Truist Financial Corp (NYSE: TFC) stock lost over 2% on 26th July, 2021 (As of 13:23:35 UTC-4 · USD; Source: Google finance) after the company posted lower than expected results for the second quarter of FY 21. The company has delivered net income available to common shareholders of $1.6 billion, up 73%, compared to the second quarter last year. The results for the second quarter posted an annualized return on average assets (ROA) of 1.28%, an annualized return on average common shareholders’ equity (ROCE) of 10.1% and an annualized return on tangible common shareholders’ equity (ROTCE) of 18.9%. The company has earlier this month successfully completed the acquisition of Constellation Affiliated Partners through our CRC Group insurance subsidiary. The acquisition is CRC’s eighth in the last 18 months and more than doubles the specialty and programs business. The acquisition makes CRC one of the largest program managers in North America and continues to drive growth in the company’s largest fee income generating business.
Meanwhile, the loan growth remained challenging in the second quarter on the back of strong liquidity levels in the marketplace and among our clients. Supply chain disruptions and low levels of rates which are driving high levels of refinance activity. The average loans declined $6.1 billion compared to the first quarter driven by a $3.3 billion decline in commercial loans and a $2.2 billion decline in residential mortgages. Average C&I balances declined $2.4 billion due to a $1.3 billion impact from PPP forgiveness and $1.2 billion from lower dealer floor plan outstandings. The average deposits increased 3.4% compared to the first quarter mainly due to the continuing effects of recent government stimulus. The company has experienced strong deposit inflows while maximizing our value proposition to clients outside of rate paid as average total deposit costs declined 1 basis point sequentially to 4 basis points.
TFC in the second quarter of FY 21 has reported the adjusted earnings per share of $1.55, beating the analysts’ estimates for the adjusted earnings per share of $1.17, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue of $5.65 billion in the second quarter of FY 21, beating the analysts’ estimates for revenue by 3.08%. Net interest income declined $40 million mainly due to $32 million lower purchase accounting accretion. Net interest margin contracted 13 basis points. Core net interest margin contracted 9 basis points due to the continued build of excess liquidity, which was approximately $18 billion this quarter as well as the impact of persistent low rate environment.