You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. 
Text: We're really pleased to have you join us.
Then we'll be happy to take questions.
Brendan Coughlin, Head of Consumer Banking; and Don McCree, Head of Commercial Banking, are here also to provide color.
We also use non-GAAP financial measures, so it's important to review our GAAP results on page 3 and use the information about these measures and their reconciliation to GAAP in the appendix.
And with that, I'll hand it over to Bruce.
The second quarter post unprecedented challenges given the impacts from the coronavirus and widespread disruption to people's lives and the economy.
Once again, I am pleased that Citizens is rising to the occasion and delivering well for all stakeholders.
We are taking great care of customers and colleagues while posting strong results that demonstrate the diversification and resilience of our business model.
We also announced further commitments to diversity and inclusion along with initiatives to promote racial equity and social justice.
Our financial performance in the second quarter featured tremendous revenue generation and strong profitability in our Mortgage business.
We made an important investment in acquiring Franklin American Mortgage Company in May 2018 in order to gain scale and diversify origination channels in the business.
In addition, we've made investments in talent, customer experience and in digitizing and streamlining the business, which has positioned us well to capture the market opportunities we've seen since the middle of last year.
These strong results have been a ballast to windward during the low rate environment and disruptions arising from the pandemic.
Overall, our fees were up 28% year-on-year and 19% sequential quarter.
With stable net interest income, total revenue was up 7% year-on-year and 6% sequential quarter.
We did a good job on expenses, which resulted in 5.9% positive operating leverage year-on-year, up 54.9% underlying efficiency ratio and PPNR growth of 15% year-on-year.
[Indecipherable] charge-offs as our credit cost in Q2 we had a record quarterly earnings of $1.14.
As expected, however we again built our credit reserves under CECL given the deterioration in the macroeconomic conditions since the close of the first quarter.
Our ACL to loans ratio is now 2.01% and that's 2.09% excluding PPP loans.
In addition, we are selling a long-duration student loan portfolio, which freed up additional reserves for reallocation.
We feel we had good coverage now with the credit risk in both the Consumer and Commercial portfolios, though uncertainty on the path of economic recovery remains.
The strong PPNR generation and reduction in commercial line draws during the quarter helped improve our CET1 ratio to 9.6%, which is up from 9.4% in the first quarter.
We had a very liquid balance sheet during the quarter with average deposit growth of 12% sequential quarter, 8% spot.
Our spot LDR at quarter-end was 87.5% or 84.5% excluding PPP loans.
So overall, we have a very strong capital, liquidity and funding position that allows us to use our balance sheet in support of our customers.
We continue to track low on all of our key strategic initiatives for 2020 and we've been working on refreshing our strategy to incorporate key trends and learnings from the crisis.
We aim to take advantage of some of the opportunities we see to come out of the crisis well-positioned for future growth.
Now, I hope you and your families are coping with the current challenges and remain healthy and safe.
Let's start with a brief overview of our headlines for the quarter.
As Bruce said, this is an outstanding quarter for Citizens against a difficult operating backdrop.
This allows us to head into the second half of the year with good momentum and excellent balance sheet strength.
The resilience of the franchises is on display as we generated $0.55 of earnings per share on an underlying basis.
This was driven by record revenues in fee income given record mortgage fees, which offset headwinds in several other fee categories.
Net interest income was stable linked quarter given strong loan growth which offset a 22 basis point decline in margin.
This was driven by lower rates and higher cash balances that we did well in cutting deposit costs in half.
We increased our allowance for credit losses to $2.5 billion, which translates to an ACL coverage ratio of 2.09% ex PPP, up from 1.73% last quarter.
We showed excellent balance sheet strength and in the quarter with a stronger CET1 ratio of 9.6%, up 20 basis points linked quarter.
Our liquidity ratio has also improved as we ended the quarter with an LDR of 84% excluding PPP loans and we remain in compliance with the LCR.
Also, our tangible book value per share is over $32 at quarter end, up 4% compared with a year ago.
Now, let me move to the highlights of our underlying results covered on pages 4 and 5.
Even in the midst of THE COVID-19 pandemic and another strong reserve build, our results highlight the resilience of our diversified business model.
Our earnings per share of $0.55 was down $0.41 year-over-year but up $0.46 linked quarter.
PPNR of $790 million was a record, up 15% year-over-year and 17% linked quarter.
And in addition to another exceptional performance in mortgage banking, we also saw strong underlying performance and IRP and improvement in capital markets results.
Average loan growth was 6% in the quarter, reflecting PPP lending and the impact of the commercial line draws we saw last quarter, which benefited NII and helped offset the impact of the more challenging rate environment.
If we adjust for the sales, PPP and line draws, average loans were up 1% linked quarter.
Moving to page 6, I'll cover net interest income, which are quite well despite a lower margin.
Net interest income was stable linked quarter as the benefit of 8% interest earning asset growth and improved funding costs was offset by the impact of lower rates.
Net interest margin decreased 22 basis points linked quarter as the impact of lower rates and higher cash balances was partially offset by lower deposit costs and outsized growth in DDA and other lower cost deposits.
About 6 basis points of the margin decline related to higher cash balances in the quarter given strong deposit flows as consumers and small businesses benefited from government stimulus and corporate clients built liquidity.
We were especially pleased with our progress on deposit cost, which we drove down 37 basis points during the quarter, a more than 50% decline.
Our total interest-bearing deposit cost was 48 basis points at the end of the quarter.
That compares to 34 basis points back in 3Q 2015 at the end of the last [Indecipherable] period.
So clearly we have a near-term opportunity to continue to reduce these costs.
Moving to page 7, I'll discuss fees, which really shows the benefit from the work we've done to build capabilities and diversify our business.
Noninterest income was a record, up 19% on a linked quarter basis and 28% year-over-year.
Record results in mortgage banking were partially offset by continued headwinds related to COVID-19 and other fee categories.
On a sequential basis mortgage banking fees increased by 74% to $276 million reflecting continued strong refi lock volumes and record high gain on sale margins in particular.
Capital market fees of $61 million, increased $18 million from first quarter reflecting strong DCM activity and a $13 million mark-to-market recovery on loan trading assets.
Foreign exchange and interest rate product revenues increased 5% linked quarter before the impact of CVA.
Interest rate product sales led the way as clients repositioned for a lower rate environment.
CVA improvement was $8 million in the quarter.
Trust and investment services fees were lower by $8 million linked quarter given the rate environment and the effect of the equity market decline on managed money revenue.
The service charges and card fee categories were down significantly compared to first quarter reflecting the full quarter impact of the shutdown and impacts from stimulus money to customers.
On a positive note, we see debit card activity roughly back to pre-pandemic level and credit card activity in June only down about 10% compared with last year, a significant improvement from the over 30% declines we saw in early April.
Turning to page 8, underlying non-interest expense declined 2% linked quarter largely driven by seasonal impacts in Q1 on salaries and employee benefits.
Salaries and employee benefits declined $30 million or 6% linked quarter largely reflecting seasonally lower payroll taxes.
Equipment and software expense and outside services were higher linked quarter and reflect increased technology spend and investments in growth initiatives.
Next, let's discuss loan trends on page 9.
Average core loans were up 7% linked quarter primarily driven by the full quarter impact of the commercial line draws at the end of the first quarter and the $4.7 billion of PPP lending to our small business customers.
Before the impact of loan sales, line draws and PPP loans, core commercial loan growth was up approximately 1% linked quarter.
The $7.2 billion of post-COVID commercial line draws in March have been substantially repaid, and were down to $1.8 billion by the end of the second quarter.
Overall utilization is down to approximately 40% from 50% at the end of the first quarter.
Core retail loans on a linked quarter basis were stable with growth in education and other retail offset by lower home equity balances and the transfer of approximately $900 million of education loans held for sale.
We are building an originate-to-distribute model for our consumer assets, which will generate fee revenue and increase our balance sheet flexibility over time.
Moving to page 10, deposit growth was exceptionally strong in the quarter.
We saw robust average deposit growth of 12% linked quarter and 15 % year-over-year, outpacing loan growth and driving our average LDR down to 89% excluding PPP as consumers and small businesses benefited from government stimulus and clients built liquidity.
These strong deposit flows came in lower cost categories with average DDA growth up 25% on a linked quarter basis and 33% year-over-year.
We continue to aggressively execute our deposit playbook to manage down our deposit costs across all channels.
We were able to cut our interest-bearing deposit costs by roughly half this quarter, down 46 basis points to 48 basis points, and down 82 basis points year-over-year.
Let's move to page 11 and cover credit.
We continue to assess the impact of the COVID-19 pandemic and are closely monitoring the portfolio for areas of potential risk.
That said, portfolio performance is progressing largely in line with our expectations but with a somewhat more adverse macro backdrop than we saw at the end of the first quarter.
Net charge-offs were stable at 46 basis points linked quarter as increases in commercial were partially offset by improvement in retail reflecting the impact of forbearance.
Non-performing loans increased 27% linked quarter driven by $192 million increase in commercial, reflecting COVID lockdown impacts and an $18 million increase in retail.
The non-performing loan ratio of 79 basis point increased 18 basis point linked quarter and 17 basis points year-over-year.
However, in spite of this increase the non-accrual coverage ratio remained strong at 255% at June 30.
We increased our CECL credit reserve coverage ratio from 1.73% in 1Q to 2.09% in 2Q excluding the PPP loans.
This 46 basis points increase was primarily driven by a net reserve build of $317 million.
In addition, approximately $100 million of reserves associated with a planned sale of student loans were reallocated to the remaining loan portfolio.
In effect the reserve build was $417 million or 99% of the Q1 build.
On page 12, we provide detail on customer forbearance and the PPP lending program.
We continue to work directly with our customers to assist them through these challenging times and have seen encouraging trends.
The average FICO score of our retail forbearance customers remains high at 725.
And approximately 93% of these loans were current when they entered forbearance.
We also continue to work proactively with our commercial clients, [Indecipherable] needed in the form of covenant modifications will offer PPP applications as well as granting selected temporary release on principal and interest payments.
I'm also pleased to say that through June 30, our customers received $4.7 billion in PPP loans, which has allowed us to help support over 540,000 jobs.
84% of loans made were below $100,000.
Moving to page 13 to discuss our CECL methodology and reserves; we have summarized the key aspects of our macroeconomic scenario, which is a foundational element of the CECL reserve estimate.
At quarter end, we elected to use the May 13th Moody's Baseline as our base scenario.
Similar to last quarter, given the uncertainty of the continued economic outlook, we also considered other Moody's and internal scenarios.
In general, our aggregate economic scenario is more severe than that used in 1Q.
It assumes the steep drop in GDP in 2Q, is followed by a gradual recovery in the second half of the year and into 2021.
If this scenario plays out, provision requirements over the second half of 2020 should be more reflective of net loan growth and incorporate a smaller build.
However, if the pandemic impacts are deeper or it takes longer for the economy to recover, or government programs are less effective than we expect, then we could require further additions to reserve levels.
On page 14, as I mentioned earlier, we feel well positioned to manage through the current environment with strong capital and liquidity positions.
Our CET1 ratio improved to 9.6%, up 20 basis points linked quarter given our strong results and a reduction in risk-weighted assets.
Additionally, during the quarter, we issued 400 million of Q1 qualifying preferred stocks, which in combination with the increase in CET1 drove a 40 basis point increase in Tier 1 capital.
Strong deposit growth outpaced loan growth, which improved our liquidity metrics and drove the spot LDR excluding PPP loans down to 84%.
Turning to page 15, let's look at reserves and capital versus stress losses.
Our ACL of $2.5 billion represents a very strong 52%% of our modeled losses using the Fed scenario and is now 38% of the stress losses in the Fed's 2020 DFAST. In addition, when adding excess capital above our preliminary SCB of $3.4 billion to our ACL, the resulting $5.9 billion is 120% of our estimate and 88% of the Fed loss estimates.
These levels are further fortified by the additional coverage from the PPNR we regenerate.
On average, we've generated approximately 35 basis points of CET1 capacity per quarter over the last six quarters.
On page 16, we show a summary of the Fed's stress test results.
The Fed estimated our PPNR at 2.3% of average assets, which is well below the peer median of 3.3%.
We believe this ignores the steady and significant progress we have made to improve our PPNR since the IPO.
For example, our PPNR to assets for 2019 has improved by approximately 37% since the IPO to 3.7%.
Importantly, this compares to a stable 3.7% in actual PPNR to assets during the first six months realized stress in 2020.
The Fed's estimate of our credit losses at 5.6% was right on top of the peer median and down from 6.1% in 2018.
However, our estimated company run severely adverse credit loss rate of 4.2% is significantly lower.
We believe that the Fed's modeled results and the 3.4% preliminary SCB is elevated above what our business model would imply.
As such and as we indicated in our CCAR release in June, we have submitted a request to the Fed to reconsider our preliminary SCB.
On page 17, I want to highlight some exciting things that are happening across the company.
While we are first and foremost focused on helping our clients, we're looking forward and continue to work toward building a better company.
We continue to execute on the transformational TOP program and are making steady progress toward our target.
Planning is under way to add significant new transformation initiatives, including the end-to-end digitization of customer interactions and operations, as well as other initiatives to adapt to the post-COVID-19 environment.
We are also moving forward with our major strategic revenue initiatives while considering new opportunities arising from the current environment in an effort to drive higher revenue growth coming out of the crisis.
Moving to page 18, we provide some commentary on how key categories are shaping up for full year 2020 compared to the prior year.
We expect net interest income to be broadly stable as loan growth is offset by a meaningful decrease in NIM due to lower rates.
Non-interest income is expected to be meaningfully driven by the exceptionally strong results in mortgage, which more than offset the weakness in other key categories related to COVID-19.
We expect several key fee categories to benefit from a return to more normal activity levels in the second half, which will help cushion in moderation in mortgage.
Non-interest expense is expected to be up modestly particularly given higher compensation tied to stronger mortgage production and impacts from COVID-19, which includes government lending programs and customer relief efforts.
Provision expense has the greatest potential for variability and remains dependent on the path of the recovery.
We expect solid loan growth driven by the impact of higher line draws in commercial during the first half and government programs like PPP as well as increased demand in education and merchant financing.
Our capital position remains robust with our regulatory capital ratios expected to improve further over the remainder of the year driven by net income growth, a moderation in RWA growth during the second half, and the suspension of our buybacks through year-end.
Looking forward, we expect to remain well-capitalized and feel confident we can continue to maintain the dividend at the current model.
Now, let's move to page 19 for some high-level commentary on the third quarter.
We expect NII to be up modestly reflecting PPP benefit on NIM.
Excluding PPP loans, loan growth is projected to be down modestly due to the full quarter impact of a decline in commercial loan line utilization in the second quarter.
Ex-PPP, the NIM is expected to be broadly stable with the benefit of lower deposit costs being offset by ongoing rate headwinds.
Fee income is expected to be down in the mid- to high-single-digit range, reflecting lower mortgage banking fees from record levels, partially offset by recovery in other fee categories.
Non-interest expense is expected to be up in the low-single-digit range, reflecting higher origination-related cost levels in the mortgage business.
We currently expect a small reserve build, but provision expense will be highly dependent on an updated view of the economic recovery and portfolio performance.
Finally, we expect average loans to be down in the low-single digits given the paydown in commercial line draws during the second quarter.
Excluding the impact of line draws, PPP and loan sales, we expect loan growth to be broadly stable.
To sum up, our profitability, capital, and liquidity position remain strong and we are delivering well on our key initiatives for stakeholders.
Operator, let's open it up for Q&A.

user
cecl-related reserve build of $317 million, or $0.59 per share, tied to covid-19 impacts.
second quarter 2020 include revenue of $1.7 billion, up 7%.

assistant