Citizens Financial Group's third-quarter earnings, released October 16, added another data point to a resilient U.S. lending season: average loans and leases reached $147.4 billion, compared with $146.1 billion in the preceding quarter. The Rhode Island-based bank also reported $636 million in net income and $1.41 in diluted earnings per share. The figures suggest borrowers were still using credit, but they do not by themselves settle how long that demand will last.

Lending grew, but the mix matters

Citizens' filing puts period-end loans and leases at $148.2 billion, up from $147.5 billion at June 30. Average balances grew about 1% quarter over quarter and roughly 5% from a year earlier. Citizens said growth was led by its private bank and retail businesses. That is a narrower claim than a broad acceleration across all types of U.S. borrowing. Its average deposits, at $183.7 billion, were nearly flat from the second quarter.

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The bank earned $1.675 billion in net interest income, up from $1.631 billion in the second quarter and $1.488 billion a year earlier. Net interest income is the spread-related revenue banks collect after interest paid on deposits and other funding. Citizens attributed the quarterly increase to a slightly wider net interest margin and more interest-earning assets. Yet its total deposit cost rose three basis points from the previous quarter to 1.66%, a reminder that lending growth can be offset if attracting or keeping funds becomes more expensive.

A wider regional-bank signal, with caveats

Reuters reported on October 16 that several regional lenders had posted loan growth alongside larger U.S. banks. PNC's own third-quarter release shows average loans of $372.2 billion, $9.0 billion above the second quarter, with average commercial loans rising $10.4 billion. PNC said new lending and greater use of existing credit commitments drove that quarterly commercial increase. But its year-over-year loan growth also benefited from its FirstBank acquisition, so the annual figure is not a clean measure of underlying demand.

PNC's release shows another reason to avoid reading the results as a simple all-clear. Its net interest income rose $99 million quarter over quarter to $4.2 billion, while higher funding costs partly offset the benefit of commercial loans and asset yields. Total nonperforming loans increased $167 million from June to $2.2 billion, even as the bank reported lower consumer delinquencies. At Citizens, net charge-offs were $137 million, or 37 basis points of average loans and leases, unchanged from the prior quarter. Neither report establishes a sector-wide credit trend on its own.

What borrowers and investors should watch

For businesses, the results indicate that credit was available and being drawn during the quarter. For depositors, they show why competition for balances still matters to bank economics. For investors and policymakers, the next question is whether loan use remains firm without a sharper rise in problem credits or funding expense. Subsequent quarters will also show whether the commercial activity described by PNC and the more mixed portfolio gains at Citizens can persist under changing borrowing rates. These are backward-looking quarterly results from different banks with different portfolios; they should not be treated as a forecast for the U.S. economy or a reason to trade bank stocks.

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