PROVIDENCE – Citizens Financial Group Inc. on Monday reported a $648 million profit for the second quarter of 2021, increasing its earnings over a year ago by more than 150%.
The increased profit comes as the parent company for Citizens Bank, like others in the region and country, releases more money from the loan loss reserves it had stockpiled during the pandemic in anticipation of bad loans. Where Citizens added $464 million to its credit loss provisions during the height of the pandemic a year ago, it let go of $213 million of that reserve fund in the most recent quarter.
Beyond Cash Donations: How New Forms of Giving Are Transforming Not-for-Profit Accounting
Evolving Funding Landscape for Not-for-Profits Not-for-profit organizations are being asked to do more with less,…
Learn More
The company also reported record results in income through capital markets and wealth management, driven by a number of investments and acquisitions that expanded its offerings.
Earnings per diluted share rose from 53 cents to $1.44, year over year.
Total revenue fell 12.6% year over year to $1.7 billion, reflecting declines in both interest and non-interest income. The 10% dip in interest income was partially offset by a 54% decline in interest-related expenses, creating net interest income of $1.1 billion, which was only down 3% over a year ago.
The net interest margin also declined by 16 basis points to 2.72%, reflecting the continued low-interest-rate environment, lower interest-earning asset yields and elevated cash balances from strong deposit flows, the company stated.
The $485 million in noninterest income, a rise of 18% over a year ago, included a $30 million increase in income from record capital markets fees thanks to higher loan syndication and strong merger and acquisition activity, the bank said. Trust and investment service fees also increased by $15 million to a record $60 million due to higher equity market levels and annuity sales. Mortgage banking fees fell $191 million thanks to lower gain-on-sale margins, though origination volume remained high.
Noninterest expenses ticked up 1% over a year ago to $991 million, including a 2% increase to salaries and employee benefits.
Quarter-end assets stood at $185.1 billion, a 3% increase driven by a spike in interest-bearing cash and due from banks and a bump in debt securities available for sale at fair value. The $122.6 billion loans and leases was down 2% year over year. Commercial loans fell by 7% to $59.1 billion, reflecting commercial clients repayments of pandemic-related balances and net payoffs, including loans through the Paycheck Protection Program, the company stated. However, the company saw gains in residential mortgages, automobile and education loans.
Total deposits stood at $150.6 billion, a 5% year-over-year increase which the company attributed to government stimulus and clients building liquidity.
“We continued to demonstrate the strength and diversity of our business model in the second quarter, as a drop in mortgage revenue was partially offset by record results in capital markets and wealth,” Chairman and CEO Bruce Van Saun said in a statement. “We saw modest loan growth during the quarter, and expect that to accelerate in the second half as the economy continues to grow and excess liquidity is redeployed. We are executing well on our strategic initiatives and have commenced work on a TOP 7 program, with details to be announced later this year.”
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
