Citizens Financial Group issues $750 million in senior notes

Citizens Financial Group Inc . (NYSE:CFG), a financial institution with a market capitalization of $19 billion and a solid track record of 12 consecutive years of dividend payments, has successfully completed the sale of $750 million in senior notes, according to a recent SEC filing. According to InvestingPro analysis, the company currently appears undervalued based on its Fair Value assessment. The 5.253% fixed/floating rate notes, due in 2031, were issued on March 5, 2025, under the terms outlined in an Underwriting Agreement with several leading financial institutions.

The notes will accrue interest at a fixed annual rate of 5.253% until March 5, 2030. Subsequently, the rate will adjust to a floating rate based on the Secured Overnight Financing Rate (SOFR) plus 1.259%, until the maturity date of March 5, 2031.

Citizens Financial Group entered into an agreement on February 24, 2025, with underwriters including Citigroup (NYSE:C) Global Markets Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Morgan Stanley (NYSE:MS) & Co. LLC, and Citizens JMP Securities, LLC. The offering was made under a Prospectus Supplement filed on February 24, 2025, and a Registration Statement dated October 4, 2024.

The company has indicated that the net proceeds from the offering will be used for general corporate purposes. These may encompass a variety of activities such as securities repurchase programs, dividend payments (currently yielding 3.85%), capital expenditures, working capital, repayment or reduction of debt, investing in subsidiaries, and financing acquisitions. With a debt-to-equity ratio of 0.66 and total debt of $14.6 billion, this offering aligns with the company’s capital management strategy. However, specific allocations for these funds have not been detailed.For deeper insights into Citizens Financial Group’s financial health and growth prospects, InvestingPro subscribers can access comprehensive analysis, including additional ProTips and detailed financial metrics in the Pro Research Report.

The issuance of these notes was made under an Indenture agreement with The Bank of New York Mellon (NYSE:BK), who will serve as the Trustee. This agreement includes a Base Indenture dated October 28, 2015, and a Tenth Supplemental Indenture dated March 5, 2025.

The financial instruments involved in this transaction are listed on the New York Stock Exchange under the symbols CFG for common stock, CFG PrE for Depositary Shares representing an interest in Series E Preferred Stock, and CFG PrH for Depositary Shares representing an interest in Series H Preferred Stock.

This news is based on information contained in a press release statement filed with the SEC. Trading at a price-to-book ratio of 0.86, Citizens Financial Group presents interesting value metrics for investors. Unlock the full potential of your investment research with InvestingPro, offering exclusive access to advanced financial analysis, Fair Value calculations, and expert insights across 1,400+ US stocks.

In other recent news, Citizens Financial Group reported its fourth-quarter 2024 earnings, surpassing expectations with an earnings per share (EPS) of $0.85 compared to the forecasted $0.82. Revenue also exceeded projections, reaching $1.98 billion against the expected $1.96 billion. Despite these positive results, Truist Securities raised its price target for Citizens Financial from $49.00 to $54.00, maintaining a Hold rating, while Keefe, Bruyette & Woods increased their price target from $53.00 to $56.00, keeping a Market Perform rating. Analysts from both firms have adjusted their future earnings estimates, citing factors such as improved net interest margins and anticipated increases in fee income.

Additionally, Citizens Financial announced the upcoming retirement of Vice Chair and Chief Experience Officer Beth Johnson in March, after an 11-year tenure. Her responsibilities will be redistributed among other senior leaders to ensure a smooth transition. The bank’s management has also expressed optimism about future net interest margin improvements, projecting it to reach around 3% by the fourth quarter of 2025. These developments reflect a mixed but generally positive outlook for the financial institution, as it continues to navigate various market conditions and strategic initiatives.

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