Citizens Financial (NYSE:CFG) posted fourth quarter and year-end numbers on Friday, and the results reflect a stock that was a solid performer for investors last year. Earnings per share increased 2% in the fourth quarter, rising to $0.98 from $0.96 in the fourth quarter of 2018 and beating analysts' estimates. For the full year, the EPS climbed 29 basis points or 8% to $3.81. That's positive news for a stock that returned 36.6% to investors in 2019. The question is: Can investors bank on Citizens Financial continue to deliver in 2020?

Bank building amid taller buildings

Image source: Getty Images.

Citizens by the numbers

Citizens Financial, based in Providence, R.I., is the 18th largest bank in the country with about $164 billion in total assets under management. In the fourth quarter, revenue climbed 3% year over year to $1.6 billion while net income declined 3% to $450 million. Non-interest income was up 16% due to gains in mortgage banking and capital markets segments, while interest income was down 2% related to the lower interest rate environment. Net interest margin fell 19 basis points to 3.1% -- also related to declining interest rates.

The company's loan-to-deposit ratio, a good measure of a bank's liquidity, decreased from 97.6% to 95% compared to the fourth quarter of 2018. A lower ratio is better as it means the company has a higher percentage of deposits to cover loans, which was the case with Citizens as deposit growth outpaced loan growth in the fourth quarter. Deposits increased about $7.9 billion, or 7%, primarily due to growth in money market accounts, savings, term deposits, and checking accounts. Loans grew 4% year over year. The efficiency ratio, which measures how efficiently a company uses assets to generate income, held steady at 60.3% year over year.

Dividend climbs 22%

For the full year, earnings per share climbed 8% to $3.81 while net income increased 2% to $1.79 billion. Overall revenue rose 6% to $363 million for the year, while net interest income grew 2% and non-interest income jumped 18% in growth. The efficiency ratio held at about 59% for the full year, while the average loan-to-deposit ratio improved to 95.6% from 97.9%.

Citizens is also a great dividend stock. It boosted its quarterly dividend to $0.39 per share from $0.36 in the previous quarter. The company has increased its dividend by 22% since last January and 77% over the past two years. The dividend has not declined since the company went public in 2015. It currently has a dividend yield of 3.6% and a payout ratio of 37.8%, which is very sustainable.

"We are pleased with the progress we made this year in building out our capabilities, enhancing customer advice and experience, and positioning our technology eco-system for the future. Success in 2020 will require further disciplined execution, but the building blocks are in place with our TOP 6 program and related strategic initiatives," Citizens Chairman and CEO Bruce Van Saun said in the earnings release.

The outlook for 2020

The banking sector should be pretty stable in 2020, with a favorable regulatory environment and interest rates expected to hold where they are. A stock like Citizens, which is very focused on growing its balance sheet and managing expenses, should continue to be a strong performer. It's a cheap stock with a P/E ratio of 10.42 and solid earnings expectations, and long-term investors could do a lot worse.