[Video] Takeaways from Mgmt Meetings; Clear Path Ahead to Achieve ROTCE Target

Research evidence excerpt

[Video] Takeaways from Mgmt Meetings; Clear Path Ahead to Achieve ROTCE Target

nwich, CT by YE26.

Credit remains stable, supported by a higher-quality loan mix and disciplined underwriting. Citizens

is maintaining a constructive credit outlook for 2026, supported by stable loss expectations and a

continued migration toward a lower-risk loan mix. Management expects credit metrics to remain

relatively stable through 2Q'26, with net charge-offs guided to be stable to modestly lower versus the

1Q26 level of 39bp and the allowance for credit losses remaining broadly steady at 1.52% as of 3/31.

Provisioning assumptions continue to incorporate a mild recessionary outlook, with recent forecast

updates reflecting modest downside risk tied to higher oil and energy prices. Portfolio trends remain

favorable across both consumer and commercial books. Consumer credit performance is stable, with

no meaningful deterioration in delinquency trends, as spending behavior remains disciplined despite

ongoing inflation pressures, particularly among lower-income cohorts. On the commercial side, asset

quality is strong, with approximately 82% of the C&I portfolio considered investment-grade equivalent,

and limited exposure to higher-risk categories, including granular leveraged lending at just 1.3% of total

loans. Corporate clients continue to demonstrate resilience, having navigated prior cycles of elevated

inflation and rates without material deterioration in credit quality. Commercial real estate remains

an area of focus, though risk appears well-contained. The general office portfolio is conservatively

reserved at 9.1% ACL coverage, with management estimating total lifetime losses of roughly 20%

when including realized charge-offs.