of installment or deferred payments.

(d)Except as may be permitted by the Board or as specifically provided in an Award Agreement, (i) no Award and no right under any Award shall be assignable, alienable, saleable or transferable by the Participant otherwise than by will or pursuant to Section 12(e) and (ii) during the Participant’s lifetime, each Award, and each right under any Award, shall be exercisable only by such Participant or, if permissible under Applicable Laws, by such Participant’s guardian or legal representative. The provisions of this Section 12(d) shall not apply to any Award that has been fully exercised or settled, as the case may be, and shall not preclude forfeiture of an Award in accordance with the terms thereof.

(e)The Participant may designate a Beneficiary or change a previous Beneficiary designation only at such times as prescribed by the Board, in its sole discretion, and only by using forms and following procedures approved or accepted by the Board for that purpose.

(f)All certificates for Shares and/or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Board may deem advisable under the Plan or Applicable Laws (including the rules, regulations and other requirements of the SEC, any stock market or exchange upon which such Shares or other securities are then quoted, traded or listed, and any applicable securities laws), and the Board may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

(g)The Board shall have the power to impose such additional terms, provisions and restrictions with respect to any Award as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements of any Applicable Law.

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Section 13.Amendments and Terminations. (a) Except to the extent prohibited by Applicable Laws and unless otherwise expressly provided in an Award Agreement or in the Plan, the Board may amend, alter, suspend, discontinue or terminate the Plan or any portion thereof at any time; provided, however, that no such amendment, alteration, suspension, discontinuation or termination shall be made without (i)shareholder approval if such approval is required by Applicable Law (including the rules of the stock market or exchange, if any, on which the Shares are principally quoted or traded) or (ii)subject to Section 5(c) and Section 11, the consent of the affected Participant, if such action would materially adversely affect the rights of such Participant under any outstanding Award, except (x) to the extent any such amendment, alteration, suspension, discontinuance or termination is made to cause the Plan to comply with Applicable Laws or accounting rules and regulations or (y) to impose any “clawback” or recoupment provisions on any Awards in accordance with Section 17. Notwithstanding anything to the contrary in the Plan, the Board may amend the Plan, or create sub-plans, in such manner as may be necessary to enable the Plan to achieve its stated purposes in any jurisdiction in a tax-efficient manner and in compliance with local rules and regulations.

(b)Dissolution or Liquidation. In the event of the dissolution or liquidation of the Company, each Award shall terminate immediately prior to the consummation of such action, unless otherwise determined by the Board.

(c)Terms of Awards. Notwithstanding anything to the contrary contained in any other provisions of this Plan, the Board may waive any conditions or rights under, amend any terms of, or amend, alter, suspend, discontinue or terminate any Award theretofore granted, prospectively or retroactively, without the consent of any relevant Participant or holder or Beneficiary of an Award; provided, however, that, subject to Section 5(c) and Section 11, no such action shall materially adversely affect the rights of any affected Participant or holder or Beneficiary under any Award theretofore granted under the Plan, except (x) to the extent any such action is made to cause the Plan to comply with Applicable Laws or accounting rules and regulations, or (y) to impose any “clawback” or recoupment provisions on any Awards in accordance with Section 17. The Board shall be authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of events (including the events described in Section 5(c)) affecting the Company, or the financial statements of the Company, or of changes in Applicable Laws or accounting principles, whenever the Board determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.

(d)No Repricing. Notwithstanding the foregoing, except as provided in Section 5(c), no action shall directly or indirectly, through cancellation and exchange for cash or other Awards, regrant or any other method, reduce, or have the effect of reducing, the exercise or hurdle price of any Award established at the time of grant thereof without approval of the Company’s shareholders.

Section 14.Miscellaneous. (a) No Participant or other Person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Participants or holders or Beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to each recipient. Any Award granted under the Plan shall be a one-time Award that does not constitute a promise of future grants. The Company, in its sole discretion, maintains the right to make available future grants under the Plan.

(b)The grant of an Award shall not be construed as giving the Participant the right to be retained in the service of the Board or the Company or any Affiliate. The receipt of any Award under the Plan is not intended to confer any rights on the receiving Participant except as set forth in the applicable Award Agreement.

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(c)Nothing contained in the Plan shall prevent the Company from adopting or continuing in effect other or additional compensation arrangements, and such arrangements may be either generally applicable or applicable only in specific cases.

(d)The Company shall be authorized to withhold from any Award granted or any payment due or transfer made under any Award or under the Plan or from any compensation or other amount owing to the Participant the amount (in cash, Shares, other Awards, other property, net settlement, or any combination thereof) of applicable withholding taxes due in respect of an Award, its exercise or settlement or any payment or transfer under such Award or under the Plan and to take such other action (including providing for elective payment of such amounts in cash or Shares by such Participant) as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes; provided that if the Board allows the withholding or surrender of Shares to satisfy the Participant’s tax withholding obligations, the Company shall not allow Shares to be withheld in an amount that exceeds statutory withholding rates for federal and state tax purposes.

(e)If any provision of the Plan or any Award Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction, or as to any Person or Award, or would disqualify the Plan or any Award under any Applicable Law deemed applicable by the Board, such provision shall be construed or deemed amended to conform to Applicable Laws, or if it cannot be so construed or deemed amended without, in the determination of the Board, materially altering the intent of the Plan or the Award Agreement, such provision shall be stricken as to such jurisdiction, Person or Award, and the remainder of the Plan and any such Award Agreement shall remain in full force and effect.

(f)Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company and the Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company.

(g)No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Board shall determine whether cash or other securities shall be paid or transferred in lieu of any fractional Shares, or whether such fractional Shares or any rights thereto shall be canceled, terminated or otherwise eliminated.

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Section 15.Effective Date of the Plan. The Plan shall be effective as of the Effective Date, subject to its approval by the Board and the shareholder(s) of the Company.

Section 16.Term of the Plan. No Award shall be granted under the Plan after the earliest to occur of (i) the tenth-year anniversary of the Effective Date; (ii) the maximum number of Shares available for issuance under the Plan have been issued; or (iii) the Board terminates the Plan in accordance with Section 13(a). However, unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award theretofore granted may extend beyond such date, and the authority of the Board to amend, alter, adjust, suspend, discontinue or terminate any such Award, or to waive any conditions or rights under any such Award, and the authority of the Board to amend the Plan, shall extend beyond such date.

Section 17.Cancellation or “Clawback” of Awards. The Board shall have full authority to implement any policies and procedures necessary to comply with Applicable Law, including but not limited to Section 10D of the Exchange Act, Section 956 of the Dodd-Frank Act and any rules promulgated thereunder and any other regulatory regimes. Notwithstanding anything to the contrary contained herein, the Board may, to the extent permitted by Applicable Laws or any applicable Company policy or arrangement, and shall, to the extent required, cancel or require reimbursement of any Awards granted to the Participant or any Shares issued or cash received upon vesting, exercise or settlement of any such Awards or sale of Shares underlying such Awards.

Section 18.Section 409A of the Code. With respect to Awards subject to Section 409A of the Code, the Plan is intended to comply with the requirements of Section 409A of the Code and the regulations thereunder, and the provisions of the Plan and any Award Agreement shall be interpreted in a manner that satisfies the requirements of Section 409A of the Code, and the Plan shall be operated accordingly. If any provision of the Plan or any term or condition of any Award would otherwise frustrate or conflict with this intent, the provision, term or condition shall be interpreted and deemed amended so as to avoid this conflict. Notwithstanding anything else in the Plan, if the Board considers a Participant to be a “specified employee” under Section 409A of the Code at the time of such Participant’s “separation from service” (as defined in Section 409A of the Code), and the amount hereunder is “deferred compensation” subject to Section 409A of the Code any distribution that otherwise would be made to such Participant with respect to an Award as a result of such separation from service shall not be made until the date that is six months after such separation from service, except to the extent that earlier distribution would not result in such Participant’s incurring interest or additional tax under Section 409A of the Code. If the Award includes a “series of installment payments” (within the meaning of Section 1.409A-2(b)(2)(iii) of the Treasury Regulations), the Participant’s right to the series of installment payments shall be treated as a right to a series of separate payments and not as a right to a single payment and if the Award includes “dividend equivalents” (within the meaning of Section 1.409A-3(e) of the Treasury Regulations), the Participant’s right to the dividend equivalents shall be treated separately from the right to other amounts under the Award. Notwithstanding the foregoing, the tax treatment of the benefits provided under the Plan or any Award Agreement is not warranted or guaranteed, and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Participant on account of non-compliance with Section 409A of the Code.

Section 19.Successors and Assigns. The terms of the Plan shall be binding upon and inure to the benefit of the Company and any successor entity, including any successor entity contemplated by Section 11.

Section 20.Governing Law. The Plan and each Award Agreement shall be governed by the laws of the State of Delaware, without application of the conflicts of law principles thereof.

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EX-10.2

AMENDED AND RESTATED

CITIZENS FINANCIAL GROUP, INC.
2014 OMNIBUS INCENTIVE PLAN

AS OF JUNE 23, 2016

Section 1.Purpose. The purpose of the Citizens Financial Group, Inc. 2014 Omnibus Incentive Plan (the “Plan”) is to motivate and reward employees and other individuals to perform at the highest level and contribute significantly to the success of Citizens Financial Group, Inc. (together with its subsidiaries and any and all successor entities, the “Company”), thereby furthering the best interests of the Company and its shareholders.

Section 2.Definitions. As used in the Plan, the following terms shall have the meanings set forth below:

(a)“Award” means any Option, SAR, Restricted Stock, RSU, Performance Award, Deferred Award, Other Cash-Based Award or Other Share-Based Award granted under the Plan.

(b)“Applicable Laws” means the laws, rules, regulations and other requirements related to or implicated by the administration of the Plan under applicable state corporate law; United States federal and state securities laws, including the Exchange Act; the Code; the Dodd-Frank Act; United States federal and state banking laws, including the Bank Holding Company Act; any rules of stock exchange or quotation system on which the Shares are listed or quoted; any banking law regulations, including rules, regulations and guidance from the Federal Reserve Board; any other applicable rules, regulations or guidance promulgated by an administrative agency or commission or other governmental authority; and the applicable laws and regulations of any foreign country or jurisdiction where Participants provide services or where Awards are granted under the Plan.

(c)“Award Agreement” means any agreement, contract or other instrument or document evidencing any Award granted under the Plan, which may, but need not, be executed or acknowledged by a Participant.

(d)“Beneficial Owner” has the meaning ascribed to such term in Rule 13d-3 under the Exchange Act.

(e)“Beneficiary” means a Person entitled to receive payments or other benefits or exercise rights that are available under the Plan in the event of the Participant’s death. If no such Person can be named or is named by the Participant, or if no Beneficiary designated by such Participant is eligible to receive payments or other benefits or exercise rights that are available under the Plan at the Participant’s death, such Participant’s Beneficiary shall be such Participant’s estate.

(f)“Board” means the board of directors of the Company.

(g) “Change of Control” means the occurrence of any one or more of the following events, except as otherwise provided in the Participant’s Award Agreement:

(i)any Person, other than an employee benefit plan or trust maintained by the Company, becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing more than 50% of the combined voting

power of the Company’s outstanding securities entitled to vote generally in the election of directors;

(ii)at any time during a period of 12 consecutive months, individuals who at the beginning of such period constituted the Board and any new member of the Board whose election or nomination for election was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was so approved, cease for any reason to constitute a majority of members of the Board; or

(iii)the consummation of (A) a merger or consolidation of the Company with any other corporation or entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or being converted into voting securities of the surviving entity or, if applicable, the ultimate parent thereof) at least 50% of the combined voting power and total fair market value of the securities of the Company or such surviving entity or parent outstanding immediately after such merger or consolidation, or (B) any sale, lease, exchange or other transfer to any Person of assets of the Company, in one transaction or a series of related transactions, having an aggregate fair market value of more than 50% of the fair market value of the Company and its subsidiaries (the “Company Value”) immediately prior to such transaction(s), but only to the extent that, in connection with such transaction(s) or within a reasonable period thereafter, the Company’s shareholders receive distributions of cash and/or assets having a fair market value that is greater than 50% of the Company Value immediately prior to such transaction(s).

Notwithstanding the foregoing or any provision of any Award Agreement to the contrary, for any Award that provides for accelerated distribution on a Change of Control of amounts that constitute “deferred compensation” (as defined in Section 409A of the Code and the regulations thereunder), if the event that constitutes such Change of Control does not also constitute a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the Company’s assets (in either case, as defined in Section 409A of the Code), such amount shall not be distributed on such Change of Control but instead shall vest as of the date of such Change of Control and shall be paid on the scheduled payment date specified in the applicable Award Agreement, except to the extent that earlier distribution would not result in the Participant who holds such Award incurring interest or additional tax under Section 409A of the Code.

(h)“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rules, regulations and guidance thereunder. Any reference to a provision in the Code shall include any successor provision thereto.

(i)“Committee” means the compensation committee of the Board unless another committee is designated by the Board. If there is no compensation committee of the Board and the Board does not designate another committee, references herein to the “Committee” shall refer to the Board.

(j)“Consultant” means any individual, including an advisor, who is providing services to the Company or any Subsidiary, other than as an Employee or non-employee Director, or who has accepted an offer of service or consultancy from the Company or any Subsidiary.

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(k)“Converted Award” means an award granted under The Royal Bank of Scotland Group plc 2010 Long Term Incentive Plan or The Royal Bank of Scotland Group plc 2010 Deferral Plan to any Employee or any other individual who provides services to the Company that is converted into an award underlying Shares upon the Company’s initial public offering, subject to the terms of applicable governing plan documents.

(l)“Covered Employee” means an individual who is, for a given fiscal year of the Company, (i) a “covered employee” within the meaning of Section 162(m) of the Code or (ii) designated by the Committee by not later than 90 days following the start of such year (or such other time as may be required or permitted by Section 162(m) of the Code) as an individual whose compensation for such fiscal year may be subject to the limit on deductible compensation imposed by Section 162(m) of the Code.

(m)“Deferred Award” shall mean an Award granted pursuant to Section 10.

(n)“Director” means any member of the Company’s Board.

(o)“Dodd-Frank Act” means the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as amended from time to time, and the rules, regulations and guidance thereunder.

(p)“Effective Date” means the effective date of the Company’s initial public offering.

(q)“Employee” means any individual, including any officer, employed by the Company or any Subsidiary or any prospective employee or officer who has accepted an offer of employment from the Company or any Subsidiary, with the status of employment determined based upon such factors as are deemed appropriate by the Committee in its discretion, subject to any requirements of the Code or Applicable Laws.

(r)“Employment Agreement” means any employment, severance, consulting or similar agreement (including any offer letter) between the Company or any Subsidiary and the Participant.

(s)“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the rules, regulations and guidance thereunder. Any reference to a provision in the Exchange Act shall include any successor provision thereto.

(t)“Fair Market Value” means (%3) with respect to Shares, the closing price of a Share on the day prior to the grant date or vesting, settlement or exercise date, as applicable (or, if there is no reported sale on such prior day, on the last preceding date on which any reported sale occurred), on the principal stock market or exchange on which the Shares are quoted or traded, or if Shares are not so quoted or traded, fair market value of a Share as determined by the Committee, and (%3) with respect to any property other than Shares, the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee.

(u)“Incentive Stock Option” means an option representing the right to purchase Shares from the Company, granted pursuant to the provisions of Section 6, that meets the requirements of Section 422 of the Code.

(v)“Intrinsic Value” with respect to an Option or SAR Award means (%3) the excess, if any, of the price or implied price per Share in a Change of Control or

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other event over (%3) the exercise or hurdle price of such Award multiplied by (%3) the number of Shares covered by such Award.

(w)“Non-Qualified Stock Option” means an option representing the right to purchase Shares from the Company, granted pursuant to Section 6, that is not an Incentive Stock Option.

(x)“Option” means an Incentive Stock Option or a Non-Qualified Stock Option.

(y)“Other Cash-Based Award” means a cash Award granted pursuant to Section 11, including cash awarded as a bonus or upon the attainment of specified performance criteria or otherwise as permitted under the Plan.

(z)“Other Share-Based Award” means an Award granted pursuant to Section 11 that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares or factors that may influence the value of Shares, including convertible or exchangeable debt securities, other rights convertible or exchangeable into Shares, purchase rights for Shares, Awards with value and payment contingent upon performance of the Company or business units thereof or any other factors designated by the Committee.

(aa)“Participant” means the recipient of an Award granted under the Plan.

(bb)“Performance Award” means an Award granted pursuant to Section 9.

(cc)“Performance Period” means the period established by the Committee at the time any Performance Award is granted or at any time thereafter during which any performance goals specified by the Committee with respect to such Award are measured.

(dd)“Person” has the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including “group” as defined in Section 13(d) thereof.

(ee)“Restricted Stock” means any Share granted pursuant to Section 8.

(ff)“Returning Shares” means any Converted Award that is forfeited, expires, terminates, otherwise lapses or is settled for cash, in whole or in part, without the delivery of Shares, subject to the terms of applicable governing plan documents.     

(gg)“RSU” means a contractual right granted pursuant to Section 8 that is denominated in Shares. Each RSU represents a right to receive the value of one Share (or a percentage of such value) in cash, Shares or a combination thereof. Awards of RSUs may include the right to receive dividend equivalents.

(hh)“SAR” means any right granted pursuant to Section 7 to receive upon exercise by the Participant or settlement, in cash, Shares or a combination thereof, the excess of (i) the Fair Market Value of one Share on the date of exercise or settlement over (ii) the exercise or hurdle price of the right on the date of grant, or if granted in connection with an Option, on the date of grant of the Option.

(ii)“SEC” means the Securities and Exchange Commission.

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(jj)“Section 162(m) Compensation” means “qualified performance-based compensation” under Section 162(m) of the Code.

(kk)“Shares” means shares of the Company’s common stock, $0.01 par value per Share.

(ll)“Subsidiary” means (i) any entity that, directly or indirectly, is controlled by the Company, (ii) any entity in which the Company, directly or indirectly, has a significant equity interest, in each case as determined by the Committee and (iii) any other company which the Committee determines should be treated as a “Subsidiary.”

(mm)“Substitute Award” means an Award granted in assumption of, or in substitution for, an outstanding award previously granted by a company or other business acquired by the Company or with which the Company combines.

Section 3.Eligibility.

(a)Any Employee, Consultant or any other individual who provides services to the Company or any Subsidiary shall be eligible to be selected to receive an Award under the Plan, to the extent an offer of an Award or a receipt of such Award is permitted by Applicable Laws or accounting rules and regulations.

(b)Holders of options and other types of awards granted by a company acquired by the Company or with which the Company combines are eligible for grants of Substitute Awards under the Plan to the extent permitted under applicable regulations of any stock exchange on which the Company is listed.

Section 4.Administration.

(a)Administration of the Plan. The Plan shall be administered by the Committee, which shall be appointed by the Board. All decisions of the Committee shall be final, conclusive and binding upon all parties, including the Company, its shareholders, Participants and any Beneficiaries thereof. The Committee may issue rules and regulations for administration of the Plan. It shall meet at such times and places as it may determine.

(b)Composition of Committee. To the extent necessary or desirable to comply with Applicable Laws and other applicable regulatory regimes, any action by the Committee shall require the approval of Committee members who are (i) independent, within the meaning of and to the extent required by applicable rulings and interpretations of the applicable stock market or exchange on which the Shares are quoted or traded; (ii) a non-employee Director within the meaning of Rule 16b-3 under the Exchange Act; and(iii) an outside Director pursuant to Section 162(m) of the Code. The Board may designate one or more Directors as alternate members of the Committee who may replace any absent or disqualified member at any meeting of the Committee. To the extent permitted by Applicable Laws, including under Section 157(c) of the Delaware General Corporation Law, the Committee may delegate to one or more officers of the Company the authority to grant Options and SARs or other Awards in the form of Share rights, except that such delegation shall not be applicable to any Award for a Person then covered by Section 16 of the Exchange Act, and the Committee may delegate to one or more committees of the Board (which may consist of solely one Director) the authority to grant all types of Awards, in accordance with Applicable Laws.

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(c)Authority of Committee. Subject to the terms of the Plan and Applicable Laws, the Committee (or its delegate) shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards (including Substitute Awards) to be granted to each Participant under the Plan; (iii) determine the number of Shares to be covered by (or with respect to which payments, rights or other matters are to be calculated in connection with) Awards; (iv) determine the terms and conditions of any Award; (v) determine whether, to what extent and under what circumstances Awards may be settled or exercised in cash, Shares, other Awards, other property, net settlement, or any combination thereof, or canceled, forfeited or suspended, and the method or methods by which Awards may be settled, exercised, canceled, forfeited or suspended; (vi) determine whether, to what extent and under what circumstances cash, Shares, other Awards, other property and other amounts payable with respect to an Award under the Plan shall be deferred either automatically or at the election of the holder thereof or of the Committee; (vii) amend terms or conditions of any outstanding Awards or portion thereof, including without limitation, to accelerate the time or times at which the Award becomes vested, unrestricted or may be exercised; (viii) correct any defect, supply any omission and reconcile any inconsistency in the Plan or any Award, in the manner and to the extent it shall deem desirable to carry the Plan into effect; (ix) interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan; (x) establish, amend, suspend or waive such rules and regulations and appoint such agents, trustees, brokers, depositories and advisors and determine such terms of their engagement as it shall deem appropriate for the proper administration of the Plan and due compliance with Applicable Laws or accounting rules and regulations; and (xi) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan and due compliance with Applicable Laws or accounting rules and regulations. Notwithstanding anything to the contrary contained herein, the Board may, in its sole discretion, at any time and from time to time, grant Awards or administer the Plan. In any such case, the Board shall have all of the authority and responsibility granted to the Committee herein.

Section 5.Shares Available for Awards.

(a)Subject to adjustment as provided in Section 5(c) and except for Substitute Awards, the maximum number of Shares available for issuance under the Plan shall not exceed in the aggregate 51,969,949 Shares plus any Returning Shares.

(b)If any Award is forfeited, expires, terminates, otherwise lapses or is settled for cash, in whole or in part, without the delivery of Shares, then the Shares covered by such forfeited, expired, terminated or lapsed Award shall again be available for grant under the Plan. For the avoidance of doubt, the following will not again become available for issuance under the Plan: (i) any Shares withheld in respect of taxes and (ii) any Shares tendered or withheld to pay the exercise price of Options.

(c)In the event that the Committee determines that, as a result of any dividend or other distribution (whether in the form of cash, Shares or other securities), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, separation, rights offering, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, issuance of Shares pursuant to the anti-dilution provisions of securities of the Company, or other similar corporate transaction or event affecting the Shares, or of changes in Applicable Laws, regulations or accounting principles, an adjustment is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the

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Plan, then the Committee shall, subject to compliance with Section 409A of the Code, adjust equitably (including, without limitation, by payment of cash) any or all of:

(i)the number and type of Shares (or other securities) which thereafter may be made the subject of Awards, including the aggregate limit specified in Section 5(a) and the individual limit specified in Section 5(e);

(ii)the number and type of Shares (or other securities) subject to outstanding Awards; and

(iii)the grant, purchase, exercise or hurdle price with respect to any Award or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award;

provided, however, that the number of Shares subject to any Award denominated in Shares shall always be a whole number.

(d)Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or Shares acquired by the Company.

(e) The following limits shall apply to the amount that may be awarded to any Participant during any calendar year, subject to adjustment as provided in Section 5(c): (i) Options and SARs that relate to no more than 1,000,000 Shares; (ii) Restricted Stock and RSUs that relate to no more than 1,000,000 Shares; (iii) Share-based Performance Awards and Other Share-Based Awards that relate to no more than 1,000,000 Shares; (iv) Share-based Deferred Awards that relate to no more than 1,000,000 Shares; (v) cash-based Deferred Awards that relate to no more than $15,000,000; and (vi) cash-based Performance Awards and Other Cash-Based Awards that relate to no more than $15,000,000.

Section 6.Options. The Committee is authorized to grant Options to Participants with the following terms and conditions and with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Committee shall determine:

(a)The exercise price per Share under an Option shall be determined by the Committee at the time of grant; provided, however, that, except in the case of Substitute Awards, and subject to Section 6(f), such exercise price shall not be less than the Fair Market Value of a Share on the date of grant of such Option.

(b)The term of each Option shall be fixed by the Committee but shall not exceed 10 years from the date of grant of such Option; provided that the Committee may (but shall not be required to) provide in an Award Agreement for an extension of such 10-year term in the event the exercise of the Option would be prohibited by law on the expiration date.

(c)The Committee shall determine the time or times at which an Option becomes vested and exercisable in whole or in part. Except as otherwise provided herein, any Option shall have a minimum vesting period, as applicable, of one year from the date of grant; provided, however, that the Committee may provide for earlier vesting upon a Participant’s termination of employment or service by reason of death or disability, or a Change of Control (as defined in Section 1(g)).  Notwithstanding any provision herein to the contrary, 5% of the total number of Shares available for issuance under the Plan (the “Excepted Shares”) shall not be subject to the minimum vesting period described in the preceding sentence, it being understood that the Committee may, in its discretion,

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and at the time an Option is granted, designate any Shares that are subject to such Option as Excepted Shares.

(d)The Committee shall determine the method or methods by which, and the form or forms, including cash, Shares, other Awards, other property, net settlement, broker assisted cashless exercise or any combination thereof, having a Fair Market Value on the exercise date equal to the exercise price of the Shares as to which the Option shall be exercised, in which payment of the exercise price with respect thereto may be made or deemed to have been made.

(e)No grant of Options may be accompanied by a tandem award of dividend equivalents or provide for dividends, dividend equivalents or other distributions to be paid on such Options.

(f)The terms of any Incentive Stock Option granted under the Plan shall comply in all respects with the provisions of Section 422 of the Code. Incentive Stock Options may be granted only to employees of the Company or of a parent or subsidiary corporation (as defined in Section 424(a) of the Code). Notwithstanding any designation as an Incentive Stock Option, to the extent that the aggregate Fair Market Value of Shares subject to a Participant’s Incentive Stock Options that become exercisable for the first time during any calendar year exceeds $100,000, such excess Options shall be treated as Non-Qualified Stock Options. For purposes of the foregoing, Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the time of grant. No Incentive Stock Options may be issued more than ten years following the earlier of (i) the date of adoption of this Plan by the Board or (ii) the date of approval of this Plan by the Company’s shareholders. In the case of a 10% shareholder, the exercise price per Share under an Incentive Stock Option shall not be less than 110% of the Fair Market Value on the date of grant of such Incentive Stock Option and the term of such Incentive Stock Option shall not exceed five years from the date of grant of such Incentive Stock Option.

Section 7.Stock Appreciation Rights.The Committee is authorized to grant SARs to Participants with the following terms and conditions and with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Committee shall determine:

(a)SARs may be granted under the Plan to Participants either alone (“freestanding”) or in addition to other Awards granted under the Plan (“tandem”) and may, but need not, relate to a specific Option granted under Section 6.

(b)The exercise or hurdle price per Share under a SAR shall be determined by the Committee; provided, however, that, except in the case of Substitute Awards, such exercise or hurdle price shall not be less than the Fair Market Value of a Share on the date of grant of such SAR.

(c)The term of each SAR shall be fixed by the Committee but shall not exceed 10 years from the date of grant of such SAR.

(d)The Committee shall determine the time or times at which a SAR may be exercised or settled in whole or in part. Except as otherwise provided herein, any SAR shall have a minimum vesting period, as applicable, of one year from the date of grant; provided, however, that the Committee may provide for earlier vesting upon a Participant’s termination of employment or service by reason of death or disability, or a Change of Control (as defined in Section 1(g)).  Notwithstanding any provision herein to

8

the contrary, the Excepted Shares shall not be subject to the minimum vesting period described in the preceding sentence and in Section 6(c), in the aggregate, it being understood that the Committee may, in its discretion, and at the time an SAR is granted, designate any Shares that are subject to such SAR as Excepted Shares.

(e)Upon the exercise of a SAR, the Company shall pay to the Participant an amount equal to the number of Shares subject to the SAR multiplied by the excess, if any, of the Fair Market Value of one Share on the exercise date over the exercise or hurdle price of such SAR. The Company shall pay such excess in cash, in Shares valued at Fair Market Value, or any combination thereof, as determined by the Committee.

(f)No grant of SARs may be accompanied by a tandem award of dividend equivalents or provide for dividends, dividend equivalents or other distributions to be paid on such SARs.

Section 8.Restricted Stock and RSUs. The Committee is authorized to grant Awards of Restricted Stock and RSUs to Participants with the following terms and conditions and with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Committee shall determine:

(a)The Award Agreement shall specify the vesting schedule and, with respect to RSUs, the delivery schedule (which may include deferred delivery later than the vesting date) and whether the Award of Restricted Stock or RSUs is entitled to voting rights or any other rights.

(b)Shares of Restricted Stock and RSUs shall be subject to such restrictions as the Committee may impose, which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise, as the Committee may deem appropriate.

(c)The Committee may specify in the applicable Award Agreement that any or all dividends, dividend equivalents or other distributions, as applicable, paid on Awards of Restricted Stock or RSUs prior to vesting or settlement, as applicable, be paid either in cash or in additional Shares and either on a current or deferred basis and that such dividends, dividend equivalents or other distributions may be reinvested in additional Shares, which may be subject to the same restrictions as the underlying Awards; provided, however, that dividends, dividend equivalents or other distributions, as applicable, on Awards of Restricted Stock and RSUs with restrictions that lapse as a result of the achievement of performance conditions shall be deferred until and paid contingent upon the achievement of the applicable performance conditions.

(d)Any Share of Restricted Stock granted under the Plan may be evidenced in such manner as the Committee may deem appropriate, including book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate is issued in respect of shares of Restricted Stock granted under the Plan, such certificate shall be registered in the name of the Participant and shall bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Stock.

(e)If, and to the extent the Committee intends that an Award granted under this Section 8 shall constitute or give rise to Section 162(m) Compensation, such Award shall be structured in accordance with the requirements of Section 9, including the

9

performance criteria set forth therein and the Award limitation set forth in Section 5(e), and any such Award shall be considered a Performance Award for purposes of the Plan.

(f)The Committee may provide in an Award Agreement that an Award of Restricted Stock is conditioned upon the Participant making or refraining from making an election with respect to the Award under Section 83(b) of the Code. If a Participant makes an election pursuant to Section 83(b) of the Code with respect to an Award of Restricted Stock, the Participant shall be required to file promptly a copy of such election with the Company and the applicable Internal Revenue Service office.

(g)The Committee may determine the form or forms (including cash, Shares, other Awards, other property or any combination thereof) in which payment of the amount owing upon settlement of any RSU Award may be made.

Section 9.Performance Awards. The Committee is authorized to grant Performance Awards to Participants with the following terms and conditions and with such additional terms and conditions, in either case not inconsistent with the provisions of the Plan, as the Committee shall determine:

(a)Performance Awards may be denominated as a cash amount, number of Shares or a combination thereof and are Awards which may be earned upon achievement or satisfaction of performance conditions specified by the Committee. In addition, the Committee may specify that any other Award shall constitute a Performance Award by conditioning the right of a Participant to exercise the Award or have it settled, and the timing thereof, upon achievement or satisfaction of such performance conditions as may be specified by the Committee. The Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions. Subject to the terms of the Plan, the performance goals to be achieved during any Performance Period, the length of any Performance Period, the amount of any Performance Award granted and the amount of any payment or transfer to be made pursuant to any Performance Award shall be determined by the Committee.

(b)If the Committee intends that a Performance Award should constitute Section 162(m) Compensation for purposes of this Plan, such Performance Award shall include a pre-established formula, such that payment, retention or vesting of the Award is subject to the achievement during a Performance Period or Performance Periods, as determined by the Committee, of a level or levels of, or increases in, in each case as determined by the Committee, one or more of the following performance measures or any other performance measure reasonably determined by the Committee, with respect to the Company:

(i)return measures (including, but not limited to, total shareholder return; return on equity; return on tangible common equity; return on tier 1 common equity; return on assets or net assets; return on risk-weighted assets; and return on capital (including return on total capital or return on invested capital));

(ii)revenues (including, but not limited to, total revenue; gross revenue; net revenue; revenue growth; and net sales);

(iii)income/earnings measures (including, but not limited to, earnings per share; earnings or loss (including earnings before or after interest, taxes, depreciation and amortization); gross income; net income after cost of capital; net interest income; non-interest income; fee income; net interest margin;

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operating income (before or after taxes); pre- or after-tax income or loss (before or after allocation of corporate overhead and bonus); pre- or after-tax operating income; net earnings; net income or loss (before or after taxes); operating margin; gross margin; and adjusted net income);

(iv)expense measures (including, but not limited to, expenses; operating efficiencies; non-interest expense and operating/efficiency ratios; and improvement in or attainment of expense levels or working capital levels (including cash and accounts receivable));

(v)balance sheet/risk management measures (including, but not limited to, loans; deposits; assets; tangible equity; charge-offs; net charge-offs; non-performing assets or loans; risk-weighted assets; classified assets; criticized assets; allowance for loans and lease losses; loan loss reserves; asset quality levels; year-end cash; investments; interest-sensitivity gap levels; regulatory compliance; satisfactory internal or external audits; financial ratings; shareholders’ equity; tier 1 capital; and liquidity);

(vi)cash flow measures (including, but not limited to, cash flow or cash flow per share (before or after dividends); and cash flow return on investment);

(vii)share price measures (including, but not limited to, share price; appreciation in and/or maintenance of share price; and market capitalization);

(viii)strategic objectives (including, but not limited to, market share; debt reduction; operating efficiencies; customer satisfaction; customer growth; employee satisfaction; research and development achievements; branding; mergers and acquisitions; succession management; people development; management retention; dynamic market response; expense reduction initiatives; reductions in costs; risk management; regulatory compliance and achievements; implementation, completion or attainment of measurable objectives with respect to research, development, commercialization, products or projects, production volume levels, acquisitions and divestitures; factoring transactions; and recruiting and maintaining personnel); and

(ix)other measures (including, but not limited to, economic value-added models or equivalent metrics; economic profit added; gross profits; economic profit; comparisons with various stock market indices; financial ratios (including those measuring liquidity, activity, profitability or leverage); cost of capital or assets under management; and financing and other capital raising transactions (including sales of the Company’s equity or debt securities; factoring transactions; sales or licenses of the Company’s assets, including its intellectual property, whether in a particular jurisdiction or territory or globally; or through partnering transactions)).

Performance criteria may be measured on an absolute (e.g., plan or budget) or relative basis, may be established on a corporate-wide basis or with respect to one or more business units, divisions, subsidiaries or business segments, may be based on a ratio or separate calculation of any performance criteria and may be made relative to an index or one or more of the performance goals themselves. Relative performance may be measured against a group of peer companies, a financial market index or other acceptable objective and quantifiable indices, subject to Applicable Laws. Except in the case of an Award intended to qualify as Section 162(m) Compensation, if the Committee

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determines that a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which the Company conducts its business, or other events or circumstances render the performance objectives unsuitable, the Committee may modify the performance objectives or the related minimum acceptable level of achievement, in whole or in part, as the Committee deems appropriate and equitable. Performance measures may vary from Performance Award to Performance Award and from Participant to Participant, and may be established on a stand-alone basis, in tandem or in the alternative. The Committee shall have the power to impose such other restrictions on Awards subject to this Section 9(b) as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements for Section 162(m) Compensation or requirements of any Applicable Laws or accounting rules and regulations. Notwithstanding any provision of the Plan to the contrary, with respect to any Award intended to be Section 162(m) Compensation, the Committee shall not be authorized to increase the amount payable under any Award to which this Section 9(b) applies upon attainment of such pre-established formula.

(c)Settlement of Performance Awards shall be in cash, Shares, other Awards, other property, net settlement, or any combination thereof, as determined in the discretion of the Committee. The Committee shall specify the circumstances in which, and the extent to which, Performance Awards shall be paid or forfeited in the event of a Participant’s termination of service.

(d)Unless otherwise provided in the applicable Award Agreement, the Committee may provide for the payment of dividend equivalents on Performance Awards either in cash or in additional Shares, subject in all cases to payment on a deferred and contingent basis based on the Participant’s earning of the Performance Shares upon achievement or satisfaction of performance conditions specified by the Committee with respect to which such dividend equivalents are paid.

(e)Performance Awards shall be settled only after the end of the relevant Performance Period. The Committee may, in its discretion, increase or reduce the amount of a settlement otherwise to be made in connection with a Performance Award but, to the extent required by Section 162(m) of the Code, may not exercise discretion to increase any amount payable to a Covered Employee in respect of a Performance Award intended to qualify as Section 162(m) Compensation. Any settlement that changes the form of payment from that originally specified shall be implemented in a manner such that the Performance Award and other related Awards do not, solely for that reason, fail to qualify as Section 162(m) Compensation.

Section 10.Deferred Awards. The Committee is authorized, subject to limitations under Applicable Laws, to grant to Participants Deferred Awards, which may be a right to receive Shares or cash under the Plan (either independently or as an element of or supplement to any other Award under the Plan), including, as may be required by any Applicable Laws or as determined by the Committee, in lieu of any annual bonus that may be payable to a Participant under any applicable bonus plan or arrangement. The Committee shall determine the terms and conditions of such Deferred Awards, including, without limitation, the method of converting the amount of annual bonus into a Deferred Award, if applicable, and the form, vesting, settlement, forfeiture and cancellation provisions or any other criteria, if any, applicable to such Deferred Awards. Shares underlying a Share-denominated Deferred Award, which is subject to a vesting schedule or other conditions or criteria, including forfeiture or cancellation provisions, set by the Committee shall not be issued until or following the date that those conditions and criteria have been satisfied. Deferred Awards shall be subject to such restrictions as the Committee may impose (including any limitation on the right to vote a Share underlying a Deferred Award or the right to receive any dividend, dividend equivalent or other right), which restrictions may lapse

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separately or in combination at such time or times, in such installments or otherwise, as the Committee may deem appropriate. The Committee may determine the form or forms (including cash, Shares, other Awards, other property or any combination thereof) in which payment of the amount owing upon settlement of any Deferred Award may be made.

Section 11.Other Cash-Based Awards and Other Share-Based Awards. The Committee is authorized, subject to limitations under Applicable Laws, to grant to Participants Other Cash-Based Awards (either independently or as an element of or supplement to any other Award under the Plan) and Other Share-Based Awards. The Committee shall determine the terms and conditions of such Awards. Shares delivered pursuant to an Award in the nature of a purchase right granted under this Section 11 shall be purchased for such consideration, paid for at such times, by such methods and in such forms, including cash, Shares, other Awards, other property, net settlement, broker-assisted cashless exercise or any combination thereof, as the Committee shall determine; provided that the purchase price therefore shall not be less than the Fair Market Value of such Shares on the date of grant of such right.

Section 12.Effect of Termination of Service or a Change of Control on Awards.

(a)The Committee may provide, by rule or regulation or in any applicable Award Agreement, or may determine in any individual case, the circumstances in which, and the extent to which, an Award may be exercised, settled, vested, paid or forfeited in the event of the Participant’s termination of service prior to the end of a Performance Period or vesting, exercise or settlement of such Award.

(b)In the event of a Change of Control, except as otherwise provided in an Award Agreement, the Committee may provide for: (i) continuation or assumption of such outstanding Awards under the Plan by the Company (if it is the surviving corporation) or by the surviving corporation or its parent; (ii) substitution by the surviving corporation or its parent of awards with substantially the same terms and value for such outstanding Awards (in the case of an Option or SAR Award, the Intrinsic Value at grant of such Substitute Award shall equal the Intrinsic Value of the Award); (iii) acceleration of the vesting (including the lapse of any restrictions, with any performance criteria or other performance conditions deemed met at target) or right to exercise such outstanding Awards immediately prior to or as of the date of the Change of Control, and the expiration of such outstanding Awards to the extent not timely exercised by the date of the Change of Control or other date thereafter designated by the Committee; or (iv) in the case of an Option or SAR Award, cancelation in consideration of a payment in cash or other consideration to the Participant who holds such Award in an amount equal to the Intrinsic Value of such Award (which may be equal to but not less than zero), which, if in excess of zero, shall be payable upon the effective date of such Change of Control. For the avoidance of doubt, in the event of a Change of Control, the Committee may, in its sole discretion, terminate any Option or SAR Awards for which the exercise or hurdle price is equal to or exceeds the per Share value of the consideration to be paid in the Change of Control transaction without payment of consideration therefor.

Section 13.General Provisions Applicable to Awards.

(a)Awards shall be granted for such cash or other consideration, if any, as the Committee determines; provided that in no event shall Awards be issued for less than such minimal consideration as may be required by Applicable Laws.

(b)Awards may, in the discretion of the Committee, be granted either alone or in addition to or in tandem with any other Award or any award granted under any other plan of the Company. Awards granted in addition to or in tandem with other Awards, or in

13

addition to or in tandem with awards granted under any other plan of the Company, may be granted either at the same time as or at a different time from the grant of such other Awards or awards.

(c)Subject to the terms of the Plan, payments or transfers to be made by the Company upon the grant, exercise or settlement of an Award may be made in the form of cash, Shares, other Awards, other property, net settlement, or any combination thereof, as determined by the Committee in its discretion at the time of grant, and may be made in a single payment or transfer, in installments or on a deferred basis, in each case in accordance with rules and procedures established by the Committee. Such rules and procedures may include provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of dividend equivalents in respect of installment or deferred payments.

(d)Except as may be permitted by the Committee (except with respect to Incentive Stock Options) or as specifically provided in an Award Agreement, (i) no Award and no right under any Award shall be assignable, alienable, saleable or transferable by a Participant otherwise than by will or pursuant to Section 13(e) and (ii) during a Participant’s lifetime, each Award, and each right under any Award, shall be exercisable only by such Participant or, if permissible under Applicable Laws, by such Participant’s guardian or legal representative. The provisions of this Section 13(d) shall not apply to any Award that has been fully exercised or settled, as the case may be, and shall not preclude forfeiture of an Award in accordance with the terms thereof.

(e)A Participant may designate a Beneficiary or change a previous Beneficiary designation only at such times as prescribed by the Committee, in its sole discretion, and only by using forms and following procedures approved or accepted by the Committee for that purpose.

(f)All certificates for Shares and/or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or Applicable Laws (including the rules, regulations and other requirements of the SEC, any stock market or exchange upon which such Shares or other securities are then quoted, traded or listed, and any applicable securities laws), and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

(g)The Committee may impose restrictions on any Award with respect to non-competition, confidentiality and other restrictive covenants as it deems necessary or appropriate in its sole discretion.

(h)The Board shall have the power to impose such additional terms, provisions and restrictions with respect to any Award as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements of any Applicable Law.

Section 14.Amendments and Terminations.

(a)Amendment or Termination of the Plan. Except to the extent prohibited by Applicable Laws and unless otherwise expressly provided in an Award Agreement or in the Plan, the Board may amend, alter, suspend, discontinue or terminate the Plan or any portion thereof at any time; provided, however, that no such amendment, alteration, suspension, discontinuation or termination shall be made without (i) shareholder approval if such approval is required by Applicable Laws (including the rules of the stock market or

14

exchange, if any, on which the Shares are principally quoted or traded) or (ii) subject to Section 5(c) and Section 12, the consent of the affected Participant, if such action would materially adversely affect the rights of such Participant under any outstanding Award, except (x) to the extent any such amendment, alteration, suspension, discontinuance or termination is made to cause the Plan to comply with Applicable Laws or accounting rules and regulations or (y) to impose any “clawback” or recoupment provisions on any Awards in accordance with Section 18. Notwithstanding anything to the contrary in the Plan, the Committee may amend the Plan, or create sub-plans, in such manner as may be necessary to enable the Plan to achieve its stated purposes in any jurisdiction in a tax-efficient manner and in compliance with local rules and regulations.

(b)Dissolution or Liquidation. In the event of the dissolution or liquidation of the Company, each Award shall terminate immediately prior to the consummation of such action, unless otherwise determined by the Committee.

(c)Terms of Awards. Notwithstanding anything to the contrary contained in any other provisions of this Plan, the Committee may waive any conditions or rights under, amend any terms of, or amend, alter, suspend, discontinue or terminate any Award theretofore granted, prospectively or retroactively, without the consent of any relevant Participant or holder or Beneficiary of an Award; provided, however, that, subject to Section 5(c) and Section 12, no such action shall materially adversely affect the rights of any affected Participant or holder or Beneficiary under any Award theretofore granted under the Plan, except (x) to the extent any such action is made to cause the Plan to comply with Applicable Laws or accounting rules and regulations, or (y) to impose any “clawback” or recoupment provisions on any Awards in accordance with Section 18; provided further, that the Committee’s authority under this Section 14(c) is limited in the case of Awards subject to Section 9(b), as provided in Section 9(b). Except as provided in Section 9, the Committee shall be authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of events (including the events described in Section 5(c)) affecting the Company, or the financial statements of the Company, or of changes in Applicable Laws or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.

(d)No Repricing. Notwithstanding the foregoing, except as provided in Section 5(c), no action shall directly or indirectly, through cancellation and exchange for cash or other Awards, regrant, or any other method, reduce, or have the effect of reducing, the exercise or hurdle price of any Award established at the time of grant thereof without approval of the Company’s shareholders.

Section 15.Miscellaneous.

(a)No Employee, Consultant, Participant or other Person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of employees, Participants or holders or Beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to each recipient. Any Award granted under the Plan shall be a one-time Award that does not constitute a promise of future grants. The Company, in its sole discretion, maintains the right to make available future grants under the Plan.

(b)The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of, or to continue to provide services to, the Company

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or any Subsidiary. The receipt of any Award under the Plan is not intended to confer any rights on the receiving Participant except as set forth in the applicable Award Agreement.

(c)Nothing contained in the Plan shall prevent the Company from adopting or continuing in effect other or additional compensation arrangements, and such arrangements may be either generally applicable or applicable only in specific cases.

(d)The Company shall be authorized to withhold from any Award granted or any payment due or transfer made under any Award or under the Plan or from any compensation or other amount owing to the Participant the amount (in cash, Shares, other Awards, other property, net settlement, or any combination thereof) of applicable withholding taxes due in respect of an Award, its exercise or settlement or any payment or transfer under such Award or under the Plan and to take such other action (including providing for elective payment of such amounts in cash or Shares by such Participant) as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes; provided that if the Committee allows the withholding or surrender of Shares to satisfy the Participant’s tax withholding obligations, the Company shall not allow Shares to be withheld in an amount that exceeds statutory withholding rates for federal and state tax purposes, including payroll taxes.

(e)If any provision of the Plan or any Award Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction, or as to any Person or Award, or would disqualify the Plan or any Award under any Applicable Law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to Applicable Laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award Agreement, such provision shall be stricken as to such jurisdiction, Person or Award, and the remainder of the Plan and any such Award Agreement shall remain in full force and effect.

(f)Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company.

(g)No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash or other securities shall be paid or transferred in lieu of any fractional Shares, or whether such fractional Shares or any rights thereto shall be canceled, terminated or otherwise eliminated.

Section 16.Effective Date of the Plan. The Plan shall be effective as of the Effective Date, subject to its approval by the Board and the shareholder(s) of the Company.

Section 17.Term of the Plan. No Award shall be granted under the Plan after the earliest to occur of (i) the tenth-year anniversary of the Effective Date; (ii) the maximum number of Shares available for issuance under the Plan have been issued; or (iii) the Board terminates the Plan in accordance with Section 14(a). However, unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award theretofore granted may extend beyond such date, and the authority of the Committee to amend, alter, adjust, suspend, discontinue or terminate any such Award, or to waive any conditions or rights under any such Award, and the authority of the Board to amend the Plan, shall extend beyond such date.

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Section 18.Cancellation or “Clawback” of Awards. The Committee shall have full authority to implement any policies and procedures necessary to comply with Applicable Laws, including but not limited to Section 10D of the Exchange Act, Section 956 of the Dodd-Frank Act and any rules promulgated thereunder and any other regulatory regimes. Notwithstanding anything to the contrary contained herein, the Committee may, to the extent permitted by Applicable Laws or by any applicable Company policy or arrangement, and shall, to the extent required, cancel or require reimbursement of any Awards granted to the Participant or any Shares issued or cash received upon vesting, exercise or settlement of any such Awards or sale of Shares underlying such Awards.

Section 19.Section 409A of the Code. With respect to Awards subject to Section 409A of the Code, the Plan is intended to comply with the requirements of Section 409A of the Code and the regulations thereunder, and the provisions of the Plan and any Award Agreement shall be interpreted in a manner that satisfies the requirements of Section 409A of the Code, and the Plan shall be operated accordingly. If any provision of the Plan or any term or condition of any Award would otherwise frustrate or conflict with this intent, the provision, term or condition shall be interpreted and deemed amended so as to avoid this conflict. Notwithstanding anything else in the Plan, if the Board considers a Participant to be a “specified employee” under Section 409A of the Code at the time of such Participant’s “separation from service” (as defined in Section 409A of the Code), and the amount hereunder is “deferred compensation” subject to Section 409A of the Code, any distribution that otherwise would be made to such Participant with respect to an Award as a result of such “separation from service” shall not be made until the date that is six months after such “separation from service,” except to the extent that earlier distribution would not result in such Participant’s incurring interest or additional tax under Section 409A of the Code. If the Award includes a “series of installment payments” (within the meaning of Section 1.409A-2(b)(2)(iii) of the Treasury Regulations), the Participant’s right to the series of installment payments shall be treated as a right to a series of separate payments and not as a right to a single payment and if the Award includes “dividend equivalents” (within the meaning of Section 1.409A-3(e) of the Treasury Regulations), the Participant’s right to the dividend equivalents shall be treated separately from the right to other amounts under the Award. Notwithstanding the foregoing, the tax treatment of the benefits provided under the Plan or any Award Agreement is not warranted or guaranteed, and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Participant on account of non-compliance with Section 409A of the Code.

Section 20.Successors and Assigns. The terms of the Plan shall be binding upon and inure to the benefit of the Company and any successor entity, including any successor entity contemplated by Section 12.

Section 21.Governing Law. The Plan and each Award Agreement shall be governed by the laws of the State of Delaware, without application of the conflicts of law principles thereof.

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EX-12.1

EXHIBIT 12.1

CITIZENS FINANCIAL GROUP, INC.

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

	Three Months			Six Months			Year Ended December 31,
(dollars in millions)	Ended June 30, 2016						2015			2014			2013(2)			2012			2011
Computation of Earnings:
Income (loss) from continuing operations before income tax expense		$361			$693			$1,263			$1,268			($3,468	)		$1,024			$778
Fixed charges	136			264			503			417			499			669			941
Total Adjusted Earnings		$497			$957			$1,766			$1,685			($2,969	)		$1,693			$1,719
Computation of Fixed Charges:
Interest expense		$123			$238			$452			$363			$443			$619			$884
Portion of net rental expense deemed representative of interest(1)	13			26			51			54			56			50			57
Total Fixed charges		$136			$264			$503			$417			$499			$669			$941
Ratio of Earnings to Fixed Charges	3.6		%	3.6		%	3.5		%	4.0		%	(5.9		)%	2.5		%	1.8		%

⁽¹⁾ The portion of rents shown as representative of the interest factor is one-quarter of total net operating lease expenses.

⁽²⁾ The deficiency for this period was $3,468 million due in part to a goodwill impairment charge of $4,435 million ($4,080 million after tax).

EX-12.2

EXHIBIT 12.2

CITIZENS FINANCIAL GROUP, INC.

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS

	Three Months			Six Months			Year Ended December 31,
(dollars in millions)	Ended June 30, 2016						2015			2014			2013(2)			2012			2011
Computation of Earnings:
Income (loss) from continuing operations before income tax expense		$361			$693			$1,263			$1,268			($3,468	)		$1,024			$778
Fixed charges	136			271			510			417			499			669			941
Total Adjusted Earnings		$497			$964			$1,773			$1,685			($2,969	)		$1,693			$1,719
Computation of Fixed Charges:
Interest expense		$123			$238			$452			$363			$443			$619			$884
Portion of net rental expense deemed representative of interest(1)	13			26			51			54			56			50			57
Preferred distribution	—			7			7			—			—			—			—
Total Fixed charges		$136			$271			$510			$417			$499			$669			$941
Ratio of Earnings to Fixed Charges and Preferred Dividends	3.6		%	3.6		%	3.5		%	4.0		%	(5.9		)%	2.5		%	1.8		%

⁽¹⁾ The portion of rents shown as representative of the interest factor is one-quarter of total net operating lease expenses.

⁽²⁾ The deficiency for this period was $3,468 million due in part to a goodwill impairment charge of $4,435 million ($4,080 million after tax).

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

_____________________________________________________________________________________________

I, Bruce Van Saun, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Citizens Financial Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: August 5, 2016                

/s/ Bruce Van Saun

Bruce Van Saun

Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

_____________________________________________________________________________________________

I, Eric W. Aboaf, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Citizens Financial Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: August 5, 2016                    

/s/ Eric W. Aboaf

Eric W. Aboaf

Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

_____________________________________________________________________________________________

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Chief Executive Officer of Citizens Financial Group, Inc. (the "Company"), does hereby certify that:

1. The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2016 (the “Form 10-Q”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 5, 2016

/s/ Bruce Van Saun

Bruce Van Saun

Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff on request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

_____________________________________________________________________________________________

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Chief Financial Officer of Citizens Financial Group, Inc. (the "Company"), does hereby certify that:

1. The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2016 (the “Form 10-Q”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 5, 2016

/s/ Eric W. Aboaf

Eric W. Aboaf

Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff on request.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 01, 2016
Document and Entity Information [Abstract]
Document Type	10-Q
Entity Central Index Key	0000759944
Amendment Flag	false
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Trading Symbol	CFG
Entity Registrant Name	CITIZENS FINANCIAL GROUP INC/RI
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		519,470,882

XML

CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Millions		Jun. 30, 2016	Dec. 31, 2015
ASSETS:
Cash and due from banks		$ 976	$ 1,099
Interest-bearing cash and due from banks		2,679	1,986
Interest-bearing deposits in banks		727	356
Securities available for sale, at fair value (including $245 and $4,283 pledged to creditors, respectively)	[1]	18,479	17,884
Securities held to maturity (including $0 and $135 pledged to creditors, respectively, and fair value of $5,136 and $5,297, respectively)	[1]	4,973	5,258
Other investment securities, at fair value		73	70
Other investment securities, at cost		873	863
Loans held for sale, at fair value		478	325
Other loans held for sale		372	40
Loans and leases		103,551	99,042
Less: Allowance for loan and lease losses		1,246	1,216
Net loans and leases		102,305	97,826
Derivative assets		1,312	625
Premises and equipment, net		551	595
Bank-owned life insurance		1,587	1,564
Goodwill		6,876	6,876
Due from broker		132	0
Other assets		2,790	2,841
TOTAL ASSETS		145,183	138,208
LIABILITIES:
Noninterest-bearing		27,108	27,649
Interest-bearing		79,149	74,890
Total deposits		106,257	102,539
Federal funds purchased and securities sold under agreements to repurchase		717	802
Other short-term borrowed funds		2,770	2,630
Derivative liabilities		1,010	485
Deferred taxes, net		961	730
Long-term borrowed funds		11,810	9,886
Due to broker		86	0
Other liabilities		1,346	1,490
TOTAL LIABILITIES		124,957	118,562
Contingencies
STOCKHOLDERS’ EQUITY:
Preferred stock, $25.00 par value, authorized 100,000,000 shares: Series A, non-cumulative perpetual, $25.00 par value (liquidation preference $1,000), 250,000 shares authorized and issued net of issuance costs and related premium at June 30, 2016, and December 31, 2015		247	247
Common stock: $0.01 par value, 1,000,000,000 shares authorized, 564,437,963 shares issued and 529,094,976 shares outstanding at June 30, 2016 and 1,000,000,000 shares authorized, 563,117,415 shares issued and 527,774,428 shares outstanding at December 31, 2015		6	6
Additional paid-in capital		18,735	18,725
Retained Earnings (Accumulated Deficit)		2,255	1,913
Treasury Stock, at cost, 35,342,987 shares at June 30, 2016 and December 31, 2015, respectively		(858)	(858)
Accumulated other comprehensive loss		(159)	(387)
TOTAL STOCKHOLDERS’ EQUITY		20,226	19,646
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$ 145,183	$ 138,208

[1] Includes only collateral pledged by the Company where counterparties have the right to sell or pledge the collateral.

XML

CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
ASSETS:
Securities held-to-maturity, fair value	$ 5,136	$ 5,297
STOCKHOLDERS’ EQUITY:
Preferred stock, par value (in dollars per share)	$ 25.00	$ 25.00
Preferred stock, authorized (in shares)	100,000,000	100,000,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	1,000,000,000	1,000,000,000
Common stock, issued (in shares)	564,437,963	563,117,415
Common stock, outstanding (in shares)	529,094,976	527,774,428
Treasury stock (in shares)	35,342,987	35,342,987
Series A Preferred Stock
STOCKHOLDERS’ EQUITY:
Preferred stock, par value (in dollars per share)	$ 25.00	$ 25.00
Preferred stock, authorized (in shares)	250,000	250,000
Preferred stock, issued (in shares)	250,000	250,000
Preferred stock, liquidation preference (in dollars per share)	$ 1,000	$ 1,000
Available-for-sale Securities
ASSETS:
Securities, pledged as collateral	$ 245	$ 4,283
Held-to-maturity Securities
ASSETS:
Securities, pledged as collateral	$ 0	$ 135

XML

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
INTEREST INCOME:
Interest and fees on loans and leases	$ 896	$ 790	$ 1,764	$ 1,569
Interest and fees on loans held for sale, at fair value	3	3	6	5
Interest and fees on other loans held for sale	4	3	5	4
Investment securities	141	155	286	314
Interest-bearing deposits in banks	2	1	4	2
Total interest income	1,046	952	2,065	1,894
INTEREST EXPENSE:
Deposits	63	60	123	112
Federal funds purchased and securities sold under agreements to repurchase	0	2	1	9
Other short-term borrowed funds	12	19	23	34
Long-term borrowed funds	48	31	91	63
Total interest expense	123	112	238	218
Net interest income	923	840	1,827	1,676
Provision for credit losses	90	77	181	135
Net interest income after provision for credit losses	833	763	1,646	1,541
NONINTEREST INCOME:
Service charges and fees	150	139	294	274
Card fees	51	60	101	112
Trust and investment services fees	38	41	75	77
Capital markets fees	35	30	57	52
Foreign exchange and letter of credit fees	21	22	42	45
Mortgage banking fees	25	30	43	63
Bank-owned life insurance income	13	14	26	26
Securities gains, net	4	9	13	17
Net securities impairment losses recognized in earnings	(7)	(2)	(8)	(3)
Other income	25	17	42	44
Total noninterest income	355	360	685	707
NONINTEREST EXPENSE:
Salaries and employee benefits	432	411	857	830
Outside services	86	99	177	178
Occupancy	76	90	152	170
Equipment expense	64	65	129	128
Amortization of software	41	37	80	73
Other operating expense	128	139	243	272
Total noninterest expense	827	841	1,638	1,651
Income before income tax expense	361	282	693	597
Income tax expense	118	92	227	198
NET INCOME	243	190	466	399
Net income available to common stockholders	$ 243	$ 190	$ 459	$ 399
Weighted-average common shares outstanding:
Basic (in Shares)	528,968,330	537,729,248	528,519,489	541,986,653
Diluted (in Shares)	530,365,203	539,909,366	530,396,871	544,804,268
Per common share information:
Basic earnings (in Dollars per Share)	$ 0.46	$ 0.35	$ 0.87	$ 0.74
Diluted earnings (in Dollars per Share)	0.46	0.35	0.87	0.73
Dividends declared and paid (in Dollars per Share)	$ 0.12	$ 0.10	$ 0.22	$ 0.20

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Statement of Comprehensive Income [Abstract]
Net income	$ 243	$ 190	$ 466	$ 399
Other comprehensive income (loss):
Net unrealized derivative instrument gains (losses) arising during the periods, net of income taxes of $8, ($3), $29 and $36, respectively	13	(5)	46	60
Reclassification adjustment for net derivative gains included in net income, net of income taxes of ($4), ($1), ($10) and ($2), respectively	(9)	(2)	(17)	(4)
Net unrealized securities available for sale gains (losses) arising during the periods, net of income taxes of $39, ($66), $131 and ($12), respectively	64	(110)	218	(20)
Other-than-temporary impairment not recognized in earnings on securities, net of income taxes of $2, $0, ($13) and ($11), respectively	4	1	(21)	(18)
Reclassification of net securities losses (gains) to net income, net of income taxes of $1, ($2), ($2) and ($5), respectively	2	(5)	(3)	(9)
Defined benefit pension plans:
Amortization of actuarial loss, net of income taxes of $1, $2, $3 and $3, respectively	3	2	5	4
Total other comprehensive income (loss), net of income taxes	77	(119)	228	13
Total comprehensive income	$ 320	$ 71	$ 694	$ 412

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Statement of Comprehensive Income [Abstract]
Net unrealized derivative instrument gains arising during the periods, tax	$ 8	$ (3)	$ 29	$ 36
Reclassification adjustment for net derivative gains included in net income, tax	(4)	(1)	(10)	(2)
Net unrealized securities available for sale gains arising during the periods, tax	39	(66)	131	(12)
Other-than-temporary impairment not recognized in earnings on securities, tax	2	0	(13)	(11)
Reclassification of net securities gains to net income, tax	1	(2)	(2)	(5)
Amortization of actuarial loss, tax	$ 1	$ 2	$ 3	$ 3

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($) shares in Millions, $ in Millions	Total	Preferred Stock	Common Stock	Additional Paid-in Capital	Retained Earnings	Treasury Stock, at Cost	Accumulated Other Comprehensive Income (Loss)
Beginning balance (in shares) at Dec. 31, 2014		0	546
Beginning balance at Dec. 31, 2014	$ 19,268	$ 0	$ 6	$ 18,676	$ 1,294	$ (336)	$ (372)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends to common stockholders	(48)				(48)
Dividends to RBS	(60)				(60)
Issuance of preferred stock (in shares)		0
Issuance of preferred stock, value	247	$ 247
Treasury stock purchased (in shares)			(10)
Treasury stock purchased	(250)					(250)
Share-based compensation plans (in shares)			1
Share-based compensation plans	13			34		(21)
Employee stock purchase plan shares purchased	4			4
Total comprehensive income:
Net income	399				399
Other comprehensive income	13						13
Total comprehensive income	412				399		13
Ending balance (in shares) at Jun. 30, 2015		0	537
Ending balance at Jun. 30, 2015	19,586	$ 247	$ 6	18,714	1,585	(607)	(359)
Beginning balance at Mar. 31, 2015							(240)
Total comprehensive income:
Other comprehensive income							(119)
Total comprehensive income	71
Ending balance (in shares) at Jun. 30, 2015		0	537
Ending balance at Jun. 30, 2015	19,586	$ 247	$ 6	18,714	1,585	(607)	(359)
Beginning balance (in shares) at Dec. 31, 2015		0	528
Beginning balance at Dec. 31, 2015	19,646	$ 247	$ 6	18,725	1,913	(858)	(387)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends to common stockholders	(117)				(117)
Dividend to preferred stockholders	(7)				(7)
Share-based compensation plans (in shares)			1
Share-based compensation plans	5			5
Employee stock purchase plan shares purchased	5			5
Total comprehensive income:
Net income	466				466
Other comprehensive income	228						228
Total comprehensive income	694				466		228
Ending balance (in shares) at Jun. 30, 2016		0	529
Ending balance at Jun. 30, 2016	20,226	$ 247	$ 6	18,735	2,255	(858)	(159)
Beginning balance at Mar. 31, 2016							(236)
Total comprehensive income:
Other comprehensive income							77
Total comprehensive income	320
Ending balance (in shares) at Jun. 30, 2016		0	529
Ending balance at Jun. 30, 2016	$ 20,226	$ 247	$ 6	$ 18,735	$ 2,255	$ (858)	$ (159)

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
OPERATING ACTIVITIES
Net income			$ 466	$ 399
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses			181	135
Originations of mortgage loans held for sale			(1,135)	(1,182)
Proceeds from sales of mortgage loans held for sale			1,022	1,111
Purchases of commercial loans held for sale			(735)	(632)
Proceeds from sales of commercial loans held for sale			739	594
Amortization of terminated cash flow hedges			16	9
Depreciation, amortization and accretion			245	234
Mortgage servicing rights valuation charge-off (recovery)	$ (1)	$ (6)	4	(7)
Securities impairment	7	2	8	3
Deferred income taxes			94	56
Share-based compensation			11	15
Net gain on sales of:
Debt securities			(13)	(17)
Marketable equity securities available for sale			0	(3)
Premises and equipment			(2)	0
Increase in other assets			(450)	(138)
Increase (decrease) in other liabilities			253	(62)
Net cash provided by operating activities			704	515
INVESTING ACTIVITIES
Purchases of securities available for sale			(2,355)	(4,089)
Proceeds from maturities and paydowns of securities available for sale			1,611	1,804
Proceeds from sales of securities available for sale			375	1,251
Purchases of securities held to maturity			0	(811)
Proceeds from maturities and paydowns of securities held to maturity			290	394
Purchases of other investment securities, at fair value			(114)	0
Proceeds from sales of other investment securities, at fair value			109	0
Purchases of other investment securities, at cost			(62)	(14)
Proceeds from sales of other investment securities, at cost			52	20
Net (increase) decrease in interest-bearing deposits in banks			(371)	184
Net increase in loans and leases			(5,045)	(3,573)
Net increase in bank-owned life insurance			(23)	(16)
Premises and equipment:
Purchases			(22)	(43)
Proceeds from sales			3	15
Capitalization of software			(85)	(92)
Net cash used in investing activities			(5,637)	(4,970)
FINANCING ACTIVITIES
Net increase in deposits			3,718	4,908
Net decrease in federal funds purchased and securities sold under agreements to repurchase			(85)	(492)
Net decrease in other short-term borrowed funds			(1,370)	(251)
Proceeds from issuance of long-term borrowed funds			6,995	0
Repayments of long-term borrowed funds			(3,631)	(6)
Treasury stock purchased			0	(250)
Net proceeds from issuance of preferred stock			0	247
Dividends declared and paid to common stockholders			(117)	(108)
Dividends declared and paid to preferred stockholders			(7)	0
Net cash provided by financing activities			5,503	4,048
Increase (decrease) in cash and cash equivalents			570	(407)
Cash and cash equivalents at beginning of period			3,085	3,276	$ 3,276
Cash and cash equivalents at end of period	$ 3,655	$ 2,869	$ 3,655	$ 2,869	$ 3,085

XML

BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2016

Basis of Presentation [Abstract]

Basis of Presentation

BASIS OF PRESENTATION

Basis of Presentation

The unaudited interim Consolidated Financial Statements, including the Notes thereto of Citizens Financial Group, Inc., have been prepared in accordance with GAAP interim reporting requirements, and therefore do not include all information and Notes included in the audited Consolidated Financial Statements in conformity with GAAP. These unaudited interim Consolidated Financial Statements and Notes thereto should be read in conjunction with the Company’s audited Consolidated Financial Statements and accompanying Notes included in the Company’s Form 10-K for the year ended December 31, 2015. The Company’s principal business activity is banking, conducted through its subsidiaries, Citizens Bank, N.A. and Citizens Bank of Pennsylvania.

The unaudited interim Consolidated Financial Statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods. The results for interim periods are not necessarily indicative of results for a full year.

Certain prior period amounts have been reclassified to conform to current period presentation. These reclassifications had no effect on net income, total comprehensive income, total assets or total stockholders’ equity as previously reported.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments.” Under current GAAP, the Company reflects credit losses on financial assets measured on an amortized cost basis only when the losses are probable or have been incurred. The ASU replaces this approach with a forward-looking methodology that reflects the expected credit losses over the lives of financial assets, starting when the assets are first acquired. Under the revised methodology, credit losses will be measured based on past events, current conditions and reasonable and supportable forecasts that affect the collectability of financial assets. The ASU also revises the approach to recognizing credit losses on securities available for sale by allowing entities to record reversals of credit losses in current-period earnings. The ASU is effective for the Company beginning on January 1, 2020. The Company is currently assessing the impact of this guidance on the Company’s unaudited interim Consolidated Financial Statements.

In May 2016, the FASB issued ASU No. 2016-12 “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.” The ASU supplements the new revenue recognition standard issued in 2014 by addressing certain issues in the guidance on assessing collectability, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications at transition. The ASU is effective for the Company beginning on January 1, 2018. The Company is currently assessing the impact of this guidance on the Company’s unaudited interim Consolidated Financial Statements.

In April 2016, the FASB issued ASU No. 2016-10 “Identifying Performance Obligations and Licensing.” The ASU supplements the new revenue recognition standard issued in 2014 by clarifying the guidance related to licensing and the identification of performance obligations. The ASU is effective for the Company beginning on January 1, 2018. The Company is currently assessing the impact of this guidance on the Company’s unaudited interim Consolidated Financial Statements.

In March 2016, the FASB issued ASU No. 2016-09 “Improvements to Employee Share-Based Payment Accounting.” The ASU modifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The ASU is effective for the Company beginning on January 1, 2017. Adoption of this guidance is not expected to have a material impact on the Company’s unaudited interim Consolidated Financial Statements.

In March 2016, the FASB issued ASU No. 2016-08 “Principal versus Agent Considerations (Reporting Revenue Gross versus Net).” The ASU supplements the new revenue recognition standard issued in 2014 by clarifying the implementation guidance on principal versus agent considerations. The ASU is effective for the Company beginning on January 1, 2018. The Company is currently assessing the impact of this guidance on the Company’s unaudited interim Consolidated Financial Statements.

In March 2016, the FASB issued ASU No. 2016-05 “Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships.” The ASU clarifies that a change in a counterparty to a derivative instrument that has been designated as a hedging instrument, in and of itself, does not result in a hedge de-designation under ASC 815. The ASU is effective for the Company beginning on January 1, 2017. Adoption of this guidance is not expected to have a material impact on the Company’s unaudited interim Consolidated Financial Statements.

In February 2016, the FASB issued ASU 2016-02 “Leases.” The ASU generally requires lessees to recognize a right-of use asset and corresponding lease liability for all leases with a lease term of greater than one year. The ASU is effective for the Company beginning on January 1, 2019. The Company is currently assessing the impact of this guidance on the Company’s unaudited interim Consolidated Financial Statements.

In January 2016, the FASB issued ASU No. 2016-01 “Recognition and Measurement of Financial Assets and Financial Liabilities.” The ASU requires equity investments (except for those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in the fair value recognized through net income. The ASU also requires separate presentation of financial assets and financial liabilities by measurement category and form of financial assets on the balance sheet or the notes to the financial statements. In addition, the ASU makes several other targeted amendments to the existing accounting and disclosure requirements for financial instruments, including revised guidance related to valuation allowance assessments when recognizing deferred tax assets on unrealized losses on debt securities available for sale. The ASU is effective for the Company beginning on January 1, 2018. The Company is currently assessing the impact of this guidance on the Company’s unaudited interim Consolidated Financial Statements.

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SECURITIES

6 Months Ended

Jun. 30, 2016

Investments, Debt and Equity Securities [Abstract]

SECURITIES

SECURITIES

The following table provides the major components of securities at amortized cost and fair value:

	June 30, 2016									December 31, 2015
(in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities Available for Sale
U.S. Treasury and other		$15		$—		$—			$15		$16		$—		$—			$16
State and political subdivisions	9		—		—			9		9		—		—			9
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	17,588		401		(8		)	17,981		17,234		153		(67		)	17,320
Other/non-agency	489		2		(34		)	457		555		4		(37		)	522
Total mortgage-backed securities	18,077		403		(42		)	18,438		17,789		157		(104		)	17,842
Total debt securities available for sale	18,101		403		(42		)	18,462		17,814		157		(104		)	17,867
Marketable equity securities	5		—		—			5		5		—		—			5
Other equity securities	12		—		—			12		12		—		—			12
Total equity securities available for sale	17		—		—			17		17		—		—			17
Total securities available for sale		$18,118		$403		($42	)		$18,479		$17,831		$157		($104	)		$17,884
Securities Held to Maturity
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities		$3,912		$119		$—			$4,031		$4,105		$27		($11	)		$4,121
Other/non-agency	1,061		44		—			1,105		1,153		23		—			1,176
Total securities held to maturity		$4,973		$163		$—			$5,136		$5,258		$50		($11	)		$5,297
Other Investment Securities, at Fair Value
Money market mutual fund		$68		$—		$—			$68		$65		$—		$—			$65
Other investments	5		—		—			5		5		—		—			5
Total other investment securities, at fair value		$73		$—		$—			$73		$70		$—		$—			$70
Other Investment Securities, at Cost
Federal Reserve Bank stock		$463		$—		$—			$463		$468		$—		$—			$468
Federal Home Loan Bank stock	410		—		—			410		395		—		—			395
Total other investment securities, at cost		$873		$—		$—			$873		$863		$—		$—			$863

The Company has reviewed its securities portfolio for other-than-temporary impairments. The following table presents the net securities impairment losses recognized in earnings:

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2016			2015			2016			2015
Other-than-temporary impairment:
Total other-than-temporary impairment losses		($1	)		($1	)		($42	)		($32	)
Portions of loss recognized in other comprehensive income (before taxes)	(6		)	(1		)	34			29
Net securities impairment losses recognized in earnings		($7	)		($2	)		($8	)		($3	)

The following tables summarize those securities whose fair values are below carrying values, segregated by those that have been in a continuous unrealized loss position for less than twelve months and those that have been in a continuous unrealized loss position for twelve months or longer:

	June 30, 2016
	Less than 12 Months					12 Months or Longer						Total
(dollars in millions)	Number of Issues	Fair Value		Gross Unrealized Losses		Number of Issues	Fair Value		Gross Unrealized Losses			Number of Issues	Fair Value		Gross Unrealized Losses
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	7		$95		$—	33		$734		($8	)	40		$829		($8	)
Other/non-agency	4	19		—		20	330		(34		)	24	349		(34		)
Total mortgage-backed securities	11	114		—		53	1,064		(42		)	64	1,178		(42		)
Total	11		$114		$—	53		$1,064		($42	)	64		$1,178		($42	)

	December 31, 2015
	Less than 12 Months						12 Months or Longer						Total
(dollars in millions)	Number of Issues	Fair Value		Gross Unrealized Losses			Number of Issues	Fair Value		Gross Unrealized Losses			Number of Issues	Fair Value		Gross Unrealized Losses
State and political subdivisions	1		$9		$—		—		$—		$—		1		$9		$—
U.S. Treasury and other	1	15		—			—	—		—			1	15		—
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	162	7,423		(51		)	36	819		(27		)	198	8,242		(78		)
Other/non-agency	2	9		—			20	361		(37		)	22	370		(37		)
Total mortgage-backed securities	164	7,432		(51		)	56	1,180		(64		)	220	8,612		(115		)
Total	166		$7,456		($51	)	56		$1,180		($64	)	222		$8,636		($115	)

For each debt security identified with an unrealized loss, the Company reviews the expected cash flows to determine if the impairment in value is temporary or other-than-temporary. If the Company has determined that the present value of the debt security’s expected cash flows is less than its amortized cost basis, an other-than-temporary impairment is deemed to have occurred. The amount of impairment loss that is recognized in current period earnings is dependent on the Company’s intent to sell (or not sell) the debt security.

If the Company intends to sell the impaired debt security, the impairment loss recognized in current period earnings equals the difference between the debt security’s fair value and its amortized cost. If the Company does not intend to sell the impaired debt security, and it is not likely that the Company will be required to sell the impaired security, the credit-related impairment loss is recognized in current period earnings and equals the difference between the amortized cost of the debt security and the present value of the expected cash flows that have currently been projected.

In addition to these cash flow projections, several other characteristics of each debt security are reviewed when determining whether a credit loss exists and the period over which the debt security is expected to recover. These characteristics include: (1) the type of investment, (2) various market factors affecting the fair value of the security (e.g., interest rates, spread levels, liquidity in the sector, etc.), (3) the length and severity of impairment, and (4) the public credit rating of the instrument.

The Company estimates the portion of loss attributable to credit using a collateral loss model and an integrated cash flow engine. The model calculates prepayment, default, and loss severity assumptions using collateral performance data. These assumptions are used to produce cash flows that generate loss projections. These loss projections are reviewed on a quarterly basis by a cross-functional governance committee. This governance committee determines whether security impairments are other-than-temporary based on this review.

The following table presents the cumulative credit-related losses recognized in earnings on debt securities held by the Company:

	Three Months Ended June 30,					Six Months Ended June 30,
(in millions)	2016		2015			2016			2015
Cumulative balance at beginning of period		$66		$62			$66			$62
Credit impairments recognized in earnings on securities that have been previously impaired	7		2			8			3
Reductions due to increases in cash flow expectations on impaired securities	—		(2		)	(1		)	(3		)
Cumulative balance at end of period		$73		$62			$73			$62

Cumulative credit losses recognized in earnings for impaired AFS debt securities held as of June 30, 2016 and 2015 were $73 million and $62 million, respectively. There were no credit losses recognized in earnings for the Company’s HTM portfolio as of June 30, 2016 and 2015. For the three months endedJune 30, 2016 and 2015, the Company recognized credit related other-than-temporary-impairment losses in earnings of $7 million and $2 million respectively, related to non-agency MBS in the AFS portfolio. The $5 millionincrease from June 30, 2015 to June 30, 2016 is primarily attributable to a one-time adjustment tied to a new model implementation. This adjustment is the result of the Company migrating in June 2016 from a proprietary internal process to a vendor-based model to estimate other-than-temporary impairment. For the six months endedJune 30, 2016 and 2015, the Company recognized credit related other-than-temporary impairment losses in earnings of $8 million and $3 million, respectively. The other-than-temporary impairment losses for the six months ended June 30, 2016 include the impact of the one-time adjustment tied to the new model implementation discussed above. There were no credit impaired debt securities sold during the three and six months endedJune 30, 2016 and 2015. Reductions in credit losses due to increases in cash flow expectations were none and $2 million for the three months endedJune 30, 2016 and 2015, respectively, and $1 million and $3 million for the six months endedJune 30, 2016 and 2015, respectively, and were presented in interest income from investment securities on the Consolidated Statements of Operations. The Company does not currently have the intent to sell these debt securities, and it is not likely that the Company will be required to sell these debt securities prior to the recovery of their amortized cost bases.

The Company has determined that credit losses are not expected to be incurred on the remaining agency and non-agency MBS identified with unrealized losses as of the current reporting date. The unrealized losses on these debt securities reflect the reduced liquidity in the MBS market and the increased risk spreads due to the uncertainty of the U.S. macroeconomic environment. Therefore, the Company has determined that these debt securities are not other-than-temporarily impaired because the Company does not currently have the intent to sell these debt securities, and it is not likely that the Company will be required to sell these debt securities prior to the recovery of their amortized cost bases. Any subsequent increases in the valuation of impaired debt securities do not impact their recorded cost bases. Additionally, $34 million and $29 million of pre-tax non-credit related losses were deferred in OCI for the six months ended June 30, 2016 and 2015, respectively.

The amortized cost and fair value of debt securities by contractual maturity are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without incurring penalties.

	June 30, 2016
	Distribution of Maturities
(in millions)	1 Year or Less		1-5 Years		5-10 Years		After 10 Years		Total
Amortized Cost:
Debt securities available for sale
U.S. Treasury and other		$15		$—		$—		$—		$15
State and political subdivisions	—		—		—		9		9
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	15		36		1,668		15,869		17,588
Other/non-agency	—		50		2		437		489
Total debt securities available for sale	30		86		1,670		16,315		18,101
Debt securities held to maturity
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	—		—		—		3,912		3,912
Other/non-agency	—		—		—		1,061		1,061
Total debt securities held to maturity	—		—		—		4,973		4,973
Total amortized cost of debt securities		$30		$86		$1,670		$21,288		$23,074
Fair Value:
Debt securities available for sale
U.S. Treasury and other		$15		$—		$—		$—		$15
State and political subdivisions	—		—		—		9		9
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	15		38		1,710		16,218		17,981
Other/non-agency	—		50		3		404		457
Total debt securities available for sale	30		88		1,713		16,631		18,462
Debt securities held to maturity
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	—		—		—		4,031		4,031
Other/non-agency	—		—		—		1,105		1,105
Total debt securities held to maturity	—		—		—		5,136		5,136
Total fair value of debt securities		$30		$88		$1,713		$21,767		$23,598

The following table reports the amounts recognized in interest income from investment securities on the Consolidated Statements of Operations:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2016		2015		2016		2015
Taxable		$141		$155		$286		$314
Non-taxable	—		—		—		—
Total interest income from investment securities		$141		$155		$286		$314

Realized gains and losses on securities are shown below:

	Three Months Ended June 30,					Six Months Ended June 30,
(in millions)	2016		2015			2016		2015
Gains on sale of debt securities		$4		$10			$13		$22
Losses on sale of debt securities	—		(1		)	—		(5		)
Debt securities gains, net		$4		$9			$13		$17
Equity securities gains		$—		$1			$—		$3

The amortized cost and fair value of securities pledged are shown below:

	June 30, 2016				December 31, 2015
(in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Pledged against repurchase agreements		$705		$720		$805		$808
Pledged against FHLB borrowed funds	1,070		1,114		1,163		1,186
Pledged against derivatives, to qualify for fiduciary powers, and to secure public and other deposits as required by law	4,236		4,341		3,579		3,610

The Company regularly enters into security repurchase agreements with unrelated counterparties. Repurchase agreements are financial transactions that involve the transfer of a security from one party to another and a subsequent transfer of the same (or “substantially the same”) security back to the original party. The Company’s repurchase agreements are typically short-term transactions, but they may be extended to longer terms to maturity. Such transactions are accounted for as secured borrowed funds on the Company’s financial statements. When permitted by GAAP, the Company offsets the short-term receivables associated with its reverse repurchase agreements with the short-term payables associated with its repurchase agreements.

The effects of this offsetting on the Consolidated Balance Sheets are presented in the following table:

	June 30, 2016						December 31, 2015
(in millions)	Gross Assets (Liabilities)		Gross Assets (Liabilities) Offset		Net Amounts of Assets (Liabilities)		Gross Assets (Liabilities)			Gross Assets (Liabilities) Offset			Net Amounts of Assets (Liabilities)
Securities purchased under agreements to resell		$—		$—		$—		$500			($500	)		$—
Securities sold under agreements to repurchase	—		—		—		(500		)	500			—

Note: The Company also offsets certain derivative assets and derivative liabilities on the Consolidated Balance Sheets. For further information see Note 11 “Derivatives.”

There were $5 million in securitizations of mortgage loans retained in the investment portfolio for the three and six months ended June 30, 2016 and none in 2015. These securitizations included a substantive guarantee by a third party. In 2016, the guarantors were Fannie Mae and Ginnie Mae. These securitizations were accounted for as a sale of the transferred loans and as a purchase of securities. The securities received from the guarantors are classified as AFS.

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LOANS AND LEASES

6 Months Ended

Jun. 30, 2016

Receivables [Abstract]

LOANS AND LEASES

LOANS AND LEASES

A summary of the loans and leases portfolio follows:

(in millions)	June 30, 2016		December 31, 2015
Commercial		$35,927		$33,264
Commercial real estate	9,825		8,971
Leases	3,805		3,979
Total commercial	49,557		46,214
Residential mortgages	13,855		13,318
Home equity loans	2,177		2,557
Home equity lines of credit	14,418		14,674
Home equity loans serviced by others (1)	860		986
Home equity lines of credit serviced by others (1)	273		389
Automobile	14,075		13,828
Student	5,516		4,359
Credit cards	1,613		1,634
Other retail	1,207		1,083
Total retail	53,994		52,828
Total loans and leases (2) (3)		$103,551		$99,042

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

⁽²⁾ Excluded from the table above are loans held for sale totaling $850 million and $365 million as of June 30, 2016 and December 31, 2015, respectively.

⁽³⁾ Mortgage loans serviced for others by the Company’s subsidiaries are not included above and amounted to $17.2 billion and $17.6 billion at June 30, 2016 and December 31, 2015, respectively.

During the three months endedJune 30, 2016, the Company purchased $348 million of student loans, $200 million of automobile loans and $63 million of residential mortgages. During the three months endedJune 30, 2015, the Company purchased $202 million of student loans, $416 million of automobile loans and $387 million of residential mortgages. During the six months endedJune 30, 2016, the Company purchased $717 million of student loans, $334 million of automobile loans and $183 million of residential mortgages. During the six months endedJune 30, 2015, the Company purchased $463 million of student loans, $809 million of automobile loans and $636 million of residential mortgages.

During the three months endedJune 30, 2016, the Company sold $108 million of residential mortgage loans and $45 million of commercial loans. During the three months endedJune 30, 2015, the Company sold $114 million of commercial loans. During the six months endedJune 30, 2016, the Company sold $281 million of residential mortgage loans and $118 million of commercial loans. During the six months endedJune 30, 2015, the Company sold $273 million of residential mortgage loans and $225 million of commercial loans.

Loans held for sale at fair value totaled $478 million and $325 million at June 30, 2016 and December 31, 2015, respectively, and consisted of residential mortgages originated for sale of $424 million and the commercial trading portfolio of $54 million as of June 30, 2016. As of December 31, 2015, residential mortgages originated for sale were $268 million and the commercial trading portfolio totaled $57 million.

Other loans held for sale, at lower of cost or market value, totaled $372 million and $40 million as of June 30, 2016 and December 31, 2015, respectively. Other loans held for sale, as of June 30, 2016, contained $322 million of TDRs, including $262 million of residential mortgages and $60 million of home equity loans. Other loans held for sale also included commercial loans associated with the Company’s syndications business of $50 million as of June 30, 2016 compared with $40 million as of December 31, 2015.

Loans pledged as collateral for FHLB borrowed funds totaled $23.2 billion at June 30, 2016 and December 31, 2015. This collateral consists primarily of residential mortgages and home equity loans. Loans pledged as collateral to support the contingent ability to borrow at the FRB discount window, if necessary, totaled $16.6 billion and $15.9 billion at June 30, 2016 and December 31, 2015, respectively.

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ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK

6 Months Ended

Jun. 30, 2016

Receivables [Abstract]

ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK

ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK

The allowance for credit losses consists of the ALLL and the reserve for unfunded commitments. It is increased through a provision for credit losses that is charged to earnings, based on the Company’s quarterly evaluation of the loan portfolio, and is reduced by net charge-offs and the ALLL associated with sold loans. See Note 1 “Significant Accounting Policies” to the Company’s audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2015, for a detailed discussion of ALLL reserve methodologies and estimation techniques.

On a quarterly basis, the Company reviews and refines its estimate of the allowance for credit losses, taking into consideration changes in portfolio size and composition, historical loss experience, internal risk ratings, current economic conditions, industry performance trends and other pertinent information.

There were no material changes in assumptions or estimation techniques compared with prior periods that impacted the determination of the current period’s ALLL and the reserve for unfunded lending commitments.

The following is a summary of changes in the allowance for credit losses:

	Three Months Ended June 30, 2016									Six Months Ended June 30, 2016
(in millions)	Commercial			Retail			Total			Commercial			Retail			Total
Allowance for loan and lease losses, beginning of period		$633			$591			$1,224			$596			$620			$1,216
Charge-offs	(7		)	(106		)	(113		)	(20		)	(219		)	(239		)
Recoveries	5			43			48			9			82			91
Net charge-offs	(2		)	(63		)	(65		)	(11		)	(137		)	(148		)
Provision charged to income	45			42			87			91			87			178
Allowance for loan and lease losses, end of period	676			570			1,246			676			570			1,246
Reserve for unfunded lending commitments, beginning of period	58			—			58			58			—			58
Credit for unfunded lending commitments	3			—			3			3			—			3
Reserve for unfunded lending commitments as of period end	61			—			61			61			—			61
Total allowance for credit losses as of period end		$737			$570			$1,307			$737			$570			$1,307

	Three Months Ended June 30, 2015									Six Months Ended June 30, 2015
(in millions)	Commercial			Retail			Total			Commercial			Retail			Total
Allowance for loan and lease losses, beginning of period		$578			$624			$1,202			$544			$651			$1,195
Charge-offs	(15		)	(106		)	(121		)	(21		)	(215		)	(236		)
Recoveries	8			35			43			36			68			104
Net recoveries (charge-offs)	(7		)	(71		)	(78		)	15			(147		)	(132		)
Sales/Other	—			—			—			—			(2		)	(2		)
Provision charged to income	(6		)	83			77			6			134			140
Allowance for loan and lease losses, end of period	565			636			1,201			565			636			1,201
Reserve for unfunded lending commitments, beginning of period	56			—			56			61			—			61
Provision for unfunded lending commitments	—			—			—			(5		)	—			(5		)
Reserve for unfunded lending commitments as of period end	56			—			56			56			—			56
Total allowance for credit losses as of period end		$621			$636			$1,257			$621			$636			$1,257

The recorded investment in loans and leases based on the Company’s evaluation methodology is as follows:

	June 30, 2016						December 31, 2015
(in millions)	Commercial		Retail		Total		Commercial		Retail		Total
Individually evaluated		$408		$802		$1,210		$218		$1,165		$1,383
Formula-based evaluation	49,149		53,192		102,341		45,996		51,663		97,659
Total		$49,557		$53,994		$103,551		$46,214		$52,828		$99,042

The following is a summary of the allowance for credit losses by evaluation method:

	June 30, 2016						December 31, 2015
(in millions)	Commercial		Retail		Total		Commercial		Retail		Total
Individually evaluated		$52		$79		$131		$36		$101		$137
Formula-based evaluation	685		491		1,176		618		519		1,137
Allowance for credit losses		$737		$570		$1,307		$654		$620		$1,274

For commercial loans and leases, the Company utilizes regulatory classification ratings to monitor credit quality. Loans with a “pass” rating are those that the Company believes will be fully repaid in accordance with the contractual loan terms. Commercial loans and leases that are “criticized” are those that have some weakness that indicates an increased probability of future loss. For retail loans, the Company primarily uses the loan’s payment and delinquency status to monitor credit quality. The further a loan is past due, the greater the likelihood of future credit loss. These credit quality indicators for both commercial and retail loans are continually updated and monitored.

The recorded investment in classes of commercial loans and leases based on regulatory classification ratings is as follows:

	June 30, 2016
			Criticized
(in millions)	Pass		Special Mention		Substandard		Doubtful		Total
Commercial		$33,931		$855		$1,015		$126		$35,927
Commercial real estate	9,281		318		156		70		9,825
Leases	3,603		80		122		—		3,805
Total		$46,815		$1,253		$1,293		$196		$49,557

	December 31, 2015
			Criticized
(in millions)	Pass		Special Mention		Substandard		Doubtful		Total
Commercial		$31,276		$911		$1,002		$75		$33,264
Commercial real estate	8,450		272		171		78		8,971
Leases	3,880		55		44		—		3,979
Total		$43,606		$1,238		$1,217		$153		$46,214

The recorded investment in classes of retail loans, categorized by delinquency status is as follows:

	June 30, 2016
(in millions)	Current		1-29 Days Past Due		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total
Residential mortgages		$13,571		$89		$40		$10		$145		$13,855
Home equity loans	1,937		133		20		8		79		2,177
Home equity lines of credit	13,755		388		44		24		207		14,418
Home equity loans serviced by others (1)	781		48		10		4		17		860
Home equity lines of credit serviced by others (1)	184		37		12		5		35		273
Automobile	12,959		926		122		31		37		14,075
Student	5,340		105		18		11		42		5,516
Credit cards	1,539		42		10		8		14		1,613
Other retail	1,149		44		6		4		4		1,207
Total		$51,215		$1,812		$282		$105		$580		$53,994

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

	December 31, 2015
(in millions)	Current		1-29 Days Past Due		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total
Residential mortgages		$12,905		$97		$54		$16		$246		$13,318
Home equity loans	2,245		164		32		12		104		2,557
Home equity lines of credit	13,982		407		60		20		205		14,674
Home equity loans serviced by others (1)	886		60		14		6		20		986
Home equity lines of credit serviced by others (1)	296		48		10		6		29		389
Automobile	12,670		964		127		32		35		13,828
Student	4,175		113		19		11		41		4,359
Credit cards	1,554		44		11		9		16		1,634
Other retail	1,013		53		8		4		5		1,083
Total		$49,726		$1,950		$335		$116		$701		$52,828

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

Nonperforming Assets

The following table presents nonperforming loans and leases and loans accruing 90 days or more past due:

	Nonperforming (1)				Accruing and 90 days or more past due
(in millions)	June 30, 2016		December 31, 2015		June 30, 2016		December 31, 2015
Commercial		$277		$71		$—		$1
Commercial real estate	70		77		4		—
Leases	—		—		—		—
Total commercial	347		148		4		1
Residential mortgages (2) (3) (4)	174		331		15		—
Home equity loans (2)	104		135		—		—
Home equity lines of credit	251		272		—		—
Home equity loans serviced by others (5)	33		38		—		—
Home equity lines of credit serviced by others (5)	38		32		—		—
Automobile	43		42		—		—
Student	37		41		6		6
Credit card	14		16		—		—
Other retail	3		5		1		2
Total retail	697		912		22		8
Total		$1,044		$1,060		$26		$9

⁽¹⁾ Effective March 31, 2016, the Company began excluding loans 90 days or more past due and still accruing from nonperforming loans and leases. Nonperforming loans and leases as of December 31, 2015 included loans and leases on nonaccrual of $1.051 billion and loans and leases accruing and 90 days or more past due of $9 million.

⁽²⁾ Nonperforming balances at June 30, 2016 excluded $71 million of troubled debt restructured loans held for sale, including $54 million of residential mortgages and $17 million of home equity loans.

⁽³⁾ Effective March 31, 2016, the Company began excluding first lien residential mortgage loans that are 100% guaranteed by the Federal Housing Administration from nonperforming balances. As of June 30, 2016, $15 million of these loans were accruing and 90 days or more past due.

⁽⁴⁾ Effective March 31, 2016, the Company began excluding guaranteed residential mortgage loans sold to GNMA for which the Company had the right, but not the obligation, to repurchase from nonperforming balances. As of June 30, 2016 these loans totaled $34 million. These loans are consolidated on the Company’s Consolidated Balance Sheets.

⁽⁵⁾ The Company's SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

A summary of other nonperforming assets is as follows:

(in millions)	June 30, 2016		December 31, 2015
Other nonperforming assets, net of valuation allowance:
Commercial		$1		$1
Retail	47		45
Other nonperforming assets, net of valuation allowance		$48		$46

Other nonperforming assets consist primarily of other real estate owned and are presented in other assets on the Consolidated Balance Sheets.

A summary of key performance indicators is as follows:

	June 30, 2016		December 31, 2015
Nonperforming commercial loans and leases as a percentage of total loans and leases (1)	0.34	%	0.15	%
Nonperforming retail loans as a percentage of total loans and leases (1)	0.67		0.92
Total nonperforming loans and leases as a percentage of total loans and leases (1)	1.01	%	1.07	%
Nonperforming commercial assets as a percentage of total assets (1)	0.24	%	0.11	%
Nonperforming retail assets as a percentage of total assets (1)	0.51		0.69
Total nonperforming assets as a percentage of total assets (1)	0.75	%	0.80	%

⁽¹⁾ December 31, 2015 ratios included loans accruing and 90 days or more past due of $1 million and $8 million for commercial and retail, respectively.

The recorded investment in mortgage loans collateralized by residential real estate property for which formal foreclosure proceedings are in process was $211 million and $257 million as of June 30, 2016 and December 31, 2015, respectively.

The following is an analysis of the age of the past due amounts (accruing and nonaccruing):

	June 30, 2016								December 31, 2015
(in millions)	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due
Commercial		$8		$23		$277		$308		$9		$4		$71		$84
Commercial real estate	2		5		74		81		30		3		77		110
Leases	1		—		—		1		9		1		—		10
Total commercial	11		28		351		390		48		8		148		204
Residential mortgages	40		10		145		195		54		16		246		316
Home equity loans	20		8		79		107		32		12		104		148
Home equity lines of credit	44		24		207		275		60		20		205		285
Home equity loans serviced by others (1)	10		4		17		31		14		6		20		40
Home equity lines of credit serviced by others (1)	12		5		35		52		10		6		29		45
Automobile	122		31		37		190		127		32		35		194
Student	18		11		42		71		19		11		41		71
Credit cards	10		8		14		32		11		9		16		36
Other retail	6		4		4		14		8		4		5		17
Total retail	282		105		580		967		335		116		701		1,152
Total		$293		$133		$931		$1,357		$383		$124		$849		$1,356

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

Impaired loans include: (1) nonaccruing larger balance commercial loans (greater than $3 million carrying value); and (2) commercial and retail TDRs (excluding loans held for sale). The following is a summary of impaired loan information by class:

	June 30, 2016
(in millions)	Impaired Loans With a Related Allowance		Allowance on Impaired Loans		Impaired Loans Without a Related Allowance		Unpaid Contractual Balance		Total Recorded Investment in Impaired Loans
Commercial		$216		$46		$139		$391		$355
Commercial real estate	42		6		11		56		53
Total commercial	258		52		150		447		408
Residential mortgages	34		4		130		214		164
Home equity loans	51		5		107		198		158
Home equity lines of credit	26		3		160		223		186
Home equity loans serviced by others (1)	45		7		21		79		66
Home equity lines of credit serviced by others (1)	3		—		7		14		10
Automobile	4		—		14		23		18
Student	161		46		1		162		162
Credit cards	26		11		—		27		26
Other retail	10		3		2		14		12
Total retail	360		79		442		954		802
Total		$618		$131		$592		$1,401		$1,210

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

	December 31, 2015
(in millions)	Impaired Loans With a Related Allowance		Allowance on Impaired Loans		Impaired Loans Without a Related Allowance		Unpaid Contractual Balance		Total Recorded Investment in Impaired Loans
Commercial		$92		$23		$58		$144		$150
Commercial real estate	56		13		12		70		68
Total commercial	148		36		70		214		218
Residential mortgages	121		16		320		608		441
Home equity loans	85		11		139		283		224
Home equity lines of credit	27		2		167		234		194
Home equity loans serviced by others (1)	50		8		24		88		74
Home equity lines of credit serviced by others (1)	3		1		7		14		10
Automobile	3		—		11		19		14
Student	163		48		2		165		165
Credit cards	28		11		—		28		28
Other retail	13		4		2		18		15
Total retail	493		101		672		1,457		1,165
Total		$641		$137		$742		$1,671		$1,383

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

Additional information on impaired loans is as follows:

	Three Months Ended June 30,
	2016				2015
(in millions)	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
Commercial		$2		$324		$1		$129
Commercial real estate	—		58		—		51
Total commercial	2		382		1		180
Residential mortgages	1		160		4		436
Home equity loans	1		158		3		272
Home equity lines of credit	2		184		1		151
Home equity loans serviced by others (1)	1		66		1		84
Home equity lines of credit serviced by others (1)	—		10		—		10
Automobile	—		15		—		12
Student	2		161		2		164
Credit cards	1		26		—		30
Other retail	—		13		—		18
Total retail	8		793		11		1,177
Total		$10		$1,175		$12		$1,357

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

	Six Months Ended June 30,
	2016				2015
(in millions)	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
Commercial		$3		$248		$1		$133
Commercial real estate	—		61		1		54
Total commercial	3		309		2		187
Residential mortgages	2		156		8		433
Home equity loans	3		154		5		266
Home equity lines of credit	3		182		2		150
Home equity loans serviced by others (1)	2		67		2		84
Home equity lines of credit serviced by others (1)	—		9		—		10
Automobile	—		14		—		11
Student	4		160		4		162
Credit cards	1		26		1		29
Other retail	—		13		—		18
Total retail	15		781		22		1,163
Total		$18		$1,090		$24		$1,350

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

Troubled Debt Restructurings

A loan modification is identified as a TDR when the Company or a bankruptcy court grants the borrower a concession the Company would not otherwise make in response to the borrower’s financial difficulties. TDRs typically result from the Company’s loss mitigation efforts and are undertaken in order to improve the likelihood of recovery and continuity of the relationship. The Company’s loan modifications are handled on a case-by-case basis and are negotiated to achieve mutually agreeable terms that maximize loan collectability and meet the borrower’s financial needs. Concessions granted in TDRs for all classes of loans may include lowering the interest rate, forgiving a portion of principal, extending the loan term, lowering scheduled payments for a specified period of time, principal forbearance, or capitalizing past due amounts. A rate increase can be a concession if the increased rate is lower than a market rate for debt with risk similar to that of the restructured loan. TDRs for commercial loans and leases may also involve creating a multiple note structure, accepting non-cash assets, accepting an equity interest, or receiving a performance-based fee. In some cases, a TDR may involve multiple concessions. The financial effects of TDRs for all loan classes may include lower income (either due to a lower interest rate or a delay in the timing of cash flows), larger loan loss provisions, and accelerated charge-offs if the modification renders the loan collateral-dependent. In some cases, interest income throughout the term of the loan may increase if, for example, the loan is extended or the interest rate is increased as a result of the restructuring.

Because TDRs are impaired loans, the Company measures impairment by comparing the present value of expected future cash flows, or when appropriate, the fair value of collateral, to the loan’s recorded investment. Any excess of recorded investment over the present value of expected future cash flows or collateral value is recognized by creating a valuation allowance or increasing an existing valuation allowance. Any portion of the loan’s recorded investment the Company does not expect to collect as a result of the modification is charged off at the time of modification.

Commercial TDRs were $126 million on June 30, 2016 and and $155 million on December 31, 2015. Retail TDRs totaled $802 million on June 30, 2016 and $1.2 billion on December 31, 2015. Other loans held for sale, as of June 30, 2016, contained $322 million of TDRs, including $262 million of residential mortgages and $60 million of home equity loans. Commitments to lend additional funds to debtors owing receivables which were TDRs were $30 million and $15 million on June 30, 2016 and December 31, 2015, respectively.

The following table summarizes how loans were modified during the three months endedJune 30, 2016, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances include loans that became TDRs during 2016 and were paid off in full, charged off, or sold prior to June 30, 2016.

	Primary Modification Types
	Interest Rate Reduction (1)					Maturity Extension (2)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	3		$—		$—	28		$4		$4
Commercial real estate	—	—		—		—	—		—
Total commercial	3	—		—		28	4		4
Residential mortgages	3	1		1		10	2		2
Home equity loans	15	1		1		21	2		2
Home equity lines of credit	6	—		—		8	1		1
Home equity loans serviced by others (3)	3	—		—		—	—		—
Home equity lines of credit serviced by others (3)	2	—		—		3	1		1
Automobile	30	—		—		3	—		—
Student	—	—		—		—	—		—
Credit cards	552	3		3		—	—		—
Other retail	1	—		—		—	—		—
Total retail	612	5		5		45	6		6
Total	615		$5		$5	73		$10		$10

	Primary Modification Types
	Other (4)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification			Charge-offs Resulting from Modification
Commercial	4		$20		$21		$—			$—
Commercial real estate	—	—		—		—			—
Total commercial	4	20		21		—			—
Residential mortgages	67	7		7		—			—
Home equity loans	94	5		5		(1		)	—
Home equity lines of credit	92	6		6		—			—
Home equity loans serviced by others (3)	16	—		—		—			—
Home equity lines of credit serviced by others (3)	5	1		—		—			—
Automobile	348	7		6		—			1
Student	111	2		2		1			—
Credit cards	—	—		—		1			—
Other retail	5	—		—		—			—
Total retail	738	28		26		1			1
Total	742		$48		$47		$1			$1

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

⁽³⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

⁽⁴⁾ Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forbearance, capitalizing arrearages, and principal forgiveness. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

The following table summarizes how loans were modified during the three months endedJune 30, 2015, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances include loans that became TDRs during 2015 and were paid off in full, charged off, or sold prior to June 30, 2015.

	Primary Modification Types
	Interest Rate Reduction (1)					Maturity Extension (2)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	7		$1		$1	36		$2		$2
Commercial real estate	—	—		—		—	—		—
Total commercial	7	1		1		36	2		2
Residential mortgages	20	3		3		9	2		2
Home equity loans	26	1		1		49	11		11
Home equity lines of credit	—	—		—		—	—		—
Home equity loans serviced by others (3)	5	—		—		—	—		—
Automobile	18	1		1		1	—		—
Credit cards	630	3		3		—	—		—
Total retail	699	8		8		59	13		13
Total	706		$9		$9	95		$15		$15

	Primary Modification Types
	Other (4)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification		Charge-offs Resulting from Modification
Commercial	3		$—		$—		$—		$—
Commercial real estate	—	—		—		—		—
Total commercial	3	—		—		—		—
Residential mortgages	42	4		4		—		—
Home equity loans	97	7		7		—		—
Home equity lines of credit	78	5		5		—		1
Home equity loans serviced by others (3)	25	1		1		—		—
Home equity lines of credit serviced by others (3)	15	1		1		—		—
Automobile	172	3		2		—		—
Student	369	7		7		1		—
Credit cards	—	—		—		1		—
Other retail	4	—		—		—		—
Total retail	802	28		27		2		1
Total	805		$28		$27		$2		$1

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

⁽³⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

⁽⁴⁾ Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forbearance, capitalizing arrearages, and principal forgiveness. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

The following table summarizes how loans were modified during the six months endedJune 30, 2016, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances include loans that became TDRs during 2016 and were paid off in full, charged off, or sold prior to June 30, 2016.

	Primary Modification Types
	Interest Rate Reduction (1)					Maturity Extension (2)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	8		$1		$1	54		$8		$8
Commercial real estate	—	—		—		—	—		—
Total commercial	8	1		1		54	8		8
Residential mortgages	25	4		4		16	3		3
Home equity loans	29	2		2		37	4		4
Home equity lines of credit	13	1		1		27	3		3
Home equity loans serviced by others (3)	6	—		—		—	—		—
Home equity lines of credit serviced by others (3)	2	—		—		4	1		1
Automobile	51	1		1		8	—		—
Student	—	—		—		—	—		—
Credit cards	1,081	6		6		—	—		—
Other retail	1	—		—		—	—		—
Total retail	1,208	14		14		92	11		11
Total	1,216		$15		$15	146		$19		$19

	Primary Modification Types
	Other (4)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification			Charge-offs Resulting from Modification
Commercial	9		$41		$41		($1	)		$—
Commercial real estate	—	—		—		—			—
Total commercial	9	41		41		(1		)	—
Residential mortgages	131	15		15		—			—
Home equity loans	181	11		11		(1		)	—
Home equity lines of credit	124	8		8		—			—
Home equity loans serviced by others (3)	34	1		1		—			—
Home equity lines of credit serviced by others (3)	13	1		—		—			—
Automobile	539	10		9		—			1
Student	297	6		6		2			—
Credit cards	—	—		—		1			—
Other retail	8	—		—		—			—
Total retail	1,327	52		50		2			1
Total	1,336		$93		$91		$1			$1

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

⁽³⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

⁽⁴⁾ Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forbearance, capitalizing arrearages, and principal forgiveness. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

The following table summarizes how loans were modified during the six months endedJune 30, 2015, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances include loans that became TDRs during 2015 and were paid off in full, charged off, or sold prior to June 30, 2015.

	Primary Modification Types
	Interest Rate Reduction (1)					Maturity Extension (2)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	14		$3		$3	64		$12		$12
Commercial real estate	1	—		—		—	—		—
Total commercial	15	3		3		64	12		12
Residential mortgages	53	9		9		19	4		4
Home equity loans	47	2		2		86	16		16
Home equity lines of credit	—	—		—		3	—		—
Home equity loans serviced by others (3)	22	1		1		—	—		—
Home equity lines of credit serviced by others (3)	—	—		—		—	—		—
Automobile	38	1		1		2	—		—
Student	—	—		—		—	—		—
Credit cards	1,234	7		7		—	—		—
Other retail	—	—		—		—	—		—
Total retail	1,394	20		20		110	20		20
Total	1,409		$23		$23	174		$32		$32

	Primary Modification Types
	Other (4)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification			Charge-offs Resulting from Modification
Commercial	4		$2		$2		($1	)		$—
Commercial real estate	1	4		4		—			—
Total commercial	5	6		6		(1		)	—
Residential mortgages	106	10		10		(1		)	—
Home equity loans	294	17		17		—			—
Home equity lines of credit	213	14		12		—			2
Home equity loans serviced by others (3)	71	3		3		—			1
Home equity lines of credit serviced by others (3)	22	1		1		—			—
Automobile	469	8		6		—			1
Student	750	14		14		3			—
Credit cards	—	—		—		1			—
Other retail	15	—		—		—			—
Total retail	1,940	67		63		3			4
Total	1,945		$73		$69		$2			$4

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

⁽³⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

⁽⁴⁾ Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forbearance, capitalizing arrearages, and principal forgiveness. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

The table below summarizes TDRs that defaulted during the three months endedJune 30, 2016 and 2015 within 12 months of their modification date. For purposes of this table, a payment default is defined as being past due 90 days or more under the modified terms. Amounts represent the loan’s recorded investment at the time of payment default. Loan data includes loans meeting the criteria that were paid off in full, charged off, or sold prior to June 30, 2016 and 2015. If a TDR of any loan type becomes 90 days past due after being modified, the loan is written down to the fair value of collateral less cost to sell. The amount written off is charged to the ALLL.

	Three Months Ended June 30,
	2016			2015
(dollars in millions)	Number of Contracts	Balance Defaulted		Number of Contracts	Balance Defaulted
Commercial	8		$3	8		$1
Commercial real estate	1	—		—	—
Total commercial	9	3		8	1
Residential mortgages	35	4		34	5
Home equity loans	32	2		32	2
Home equity lines of credit	20	1		32	1
Home equity loans serviced by others (1)	11	—		7	—
Home equity lines of credit serviced by others (1)	6	—		6	—
Automobile	22	1		19	—
Student	18	1		44	1
Credit cards	85	—		100	1
Other retail	—	—		1	—
Total retail	229	9		275	10
Total	238		$12	283		$11

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

The table below summarizes TDRs that defaulted during the six months endedJune 30, 2016 and 2015 within 12 months of their modification date.

	Six Months Ended June 30,
	2016			2015
(dollars in millions)	Number of Contracts	Balance Defaulted		Number of Contracts	Balance Defaulted
Commercial	11		$3	14		$1
Commercial real estate	1	—		—	—
Total commercial	12	3		14	1
Residential mortgages	89	12		83	11
Home equity loans	50	3		83	6
Home equity lines of credit	45	4		72	3
Home equity loans serviced by others (1)	21	1		23	1
Home equity lines of credit serviced by others (1)	11	—		7	—
Automobile	37	1		42	1
Student	31	1		109	2
Credit cards	206	1		202	1
Other retail	—	—		3	—
Total retail	490	23		624	25
Total	502		$26	638		$26

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

Concentrations of Credit Risk

Most of the Company’s business activity is with customers located in the New England, Mid-Atlantic and Midwest regions. Generally, loans are collateralized by assets including real estate, inventory, accounts receivable, other personal property and investment securities. As of June 30, 2016 and December 31, 2015, the Company had a significant amount of loans collateralized by residential and commercial real estate. There are no significant concentrations within the commercial loan or retail loan portfolios. Exposure to credit losses arising from lending transactions may fluctuate with fair values of collateral supporting loans, which may not perform according to contractual agreements. The Company’s policy is to collateralize loans to the extent necessary; however, unsecured loans are also granted on the basis of the financial strength of the applicant and the facts surrounding the transaction.

Certain loan products, including residential mortgages, home equity loans and lines of credit, and credit cards, have contractual features that may increase credit exposure to the Company in the event of an increase in interest rates or a decline in housing values. These products include loans that exceed 90% of the value of the underlying collateral (high LTV loans), interest-only and negative amortization residential mortgages, and loans with low introductory rates. Certain loans have more than one of these characteristics.

The following table presents balances of loans with these characteristics:

	June 30, 2016
(in millions)	Residential Mortgages		Home Equity Loans and Lines of Credit		Home Equity Products Serviced by Others		Credit Cards		Student		Total
High loan-to-value		$595		$782		$621		$—		$—		$1,998
Interest only/negative amortization	1,369		—		—		—		1		1,370
Low introductory rate	—		—		—		94		—		94
Multiple characteristics and other	4		—		—		—		—		4
Total		$1,968		$782		$621		$94		$1		$3,466

	December 31, 2015
(in millions)	Residential Mortgages		Home Equity Loans and Lines of Credit		Home Equity Products Serviced by Others		Credit Cards		Student		Total
High loan-to-value		$649		$1,038		$785		$—		$—		$2,472
Interest only/negative amortization	1,110		—		—		—		—		1,110
Low introductory rate	—		3		—		96		—		99
Multiple characteristics and other	14		—		—		—		—		14
Total		$1,773		$1,041		$785		$96		$—		$3,695

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VARIABLE INTEREST ENTITIES

6 Months Ended

Jun. 30, 2016

Equity Method Investments and Joint Ventures [Abstract]

Variable Interest Entities

VARIABLE INTEREST ENTITIES

The Company makes equity investments in various entities that are considered VIEs, as defined by GAAP. These investments primarily include ownership interests in limited partnerships that sponsor affordable housing projects and ownership interests in limited liability companies that sponsor renewable energy projects. A summary of these investments is as follows:

(in millions)	June 30, 2016		December 31, 2015
LIHTC investment included in other assets		$660		$598
LIHTC unfunded commitments included in other liabilities	365		365
Renewable energy investments included in other assets	117		118

Low Income Housing Tax Credit Partnerships

The purpose of the Company’s equity investments is to assist in achieving goals of the Community Reinvestment Act and to earn an adequate return of capital. The LIHTC partnerships are managed by general partners that have the power to direct the activities which most significantly affect the performance of the partnerships. The Company is therefore not the primary beneficiary of any LIHTC partnerships. Accordingly, the Company does not consolidate these VIEs and accounts for these investments in other assets on the Consolidated Balance Sheets.

The Company applies the proportional amortization method to account for its LIHTC investments. Under the proportional amortization method, the initial investment is amortized in proportion to the actual tax credits and other tax benefits to be received in the current period as compared to the total tax credits and other tax benefits expected to be received over the life of the investment. The amortization and tax benefits are included as a component of income tax expense. The Company reports its equity share of affordable housing partnership gains and losses as an adjustment to non-interest income. The Company reports its commitments to make future investments in other liabilities on the Consolidated Balance Sheets. The Company also receives tax credits, which are reported as a reduction of income tax expense (or increase to income tax benefit) related to these transactions.

    For the three months endedJune 30, 2016, the Company recognized $16 million of amortization expense, $14 million of tax credits and $7 million of other tax benefits associated with these investments in the provision for income taxes. For the six months endedJune 30, 2016, the Company recognized $31 million of amortization expense, $29 million of tax credits and $13 million of other tax benefits associated with these investments in the provision for income taxes. For the three months endedJune 30, 2015, the Company recognized $12 million of amortization expense, $12 million of tax credits and $5 million of other tax benefits associated with these investments in the provision for income taxes. For the six months endedJune 30, 2015, the Company recognized $24 million of amortization expense, $23 million of tax credits and $9 million of other tax benefits associated with these investments in the provision for income taxes. No LIHTC investment impairment losses were recognized during the three and six months ended June 30, 2016 and 2015, respectively

Renewable Energy Entities

The Company’s investments in renewable energy entities provide benefits from a return generated by government incentives plus other tax attributes that are associated with tax ownership (e.g., tax depreciation). As a tax equity investor, the Company does not have the power to direct the activities which most significantly affect the performance of these entities and therefore is not the primary beneficiary of any renewable energy entities. Accordingly, the Company does not consolidate these VIEs.

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MORTGAGE BANKING

6 Months Ended

Jun. 30, 2016

Mortgage Banking [Abstract]

MORTGAGE BANKING

MORTGAGE BANKING

In its mortgage banking business, the Company sells residential mortgages to government-sponsored entities and other parties, who may issue securities backed by pools of such loans. The Company retains no beneficial interests in these sales, but may retain the servicing rights of the loans sold. The Company is obligated to subsequently repurchase a loan if the purchaser discovers a standard representation or warranty violation such as noncompliance with eligibility requirements, customer fraud, or servicing violations. This primarily occurs during a loan file review.

The Company received proceeds from the sale of residential mortgages held for sale of $543 million and $649 million for the three months endedJune 30, 2016 and 2015, respectively, and $1.0 billion and $1.1 billion for the six months endedJune 30, 2016 and 2015, respectively.

The Company recognized gains on sales of residential mortgages held for sale of $16 million and $11 million for the three months endedJune 30, 2016 and 2015, respectively, and $30 million and $32 million for the six months endedJune 30, 2016 and 2015, respectively.

Pursuant to the standard representations and warranties obligations discussed above the Company repurchased residential mortgages totaling $2 million and $3 million for the three months endedJune 30, 2016 and 2015, respectively, and $4 million and $7 million for the six months endedJune 30, 2016 and 2015, respectively.

Mortgage servicing fees, a component of mortgage banking fees, were $13 million and $14 million for the three months endedJune 30, 2016 and 2015, respectively, and $26 million and $28 million for the six months endedJune 30, 2016 and 2015, respectively.

The Company recorded valuation recoveries of $1 million and $6 million for its MSRs for the three months endedJune 30, 2016 and 2015, respectively, and valuation charge-offs of $4 million and recoveries of $7 million for its MSRs for the six months endedJune 30, 2016 and 2015, respectively.

Changes related to MSRs were as follows:

	As of and for the Three Months Ended June 30,						As of and for the Six Months Ended June 30,
(in millions)	2016			2015			2016			2015
MSRs:
Balance as of beginning of period		$169			$180			$173			$184
Amount capitalized	5			7			10			13
Amortization	(8		)	(10		)	(17		)	(20		)
Carrying amount before valuation allowance	166			177			166			177
Valuation allowance for servicing assets:
Balance as of beginning of period	14			17			9			18
Valuation charge-offs (recoveries)	(1		)	(6		)	4			(7		)
Balance at end of period	13			11			13			11
Net carrying value of MSRs		$153			$166			$153			$166

MSRs are presented in other assets on the Consolidated Balance Sheets.

The fair value of MSRs is estimated using a valuation model that calculates the present value of estimated future net servicing cash flows, taking into consideration actual and expected mortgage loan prepayment rates, discount rates, contractual servicing fee income, servicing costs, default rates, ancillary income, and other economic factors, which are determined based on current market conditions. The valuation model uses a static discounted cash flow methodology incorporating current market interest rates. A static model does not attempt to forecast or predict the future direction of interest rates; rather it estimates the amount and timing of future servicing cash flows using current market interest rates. The current mortgage interest rate influences the expected prepayment rate and therefore, the length of the cash flows associated with the servicing asset, while the discount rate determines the present value of those cash flows. Expected mortgage loan prepayment assumptions are obtained using the QRM Multi Component prepayment model. The Company periodically obtains third-party valuations of its MSRs to assess the reasonableness of the fair value calculated by the valuation model.

The key economic assumptions used to estimate the value of MSRs are presented in the following table:

(dollars in millions)	June 30, 2016	December 31, 2015
Fair value	$165	$178
Weighted average life (in years)	4.9	5.4
Weighted average constant prepayment rate	13.5%	11.6%
Weighted average discount rate	9.7%	9.7%

The key economic assumptions used in estimating the fair value of MSRs capitalized during the period were as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2016	2015	2016	2015
Weighted average life (in years)	5.9	6.3	6.0	5.4
Weighted average constant prepayment rate	11.3%	9.8%	11.1%	11.1%
Weighted average discount rate	9.7%	9.7%	9.7%	9.6%

The sensitivity analysis below as of June 30, 2016 and December 31, 2015 presents the impact to current fair value of an immediate 50 basis points and 100 basis points adverse change in the key economic assumptions and presents the decline in fair value that would occur if the adverse change were realized. These sensitivities are hypothetical. The effect of a variation in a particular assumption on the fair value of the mortgage servicing rights is calculated independently without changing any other assumption. In reality, changes in one factor may result in changes in another (e.g., changes in interest rates, which drive changes in prepayment speeds, could result in changes in the discount rates), which might amplify or counteract the sensitivities. The primary risk inherent in the Company’s MSRs is an increase in prepayments of the underlying mortgage loans serviced, which is dependent upon market movements of interest rates.

(in millions)	June 30, 2016		December 31, 2015
Prepayment rate:
Decline in fair value from a 50 basis point decrease in interest rates		$6		$5
Decline in fair value from a 100 basis point decrease in interest rates		$17		$11
Weighted average discount rate:
Decline in fair value from a 50 basis point increase in weighted average discount rate		$3		$3
Decline in fair value from a 100 basis point increase in weighted average discount rate		$5		$6

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BORROWED FUNDS

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

BORROWED FUNDS

BORROWED FUNDS

The following is a summary of the Company’s short-term borrowed funds:

(in millions)	June 30, 2016		December 31, 2015
Securities sold under agreements to repurchase		$717		$802
Other short-term borrowed funds (primarily current portion of FHLB advances)	2,770		2,630
Total short-term borrowed funds		$3,487		$3,432

Key data related to short-term borrowed funds is presented in the following table:

(dollars in millions)	As of and for the Six Months Ended June 30, 2016			As of and for the Year Ended December 31, 2015
Weighted-average interest rate at period-end:
Federal funds purchased and securities sold under agreements to repurchase	0.00		%	0.15		%
Other short-term borrowed funds (primarily current portion of FHLB advances)	0.65			0.44
Maximum amount outstanding at month-end during the period:
Federal funds purchased and securities sold under agreements to repurchase		$1,274			$5,375
Other short-term borrowed funds (primarily current portion of FHLB advances)	4,764			7,004
Average amount outstanding during the period:
Federal funds purchased and securities sold under agreements to repurchase		$927			$3,364
Other short-term borrowed funds (primarily current portion of FHLB advances)	3,421			5,865
Weighted-average interest rate during the period:
Federal funds purchased and securities sold under agreements to repurchase	0.07		%	0.22		%
Other short-term borrowed funds (primarily current portion of FHLB advances)	0.60			0.28

Note: Balances are net of certain short-term receivables associated with reverse repurchase agreements. Interest expense includes the full cost of the repurchase agreements, but excludes certain hedging costs and broker fees.

The following is a summary of the Company’s long-term borrowed funds:

(in millions)	June 30, 2016		December 31, 2015
Citizens Financial Group, Inc.:
4.150% fixed rate subordinated debt, due 2022 (1)		$347		$350
5.158% fixed-to-floating rate subordinated debt, (LIBOR + 3.56%) callable, due 2023 (2)	333		333
3.750% fixed rate subordinated debt, due 2024 (2) (3)	250		250
4.023% fixed rate subordinated debt, due 2024 (2) (4)	218		331
4.082% fixed rate subordinated debt, due 2025 (2) (5)	355		331
4.350% fixed rate subordinated debt, due 2025 (6)	249		250
4.300% fixed rate subordinated debt, due 2025 (7)	749		750
Banking Subsidiaries:
1.600% senior unsecured notes, due 2017 (8) (9)	753		749
2.300% senior unsecured notes, due 2018 (8) (10)	756		747
2.450% senior unsecured notes, due 2019 (8) (11)	767		752
2.500% senior unsecured notes, due 2019 (8)(12)	753		—
2.550% senior unsecured notes, due 2021(8)(13)	1,004		—
Federal Home Loan advances due through 2033	5,264		5,018
Other	12		25
Total long-term borrowed funds		$11,810		$9,886

⁽¹⁾ These balances are comprised of: principal balances of $350 million at June 30, 2016 and December 31, 2015, as well as the impact of ($3) million of unamortized deferred issuance costs and discount at June 30, 2016.

⁽²⁾ Borrowed funds with RBS as of December 31, 2015. See Note 13 “Related Party Transactions and Significant Transactions with RBS” for further information.

⁽³⁾ Prior to January 1, 2016, interest was payable at a fixed rate per annum of 4.153%.

⁽⁴⁾ These balances are comprised of: principal balance of $208 million and $333 million at June 30, 2016 and December 31, 2015, respectively, as well as the impact from interest rate swaps of $10 million and ($2) million at June 30, 2016 and December 31, 2015, respectively. See Note 11 “Derivatives” for further information. In addition, on March 7, 2016, the Company repurchased $125 million of these securities from RBS. See Note 13 “Related Party Transactions and Significant Transactions with RBS” for further information.

⁽⁵⁾ These balances are comprised of: principal balance of $334 million at June 30, 2016 and December 31, 2015; impact from interest rate swaps of $21 million and ($3) million at June 30, 2016 and December 31, 2015, respectively. See Note 11 “Derivatives” for further information.

⁽⁶⁾ These balances are comprised of: principal balances of $250 million at June 30, 2016 and December 31, 2015, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2016.

⁽⁷⁾ These balances are comprised of: principal balances of $750 million at June 30, 2016 and December 31, 2015, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2016.

⁽⁸⁾ These securities were offered under CBNA’s Global Bank Note Program dated December 1, 2014.

⁽⁹⁾ These balances are comprised of: principal balances of $750 million at June 30, 2016 and December 31, 2015; impact from interest rate swaps of $4 million and ($1) million at June 30, 2016 and December 31, 2015, respectively; and ($1) million of unamortized deferred issuance costs and discount at June 30, 2016. See Note 11 “Derivatives” for further information.

⁽¹⁰⁾ These balances are comprised of: principal balances of $750 million at June 30, 2016 and December 31, 2015; impact from interest rate swaps of $8 million and ($3) million at June 30, 2016 and December 31, 2015, respectively; and ($2) million of unamortized deferred issuance costs and discount at June 30, 2016. See Note 11 “Derivatives” for further information.

⁽¹¹⁾ These balances are comprised of: principal balances of $750 million at June 30, 2016 and December 31, 2015; impact from interest rate swaps of $20 million and $2 million at June 30, 2016 and December 31, 2015, respectively; and ($3) million of unamortized deferred issuance costs and discount at June 30, 2016. See Note 11 “Derivatives” for further information.

⁽¹²⁾ The balance is comprised of: principal balance of $750 million at June 30, 2016; impact from interest rate swaps of $5 million and ($2) million of unamortized deferred issuance costs and discount at June 30, 2016. See Note 11 “Derivatives” for further information.

⁽¹³⁾ The balance is comprised of: principal balance of $1.0 billion at June 30, 2016; impact from interest rate swaps of $9 million and ($5) million of unamortized deferred issuance costs and discount at June 30, 2016. See Note 11 “Derivatives” for further information.

Advances, lines of credit, and letters of credit from the FHLB are collateralized by pledged mortgages and pledged securities at least sufficient to satisfy the collateral maintenance level established by the FHLB. The utilized borrowing capacity for FHLB advances and letters of credit was $12.0 billion and $11.3 billion at June 30, 2016 and December 31, 2015, respectively. The Company’s available FHLB borrowing capacity was $3.5 billionand $4.1 billion at June 30, 2016 and December 31, 2015, respectively. The Company can also borrow from the FRB discount window to meet short-term liquidity requirements. Collateral, such as investment securities and loans, was pledged to provide borrowing capacity at the FRB. At June 30, 2016, the Company’s unused secured borrowing capacity was approximately $32.2 billion, which includes unencumbered securities, FHLB borrowing capacity, and FRB discount window capacity.

The following is a summary of maturities for the Company’s long-term borrowed funds at June 30, 2016:

Year (in millions)	CFG Parent Company		Banking Subsidiaries		Consolidated
2017 or on demand		$—		$6,004		$6,004
2018	—		761		761
2019	—		1,521		1,521
2020	—		2		2
2021	—		1,009		1,009
2022 and thereafter	2,501		12		2,513
Total		$2,501		$9,309		$11,810

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STOCKHOLDERS' EQUITY

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS’ EQUITY

Preferred Stock

The Company had 100,000,000 shares authorized and 250,000 shares outstanding of $25.00 par value undesignated preferred stock as of June 30, 2016 and December 31, 2015, respectively. The Board of Directors or any authorized committee thereof are authorized to provide for the issuance of these shares in one or more series, and by filing a certificate pursuant to applicable law of the State of Delaware, to establish or change from time to time the number of shares of each such series, and to fix the designations, powers, including voting powers, full or limited, or no voting powers, preferences and the relative, participating, optional or other special rights of the shares of each series and any qualifications, limitations and restrictions thereof.

On April 6, 2015, the Company issued $250 million, or 250,000 shares, of 5.500% fixed-to-floating rate non-cumulative perpetual Series A Preferred Stock, par value of $25.00 per share with a liquidation preference $1,000 per share (the “Series A Preferred Stock”) to the initial purchasers in reliance on the exemption from registration provided by Section (4)(a)(2) of the Securities Act of 1933, as amended, for resale pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. As a result of this issuance, the Company received net proceeds of $247 million after underwriting discount.

The Series A Preferred Stock has no stated maturity and is not subject to any sinking fund or other obligation of the Company. Holders of the Series A Preferred Stock will be entitled to receive dividend payments when, and if, declared by the Company’s Board of Directors or a duly authorized committee thereof. Any such dividends will be payable on a semi-annual basis at an annual rate equal to 5.500%. On April 6, 2020, the Series A Preferred Stock converts to a quarterly floating-rate basis equal to three-month U.S. dollar LIBOR on the related dividend determination date plus 3.960%.

Citizens may redeem the Series A Preferred Stock, in whole or in part on any dividend payment date, on or after April 6, 2020 or, in whole but not in part, at any time within 90 days following a regulatory capital treatment event at a redemption price equal to $1,000 per share, plus any declared and unpaid dividends, without accumulation of any undeclared dividends. Citizens may not redeem shares of the Series A Preferred Stock without obtaining the prior approval of the FRBG if then required under applicable capital guidelines.

Shares of the Series A Preferred Stock have priority over the Company's common stock with regard to the payment of dividends and, as such, the Company may not pay dividends on or repurchase, redeem, or otherwise acquire for consideration shares of its common stock unless dividends for the Series A Preferred Stock have been declared for that period and sufficient funds have been set aside to make payment.

Except in certain limited circumstances, the Series A Preferred Stock does not have any voting rights.

Treasury Stock

On August 3, 2015, CFG used the net proceeds of its public offering of $250 million aggregate principal amount 4.350% Subordinated Notes due 2025 issued on July 31, 2015, to repurchase 9,615,384 shares of its outstanding common stock directly from RBS at a public offering price of $26.00 per share. The repurchased shares are held in treasury.

On April 7, 2015, the Company used the net proceeds of the Series A Preferred Stock offering to repurchase 10,473,397 shares of its common stock from RBS at a total cost of approximately $250 million and a price per share of $23.87, which equaled the volume-weighted average price of the Company’s common stock for all traded volume over the five trading days preceding the repurchase agreement date of April 1, 2015. The repurchased shares are held in treasury.

No treasury stock activity was recorded during the six months endedJune 30, 2016. During the year ended December 31, 2015, the Company recorded an additional 876,087 shares of treasury stock associated with share-based compensation plan activity for a total cost of $22 million at a weighted-average price per share of $25.50.

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EMPLOYEE BENEFITS

6 Months Ended

Jun. 30, 2016

Compensation and Retirement Disclosure [Abstract]

EMPLOYEE BENEFITS

EMPLOYEE BENEFITS

The Company maintains a non-contributory pension plan (the “Plan” or “qualified plan”) that was closed to new hires and re-hires effective January 1, 2009, and frozen to all participants effective December 31, 2012. Benefits under the Plan are based on employees’ years of service and highest five-year average of eligible compensation. The Plan is funded on a current basis, in compliance with the requirements of ERISA. The Company also provides an unfunded, non-qualified supplemental retirement plan (the “non-qualified plan”), which was closed and frozen effective December 12, 2012.

The following table presents the components of net periodic (income) cost for the Company’s qualified and non-qualified plans:

	Six Months Ended June 30,
	Qualified Plan						Non-Qualified Plan				Total
(in millions)	2016			2015			2016		2015		2016			2015
Service cost		$2			$2			$—		$—		$2			$2
Interest cost	22			22			2		2		24			24
Expected return on plan assets	(34		)	(37		)	—		—		(34		)	(37		)
Amortization of actuarial loss	7			6			1		1		8			7
Net periodic pension (income) cost		($3	)		($7	)		$3		$3		$—			($4	)

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INCOME TAXES

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Income Tax Provision

The provision for income taxes was $118 million and $92 million for the three months ended June 30, 2016 and 2015, respectively, resulting in effective tax rates of 32.6% and 32.7%, respectively. The provision for income taxes was $227 million and $198 million for the six months ended June 30, 2016 and 2015, respectively, resulting in effective tax rates of 32.7% and 33.2%, respectively. For the six months ended June 30, 2016 and 2015, the effective tax rate compared favorably to the statutory rate of 35% primarily as a result of the permanent benefits of tax credits and tax-exempt income.

Deferred Tax Liability

At June 30, 2016, the Company reported a net deferred tax liability of $961 million, compared to a $730 million liability as of December 31, 2015. The increase in the net deferred tax liability is primarily attributable to the tax effect of net unrealized gains on securities and derivatives arising during the period and the tax effect of current year timing adjustments.

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DERIVATIVES

6 Months Ended

Jun. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES

DERIVATIVES

In the normal course of business, the Company enters into a variety of derivative transactions in order to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates and foreign currency exchange rates. The Company does not use derivatives for speculative purposes.

The Company’s derivative instruments are recognized on the Consolidated Balance Sheets at fair value. Information regarding the valuation methodology and inputs used to estimate the fair value of the Company’s derivative instruments is described in Note 14 “Fair Value Measurements.”

The following table identifies derivative instruments included on the Consolidated Balance Sheets in derivative assets and derivative liabilities:

	June 30, 2016								December 31, 2015
(in millions)	Notional Amount (1)		Derivative Assets			Derivative Liabilities			Notional Amount (1)		Derivative Assets			Derivative Liabilities
Derivatives designated as hedging instruments:
Interest rate contracts		$15,500		$425			$255			$16,750		$96			$50
Derivatives not designated as hedging instruments:
Interest rate contracts	39,606		810			723			33,719		540			455
Foreign exchange contracts	9,490		193			185			8,366		163			156
Other contracts	1,491		15			14			981		8			5
Total derivatives not designated as hedging instruments			1,018			922					711			616
Gross derivative fair values			1,443			1,177					807			666
Less: Gross amounts offset in the Consolidated Balance Sheets (2)			(130		)	(130		)			(178		)	(178		)
Less: Cash collateral applied (2)			(1		)	(37		)			(4		)	(3		)
Total net derivative fair values presented in the Consolidated Balance Sheets (3)				$1,312			$1,010					$625			$485

⁽¹⁾ The notional or contractual amount of interest rate derivatives and foreign exchange contracts is the amount upon which interest and other payments under the contract are based. Notional amounts are typically not exchanged. Therefore, notional amounts should not be taken as the measure of credit or market risk, as they do not measure the true economic risk of these contracts.

⁽²⁾ Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle positive and negative positions.

⁽³⁾ The Company also offsets assets and liabilities associated with repurchase agreements on the Consolidated Balance Sheets. See Note 2 “Securities” for further information.

The Company’s derivative transactions are internally divided into three sub-groups: institutional, customer and residential loan.

Institutional derivatives

The institutional derivatives portfolio primarily consists of interest rate swap agreements that are used to hedge the interest rate risk associated with the Company’s loans and financing liabilities (i.e., borrowed funds, deposits, etc.). The goal of the Company’s interest rate hedging activities is to manage interest rate sensitivity so that movements in interest rates do not significantly adversely affect net interest income.

The Company enters into certain interest rate swap agreements to hedge the risk associated with floating rate loans. By entering into pay-floating/receive-fixed interest rate swaps, the Company was able to minimize the variability in the cash flows of these assets due to changes in interest rates. The Company has outstanding interest rate swap agreements designed to hedge a portion of the Company’s borrowed funds and deposit liabilities. By entering into a pay-fixed/receive-floating interest rate swap, a portion of these liabilities has been effectively converted to a fixed-rate liability for the term of the interest rate swap agreement. The Company has also entered into a forward-starting interest rate swap to minimize the exposure to variability in the interest cash flows on a forecasted fixed rate debt issuance.

The Company also uses receive-fixed/pay-floating interest rate swaps to manage the interest rate exposure on its medium term borrowings.

Customer derivatives

The customer derivatives portfolio consists of interest rate swap agreements and option contracts that are transacted to meet the financing needs of the Company’s customers. Swap agreements and interest rate option agreements are transacted to effectively minimize the Company’s market risk associated with the customer derivative products. The customer derivatives portfolio also includes foreign exchange contracts that are entered into on behalf of customers for the purpose of hedging exposure related to cash orders and loans and deposits denominated in foreign currency. The primary risks associated with these transactions arise from exposure to changes in foreign currency exchange rates and the ability of the counterparties to meet the terms of the contract. To manage this market risk, the Company simultaneously enters into offsetting foreign exchange contracts.

Residential loan derivatives

The Company enters into residential loan commitments that allow residential mortgage customers to lock in the interest rate on a residential mortgage while the loan undergoes the underwriting process. The Company also uses forward sales contracts to protect the value of residential mortgage loans and loan commitments that are being underwritten for future sale to investors in the secondary market.

The Company has certain derivative transactions that are designated as hedging instruments described as follows:

Derivatives designated as hedging instruments

The Company’s institutional hedging portfolio qualifies for hedge accounting. This includes interest rate swaps that are designated in highly effective fair value and cash flow hedging relationships. The Company formally documents at inception all hedging relationships, as well as risk management objectives and strategies for undertaking various accounting hedges. Additionally, the Company uses dollar offset or regression analysis at the hedge’s inception, and monthly thereafter to assess whether the derivatives are expected to be, or have been, highly effective in offsetting changes in the hedged item’s expected cash flows. The Company discontinues hedge accounting when it is determined that a derivative is not expected to be or has ceased to be effective as a hedge, and then reflects changes in fair value in earnings after termination of the hedge relationship.

Fair value hedges

The Company entered into interest rate swap agreements to manage the interest rate exposure on its medium term borrowings. The changes in fair value of the fair value hedges, to the extent that the hedging relationship is effective, are recorded through earnings and offset against changes in the fair value of the hedged item.

The following tables summarize certain information related to the Company’s fair value hedges:

	The Effect of Fair Value Hedges on Net Income
	Amounts Recognized in Other Income for the
	Three Months Ended June 30, 2016							Three Months Ended June 30, 2015
(in millions)	Derivative		Hedged Item			Hedge Ineffectiveness		Derivative			Hedged Item		Hedge Ineffectiveness
Hedges of interest rate risk on borrowings using interest rate swaps		$32		($31	)		$1		($3	)		$3		$—

	The Effect of Fair Value Hedges on Net Income
	Amounts Recognized in Other Income for the
	Six Months Ended June 30, 2016							Six Months Ended June 30, 2015
(in millions)	Derivative		Hedged Item			Hedge Ineffectiveness		Derivative		Hedged Item			Hedge Ineffectiveness
Hedges of interest rate risk on borrowings using interest rate swaps		$84		($83	)		$1		$6		($6	)		$—

Cash flow hedges

The Company has outstanding interest rate swap agreements designed to hedge a portion of the Company’s floating rate assets, financing liabilities (including its borrowed funds), and a forecasted debt issuance. All of these swaps have been deemed as highly effective cash flow hedges. The effective portion of the hedging gains and losses associated with these hedges are recorded in OCI; the ineffective portion of the hedging gains and losses is recorded in earnings (other income). Hedging gains and losses on derivative contracts reclassified from OCI to current period earnings are included in the line item in the accompanying Consolidated Statements of Operations in which the hedged item is recorded and in the same period that the hedged item affects earnings. During the next 12 months, approximately $4 million of net gain (pre-tax) on derivative instruments included in OCI is expected to be reclassified to net interest income in the Consolidated Statements of Operations.

Hedging gains and losses associated with the Company’s cash flow hedges are immediately reclassified from OCI to current period earnings (other income) if it becomes probable that the hedged forecasted transactions will not occur during the originally specified time period.

The following table summarizes certain information related to the Company’s cash flow hedges:

The Effect of Cash Flow Hedges on Net Income and Stockholders' Equity
	Amounts Recognized for the
	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2016			2015			2016			2015
Effective portion of gain (loss) recognized in OCI (1)		$21			($8	)		$75			$96
Amounts reclassified from OCI to interest income (2)	21			17			43			35
Amounts reclassified from OCI to interest expense (2)	(8		)	(14		)	(16		)	(29		)

⁽¹⁾ The cumulative effective gains and losses on the Company’s cash flow hedging activities are included on the accumulated other comprehensive loss line item on the Consolidated Balance Sheets.

⁽²⁾ This amount includes both (a) the amortization of effective gains and losses associated with the Company’s terminated cash flow hedges and (b) the current reporting period’s interest settlements realized on the Company’s active cash flow hedges. Both (a) and (b) were previously included on the accumulated other comprehensive loss line item on the Consolidated Balance Sheets and were subsequently recorded as adjustments to the interest expense of the underlying hedged item.

Economic hedges

The Company’s customer derivatives are recorded on the Consolidated Balance Sheets at fair value. These include interest rate and foreign exchange derivative contracts that are transacted to meet the hedging and financing needs of the Company’s customers. Mark-to-market adjustments to the fair value of customer related interest rate contracts are included in other income in the accompanying Consolidated Statements of Operations. Mark-to-market adjustments to the fair value of foreign exchange contracts relating to foreign currency loans are included in interest and fees on loans and leases in the accompanying Consolidated Statements of Operations, while all other foreign currency contract fair value changes are included in foreign exchange and letter of credit fees. In both cases, the mark-to-market gains and losses associated with the customer derivatives are mitigated by the mark-to-market gains and losses on the offsetting interest rate and foreign exchange derivative contracts transacted.

The Company’s residential loan derivatives (including residential loan commitments and forward sales contracts) are recorded on the Consolidated Balance Sheets at fair value. Mark-to-market adjustments to the fair value of residential loan commitments and forward sale contracts are included in noninterest income under mortgage banking fees.

The following table summarizes certain information related to the Company’s customer derivatives and economic hedges:

The Effect of Customer Derivatives and Economic Hedges on Net Income
	Amounts Recognized in Noninterest Income for the
	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2016			2015			2016			2015
Customer derivative contracts
Customer interest rate contracts (1)		($2	)		($9	)		$95			$64
Customer foreign exchange contracts (1)	(23		)	18			28			(17		)
Residential loan commitments (2)	3			(7		)	7			(7		)
Economic hedges
Offsetting derivatives transactions to hedge interest rate risk on customer interest rate contracts (1)	15			17			(76		)	(51		)
Offsetting derivatives transactions to hedge foreign exchange risk on customer foreign exchange contracts (3)	23			(19		)	(27		)	16
Forward sale contracts (2)	(5		)	3			(10		)	2
Total		$11			$3			$17			$7

⁽¹⁾ Reported in other income on the Consolidated Statements of Operations.

⁽²⁾ Reported in mortgage banking fees on the Consolidated Statements of Operations.

⁽³⁾ Reported in foreign exchange and letter of credit fees on the Consolidated Statements of Operations.

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

The following is a summary of outstanding off-balance sheet arrangements:

(in millions)	June 30, 2016		December 31, 2015
Commitment amount:
Undrawn commitments to extend credit		$58,622		$56,524
Financial standby letters of credit	1,946		2,010
Performance letters of credit	37		42
Commercial letters of credit	70		87
Marketing rights	46		47
Risk participation agreements	64		26
Residential mortgage loans sold with recourse	9		10
Total		$60,794		$58,746

Commitments to Extend Credit

Commitments to extend credit are agreements to lend to customers in accordance with conditions contractually agreed upon in advance. Generally, the commitments have fixed expiration dates or termination clauses and may require payment of a fee. Since many of these commitments are expected to expire without being drawn upon, the contract amounts are not necessarily indicative of future cash requirements.

Letters of Credit

Standby letters of credit, both financial and performance, are issued by the Company for its customers. They are used as conditional guarantees of payment to a third party in the event the customer either fails to make specific payments (financial) or fails to complete a specific project (performance). Commercial letters of credit are used to facilitate the import of goods. The commercial letter of credit is used as the method of payment to the Company’s customers’ suppliers. The Company’s exposure to credit loss in the event of counterparty nonperformance in connection with the above instruments is represented by the contractual amount of those instruments, net of the value of collateral held. Standby letters of credit and commercial letters of credit are issued for terms of up to ten years and one year, respectively.

Generally, letters of credit are collateralized by cash, accounts receivable, inventory or investment securities. Credit risk associated with letters of credit is considered in determining the appropriate amounts of reserves for unfunded commitments.

The Company recognizes a liability on the Consolidated Balance Sheets representing its obligation to stand ready to perform over the term of the standby letters of credit in the event that the specified triggering events occur. The liability for these guarantees was $3 million at June 30, 2016 and December 31, 2015.

Marketing Rights

During 2003, the Company entered into a 25-year agreement to acquire the naming and marketing rights of a baseball stadium in Pennsylvania. The Company paid $1 million for the six months ended June 30, 2016 and $3 million for the year ended December 31, 2015, and is obligated to pay $46 million over the remainder of the contract.

Risk Participation Agreements

RPAs are guarantees issued by the Company to other parties for a fee, whereby the Company agrees to participate in the credit risk of a derivative customer of the other party. Under the terms of these agreements, the “participating bank” receives a fee from the “lead bank” in exchange for the guarantee of reimbursement if the customer defaults on an interest rate swap. The interest rate swap is transacted such that any and all exchanges of interest payments (favorable and unfavorable) are made between the lead bank and the customer. In the event that an early termination of the swap occurs and the customer is unable to make a required close out payment, the participating bank assumes that obligation and is required to make this payment.

RPAs where the Company acts as the lead bank are referred to as “participations-out,” in reference to the credit risk associated with the customer derivatives being transferred out of the Company. Participations-out generally occur concurrently with the sale of new customer derivatives. RPAs where the Company acts as the participating bank are referred to as “participations-in,” in reference to the credit risk associated with the counterparty’s derivatives being assumed by the Company. The Company’s maximum credit exposure is based on its proportionate share of the settlement amount of the referenced interest rate swap. Settlement amounts are generally calculated based on the fair value of the swap plus outstanding accrued interest receivables from the customer. The Company’s estimate of the credit exposure associated with its risk participations-in as of June 30, 2016 and December 31, 2015 is $64 million and $26 million, respectively. The current amount of credit exposure is spread out over 89 counterparties. RPAs generally have terms ranging from 1-5 years; however, certain outstanding agreements have terms as long as 10 years.

Other Commitments

On January 7, 2016, the Company entered into an agreement to purchase student loans on a quarterly basis beginning with the first calendar quarter in 2016 and ending with the fourth calendar quarter in 2016. Under the terms of the agreement, the Company committed to purchase a minimum of $125 million of loans per quarter. The minimum and maximum amount of the aggregate purchase principal balance of loans under the terms of the agreement are $500 million and $1 billion, respectively. The agreement will terminate immediately if at any time during its term the aggregate purchase principal balance of loans equals the maximum amount. The agreement may be extended by written agreement of the parties for an additional four quarters. The Company may terminate the agreement at will with payment of a termination fee equal to the product of $1 million times the number of calendar quarters remaining in the term.

The Company’s agreement to purchase automobile loans, originally entered into in May 2014, was most recently amended on February 18, 2016. For quarterly periods on or after August 1, 2015, the minimum and maximum purchases are $50 million and $200 million, respectively. The agreement automatically renews until terminated by either party. The Company may cancel the agreement at will with payment of a variable termination fee. There is no termination fee after May 2017.

The Company’s commercial loan trading desk provides ongoing secondary market support and liquidity to its clients. Unsettled loan trades (i.e., loan purchase contracts) represent firm commitments to purchase loans from a third party at an agreed-upon price. Principal amounts associated with unsettled commercial loan trades are off-balance sheet commitments until delivery of the loans has taken place. Fair value adjustments associated with each unsettled loan trade are recognized on the Consolidated Balance Sheets and classified within other assets or other liabilities, depending on whether the fair value of the unsettled trade represents an unrealized gain or unrealized loss. The principal balance of unsettled commercial loan trade purchases and sales were $111 million and $108 million, respectively, at June 30, 2016. Settled loans purchased by the trading desk are classified as loans held for sale, at fair value on the Consolidated Balance Sheets. Refer to Note 14 “Fair Value Measurements” for further information.

Contingencies

The Company operates in a legal and regulatory environment that exposes it to potentially significant risks. A certain amount of litigation ordinarily results from the nature of the Company’s banking and other businesses. The Company is a party to legal proceedings, including class actions. The Company is also the subject of investigations, reviews, subpoenas, and regulatory matters arising out of its normal business operations, which, in some instances, relate to concerns about fair lending, unfair and/or deceptive practices, mortgage-related issues, and mis-selling of certain products. In addition, the Company engages in discussions with relevant governmental and regulatory authorities on a regular and ongoing basis regarding various issues, and any issues discussed or identified may result in investigatory or other action being taken. Litigation and regulatory matters may result in settlements, damages, fines, penalties, public or private censure, increased costs, required remediation, restrictions on business activities, or other impacts on the Company.

In these disputes and proceedings, the Company contests liability and the amount of damages as appropriate. Given their complex nature, it may be years before some of these matters are finally resolved. Moreover, before liability can be reasonably estimated for a claim, numerous legal and factual issues may need to be examined, including through potentially lengthy discovery and determination of important factual matters, and by addressing novel or unsettled legal issues relevant to the proceedings in question.

The Company cannot predict with certainty if, how, or when such claims will be resolved or what the eventual settlement, fine, penalty or other relief, if any, may be, particularly for claims that are at an early stage in their development or where claimants seek substantial or indeterminate damages. The Company recognizes a provision for a claim when, in the opinion of management after seeking legal advice, it is probable that a liability exists and the amount of loss can be reasonably estimated. In many proceedings, however, it is not possible to determine whether any loss is probable or to estimate the amount of any loss. In each of the matters described below, the Company is unable to estimate the liability in excess of any provision accrued, if any, that might arise or its effects on the Company’s Consolidated Statements of Operations or Consolidated Statements of Cash Flows in any particular period.

Set out below is a description of significant legal matters involving the Company and its banking subsidiaries. Based on information currently available, the advice of legal counsel and other advisers, and established reserves, management believes that the aggregate liabilities, if any, potentially arising from these proceedings will not have a materially adverse effect on the Company’s unaudited interim Consolidated Financial Statements.

Consumer Products Matters

The activities of the Company’s banking subsidiaries are subject to extensive laws and regulations concerning unfair or deceptive acts or practices in connection with customer products. Certain of the banking subsidiaries’ past practices have not met applicable standards, and they have implemented and are continuing to implement changes to improve and bring their practices in accordance with regulatory guidance. The Company and its banking subsidiaries have actively pursued resolution of the legacy regulatory enforcement matters set forth below.

As previously reported, CBNA is currently subject to a consent order issued in 2013 by the OCC in connection with its findings of deceptive marketing and implementation of some of our checking account and funds transfer products and services. Among other things, the consent order requires us to remedy deficiencies and develop stronger compliance controls, policies and procedures. The Company and its banking subsidiaries are also currently subject to consent orders issued in August 2015 by the CFPB, the OCC and the FDIC in connection with past deposit reconciliation practices, and CBNA is subject to a consent order issued in November 2015 by the OCC in connection with past billing and sales practices pertaining to identity theft and debt cancellation products, under which the applicable regulators have provided non-objections to, among other things, restitution plans for affected customers.

All financial penalties associated with these legacy regulatory enforcement matters have been paid, and substantially all remediation related to such legacy matters is expected to be resolved by the end of 2016.

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RELATED PARTY TRANSACTIONS AND SIGNIFICANT TRANSACTIONS WITH RBS

6 Months Ended

Jun. 30, 2016

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS AND SIGNIFICANT TRANSACTIONS WITH RBS

RELATED PARTY TRANSACTIONS AND SIGNIFICANT TRANSACTIONS WITH RBS

On November 3, 2015, RBS completed the sale of all of its remaining shares of CFG’s common stock. The parenthetical disclosures related to long-term borrowed funds on the Consolidated Balance Sheets, Consolidated Statements of Operations, and Consolidated Statements of Cash Flows as well as the tables and discussions below include significant related party transactions with RBS prior to the Company’s separation from RBS and significant transactions subsequent to the separation.    

In September 2014, the Company entered into certain agreements that established a framework for its ongoing relationship with RBS. Specifically, the Company entered into the following agreements with RBS: Separation and Shareholder Agreement, Registration Rights Agreement, Trade Mark License Agreement, Amended and Restated Master Services Agreement, and Transitional Services Agreements. In connection with RBS’s exit of its ownership in our common stock in 2015, the Separation and Shareholder Agreement and the Registration Rights Agreement were terminated and the Trademark License Agreement was partially terminated.

The following is a summary of borrowed funds originally issued to RBS:

	Interest Rate			Maturity Date	June 30, 2016	December 31, 2015
(dollars in millions)
Subordinated debt	5.158	%		June 2023	$333		$333
	3.750	%	(1)	July 2024	250	250
	4.023	%	(2) (3)	October 2024	208	333
	4.082	%	(3)	January 2025	334	334

⁽¹⁾ Prior to January 1, 2016, interest was payable at a fixed rate per annum of 4.153%.

⁽²⁾ On March 7, 2016, the Company repurchased $125 million of these securities from RBS.

⁽³⁾ On July 28, 2016, the Company repurchased $500 million of its subordinated notes held by RBS, including $166 million of its 4.023% subordinated notes due 2024 and $334 million of its 4.082% subordinated notes due 2025. Refer to Note 21 “Subsequent Events” for further information.

The following table presents total interest expense recorded on the subordinated debt presented above:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2016		2015		2016		2015
Interest expense on subordinated debt		$10		$20		$21		$40

On March 7, 2016, the Company repurchased $125 million of its subordinated notes held by RBS. On December 3, 2015, the Company repurchased $750 million of outstanding subordinated debt instruments held by RBS. The $3 million difference between the reacquisition price and the net carrying amount of the repurchased debt was recognized as a gain on extinguishment of the debt and is presented in other income in the Consolidated Statement of Operations. On July 28, 2016, the Company repurchased $500 million of the subordinated notes held by RBS pursuant to an agreement entered into in November 2015. Refer to Note 21 “Subsequent Events” for further information.

The Company paid no dividends to RBS for the three or six months ended June 30, 2016. For the three and six months ended June 30, 2015, the Company paid $21 million and $60 million in regular common stock dividends to RBS, respectively.

Additionally, during 2015 the Company engaged in repurchases of its common stock directly from RBS. Refer to Note 8 “Stockholders’ Equity” for further information.

The Company, as a matter of policy and during the ordinary course of business with underwriting terms similar to those offered to the public, has entered into credit facilities with directors and executive officers and their immediate families, as well as their affiliated companies. Extensions of credit amounted to $141 million and $136 million at June 30, 2016 and December 31, 2015, respectively.

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FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

As discussed in Note 1 “Significant Accounting Policies,” to the Company’s audited Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2015, the Company measures or monitors many of its assets and liabilities on a fair value basis. Fair value is used on a recurring basis for assets and liabilities for which fair value is the required or elected measurement basis of accounting. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or for disclosure purposes. Nonrecurring fair value adjustments typically involve the application of lower of cost or market accounting or write-downs of individual assets. The Company also applies the fair value measurement guidance to determine amounts reported for certain disclosures in this Note for assets and liabilities not required to be reported at fair value in the financial statements.

The Company elected to account for residential mortgage loans held for sale and certain commercial and commercial real estate loans held for sale at fair value. Applying fair value accounting to the residential mortgage loans held for sale better aligns the reported results of the economic changes in the value of these loans and their related hedge instruments. Certain commercial and commercial real estate held for sale loans are managed by a commercial secondary loan desk that provides liquidity to banks, finance companies and institutional investors. Applying fair value accounting to this portfolio is appropriate because the Company holds these loans with the intent to sell within short term periods.

Fair Value Option

Residential Mortgage Loans Held for Sale

The fair value of residential mortgage loans held for sale is derived from observable mortgage security prices and includes adjustments for loan servicing value, agency guarantee fees, and other loan level attributes which are mostly observable in the marketplace. Credit risk does not significantly impact the valuation since these loans are sold shortly after origination. Therefore, the Company classifies the residential mortgage loans held for sale in Level 2 of the fair value hierarchy.

The election of the fair value option for financial assets and financial liabilities is optional and irrevocable. The loans accounted for under the fair value option are initially measured at fair value (i.e., acquisition cost) when the financial asset is acquired. Subsequent changes in fair value are recognized in mortgage banking fees on the Consolidated Statements of Operations. The Company recognized mortgage banking income (expense) of $6 million and ($3) million for the three months ended June 30, 2016 and 2015, respectively. The Company recognized mortgage banking income (expense) of $12 million and ($2) million for the six months ended June 30, 2016 and 2015, respectively.

Interest income on residential mortgage loans held for sale is calculated based on the contractual interest rate of the loan and is recorded in interest income.

Commercial and Commercial Real Estate Loans Held for Sale

The fair value of commercial and commercial real estate loans held for sale is estimated using observable prices of identical or similar loans that transact in the marketplace. In addition, the Company uses external pricing services that provide estimates of fair values based on quotes from various dealers transacting in the market, sector curves or benchmarking techniques. Therefore, the Company classifies the commercial and commercial real estate loans managed by the commercial secondary loan desk in Level 2 of the fair value hierarchy given the observable market inputs.

There were no loans in this portfolio that were 90 days or more past due or nonaccruing as of June 30, 2016. The loans accounted for under the fair value option are initially measured at fair value when the financial asset is recognized. Subsequent changes in fair value are recognized in current earnings. Since all loans in the Company’s commercial trading portfolio consist of floating rate obligations, all changes in fair value are due to changes in credit risk. Such credit-related fair value changes may include observed changes in overall credit spreads and/or changes to the creditworthiness of an individual borrower. Unsettled trades within the commercial trading portfolio are not recognized on the Consolidated Balance Sheets and represent off-balance sheet commitments. Refer to Note 12 “Commitments and Contingencies” for further information.

Interest income on commercial and commercial real estate loans held for sale is calculated based on the contractual interest rate of the loan and is recorded in interest income. The Company recognized $2 million income in other noninterest income related to its commercial trading portfolio for the three months ended June 30, 2016 and $1 million for the three months ended June 30, 2015. The Company recognized $2 million income in other noninterest income related to its commercial trading portfolio for the six months ended June 30, 2016 and $3 million for the six months ended June 30, 2015.

The following table summarizes the difference between the aggregate fair value and the aggregate unpaid principal balance loans held for sale measured at fair value:

	June 30, 2016						December 31, 2015
(in millions)	Aggregate Fair Value		Aggregate Unpaid Principal		Aggregate Fair Value Less Aggregate Unpaid Principal		Aggregate Fair Value		Aggregate Unpaid Principal		Aggregate Fair Value Less Aggregate Unpaid Principal
Residential mortgage loans held for sale, at fair value		$424		$408		$16		$268		$263		$5
Commercial and commercial real estate loans held for sale, at fair value	54		54		—		57		57		—

Recurring Fair Value Measurements

The Company utilizes a variety of valuation techniques to measure its assets and liabilities at fair value. Following is a description of valuation methodologies used for significant assets and liabilities carried on the balance sheet at fair value on a recurring basis:

Securities available for sale

The fair value of securities classified as AFS is based upon quoted prices, if available. Where observable quoted prices are available in an active market, securities are classified as Level 1 in the fair value hierarchy. Classes of instruments that are valued using this market approach include debt securities issued by the U.S. Treasury. If quoted market prices are not available, the fair value for the security is estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. These instruments are classified as Level 2 because they currently trade in active markets and the inputs to the valuations are observable. The pricing models used to value securities generally begin with market prices (or rates) for similar instruments and make adjustments based on the unique characteristics of the instrument being valued. These adjustments reflect assumptions made regarding the sensitivity of each security’s value to changes in interest rates and prepayment speeds. Classes of instruments that are valued using this market approach include residential and commercial CMOs, specified pool mortgage “pass-through” securities and other debt securities issued by U.S. government-sponsored entities and state and political subdivisions.

A significant majority of the Company’s Level 1 and 2 securities are priced using an external pricing service. The Company verifies the accuracy of the pricing provided by its primary outside pricing service on a quarterly basis. This process involves using a secondary external vendor to provide valuations for the Company’s securities portfolio for comparison purposes. Any securities with discrepancies beyond a certain threshold are researched and, if necessary, valued by an independent outside broker.

In certain cases where there is limited activity or less transparency around inputs to the valuation model, securities are classified as Level 3.

Residential loans held for sale

See the “Fair Value Option, Residential Mortgage Loans Held for Sale” discussion above.

Commercial loans held for sale

See the “Fair Value Option, Commercial and Commercial Real Estate Loans Held for Sale” discussion above.

Derivatives

The vast majority of the Company’s derivatives portfolio is composed of “plain vanilla” interest rate swaps, which are traded in over-the-counter markets where quoted market prices are not readily available. For these interest rate derivatives, fair value is determined utilizing models that use primarily market observable inputs, such as swap rates and yield curves. The pricing models used to value interest rate swaps calculate the sum of each instrument’s fixed and variable cash flows, which are then discounted using an appropriate yield curve (i.e., LIBOR or OIS curve) to arrive at the fair value of each swap. The pricing models do not contain a high level of subjectivity as the methodologies used do not require significant judgment. The Company also considers certain adjustments to the modeled price which market participants would make when pricing each instrument, including a credit valuation adjustment that reflects the credit quality of the swap counterparty. The Company incorporates the effect of exposure to a particular counterparty’s credit by netting its derivative contracts with the collateral available and calculating a credit valuation adjustment on the basis of the net position with the counterparty where permitted. The determination of this adjustment requires judgment on behalf of Company management; however, the total amount of this portfolio-level adjustment is not material to the total fair value of the interest rate swaps in their entirety. Therefore, interest rate swaps are classified as Level 2 in the valuation hierarchy.

The Company’s other derivatives include foreign exchange contracts. Fair value of foreign exchange derivatives uses the mid-point of daily quoted currency spot prices. A valuation model estimates fair value based on the quoted spot rates together with interest rate yield curves and forward currency rates. Since all of these inputs are observable in the market, foreign exchange derivatives are classified as Level 2 in the fair value hierarchy.

Money Market Mutual Fund

Fair value is determined based upon unadjusted quoted market prices and is considered a Level 1 fair value measurement.

Other investments

The fair values of the Company’s other investments are based on security prices in the market that are not active; therefore, these investments are classified as Level 2 in the fair value hierarchy.

The following table presents assets and liabilities measured at fair value, including gross derivative assets and liabilities on a recurring basis at June 30, 2016:

(in millions)	Total		Level 1		Level 2		Level 3
Securities available for sale:
Mortgage-backed securities		$18,438		$—		$18,438		$—
State and political subdivisions	9		—		9		—
Equity securities	17		—		17		—
U.S. Treasury and other	15		15		—		—
Total securities available for sale	18,479		15		18,464		—
Loans held for sale, at fair value:
Residential loans held for sale	424		—		424		—
Commercial loans held for sale	54		—		54		—
Total loans held for sale, at fair value	478		—		478		—
Derivative assets:
Interest rate swaps	1,235		—		1,235		—
Foreign exchange contracts	193		—		193		—
Other contracts	15		—		15		—
Total derivative assets	1,443		—		1,443		—
Other investment securities, at fair value:
Money market mutual fund	68		68		—		—
Other investments	5		—		5		—
Total other investment securities, at fair value	73		68		5		—
Total assets		$20,473		$83		$20,390		$—
Derivative liabilities:
Interest rate swaps		$978		$—		$978		$—
Foreign exchange contracts	185		—		185		—
Other contracts	14		—		14		—
Total derivative liabilities	1,177		—		1,177		—
Total liabilities		$1,177		$—		$1,177		$—

The following table presents assets and liabilities measured at fair value including gross derivative assets and liabilities on a recurring basis at December 31, 2015:

(in millions)	Total		Level 1		Level 2		Level 3
Securities available for sale:
Mortgage-backed securities		$17,842		$—		$17,842		$—
State and political subdivisions	9		—		9		—
Equity securities	17		—		17		—
U.S. Treasury	16		15		1		—
Total securities available for sale	17,884		15		17,869		—
Loans held for sale, at fair value:
Residential loans held for sale	268		—		268		—
Commercial loans held for sale	57		—		57		—
Total loans held for sale, at fair value	325		—		325		—
Derivative assets:
Interest rate swaps	636		—		636		—
Foreign exchange contracts	163		—		163		—
Other contracts	8		—		8		—
Total derivative assets	807		—		807		—
Other investment securities, at fair value:
Money market mutual fund	65		65		—		—
Other investments	5		—		5		—
Total other investment securities, at fair value	70		65		5		—
Total assets		$19,086		$80		$19,006		$—
Derivative liabilities:
Interest rate swaps		$505		$—		$505		$—
Foreign exchange contracts	156		—		156		—
Other contracts	5		—		5		—
Total derivative liabilities	666		—		666		—
Total liabilities		$666		$—		$666		$—

The changes in Level 3 assets measured at fair value on a recurring basis are summarized as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2016		2015		2016		2015
Beginning of period balance		$—		$1		$—		$5
Purchases, issuances, sales and settlements:
Purchases	—		—		—		1
Sales	—		—		—		—
Settlements	—		—		—		—
Net (losses) gains	—		—		—		—
Transfers from Level 3 to Level 2	—		—		—		(5		)
Balance as of June 30		$—		$1		$—		$1
Net unrealized gain (loss) included in net income for the year relating to assets held at period end		$—		$—		$—		$1

In March 2015, the Company transferred $5 million of securities from Level 3 to Level 2. The fair values of these securities are based on security prices in the market that are not active.

Nonrecurring Fair Value Measurements

The following valuation techniques are utilized to measure significant assets for which the Company utilizes fair value on a nonrecurring basis:

Impaired Loans

The carrying amount of collateral-dependent impaired loans is compared to the appraised value of the collateral less costs to dispose and is classified as Level 2. Any excess of carrying amount over the appraised value is charged to the ALLL.

Mortgage Servicing Rights

MSRs do not trade in an active market with readily observable prices. MSRs are classified as Level 3 since the valuation methodology utilizes significant unobservable inputs. At June 30, 2016, the fair value was calculated using a discounted cash flow model, which used assumptions, including weighted-average life of 4.9 years (range of 2.5 - 5.3 years), weighted-average constant prepayment rate of 13.5% (range of 13.2% - 24.3%) and weighted-average discount rate of 9.7% (range of 9.1% - 12.1%). At December 31, 2015, the fair value was calculated using a discounted cash flow model, which used assumptions, including weighted-average life of 5.4 years (range of 2.8 - 6.2 years), weighted-average constant prepayment rate of 11.6% (range of 10.7% - 22.2%) and weighted-average discount rate of 9.7% (range of 9.1% - 12.1%). Refer to Note 1 “Significant Accounting Policies” to the Company’s audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2015 and Note 6 “Mortgage Banking” for more information.

Foreclosed assets

Foreclosed assets consist primarily of residential properties. Foreclosed assets are carried at the lower of carrying value or fair value less costs to dispose. Fair value is based upon independent market prices or appraised values of the collateral and is classified as Level 2.

The following table presents gains (losses) on assets and liabilities measured at fair value on a nonrecurring basis and recorded in earnings:

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2016			2015			2016			2015
Impaired collateral-dependent loans		($6	)		($10	)		($11	)		($13	)
MSRs	1			6			(4		)	7
Foreclosed assets	(1		)	(1		)	(2		)	(2		)

The following table present assets and liabilities measured at fair value on a nonrecurring basis:

	June 30, 2016								December 31, 2015
(in millions)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Impaired collateral-dependent loans		$55		$—		$55		$—		$60		$—		$60		$—
MSRs	165		—		—		165		178		—		—		178
Foreclosed assets	46		—		46		—		42		—		42		—

Disclosures about Fair Value of Financial Instruments

Following is a description of valuation methodologies used to estimate the fair value of financial instruments for disclosure purposes (these instruments are not recorded in the financial statements at fair value):

Securities held to maturity

The fair value of securities classified as HTM is estimated using pricing models, quoted prices of securities with similar characteristics or discounted cash flow. The pricing models used to value these securities generally begin with market prices (or rates) for similar instruments and make adjustments based on the unique characteristics of the instrument being valued. These adjustments reflect assumptions made regarding the sensitivity of each security’s value to changes in interest rates and prepayment speeds.

Other investment securities, at cost

The fair value of other investment securities, at cost, such as FHLB stock and FRB stock, is assumed to approximate the cost basis of the securities. As a member of the FHLB and FRB, the Company is required to hold FHLB and FRB stock. The stock can be sold only to the FHLB and FRB upon termination of membership, or redeemed at the FHLB’s or FRB’s sole discretion.

Loans and leases

For loans and leases not recorded at fair value on a recurring basis that are not accounted for as collateral-dependent impaired loans, fair value is estimated by using one of two methods: a discounted cash flow method or a securitization method. The discounted cash flow method involves discounting the expected future cash flows using current rates which a market participant would likely use to value similar pools of loans. Inputs used in this method include observable information such as contractual cash flows (net of servicing cost) and unobservable information such as estimated prepayment speeds, credit loss exposures, and discount rates. The securitization method involves utilizing market securitization data to value the assets as if a securitization transaction had been executed. Inputs used include observable market-based MBS data and pricing adjustments based on unobservable data reflecting the liquidity risk, credit loss exposure and other characteristics of the underlying loans. The internal risk-weighted balances of loans are grouped by product type for purposes of these estimated valuations. For nonaccruing loans, fair value is estimated by discounting management’s estimate of future cash flows with a discount rate commensurate with the risk associated with such assets. Fair value of collateral-dependent loans is primarily based on the appraised value of the collateral.

Other loans held for sale

Balances are loans that were transferred to loans held for sale that are reported at the lower of cost or fair value.

Deposits

The fair value of demand deposits, checking with interest accounts, regular savings and money market accounts is the amount payable on demand at the balance sheet date. The fair value of term deposits is estimated by discounting the expected future cash flows using rates currently offered for deposits of similar remaining maturities.

Federal funds purchased and securities sold under agreements to repurchase, other short-term borrowed funds, and long-term borrowed funds

Rates currently available to the Company for debt of similar terms and remaining maturities are used to discount the expected cash flows of existing debt.

The following table is a summary of fair value for financial instruments not recorded at fair value in the unaudited interim Consolidated Financial Statements. The carrying amounts in the following table are recorded in the Consolidated Balance Sheets under the indicated captions:

	June 30, 2016
	Total				Level 1				Level 2				Level 3
(in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets:
Securities held to maturity		$4,973		$5,136		$—		$—		$4,973		$5,136		$—		$—
Other investment securities, at cost	873		873		—		—		873		873		—		—
Other loans held for sale	372		372		—		—		—		—		372		372
Loans and leases	103,551		104,381		—		—		55		55		103,496		104,326
Financial Liabilities:
Deposits	106,257		106,260		—		—		106,257		106,260		—		—
Federal funds purchased and securities sold under agreements to repurchase	717		717		—		—		717		717		—		—
Other short-term borrowed funds	2,770		2,770		—		—		2,770		2,770		—		—
Long-term borrowed funds	11,810		11,968		—		—		11,810		11,968		—		—

	December 31, 2015
	Total				Level 1				Level 2				Level 3
(in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets:
Securities held to maturity		$5,258		$5,297		$—		$—		$5,258		$5,297		$—		$—
Other investment securities, at cost	863		863		—		—		863		863		—		—
Other loans held for sale	40		40		—		—		—		—		40		40
Loans and leases	99,042		99,026		—		—		60		60		98,982		98,966
Financial Liabilities:
Deposits	102,539		102,528		—		—		102,539		102,528		—		—
Federal funds purchased and securities sold under agreements to repurchase	802		802		—		—		802		802		—		—
Other short-term borrowed funds	2,630		2,630		—		—		2,630		2,630		—		—
Long-term borrowed funds	9,886		9,837		—		—		9,886		9,837		—		—

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REGULATORY MATTERS

6 Months Ended

Jun. 30, 2016

Banking and Thrift [Abstract]

REGULATORY MATTERS

REGULATORY MATTERS

As a BHC, the Company is subject to regulation and supervision by the FRB. The primary subsidiaries of the Company are its two insured depository institutions CBNA, a national banking association whose primary federal regulator is the OCC, and CBPA, a Pennsylvania-chartered savings bank regulated by the Department of Banking of the Commonwealth of Pennsylvania and supervised by the FDIC as its primary federal regulator. Under the Basel III capital framework that took effect on January 1, 2015, the Company and its banking subsidiaries must meet specific capital requirements. Basel III requirements are expressed in terms of the following ratios: (1) common equity tier 1 capital (common equity tier 1 capital/risk-weighted on- and off-balance sheet assets); (2) tier 1 capital (tier 1 capital/risk-weighted on- and off-balance sheet assets); (3) total capital (total capital/risk-weighted on- and off-balance sheet assets); and (4) tier 1 leverage (tier 1 capital/adjusted average quarterly assets). To meet the regulatory capital requirements, the Company and its banking subsidiaries must maintain minimum regulatory levels for each ratio. In addition, the Company must not be subject to a written agreement, order or capital directive with any of its regulators. Failure to meet minimum capital requirements can result in the initiation of certain actions that, if undertaken, could have a material effect on the Company’s Consolidated Financial Statements.

The following table presents the Company’s capital and capital ratios under Basel III Transitional rules as of June 30, 2016 and December 31, 2015. Certain Basel III requirements are subject to phase-in through 2019, and these phase-in rules are used in this report of actual regulatory ratios. In addition, the Company has declared itself as an “AOCI opt-out” institution, which means that the Company will not be required to change its methodology for recognizing in regulatory capital only a subset of unrealized gains and losses that are classified as AOCI. As an AOCI opt-out institution, the Company is not required to recognize within regulatory capital the impacts of net unrealized gains and losses on securities AFS, accumulated net gains and losses on cash-flow hedges included in AOCI, net gains and losses on certain defined benefit pension plan assets, and net unrealized gains and losses on securities held to maturity that are included in AOCI.

	Transitional Basel III
									FDIA Requirements
	Actual				Minimum Capital Adequacy				Classification as Well-capitalized
(dollars in millions)	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of June 30, 2016
Common equity tier 1 capital (1) (5)		$13,768	11.5	%		$6,124	5.125	%		$7,767	6.5	%
Tier 1 capital (2) (5)	14,015		11.7		7,916		6.625		9,559		8.0
Total capital (3)(5)	17,823		14.9		10,306		8.625		11,949		10.0
Tier 1 leverage (4)	14,015		10.3		5,452		4.000		6,815		5.0
As of December 31, 2015
Common equity tier 1 capital (1)		$13,389	11.7	%		$5,134	4.5	%		$7,415	6.5	%
Tier 1 capital (2)	13,636		12.0		6,845		6.0		9,127		8.0
Total capital (3)	17,505		15.3		9,127		8.0		11,408		10.0
Tier 1 leverage (4)	13,636		10.5		5,218		4.0		6,523		5.0

⁽¹⁾ “Common equity tier 1 capital ratio” represents CET1 divided by total risk-weighted assets as defined under Basel III Standardized approach.

⁽²⁾ “Tier 1 capital ratio” is tier 1 capital, which includes CET1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital, divided by total risk-weighted assets as defined under Basel III Standardized approach.

⁽³⁾ “Total capital ratio” is total capital divided by total risk-weighted assets as defined under Basel III Standardized approach.

⁽⁴⁾ “Tier 1 leverage ratio” is tier 1 capital divided by quarterly average total assets as defined under Basel III Standardized approach.

⁽⁵⁾ “Minimum Capital ratio” for 2016 includes capital conservation buffer of 0.625%.

Under the Capital Plan Rule, the Company may only make capital distributions, including payment of dividends, in accordance with a capital plan that has been reviewed by the Federal Reserve and to which the Federal Reserve has not objected. In the three and six months ended June 30, 2016, the Company paid total common dividends of approximately $64 million and $117 million, respectively.

In April 2016, the Company submitted its 2016 Capital Plan to the Federal Reserve under the annual CCAR process. On June 29, 2016, the FRBG indicated that it did not object to the Company’s 2016 Capital Plan or to its proposed capital actions in the period beginning July 1, 2016 and ending June 30, 2017. The Company’s 2016 Capital Plan includes proposed quarterly common dividends of $0.12 per share through the end of 2016, a potential 17% increase to quarterly common dividends to $0.14 per share in 2017, and a share repurchase plan of up to $690 million through the second quarter of 2017.

All proposed distributions are subject to consideration and approval by CFG’s Board of Directors prior to execution. The timing and exact amount of dividends and share repurchases will depend on various factors, including CFG’s capital position, financial performance and market conditions. All of these actions were part of the Company’s 2016 Capital Plan to which the Federal Reserve indicated no objection.

In accordance with federal and state banking regulations, dividends paid by the Company’s banking subsidiaries to the Company itself are generally limited to the retained earnings of the respective banking subsidiaries unless specifically approved by the appropriate bank regulator.

On March 13, 2014, the OCC determined that CBNA no longer meets the condition to own a financial subsidiary — namely that CBNA must be both well capitalized and well managed. A financial subsidiary is permitted to engage in a broader range of activities, similar to those of a financial holding company, than those permissible for a national bank itself. CBNA has two financial subsidiaries, Citizens Securities, Inc., a registered broker-dealer, and RBS Citizens Insurance Agency, Inc., a dormant entity. CBNA has entered into an agreement with the OCC pursuant to which the Company has developed and submitted to the OCC a remediation plan, that sets forth the specific actions it will take to bring itself back into compliance with the conditions to own a financial subsidiary. CBNA has made substantial progress toward completing those actions. However, until the plan has been completed to the OCC’s satisfaction, CBNA will be subject to restrictions on its ability to acquire control or hold an interest in any new financial subsidiary and to commence new activities in any existing financial subsidiary without the prior consent of the OCC.

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EXIT COSTS AND RESTRUCTURING RESERVES

6 Months Ended

Jun. 30, 2016

Restructuring and Related Activities [Abstract]

EXIT COSTS AND RESTRUCTURING RESERVES

EXIT COSTS AND RESTRUCTURING RESERVES

The Company incurred no restructuring costs for the three and six months endedJune 30, 2016. For the three months ended June 30, 2015, the Company incurred $25 million of restructuring costs, consisting of $15 million of facilities costs in occupancy, $5 million in outside services, and $5 million in salaries and employee benefits, relating to restructuring initiatives designed to enhance operating efficiencies and reduce expense growth. For the six months ended June 30, 2015, the Company incurred $26 million of restructuring costs, consisting of $17 million of facilities costs in occupancy, $6 million in outside services, and $3 million in salaries and employee benefits, substantially completing the restructuring initiatives designed to enhance operating efficiencies and reduce expense growth.

For segment reporting, all of these restructuring costs are reported within Other. See Note 18 “Business Segments” for further information.

The following tables include the activity in the exit costs and restructuring reserves:

	As of and for the Three Months Ended June 30,
	2016											2015
(in millions)	Salaries & Employee Benefits			Occupancy & Equipment			Other		Total			Salaries & Employee Benefits			Occupancy & Equipment			Other			Total
Beginning of period balance		$10			$14			$—		$24			$18			$17			$—			$35
Additions	—			—			—		—			5			15			5			25
Reversals	—			—			—		—			—			—			—			—
Utilization	(2		)	(2		)	—		(4		)	(2		)	(5		)	(1		)	(8		)
Balance as of June 30,		$8			$12			$—		$20			$21			$27			$4			$52

	As of and for the Six Months Ended June 30,
	2016												2015
(in millions)	Salaries & Employee Benefits			Occupancy & Equipment			Other			Total			Salaries & Employee Benefits			Occupancy & Equipment			Other			Total
Beginning of period balance		$12			$16			$5			$33			$23			$18			$3			$44
Additions	—			—			—			—			5			17			6			28
Reversals	—			—			—			—			(2		)	—			—			(2		)
Utilization	(4		)	(4		)	(5		)	(13		)	(5		)	(8		)	(5		)	(18		)
Balance as of June 30,		$8			$12			$—			$20			$21			$27			$4			$52

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RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables present the changes in the balances, net of income taxes, of each component of AOCI:

	As of and for the three months ended June 30,
(in millions)	Net Unrealized Gains (Losses) on Derivatives			Net Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Total AOCI
Balance at beginning of period April 1, 2015		($6	)		$141			($375	)		($240	)
Other comprehensive income (loss) before reclassifications	(5		)	(110		)	—			(115		)
Other-than-temporary impairment not recognized in earnings on securities	—			1			—			1
Amounts reclassified from other comprehensive (loss) income	(2		)	(5		)	2			(5		)
Net other comprehensive income (loss)	(7		)	(114		)	2			(119		)
Balance at end of period June 30, 2015		($13	)		$27			($373	)		($359	)
Balance at beginning of period April 1, 2016		$35			$96			($367	)		($236	)
Other comprehensive income before reclassifications	13			64			—			77
Other-than-temporary impairment not recognized in earnings on securities	—			4			—			4
Amounts reclassified from other comprehensive (loss) income	(9		)	2			3			(4		)
Net other comprehensive income	4			70			3			77
Balance at end of period June 30, 2016		$39			$166			($364	)		($159	)

	As of and for the six month ended June 30,
(in millions)	Net Unrealized Gains (Losses) on Derivatives			Net Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Total AOCI
Balance at beginning of period January 1, 2015		($69	)		$74			($377	)		($372	)
Other comprehensive income (loss) before reclassifications	60			(20		)	—			40
Other-than-temporary impairment not recognized in earnings on securities	—			(18		)	—			(18		)
Amounts reclassified from other comprehensive (loss) income	(4		)	(9		)	4			(9		)
Net other comprehensive income	56			(47		)	4			13
Balance at end of period June 30, 2015		($13	)		$27			($373	)		($359	)
Balance at beginning of period January 1, 2016		$10			($28	)		($369	)		($387	)
Other comprehensive income before reclassifications	46			218			—			264
Other-than-temporary impairment not recognized in earnings on securities	—			(21		)	—			(21		)
Amounts reclassified from other comprehensive (loss) income	(17		)	(3		)	5			(15		)
Net other comprehensive income	29			194			5			228
Balance at end of period June 30, 2016		$39			$166			($364	)		($159	)

The following table reports the amounts reclassified out of each component of AOCI and into the Consolidated Statements of Operations:

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2016			2015			2016			2015
Details about AOCI Components													Affected Line Item in the Consolidated Statements of Operations
Reclassification adjustment for net derivative gains (losses) included in net income:		$21			$17			$43			$35		Interest income
	(8		)	(14		)	(16		)	(29		)	Interest expense
	13			3			27			6			Income before income tax expense
	4			1			10			2			Income tax expense
		$9			$2			$17			$4		Net income
Reclassification of net securities gains (losses) to net income:		$4			$9			$13			$17		Securities gains, net
	(7		)	(2		)	(8		)	(3		)	Net securities impairment losses recognized in earnings
	(3		)	7			5			14			Income before income tax expense
	(1		)	2			2			5			Income tax expense
		($2	)		$5			$3			$9		Net income
Reclassification of changes related to defined benefit pension plans:		($4	)		($4	)		($8	)		($7	)	Salaries and employee benefits
	(4		)	(4		)	(8		)	(7		)	Income before income tax expense
	(1		)	(2		)	(3		)	(3		)	Income tax expense
		($3	)		($2	)		($5	)		($4	)	Net income
Total reclassification gains (losses)		$4			$5			$15			$9		Net income

The following table presents the effects to net income of the amounts reclassified out of AOCI:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2016		2015		2016		2015
Net interest income (includes $13, $3, $27 and $6 of AOCI reclassifications, respectively)		$923		$840		$1,827		$1,676
Provision for credit losses	90		77		181		135
Noninterest income (includes ($3), $7, $5 and $14 of AOCI reclassifications, respectively)	355		360		685		707
Noninterest expense (includes $4, $4, $8 and $7 of AOCI reclassifications, respectively)	827		841		1,638		1,651
Income before income tax expense	361		282		693		597
Income tax expense (includes $2, $1, $9 and $4 income tax net expense (benefit) from reclassification items, respectively)	118		92		227		198
Net income		$243		$190		$466		$399

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BUSINESS SEGMENTS

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

BUSINESS SEGMENTS

BUSINESS SEGMENTS

The Company is managed by its CEO on a segment basis. The Company’s two business segments are Consumer Banking and Commercial Banking. The business segments are determined based on the products and services provided, or the type of customer served. Each segment has one or more segment heads who report directly to the CEO. The CEO has final authority over resource allocation decisions and performance assessment. The business segments reflect this management structure and the manner in which financial information is currently evaluated by the CEO. Non-segment operations are classified as Other, which includes corporate functions, the Treasury function, the securities portfolio, wholesale funding activities, intangible assets, community development, non-core assets, and other unallocated assets, liabilities, capital, revenues, provision for credit losses and expenses.

Reportable Segments

Segment results are determined based upon the Company’s management reporting system, which assigns balance sheet and income statement items to each of the business segments. The process is designed around the Company’s organizational and management structure and, accordingly, the results derived are not necessarily comparable with similar information published by other financial institutions. A description of each reportable segment and table of financial results is presented below:

Consumer Banking

The Consumer Banking segment focuses on retail customers and small businesses with annual revenues of up to $25 million. It offers traditional banking products and services, including checking, savings, home loans, student loans, credit cards, business loans and financial management services. It also operates an indirect auto financing business, providing financing for both new and used vehicles through auto dealerships. The segment’s distribution channels include a branch network, ATMs and a work force of experienced specialists ranging from financial consultants, mortgage loan officers and business banking officers to private bankers. Our Consumer Banking value proposition is based on providing simple, easy to understand product offerings and a convenient banking experience with a more personalized approach.

Commercial Banking

The Commercial Banking segment primarily targets companies with annual revenues from $25 million to $2.5 billion and provides a full complement of financial products and solutions, including loans, leases, trade financing, deposits, cash management, commercial cards, foreign exchange, interest rate risk management, corporate finance and capital markets advisory capabilities. It focuses on middle-market companies, large corporations and institutions and has dedicated teams with industry expertise in government banking, not-for-profit, healthcare, technology, professionals, oil & gas, asset finance, franchise finance, asset-based lending, commercial real estate, private equity and sponsor finance. While the segment’s business development efforts are predominantly focused in the Company’s footprint, some of its specialized industry businesses also operate selectively on a national basis (such as healthcare, asset finance and franchise finance). A key component of Commercial Banking’s growth strategy is to bring ideas to clients that help their businesses thrive, and in doing so, expand the loan portfolio and ancillary product sales.

Non-segment Operations

Other

In addition to non-segment operations, Other includes certain reconciling items in order to translate the segment results that are based on management accounting practices into consolidated results. For example, Other includes goodwill and any associated goodwill impairment charges.

	As of and for the Three Months Ended June 30, 2016
(in millions)	Consumer Banking		Commercial Banking			Other			Consolidated
Net interest income		$602		$314			$7			$923
Noninterest income	219		122			14			355
Total revenue	821		436			21			1,278
Noninterest expense	632		186			9			827
Profit before provision for credit losses	189		250			12			451
Provision for credit losses	49		(1		)	42			90
Income (loss) before income tax expense (benefit)	140		251			(30		)	361
Income tax expense (benefit)	50		87			(19		)	118
Net income (loss)		$90		$164			($11	)		$243
Total average assets		$55,660		$47,388			$39,131			$142,179

	As of and for the Three Months Ended June 30, 2015
(in millions)	Consumer Banking		Commercial Banking		Other			Consolidated
Net interest income		$544		$286		$10			$840
Noninterest income	230		108		22			360
Total revenue	774		394		32			1,200
Noninterest expense	613		181		47			841
Profit (loss) before provision for credit losses	161		213		(15		)	359
Provision for credit losses	60		7		10			77
Income (loss) before income tax expense (benefit)	101		206		(25		)	282
Income tax expense (benefit)	35		71		(14		)	92
Net income (loss)		$66		$135		($11	)		$190
Total average assets		$52,489		$42,617		$40,415			$135,521

	As of and for the Six Months Ended June 30, 2016
(in millions)	Consumer Banking		Commercial Banking		Other			Consolidated
Net interest income		$1,183		$614		$30			$1,827
Noninterest income	427		221		37			685
Total revenue	1,610		835		67			2,512
Noninterest expense	1,248		373		17			1,638
Profit before provision for credit losses	362		462		50			874
Provision for credit losses	112		8		61			181
Income (loss) before income tax expense (benefit)	250		454		(11		)	693
Income tax expense (benefit)	89		157		(19		)	227
Net income		$161		$297		$8			$466
Total average assets		$55,388		$46,346		$38,745			$140,479

	As of and for the Six Months Ended June 30, 2015
(in millions)	Consumer Banking		Commercial Banking			Other			Consolidated
Net interest income		$1,077		$562			$37			$1,676
Noninterest income	449		208			50			707
Total revenue	1,526		770			87			2,383
Noninterest expense	1,209		354			88			1,651
Profit (loss) before provision for credit losses	317		416			(1		)	732
Provision for credit losses	123		(14		)	26			135
Income (loss) before income tax expense (benefit)	194		430			(27		)	597
Income tax expense (benefit)	67		148			(17		)	198
Net income (loss)		$127		$282			($10	)		$399
Total average assets		$52,048		$42,114			$40,267			$134,429

Management accounting practices utilized by the Company as the basis for presentation for segment results include the following:

FTP adjustments

The Company utilizes an FTP system to eliminate the effect of interest rate risk from the segments’ net interest income because such risk is centrally managed within the Treasury function. The FTP system credits (or charges) the segments with the economic value of the funds created (or used) by the segments. The FTP system provides a funds credit for sources of funds and a funds charge for the use of funds by each segment. The sum of the interest income/expense and FTP charges/credits for each segment is its designated net interest income. The variance between the Company’s cumulative FTP charges and cumulative FTP credits is offset in Other.

Provision for credit losses allocations

Provision for credit losses is allocated to each business segment based on actual net charge-offs that have been recognized by the business segment. The difference between the consolidated provision for credit losses and the business segments’ net charge-offs is reflected in Other.

Income tax allocations

Income taxes are assessed to each line of business at a standard tax rate with the residual tax expense or benefit to arrive at the consolidated effective tax rate included in Other.

Expense allocations

Noninterest expenses incurred by centrally managed operations or business lines that directly support another business line’s operations are charged to the applicable business line based on its utilization of those services.

Goodwill

For impairment testing purposes, the Company allocates goodwill to its Consumer Banking and Commercial Banking reporting units. For management reporting purposes, the Company presents the goodwill balance (and any related impairment charges) in Other.

Substantially all revenues generated and long-lived assets held by the Company’s business segments are derived from clients that reside in the United States. Neither business segment earns revenue from a single external customer that represents 10 percent or more of the Company’s total revenues.

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EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in millions, except share and per-share data)	2016		2015		2016		2015
Numerator (basic and diluted):
Net income		$243		$190		$466		$399
Less: Preferred stock dividends	—		—		7		—
Net income available to common stockholders		$243		$190		$459		$399
Denominator:
Weighted-average common shares outstanding - basic	528,968,330		537,729,248		528,519,489		541,986,653
Dilutive common shares: share-based awards	1,396,873		2,180,118		1,877,382		2,817,615
Weighted-average common shares outstanding - diluted	530,365,203		539,909,366		530,396,871		544,804,268
Earnings per common share:
Basic		$0.46		$0.35		$0.87		$0.74
Diluted	0.46		0.35		0.87		0.73

Basic EPS is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during each period. Diluted EPS is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during each period, plus the effect of potential dilutive common shares such as share-based awards, using the treasury stock method. Potential dilutive common shares are excluded from the computation of diluted EPS in the periods where the effect would be antidilutive.

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OTHER OPERATING EXPENSE

6 Months Ended

Jun. 30, 2016

Other Income and Expenses [Abstract]

OTHER OPERATING EXPENSE

OTHER OPERATING EXPENSE

The following table presents the details of other operating expense:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2016		2015		2016		2015
Deposit insurance		$29		$26		$55		$60
Promotional expense	25		29		49		51
Other	74		84		139		161
Other operating expense		$128		$139		$243		$272

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2016

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

The Company has evaluated the impacts of events that have occurred subsequent to June 30, 2016 through the date the Consolidated Financial Statements were filed with the SEC. Based on this evaluation, the Company has determined none of these events were required to be recognized or disclosed in the Consolidated Financial Statements and related Notes, except as follows:

On July 19, 2016, the Company completed the sale of consumer real estate-secured loans classified as TDRs (the “TDR Transaction”). The TDR Transaction will result in a third quarter 2016 pre-tax gain of approximately $70 million on the sale of $310 million of loans held for sale.

On July 20, 2016, the Company declared a quarterly common stock dividend of $0.12 per share, or $63 million, payable on August 17, 2016 to stockholders of record at the close of business on August 3, 2016.

On July 28, 2016, the Company issued $350 million of 2.375% fixed-rate senior notes due 2021, and used the net proceeds and available cash to repurchase $500 million of its subordinated notes held by RBS. Specifically, the Company retired $334 million of its 4.082% subordinated notes due 2025 and $166 million of its 4.023% subordinated notes due 2024 that were held by RBS.

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BASIS OF PRESENTATION (Policies)

6 Months Ended

Jun. 30, 2016

Basis of Presentation [Abstract]

Basis of Presentation

The unaudited interim Consolidated Financial Statements, including the Notes thereto of Citizens Financial Group, Inc., have been prepared in accordance with GAAP interim reporting requirements, and therefore do not include all information and Notes included in the audited Consolidated Financial Statements in conformity with GAAP. These unaudited interim Consolidated Financial Statements and Notes thereto should be read in conjunction with the Company’s audited Consolidated Financial Statements and accompanying Notes included in the Company’s Form 10-K for the year ended December 31, 2015. The Company’s principal business activity is banking, conducted through its subsidiaries, Citizens Bank, N.A. and Citizens Bank of Pennsylvania.

The unaudited interim Consolidated Financial Statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods. The results for interim periods are not necessarily indicative of results for a full year.

Reclassifications

Certain prior period amounts have been reclassified to conform to current period presentation. These reclassifications had no effect on net income, total comprehensive income, total assets or total stockholders’ equity as previously reported.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments.” Under current GAAP, the Company reflects credit losses on financial assets measured on an amortized cost basis only when the losses are probable or have been incurred. The ASU replaces this approach with a forward-looking methodology that reflects the expected credit losses over the lives of financial assets, starting when the assets are first acquired. Under the revised methodology, credit losses will be measured based on past events, current conditions and reasonable and supportable forecasts that affect the collectability of financial assets. The ASU also revises the approach to recognizing credit losses on securities available for sale by allowing entities to record reversals of credit losses in current-period earnings. The ASU is effective for the Company beginning on January 1, 2020. The Company is currently assessing the impact of this guidance on the Company’s unaudited interim Consolidated Financial Statements.

In May 2016, the FASB issued ASU No. 2016-12 “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.” The ASU supplements the new revenue recognition standard issued in 2014 by addressing certain issues in the guidance on assessing collectability, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications at transition. The ASU is effective for the Company beginning on January 1, 2018. The Company is currently assessing the impact of this guidance on the Company’s unaudited interim Consolidated Financial Statements.

In April 2016, the FASB issued ASU No. 2016-10 “Identifying Performance Obligations and Licensing.” The ASU supplements the new revenue recognition standard issued in 2014 by clarifying the guidance related to licensing and the identification of performance obligations. The ASU is effective for the Company beginning on January 1, 2018. The Company is currently assessing the impact of this guidance on the Company’s unaudited interim Consolidated Financial Statements.

In March 2016, the FASB issued ASU No. 2016-09 “Improvements to Employee Share-Based Payment Accounting.” The ASU modifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The ASU is effective for the Company beginning on January 1, 2017. Adoption of this guidance is not expected to have a material impact on the Company’s unaudited interim Consolidated Financial Statements.

In March 2016, the FASB issued ASU No. 2016-08 “Principal versus Agent Considerations (Reporting Revenue Gross versus Net).” The ASU supplements the new revenue recognition standard issued in 2014 by clarifying the implementation guidance on principal versus agent considerations. The ASU is effective for the Company beginning on January 1, 2018. The Company is currently assessing the impact of this guidance on the Company’s unaudited interim Consolidated Financial Statements.

In March 2016, the FASB issued ASU No. 2016-05 “Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships.” The ASU clarifies that a change in a counterparty to a derivative instrument that has been designated as a hedging instrument, in and of itself, does not result in a hedge de-designation under ASC 815. The ASU is effective for the Company beginning on January 1, 2017. Adoption of this guidance is not expected to have a material impact on the Company’s unaudited interim Consolidated Financial Statements.

In February 2016, the FASB issued ASU 2016-02 “Leases.” The ASU generally requires lessees to recognize a right-of use asset and corresponding lease liability for all leases with a lease term of greater than one year. The ASU is effective for the Company beginning on January 1, 2019. The Company is currently assessing the impact of this guidance on the Company’s unaudited interim Consolidated Financial Statements.

In January 2016, the FASB issued ASU No. 2016-01 “Recognition and Measurement of Financial Assets and Financial Liabilities.” The ASU requires equity investments (except for those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in the fair value recognized through net income. The ASU also requires separate presentation of financial assets and financial liabilities by measurement category and form of financial assets on the balance sheet or the notes to the financial statements. In addition, the ASU makes several other targeted amendments to the existing accounting and disclosure requirements for financial instruments, including revised guidance related to valuation allowance assessments when recognizing deferred tax assets on unrealized losses on debt securities available for sale. The ASU is effective for the Company beginning on January 1, 2018. The Company is currently assessing the impact of this guidance on the Company’s unaudited interim Consolidated Financial Statements.

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SECURITIES (Tables)

6 Months Ended

Jun. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Schedule of securities held

The following table provides the major components of securities at amortized cost and fair value:

	June 30, 2016									December 31, 2015
(in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities Available for Sale
U.S. Treasury and other		$15		$—		$—			$15		$16		$—		$—			$16
State and political subdivisions	9		—		—			9		9		—		—			9
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	17,588		401		(8		)	17,981		17,234		153		(67		)	17,320
Other/non-agency	489		2		(34		)	457		555		4		(37		)	522
Total mortgage-backed securities	18,077		403		(42		)	18,438		17,789		157		(104		)	17,842
Total debt securities available for sale	18,101		403		(42		)	18,462		17,814		157		(104		)	17,867
Marketable equity securities	5		—		—			5		5		—		—			5
Other equity securities	12		—		—			12		12		—		—			12
Total equity securities available for sale	17		—		—			17		17		—		—			17
Total securities available for sale		$18,118		$403		($42	)		$18,479		$17,831		$157		($104	)		$17,884
Securities Held to Maturity
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities		$3,912		$119		$—			$4,031		$4,105		$27		($11	)		$4,121
Other/non-agency	1,061		44		—			1,105		1,153		23		—			1,176
Total securities held to maturity		$4,973		$163		$—			$5,136		$5,258		$50		($11	)		$5,297
Other Investment Securities, at Fair Value
Money market mutual fund		$68		$—		$—			$68		$65		$—		$—			$65
Other investments	5		—		—			5		5		—		—			5
Total other investment securities, at fair value		$73		$—		$—			$73		$70		$—		$—			$70
Other Investment Securities, at Cost
Federal Reserve Bank stock		$463		$—		$—			$463		$468		$—		$—			$468
Federal Home Loan Bank stock	410		—		—			410		395		—		—			395
Total other investment securities, at cost		$873		$—		$—			$873		$863		$—		$—			$863

Other than temporary impairment recognized in earnings

The following table presents the net securities impairment losses recognized in earnings:

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2016			2015			2016			2015
Other-than-temporary impairment:
Total other-than-temporary impairment losses		($1	)		($1	)		($42	)		($32	)
Portions of loss recognized in other comprehensive income (before taxes)	(6		)	(1		)	34			29
Net securities impairment losses recognized in earnings		($7	)		($2	)		($8	)		($3	)

Schedule of unrealized loss on investments

The following tables summarize those securities whose fair values are below carrying values, segregated by those that have been in a continuous unrealized loss position for less than twelve months and those that have been in a continuous unrealized loss position for twelve months or longer:

	June 30, 2016
	Less than 12 Months					12 Months or Longer						Total
(dollars in millions)	Number of Issues	Fair Value		Gross Unrealized Losses		Number of Issues	Fair Value		Gross Unrealized Losses			Number of Issues	Fair Value		Gross Unrealized Losses
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	7		$95		$—	33		$734		($8	)	40		$829		($8	)
Other/non-agency	4	19		—		20	330		(34		)	24	349		(34		)
Total mortgage-backed securities	11	114		—		53	1,064		(42		)	64	1,178		(42		)
Total	11		$114		$—	53		$1,064		($42	)	64		$1,178		($42	)

	December 31, 2015
	Less than 12 Months						12 Months or Longer						Total
(dollars in millions)	Number of Issues	Fair Value		Gross Unrealized Losses			Number of Issues	Fair Value		Gross Unrealized Losses			Number of Issues	Fair Value		Gross Unrealized Losses
State and political subdivisions	1		$9		$—		—		$—		$—		1		$9		$—
U.S. Treasury and other	1	15		—			—	—		—			1	15		—
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	162	7,423		(51		)	36	819		(27		)	198	8,242		(78		)
Other/non-agency	2	9		—			20	361		(37		)	22	370		(37		)
Total mortgage-backed securities	164	7,432		(51		)	56	1,180		(64		)	220	8,612		(115		)
Total	166		$7,456		($51	)	56		$1,180		($64	)	222		$8,636		($115	)

Schedule of credit losses recognized in earnings

The following table presents the cumulative credit-related losses recognized in earnings on debt securities held by the Company:

	Three Months Ended June 30,					Six Months Ended June 30,
(in millions)	2016		2015			2016			2015
Cumulative balance at beginning of period		$66		$62			$66			$62
Credit impairments recognized in earnings on securities that have been previously impaired	7		2			8			3
Reductions due to increases in cash flow expectations on impaired securities	—		(2		)	(1		)	(3		)
Cumulative balance at end of period		$73		$62			$73			$62

Schedule of investments classified by maturity date

The amortized cost and fair value of debt securities by contractual maturity are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without incurring penalties.

	June 30, 2016
	Distribution of Maturities
(in millions)	1 Year or Less		1-5 Years		5-10 Years		After 10 Years		Total
Amortized Cost:
Debt securities available for sale
U.S. Treasury and other		$15		$—		$—		$—		$15
State and political subdivisions	—		—		—		9		9
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	15		36		1,668		15,869		17,588
Other/non-agency	—		50		2		437		489
Total debt securities available for sale	30		86		1,670		16,315		18,101
Debt securities held to maturity
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	—		—		—		3,912		3,912
Other/non-agency	—		—		—		1,061		1,061
Total debt securities held to maturity	—		—		—		4,973		4,973
Total amortized cost of debt securities		$30		$86		$1,670		$21,288		$23,074
Fair Value:
Debt securities available for sale
U.S. Treasury and other		$15		$—		$—		$—		$15
State and political subdivisions	—		—		—		9		9
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	15		38		1,710		16,218		17,981
Other/non-agency	—		50		3		404		457
Total debt securities available for sale	30		88		1,713		16,631		18,462
Debt securities held to maturity
Mortgage-backed securities:
Federal agencies and U.S. government sponsored entities	—		—		—		4,031		4,031
Other/non-agency	—		—		—		1,105		1,105
Total debt securities held to maturity	—		—		—		5,136		5,136
Total fair value of debt securities		$30		$88		$1,713		$21,767		$23,598

Schedule of income recognized on investment securities

The following table reports the amounts recognized in interest income from investment securities on the Consolidated Statements of Operations:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2016		2015		2016		2015
Taxable		$141		$155		$286		$314
Non-taxable	—		—		—		—
Total interest income from investment securities		$141		$155		$286		$314

Realized gains and losses on securities are shown below:

	Three Months Ended June 30,					Six Months Ended June 30,
(in millions)	2016		2015			2016		2015
Gains on sale of debt securities		$4		$10			$13		$22
Losses on sale of debt securities	—		(1		)	—		(5		)
Debt securities gains, net		$4		$9			$13		$17
Equity securities gains		$—		$1			$—		$3

Schedule of financial instruments owned and pledged as collateral

The amortized cost and fair value of securities pledged are shown below:

	June 30, 2016				December 31, 2015
(in millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Pledged against repurchase agreements		$705		$720		$805		$808
Pledged against FHLB borrowed funds	1,070		1,114		1,163		1,186
Pledged against derivatives, to qualify for fiduciary powers, and to secure public and other deposits as required by law	4,236		4,341		3,579		3,610

Schedule of effect of repurchase agreements on balance sheet accounts

The effects of this offsetting on the Consolidated Balance Sheets are presented in the following table:

	June 30, 2016						December 31, 2015
(in millions)	Gross Assets (Liabilities)		Gross Assets (Liabilities) Offset		Net Amounts of Assets (Liabilities)		Gross Assets (Liabilities)			Gross Assets (Liabilities) Offset			Net Amounts of Assets (Liabilities)
Securities purchased under agreements to resell		$—		$—		$—		$500			($500	)		$—
Securities sold under agreements to repurchase	—		—		—		(500		)	500			—

Note: The Company also offsets certain derivative assets and derivative liabilities on the Consolidated Balance Sheets. For further information see Note 11 “Derivatives.”

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LOANS AND LEASES (Tables)

6 Months Ended

Jun. 30, 2016

Receivables [Abstract]

Schedule of loans and leases

A summary of the loans and leases portfolio follows:

(in millions)	June 30, 2016		December 31, 2015
Commercial		$35,927		$33,264
Commercial real estate	9,825		8,971
Leases	3,805		3,979
Total commercial	49,557		46,214
Residential mortgages	13,855		13,318
Home equity loans	2,177		2,557
Home equity lines of credit	14,418		14,674
Home equity loans serviced by others (1)	860		986
Home equity lines of credit serviced by others (1)	273		389
Automobile	14,075		13,828
Student	5,516		4,359
Credit cards	1,613		1,634
Other retail	1,207		1,083
Total retail	53,994		52,828
Total loans and leases (2) (3)		$103,551		$99,042

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

⁽²⁾ Excluded from the table above are loans held for sale totaling $850 million and $365 million as of June 30, 2016 and December 31, 2015, respectively.

⁽³⁾ Mortgage loans serviced for others by the Company’s subsidiaries are not included above and amounted to $17.2 billion and $17.6 billion at June 30, 2016 and December 31, 2015, respectively.

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ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK (Tables)

6 Months Ended

Jun. 30, 2016

Receivables [Abstract]

Schedule of changes in the allowance for credit losses

The following is a summary of changes in the allowance for credit losses:

	Three Months Ended June 30, 2016									Six Months Ended June 30, 2016
(in millions)	Commercial			Retail			Total			Commercial			Retail			Total
Allowance for loan and lease losses, beginning of period		$633			$591			$1,224			$596			$620			$1,216
Charge-offs	(7		)	(106		)	(113		)	(20		)	(219		)	(239		)
Recoveries	5			43			48			9			82			91
Net charge-offs	(2		)	(63		)	(65		)	(11		)	(137		)	(148		)
Provision charged to income	45			42			87			91			87			178
Allowance for loan and lease losses, end of period	676			570			1,246			676			570			1,246
Reserve for unfunded lending commitments, beginning of period	58			—			58			58			—			58
Credit for unfunded lending commitments	3			—			3			3			—			3
Reserve for unfunded lending commitments as of period end	61			—			61			61			—			61
Total allowance for credit losses as of period end		$737			$570			$1,307			$737			$570			$1,307

	Three Months Ended June 30, 2015									Six Months Ended June 30, 2015
(in millions)	Commercial			Retail			Total			Commercial			Retail			Total
Allowance for loan and lease losses, beginning of period		$578			$624			$1,202			$544			$651			$1,195
Charge-offs	(15		)	(106		)	(121		)	(21		)	(215		)	(236		)
Recoveries	8			35			43			36			68			104
Net recoveries (charge-offs)	(7		)	(71		)	(78		)	15			(147		)	(132		)
Sales/Other	—			—			—			—			(2		)	(2		)
Provision charged to income	(6		)	83			77			6			134			140
Allowance for loan and lease losses, end of period	565			636			1,201			565			636			1,201
Reserve for unfunded lending commitments, beginning of period	56			—			56			61			—			61
Provision for unfunded lending commitments	—			—			—			(5		)	—			(5		)
Reserve for unfunded lending commitments as of period end	56			—			56			56			—			56
Total allowance for credit losses as of period end		$621			$636			$1,257			$621			$636			$1,257

Schedule of loans and leases based on evaluation method

The recorded investment in loans and leases based on the Company’s evaluation methodology is as follows:

	June 30, 2016						December 31, 2015
(in millions)	Commercial		Retail		Total		Commercial		Retail		Total
Individually evaluated		$408		$802		$1,210		$218		$1,165		$1,383
Formula-based evaluation	49,149		53,192		102,341		45,996		51,663		97,659
Total		$49,557		$53,994		$103,551		$46,214		$52,828		$99,042

Schedule of allowance for credit losses by evaluation method

The following is a summary of the allowance for credit losses by evaluation method:

	June 30, 2016						December 31, 2015
(in millions)	Commercial		Retail		Total		Commercial		Retail		Total
Individually evaluated		$52		$79		$131		$36		$101		$137
Formula-based evaluation	685		491		1,176		618		519		1,137
Allowance for credit losses		$737		$570		$1,307		$654		$620		$1,274

Schedule of classes of commercial loans and leases based on regulatory classifications

The recorded investment in classes of commercial loans and leases based on regulatory classification ratings is as follows:

	June 30, 2016
			Criticized
(in millions)	Pass		Special Mention		Substandard		Doubtful		Total
Commercial		$33,931		$855		$1,015		$126		$35,927
Commercial real estate	9,281		318		156		70		9,825
Leases	3,603		80		122		—		3,805
Total		$46,815		$1,253		$1,293		$196		$49,557

	December 31, 2015
			Criticized
(in millions)	Pass		Special Mention		Substandard		Doubtful		Total
Commercial		$31,276		$911		$1,002		$75		$33,264
Commercial real estate	8,450		272		171		78		8,971
Leases	3,880		55		44		—		3,979
Total		$43,606		$1,238		$1,217		$153		$46,214

Schedule of retail loan investments categorized by delinquency status

The recorded investment in classes of retail loans, categorized by delinquency status is as follows:

	June 30, 2016
(in millions)	Current		1-29 Days Past Due		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total
Residential mortgages		$13,571		$89		$40		$10		$145		$13,855
Home equity loans	1,937		133		20		8		79		2,177
Home equity lines of credit	13,755		388		44		24		207		14,418
Home equity loans serviced by others (1)	781		48		10		4		17		860
Home equity lines of credit serviced by others (1)	184		37		12		5		35		273
Automobile	12,959		926		122		31		37		14,075
Student	5,340		105		18		11		42		5,516
Credit cards	1,539		42		10		8		14		1,613
Other retail	1,149		44		6		4		4		1,207
Total		$51,215		$1,812		$282		$105		$580		$53,994

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

	December 31, 2015
(in millions)	Current		1-29 Days Past Due		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total
Residential mortgages		$12,905		$97		$54		$16		$246		$13,318
Home equity loans	2,245		164		32		12		104		2,557
Home equity lines of credit	13,982		407		60		20		205		14,674
Home equity loans serviced by others (1)	886		60		14		6		20		986
Home equity lines of credit serviced by others (1)	296		48		10		6		29		389
Automobile	12,670		964		127		32		35		13,828
Student	4,175		113		19		11		41		4,359
Credit cards	1,554		44		11		9		16		1,634
Other retail	1,013		53		8		4		5		1,083
Total		$49,726		$1,950		$335		$116		$701		$52,828

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

Schedule of nonperforming loans and leases by class

The following table presents nonperforming loans and leases and loans accruing 90 days or more past due:

	Nonperforming (1)				Accruing and 90 days or more past due
(in millions)	June 30, 2016		December 31, 2015		June 30, 2016		December 31, 2015
Commercial		$277		$71		$—		$1
Commercial real estate	70		77		4		—
Leases	—		—		—		—
Total commercial	347		148		4		1
Residential mortgages (2) (3) (4)	174		331		15		—
Home equity loans (2)	104		135		—		—
Home equity lines of credit	251		272		—		—
Home equity loans serviced by others (5)	33		38		—		—
Home equity lines of credit serviced by others (5)	38		32		—		—
Automobile	43		42		—		—
Student	37		41		6		6
Credit card	14		16		—		—
Other retail	3		5		1		2
Total retail	697		912		22		8
Total		$1,044		$1,060		$26		$9

⁽¹⁾ Effective March 31, 2016, the Company began excluding loans 90 days or more past due and still accruing from nonperforming loans and leases. Nonperforming loans and leases as of December 31, 2015 included loans and leases on nonaccrual of $1.051 billion and loans and leases accruing and 90 days or more past due of $9 million.

⁽²⁾ Nonperforming balances at June 30, 2016 excluded $71 million of troubled debt restructured loans held for sale, including $54 million of residential mortgages and $17 million of home equity loans.

⁽³⁾ Effective March 31, 2016, the Company began excluding first lien residential mortgage loans that are 100% guaranteed by the Federal Housing Administration from nonperforming balances. As of June 30, 2016, $15 million of these loans were accruing and 90 days or more past due.

⁽⁴⁾ Effective March 31, 2016, the Company began excluding guaranteed residential mortgage loans sold to GNMA for which the Company had the right, but not the obligation, to repurchase from nonperforming balances. As of June 30, 2016 these loans totaled $34 million. These loans are consolidated on the Company’s Consolidated Balance Sheets.

⁽⁵⁾ The Company's SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

Schedule of nonperforming assets

A summary of other nonperforming assets is as follows:

(in millions)	June 30, 2016		December 31, 2015
Other nonperforming assets, net of valuation allowance:
Commercial		$1		$1
Retail	47		45
Other nonperforming assets, net of valuation allowance		$48		$46

Summary of key performance indicators

A summary of key performance indicators is as follows:

	June 30, 2016		December 31, 2015
Nonperforming commercial loans and leases as a percentage of total loans and leases (1)	0.34	%	0.15	%
Nonperforming retail loans as a percentage of total loans and leases (1)	0.67		0.92
Total nonperforming loans and leases as a percentage of total loans and leases (1)	1.01	%	1.07	%
Nonperforming commercial assets as a percentage of total assets (1)	0.24	%	0.11	%
Nonperforming retail assets as a percentage of total assets (1)	0.51		0.69
Total nonperforming assets as a percentage of total assets (1)	0.75	%	0.80	%

⁽¹⁾ December 31, 2015 ratios included loans accruing and 90 days or more past due of $1 million and $8 million for commercial and retail, respectively.

Analysis of age of past due amounts

The following is an analysis of the age of the past due amounts (accruing and nonaccruing):

	June 30, 2016								December 31, 2015
(in millions)	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due
Commercial		$8		$23		$277		$308		$9		$4		$71		$84
Commercial real estate	2		5		74		81		30		3		77		110
Leases	1		—		—		1		9		1		—		10
Total commercial	11		28		351		390		48		8		148		204
Residential mortgages	40		10		145		195		54		16		246		316
Home equity loans	20		8		79		107		32		12		104		148
Home equity lines of credit	44		24		207		275		60		20		205		285
Home equity loans serviced by others (1)	10		4		17		31		14		6		20		40
Home equity lines of credit serviced by others (1)	12		5		35		52		10		6		29		45
Automobile	122		31		37		190		127		32		35		194
Student	18		11		42		71		19		11		41		71
Credit cards	10		8		14		32		11		9		16		36
Other retail	6		4		4		14		8		4		5		17
Total retail	282		105		580		967		335		116		701		1,152
Total		$293		$133		$931		$1,357		$383		$124		$849		$1,356

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

Schedule of impaired loans by class

The following is a summary of impaired loan information by class:

	June 30, 2016
(in millions)	Impaired Loans With a Related Allowance		Allowance on Impaired Loans		Impaired Loans Without a Related Allowance		Unpaid Contractual Balance		Total Recorded Investment in Impaired Loans
Commercial		$216		$46		$139		$391		$355
Commercial real estate	42		6		11		56		53
Total commercial	258		52		150		447		408
Residential mortgages	34		4		130		214		164
Home equity loans	51		5		107		198		158
Home equity lines of credit	26		3		160		223		186
Home equity loans serviced by others (1)	45		7		21		79		66
Home equity lines of credit serviced by others (1)	3		—		7		14		10
Automobile	4		—		14		23		18
Student	161		46		1		162		162
Credit cards	26		11		—		27		26
Other retail	10		3		2		14		12
Total retail	360		79		442		954		802
Total		$618		$131		$592		$1,401		$1,210

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

	December 31, 2015
(in millions)	Impaired Loans With a Related Allowance		Allowance on Impaired Loans		Impaired Loans Without a Related Allowance		Unpaid Contractual Balance		Total Recorded Investment in Impaired Loans
Commercial		$92		$23		$58		$144		$150
Commercial real estate	56		13		12		70		68
Total commercial	148		36		70		214		218
Residential mortgages	121		16		320		608		441
Home equity loans	85		11		139		283		224
Home equity lines of credit	27		2		167		234		194
Home equity loans serviced by others (1)	50		8		24		88		74
Home equity lines of credit serviced by others (1)	3		1		7		14		10
Automobile	3		—		11		19		14
Student	163		48		2		165		165
Credit cards	28		11		—		28		28
Other retail	13		4		2		18		15
Total retail	493		101		672		1,457		1,165
Total		$641		$137		$742		$1,671		$1,383

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

Schedule of additional information on impaired loans

Additional information on impaired loans is as follows:

	Three Months Ended June 30,
	2016				2015
(in millions)	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
Commercial		$2		$324		$1		$129
Commercial real estate	—		58		—		51
Total commercial	2		382		1		180
Residential mortgages	1		160		4		436
Home equity loans	1		158		3		272
Home equity lines of credit	2		184		1		151
Home equity loans serviced by others (1)	1		66		1		84
Home equity lines of credit serviced by others (1)	—		10		—		10
Automobile	—		15		—		12
Student	2		161		2		164
Credit cards	1		26		—		30
Other retail	—		13		—		18
Total retail	8		793		11		1,177
Total		$10		$1,175		$12		$1,357

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

	Six Months Ended June 30,
	2016				2015
(in millions)	Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment
Commercial		$3		$248		$1		$133
Commercial real estate	—		61		1		54
Total commercial	3		309		2		187
Residential mortgages	2		156		8		433
Home equity loans	3		154		5		266
Home equity lines of credit	3		182		2		150
Home equity loans serviced by others (1)	2		67		2		84
Home equity lines of credit serviced by others (1)	—		9		—		10
Automobile	—		14		—		11
Student	4		160		4		162
Credit cards	1		26		1		29
Other retail	—		13		—		18
Total retail	15		781		22		1,163
Total		$18		$1,090		$24		$1,350

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

Troubled debt restructurings on financing receivables

The following table summarizes how loans were modified during the three months endedJune 30, 2016, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances include loans that became TDRs during 2016 and were paid off in full, charged off, or sold prior to June 30, 2016.

	Primary Modification Types
	Interest Rate Reduction (1)					Maturity Extension (2)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	3		$—		$—	28		$4		$4
Commercial real estate	—	—		—		—	—		—
Total commercial	3	—		—		28	4		4
Residential mortgages	3	1		1		10	2		2
Home equity loans	15	1		1		21	2		2
Home equity lines of credit	6	—		—		8	1		1
Home equity loans serviced by others (3)	3	—		—		—	—		—
Home equity lines of credit serviced by others (3)	2	—		—		3	1		1
Automobile	30	—		—		3	—		—
Student	—	—		—		—	—		—
Credit cards	552	3		3		—	—		—
Other retail	1	—		—		—	—		—
Total retail	612	5		5		45	6		6
Total	615		$5		$5	73		$10		$10

	Primary Modification Types
	Other (4)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification			Charge-offs Resulting from Modification
Commercial	4		$20		$21		$—			$—
Commercial real estate	—	—		—		—			—
Total commercial	4	20		21		—			—
Residential mortgages	67	7		7		—			—
Home equity loans	94	5		5		(1		)	—
Home equity lines of credit	92	6		6		—			—
Home equity loans serviced by others (3)	16	—		—		—			—
Home equity lines of credit serviced by others (3)	5	1		—		—			—
Automobile	348	7		6		—			1
Student	111	2		2		1			—
Credit cards	—	—		—		1			—
Other retail	5	—		—		—			—
Total retail	738	28		26		1			1
Total	742		$48		$47		$1			$1

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

⁽³⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

⁽⁴⁾ Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forbearance, capitalizing arrearages, and principal forgiveness. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

The following table summarizes how loans were modified during the three months endedJune 30, 2015, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances include loans that became TDRs during 2015 and were paid off in full, charged off, or sold prior to June 30, 2015.

	Primary Modification Types
	Interest Rate Reduction (1)					Maturity Extension (2)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	7		$1		$1	36		$2		$2
Commercial real estate	—	—		—		—	—		—
Total commercial	7	1		1		36	2		2
Residential mortgages	20	3		3		9	2		2
Home equity loans	26	1		1		49	11		11
Home equity lines of credit	—	—		—		—	—		—
Home equity loans serviced by others (3)	5	—		—		—	—		—
Automobile	18	1		1		1	—		—
Credit cards	630	3		3		—	—		—
Total retail	699	8		8		59	13		13
Total	706		$9		$9	95		$15		$15

	Primary Modification Types
	Other (4)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification		Charge-offs Resulting from Modification
Commercial	3		$—		$—		$—		$—
Commercial real estate	—	—		—		—		—
Total commercial	3	—		—		—		—
Residential mortgages	42	4		4		—		—
Home equity loans	97	7		7		—		—
Home equity lines of credit	78	5		5		—		1
Home equity loans serviced by others (3)	25	1		1		—		—
Home equity lines of credit serviced by others (3)	15	1		1		—		—
Automobile	172	3		2		—		—
Student	369	7		7		1		—
Credit cards	—	—		—		1		—
Other retail	4	—		—		—		—
Total retail	802	28		27		2		1
Total	805		$28		$27		$2		$1

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

⁽³⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

⁽⁴⁾ Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forbearance, capitalizing arrearages, and principal forgiveness. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

The following table summarizes how loans were modified during the six months endedJune 30, 2016, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances include loans that became TDRs during 2016 and were paid off in full, charged off, or sold prior to June 30, 2016.

	Primary Modification Types
	Interest Rate Reduction (1)					Maturity Extension (2)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	8		$1		$1	54		$8		$8
Commercial real estate	—	—		—		—	—		—
Total commercial	8	1		1		54	8		8
Residential mortgages	25	4		4		16	3		3
Home equity loans	29	2		2		37	4		4
Home equity lines of credit	13	1		1		27	3		3
Home equity loans serviced by others (3)	6	—		—		—	—		—
Home equity lines of credit serviced by others (3)	2	—		—		4	1		1
Automobile	51	1		1		8	—		—
Student	—	—		—		—	—		—
Credit cards	1,081	6		6		—	—		—
Other retail	1	—		—		—	—		—
Total retail	1,208	14		14		92	11		11
Total	1,216		$15		$15	146		$19		$19

	Primary Modification Types
	Other (4)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification			Charge-offs Resulting from Modification
Commercial	9		$41		$41		($1	)		$—
Commercial real estate	—	—		—		—			—
Total commercial	9	41		41		(1		)	—
Residential mortgages	131	15		15		—			—
Home equity loans	181	11		11		(1		)	—
Home equity lines of credit	124	8		8		—			—
Home equity loans serviced by others (3)	34	1		1		—			—
Home equity lines of credit serviced by others (3)	13	1		—		—			—
Automobile	539	10		9		—			1
Student	297	6		6		2			—
Credit cards	—	—		—		1			—
Other retail	8	—		—		—			—
Total retail	1,327	52		50		2			1
Total	1,336		$93		$91		$1			$1

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

⁽³⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

⁽⁴⁾ Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forbearance, capitalizing arrearages, and principal forgiveness. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

The following table summarizes how loans were modified during the six months endedJune 30, 2015, the charge-offs related to the modifications, and the impact on the ALLL. The reported balances include loans that became TDRs during 2015 and were paid off in full, charged off, or sold prior to June 30, 2015.

	Primary Modification Types
	Interest Rate Reduction (1)					Maturity Extension (2)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial	14		$3		$3	64		$12		$12
Commercial real estate	1	—		—		—	—		—
Total commercial	15	3		3		64	12		12
Residential mortgages	53	9		9		19	4		4
Home equity loans	47	2		2		86	16		16
Home equity lines of credit	—	—		—		3	—		—
Home equity loans serviced by others (3)	22	1		1		—	—		—
Home equity lines of credit serviced by others (3)	—	—		—		—	—		—
Automobile	38	1		1		2	—		—
Student	—	—		—		—	—		—
Credit cards	1,234	7		7		—	—		—
Other retail	—	—		—		—	—		—
Total retail	1,394	20		20		110	20		20
Total	1,409		$23		$23	174		$32		$32

	Primary Modification Types
	Other (4)
(dollars in millions)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Net Change to ALLL Resulting from Modification			Charge-offs Resulting from Modification
Commercial	4		$2		$2		($1	)		$—
Commercial real estate	1	4		4		—			—
Total commercial	5	6		6		(1		)	—
Residential mortgages	106	10		10		(1		)	—
Home equity loans	294	17		17		—			—
Home equity lines of credit	213	14		12		—			2
Home equity loans serviced by others (3)	71	3		3		—			1
Home equity lines of credit serviced by others (3)	22	1		1		—			—
Automobile	469	8		6		—			1
Student	750	14		14		3			—
Credit cards	—	—		—		1			—
Other retail	15	—		—		—			—
Total retail	1,940	67		63		3			4
Total	1,945		$73		$69		$2			$4

⁽¹⁾ Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

⁽²⁾ Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

⁽³⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

⁽⁴⁾ Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forbearance, capitalizing arrearages, and principal forgiveness. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

Schedule of defaults

The table below summarizes TDRs that defaulted during the three months endedJune 30, 2016 and 2015 within 12 months of their modification date. For purposes of this table, a payment default is defined as being past due 90 days or more under the modified terms. Amounts represent the loan’s recorded investment at the time of payment default. Loan data includes loans meeting the criteria that were paid off in full, charged off, or sold prior to June 30, 2016 and 2015. If a TDR of any loan type becomes 90 days past due after being modified, the loan is written down to the fair value of collateral less cost to sell. The amount written off is charged to the ALLL.

	Three Months Ended June 30,
	2016			2015
(dollars in millions)	Number of Contracts	Balance Defaulted		Number of Contracts	Balance Defaulted
Commercial	8		$3	8		$1
Commercial real estate	1	—		—	—
Total commercial	9	3		8	1
Residential mortgages	35	4		34	5
Home equity loans	32	2		32	2
Home equity lines of credit	20	1		32	1
Home equity loans serviced by others (1)	11	—		7	—
Home equity lines of credit serviced by others (1)	6	—		6	—
Automobile	22	1		19	—
Student	18	1		44	1
Credit cards	85	—		100	1
Other retail	—	—		1	—
Total retail	229	9		275	10
Total	238		$12	283		$11

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

The table below summarizes TDRs that defaulted during the six months endedJune 30, 2016 and 2015 within 12 months of their modification date.

	Six Months Ended June 30,
	2016			2015
(dollars in millions)	Number of Contracts	Balance Defaulted		Number of Contracts	Balance Defaulted
Commercial	11		$3	14		$1
Commercial real estate	1	—		—	—
Total commercial	12	3		14	1
Residential mortgages	89	12		83	11
Home equity loans	50	3		83	6
Home equity lines of credit	45	4		72	3
Home equity loans serviced by others (1)	21	1		23	1
Home equity lines of credit serviced by others (1)	11	—		7	—
Automobile	37	1		42	1
Student	31	1		109	2
Credit cards	206	1		202	1
Other retail	—	—		3	—
Total retail	490	23		624	25
Total	502		$26	638		$26

⁽¹⁾ The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

Schedule of loans that may increase credit exposure

The following table presents balances of loans with these characteristics:

	June 30, 2016
(in millions)	Residential Mortgages		Home Equity Loans and Lines of Credit		Home Equity Products Serviced by Others		Credit Cards		Student		Total
High loan-to-value		$595		$782		$621		$—		$—		$1,998
Interest only/negative amortization	1,369		—		—		—		1		1,370
Low introductory rate	—		—		—		94		—		94
Multiple characteristics and other	4		—		—		—		—		4
Total		$1,968		$782		$621		$94		$1		$3,466

	December 31, 2015
(in millions)	Residential Mortgages		Home Equity Loans and Lines of Credit		Home Equity Products Serviced by Others		Credit Cards		Student		Total
High loan-to-value		$649		$1,038		$785		$—		$—		$2,472
Interest only/negative amortization	1,110		—		—		—		—		1,110
Low introductory rate	—		3		—		96		—		99
Multiple characteristics and other	14		—		—		—		—		14
Total		$1,773		$1,041		$785		$96		$—		$3,695

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VARIABLE INTEREST ENTITIES (Tables)

6 Months Ended

Jun. 30, 2016

Equity Method Investments and Joint Ventures [Abstract]

Schedule of Variable Interest Entities

A summary of these investments is as follows:

(in millions)	June 30, 2016		December 31, 2015
LIHTC investment included in other assets		$660		$598
LIHTC unfunded commitments included in other liabilities	365		365
Renewable energy investments included in other assets	117		118

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MORTGAGE BANKING (Tables)

6 Months Ended

Jun. 30, 2016

Mortgage Banking [Abstract]

Schedule of valuation allowance for impairment of recognized servicing assets

Changes related to MSRs were as follows:

	As of and for the Three Months Ended June 30,						As of and for the Six Months Ended June 30,
(in millions)	2016			2015			2016			2015
MSRs:
Balance as of beginning of period		$169			$180			$173			$184
Amount capitalized	5			7			10			13
Amortization	(8		)	(10		)	(17		)	(20		)
Carrying amount before valuation allowance	166			177			166			177
Valuation allowance for servicing assets:
Balance as of beginning of period	14			17			9			18
Valuation charge-offs (recoveries)	(1		)	(6		)	4			(7		)
Balance at end of period	13			11			13			11
Net carrying value of MSRs		$153			$166			$153			$166

Servicing asset at amortized cost

Changes related to MSRs were as follows:

	As of and for the Three Months Ended June 30,						As of and for the Six Months Ended June 30,
(in millions)	2016			2015			2016			2015
MSRs:
Balance as of beginning of period		$169			$180			$173			$184
Amount capitalized	5			7			10			13
Amortization	(8		)	(10		)	(17		)	(20		)
Carrying amount before valuation allowance	166			177			166			177
Valuation allowance for servicing assets:
Balance as of beginning of period	14			17			9			18
Valuation charge-offs (recoveries)	(1		)	(6		)	4			(7		)
Balance at end of period	13			11			13			11
Net carrying value of MSRs		$153			$166			$153			$166

Schedule of fair value assumptions used to estimate the value of Mortgage Servicing Rights

The key economic assumptions used to estimate the value of MSRs are presented in the following table:

(dollars in millions)	June 30, 2016	December 31, 2015
Fair value	$165	$178
Weighted average life (in years)	4.9	5.4
Weighted average constant prepayment rate	13.5%	11.6%
Weighted average discount rate	9.7%	9.7%

Schedule of fair value assumptions used to estimate the value of Mortgage Servicing Rights capitalized in current period

The key economic assumptions used in estimating the fair value of MSRs capitalized during the period were as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2016	2015	2016	2015
Weighted average life (in years)	5.9	6.3	6.0	5.4
Weighted average constant prepayment rate	11.3%	9.8%	11.1%	11.1%
Weighted average discount rate	9.7%	9.7%	9.7%	9.6%

Schedule of the impact to fair value of an adverse change in key economic assumptions

The sensitivity analysis below as of June 30, 2016 and December 31, 2015 presents the impact to current fair value of an immediate 50 basis points and 100 basis points adverse change in the key economic assumptions and presents the decline in fair value that would occur if the adverse change were realized. These sensitivities are hypothetical. The effect of a variation in a particular assumption on the fair value of the mortgage servicing rights is calculated independently without changing any other assumption. In reality, changes in one factor may result in changes in another (e.g., changes in interest rates, which drive changes in prepayment speeds, could result in changes in the discount rates), which might amplify or counteract the sensitivities. The primary risk inherent in the Company’s MSRs is an increase in prepayments of the underlying mortgage loans serviced, which is dependent upon market movements of interest rates.

(in millions)	June 30, 2016		December 31, 2015
Prepayment rate:
Decline in fair value from a 50 basis point decrease in interest rates		$6		$5
Decline in fair value from a 100 basis point decrease in interest rates		$17		$11
Weighted average discount rate:
Decline in fair value from a 50 basis point increase in weighted average discount rate		$3		$3
Decline in fair value from a 100 basis point increase in weighted average discount rate		$5		$6

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BORROWED FUNDS (Tables)

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Schedule of short-term borrowed funds

The following is a summary of the Company’s short-term borrowed funds:

(in millions)	June 30, 2016		December 31, 2015
Securities sold under agreements to repurchase		$717		$802
Other short-term borrowed funds (primarily current portion of FHLB advances)	2,770		2,630
Total short-term borrowed funds		$3,487		$3,432

Key data related to short-term borrowed funds is presented in the following table:

(dollars in millions)	As of and for the Six Months Ended June 30, 2016			As of and for the Year Ended December 31, 2015
Weighted-average interest rate at period-end:
Federal funds purchased and securities sold under agreements to repurchase	0.00		%	0.15		%
Other short-term borrowed funds (primarily current portion of FHLB advances)	0.65			0.44
Maximum amount outstanding at month-end during the period:
Federal funds purchased and securities sold under agreements to repurchase		$1,274			$5,375
Other short-term borrowed funds (primarily current portion of FHLB advances)	4,764			7,004
Average amount outstanding during the period:
Federal funds purchased and securities sold under agreements to repurchase		$927			$3,364
Other short-term borrowed funds (primarily current portion of FHLB advances)	3,421			5,865
Weighted-average interest rate during the period:
Federal funds purchased and securities sold under agreements to repurchase	0.07		%	0.22		%
Other short-term borrowed funds (primarily current portion of FHLB advances)	0.60			0.28

Schedule of long-term borrowed funds

The following is a summary of the Company’s long-term borrowed funds:

(in millions)	June 30, 2016		December 31, 2015
Citizens Financial Group, Inc.:
4.150% fixed rate subordinated debt, due 2022 (1)		$347		$350
5.158% fixed-to-floating rate subordinated debt, (LIBOR + 3.56%) callable, due 2023 (2)	333		333
3.750% fixed rate subordinated debt, due 2024 (2) (3)	250		250
4.023% fixed rate subordinated debt, due 2024 (2) (4)	218		331
4.082% fixed rate subordinated debt, due 2025 (2) (5)	355		331
4.350% fixed rate subordinated debt, due 2025 (6)	249		250
4.300% fixed rate subordinated debt, due 2025 (7)	749		750
Banking Subsidiaries:
1.600% senior unsecured notes, due 2017 (8) (9)	753		749
2.300% senior unsecured notes, due 2018 (8) (10)	756		747
2.450% senior unsecured notes, due 2019 (8) (11)	767		752
2.500% senior unsecured notes, due 2019 (8)(12)	753		—
2.550% senior unsecured notes, due 2021(8)(13)	1,004		—
Federal Home Loan advances due through 2033	5,264		5,018
Other	12		25
Total long-term borrowed funds		$11,810		$9,886

⁽¹⁾ These balances are comprised of: principal balances of $350 million at June 30, 2016 and December 31, 2015, as well as the impact of ($3) million of unamortized deferred issuance costs and discount at June 30, 2016.

⁽²⁾ Borrowed funds with RBS as of December 31, 2015. See Note 13 “Related Party Transactions and Significant Transactions with RBS” for further information.

⁽³⁾ Prior to January 1, 2016, interest was payable at a fixed rate per annum of 4.153%.

⁽⁴⁾ These balances are comprised of: principal balance of $208 million and $333 million at June 30, 2016 and December 31, 2015, respectively, as well as the impact from interest rate swaps of $10 million and ($2) million at June 30, 2016 and December 31, 2015, respectively. See Note 11 “Derivatives” for further information. In addition, on March 7, 2016, the Company repurchased $125 million of these securities from RBS. See Note 13 “Related Party Transactions and Significant Transactions with RBS” for further information.

⁽⁵⁾ These balances are comprised of: principal balance of $334 million at June 30, 2016 and December 31, 2015; impact from interest rate swaps of $21 million and ($3) million at June 30, 2016 and December 31, 2015, respectively. See Note 11 “Derivatives” for further information.

⁽⁶⁾ These balances are comprised of: principal balances of $250 million at June 30, 2016 and December 31, 2015, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2016.

⁽⁷⁾ These balances are comprised of: principal balances of $750 million at June 30, 2016 and December 31, 2015, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2016.

⁽⁸⁾ These securities were offered under CBNA’s Global Bank Note Program dated December 1, 2014.

⁽⁹⁾ These balances are comprised of: principal balances of $750 million at June 30, 2016 and December 31, 2015; impact from interest rate swaps of $4 million and ($1) million at June 30, 2016 and December 31, 2015, respectively; and ($1) million of unamortized deferred issuance costs and discount at June 30, 2016. See Note 11 “Derivatives” for further information.

⁽¹⁰⁾ These balances are comprised of: principal balances of $750 million at June 30, 2016 and December 31, 2015; impact from interest rate swaps of $8 million and ($3) million at June 30, 2016 and December 31, 2015, respectively; and ($2) million of unamortized deferred issuance costs and discount at June 30, 2016. See Note 11 “Derivatives” for further information.

⁽¹¹⁾ These balances are comprised of: principal balances of $750 million at June 30, 2016 and December 31, 2015; impact from interest rate swaps of $20 million and $2 million at June 30, 2016 and December 31, 2015, respectively; and ($3) million of unamortized deferred issuance costs and discount at June 30, 2016. See Note 11 “Derivatives” for further information.

⁽¹²⁾ The balance is comprised of: principal balance of $750 million at June 30, 2016; impact from interest rate swaps of $5 million and ($2) million of unamortized deferred issuance costs and discount at June 30, 2016. See Note 11 “Derivatives” for further information.

⁽¹³⁾ The balance is comprised of: principal balance of $1.0 billion at June 30, 2016; impact from interest rate swaps of $9 million and ($5) million of unamortized deferred issuance costs and discount at June 30, 2016. See Note 11 “Derivatives” for further information.

Schedule of maturities of long-term borrowed funds

The following is a summary of maturities for the Company’s long-term borrowed funds at June 30, 2016:

Year (in millions)	CFG Parent Company		Banking Subsidiaries		Consolidated
2017 or on demand		$—		$6,004		$6,004
2018	—		761		761
2019	—		1,521		1,521
2020	—		2		2
2021	—		1,009		1,009
2022 and thereafter	2,501		12		2,513
Total		$2,501		$9,309		$11,810

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EMPLOYEE BENEFITS (Tables)

6 Months Ended

Jun. 30, 2016

Compensation and Retirement Disclosure [Abstract]

Schedule of net periodic (income) cost

The following table presents the components of net periodic (income) cost for the Company’s qualified and non-qualified plans:

	Six Months Ended June 30,
	Qualified Plan						Non-Qualified Plan				Total
(in millions)	2016			2015			2016		2015		2016			2015
Service cost		$2			$2			$—		$—		$2			$2
Interest cost	22			22			2		2		24			24
Expected return on plan assets	(34		)	(37		)	—		—		(34		)	(37		)
Amortization of actuarial loss	7			6			1		1		8			7
Net periodic pension (income) cost		($3	)		($7	)		$3		$3		$—			($4	)

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DERIVATIVES (Tables)

6 Months Ended

Jun. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of derivative instruments in consolidated balance sheets

The following table identifies derivative instruments included on the Consolidated Balance Sheets in derivative assets and derivative liabilities:

	June 30, 2016								December 31, 2015
(in millions)	Notional Amount (1)		Derivative Assets			Derivative Liabilities			Notional Amount (1)		Derivative Assets			Derivative Liabilities
Derivatives designated as hedging instruments:
Interest rate contracts		$15,500		$425			$255			$16,750		$96			$50
Derivatives not designated as hedging instruments:
Interest rate contracts	39,606		810			723			33,719		540			455
Foreign exchange contracts	9,490		193			185			8,366		163			156
Other contracts	1,491		15			14			981		8			5
Total derivatives not designated as hedging instruments			1,018			922					711			616
Gross derivative fair values			1,443			1,177					807			666
Less: Gross amounts offset in the Consolidated Balance Sheets (2)			(130		)	(130		)			(178		)	(178		)
Less: Cash collateral applied (2)			(1		)	(37		)			(4		)	(3		)
Total net derivative fair values presented in the Consolidated Balance Sheets (3)				$1,312			$1,010					$625			$485

⁽¹⁾ The notional or contractual amount of interest rate derivatives and foreign exchange contracts is the amount upon which interest and other payments under the contract are based. Notional amounts are typically not exchanged. Therefore, notional amounts should not be taken as the measure of credit or market risk, as they do not measure the true economic risk of these contracts.

⁽²⁾ Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle positive and negative positions.

⁽³⁾ The Company also offsets assets and liabilities associated with repurchase agreements on the Consolidated Balance Sheets. See Note 2 “Securities” for further information

Schedule of fair value hedges

The following tables summarize certain information related to the Company’s fair value hedges:

	The Effect of Fair Value Hedges on Net Income
	Amounts Recognized in Other Income for the
	Three Months Ended June 30, 2016							Three Months Ended June 30, 2015
(in millions)	Derivative		Hedged Item			Hedge Ineffectiveness		Derivative			Hedged Item		Hedge Ineffectiveness
Hedges of interest rate risk on borrowings using interest rate swaps		$32		($31	)		$1		($3	)		$3		$—

	The Effect of Fair Value Hedges on Net Income
	Amounts Recognized in Other Income for the
	Six Months Ended June 30, 2016							Six Months Ended June 30, 2015
(in millions)	Derivative		Hedged Item			Hedge Ineffectiveness		Derivative		Hedged Item			Hedge Ineffectiveness
Hedges of interest rate risk on borrowings using interest rate swaps		$84		($83	)		$1		$6		($6	)		$—

Schedule of effect of cash flow hedges on net income and stockholders' equity

The following table summarizes certain information related to the Company’s cash flow hedges:

The Effect of Cash Flow Hedges on Net Income and Stockholders' Equity
	Amounts Recognized for the
	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2016			2015			2016			2015
Effective portion of gain (loss) recognized in OCI (1)		$21			($8	)		$75			$96
Amounts reclassified from OCI to interest income (2)	21			17			43			35
Amounts reclassified from OCI to interest expense (2)	(8		)	(14		)	(16		)	(29		)

⁽¹⁾ The cumulative effective gains and losses on the Company’s cash flow hedging activities are included on the accumulated other comprehensive loss line item on the Consolidated Balance Sheets.

⁽²⁾ This amount includes both (a) the amortization of effective gains and losses associated with the Company’s terminated cash flow hedges and (b) the current reporting period’s interest settlements realized on the Company’s active cash flow hedges. Both (a) and (b) were previously included on the accumulated other comprehensive loss line item on the Consolidated Balance Sheets and were subsequently recorded as adjustments to the interest expense of the underlying hedged item.

Schedule of effect of derivative Instruments on net income

The following table summarizes certain information related to the Company’s customer derivatives and economic hedges:

The Effect of Customer Derivatives and Economic Hedges on Net Income
	Amounts Recognized in Noninterest Income for the
	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2016			2015			2016			2015
Customer derivative contracts
Customer interest rate contracts (1)		($2	)		($9	)		$95			$64
Customer foreign exchange contracts (1)	(23		)	18			28			(17		)
Residential loan commitments (2)	3			(7		)	7			(7		)
Economic hedges
Offsetting derivatives transactions to hedge interest rate risk on customer interest rate contracts (1)	15			17			(76		)	(51		)
Offsetting derivatives transactions to hedge foreign exchange risk on customer foreign exchange contracts (3)	23			(19		)	(27		)	16
Forward sale contracts (2)	(5		)	3			(10		)	2
Total		$11			$3			$17			$7

⁽¹⁾ Reported in other income on the Consolidated Statements of Operations.

⁽²⁾ Reported in mortgage banking fees on the Consolidated Statements of Operations.

⁽³⁾ Reported in foreign exchange and letter of credit fees on the Consolidated Statements of Operations.

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COMMITMENTS AND CONTINGENCIES (Tables)

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Schedule of outstanding off balance sheet arrangements

The following is a summary of outstanding off-balance sheet arrangements:

(in millions)	June 30, 2016		December 31, 2015
Commitment amount:
Undrawn commitments to extend credit		$58,622		$56,524
Financial standby letters of credit	1,946		2,010
Performance letters of credit	37		42
Commercial letters of credit	70		87
Marketing rights	46		47
Risk participation agreements	64		26
Residential mortgage loans sold with recourse	9		10
Total		$60,794		$58,746

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RELATED PARTY TRANSACTIONS AND SIGNIFICANT TRANSACTIONS WITH RBS (Tables)

6 Months Ended

Jun. 30, 2016

Related Party Transactions [Abstract]

Schedule of inter-company borrowed funds

The following is a summary of borrowed funds originally issued to RBS:

	Interest Rate			Maturity Date	June 30, 2016	December 31, 2015
(dollars in millions)
Subordinated debt	5.158	%		June 2023	$333		$333
	3.750	%	(1)	July 2024	250	250
	4.023	%	(2) (3)	October 2024	208	333
	4.082	%	(3)	January 2025	334	334

⁽¹⁾ Prior to January 1, 2016, interest was payable at a fixed rate per annum of 4.153%.

⁽²⁾ On March 7, 2016, the Company repurchased $125 million of these securities from RBS.

⁽³⁾ On July 28, 2016, the Company repurchased $500 million of its subordinated notes held by RBS, including $166 million of its 4.023% subordinated notes due 2024 and $334 million of its 4.082% subordinated notes due 2025. Refer to Note 21 “Subsequent Events” for further information.

Schedule of related party transactions, recorded interest expense

The following table presents total interest expense recorded on the subordinated debt presented above:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2016		2015		2016		2015
Interest expense on subordinated debt		$10		$20		$21		$40

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FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Summary of difference between aggregated fair value and unpaid principal balance of loans held for sale

The following table summarizes the difference between the aggregate fair value and the aggregate unpaid principal balance loans held for sale measured at fair value:

	June 30, 2016						December 31, 2015
(in millions)	Aggregate Fair Value		Aggregate Unpaid Principal		Aggregate Fair Value Less Aggregate Unpaid Principal		Aggregate Fair Value		Aggregate Unpaid Principal		Aggregate Fair Value Less Aggregate Unpaid Principal
Residential mortgage loans held for sale, at fair value		$424		$408		$16		$268		$263		$5
Commercial and commercial real estate loans held for sale, at fair value	54		54		—		57		57		—

Assets and liabilities measured on recurring basis

The following table presents assets and liabilities measured at fair value, including gross derivative assets and liabilities on a recurring basis at June 30, 2016:

(in millions)	Total		Level 1		Level 2		Level 3
Securities available for sale:
Mortgage-backed securities		$18,438		$—		$18,438		$—
State and political subdivisions	9		—		9		—
Equity securities	17		—		17		—
U.S. Treasury and other	15		15		—		—
Total securities available for sale	18,479		15		18,464		—
Loans held for sale, at fair value:
Residential loans held for sale	424		—		424		—
Commercial loans held for sale	54		—		54		—
Total loans held for sale, at fair value	478		—		478		—
Derivative assets:
Interest rate swaps	1,235		—		1,235		—
Foreign exchange contracts	193		—		193		—
Other contracts	15		—		15		—
Total derivative assets	1,443		—		1,443		—
Other investment securities, at fair value:
Money market mutual fund	68		68		—		—
Other investments	5		—		5		—
Total other investment securities, at fair value	73		68		5		—
Total assets		$20,473		$83		$20,390		$—
Derivative liabilities:
Interest rate swaps		$978		$—		$978		$—
Foreign exchange contracts	185		—		185		—
Other contracts	14		—		14		—
Total derivative liabilities	1,177		—		1,177		—
Total liabilities		$1,177		$—		$1,177		$—

The following table presents assets and liabilities measured at fair value including gross derivative assets and liabilities on a recurring basis at December 31, 2015:

(in millions)	Total		Level 1		Level 2		Level 3
Securities available for sale:
Mortgage-backed securities		$17,842		$—		$17,842		$—
State and political subdivisions	9		—		9		—
Equity securities	17		—		17		—
U.S. Treasury	16		15		1		—
Total securities available for sale	17,884		15		17,869		—
Loans held for sale, at fair value:
Residential loans held for sale	268		—		268		—
Commercial loans held for sale	57		—		57		—
Total loans held for sale, at fair value	325		—		325		—
Derivative assets:
Interest rate swaps	636		—		636		—
Foreign exchange contracts	163		—		163		—
Other contracts	8		—		8		—
Total derivative assets	807		—		807		—
Other investment securities, at fair value:
Money market mutual fund	65		65		—		—
Other investments	5		—		5		—
Total other investment securities, at fair value	70		65		5		—
Total assets		$19,086		$80		$19,006		$—
Derivative liabilities:
Interest rate swaps		$505		$—		$505		$—
Foreign exchange contracts	156		—		156		—
Other contracts	5		—		5		—
Total derivative liabilities	666		—		666		—
Total liabilities		$666		$—		$666		$—

The changes in Level 3 assets measured at fair value on a recurring basis are summarized as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2016		2015		2016		2015
Beginning of period balance		$—		$1		$—		$5
Purchases, issuances, sales and settlements:
Purchases	—		—		—		1
Sales	—		—		—		—
Settlements	—		—		—		—
Net (losses) gains	—		—		—		—
Transfers from Level 3 to Level 2	—		—		—		(5		)
Balance as of June 30		$—		$1		$—		$1
Net unrealized gain (loss) included in net income for the year relating to assets held at period end		$—		$—		$—		$1

Gains (losses) on assets and liabilities measured on a nonrecurring basis included in earnings

The following table presents gains (losses) on assets and liabilities measured at fair value on a nonrecurring basis and recorded in earnings:

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2016			2015			2016			2015
Impaired collateral-dependent loans		($6	)		($10	)		($11	)		($13	)
MSRs	1			6			(4		)	7
Foreclosed assets	(1		)	(1		)	(2		)	(2		)

Fair value of assets and liabilities measured on a nonrecurring basis

The following table present assets and liabilities measured at fair value on a nonrecurring basis:

	June 30, 2016								December 31, 2015
(in millions)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Impaired collateral-dependent loans		$55		$—		$55		$—		$60		$—		$60		$—
MSRs	165		—		—		165		178		—		—		178
Foreclosed assets	46		—		46		—		42		—		42		—

Assets and liabilities measured at fair value

The following table is a summary of fair value for financial instruments not recorded at fair value in the unaudited interim Consolidated Financial Statements. The carrying amounts in the following table are recorded in the Consolidated Balance Sheets under the indicated captions:

	June 30, 2016
	Total				Level 1				Level 2				Level 3
(in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets:
Securities held to maturity		$4,973		$5,136		$—		$—		$4,973		$5,136		$—		$—
Other investment securities, at cost	873		873		—		—		873		873		—		—
Other loans held for sale	372		372		—		—		—		—		372		372
Loans and leases	103,551		104,381		—		—		55		55		103,496		104,326
Financial Liabilities:
Deposits	106,257		106,260		—		—		106,257		106,260		—		—
Federal funds purchased and securities sold under agreements to repurchase	717		717		—		—		717		717		—		—
Other short-term borrowed funds	2,770		2,770		—		—		2,770		2,770		—		—
Long-term borrowed funds	11,810		11,968		—		—		11,810		11,968		—		—

	December 31, 2015
	Total				Level 1				Level 2				Level 3
(in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets:
Securities held to maturity		$5,258		$5,297		$—		$—		$5,258		$5,297		$—		$—
Other investment securities, at cost	863		863		—		—		863		863		—		—
Other loans held for sale	40		40		—		—		—		—		40		40
Loans and leases	99,042		99,026		—		—		60		60		98,982		98,966
Financial Liabilities:
Deposits	102,539		102,528		—		—		102,539		102,528		—		—
Federal funds purchased and securities sold under agreements to repurchase	802		802		—		—		802		802		—		—
Other short-term borrowed funds	2,630		2,630		—		—		2,630		2,630		—		—
Long-term borrowed funds	9,886		9,837		—		—		9,886		9,837		—		—

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REGULATORY MATTERS (Tables)

6 Months Ended

Jun. 30, 2016

Banking and Thrift [Abstract]

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations

The following table presents the Company’s capital and capital ratios under Basel III Transitional rules as of June 30, 2016 and December 31, 2015. Certain Basel III requirements are subject to phase-in through 2019, and these phase-in rules are used in this report of actual regulatory ratios. In addition, the Company has declared itself as an “AOCI opt-out” institution, which means that the Company will not be required to change its methodology for recognizing in regulatory capital only a subset of unrealized gains and losses that are classified as AOCI. As an AOCI opt-out institution, the Company is not required to recognize within regulatory capital the impacts of net unrealized gains and losses on securities AFS, accumulated net gains and losses on cash-flow hedges included in AOCI, net gains and losses on certain defined benefit pension plan assets, and net unrealized gains and losses on securities held to maturity that are included in AOCI.

	Transitional Basel III
									FDIA Requirements
	Actual				Minimum Capital Adequacy				Classification as Well-capitalized
(dollars in millions)	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of June 30, 2016
Common equity tier 1 capital (1) (5)		$13,768	11.5	%		$6,124	5.125	%		$7,767	6.5	%
Tier 1 capital (2) (5)	14,015		11.7		7,916		6.625		9,559		8.0
Total capital (3)(5)	17,823		14.9		10,306		8.625		11,949		10.0
Tier 1 leverage (4)	14,015		10.3		5,452		4.000		6,815		5.0
As of December 31, 2015
Common equity tier 1 capital (1)		$13,389	11.7	%		$5,134	4.5	%		$7,415	6.5	%
Tier 1 capital (2)	13,636		12.0		6,845		6.0		9,127		8.0
Total capital (3)	17,505		15.3		9,127		8.0		11,408		10.0
Tier 1 leverage (4)	13,636		10.5		5,218		4.0		6,523		5.0

⁽¹⁾ “Common equity tier 1 capital ratio” represents CET1 divided by total risk-weighted assets as defined under Basel III Standardized approach.

⁽²⁾ “Tier 1 capital ratio” is tier 1 capital, which includes CET1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital, divided by total risk-weighted assets as defined under Basel III Standardized approach.

⁽³⁾ “Total capital ratio” is total capital divided by total risk-weighted assets as defined under Basel III Standardized approach.

⁽⁴⁾ “Tier 1 leverage ratio” is tier 1 capital divided by quarterly average total assets as defined under Basel III Standardized approach.

⁽⁵⁾ “Minimum Capital ratio” for 2016 includes capital conservation buffer of 0.625%.

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EXIT COSTS AND RESTRUCTURING RESERVES (Tables)

6 Months Ended

Jun. 30, 2016

Restructuring and Related Activities [Abstract]

Schedule of restructuring and related costs

The following tables include the activity in the exit costs and restructuring reserves:

	As of and for the Three Months Ended June 30,
	2016											2015
(in millions)	Salaries & Employee Benefits			Occupancy & Equipment			Other		Total			Salaries & Employee Benefits			Occupancy & Equipment			Other			Total
Beginning of period balance		$10			$14			$—		$24			$18			$17			$—			$35
Additions	—			—			—		—			5			15			5			25
Reversals	—			—			—		—			—			—			—			—
Utilization	(2		)	(2		)	—		(4		)	(2		)	(5		)	(1		)	(8		)
Balance as of June 30,		$8			$12			$—		$20			$21			$27			$4			$52

	As of and for the Six Months Ended June 30,
	2016												2015
(in millions)	Salaries & Employee Benefits			Occupancy & Equipment			Other			Total			Salaries & Employee Benefits			Occupancy & Equipment			Other			Total
Beginning of period balance		$12			$16			$5			$33			$23			$18			$3			$44
Additions	—			—			—			—			5			17			6			28
Reversals	—			—			—			—			(2		)	—			—			(2		)
Utilization	(4		)	(4		)	(5		)	(13		)	(5		)	(8		)	(5		)	(18		)
Balance as of June 30,		$8			$12			$—			$20			$21			$27			$4			$52

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RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Schedule of other comprehensive income

The following tables present the changes in the balances, net of income taxes, of each component of AOCI:

	As of and for the three months ended June 30,
(in millions)	Net Unrealized Gains (Losses) on Derivatives			Net Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Total AOCI
Balance at beginning of period April 1, 2015		($6	)		$141			($375	)		($240	)
Other comprehensive income (loss) before reclassifications	(5		)	(110		)	—			(115		)
Other-than-temporary impairment not recognized in earnings on securities	—			1			—			1
Amounts reclassified from other comprehensive (loss) income	(2		)	(5		)	2			(5		)
Net other comprehensive income (loss)	(7		)	(114		)	2			(119		)
Balance at end of period June 30, 2015		($13	)		$27			($373	)		($359	)
Balance at beginning of period April 1, 2016		$35			$96			($367	)		($236	)
Other comprehensive income before reclassifications	13			64			—			77
Other-than-temporary impairment not recognized in earnings on securities	—			4			—			4
Amounts reclassified from other comprehensive (loss) income	(9		)	2			3			(4		)
Net other comprehensive income	4			70			3			77
Balance at end of period June 30, 2016		$39			$166			($364	)		($159	)

	As of and for the six month ended June 30,
(in millions)	Net Unrealized Gains (Losses) on Derivatives			Net Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Total AOCI
Balance at beginning of period January 1, 2015		($69	)		$74			($377	)		($372	)
Other comprehensive income (loss) before reclassifications	60			(20		)	—			40
Other-than-temporary impairment not recognized in earnings on securities	—			(18		)	—			(18		)
Amounts reclassified from other comprehensive (loss) income	(4		)	(9		)	4			(9		)
Net other comprehensive income	56			(47		)	4			13
Balance at end of period June 30, 2015		($13	)		$27			($373	)		($359	)
Balance at beginning of period January 1, 2016		$10			($28	)		($369	)		($387	)
Other comprehensive income before reclassifications	46			218			—			264
Other-than-temporary impairment not recognized in earnings on securities	—			(21		)	—			(21		)
Amounts reclassified from other comprehensive (loss) income	(17		)	(3		)	5			(15		)
Net other comprehensive income	29			194			5			228
Balance at end of period June 30, 2016		$39			$166			($364	)		($159	)

Schedule of reclassification out of accumulated other comprehensive income

The following table reports the amounts reclassified out of each component of AOCI and into the Consolidated Statements of Operations:

	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2016			2015			2016			2015
Details about AOCI Components													Affected Line Item in the Consolidated Statements of Operations
Reclassification adjustment for net derivative gains (losses) included in net income:		$21			$17			$43			$35		Interest income
	(8		)	(14		)	(16		)	(29		)	Interest expense
	13			3			27			6			Income before income tax expense
	4			1			10			2			Income tax expense
		$9			$2			$17			$4		Net income
Reclassification of net securities gains (losses) to net income:		$4			$9			$13			$17		Securities gains, net
	(7		)	(2		)	(8		)	(3		)	Net securities impairment losses recognized in earnings
	(3		)	7			5			14			Income before income tax expense
	(1		)	2			2			5			Income tax expense
		($2	)		$5			$3			$9		Net income
Reclassification of changes related to defined benefit pension plans:		($4	)		($4	)		($8	)		($7	)	Salaries and employee benefits
	(4		)	(4		)	(8		)	(7		)	Income before income tax expense
	(1		)	(2		)	(3		)	(3		)	Income tax expense
		($3	)		($2	)		($5	)		($4	)	Net income
Total reclassification gains (losses)		$4			$5			$15			$9		Net income

The following table presents the effects to net income of the amounts reclassified out of AOCI:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2016		2015		2016		2015
Net interest income (includes $13, $3, $27 and $6 of AOCI reclassifications, respectively)		$923		$840		$1,827		$1,676
Provision for credit losses	90		77		181		135
Noninterest income (includes ($3), $7, $5 and $14 of AOCI reclassifications, respectively)	355		360		685		707
Noninterest expense (includes $4, $4, $8 and $7 of AOCI reclassifications, respectively)	827		841		1,638		1,651
Income before income tax expense	361		282		693		597
Income tax expense (includes $2, $1, $9 and $4 income tax net expense (benefit) from reclassification items, respectively)	118		92		227		198
Net income		$243		$190		$466		$399

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BUSINESS SEGMENTS (Tables)

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Schedule of segment reporting information

	As of and for the Three Months Ended June 30, 2016
(in millions)	Consumer Banking		Commercial Banking			Other			Consolidated
Net interest income		$602		$314			$7			$923
Noninterest income	219		122			14			355
Total revenue	821		436			21			1,278
Noninterest expense	632		186			9			827
Profit before provision for credit losses	189		250			12			451
Provision for credit losses	49		(1		)	42			90
Income (loss) before income tax expense (benefit)	140		251			(30		)	361
Income tax expense (benefit)	50		87			(19		)	118
Net income (loss)		$90		$164			($11	)		$243
Total average assets		$55,660		$47,388			$39,131			$142,179

	As of and for the Three Months Ended June 30, 2015
(in millions)	Consumer Banking		Commercial Banking		Other			Consolidated
Net interest income		$544		$286		$10			$840
Noninterest income	230		108		22			360
Total revenue	774		394		32			1,200
Noninterest expense	613		181		47			841
Profit (loss) before provision for credit losses	161		213		(15		)	359
Provision for credit losses	60		7		10			77
Income (loss) before income tax expense (benefit)	101		206		(25		)	282
Income tax expense (benefit)	35		71		(14		)	92
Net income (loss)		$66		$135		($11	)		$190
Total average assets		$52,489		$42,617		$40,415			$135,521

	As of and for the Six Months Ended June 30, 2016
(in millions)	Consumer Banking		Commercial Banking		Other			Consolidated
Net interest income		$1,183		$614		$30			$1,827
Noninterest income	427		221		37			685
Total revenue	1,610		835		67			2,512
Noninterest expense	1,248		373		17			1,638
Profit before provision for credit losses	362		462		50			874
Provision for credit losses	112		8		61			181
Income (loss) before income tax expense (benefit)	250		454		(11		)	693
Income tax expense (benefit)	89		157		(19		)	227
Net income		$161		$297		$8			$466
Total average assets		$55,388		$46,346		$38,745			$140,479

	As of and for the Six Months Ended June 30, 2015
(in millions)	Consumer Banking		Commercial Banking			Other			Consolidated
Net interest income		$1,077		$562			$37			$1,676
Noninterest income	449		208			50			707
Total revenue	1,526		770			87			2,383
Noninterest expense	1,209		354			88			1,651
Profit (loss) before provision for credit losses	317		416			(1		)	732
Provision for credit losses	123		(14		)	26			135
Income (loss) before income tax expense (benefit)	194		430			(27		)	597
Income tax expense (benefit)	67		148			(17		)	198
Net income (loss)		$127		$282			($10	)		$399
Total average assets		$52,048		$42,114			$40,267			$134,429

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EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Schedule of earnings per share

	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in millions, except share and per-share data)	2016		2015		2016		2015
Numerator (basic and diluted):
Net income		$243		$190		$466		$399
Less: Preferred stock dividends	—		—		7		—
Net income available to common stockholders		$243		$190		$459		$399
Denominator:
Weighted-average common shares outstanding - basic	528,968,330		537,729,248		528,519,489		541,986,653
Dilutive common shares: share-based awards	1,396,873		2,180,118		1,877,382		2,817,615
Weighted-average common shares outstanding - diluted	530,365,203		539,909,366		530,396,871		544,804,268
Earnings per common share:
Basic		$0.46		$0.35		$0.87		$0.74
Diluted	0.46		0.35		0.87		0.73

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OTHER OPERATING EXPENSE (Tables)

6 Months Ended

Jun. 30, 2016

Other Income and Expenses [Abstract]

Schedule of other operating expense

The following table presents the details of other operating expense:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2016		2015		2016		2015
Deposit insurance		$29		$26		$55		$60
Promotional expense	25		29		49		51
Other	74		84		139		161
Other operating expense		$128		$139		$243		$272

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SECURITIES - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Mar. 31, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Impaired debt securities sold	$ 0	$ 0	$ 0	$ 0
Pretax non-credit related losses were deferred in OCI			34,000,000	29,000,000
Available-for-sale Securities
Schedule of Available-for-sale Securities [Line Items]
Cumulative credit losses recognized in earnings	73,000,000	62,000,000	73,000,000	62,000,000	$ 73,000,000	$ 66,000,000	$ 66,000,000	$ 62,000,000	$ 62,000,000
Credit impairments recognized in earnings on securities that have been previously impaired	7,000,000	2,000,000	8,000,000	3,000,000	5,000,000
Reductions due to increases in cash flow expectations on impaired securities	0	2,000,000	1,000,000	3,000,000
Held-to-maturity Securities
Schedule of Available-for-sale Securities [Line Items]
Cumulative credit losses recognized in earnings	0	0	0	0	$ 0
Mortgage-backed securities
Schedule of Available-for-sale Securities [Line Items]
Securitizations of mortgage loans	$ 5,000,000	$ 0	$ 5,000,000	$ 0

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SECURITIES - Schedule of Investments (Details) - USD ($) $ in Millions		Jun. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Securities Available-for-sale, Amortized Cost		$ 18,118	$ 17,831
Securities Available-for-sale, Gross Unrealized Gains		403	157
Securities Available-for-sale, Gross Unrealized Losses		(42)	(104)
Securities Available-for-sale, Fair Value	[1]	18,479	17,884
Securities Held-to-maturity, Amortized Cost	[1]	4,973	5,258
Securities Held-to-maturity, Gross Unrealized Gain		163	50
Securities Held-to-maturity, Gross Unrealized Losses		0	(11)
Securities held-to-maturity, Fair Value		5,136	5,297
Money market mutual fund, Amortized Cost		68	65
Money Market Mutual Fund, Gross Unrealized Gain		0	0
Money Market Mutual Fund, Gross Unrealized Loss		0	0
Money market mutual fund, Fair Value		68	65
Total other investment securities, at fair value, Amortized Cost		73	70
Total other investments securities, at fair value, at cost, Gross Unrealized Gains		0	0
Total other investments securities, at fair value, Gross Unrealized Losses		0	0
Total other investment securities, at fair value, Fair Value		73	70
Total other investment securities, at cost		873	863
Total other investment securities, at cost, Gross Unrealized Gain		0	0
Total other investment securities, at cost, Gross Unrealized Losses		0	0
Total other investment securities, at cost, Fair Value		873	863
U.S. Treasury and other
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Debt Securities Available-for-sale, Amortized Cost		15	16
Debt Securities Available-for-sale, Gross Unrealized Gains		0	0
Debt Securities Available-for-sale, Gross Unrealized Losses		0	0
Debt Securities Available-for-sale, Fair Value		15	16
State and political subdivisions
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Debt Securities Available-for-sale, Amortized Cost		9	9
Debt Securities Available-for-sale, Gross Unrealized Gains		0	0
Debt Securities Available-for-sale, Gross Unrealized Losses		0	0
Debt Securities Available-for-sale, Fair Value		9	9
Federal agencies and U.S. government sponsored entities
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Debt Securities Available-for-sale, Amortized Cost		17,588	17,234
Debt Securities Available-for-sale, Gross Unrealized Gains		401	153
Debt Securities Available-for-sale, Gross Unrealized Losses		(8)	(67)
Debt Securities Available-for-sale, Fair Value		17,981	17,320
Securities Held-to-maturity, Amortized Cost		3,912	4,105
Securities Held-to-maturity, Gross Unrealized Gain		119	27
Securities Held-to-maturity, Gross Unrealized Losses		0	(11)
Securities held-to-maturity, Fair Value		4,031	4,121
Other/non-agency
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Debt Securities Available-for-sale, Amortized Cost		489	555
Debt Securities Available-for-sale, Gross Unrealized Gains		2	4
Debt Securities Available-for-sale, Gross Unrealized Losses		(34)	(37)
Debt Securities Available-for-sale, Fair Value		457	522
Securities Held-to-maturity, Amortized Cost		1,061	1,153
Securities Held-to-maturity, Gross Unrealized Gain		44	23
Securities Held-to-maturity, Gross Unrealized Losses		0	0
Securities held-to-maturity, Fair Value		1,105	1,176
Total mortgage-backed securities
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Debt Securities Available-for-sale, Amortized Cost		18,077	17,789
Debt Securities Available-for-sale, Gross Unrealized Gains		403	157
Debt Securities Available-for-sale, Gross Unrealized Losses		(42)	(104)
Debt Securities Available-for-sale, Fair Value		18,438	17,842
Total debt securities available for sale
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Debt Securities Available-for-sale, Amortized Cost		18,101	17,814
Debt Securities Available-for-sale, Gross Unrealized Gains		403	157
Debt Securities Available-for-sale, Gross Unrealized Losses		(42)	(104)
Debt Securities Available-for-sale, Fair Value		18,462	17,867
Marketable equity securities
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Equity Securities Available-for-sale, Amortized Cost		5	5
Equity Securities Available-for-sale, Gross Unrealized Gains		0	0
Equity Securities Available-for-sale, Gross Unrealized Losses		0	0
Equity Securities Available-for-sale, Fair Value		5	5
Other equity securities
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Equity Securities Available-for-sale, Amortized Cost		12	12
Equity Securities Available-for-sale, Gross Unrealized Gains		0	0
Equity Securities Available-for-sale, Gross Unrealized Losses		0	0
Equity Securities Available-for-sale, Fair Value		12	12
Total equity securities available for sale
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Equity Securities Available-for-sale, Amortized Cost		17	17
Equity Securities Available-for-sale, Gross Unrealized Gains		0	0
Equity Securities Available-for-sale, Gross Unrealized Losses		0	0
Equity Securities Available-for-sale, Fair Value		17	17
Other investments
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Other Investments, Amortized Cost		5	5
Other Investments, Gross Unrealized Gain		0	0
Other Investments, Gross Unrealized Loss		0	0
Other Investments, Fair Value		5	5
Federal Reserve Bank stock
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Federal Reserve Bank stock, Amortized Cost		463	468
Federal Reserve Bank stock, Gross Unrealized Gains		0	0
Federal Reserve Bank stock, Gross Unrealized Losses		0	0
Federal Reserve Bank stock, Fair Value		463	468
Federal Home Loan Bank stock
Schedule of Available-for-sale and Held-to-maturity Securities [Line Items]
Federal Home Loan Bank stock, Amortized Cost		410	395
Federal Home Loan Bank stock, Gross Unrealized Gain		0	0
Federal Home Loan Bank stock, Gross Unrealized Losses		0	0
Federal Home Loan Bank stock, Fair Value		$ 410	$ 395

[1] Includes only collateral pledged by the Company where counterparties have the right to sell or pledge the collateral.

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SECURITIES - Other than temporary impairment recognized in earnings (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Investments, Debt and Equity Securities [Abstract]
Total other-than-temporary impairment losses	$ (1)	$ (1)	$ (42)	$ (32)
Portions of loss recognized in other comprehensive income (before taxes)	(6)	(1)	34	29
Net securities impairment losses recognized in earnings	$ (7)	$ (2)	$ (8)	$ (3)

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SECURITIES - Schedule of Investments in Continuous Loss Positions (Details) $ in Millions	Jun. 30, 2016 USD ($) Securities	Dec. 31, 2015 USD ($) Securities
Schedule of Available-for-sale Securities [Line Items]
Securities Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Number of Issues | Securities	11	166
Securities Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Fair Value	$ 114	$ 7,456
Securities Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Gross Unrealized Loss	$ 0	$ (51)
Securities Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Number of Issues | Securities	53	56
Securities Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Fair Value	$ 1,064	$ 1,180
Securities Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Gross Unrealized Loss	$ (42)	$ (64)
Securities Available-for-sale, Continuous Unrealized Loss Position, Number of Issues | Securities	64	222
Securities Available-for-sale, Continuous Unrealized Loss Position, Fair Value	$ 1,178	$ 8,636
Securities Available-for-sale, Continuous Unrealized Loss Position, Gross Unrealized Loss	$ (42)	$ (115)
State and political subdivisions
Schedule of Available-for-sale Securities [Line Items]
Securities Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Number of Issues | Securities		1
Securities Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Fair Value		$ 9
Securities Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Gross Unrealized Loss		$ 0
Securities Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Number of Issues | Securities		0
Securities Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Fair Value		$ 0
Securities Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Gross Unrealized Loss		$ 0
Securities Available-for-sale, Continuous Unrealized Loss Position, Number of Issues | Securities		1
Securities Available-for-sale, Continuous Unrealized Loss Position, Fair Value		$ 9
Securities Available-for-sale, Continuous Unrealized Loss Position, Gross Unrealized Loss		$ 0
U.S. Treasury and other
Schedule of Available-for-sale Securities [Line Items]
Securities Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Number of Issues | Securities		1
Securities Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Fair Value		$ 15
Securities Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Gross Unrealized Loss		$ 0
Securities Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Number of Issues | Securities		0
Securities Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Fair Value		$ 0
Securities Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Gross Unrealized Loss		$ 0
Securities Available-for-sale, Continuous Unrealized Loss Position, Number of Issues | Securities		1
Securities Available-for-sale, Continuous Unrealized Loss Position, Fair Value		$ 15
Securities Available-for-sale, Continuous Unrealized Loss Position, Gross Unrealized Loss		$ 0
Federal agencies and U.S. government sponsored entities
Schedule of Available-for-sale Securities [Line Items]
Securities Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Number of Issues | Securities	7	162
Securities Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Fair Value	$ 95	$ 7,423
Securities Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Gross Unrealized Loss	$ 0	$ (51)
Securities Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Number of Issues | Securities	33	36
Securities Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Fair Value	$ 734	$ 819
Securities Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Gross Unrealized Loss	$ (8)	$ (27)
Securities Available-for-sale, Continuous Unrealized Loss Position, Number of Issues | Securities	40	198
Securities Available-for-sale, Continuous Unrealized Loss Position, Fair Value	$ 829	$ 8,242
Securities Available-for-sale, Continuous Unrealized Loss Position, Gross Unrealized Loss	$ (8)	$ (78)
Other/non-agency
Schedule of Available-for-sale Securities [Line Items]
Securities Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Number of Issues | Securities	4	2
Securities Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Fair Value	$ 19	$ 9
Securities Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Gross Unrealized Loss	$ 0	$ 0
Securities Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Number of Issues | Securities	20	20
Securities Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Fair Value	$ 330	$ 361
Securities Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Gross Unrealized Loss	$ (34)	$ (37)
Securities Available-for-sale, Continuous Unrealized Loss Position, Number of Issues | Securities	24	22
Securities Available-for-sale, Continuous Unrealized Loss Position, Fair Value	$ 349	$ 370
Securities Available-for-sale, Continuous Unrealized Loss Position, Gross Unrealized Loss	$ (34)	$ (37)
Total mortgage-backed securities
Schedule of Available-for-sale Securities [Line Items]
Securities Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Number of Issues | Securities	11	164
Securities Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Fair Value	$ 114	$ 7,432
Securities Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Gross Unrealized Loss	$ 0	$ (51)
Securities Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Number of Issues | Securities	53	56
Securities Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Fair Value	$ 1,064	$ 1,180
Securities Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Gross Unrealized Loss	$ (42)	$ (64)
Securities Available-for-sale, Continuous Unrealized Loss Position, Number of Issues | Securities	64	220
Securities Available-for-sale, Continuous Unrealized Loss Position, Fair Value	$ 1,178	$ 8,612
Securities Available-for-sale, Continuous Unrealized Loss Position, Gross Unrealized Loss	$ (42)	$ (115)

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SECURITIES - Schedule of Cumulative Credit Losses Recognized in Earnings (Details) - Available-for-sale Securities - USD ($) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Cumulative balance at beginning of period	$ 66	$ 62	$ 66	$ 62	$ 62
Credit impairments recognized in earnings on securities that have been previously impaired	7	2	8	3	5
Reductions due to increases in cash flow expectations on impaired securities	0	(2)	(1)	(3)
Cumulative balance at end of period	$ 73	$ 62	$ 73	$ 62	$ 73

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SECURITIES - Schedule of Available for Sale Securities Debt Maturities (Details) $ in Millions	Jun. 30, 2016 USD ($)
Available-for-sale Securities and Held-to-maturity Securities, Debt Maturities, Amortized Cost Basis [Abstract]
Amortized Cost, Debt securities available for sale, Maturity of 1 Year or Less	$ 30
Amortized Cost, Debt securities available for sale, Maturity of 1-5 Years	86
Amortized Cost, Debt securities available for sale, Maturity of 5-10 Years	1,670
Amortized Cost, Debt securities available for sale, Maturity After 10 Years	16,315
Amortized Cost, Debt securities available for sale, Total	18,101
Amortized Cost, Debt securities held to maturity, Maturity of 1 Year or Less	0
Amortized Cost, Debt securities held to maturity, Maturity of 1-5 Years	0
Amortized Cost, Debt securities held to maturity, Maturity of 5-10 Years	0
Amortized Cost, Debt securities held to maturity, Maturity After 10 Years	4,973
Amortized Cost, Debt securities held to maturity, Total	4,973
Total amortized cost of debt securities, Maturity of 1 Year or Less	30
Total amortized cost of debt securities, Maturity of 1-5 Years	86
Total amortized cost of debt securities, Maturity of 5-10 Years	1,670
Total amortized cost of debt securities, Maturity After 10 Years	21,288
Total amortized cost of debt securities, Total	23,074
Available-for-sale Securities and Held-to-maturity Securities, Debt Maturities, Fair Value [Abstract]
Fair Value, Debt securities available for sale, Maturity of 1 Year or Less	30
Fair Value, Debt securities available for sale, Maturity of 1-5 Years	88
Fair Value, Debt securities available for sale, Maturity of 5-10 Years	1,713
Fair Value, Debt securities available for sale, Maturity After 10 Years	16,631
Fair Value, Debt securities available for sale, Total	18,462
Fair Value, Debt securities held to maturity, Maturity of 1 Year or Less	0
Fair Value, Debt securities held to maturity, Maturity of 1-5 Years	0
Fair Value, Debt securities held to maturity, Maturity of 5-10 Years	0
Fair Value, Debt securities held to maturity, Maturity After 10 Years	5,136
Fair Value, Debt securities held to maturity, Total	5,136
Total fair value of debt securities, Maturity of 1 Year or Less	30
Total fair value of debt securities, Maturity of 1-5 Years	88
Total fair value of debt securities, Maturity of 5-10 Years	1,713
Total fair value of debt securities, Maturity After 10 Years	21,767
Total fair value of debt securities, Total	23,598
U.S. Treasury and other
Available-for-sale Securities and Held-to-maturity Securities, Debt Maturities, Amortized Cost Basis [Abstract]
Amortized Cost, Debt securities available for sale, Maturity of 1 Year or Less	15
Amortized Cost, Debt securities available for sale, Maturity of 1-5 Years	0
Amortized Cost, Debt securities available for sale, Maturity of 5-10 Years	0
Amortized Cost, Debt securities available for sale, Maturity After 10 Years	0
Amortized Cost, Debt securities available for sale, Total	15
Available-for-sale Securities and Held-to-maturity Securities, Debt Maturities, Fair Value [Abstract]
Fair Value, Debt securities available for sale, Maturity of 1 Year or Less	15
Fair Value, Debt securities available for sale, Maturity of 1-5 Years	0
Fair Value, Debt securities available for sale, Maturity of 5-10 Years	0
Fair Value, Debt securities available for sale, Maturity After 10 Years	0
Fair Value, Debt securities available for sale, Total	15
State and political subdivisions
Available-for-sale Securities and Held-to-maturity Securities, Debt Maturities, Amortized Cost Basis [Abstract]
Amortized Cost, Debt securities available for sale, Maturity of 1 Year or Less	0
Amortized Cost, Debt securities available for sale, Maturity of 1-5 Years	0
Amortized Cost, Debt securities available for sale, Maturity of 5-10 Years	0
Amortized Cost, Debt securities available for sale, Maturity After 10 Years	9
Amortized Cost, Debt securities available for sale, Total	9
Available-for-sale Securities and Held-to-maturity Securities, Debt Maturities, Fair Value [Abstract]
Fair Value, Debt securities available for sale, Maturity of 1 Year or Less	0
Fair Value, Debt securities available for sale, Maturity of 1-5 Years	0
Fair Value, Debt securities available for sale, Maturity of 5-10 Years	0
Fair Value, Debt securities available for sale, Maturity After 10 Years	9
Fair Value, Debt securities available for sale, Total	9
Federal agencies and U.S. government sponsored entities
Available-for-sale Securities and Held-to-maturity Securities, Debt Maturities, Amortized Cost Basis [Abstract]
Amortized Cost, Debt securities available for sale, Maturity of 1 Year or Less	15
Amortized Cost, Debt securities available for sale, Maturity of 1-5 Years	36
Amortized Cost, Debt securities available for sale, Maturity of 5-10 Years	1,668
Amortized Cost, Debt securities available for sale, Maturity After 10 Years	15,869
Amortized Cost, Debt securities available for sale, Total	17,588
Amortized Cost, Debt securities held to maturity, Maturity of 1 Year or Less	0
Amortized Cost, Debt securities held to maturity, Maturity of 1-5 Years	0
Amortized Cost, Debt securities held to maturity, Maturity of 5-10 Years	0
Amortized Cost, Debt securities held to maturity, Maturity After 10 Years	3,912
Amortized Cost, Debt securities held to maturity, Total	3,912
Available-for-sale Securities and Held-to-maturity Securities, Debt Maturities, Fair Value [Abstract]
Fair Value, Debt securities available for sale, Maturity of 1 Year or Less	15
Fair Value, Debt securities available for sale, Maturity of 1-5 Years	38
Fair Value, Debt securities available for sale, Maturity of 5-10 Years	1,710
Fair Value, Debt securities available for sale, Maturity After 10 Years	16,218
Fair Value, Debt securities available for sale, Total	17,981
Fair Value, Debt securities held to maturity, Maturity of 1 Year or Less	0
Fair Value, Debt securities held to maturity, Maturity of 1-5 Years	0
Fair Value, Debt securities held to maturity, Maturity of 5-10 Years	0
Fair Value, Debt securities held to maturity, Maturity After 10 Years	4,031
Fair Value, Debt securities held to maturity, Total	4,031
Other/non-agency
Available-for-sale Securities and Held-to-maturity Securities, Debt Maturities, Amortized Cost Basis [Abstract]
Amortized Cost, Debt securities available for sale, Maturity of 1 Year or Less	0
Amortized Cost, Debt securities available for sale, Maturity of 1-5 Years	50
Amortized Cost, Debt securities available for sale, Maturity of 5-10 Years	2
Amortized Cost, Debt securities available for sale, Maturity After 10 Years	437
Amortized Cost, Debt securities available for sale, Total	489
Amortized Cost, Debt securities held to maturity, Maturity of 1 Year or Less	0
Amortized Cost, Debt securities held to maturity, Maturity of 1-5 Years	0
Amortized Cost, Debt securities held to maturity, Maturity of 5-10 Years	0
Amortized Cost, Debt securities held to maturity, Maturity After 10 Years	1,061
Amortized Cost, Debt securities held to maturity, Total	1,061
Available-for-sale Securities and Held-to-maturity Securities, Debt Maturities, Fair Value [Abstract]
Fair Value, Debt securities available for sale, Maturity of 1 Year or Less	0
Fair Value, Debt securities available for sale, Maturity of 1-5 Years	50
Fair Value, Debt securities available for sale, Maturity of 5-10 Years	3
Fair Value, Debt securities available for sale, Maturity After 10 Years	404
Fair Value, Debt securities available for sale, Total	457
Fair Value, Debt securities held to maturity, Maturity of 1 Year or Less	0
Fair Value, Debt securities held to maturity, Maturity of 1-5 Years	0
Fair Value, Debt securities held to maturity, Maturity of 5-10 Years	0
Fair Value, Debt securities held to maturity, Maturity After 10 Years	1,105
Fair Value, Debt securities held to maturity, Total	$ 1,105

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SECURITIES - Income Recognized from Investment Securities (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Interest Income, Securities, Operating, by Taxable Status [Abstract]
Taxable	$ 141	$ 155	$ 286	$ 314
Non-taxable	0	0	0	0
Total interest income from investment securities	141	155	286	314
Gain (Loss) on Sale of Investments [Abstract]
Gains on sale of debt securities	4	10	13	22
Losses on sale of debt securities	0	(1)	0	(5)
Debt securities gains, net	4	9	13	17
Equity securities gains	$ 0	$ 1	$ 0	$ 3

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SECURITIES - Schedule of Securities Pledged (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Investments, Debt and Equity Securities [Abstract]
Pledged against repurchase agreements, Amortized Cost	$ 705	$ 805
Pledged against Federal Home Loan Bank borrowed funds, Amortized Cost	1,070	1,163
Pledged against derivatives to qualify for fiduciary powers, and to secure public and other deposits as required by law, Amortized Cost	4,236	3,579
Pledged against repurchase agreements, Fair Value	720	808
Pledged against Federal Home Loan Bank borrowed funds, Fair Value	1,114	1,186
Pledged against derivatives to qualify for fiduciary powers, and to secure public and other deposits as required by law, Fair Value	$ 4,341	$ 3,610

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SECURITIES - Schedule of Balance Sheet Effect of Repurchase Agreement Offsetting (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Investments, Debt and Equity Securities [Abstract]
Securities purchased under agreements to resell, gross	$ 0	$ 500
Securities purchased under agreements to resell, offset	0	(500)
Securities purchased under agreements to resell	0	0
Securities sold under agreements to repurchase, gross	0	(500)
Securities sold under agreements to repurchase, offset	0	500
Securities sold under agreements to repurchase, net	$ 0	$ 0

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LOANS AND LEASES - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for sale	$ 478		$ 478		$ 325
Other loans held for sale	372		372		40
Residential mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans pledged as collateral for FHLB borrowed funds	23,200		23,200		23,200
Loans pledged as collateral to support the contingent ability to borrow at the FRB discount window	16,600		16,600		15,900
Automobile
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans purchased during period	200	$ 416	334	$ 809
Student loan
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans purchased during period	348	202	717	463
Residential portfolio segment
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans purchased during period	63	387	183	636
Mortgage loans sold	108		281	273
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans sold during the period	45	$ 114	118	$ 225
Commercial loan syndication
Accounts, Notes, Loans and Financing Receivable [Line Items]
Other loans held for sale	50		50		40
Level 2
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for sale	478		478		325
Other loans held for sale	0		0		0
Residential loans held for sale | Level 2
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for sale	424		424		268
Commercial real estate loans held for sale | Level 2
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for sale	54		54		$ 57
TDR Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Other loans held for sale	322		322
TDR Loans | Home equity loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Other loans held for sale	60		60
TDR Loans | Residential mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Other loans held for sale	$ 262		$ 262

XML

LOANS AND LEASES - Summary of Loans and Leases Portfolio (Details) - USD ($) $ in Millions		Jun. 30, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial loans and leases		$ 49,557	$ 46,214
Loans and leases retail		53,994	52,828
Loans and leases		103,551	99,042
Total loans receivable held for sale		850	365
Banking Subsidiaries
Accounts, Notes, Loans and Financing Receivable [Line Items]
Mortgage loans serviced for others by the Company's subsidiaries		17,200	17,600
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial loans and leases		35,927	33,264
Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial loans and leases		9,825	8,971
Leases
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial loans and leases		3,805	3,979
Residential mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases retail		13,855	13,318
Home equity loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases retail		2,177	2,557
Home equity lines of credit
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases retail		14,418	14,674
Home equity loans serviced by others
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases retail	[1]	860	986
Home equity lines of credit serviced by others
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases retail	[1]	273	389
Automobile
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases retail		14,075	13,828
Student
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases retail		5,516	4,359
Credit cards
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases retail		1,613	1,634
Other retail
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases retail		1,207	1,083
Total Loans and Leases
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and leases	[2],[3]	$ 103,551	$ 99,042

[1] The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

[2] Excluded from the table above are loans held for sale totaling $850 million and $365 million as of June 30, 2016 and December 31, 2015, respectively.

[3] Mortgage loans serviced for others by the Company’s subsidiaries are not included above and amounted to $17.2 billion and $17.6 billion at June 30, 2016 and December 31, 2015, respectively.

XML

ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Narrative (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Modifications [Line Items]
Mortgage loans collateralized by OREO	$ 211	$ 257
Larger balance commercial loans minimum balance (greater than)	3	3
Other loans held for sale	372	40
Commitments to lend additional funds to debtors owing receivables which were TDRs	$ 30	$ 15
High loan to value criteria (exceeds)	90.00%	90.00%
Total commercial
Financing Receivable, Modifications [Line Items]
TDR balance	$ 126	$ 155
Total retail
Financing Receivable, Modifications [Line Items]
TDR balance	802	$ 1,200
TDR Loans
Financing Receivable, Modifications [Line Items]
Other loans held for sale	322
TDR Loans | Residential mortgages
Financing Receivable, Modifications [Line Items]
Other loans held for sale	262
TDR Loans | Home equity loans
Financing Receivable, Modifications [Line Items]
Other loans held for sale	$ 60

XML

ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Summary of Changes in Allowance for Credit Losses (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Allowance for Loan and Lease Losses [Roll Forward]
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Beginning balance			$ 1,216
Provision charged to income			181	$ 135
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Ending balance	$ 1,246		1,246
Allowance for loan and lease losses
Allowance for Loan and Lease Losses [Roll Forward]
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Beginning balance	1,224	$ 1,202	1,216	1,195
Charge-offs	(113)	(121)	(239)	(236)
Recoveries	48	43	91	104
Net charge-offs	(65)	(78)	(148)	(132)
Sales/Other		0		(2)
Provision charged to income	87	77	178	140
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Ending balance	1,246	1,201	1,246	1,201
Allowance for loan and lease losses | Commercial
Allowance for Loan and Lease Losses [Roll Forward]
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Beginning balance	633	578	596	544
Charge-offs	(7)	(15)	(20)	(21)
Recoveries	5	8	9	36
Net charge-offs	(2)	(7)	(11)	15
Sales/Other		0		0
Provision charged to income	45	(6)	91	6
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Ending balance	676	565	676	565
Allowance for loan and lease losses | Retail
Allowance for Loan and Lease Losses [Roll Forward]
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Beginning balance	591	624	620	651
Charge-offs	(106)	(106)	(219)	(215)
Recoveries	43	35	82	68
Net charge-offs	(63)	(71)	(137)	(147)
Sales/Other		0		(2)
Provision charged to income	42	83	87	134
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Ending balance	570	636	570	636
Reserve for unfunded lending commitments
Allowance for Loan and Lease Losses [Roll Forward]
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Beginning balance	58	56	58	61
Credit for unfunded lending commitments	3	0	3	(5)
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Ending balance	61	56	61	56
Reserve for unfunded lending commitments | Commercial
Allowance for Loan and Lease Losses [Roll Forward]
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Beginning balance	58	56	58	61
Credit for unfunded lending commitments	3	0	3	(5)
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Ending balance	61	56	61	56
Reserve for unfunded lending commitments | Retail
Allowance for Loan and Lease Losses [Roll Forward]
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Beginning balance	0	0	0	0
Credit for unfunded lending commitments	0	0	0	0
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Ending balance	0	0	0	0
Allowance for loan and lease losses and reserve for off-balance sheet activities, total
Allowance for Loan and Lease Losses [Roll Forward]
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Ending balance	1,307	1,257	1,307	1,257
Allowance for loan and lease losses and reserve for off-balance sheet activities, total | Commercial
Allowance for Loan and Lease Losses [Roll Forward]
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Ending balance	737	621	737	621
Allowance for loan and lease losses and reserve for off-balance sheet activities, total | Retail
Allowance for Loan and Lease Losses [Roll Forward]
Allowance for loan and lease losses / Reserve for unfunded lending commitments, Ending balance	$ 570	$ 636	$ 570	$ 636

XML

ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Recorded Investment in Loan and Leases (Details) - Loans and Leases - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment [Line Items]
Individually evaluated	$ 1,210	$ 1,383
Formula-based evaluation	102,341	97,659
Total	103,551	99,042
Commercial Banking
Financing Receivable, Recorded Investment [Line Items]
Individually evaluated	408	218
Formula-based evaluation	49,149	45,996
Total	49,557	46,214
Retail
Financing Receivable, Recorded Investment [Line Items]
Individually evaluated	802	1,165
Formula-based evaluation	53,192	51,663
Total	$ 53,994	$ 52,828

XML

ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Summary of Allowance for Credit Losses by Evaluation Method (Details) - Loans and Leases - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated	$ 131	$ 137
Formula-based evaluation	1,176	1,137
Allowance for credit losses	1,307	1,274
Commercial Banking
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated	52	36
Formula-based evaluation	685	618
Allowance for credit losses	737	654
Retail
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated	79	101
Formula-based evaluation	491	519
Allowance for credit losses	$ 570	$ 620

XML

ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Recorded Investment in Commercial Loans and Leases by Regulatory Classification Ratings (Details) - Loans and Leases - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment [Line Items]
Total	$ 103,551	$ 99,042
Commercial Banking
Financing Receivable, Recorded Investment [Line Items]
Total	49,557	46,214
Commercial
Financing Receivable, Recorded Investment [Line Items]
Total	35,927	33,264
Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Total	9,825	8,971
Leases
Financing Receivable, Recorded Investment [Line Items]
Total	3,805	3,979
Pass | Commercial Banking
Financing Receivable, Recorded Investment [Line Items]
Total	46,815	43,606
Pass | Commercial
Financing Receivable, Recorded Investment [Line Items]
Total	33,931	31,276
Pass | Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Total	9,281	8,450
Pass | Leases
Financing Receivable, Recorded Investment [Line Items]
Total	3,603	3,880
Special Mention | Commercial Banking
Financing Receivable, Recorded Investment [Line Items]
Total	1,253	1,238
Special Mention | Commercial
Financing Receivable, Recorded Investment [Line Items]
Total	855	911
Special Mention | Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Total	318	272
Special Mention | Leases
Financing Receivable, Recorded Investment [Line Items]
Total	80	55
Substandard | Commercial Banking
Financing Receivable, Recorded Investment [Line Items]
Total	1,293	1,217
Substandard | Commercial
Financing Receivable, Recorded Investment [Line Items]
Total	1,015	1,002
Substandard | Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Total	156	171
Substandard | Leases
Financing Receivable, Recorded Investment [Line Items]
Total	122	44
Doubtful | Commercial Banking
Financing Receivable, Recorded Investment [Line Items]
Total	196	153
Doubtful | Commercial
Financing Receivable, Recorded Investment [Line Items]
Total	126	75
Doubtful | Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Total	70	78
Doubtful | Leases
Financing Receivable, Recorded Investment [Line Items]
Total	$ 0	$ 0

XML

ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Recorded Investment in Retail Loans by Delinquency Status (Details) - Loans and Leases - USD ($) $ in Millions		Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		$ 1,357	$ 1,356
Total		103,551	99,042
Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current		13,571	12,905
Past Due		195	316
Total		13,855	13,318
Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current		1,937	2,245
Past Due		107	148
Total		2,177	2,557
Home equity lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current		13,755	13,982
Past Due		275	285
Total		14,418	14,674
Home equity loans serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	[1]	781	886
Past Due	[1]	31	40
Total	[1]	860	986
Home equity lines of credit serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	[1]	184	296
Past Due	[1]	52	45
Total	[1]	273	389
Automobile
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current		12,959	12,670
Past Due		190	194
Total		14,075	13,828
Student
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current		5,340	4,175
Past Due		71	71
Total		5,516	4,359
Credit cards
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current		1,539	1,554
Past Due		32	36
Total		1,613	1,634
Other retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current		1,149	1,013
Past Due		14	17
Total		1,207	1,083
Total retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current		51,215	49,726
Total		53,994	52,828
Financing Receivables, 1 to 29 Days Past Due | Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		89	97
Financing Receivables, 1 to 29 Days Past Due | Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		133	164
Financing Receivables, 1 to 29 Days Past Due | Home equity lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		388	407
Financing Receivables, 1 to 29 Days Past Due | Home equity loans serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	[1]	48	60
Financing Receivables, 1 to 29 Days Past Due | Home equity lines of credit serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	[1]	37	48
Financing Receivables, 1 to 29 Days Past Due | Automobile
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		926	964
Financing Receivables, 1 to 29 Days Past Due | Student
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		105	113
Financing Receivables, 1 to 29 Days Past Due | Credit cards
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		42	44
Financing Receivables, 1 to 29 Days Past Due | Other retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		44	53
Financing Receivables, 1 to 29 Days Past Due | Total retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		1,812	1,950
Financing Receivables, 30 to 59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		293	383
Financing Receivables, 30 to 59 Days Past Due | Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		40	54
Financing Receivables, 30 to 59 Days Past Due | Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		20	32
Financing Receivables, 30 to 59 Days Past Due | Home equity lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		44	60
Financing Receivables, 30 to 59 Days Past Due | Home equity loans serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	[1]	10	14
Financing Receivables, 30 to 59 Days Past Due | Home equity lines of credit serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	[1]	12	10
Financing Receivables, 30 to 59 Days Past Due | Automobile
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		122	127
Financing Receivables, 30 to 59 Days Past Due | Student
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		18	19
Financing Receivables, 30 to 59 Days Past Due | Credit cards
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		10	11
Financing Receivables, 30 to 59 Days Past Due | Other retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		6	8
Financing Receivables, 30 to 59 Days Past Due | Total retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		282	335
Financing Receivables 60 To 89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		133	124
Financing Receivables 60 To 89 Days Past Due | Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		10	16
Financing Receivables 60 To 89 Days Past Due | Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		8	12
Financing Receivables 60 To 89 Days Past Due | Home equity lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		24	20
Financing Receivables 60 To 89 Days Past Due | Home equity loans serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	[1]	4	6
Financing Receivables 60 To 89 Days Past Due | Home equity lines of credit serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	[1]	5	6
Financing Receivables 60 To 89 Days Past Due | Automobile
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		31	32
Financing Receivables 60 To 89 Days Past Due | Student
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		11	11
Financing Receivables 60 To 89 Days Past Due | Credit cards
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		8	9
Financing Receivables 60 To 89 Days Past Due | Other retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		4	4
Financing Receivables 60 To 89 Days Past Due | Total retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		105	116
Financing Receivables 90 Days or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		931	849
Financing Receivables 90 Days or More Past Due | Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		145	246
Financing Receivables 90 Days or More Past Due | Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		79	104
Financing Receivables 90 Days or More Past Due | Home equity lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		207	205
Financing Receivables 90 Days or More Past Due | Home equity loans serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	[1]	17	20
Financing Receivables 90 Days or More Past Due | Home equity lines of credit serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	[1]	35	29
Financing Receivables 90 Days or More Past Due | Automobile
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		37	35
Financing Receivables 90 Days or More Past Due | Student
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		42	41
Financing Receivables 90 Days or More Past Due | Credit cards
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		14	16
Financing Receivables 90 Days or More Past Due | Other retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		4	5
Financing Receivables 90 Days or More Past Due | Total retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		$ 580	$ 701

[1] The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

XML

ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Nonperforming Loans and Leases by Class (Details) - USD ($) $ in Millions		Jun. 30, 2016		Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans		$ 1,044	[1]	$ 1,051
Nonperforming loans including 90 days past due	[1]			1,060
Loans accruing and 90 days or more past due		26		9
Other loans held for sale		372		40
GNMA
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans sold with right to repurchase		34
Commercial Banking
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans	[1]	347
Nonperforming loans including 90 days past due	[1]			148
Loans accruing and 90 days or more past due		4		1
Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans	[1]	277
Nonperforming loans including 90 days past due	[1]			71
Loans accruing and 90 days or more past due		0		1
Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans	[1]	70
Nonperforming loans including 90 days past due	[1]			77
Loans accruing and 90 days or more past due		4		0
Leases
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans	[1]	0
Nonperforming loans including 90 days past due	[1]			0
Loans accruing and 90 days or more past due		0		0
Retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans	[1]	697
Nonperforming loans including 90 days past due	[1]			912
Loans accruing and 90 days or more past due		22		8
Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans	[1],[2],[3],[4]	174
Nonperforming loans including 90 days past due	[1],[2],[3],[4]			331
Loans accruing and 90 days or more past due	[2],[3],[4]	15		0
Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans	[1],[4]	104
Nonperforming loans including 90 days past due	[1],[4]			135
Loans accruing and 90 days or more past due	[4]	0		0
Home equity lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans	[1]	251
Nonperforming loans including 90 days past due	[1]			272
Loans accruing and 90 days or more past due		0		0
Home equity loans serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans	[1],[5]	33
Nonperforming loans including 90 days past due	[1],[5]			38
Loans accruing and 90 days or more past due	[5]	0		0
Home equity lines of credit serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans	[1],[5]	38
Nonperforming loans including 90 days past due	[1],[5]			32
Loans accruing and 90 days or more past due	[5]	0		0
Automobile
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans	[1]	43
Nonperforming loans including 90 days past due	[1]			42
Loans accruing and 90 days or more past due		0		0
Student
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans	[1]	37
Nonperforming loans including 90 days past due	[1]			41
Loans accruing and 90 days or more past due		6		6
Credit cards
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans	[1]	14
Nonperforming loans including 90 days past due	[1]			16
Loans accruing and 90 days or more past due		0		0
Other retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans	[1]	3
Nonperforming loans including 90 days past due	[1]			5
Loans accruing and 90 days or more past due		1		$ 2
TDR Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Other loans held for sale		322
TDR Loans | Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Other loans held for sale		262
TDR Loans | Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Other loans held for sale		60
Total Loans and Leases | TDR Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Other loans held for sale		71
Total Loans and Leases | TDR Loans | Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Other loans held for sale		54
Total Loans and Leases | TDR Loans | Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Other loans held for sale		$ 17

[1] Effective March 31, 2016, the Company began excluding loans 90 days or more past due and still accruing from nonperforming loans and leases. Nonperforming loans and leases as of December 31, 2015 included loans and leases on nonaccrual of $1.051 billion and loans and leases accruing and 90 days or more past due of $9 million.

[2] Effective March 31, 2016, the Company began excluding first lien residential mortgage loans that are 100% guaranteed by the Federal Housing Administration from nonperforming balances. As of June 30, 2016, $15 million of these loans were accruing and 90 days or more past due.

[3] Effective March 31, 2016, the Company began excluding guaranteed residential mortgage loans sold to GNMA for which the Company had the right, but not the obligation, to repurchase from nonperforming balances. As of June 30, 2016 these loans totaled $34 million. These loans are consolidated on the Company’s Consolidated Balance Sheets.

[4] Nonperforming balances at June 30, 2016 excluded $71 million of troubled debt restructured loans held for sale, including $54 million of residential mortgages and $17 million of home equity loans.

[5] The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

XML

ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Other Nonperforming Assets (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Other nonperforming assets, net of valuation allowance	$ 48	$ 46
Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Other nonperforming assets, net of valuation allowance	1	1
Retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Other nonperforming assets, net of valuation allowance	$ 47	$ 45

XML

ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Performance Indicators for Nonperforming Assets (Details) - USD ($) $ in Millions		Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans and leases as a percentage of total loans and leases	[1]	1.01%	1.07%
Nonperforming assets as a percentage of total assets	[1]	0.75%	0.80%
Loans accruing and 90 days or more past due		$ 26	$ 9
Commercial Banking
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans and leases as a percentage of total loans and leases	[1]	0.34%	0.15%
Nonperforming assets as a percentage of total assets	[1]	0.24%	0.11%
Loans accruing and 90 days or more past due		$ 4	$ 1
Retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming loans and leases as a percentage of total loans and leases	[1]	0.67%	0.92%
Nonperforming assets as a percentage of total assets	[1]	0.51%	0.69%
Loans accruing and 90 days or more past due		$ 22	$ 8

[1] December 31, 2015 ratios included loans accruing and 90 days or more past due of $1 million and $8 million for commercial and retail, respectively.

XML

ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Accruing and Nonaccruing Past Due Amounts (Details) - Loans and Leases - USD ($) $ in Millions		Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		$ 1,357	$ 1,356
Commercial Banking
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		390	204
Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		308	84
Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		81	110
Leases
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		1	10
Retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		967	1,152
Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		195	316
Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		107	148
Home equity lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		275	285
Home equity loans serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	[1]	31	40
Home equity lines of credit serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	[1]	52	45
Automobile
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		190	194
Student
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		71	71
Credit cards
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		32	36
Other retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		14	17
Financing Receivables, 30 to 59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		293	383
Financing Receivables, 30 to 59 Days Past Due | Commercial Banking
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		11	48
Financing Receivables, 30 to 59 Days Past Due | Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		8	9
Financing Receivables, 30 to 59 Days Past Due | Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		2	30
Financing Receivables, 30 to 59 Days Past Due | Leases
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		1	9
Financing Receivables, 30 to 59 Days Past Due | Retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		282	335
Financing Receivables, 30 to 59 Days Past Due | Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		40	54
Financing Receivables, 30 to 59 Days Past Due | Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		20	32
Financing Receivables, 30 to 59 Days Past Due | Home equity lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		44	60
Financing Receivables, 30 to 59 Days Past Due | Home equity loans serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	[1]	10	14
Financing Receivables, 30 to 59 Days Past Due | Home equity lines of credit serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	[1]	12	10
Financing Receivables, 30 to 59 Days Past Due | Automobile
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		122	127
Financing Receivables, 30 to 59 Days Past Due | Student
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		18	19
Financing Receivables, 30 to 59 Days Past Due | Credit cards
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		10	11
Financing Receivables, 30 to 59 Days Past Due | Other retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		6	8
Financing Receivables 60 To 89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		133	124
Financing Receivables 60 To 89 Days Past Due | Commercial Banking
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		28	8
Financing Receivables 60 To 89 Days Past Due | Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		23	4
Financing Receivables 60 To 89 Days Past Due | Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		5	3
Financing Receivables 60 To 89 Days Past Due | Leases
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		0	1
Financing Receivables 60 To 89 Days Past Due | Retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		105	116
Financing Receivables 60 To 89 Days Past Due | Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		10	16
Financing Receivables 60 To 89 Days Past Due | Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		8	12
Financing Receivables 60 To 89 Days Past Due | Home equity lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		24	20
Financing Receivables 60 To 89 Days Past Due | Home equity loans serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	[1]	4	6
Financing Receivables 60 To 89 Days Past Due | Home equity lines of credit serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	[1]	5	6
Financing Receivables 60 To 89 Days Past Due | Automobile
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		31	32
Financing Receivables 60 To 89 Days Past Due | Student
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		11	11
Financing Receivables 60 To 89 Days Past Due | Credit cards
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		8	9
Financing Receivables 60 To 89 Days Past Due | Other retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		4	4
Financing Receivables 90 Days or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		931	849
Financing Receivables 90 Days or More Past Due | Commercial Banking
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		351	148
Financing Receivables 90 Days or More Past Due | Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		277	71
Financing Receivables 90 Days or More Past Due | Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		74	77
Financing Receivables 90 Days or More Past Due | Leases
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		0	0
Financing Receivables 90 Days or More Past Due | Retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		580	701
Financing Receivables 90 Days or More Past Due | Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		145	246
Financing Receivables 90 Days or More Past Due | Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		79	104
Financing Receivables 90 Days or More Past Due | Home equity lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		207	205
Financing Receivables 90 Days or More Past Due | Home equity loans serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	[1]	17	20
Financing Receivables 90 Days or More Past Due | Home equity lines of credit serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	[1]	35	29
Financing Receivables 90 Days or More Past Due | Automobile
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		37	35
Financing Receivables 90 Days or More Past Due | Student
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		42	41
Financing Receivables 90 Days or More Past Due | Credit cards
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		14	16
Financing Receivables 90 Days or More Past Due | Other retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due		$ 4	$ 5

[1] The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

XML

ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Impaired Loans by Class (Details) - USD ($) $ in Millions		Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance		$ 618	$ 641
Allowance on Impaired Loans		131	137
Impaired Loans Without a Related Allowance		592	742
Unpaid Contractual Balance		1,401	1,671
Total Recorded Investment in Impaired Loans		1,210	1,383
Commercial Banking
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance		258	148
Allowance on Impaired Loans		52	36
Impaired Loans Without a Related Allowance		150	70
Unpaid Contractual Balance		447	214
Total Recorded Investment in Impaired Loans		408	218
Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance		216	92
Allowance on Impaired Loans		46	23
Impaired Loans Without a Related Allowance		139	58
Unpaid Contractual Balance		391	144
Total Recorded Investment in Impaired Loans		355	150
Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance		42	56
Allowance on Impaired Loans		6	13
Impaired Loans Without a Related Allowance		11	12
Unpaid Contractual Balance		56	70
Total Recorded Investment in Impaired Loans		53	68
Retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance		360	493
Allowance on Impaired Loans		79	101
Impaired Loans Without a Related Allowance		442	672
Unpaid Contractual Balance		954	1,457
Total Recorded Investment in Impaired Loans		802	1,165
Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance		34	121
Allowance on Impaired Loans		4	16
Impaired Loans Without a Related Allowance		130	320
Unpaid Contractual Balance		214	608
Total Recorded Investment in Impaired Loans		164	441
Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance		51	85
Allowance on Impaired Loans		5	11
Impaired Loans Without a Related Allowance		107	139
Unpaid Contractual Balance		198	283
Total Recorded Investment in Impaired Loans		158	224
Home equity lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance		26	27
Allowance on Impaired Loans		3	2
Impaired Loans Without a Related Allowance		160	167
Unpaid Contractual Balance		223	234
Total Recorded Investment in Impaired Loans		186	194
Home equity loans serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance	[1]	45	50
Allowance on Impaired Loans	[1]	7	8
Impaired Loans Without a Related Allowance	[1]	21	24
Unpaid Contractual Balance	[1]	79	88
Total Recorded Investment in Impaired Loans	[1]	66	74
Home equity lines of credit serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance	[1]	3	3
Allowance on Impaired Loans	[1]	0	1
Impaired Loans Without a Related Allowance	[1]	7	7
Unpaid Contractual Balance	[1]	14	14
Total Recorded Investment in Impaired Loans	[1]	10	10
Automobile
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance		4	3
Allowance on Impaired Loans		0	0
Impaired Loans Without a Related Allowance		14	11
Unpaid Contractual Balance		23	19
Total Recorded Investment in Impaired Loans		18	14
Student
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance		161	163
Allowance on Impaired Loans		46	48
Impaired Loans Without a Related Allowance		1	2
Unpaid Contractual Balance		162	165
Total Recorded Investment in Impaired Loans		162	165
Credit cards
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance		26	28
Allowance on Impaired Loans		11	11
Impaired Loans Without a Related Allowance		0	0
Unpaid Contractual Balance		27	28
Total Recorded Investment in Impaired Loans		26	28
Other retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Impaired Loans With a Related Allowance		10	13
Allowance on Impaired Loans		3	4
Impaired Loans Without a Related Allowance		2	2
Unpaid Contractual Balance		14	18
Total Recorded Investment in Impaired Loans		$ 12	$ 15

[1] The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

XML

ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Additional Impaired Loan Information (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized		$ 10	$ 12	$ 18	$ 24
Average Recorded Investment		1,175	1,357	1,090	1,350
Commercial Banking
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized		2	1	3	2
Average Recorded Investment		382	180	309	187
Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized		2	1	3	1
Average Recorded Investment		324	129	248	133
Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized		0	0	0	1
Average Recorded Investment		58	51	61	54
Retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized		8	11	15	22
Average Recorded Investment		793	1,177	781	1,163
Residential mortgages
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized		1	4	2	8
Average Recorded Investment		160	436	156	433
Home equity loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized		1	3	3	5
Average Recorded Investment		158	272	154	266
Home equity lines of credit
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized		2	1	3	2
Average Recorded Investment		184	151	182	150
Home equity loans serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized	[1]	1	1	2	2
Average Recorded Investment	[1]	66	84	67	84
Home equity lines of credit serviced by others
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized	[1]	0	0	0	0
Average Recorded Investment	[1]	10	10	9	10
Automobile
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized		0	0	0	0
Average Recorded Investment		15	12	14	11
Student
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized		2	2	4	4
Average Recorded Investment		161	164	160	162
Credit cards
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized		1	0	1	1
Average Recorded Investment		26	30	26	29
Other retail
Financing Receivable, Recorded Investment, Past Due [Line Items]
Interest Income Recognized		0	0	0	0
Average Recorded Investment		$ 13	$ 18	$ 13	$ 18

[1] The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

XML

ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Troubled Debt Restructuring (Details) $ in Millions		3 Months Ended		6 Months Ended
		Jun. 30, 2016 USD ($) contract	Jun. 30, 2015 USD ($) contract	Jun. 30, 2016 USD ($) contract	Jun. 30, 2015 USD ($) contract
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		$ 1	$ 2	$ 1	$ 2
Charge-offs Resulting from Modification		1	1	1	4
Commercial Banking
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		0	0	(1)	(1)
Charge-offs Resulting from Modification		0	0	0	0
Commercial
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		0	0	(1)	(1)
Charge-offs Resulting from Modification		0	0	0	0
Commercial real estate
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		0	0	0	0
Charge-offs Resulting from Modification		0	0	0	0
Retail
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		1	2	2	3
Charge-offs Resulting from Modification		1	1	1	4
Residential mortgages
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		0	0	0	(1)
Charge-offs Resulting from Modification		0	0	0	0
Home equity loans
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		(1)	0	(1)	0
Charge-offs Resulting from Modification		0	0	0	0
Home equity lines of credit
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		0	0	0	0
Charge-offs Resulting from Modification		0	1	0	2
Home equity loans serviced by others
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification	[1]	0	0	0	0
Charge-offs Resulting from Modification	[1]	0	0	0	1
Home equity lines of credit serviced by others
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification	[1]	0	0	0	0
Charge-offs Resulting from Modification	[1]	0	0	0	0
Automobile
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		0	0	0	0
Charge-offs Resulting from Modification		1	0	1	1
Student
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		1	1	2	3
Charge-offs Resulting from Modification		0	0	0	0
Credit cards
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		1	1	1	1
Charge-offs Resulting from Modification		0	0	0	0
Other retail
Financing Receivable, Modifications [Line Items]
Net Change to ALLL Resulting from Modification		0	0	0	0
Charge-offs Resulting from Modification		$ 0	$ 0	$ 0	$ 0
Interest Rate Reduction
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	615	706	1,216	1,409
Pre-Modification Outstanding Recorded Investment	[2]	$ 5	$ 9	$ 15	$ 23
Post-Modification Outstanding Recorded Investment	[2]	$ 5	$ 9	$ 15	$ 23
Interest Rate Reduction | Commercial Banking
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	3	7	8	15
Pre-Modification Outstanding Recorded Investment	[2]	$ 0	$ 1	$ 1	$ 3
Post-Modification Outstanding Recorded Investment	[2]	$ 0	$ 1	$ 1	$ 3
Interest Rate Reduction | Commercial
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	3	7	8	14
Pre-Modification Outstanding Recorded Investment	[2]	$ 0	$ 1	$ 1	$ 3
Post-Modification Outstanding Recorded Investment	[2]	$ 0	$ 1	$ 1	$ 3
Interest Rate Reduction | Commercial real estate
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	0	0	0	1
Pre-Modification Outstanding Recorded Investment	[2]	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[2]	$ 0	$ 0	$ 0	$ 0
Interest Rate Reduction | Retail
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	612	699	1,208	1,394
Pre-Modification Outstanding Recorded Investment	[2]	$ 5	$ 8	$ 14	$ 20
Post-Modification Outstanding Recorded Investment	[2]	$ 5	$ 8	$ 14	$ 20
Interest Rate Reduction | Residential mortgages
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	3	20	25	53
Pre-Modification Outstanding Recorded Investment	[2]	$ 1	$ 3	$ 4	$ 9
Post-Modification Outstanding Recorded Investment	[2]	$ 1	$ 3	$ 4	$ 9
Interest Rate Reduction | Home equity loans
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	15	26	29	47
Pre-Modification Outstanding Recorded Investment	[2]	$ 1	$ 1	$ 2	$ 2
Post-Modification Outstanding Recorded Investment	[2]	$ 1	$ 1	$ 2	$ 2
Interest Rate Reduction | Home equity lines of credit
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	6	0	13	0
Pre-Modification Outstanding Recorded Investment	[2]	$ 0	$ 0	$ 1	$ 0
Post-Modification Outstanding Recorded Investment	[2]	$ 0	$ 0	$ 1	$ 0
Interest Rate Reduction | Home equity loans serviced by others
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[1],[2]	3	5	6	22
Pre-Modification Outstanding Recorded Investment	[1],[2]	$ 0	$ 0	$ 0	$ 1
Post-Modification Outstanding Recorded Investment	[1],[2]	$ 0	$ 0	$ 0	$ 1
Interest Rate Reduction | Home equity lines of credit serviced by others
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[1],[2]	2		2	0
Pre-Modification Outstanding Recorded Investment	[1],[2]	$ 0		$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[1],[2]	$ 0		$ 0	$ 0
Interest Rate Reduction | Automobile
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	30	18	51	38
Pre-Modification Outstanding Recorded Investment	[2]	$ 0	$ 1	$ 1	$ 1
Post-Modification Outstanding Recorded Investment	[2]	$ 0	$ 1	$ 1	$ 1
Interest Rate Reduction | Student
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	0		0	0
Pre-Modification Outstanding Recorded Investment	[2]	$ 0		$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[2]	$ 0		$ 0	$ 0
Interest Rate Reduction | Credit cards
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	552	630	1,081	1,234
Pre-Modification Outstanding Recorded Investment	[2]	$ 3	$ 3	$ 6	$ 7
Post-Modification Outstanding Recorded Investment	[2]	$ 3	$ 3	$ 6	$ 7
Interest Rate Reduction | Other retail
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[2]	1		1	0
Pre-Modification Outstanding Recorded Investment	[2]	$ 0		$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[2]	$ 0		$ 0	$ 0
Maturity Extension
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	73	95	146	174
Pre-Modification Outstanding Recorded Investment	[3]	$ 10	$ 15	$ 19	$ 32
Post-Modification Outstanding Recorded Investment	[3]	$ 10	$ 15	$ 19	$ 32
Maturity Extension | Commercial Banking
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	28	36	54	64
Pre-Modification Outstanding Recorded Investment	[3]	$ 4	$ 2	$ 8	$ 12
Post-Modification Outstanding Recorded Investment	[3]	$ 4	$ 2	$ 8	$ 12
Maturity Extension | Commercial
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	28	36	54	64
Pre-Modification Outstanding Recorded Investment	[3]	$ 4	$ 2	$ 8	$ 12
Post-Modification Outstanding Recorded Investment	[3]	$ 4	$ 2	$ 8	$ 12
Maturity Extension | Commercial real estate
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	0	0	0	0
Pre-Modification Outstanding Recorded Investment	[3]	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[3]	$ 0	$ 0	$ 0	$ 0
Maturity Extension | Retail
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	45	59	92	110
Pre-Modification Outstanding Recorded Investment	[3]	$ 6	$ 13	$ 11	$ 20
Post-Modification Outstanding Recorded Investment	[3]	$ 6	$ 13	$ 11	$ 20
Maturity Extension | Residential mortgages
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	10	9	16	19
Pre-Modification Outstanding Recorded Investment	[3]	$ 2	$ 2	$ 3	$ 4
Post-Modification Outstanding Recorded Investment	[3]	$ 2	$ 2	$ 3	$ 4
Maturity Extension | Home equity loans
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	21	49	37	86
Pre-Modification Outstanding Recorded Investment	[3]	$ 2	$ 11	$ 4	$ 16
Post-Modification Outstanding Recorded Investment	[3]	$ 2	$ 11	$ 4	$ 16
Maturity Extension | Home equity lines of credit
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	8	0	27	3
Pre-Modification Outstanding Recorded Investment	[3]	$ 1	$ 0	$ 3	$ 0
Post-Modification Outstanding Recorded Investment	[3]	$ 1	$ 0	$ 3	$ 0
Maturity Extension | Home equity loans serviced by others
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[1],[3]	0	0	0	0
Pre-Modification Outstanding Recorded Investment	[1],[3]	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[1],[3]	$ 0	$ 0	$ 0	$ 0
Maturity Extension | Home equity lines of credit serviced by others
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[1],[3]	3		4	0
Pre-Modification Outstanding Recorded Investment	[1],[3]	$ 1		$ 1	$ 0
Post-Modification Outstanding Recorded Investment	[1],[3]	$ 1		$ 1	$ 0
Maturity Extension | Automobile
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	3	1	8	2
Pre-Modification Outstanding Recorded Investment	[3]	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[3]	$ 0	$ 0	$ 0	$ 0
Maturity Extension | Student
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	0		0	0
Pre-Modification Outstanding Recorded Investment	[3]	$ 0		$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[3]	$ 0		$ 0	$ 0
Maturity Extension | Credit cards
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	0	0	0	0
Pre-Modification Outstanding Recorded Investment	[3]	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[3]	$ 0	$ 0	$ 0	$ 0
Maturity Extension | Other retail
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[3]	0		0	0
Pre-Modification Outstanding Recorded Investment	[3]	$ 0		$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[3]	$ 0		$ 0	$ 0
Other
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[4]	742	805	1,336	1,945
Pre-Modification Outstanding Recorded Investment	[4]	$ 48	$ 28	$ 93	$ 73
Post-Modification Outstanding Recorded Investment	[4]	$ 47	$ 27	$ 91	$ 69
Other | Commercial Banking
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[4]	4	3	9	5
Pre-Modification Outstanding Recorded Investment	[4]	$ 20	$ 0	$ 41	$ 6
Post-Modification Outstanding Recorded Investment	[4]	$ 21	$ 0	$ 41	$ 6
Other | Commercial
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[4]	4	3	9	4
Pre-Modification Outstanding Recorded Investment	[4]	$ 20	$ 0	$ 41	$ 2
Post-Modification Outstanding Recorded Investment	[4]	$ 21	$ 0	$ 41	$ 2
Other | Commercial real estate
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[4]	0	0	0	1
Pre-Modification Outstanding Recorded Investment	[4]	$ 0	$ 0	$ 0	$ 4
Post-Modification Outstanding Recorded Investment	[4]	$ 0	$ 0	$ 0	$ 4
Other | Retail
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[4]	738	802	1,327	1,940
Pre-Modification Outstanding Recorded Investment	[4]	$ 28	$ 28	$ 52	$ 67
Post-Modification Outstanding Recorded Investment	[4]	$ 26	$ 27	$ 50	$ 63
Other | Residential mortgages
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[4]	67	42	131	106
Pre-Modification Outstanding Recorded Investment	[4]	$ 7	$ 4	$ 15	$ 10
Post-Modification Outstanding Recorded Investment	[4]	$ 7	$ 4	$ 15	$ 10
Other | Home equity loans
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[4]	94	97	181	294
Pre-Modification Outstanding Recorded Investment	[4]	$ 5	$ 7	$ 11	$ 17
Post-Modification Outstanding Recorded Investment	[4]	$ 5	$ 7	$ 11	$ 17
Other | Home equity lines of credit
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[4]	92	78	124	213
Pre-Modification Outstanding Recorded Investment	[4]	$ 6	$ 5	$ 8	$ 14
Post-Modification Outstanding Recorded Investment	[4]	$ 6	$ 5	$ 8	$ 12
Other | Home equity loans serviced by others
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[1],[4]	16	25	34	71
Pre-Modification Outstanding Recorded Investment	[1],[4]	$ 0	$ 1	$ 1	$ 3
Post-Modification Outstanding Recorded Investment	[1],[4]	$ 0	$ 1	$ 1	$ 3
Other | Home equity lines of credit serviced by others
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[1],[4]	5	15	13	22
Pre-Modification Outstanding Recorded Investment	[1],[4]	$ 1	$ 1	$ 1	$ 1
Post-Modification Outstanding Recorded Investment	[1],[4]	$ 0	$ 1	$ 0	$ 1
Other | Automobile
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[4]	348	172	539	469
Pre-Modification Outstanding Recorded Investment	[4]	$ 7	$ 3	$ 10	$ 8
Post-Modification Outstanding Recorded Investment	[4]	$ 6	$ 2	$ 9	$ 6
Other | Student
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[4]	111	369	297	750
Pre-Modification Outstanding Recorded Investment	[4]	$ 2	$ 7	$ 6	$ 14
Post-Modification Outstanding Recorded Investment	[4]	$ 2	$ 7	$ 6	$ 14
Other | Credit cards
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[4]	0	0	0	0
Pre-Modification Outstanding Recorded Investment	[4]	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[4]	$ 0	$ 0	$ 0	$ 0
Other | Other retail
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[4]	5	4	8	15
Pre-Modification Outstanding Recorded Investment	[4]	$ 0	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment	[4]	$ 0	$ 0	$ 0	$ 0

[1] The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

[2] Includes modifications that consist of multiple concessions, one of which is an interest rate reduction.

[3] Includes modifications that consist of multiple concessions, one of which is a maturity extension (unless one of the other concessions was an interest rate reduction).

[4] Includes modifications other than interest rate reductions or maturity extensions, such as lowering scheduled payments for a specified period of time, principal forbearance, capitalizing arrearages, and principal forgiveness. Also included are the following: deferrals, trial modifications, certain bankruptcies, loans in forbearance and prepayment plans. Modifications can include the deferral of accrued interest resulting in post modification balances being higher than pre-modification.

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ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Default of Modified Debt Agreements (Details) $ in Millions		3 Months Ended		6 Months Ended
		Jun. 30, 2016 USD ($) contract	Jun. 30, 2015 USD ($) contract	Jun. 30, 2016 USD ($) contract	Jun. 30, 2015 USD ($) contract
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract		238	283	502	638
Balance Defaulted | $		$ 12	$ 11	$ 26	$ 26
Commercial Banking
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract		9	8	12	14
Balance Defaulted | $		$ 3	$ 1	$ 3	$ 1
Commercial
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract		8	8	11	14
Balance Defaulted | $		$ 3	$ 1	$ 3	$ 1
Commercial real estate
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract		1	0	1	0
Balance Defaulted | $		$ 0	$ 0	$ 0	$ 0
Retail
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract		229	275	490	624
Balance Defaulted | $		$ 9	$ 10	$ 23	$ 25
Residential mortgages
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract		35	34	89	83
Balance Defaulted | $		$ 4	$ 5	$ 12	$ 11
Home equity loans
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract		32	32	50	83
Balance Defaulted | $		$ 2	$ 2	$ 3	$ 6
Home equity lines of credit
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract		20	32	45	72
Balance Defaulted | $		$ 1	$ 1	$ 4	$ 3
Home equity loans serviced by others
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[1]	11	7	21	23
Balance Defaulted | $	[1]	$ 0	$ 0	$ 1	$ 1
Home equity lines of credit serviced by others
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	[1]	6	6	11	7
Balance Defaulted | $	[1]	$ 0	$ 0	$ 0	$ 0
Automobile
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract		22	19	37	42
Balance Defaulted | $		$ 1	$ 0	$ 1	$ 1
Student
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract		18	44	31	109
Balance Defaulted | $		$ 1	$ 1	$ 1	$ 2
Credit cards
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract		85	100	206	202
Balance Defaulted | $		$ 0	$ 1	$ 1	$ 1
Other retail
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract		0	1	0	3
Balance Defaulted | $		$ 0	$ 0	$ 0	$ 0

[1] The Company’s SBO portfolio consists of purchased home equity loans and lines that were originally serviced by others. The Company now services a portion of this portfolio internally.

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ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS, AND CONCENTRATIONS OF CREDIT RISK - Loans with Indicators of High Credit Risk (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
High loan-to-value
Financing Receivable, Recorded Investment [Line Items]
Total	$ 1,998	$ 2,472
High loan-to-value | Residential Mortgages
Financing Receivable, Recorded Investment [Line Items]
Total	595	649
High loan-to-value | Home Equity Loans and Lines of Credit
Financing Receivable, Recorded Investment [Line Items]
Total	782	1,038
High loan-to-value | Home Equity Products Serviced by Others
Financing Receivable, Recorded Investment [Line Items]
Total	621	785
High loan-to-value | Credit Cards
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
High loan-to-value | Student
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Interest only/negative amortization
Financing Receivable, Recorded Investment [Line Items]
Total	1,370	1,110
Interest only/negative amortization | Residential Mortgages
Financing Receivable, Recorded Investment [Line Items]
Total	1,369	1,110
Interest only/negative amortization | Home Equity Loans and Lines of Credit
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Interest only/negative amortization | Home Equity Products Serviced by Others
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Interest only/negative amortization | Credit Cards
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Interest only/negative amortization | Student
Financing Receivable, Recorded Investment [Line Items]
Total	1	0
Low introductory rate
Financing Receivable, Recorded Investment [Line Items]
Total	94	99
Low introductory rate | Residential Mortgages
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Low introductory rate | Home Equity Loans and Lines of Credit
Financing Receivable, Recorded Investment [Line Items]
Total	0	3
Low introductory rate | Home Equity Products Serviced by Others
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Low introductory rate | Credit Cards
Financing Receivable, Recorded Investment [Line Items]
Total	94	96
Low introductory rate | Student
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Multiple characteristics and other
Financing Receivable, Recorded Investment [Line Items]
Total	4	14
Multiple characteristics and other | Residential Mortgages
Financing Receivable, Recorded Investment [Line Items]
Total	4	14
Multiple characteristics and other | Home Equity Loans and Lines of Credit
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Multiple characteristics and other | Home Equity Products Serviced by Others
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Multiple characteristics and other | Credit Cards
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Multiple characteristics and other | Student
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Credit risk, loans with increased credit exposure
Financing Receivable, Recorded Investment [Line Items]
Total	3,466	3,695
Credit risk, loans with increased credit exposure | Residential Mortgages
Financing Receivable, Recorded Investment [Line Items]
Total	1,968	1,773
Credit risk, loans with increased credit exposure | Home Equity Loans and Lines of Credit
Financing Receivable, Recorded Investment [Line Items]
Total	782	1,041
Credit risk, loans with increased credit exposure | Home Equity Products Serviced by Others
Financing Receivable, Recorded Investment [Line Items]
Total	621	785
Credit risk, loans with increased credit exposure | Credit Cards
Financing Receivable, Recorded Investment [Line Items]
Total	94	96
Credit risk, loans with increased credit exposure | Student
Financing Receivable, Recorded Investment [Line Items]
Total	$ 1	$ 0

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VARIABLE INTEREST ENTITIES - Narrative (Details) - LIHTC Investments - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Variable Interest Entity [Line Items]
Amortization method qualified affordable housing project investments, amortization	$ 16,000,000	$ 12,000,000	$ 31,000,000	$ 24,000,000
Affordable housing tax credits and other tax benefits, amount	14,000,000	12,000,000	29,000,000	23,000,000
Other tax expense (benefit)	(7,000,000)	(5,000,000)	(13,000,000)	(9,000,000)
Net impairment losses recognized in earnings	$ 0	$ 0	$ 0	$ 0

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VARIABLE INTEREST ENTITIES - Schedule of Variable Interest Entities (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
LIHTC Investments
Variable Interest Entity [Line Items]
LIHTC investment included in other assets	$ 660	$ 598
LIHTC unfunded commitments included in other liabilities	365	365
Renewable Energy
Variable Interest Entity [Line Items]
Renewable energy investments included in other assets	$ 117	$ 118

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MORTGAGE BANKING - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Proceeds from sale of residential mortgages			$ 1,022	$ 1,111
Repurchased mortgage loans	$ 2	$ 3	4	7
Mortgage servicing fees	13	14	26	28
Mortgage servicing rights valuation charge-off (recovery)	(1)	(6)	4	(7)
Residential mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Proceeds from sale of residential mortgages	543	649	1,000	1,100
Gain on sale of residential mortgages	$ 16	$ 11	$ 30	$ 32

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MORTGAGE BANKING - Changes Related to MSRs (Details) - Residential mortgages - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
MSRs
Balance as of beginning of period	$ 169	$ 180	$ 173	$ 184
Amount capitalized	5	7	10	13
Amortization	(8)	(10)	(17)	(20)
Carrying amount before valuation allowance	166	177	166	177
Valuation allowance for servicing assets
Balance as of beginning of period	14	17	9	18
Valuation charge-offs (recoveries)	(1)	(6)	4	(7)
Balance at end of period	13	11	13	11
Net carrying value of MSRs	$ 153	$ 166	$ 153	$ 166

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MORTGAGE BANKING - Economic Assumptions Used to Estimate Value of MSRs (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value [Abstract]
Weighted average life (in years)	4 years 10 months 24 days	5 years 4 months 24 days
Weighted average constant prepayment rate	13.50%	11.60%
Weighted average discount rate	9.70%	9.70%
Residential mortgages
Servicing Assets and Servicing Liabilities at Fair Value, Assumptions Used to Estimate Fair Value [Abstract]
Fair value	$ 165	$ 178
Weighted average life (in years)	4 years 10 months 24 days	5 years 4 months 24 days
Weighted average constant prepayment rate	13.50%	11.60%
Weighted average discount rate	9.70%	9.70%

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MORTGAGE BANKING - Economic Assumptions Used to Estimate Value of MSRs Capitalized (Details) - Residential mortgages	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Servicing Assets at Fair Value [Line Items]
Weighted average life (in years)	5 years 10 months 24 days	6 years 3 months 18 days	6 years	5 years 4 months 24 days
Weighted average constant prepayment rate	11.30%	9.80%	11.10%	11.10%
Weighted average discount rate	9.70%	9.70%	9.70%	9.60%

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MORTGAGE BANKING - Sensitivity Analysis (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Minimum
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items]
Adverse change in basis points	0.50%	0.50%
Maximum
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items]
Adverse change in basis points	1.00%	1.00%
Prepayment rate
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items]
Decline in fair value from a 50 basis point decrease in interest rates	$ 6	$ 5
Decline in fair value from a 100 basis point decrease in interest rates	17	11
Weighted average discount rate
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items]
Decline in fair value from a 50 basis point increase in weighted average discount rate	3	3
Decline in fair value from a 100 basis point increase in weighted average discount rate	$ 5	$ 6

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BORROWED FUNDS - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Short-term borrowed funds	$ 3,487	$ 3,432
Federal Home Loan Bank Advances and Letters of Credit | Secured Debt
Debt Instrument [Line Items]
Short-term borrowed funds	12,000	11,300
Federal Home Loan advances
Debt Instrument [Line Items]
Available borrowing capacity	3,500	$ 4,100
Federal Reserve Bank advances
Debt Instrument [Line Items]
Available borrowing capacity	$ 32,200

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BORROWED FUNDS - Short Term Debt (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Short-term Debt [Line Items]
Total short-term borrowed funds	$ 3,487	$ 3,432
Securities sold under agreements to repurchase
Short-term Debt [Line Items]
Total short-term borrowed funds	717	802
Other short-term borrowed funds (primarily current portion of FHLB advances)
Short-term Debt [Line Items]
Total short-term borrowed funds	$ 2,770	$ 2,630

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BORROWED FUNDS - Short Term Borrowed Debt Key Data (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Federal funds purchased and securities sold under agreements to repurchase
Short-term Debt [Line Items]
Weighted-average interest rate at period end	0.00%	0.15%
Maximum amount outstanding at month-end during the period	$ 1,274	$ 5,375
Average amount outstanding during the period	$ 927	$ 3,364
Weighted-average interest rate during the period	0.07%	0.22%
Other short-term borrowed funds (primarily current portion of FHLB advances)
Short-term Debt [Line Items]
Weighted-average interest rate at period end	0.65%	0.44%
Maximum amount outstanding at month-end during the period	$ 4,764	$ 7,004
Average amount outstanding during the period	$ 3,421	$ 5,865
Weighted-average interest rate during the period	0.60%	0.28%

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BORROWED FUNDS - Long Term Debt (Details) - USD ($) $ in Millions		Mar. 07, 2016	Jun. 30, 2016		Dec. 31, 2015	Aug. 03, 2015
Debt Instrument [Line Items]
Long-term borrowed funds			$ 11,810		$ 9,886
Interest rate swaps			(1,443)		(807)
Interest rate swaps
Debt Instrument [Line Items]
Interest rate swaps			(1,235)		(636)
Subordinated Debt | 4.350% fixed rate subordinated debt, due 2025
Debt Instrument [Line Items]
Interest rate						4.35%
Citizens Financial Group, Inc.
Debt Instrument [Line Items]
Long-term borrowed funds			2,501
Citizens Financial Group, Inc. | Subordinated Debt | 4.150% fixed rate subordinated debt, due 2022
Debt Instrument [Line Items]
Long-term borrowed funds	[1]		$ 347		350
Interest rate	[1]		4.15%
Principal balance			$ 350		350
Unamortized deferred issuance costs and discount			(3)
Citizens Financial Group, Inc. | Subordinated Debt | 5.158% fixed-to-floating rate subordinated debt, (LIBOR 3.56%) callable, due 2023
Debt Instrument [Line Items]
Long-term borrowed funds	[2]		$ 333		333
Interest rate	[2]		5.158%
Citizens Financial Group, Inc. | Subordinated Debt | 3.750% fixed rate subordinated debt, due 2024
Debt Instrument [Line Items]
Long-term borrowed funds	[2],[3]		$ 250		$ 250
Interest rate	[2]		3.75%	[3]	4.153%
Citizens Financial Group, Inc. | Subordinated Debt | 4.023% fixed rate subordinated debt, due 2024
Debt Instrument [Line Items]
Long-term borrowed funds	[2],[4]		$ 218		$ 331
Interest rate	[2],[4]		4.023%
Principal balance			$ 208		333
Extinguishment of debt, amount		$ 125
Citizens Financial Group, Inc. | Subordinated Debt | 4.082% fixed rate subordinated debt, due 2025
Debt Instrument [Line Items]
Long-term borrowed funds	[2],[5]		$ 355		331
Interest rate	[2],[5]		4.082%
Principal balance			$ 334		334
Citizens Financial Group, Inc. | Subordinated Debt | 4.350% fixed rate subordinated debt, due 2025
Debt Instrument [Line Items]
Long-term borrowed funds	[6]		$ 249		250
Interest rate	[6]		4.35%
Principal balance			$ 250		250
Unamortized deferred issuance costs and discount			(1)
Citizens Financial Group, Inc. | Subordinated Debt | 4.300% fixed rate subordinated debt, due 2025
Debt Instrument [Line Items]
Long-term borrowed funds	[7]		$ 749		750
Interest rate	[7]		4.30%
Principal balance			$ 750		750
Unamortized deferred issuance costs and discount			$ (1)
Citizens Financial Group, Inc. | Subordinated Debt | LIBOR | 5.158% fixed-to-floating rate subordinated debt, (LIBOR 3.56%) callable, due 2023
Debt Instrument [Line Items]
Interest rate	[2]		3.56%
Citizens Financial Group, Inc. | Senior Unsecured Notes | Interest rate swaps | 4.023% fixed rate subordinated debt, due 2024
Debt Instrument [Line Items]
Interest rate swaps			$ 10		(2)
Citizens Financial Group, Inc. | Senior Unsecured Notes | Interest rate swaps | 4.082% fixed rate subordinated debt, due 2025
Debt Instrument [Line Items]
Interest rate swaps			21		(3)
Banking Subsidiaries
Debt Instrument [Line Items]
Long-term borrowed funds			9,309
Banking Subsidiaries | Senior Unsecured Notes | 1.600% senior unsecured notes, due 2017
Debt Instrument [Line Items]
Long-term borrowed funds	[8],[9]		$ 753		749
Interest rate	[8],[9]		1.60%
Principal balance			$ 750		750
Unamortized deferred issuance costs and discount			(1)
Banking Subsidiaries | Senior Unsecured Notes | 2.300% senior unsecured notes, due 2018
Debt Instrument [Line Items]
Long-term borrowed funds	[9],[10]		$ 756		747
Interest rate	[9],[10]		2.30%
Principal balance			$ 750		750
Unamortized deferred issuance costs and discount			(2)
Banking Subsidiaries | Senior Unsecured Notes | 2.450% senior unsecured notes, due 2019
Debt Instrument [Line Items]
Long-term borrowed funds	[9],[11]		$ 767		752
Interest rate	[9],[11]		2.45%
Principal balance			$ 750		750
Unamortized deferred issuance costs and discount			(3)
Banking Subsidiaries | Senior Unsecured Notes | 2.500% senior unsecured notes, due 2019
Debt Instrument [Line Items]
Long-term borrowed funds	[9],[12]		$ 753		0
Interest rate	[9],[12]		2.50%
Principal balance			$ 750
Unamortized deferred issuance costs and discount			(2)
Banking Subsidiaries | Senior Unsecured Notes | 2.550% Senior Unsecured Notes, Due 2021
Debt Instrument [Line Items]
Long-term borrowed funds	[9],[13]		$ 1,004		0
Interest rate	[9],[13]		2.55%
Principal balance			$ 1,000
Unamortized deferred issuance costs and discount			(5)
Banking Subsidiaries | Senior Unsecured Notes | Interest rate swaps | 1.600% senior unsecured notes, due 2017
Debt Instrument [Line Items]
Interest rate swaps			4		(1)
Banking Subsidiaries | Senior Unsecured Notes | Interest rate swaps | 2.300% senior unsecured notes, due 2018
Debt Instrument [Line Items]
Interest rate swaps			8		(3)
Banking Subsidiaries | Senior Unsecured Notes | Interest rate swaps | 2.450% senior unsecured notes, due 2019
Debt Instrument [Line Items]
Interest rate swaps			20		2
Banking Subsidiaries | Senior Unsecured Notes | Interest rate swaps | 2.500% senior unsecured notes, due 2019
Debt Instrument [Line Items]
Interest rate swaps			5
Banking Subsidiaries | Senior Unsecured Notes | Interest rate swaps | 2.550% Senior Unsecured Notes, Due 2021
Debt Instrument [Line Items]
Interest rate swaps			9
Banking Subsidiaries | Federal Home Loan advances
Debt Instrument [Line Items]
Long-term borrowed funds			5,264		5,018
Banking Subsidiaries | Other
Debt Instrument [Line Items]
Long-term borrowed funds			$ 12		$ 25

[1] These balances are comprised of: principal balances of $350 million at June 30, 2016 and December 31, 2015, as well as the impact of ($3) million of unamortized deferred issuance costs and discount at June 30, 2016.

[2] Borrowed funds with RBS as of December 31, 2015. See Note 13 “Related Party Transactions and Significant Transactions with RBS” for further information.

[3] Prior to January 1, 2016, interest was payable at a fixed rate per annum of 4.153%.

[4] These balances are comprised of: principal balance of $208 million and $333 million at June 30, 2016 and December 31, 2015, respectively, as well as the impact from interest rate swaps of $10 million and ($2) million at June 30, 2016 and December 31, 2015, respectively. See Note 11 “Derivatives” for further information. In addition, on March 7, 2016, the Company repurchased $125 million of these securities from RBS. See Note 13 “Related Party Transactions and Significant Transactions with RBS” for further information.

[5] These balances are comprised of: principal balance of $334 million at June 30, 2016 and December 31, 2015; impact from interest rate swaps of $21 million and ($3) million at June 30, 2016 and December 31, 2015, respectively. See Note 11 “Derivatives” for further information.

[6] These balances are comprised of: principal balances of $250 million at June 30, 2016 and December 31, 2015, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2016.

[7] These balances are comprised of: principal balances of $750 million at June 30, 2016 and December 31, 2015, as well as the impact of ($1) million of unamortized deferred issuance costs and discount at June 30, 2016.

[8] These balances are comprised of: principal balances of $750 million at June 30, 2016 and December 31, 2015; impact from interest rate swaps of $4 million and ($1) million at June 30, 2016 and December 31, 2015, respectively; and ($1) million of unamortized deferred issuance costs and discount at June 30, 2016. See Note 11 “Derivatives” for further information.

[9] These securities were offered under CBNA’s Global Bank Note Program dated December 1, 2014.

[10] These balances are comprised of: principal balances of $750 million at June 30, 2016 and December 31, 2015; impact from interest rate swaps of $8 million and ($3) million at June 30, 2016 and December 31, 2015, respectively; and ($2) million of unamortized deferred issuance costs and discount at June 30, 2016. See Note 11 “Derivatives” for further information.

[11] These balances are comprised of: principal balances of $750 million at June 30, 2016 and December 31, 2015; impact from interest rate swaps of $20 million and $2 million at June 30, 2016 and December 31, 2015, respectively; and ($3) million of unamortized deferred issuance costs and discount at June 30, 2016. See Note 11 “Derivatives” for further information.

[12] The balance is comprised of: principal balance of $750 million at June 30, 2016; impact from interest rate swaps of $5 million and ($2) million of unamortized deferred issuance costs and discount at June 30, 2016. See Note 11 “Derivatives” for further information.

[13] The balance is comprised of: principal balance of $1.0 billion at June 30, 2016; impact from interest rate swaps of $9 million and ($5) million of unamortized deferred issuance costs and discount at June 30, 2016. See Note 11 “Derivatives” for further information.

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BORROWED FUNDS - Maturities of Long-term Borrowed Funds (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
2017 or on demand	$ 6,004
2018	761
2019	1,521
2020	2
2021	1,009
2022 and thereafter	2,513
Total	11,810	$ 9,886
Citizens Financial Group, Inc.
Debt Instrument [Line Items]
2017 or on demand	0
2018	0
2019	0
2020	0
2021	0
2022 and thereafter	2,501
Total	2,501
Banking Subsidiaries
Debt Instrument [Line Items]
2017 or on demand	6,004
2018	761
2019	1,521
2020	2
2021	1,009
2022 and thereafter	12
Total	$ 9,309

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STOCKHOLDERS' EQUITY (Details) - USD ($)				6 Months Ended		12 Months Ended
	Aug. 03, 2015	Apr. 07, 2015	Apr. 06, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Preferred Stock
Preferred stock, authorized (in shares)				100,000,000		100,000,000
Preferred stock, outstanding (in shares)				250,000		250,000
Preferred stock, par value (in dollars per share)				$ 25.00		$ 25.00
Treasury Stock
Cost of stock repurchase				$ 0	$ 250,000,000
RBSG
Treasury Stock
Treasury stock purchased (in shares)	9,615,384	10,473,397
Treasury stock purchased, price per share (in dollars per share)	$ 26.00	$ 23.87
Cost of stock repurchase		$ 250,000,000
4.350% fixed rate subordinated debt, due 2025 | Subordinated Debt
Treasury Stock
Aggregate principal amount of debt	$ 250,000,000
Interest rate	4.35%
Series A Preferred Stock
Preferred Stock
Preferred stock, authorized (in shares)				250,000		250,000
Preferred stock, par value (in dollars per share)			$ 25.00	$ 25.00		$ 25.00
Preferred stock, issued			$ 250,000,000
Preferred stock, issued (in shares)			250,000	250,000		250,000
Preferred stock, dividend rate			5.50%
Preferred stock, liquidation preference (in dollars per share)			$ 1,000	$ 1,000		$ 1,000
Net proceeds from issuance of stock			$ 247,000,000
Preferred stock, redemption price per share (in dollars per share)			$ 1,000
Series A Preferred Stock | LIBOR
Preferred Stock
Preferred stock, dividend payment rate, basis spread on variable rate, beginning after April 6, 2020			3.96%
Share-based compensation plan activity
Treasury Stock
Treasury stock purchased, price per share (in dollars per share)						$ 25.50
Cost of stock repurchase				$ 0		$ 22,000,000
Stock repurchased during period (in shares)						876,087

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EMPLOYEE BENEFITS Schedule of Net Periodic (Income) Cost (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 2	$ 2
Interest cost	24	24
Expected return on plan assets	(34)	(37)
Amortization of actuarial loss	8	7
Net periodic pension (income) cost	0	(4)
Qualified Plan
Defined Benefit Plan Disclosure [Line Items]
Service cost	2	2
Interest cost	22	22
Expected return on plan assets	(34)	(37)
Amortization of actuarial loss	7	6
Net periodic pension (income) cost	(3)	(7)
Non-Qualified Plan
Defined Benefit Plan Disclosure [Line Items]
Service cost	0	0
Interest cost	2	2
Expected return on plan assets	0	0
Amortization of actuarial loss	1	1
Net periodic pension (income) cost	$ 3	$ 3

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INCOME TAXES - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Income tax expense	$ 118	$ 92	$ 227	$ 198
Effective income tax rate	32.60%	32.70%	32.70%	33.20%
Federal income tax rate			35.00%	35.00%
Deferred taxes, net	$ 961		$ 961		$ 730

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DERIVATIVES - Narrative (Details) $ in Millions	Jun. 30, 2016 USD ($)
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Net gain (pre-tax) on derivatives expected to be reclassified in next 12 months	$ 4

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DERIVATIVES - Schedule of Derivative Instruments (Details) - USD ($) $ in Millions		Jun. 30, 2016	Dec. 31, 2015
Derivative Assets
Derivative assets		$ 1,443	$ 807
Less: Gross amounts offset in the Consolidated Balance Sheets	[1]	(130)	(178)
Less: Cash collateral applied	[1]	(1)	(4)
Total net derivative fair values presented in the Consolidated Balance Sheets	[2]	1,312	625
Derivative Liabilities
Derivative Liabilities		1,177	666
Less: Gross amounts offset in the Consolidated Balance Sheets	[1]	(130)	(178)
Less: Cash collateral applied	[1]	(37)	(3)
Total net derivative fair values presented in the Consolidated Balance Sheets	[2]	1,010	485
Derivatives not designated as hedging instruments:
Derivative Assets
Derivative assets		1,018	711
Derivative Liabilities
Derivative Liabilities		922	616
Interest rate swaps
Derivative Assets
Derivative assets		1,235	636
Derivative Liabilities
Derivative Liabilities		978	505
Interest rate swaps | Derivatives designated as hedging instruments:
Derivatives, Fair Value [Line Items]
Notional amount	[3]	15,500	16,750
Derivative Assets
Derivative assets		425	96
Derivative Liabilities
Derivative Liabilities		255	50
Interest rate swaps | Derivatives not designated as hedging instruments:
Derivatives, Fair Value [Line Items]
Notional amount	[3]	39,606	33,719
Derivative Assets
Derivative assets		810	540
Derivative Liabilities
Derivative Liabilities		723	455
Foreign exchange contracts
Derivative Assets
Derivative assets		193	163
Derivative Liabilities
Derivative Liabilities		185	156
Foreign exchange contracts | Derivatives not designated as hedging instruments:
Derivatives, Fair Value [Line Items]
Notional amount	[3]	9,490	8,366
Derivative Assets
Derivative assets		193	163
Derivative Liabilities
Derivative Liabilities		185	156
Other contracts
Derivative Assets
Derivative assets		15	8
Derivative Liabilities
Derivative Liabilities		14	5
Other contracts | Derivatives not designated as hedging instruments:
Derivatives, Fair Value [Line Items]
Notional amount	[3]	1,491	981
Derivative Assets
Derivative assets		15	8
Derivative Liabilities
Derivative Liabilities		$ 14	$ 5

[1] Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle positive and negative positions.

[2] The Company also offsets assets and liabilities associated with repurchase agreements on the Consolidated Balance Sheets. See Note 2 “Securities” for further information.

[3] The notional or contractual amount of interest rate derivatives and foreign exchange contracts is the amount upon which interest and other payments under the contract are based. Notional amounts are typically not exchanged. Therefore, notional amounts should not be taken as the measure of credit or market risk, as they do not measure the true economic risk of these contracts.

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DERIVATIVES - Schedule of Fair Value Hedges (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Derivative Instruments, Gain (Loss) [Line Items]
Derivative	$ 11	$ 3	$ 17	$ 7
Hedge of interest rate risk | Other Income
Derivative Instruments, Gain (Loss) [Line Items]
Derivative	32	(3)	84	6
Hedged Item	(31)	3	(83)	(6)
Hedge Ineffectiveness	$ 1	$ 0	$ 1	$ 0

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DERIVATIVES - Effect of Derivative Instruments on Net Income (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Derivative Instruments, Gain (Loss) [Line Items]
Amounts reclassified from OCI to interest income		$ 141	$ 155	$ 286	$ 314
Amounts reclassified from OCI to interest expense		(123)	(112)	(238)	(218)
Amount Reclassified from AOCI
Derivative Instruments, Gain (Loss) [Line Items]
Effective portion of gain (loss) recognized in OCI	[1]	21	(8)	75	96
Amount Reclassified from AOCI | Net Unrealized Gains (Losses) on Derivatives
Derivative Instruments, Gain (Loss) [Line Items]
Amounts reclassified from OCI to interest income	[2]	21	17	43	35
Amounts reclassified from OCI to interest expense	[2]	$ (8)	$ (14)	$ (16)	$ (29)

[1] The cumulative effective gains and losses on the Company’s cash flow hedging activities are included on the accumulated other comprehensive loss line item on the Consolidated Balance Sheets.

[2] This amount includes both (a) the amortization of effective gains and losses associated with the Company’s terminated cash flow hedges and (b) the current reporting period’s interest settlements realized on the Company’s active cash flow hedges. Both (a) and (b) were previously included on the accumulated other comprehensive loss line item on the Consolidated Balance Sheets and were subsequently recorded as adjustments to the interest expense of the underlying hedged item.

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DERIVATIVES - Effect of Customer Derivatives and Economic Hedges on Net Income (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Derivative Instruments, Gain (Loss) [Line Items]
Amounts Recognized in Noninterest Income		$ 11	$ 3	$ 17	$ 7
Other Income | Interest rate swaps
Derivative Instruments, Gain (Loss) [Line Items]
Amounts Recognized in Noninterest Income		32	(3)	84	6
Customer derivative contracts | Other Income | Interest rate swaps
Derivative Instruments, Gain (Loss) [Line Items]
Amounts Recognized in Noninterest Income	[1]	(2)	(9)	95	64
Customer derivative contracts | Other Income | Foreign exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Amounts Recognized in Noninterest Income	[1]	(23)	18	28	(17)
Customer derivative contracts | Mortgage Banking Fees | Residential loan commitments
Derivative Instruments, Gain (Loss) [Line Items]
Amounts Recognized in Noninterest Income	[2]	3	(7)	7	(7)
Economic hedges | Other Income | Interest rate swaps
Derivative Instruments, Gain (Loss) [Line Items]
Amounts Recognized in Noninterest Income	[1]	15	17	(76)	(51)
Economic hedges | Foreign Exchange and Trade Finance Fees | Foreign exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Amounts Recognized in Noninterest Income	[3]	23	(19)	(27)	16
Economic hedges | Mortgage Banking Fees | Forward sale contracts
Derivative Instruments, Gain (Loss) [Line Items]
Amounts Recognized in Noninterest Income	[2]	$ (5)	$ 3	$ (10)	$ 2

[1] Reported in other income on the Consolidated Statements of Operations.

[2] Reported in mortgage banking fees on the Consolidated Statements of Operations.

[3] Reported in foreign exchange and letter of credit fees on the Consolidated Statements of Operations.

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COMMITMENTS AND CONTINGENCIES - Narrative (Details) $ in Millions		6 Months Ended	12 Months Ended
	Jan. 07, 2016 USD ($)	Jun. 30, 2016 USD ($) counterparty	Dec. 31, 2015 USD ($)	Dec. 31, 2003
Letters of Credit [Abstract]
Letters of credit outstanding		$ 3	$ 3
Risk Participation Agreements [Abstract]
Risk participation agreements		$ 64	26
Risk participation agreements number of counterparties | counterparty		89
Risk participation agreements, Maximum term		10 years
Commercial real estate loans held for sale | Purchase commitment
Commitments [Abstract]
Unsettled commercial loan trade purchases		$ 111
Unsettled commercial loan trade sales		$ 108
Minimum
Risk Participation Agreements [Abstract]
Risk participation agreements, Average term		1 year
Maximum
Risk Participation Agreements [Abstract]
Risk participation agreements, Average term		5 years
Marketing rights
Marketing Rights [Abstract]
Commitment period				25 years
Payments made		$ 1	$ 3
Remaining obligation due		46
Automobile | Minimum
Commitments [Abstract]
Purchase commitment, due after next twelve months		50
Automobile | Maximum
Commitments [Abstract]
Purchase commitment, due after next twelve months		$ 200
Student
Commitments [Abstract]
Termination fee	$ 1
Student | Minimum
Commitments [Abstract]
Purchase commitment, due in next twelve months	125
Aggregate purchase principal balance	500
Student | Maximum
Commitments [Abstract]
Aggregate purchase principal balance	$ 1,000
Financial standby letters of credit
Letters of Credit [Abstract]
Letters of credit terms		10 years
Commercial letters of credit
Letters of Credit [Abstract]
Letters of credit terms		1 year

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COMMITMENTS AND CONTINGENCIES - Schedule of Outstanding Off-balance sheet Arrangements (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Other Commitments [Line Items]
Commitment amount	$ 60,794	$ 58,746
Undrawn commitments to extend credit
Other Commitments [Line Items]
Commitment amount	58,622	56,524
Financial standby letters of credit
Other Commitments [Line Items]
Commitment amount	1,946	2,010
Performance letters of credit
Other Commitments [Line Items]
Commitment amount	37	42
Commercial letters of credit
Other Commitments [Line Items]
Commitment amount	70	87
Marketing rights
Other Commitments [Line Items]
Commitment amount	46	47
Risk participation agreements
Other Commitments [Line Items]
Commitment amount	64	26
Residential mortgage loans sold with recourse
Other Commitments [Line Items]
Commitment amount	$ 9	$ 10

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RELATED PARTY TRANSACTIONS AND SIGNIFICANT TRANSACTIONS WITH RBS - Narrative (Details) - USD ($)				3 Months Ended		6 Months Ended
	Jul. 28, 2016	Mar. 07, 2016	Dec. 03, 2015	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Related Party Transaction [Line Items]
Repurchase of long-term borrowed funds						$ 3,631,000,000	$ 6,000,000
Gain on extinguishment of debt			$ 3,000,000
RBSG
Related Party Transaction [Line Items]
Repurchase of long-term borrowed funds		$ 125,000,000	$ 750,000,000
Payments of ordinary common stock dividends				$ 0	$ 21,000,000	0	$ 60,000,000
Executive Officers, Family Members, and Their Businesses
Related Party Transaction [Line Items]
Related party loans				$ 141,000,000		$ 141,000,000		$ 136,000,000
Subsequent Event | RBSG
Related Party Transaction [Line Items]
Repurchase of long-term borrowed funds	$ 500,000,000

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RELATED PARTY TRANSACTIONS AND SIGNIFICANT TRANSACTIONS WITH RBS - Schedule of Related Party Debt Terms (Details) - USD ($) $ in Millions					6 Months Ended
		Jul. 28, 2016	Mar. 07, 2016	Dec. 03, 2015	Jun. 30, 2016		Jun. 30, 2015	Dec. 31, 2015
Related Party Transaction [Line Items]
Long-term borrowed funds					$ 11,810			$ 9,886
Repurchase of long-term borrowed funds					3,631		$ 6
Citizens Financial Group, Inc.
Related Party Transaction [Line Items]
Long-term borrowed funds					$ 2,501
Subordinated Debt | 5.158% fixed-to-floating rate subordinated debt, (LIBOR 3.56%) callable, due 2023 | Citizens Financial Group, Inc.
Related Party Transaction [Line Items]
Interest rate	[1]				5.158%
Long-term borrowed funds	[1]				$ 333			$ 333
Subordinated Debt | 3.750% fixed rate subordinated debt, due 2024 | Citizens Financial Group, Inc.
Related Party Transaction [Line Items]
Interest rate	[1]				3.75%	[2]		4.153%
Long-term borrowed funds	[1],[2]				$ 250			$ 250
Subordinated Debt | 4.023% fixed rate subordinated debt, due 2024 | Citizens Financial Group, Inc.
Related Party Transaction [Line Items]
Interest rate	[1],[3]				4.023%
Long-term borrowed funds	[1],[3]				$ 218			331
Extinguishment of debt, amount			$ 125
Subordinated Debt | 4.082% fixed rate subordinated debt, due 2025 | Citizens Financial Group, Inc.
Related Party Transaction [Line Items]
Interest rate	[1],[4]				4.082%
Long-term borrowed funds	[1],[4]				$ 355			$ 331
RBSG
Related Party Transaction [Line Items]
Repurchase of long-term borrowed funds			$ 125	$ 750
RBSG | Subsequent Event
Related Party Transaction [Line Items]
Repurchase of long-term borrowed funds		$ 500
RBSG | Subordinated Debt | 5.158% fixed-to-floating rate subordinated debt, (LIBOR 3.56%) callable, due 2023
Related Party Transaction [Line Items]
Interest rate					5.158%			5.158%
Long-term borrowed funds					$ 333			$ 333
RBSG | Subordinated Debt | 3.750% fixed rate subordinated debt, due 2024
Related Party Transaction [Line Items]
Interest rate	[5]				3.75%
Long-term borrowed funds					$ 250
RBSG | Subordinated Debt | 4.153% fixed rate subordinated debt, due 2024
Related Party Transaction [Line Items]
Interest rate								4.153%
Long-term borrowed funds								$ 250
RBSG | Subordinated Debt | 4.023% fixed rate subordinated debt, due 2024
Related Party Transaction [Line Items]
Interest rate					4.023%	[6],[7]		4.023%
Long-term borrowed funds					$ 208			$ 333
RBSG | Subordinated Debt | 4.023% fixed rate subordinated debt, due 2024 | Subsequent Event
Related Party Transaction [Line Items]
Interest rate		4.023%
Repurchase of long-term borrowed funds		$ 166
RBSG | Subordinated Debt | 4.082% fixed rate subordinated debt, due 2025
Related Party Transaction [Line Items]
Interest rate					4.082%	[6]		4.082%
Long-term borrowed funds					$ 334			$ 334
RBSG | Subordinated Debt | 4.082% fixed rate subordinated debt, due 2025 | Subsequent Event
Related Party Transaction [Line Items]
Interest rate		4.082%
Repurchase of long-term borrowed funds		$ 334

[1] Borrowed funds with RBS as of December 31, 2015. See Note 13 “Related Party Transactions and Significant Transactions with RBS” for further information.

[2] Prior to January 1, 2016, interest was payable at a fixed rate per annum of 4.153%.

[3] These balances are comprised of: principal balance of $208 million and $333 million at June 30, 2016 and December 31, 2015, respectively, as well as the impact from interest rate swaps of $10 million and ($2) million at June 30, 2016 and December 31, 2015, respectively. See Note 11 “Derivatives” for further information. In addition, on March 7, 2016, the Company repurchased $125 million of these securities from RBS. See Note 13 “Related Party Transactions and Significant Transactions with RBS” for further information.

[4] These balances are comprised of: principal balance of $334 million at June 30, 2016 and December 31, 2015; impact from interest rate swaps of $21 million and ($3) million at June 30, 2016 and December 31, 2015, respectively. See Note 11 “Derivatives” for further information.

[5] Prior to January 1, 2016, interest was payable at a fixed rate per annum of 4.153%.

[6] On July 28, 2016, the Company repurchased $500 million of its subordinated notes held by RBS, including $166 million of its 4.023% subordinated notes due 2024 and $334 million of its 4.082% subordinated notes due 2025. Refer to Note 21 “Subsequent Events” for further information.

[7] On March 7, 2016, the Company repurchased $125 million of these securities from RBS.

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RELATED PARTY TRANSACTIONS AND SIGNIFICANT TRANSACTIONS WITH RBS - Schedule of Related Party Transactions, Recorded Interest Expense (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Related Party Transactions [Abstract]
Interest expense on subordinated debt	$ 10	$ 20	$ 21	$ 40

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FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Mar. 31, 2015	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage banking (expense) income		$ 25,000,000	$ 30,000,000	$ 43,000,000	$ 63,000,000
Transfers from Level 3 to Level 2	$ 5,000,000
Weighted average life (in years)				4 years 10 months 24 days		5 years 4 months 24 days
Weighted average constant prepayment rate				13.50%		11.60%
Weighted average discount rate				9.70%		9.70%
Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Weighted average life (in years)				2 years 6 months		2 years 9 months 18 days
Weighted average constant prepayment rate				13.20%		10.70%
Weighted average discount rate				9.10%		9.10%
Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Weighted average life (in years)				5 years 3 months 18 days		6 years 2 months 12 days
Weighted average constant prepayment rate				24.30%		22.20%
Weighted average discount rate				12.10%		12.10%
Residential loans held for sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage banking (expense) income		6,000,000	(3,000,000)	$ 12,000,000	(2,000,000)
Commercial real estate loans held for sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans in this portfolio that were 90 days or more past due or nonaccruing		0		0
Other noninterest income		$ 2,000,000	$ 1,000,000	$ 2,000,000	$ 3,000,000

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FAIR VALUE MEASUREMENTS - Residential and Commercial Mortgage Loans Held For Sale (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Aggregate Fair Value	$ 478	$ 325
Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Aggregate Fair Value	478	325
Level 2 | Residential loans held for sale
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Aggregate Fair Value	424	268
Aggregate Unpaid Principal	408	263
Aggregate Fair Value Less Aggregate Unpaid Principal	16	5
Level 2 | Commercial real estate loans held for sale
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Aggregate Fair Value	54	57
Aggregate Unpaid Principal	54	57
Aggregate Fair Value Less Aggregate Unpaid Principal	$ 0	$ 0

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FAIR VALUE MEASUREMENTS - Schedule of Fair Value Measurements (Details) - USD ($) $ in Millions		Jun. 30, 2016	Dec. 31, 2015
Assets
Securities available for sale	[1]	$ 18,479	$ 17,884
Loans held for sale, at fair value		478	325
Derivative assets		1,443	807
Money market mutual fund		68	65
Other investments		5	5
Total other investment securities, at fair value		73	70
Total assets		20,473	19,086
Liabilities
Total derivative liabilities		1,177	666
Total liabilities		1,177	666
Interest rate swaps
Assets
Derivative assets		1,235	636
Liabilities
Total derivative liabilities		978	505
Foreign exchange contracts
Assets
Derivative assets		193	163
Liabilities
Total derivative liabilities		185	156
Other contracts
Assets
Derivative assets		15	8
Liabilities
Total derivative liabilities		14	5
Mortgage-backed securities
Assets
Securities available for sale		18,438	17,842
State and political subdivisions
Assets
Securities available for sale		9	9
Equity securities
Assets
Securities available for sale		17	17
U.S. Treasury and other
Assets
Securities available for sale		15	16
Residential loans held for sale
Assets
Loans held for sale, at fair value		424	268
Commercial loans held for sale
Assets
Loans held for sale, at fair value		54	57
Level 1
Assets
Securities available for sale		15	15
Loans held for sale, at fair value		0	0
Derivative assets		0	0
Money market mutual fund		68	65
Other investments		0	0
Total other investment securities, at fair value		68	65
Total assets		83	80
Liabilities
Total derivative liabilities		0	0
Total liabilities		0	0
Level 1 | Interest rate swaps
Assets
Derivative assets		0	0
Liabilities
Total derivative liabilities		0	0
Level 1 | Foreign exchange contracts
Assets
Derivative assets		0	0
Liabilities
Total derivative liabilities		0	0
Level 1 | Other contracts
Assets
Derivative assets		0	0
Liabilities
Total derivative liabilities		0	0
Level 1 | Mortgage-backed securities
Assets
Securities available for sale		0	0
Level 1 | State and political subdivisions
Assets
Securities available for sale		0	0
Level 1 | Equity securities
Assets
Securities available for sale		0	0
Level 1 | U.S. Treasury and other
Assets
Securities available for sale		15	15
Level 1 | Residential loans held for sale
Assets
Loans held for sale, at fair value		0	0
Level 1 | Commercial loans held for sale
Assets
Loans held for sale, at fair value		0	0
Level 2
Assets
Securities available for sale		18,464	17,869
Loans held for sale, at fair value		478	325
Derivative assets		1,443	807
Money market mutual fund		0	0
Other investments		5	5
Total other investment securities, at fair value		5	5
Total assets		20,390	19,006
Liabilities
Total derivative liabilities		1,177	666
Total liabilities		1,177	666
Level 2 | Interest rate swaps
Assets
Derivative assets		1,235	636
Liabilities
Total derivative liabilities		978	505
Level 2 | Foreign exchange contracts
Assets
Derivative assets		193	163
Liabilities
Total derivative liabilities		185	156
Level 2 | Other contracts
Assets
Derivative assets		15	8
Liabilities
Total derivative liabilities		14	5
Level 2 | Mortgage-backed securities
Assets
Securities available for sale		18,438	17,842
Level 2 | State and political subdivisions
Assets
Securities available for sale		9	9
Level 2 | Equity securities
Assets
Securities available for sale		17	17
Level 2 | U.S. Treasury and other
Assets
Securities available for sale		0	1
Level 2 | Residential loans held for sale
Assets
Loans held for sale, at fair value		424	268
Level 2 | Commercial loans held for sale
Assets
Loans held for sale, at fair value		54	57
Level 3
Assets
Securities available for sale		0	0
Loans held for sale, at fair value		0	0
Derivative assets		0	0
Money market mutual fund		0	0
Other investments		0	0
Total other investment securities, at fair value		0	0
Total assets		0	0
Liabilities
Total derivative liabilities		0	0
Total liabilities		0	0
Level 3 | Interest rate swaps
Assets
Derivative assets		0	0
Liabilities
Total derivative liabilities		0	0
Level 3 | Foreign exchange contracts
Assets
Derivative assets		0	0
Liabilities
Total derivative liabilities		0	0
Level 3 | Other contracts
Assets
Derivative assets		0	0
Liabilities
Total derivative liabilities		0	0
Level 3 | Mortgage-backed securities
Assets
Securities available for sale		0	0
Level 3 | State and political subdivisions
Assets
Securities available for sale		0	0
Level 3 | Equity securities
Assets
Securities available for sale		0	0
Level 3 | U.S. Treasury and other
Assets
Securities available for sale		0	0
Level 3 | Residential loans held for sale
Assets
Loans held for sale, at fair value		0	0
Level 3 | Commercial loans held for sale
Assets
Loans held for sale, at fair value		$ 0	$ 0

[1] Includes only collateral pledged by the Company where counterparties have the right to sell or pledge the collateral.

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FAIR VALUE MEASUREMENTS - Schedule of Changes in Level 3 (Details) - Recurring basis - Level 3 - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning of period balance	$ 0	$ 1	$ 0	$ 5
Purchases	0	0	0	1
Sales	0	0	0	0
Settlements	0	0	0	0
Net (losses) gains	0	0	0	0
Transfers from Level 3 to Level 2	0	0	0	(5)
Balance as of period end	0	1	0	1
Net unrealized gain (loss) included in net income for the year relating to assets held at period end	$ 0	$ 0	$ 0	$ 1

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FAIR VALUE MEASUREMENTS - Schedule of Gain (Loss) on Assets and Liabilities Measured on Nonrecurring Basis Included in Earnings (Details) - Nonrecurring measurement basis - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Impaired collateral-dependent loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain (loss) included in earnings on assets measured on a nonrecurring basis	$ (6)	$ (10)	$ (11)	$ (13)
MSRs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain (loss) included in earnings on assets measured on a nonrecurring basis	1	6	(4)	7
Foreclosed assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain (loss) included in earnings on assets measured on a nonrecurring basis	$ (1)	$ (1)	$ (2)	$ (2)

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FAIR VALUE MEASUREMENTS - Schedule of Fair Value Measurements on a Nonrecurring Basis (Details) - Nonrecurring measurement basis - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired collateral-dependent loans	$ 55	$ 60
MSRs	165	178
Foreclosed assets	46	42
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired collateral-dependent loans	0	0
MSRs	0	0
Foreclosed assets	0	0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired collateral-dependent loans	55	60
MSRs	0	0
Foreclosed assets	46	42
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired collateral-dependent loans	0	0
MSRs	165	178
Foreclosed assets	$ 0	$ 0

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FAIR VALUE MEASUREMENTS - Schedule of Financial Instruments not Recorded at Fair Value (Details) - USD ($) $ in Millions		Jun. 30, 2016	Dec. 31, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities held to maturity, carrying value	[1]	$ 4,973	$ 5,258
Securities held-to-maturity, fair value		5,136	5,297
Other investment securities, at cost, carrying value		873	863
Other investment securities, at cost, fair value		873	863
Other loans held for sale, carrying value		372	40
Other loans held for sale, fair value		372	40
Loans and leases, carrying value		103,551	99,042
Loans and leases, fair value		104,381	99,026
Deposits, carrying value		106,257	102,539
Deposits, fair value		106,260	102,528
Federal funds purchased and securities sold under agreements to repurchase, carrying value		717	802
Federal funds purchased and securities sold under agreements to repurchase, fair value		717	802
Other short-term borrowed funds, carrying value		2,770	2,630
Other short-term borrowed funds, fair value		2,770	2,630
Long-term borrowed funds, carrying value		11,810	9,886
Long-term borrowed funds, fair value		11,968	9,837
Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities held to maturity, carrying value		0	0
Securities held-to-maturity, fair value		0	0
Other investment securities, at cost, carrying value		0	0
Other investment securities, at cost, fair value		0	0
Other loans held for sale, carrying value		0	0
Other loans held for sale, fair value		0	0
Loans and leases, carrying value		0	0
Loans and leases, fair value		0	0
Deposits, carrying value		0	0
Deposits, fair value		0	0
Federal funds purchased and securities sold under agreements to repurchase, carrying value		0	0
Federal funds purchased and securities sold under agreements to repurchase, fair value		0	0
Other short-term borrowed funds, carrying value		0	0
Other short-term borrowed funds, fair value		0	0
Long-term borrowed funds, carrying value		0	0
Long-term borrowed funds, fair value		0	0
Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities held to maturity, carrying value		4,973	5,258
Securities held-to-maturity, fair value		5,136	5,297
Other investment securities, at cost, carrying value		873	863
Other investment securities, at cost, fair value		873	863
Other loans held for sale, carrying value		0	0
Other loans held for sale, fair value		0	0
Loans and leases, carrying value		55	60
Loans and leases, fair value		55	60
Deposits, carrying value		106,257	102,539
Deposits, fair value		106,260	102,528
Federal funds purchased and securities sold under agreements to repurchase, carrying value		717	802
Federal funds purchased and securities sold under agreements to repurchase, fair value		717	802
Other short-term borrowed funds, carrying value		2,770	2,630
Other short-term borrowed funds, fair value		2,770	2,630
Long-term borrowed funds, carrying value		11,810	9,886
Long-term borrowed funds, fair value		11,968	9,837
Level 3
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities held to maturity, carrying value		0	0
Securities held-to-maturity, fair value		0	0
Other investment securities, at cost, carrying value		0	0
Other investment securities, at cost, fair value		0	0
Other loans held for sale, carrying value		372	40
Other loans held for sale, fair value		372	40
Loans and leases, carrying value		103,496	98,982
Loans and leases, fair value		104,326	98,966
Deposits, carrying value		0	0
Deposits, fair value		0	0
Federal funds purchased and securities sold under agreements to repurchase, carrying value		0	0
Federal funds purchased and securities sold under agreements to repurchase, fair value		0	0
Other short-term borrowed funds, carrying value		0	0
Other short-term borrowed funds, fair value		0	0
Long-term borrowed funds, carrying value		0	0
Long-term borrowed funds, fair value		$ 0	$ 0

[1] Includes only collateral pledged by the Company where counterparties have the right to sell or pledge the collateral.

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REGULATORY MATTERS - Narrative (Details)		3 Months Ended	6 Months Ended			12 Months Ended
	Jul. 20, 2016 $ / shares	Jun. 30, 2016 USD ($) subsidiary	Jun. 30, 2017 $ / shares	Dec. 31, 2016 $ / shares	Jun. 30, 2016 USD ($) subsidiary	Jun. 30, 2017	Jul. 01, 2016 USD ($)
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Dividends | $		$ 64,000,000			$ 117,000,000
Banking Subsidiaries
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Number of financial subsidiaries | subsidiary		2			2
CBNA subsidiaries
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Number of financial subsidiaries | subsidiary		2			2
Scenario, Forecast
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Dividends declared (in Dollars per Share) | $ / shares			$ 0.14	$ 0.12
Percentage increase in quarterly dividend						17.00%
Subsequent Event
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Dividends declared (in Dollars per Share) | $ / shares	$ 0.12
Share repurchase plan, authorized amount | $							$ 690,000,000

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REGULATORY MATTERS - Capital and Capital Ratio Information (Details) - USD ($) $ in Millions		Jun. 30, 2016		Dec. 31, 2015
Common Equity Tier 1 to Risk-Weighted Assets (Amount)
Actual	[1]	$ 13,768	[2]	$ 13,389
Minimum Capital Adequacy	[1]	6,124	[2]	5,134
Classification as Well-capitalized	[1]	$ 7,767	[2]	$ 7,415
Common Equity Tier 1 to Risk-Weighted Assets (Ratio)
Actual	[1]	11.50%	[2]	11.70%
Minimum Capital Adequacy	[1]	5.125%	[2]	4.50%
Classification as Well-capitalized	[1]	6.50%	[2]	6.50%
Tier 1 Capital to Risk-Weighted Assets (Amount)
Actual	[3]	$ 14,015	[2]	$ 13,636
Minimum Capital Adequacy	[3]	7,916	[2]	6,845
Classification as Well-capitalized	[3]	$ 9,559	[2]	$ 9,127
Tier 1 Capital to Risk-Weighted Assets (Ratio)
Actual	[3]	11.70%	[2]	12.00%
Minimum Capital Adequacy	[3]	6.625%	[2]	6.00%
Classification as Well-capitalized	[3]	8.00%	[2]	8.00%
Total Capital to Risk-Weighted Assets (Amount)
Actual	[4]	$ 17,823	[2]	$ 17,505
Minimum Capital Adequacy	[4]	10,306	[2]	9,127
Classification as Well-capitalized	[4]	$ 11,949	[2]	$ 11,408
Total Capital to Risk-Weighted Assets (Ratio)
Actual	[4]	14.90%	[2]	15.30%
Minimum Capital Adequacy	[4]	8.625%	[2]	8.00%
Classification as Well-capitalized	[4]	10.00%	[2]	10.00%
Tier 1 Capital to Average Assets (Leverage) (Amount)
Actual	[5]	$ 14,015		$ 13,636
Minimum Capital Adequacy	[5]	5,452		5,218
Classification as Well-capitalized	[5]	$ 6,815		$ 6,523
Tier 1 Capital to Average Assets (Leverage) (Ratio)
Actual	[5]	10.30%		10.50%
Minimum Capital Adequacy	[5]	4.00%		4.00%
Classification as Well-capitalized	[5]	5.00%		5.00%
Capital Conservation Buffer		0.625%

[1] “Common equity tier 1 capital ratio” represents CET1 divided by total risk-weighted assets as defined under Basel III Standardized approach.

[2] “Minimum Capital ratio” for 2016 includes capital conservation buffer of 0.625%.

[3] “Tier 1 capital ratio” is tier 1 capital, which includes CET1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital, divided by total risk-weighted assets as defined under Basel III Standardized approach.

[4] “Total capital ratio” is total capital divided by total risk-weighted assets as defined under Basel III Standardized approach.

[5] “Tier 1 leverage ratio” is tier 1 capital divided by quarterly average total assets as defined under Basel III Standardized approach.

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EXIT COSTS AND RESTRUCTURING RESERVES - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Restructuring Cost and Reserve [Line Items]
Restructuring charges incurred	$ 0	$ 25,000,000	$ 0	$ 26,000,000
Outside Services
Restructuring Cost and Reserve [Line Items]
Restructuring charges incurred		5,000,000		6,000,000
Salaries & Employee Benefits
Restructuring Cost and Reserve [Line Items]
Restructuring charges incurred		5,000,000
Salaries & Employee Benefits | Salaries & Employee Benefits
Restructuring Cost and Reserve [Line Items]
Restructuring charges incurred				3,000,000
Occupancy & Equipment | Occupancy & Equipment
Restructuring Cost and Reserve [Line Items]
Restructuring charges incurred		$ 15,000,000		$ 17,000,000

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EXIT COSTS AND RESTRUCTURING RESERVES - Reserve Rollforward (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Restructuring Reserve [Roll Forward]
Beginning balance	$ 24	$ 35	$ 33	$ 44
Additions	0	25	0	28
Reversals	0	0	0	(2)
Utilization	(4)	(8)	(13)	(18)
Ending balance	20	52	20	52
Salaries & Employee Benefits | Salaries & Employee Benefits
Restructuring Reserve [Roll Forward]
Beginning balance	10	18	12	23
Additions	0	5	0	5
Reversals	0	0	0	(2)
Utilization	(2)	(2)	(4)	(5)
Ending balance	8	21	8	21
Occupancy & Equipment | Occupancy & Equipment
Restructuring Reserve [Roll Forward]
Beginning balance	14	17	16	18
Additions	0	15	0	17
Reversals	0	0	0	0
Utilization	(2)	(5)	(4)	(8)
Ending balance	12	27	12	27
Other | Other
Restructuring Reserve [Roll Forward]
Beginning balance	0	0	5	3
Additions	0	5	0	6
Reversals	0	0	0	0
Utilization	0	(1)	(5)	(5)
Ending balance	$ 0	$ 4	$ 0	$ 4

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RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Schedule of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance			$ 19,646	$ 19,268
Other-than-temporary impairment not recognized in earnings on securities	$ 4	$ 1	(21)	(18)
Net other comprehensive income			228	13
Ending balance	20,226	19,586	20,226	19,586
Total AOCI
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	(236)	(240)	(387)	(372)
Other comprehensive income before reclassifications	77	(115)	264	40
Other-than-temporary impairment not recognized in earnings on securities	4	1	(21)	(18)
Amounts reclassified from other comprehensive (loss) income	(4)	(5)	(15)	(9)
Net other comprehensive income	77	(119)	228	13
Ending balance	(159)	(359)	(159)	(359)
Net Unrealized Gains (Losses) on Derivatives
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	35	(6)	10	(69)
Other comprehensive income before reclassifications	13	(5)	46	60
Other-than-temporary impairment not recognized in earnings on securities	0	0	0	0
Amounts reclassified from other comprehensive (loss) income	(9)	(2)	(17)	(4)
Net other comprehensive income	4	(7)	29	56
Ending balance	39	(13)	39	(13)
Net Unrealized Gains (Losses) on Securities
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	96	141	(28)	74
Other comprehensive income before reclassifications	64	(110)	218	(20)
Other-than-temporary impairment not recognized in earnings on securities	4	1	(21)	(18)
Amounts reclassified from other comprehensive (loss) income	2	(5)	(3)	(9)
Net other comprehensive income	70	(114)	194	(47)
Ending balance	166	27	166	27
Defined Benefit Pension Plans
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	(367)	(375)	(369)	(377)
Other comprehensive income before reclassifications	0	0	0	0
Other-than-temporary impairment not recognized in earnings on securities	0	0	0	0
Amounts reclassified from other comprehensive (loss) income	3	2	5	4
Net other comprehensive income	3	2	5	4
Ending balance	$ (364)	$ (373)	$ (364)	$ (373)

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RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Reclassifications out of Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Interest income		$ 141	$ 155	$ 286	$ 314
Interest expense		(123)	(112)	(238)	(218)
Net securities impairment losses recognized in earnings		(7)	(2)	(8)	(3)
Salaries and employee benefits		(432)	(411)	(857)	(830)
Income before income tax expense		361	282	693	597
Income tax expense		118	92	227	198
Net income		243	190	466	399
Amount Reclassified from AOCI
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income tax expense		2	1	9	4
Net income		4	5	15	9
Reclassification adjustment for net derivative gains (losses) included in net income: | Amount Reclassified from AOCI
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Interest income	[1]	21	17	43	35
Interest expense	[1]	(8)	(14)	(16)	(29)
Income before income tax expense		13	3	27	6
Income tax expense		4	1	10	2
Net income		9	2	17	4
Reclassification of net securities gains (losses) to net income: | Amount Reclassified from AOCI
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Securities gains, net		4	9	13	17
Net securities impairment losses recognized in earnings		(7)	(2)	(8)	(3)
Income before income tax expense		(3)	7	5	14
Income tax expense		(1)	2	2	5
Net income		(2)	5	3	9
Reclassification of changes related to defined benefit pension plans: | Amount Reclassified from AOCI
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Salaries and employee benefits		(4)	(4)	(8)	(7)
Income before income tax expense		(4)	(4)	(8)	(7)
Income tax expense		(1)	(2)	(3)	(3)
Net income		$ (3)	$ (2)	$ (5)	$ (4)

[1] This amount includes both (a) the amortization of effective gains and losses associated with the Company’s terminated cash flow hedges and (b) the current reporting period’s interest settlements realized on the Company’s active cash flow hedges. Both (a) and (b) were previously included on the accumulated other comprehensive loss line item on the Consolidated Balance Sheets and were subsequently recorded as adjustments to the interest expense of the underlying hedged item.

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RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Effects to Net Income of Amounts Reclassified Out of OCI (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net interest income	$ 923	$ 840	$ 1,827	$ 1,676
Provision for credit losses	90	77	181	135
Noninterest income	355	360	685	707
Noninterest expense	827	841	1,638	1,651
Income before income tax expense	361	282	693	597
Income tax expense	118	92	227	198
Net income	243	190	466	399
Amount Reclassified from AOCI
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net interest income	13	3	27	6
Noninterest income	(3)	7	5	14
Noninterest expense	4	4	8	7
Income tax expense	2	1	9	4
Net income	$ 4	$ 5	$ 15	$ 9

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BUSINESS SEGMENTS - Narrative (Details) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) segment	Jun. 30, 2015 USD ($)
Segment Reporting Information [Line Items]
Number of segments | segment			2
Revenues	$ 1,278	$ 1,200	$ 2,512	$ 2,383
Consumer Banking
Segment Reporting Information [Line Items]
Revenues	821	774	1,610	1,526
Consumer Banking | Maximum
Segment Reporting Information [Line Items]
Revenues			25
Commercial Banking
Segment Reporting Information [Line Items]
Revenues	$ 436	$ 394	835	$ 770
Commercial Banking | Minimum
Segment Reporting Information [Line Items]
Revenues			25
Commercial Banking | Maximum
Segment Reporting Information [Line Items]
Revenues			$ 2,500

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BUSINESS SEGMENTS (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Segment Reporting Information [Line Items]
Net interest income	$ 923	$ 840	$ 1,827	$ 1,676
Noninterest income	355	360	685	707
Total revenue	1,278	1,200	2,512	2,383
Noninterest expense	827	841	1,638	1,651
Profit before provision for credit losses	451	359	874	732
Provision for credit losses	90	77	181	135
Income before income tax expense	361	282	693	597
Income tax expense	118	92	227	198
NET INCOME	243	190	466	399
Total average assets	142,179	135,521	140,479	134,429
Consumer Banking
Segment Reporting Information [Line Items]
Net interest income	602	544	1,183	1,077
Noninterest income	219	230	427	449
Total revenue	821	774	1,610	1,526
Noninterest expense	632	613	1,248	1,209
Profit before provision for credit losses	189	161	362	317
Provision for credit losses	49	60	112	123
Income before income tax expense	140	101	250	194
Income tax expense	50	35	89	67
NET INCOME	90	66	161	127
Total average assets	55,660	52,489	55,388	52,048
Commercial Banking
Segment Reporting Information [Line Items]
Net interest income	314	286	614	562
Noninterest income	122	108	221	208
Total revenue	436	394	835	770
Noninterest expense	186	181	373	354
Profit before provision for credit losses	250	213	462	416
Provision for credit losses	(1)	7	8	(14)
Income before income tax expense	251	206	454	430
Income tax expense	87	71	157	148
NET INCOME	164	135	297	282
Total average assets	47,388	42,617	46,346	42,114
Other
Segment Reporting Information [Line Items]
Net interest income	7	10	30	37
Noninterest income	14	22	37	50
Total revenue	21	32	67	87
Noninterest expense	9	47	17	88
Profit before provision for credit losses	12	(15)	50	(1)
Provision for credit losses	42	10	61	26
Income before income tax expense	(30)	(25)	(11)	(27)
Income tax expense	(19)	(14)	(19)	(17)
NET INCOME	(11)	(11)	8	(10)
Total average assets	$ 39,131	$ 40,415	$ 38,745	$ 40,267

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Numerator (basic and diluted):
Net income	$ 243	$ 190	$ 466	$ 399
Less: Preferred stock dividends	0	0	7	0
Net income available to common stockholders	$ 243	$ 190	$ 459	$ 399
Denominator:
Weighted-average common shares outstanding - basic (in Shares)	528,968,330	537,729,248	528,519,489	541,986,653
Dilutive common shares: share-based awards (in Shares)	1,396,873	2,180,118	1,877,382	2,817,615
Weighted-average common shares outstanding - diluted (in Shares)	530,365,203	539,909,366	530,396,871	544,804,268
Earnings per common share:
Basic (in Dollars per Share)	$ 0.46	$ 0.35	$ 0.87	$ 0.74
Diluted (in Dollars per Share)	$ 0.46	$ 0.35	$ 0.87	$ 0.73

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OTHER OPERATING EXPENSE (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Other Income and Expenses [Abstract]
Deposit insurance	$ 29	$ 26	$ 55	$ 60
Promotional expense	25	29	49	51
Other	74	84	139	161
Other operating expense	$ 128	$ 139	$ 243	$ 272

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SUBSEQUENT EVENTS (Details) - USD ($)						6 Months Ended
	Jul. 28, 2016	Jul. 20, 2016	Jul. 19, 2016	Mar. 07, 2016	Dec. 03, 2015	Jun. 30, 2016		Jun. 30, 2015	Dec. 31, 2015
Subsequent Event [Line Items]
Loans held for sale						$ 850,000,000			$ 365,000,000
Repurchase of long-term borrowed funds						$ 3,631,000,000		$ 6,000,000
RBSG
Subsequent Event [Line Items]
Repurchase of long-term borrowed funds				$ 125,000,000	$ 750,000,000
Subordinated Debt | 4.082% fixed rate subordinated debt, due 2025 | RBSG
Subsequent Event [Line Items]
Interest rate						4.082%	[1]		4.082%
Subordinated Debt | 4.023% fixed rate subordinated debt, due 2024 | RBSG
Subsequent Event [Line Items]
Interest rate						4.023%	[1],[2]		4.023%
Subsequent Event
Subsequent Event [Line Items]
Gain (loss) on sales of loans, net			$ 70,000,000
Loans held for sale			$ 310,000,000
Dividends declared (in Dollars per Share)		$ 0.12
Dividends to common stockholders		$ 63,000,000
Subsequent Event | RBSG
Subsequent Event [Line Items]
Repurchase of long-term borrowed funds	$ 500,000,000
Subsequent Event | Subordinated Debt | 2.375% fixed rate subordinated debt, due 2021
Subsequent Event [Line Items]
Principal balance	$ 350,000,000
Interest rate	2.375%
Subsequent Event | Subordinated Debt | 4.082% fixed rate subordinated debt, due 2025 | RBSG
Subsequent Event [Line Items]
Interest rate	4.082%
Repurchase of long-term borrowed funds	$ 334,000,000
Subsequent Event | Subordinated Debt | 4.023% fixed rate subordinated debt, due 2024 | RBSG
Subsequent Event [Line Items]
Interest rate	4.023%
Repurchase of long-term borrowed funds	$ 166,000,000

[1] On July 28, 2016, the Company repurchased $500 million of its subordinated notes held by RBS, including $166 million of its 4.023% subordinated notes due 2024 and $334 million of its 4.082% subordinated notes due 2025. Refer to Note 21 “Subsequent Events” for further information.

[2] On March 7, 2016, the Company repurchased $125 million of these securities from RBS.