Citizens Financial Still Faces High Delinquencies Despite Pullback

Citizens One Auto Finance’s delinquencies rose by 15% in the first quarter compared to the same period the year prior while charge-offs grew by 8% in that same period, according to the company’s first-quarter earnings on Friday.

The bank held $60 million in non-performing auto assets during the quarter up from $52 million the comparable quarter. Meanwhile, net-charge offs rose to $28 million compared with $26 million the year prior.

Citizens did improve performance quarter over quarter, largely due to seasonality. Delinquencies declined 14% while net charge-offs fell 13% compared with the fourth quarter.

“Our commercial charge-offs were very low again this quarter, and retail net charge-offs were $3 million lower than the fourth quarter, primarily due to seasonality in auto and education,” John Woods, Citizens Financial Group chief financial officer, said on the earnings call.

The company originated $12.7 million worth of auto loans, a 6% decline year over year. This continues the company’s strategy of purposely decreasing its portfolio by 5% in 2017. Citizens expects another $2 billion to $3 billion runoff in the coming years to improve profitability, the company said during its 4Q17 earnings.

Additionally, average loans and lease balances increased by 3% year over year to $3.1 billion. including a $589 million increase in commercial loans and leases. Retail loan growth was partially offset by the planned reduction in auto lending, the report said.