Company: CFG-PE
Filing Date: 2025-05-01
Form Type: 10-Q
Source: 0000759944-25-000070
Chunk: 71

Company: CITIZENS FINANCIAL GROUP INC/RI
Filing Date: 2025-05-01
Form: 10-Q
Item: Part II, Item 8
Chunk 71
---
,488 Gain on sales(1)16 15 Contractually specified servicing, late and other ancillary fees(1)70 79 (1) Reported in mortgage banking fees in the Consolidated Statements of Operations.The unpaid principal balance of residential mortgage loans related to our MSRs was $95.2 billion and $95.6 billion at March 31, 2025 and December 31, 2024, respectively. The Company manages the risk associated with changes in the value of the MSRs with an active economic hedging strategy, which includes the purchase of freestanding derivatives.The following table summarizes changes in MSRs recorded using the fair value method:As of and for the Three Months Ended March 31,(dollars in millions)20252024Fair value as of beginning of the period$1,491 $1,552 Amounts capitalized27 18 Sales(1)(72)— Changes in unpaid principal balance during the period(2)(39)(46)Changes in fair value during the period(3)(10)40 Fair value at end of the period$1,397 $1,564 (1) For the three months ended March 31, 2025, represents the sale of the excess servicing yield on MSRs related to certain FNMA mortgages with a total unpaid principal balance of $10.5 billion.(2) Represents changes in value of the MSRs due to i) passage of time including the impact from both regularly scheduled loan principal payments and partial    paydowns, and ii) loans that paid off during the period. (3) Represents changes in value primarily driven by market conditions. These changes are recorded in mortgage banking fees in the Consolidated Statements of Operations.The fair value of MSRs is estimated by using 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 determined based on current market interest rates. The valuation does not attempt to forecast or predict the future direction of interest rates.

Citizens Financial Group, Inc. | 52

The sensitivity analysis below presents the impact of an immediate 10% and 20% adverse change in key economic assumptions to the current fair value of MSRs. These sensitivities are hypothetical, with the effect of a variation in a particular assumption on the fair value of the MSRs calculated independently without changing any other assumption. Changes in one factor