Company: CFG-PE
Filing Date: 2025-02-13
Form Type: 10-K
Source: 0000759944-25-000013
Chunk: 1064

Company: CITIZENS FINANCIAL GROUP INC/RI
Filing Date: 2025-02-13
Form: 10-K
Item: Item 1
Chunk 1064
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 Reinvestment Act

The CRA requires CBNA’s primary federal bank regulatory agency, the OCC, to evaluate the bank’s record in meeting the credit needs of the communities it serves, including low- and moderate-income neighborhoods and individuals. Institutions are assigned one of four ratings: “Outstanding,” “Satisfactory,” “Needs to Improve,” or “Substantial Noncompliance.” A bank’s CRA record is considered by regulatory agencies in evaluating mergers, acquisitions and applications to open a branch or facility. In addition, the CRA record of a subsidiary bank of a FHC is considered if a FHC wishes to commence certain new financial activities or to acquire a company engaged in such activities, which requires a rating of at least “satisfactory.” CBNA received an “Outstanding” rating on its most recent CRA evaluation. 

In October 2023, the federal banking regulators issued a joint final rule that revises the agencies’ CRA regulations. The primary provisions of the final rule, along with the most significant changes from the existing CRA regulatory framework, are outlined below:

•a tiered evaluation framework is established based on a bank’s asset size, similar to the existing CRA regulatory framework;

•the geographic area in which banks may be evaluated for performance is expanded to include areas outside of where they have physical locations in order to capture the varied activities a bank conducts, such as online and mobile banking, and the communities in which it operates;

•bank retail lending and community development financing will be evaluated using a new metrics-based approach; and

•clarifies eligible CRA activities, such as affordable housing.

The final rule took effect on April 1, 2024, with most of its requirements effective January 1, 2026, and certain reporting requirements effective January 1, 2027. A court has issued a preliminary injunction enjoining the federal banking regulators from enforcing the revised regulations pending resolution of the lawsuit challenging the regulations. We will continue to monitor the outcome of this preliminary injunction.

Compensation

Our compensation practices are subject to oversight by the federal banking regulators. Guidance issued jointly by the federal banking regulators is designed to ensure that incentive compensation arrangements take into account risk and are consistent with safe and sound practices. The guidance sets forth the following three key principles with respect to incentive compensation arrangements: 

•the arrangements should provide employees with incentives that appropriately balance risk and financial results in a manner that does not encourage employees to expose their organizations to imprudent risk; 

•the arrangements should be compatible with effective controls and risk management; and