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Citizens Financial says mortgage business provided offset to NIM pressure in Q3

Citizens Financial Group Inc. reported third-quarter net income available to common shareholders of $432 million, or 97 cents per share, compared with $436 million, or 91 cents per share, in the year-ago period.

The S&P Global Market Intelligence consensus GAAP EPS estimate for the quarter was 96 cents.

Net interest margin on a fully taxable-equivalent basis for the third quarter stood at 3.12%, representing a decrease from 3.21% in the previous quarter and a decline from 3.22% in the year-ago period. The Providence, R.I.-based company said the year-over-year decrease was due to higher funding costs tied to "modestly higher" short-term rates and growth, as well as higher securities premium amortization tied to "significantly lower" long-term rates, which were partially offset by higher interest-earning asset yields.

Despite pressure on net interest margin, Citizens Chairman and CEO Bruce Van Saun said the company's mortgage business "provided a good offset." Noninterest income increased on a year-over-year basis to $493 million from $416 million, with mortgage banking fees surging to $117 million from $49 million.

Net interest income for the quarter was $1.15 billion, flat from the year-ago period. Citizens hailed net interest income to be stable despite the yield-curve environment "given 3% growth in interest-earning assets."

Provision for credit losses totaled $101 million, an increase from $78 million in the year-ago period. Net charge-offs also increased year over year to $113 million from $86 million.

Total loans and leases at the end of the third quarter were $117.88 billion, compared with $116.84 billion in the previous quarter and $114.72 billion in the year-ago period.

Total deposits at the end of the third quarter were $124.71 billion, compared with $124.00 billion in the previous quarter and $117.08 billion in the year-ago period.