Subsid's Final Results
Royal Bank of Scotland Group PLC
28 February 2002
The Royal Bank of Scotland Group plc ('RBSG') is pleased to attach a copy of the
results of Citizens Financial Group, Inc., its U.S. banking subsidiary.
The financial information contained in the attached release has been prepared in
accordance with accounting principles generally accepted in the United States of
America ('U.S. GAAP'). Citizens' operating earnings before taxation,
amortization of goodwill and core deposit intangible and their one-time costs of
their acquisitions and other one-time costs for the year ended December 31, 2001
based on U.K. GAAP and U.S. GAAP were as follows:-
$ In Millions Year Ended December 31
2001 2000
U.K. GAAP $720 $535
U.S. GAAP $703 $561
28 February 2002
Contact: Fred Watt Group Finance Director 020 7427 8412
0131 523 2028
Grahame Whitehead Deputy Group Finance Director 020 7427 9450
0131 523 2970
Heather Campion Public Relations 001 617 725 5825
Citizens reports record growth and earnings
Cash operating earnings increase 27%
PROVIDENCE, RI -- Citizens Financial Group, Inc. ('Citizens') today reported
record cash operating earnings of $475 million for the year 2001, up 27% from
$375 million for 2000. This was the company's ninth consecutive year of record
cash operating earnings.
Cash operating earnings exclude the amortization of intangible assets related to
various acquisitions, including goodwill and core deposit intangibles, one-time
merger and other costs, gains from the sale of business lines and the cumulative
effect of accounting change. This reporting is consistent with Citizens' parent,
The Royal Bank of Scotland Group plc.
On December 1, 2001, Citizens completed the purchase of the retail, small
business and certain middle market commercial banking businesses of Mellon
Financial Corporation. This transaction included 345 bank branches in
Pennsylvania, New Jersey and Delaware and the assumption of $14.4 billion in
deposits. The effect of the Mellon transaction had minimal impact on 2001
earnings results.
At December 31, 2001, Citizens' total assets were $53.1 billion compared with
$30.9 billion at December 31, 2000. The Mellon transaction on December 1, 2001
added assets of $17.5 billion, with New England assets growing by $4.7 billion
during 2001.
Between the announcement of the Mellon acquisition on July 17, 2001 and the
closing on December 1, 2001, deposits grew 7%, or $1 billion, in the
Mid-Atlantic area.
Excluding the impact of Mellon, Citizens had strong organic loan and deposit
growth. Loans and leases, excluding consumer mortgages, increased 13%, or $2.2
billion. Deposits increased 12%, or $2.6 billion.
'2001 was an extremely exciting and productive year for Citizens,' said Lawrence
K. Fish, Chairman, President and CEO of Citizens Financial Group, Inc. 'The
Mellon transaction is proving already that Citizens' dedication to a strong
local focus on our customers, in our communities and with our employees is a
winning strategy in all markets,' Fish said.
Net interest income increased $139 million, or 13%, for 2001. This was due
primarily to strong organic loan and deposit growth.
Noninterest income increased $67 million, or 18%, for 2001. The growth in
noninterest income is being driven by strong growth in Citizens' major business
lines.
Noninterest operating expense, which excludes the impact of one-time merger and
other costs and the amortization of goodwill and core deposit intangible, was
$819 million for 2001, a $27 million increase over 2000.
Citizens also recorded pre-tax costs for amortization of goodwill and core
deposit intangible of $123 million for 2001 compared with $116 million for 2000.
Citizens recorded one-time merger and other costs in 2001 of $82 million, $53
million after tax, connected with the December 1, 2001 Mellon transaction. In
2000, one-time merger and other costs of $61 million, $39 million after tax,
included the acquisition of UST Corp. on January 11, 2000. Including the impact
of the one-time costs, one-time gains, amortization and cumulative effect of
accounting change, net income was $319 million for 2001 and $230 million for
2000.
Citizens Financial Group, Inc., is a $53.1 billion commercial bank holding
company headquartered in Providence, RI. It operates as Citizens Bank in
Connecticut, Delaware, Massachusetts, New Hampshire, New Jersey, Pennsylvania,
and Rhode Island. Citizens is wholly owned by The Royal Bank of Scotland Group
plc. Combined, Citizens has more than 710 branches, more than 1,495 ATMs and
more than 12,000 employees in seven states. For more information, please contact
our website, citizensbank.com.
CITIZENS FINANCIAL GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
YEAR ENDED DECEMBER 31
2001 2000
(In Millions)
Net interest income $1,171 $1,032
Provision for credit losses 96 59
-------- --------
Net interest income after provision 1,075 973
for credit losses -------- --------
Noninterest income 447 380
Noninterest expense 819 792
Operating
Amortization of goodwill and core deposit 123 116
intangible
-------- --------
Total noninterest expense 942 908
Earnings before income taxes 580 445
Income taxes 215 176
Net income-operating -------- --------
269
365
Cumulative effect of accounting change, net of tax 1 -
One-time gain from the sale of business line, net of tax 6 -
One-time merger and other costs, net of tax 53 39
-------- --------
Net income 319 230
Cash basis and one-time adjustment, net of tax 156 145
-------- --------
Cash basis-operating earnings $ 475 $ 375
===== =====
CITIZENS FINANCIAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
DECEMBER 31
2001 2000
(In Millions)
Assets
-------
Cash and due from banks $ 1,126 $ 930
Short-term investments 371 189
Securities 19,256 8,803
Loans and leases: 26,008 17,790
Less: Allowance for possible credit losses 425 296
----------- ---------
Net loans and leases 25,583 17,494
----------- ---------
Goodwill and core deposit intangible 4,205 1,988
Other assets 2,571 1,524
----------- -----------
Total assets $ 53,112 $ 30,928
======= =======
Liabilities and Stockholder's Equity
-----------------------------------------
Deposits $ 39,865 $ 22,541
Borrowed funds 6,909 4,938
Other liabilities 608 414
----------- -----------
Total liabilities 47,382 27,893
----------- -----------
Stockholder's equity 5,730 3,035
----------- -----------
Total liabilities and stockholder's equity $ 53,112 $ 30,928
======= =======
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