Grew loans; controlled expenses; maintained strong credit
quality
Raised quarterly common stock dividend 20% to $1.50 per share on April
1, 2022
PITTSBURGH, April 14,
2022 /PRNewswire/ -- The PNC Financial Services
Group, Inc. (NYSE: PNC) today reported:
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For the
quarter
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In millions, except per
share data and as noted
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1Q22
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4Q21
|
1Q21
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First Quarter
Highlights
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▪
Diluted EPS as adjusted was $3.29,
excluding $31 million of pre-tax integration costs related to BBVA
USA
▪
Revenue decreased 8% linked quarter,
primarily driven by lower noninterest income reflecting lower
capital markets related revenue and lower business
activity
▪
Expenses decreased 16% linked quarter,
and 7% excluding integration expenses, reflecting lower personnel
costs
▪
Provision recapture of $208
million
▪
Average loans increased 1% linked quarter
driven by commercial loan growth, partially offset by $2.2 billion
of PPP loan forgiveness
▪
Average deposits increased
modestly
▪
Book value and tangible book value
decreased 12% and 15%, respectively, linked quarter due to a
decrease in accumulated other comprehensive income
▪
Net loan charge-offs were $137 million or
0.19% of annualized average loans
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Financial
Results
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Revenue
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$
4,692
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$
5,127
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$
4,220
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Noninterest
expense
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3,172
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3,791
|
2,574
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Pretax, pre-provision
earnings (non-GAAP)
|
1,520
|
1,336
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1,646
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Integration
costs
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31
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438
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6
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Pretax, pre-provision
earnings excluding integration costs (non-GAAP)
|
1,551
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1,774
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1,652
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Provision for
(recapture of) credit losses
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(208)
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(327)
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(551)
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Net income
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1,429
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1,306
|
1,826
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Per Common
Share
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Diluted earnings - as
reported
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$ 3.23
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$ 2.86
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$ 4.10
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Impact from integration
costs (non-GAAP)
|
0.06
|
0.82
|
0.01
|
Diluted earnings - as
adjusted (non-GAAP)
|
3.29
|
3.68
|
4.11
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Average diluted common
shares outstanding
|
420
|
424
|
426
|
Book value
|
106.47
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120.61
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118.47
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Tangible book value
(non-GAAP)
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79.68
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94.11
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96.57
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Balance Sheet &
Credit Quality
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Average loans (in
billions)
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$
290.7
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$
288.9
|
$
238.1
|
Average deposits (in
billions)
|
453.3
|
452.8
|
365.4
|
Net loan
charge-offs
|
137
|
124
|
146
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Allowance for credit
losses to total loans
|
1.76%
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1.92%
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2.20%
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Selected
Ratios
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Return on average
common shareholders' equity
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11.64%
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9.61%
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14.31%
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Return on average
assets
|
1.05
|
0.93
|
1.58
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Net interest margin
(non-GAAP)
|
2.28
|
2.27
|
2.27
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Noninterest income to
total revenue
|
40
|
44
|
44
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Efficiency
|
68
|
74
|
61
|
Efficiency excluding
integration costs (non-GAAP)
|
67
|
66
|
61
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Common Equity Tier 1
capital ratio
|
9.9
|
10.3
|
12.6
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Diluted earnings as
adjusted is a non-GAAP measure calculated by excluding post-tax
integration costs for BBVA USA. See this and other non-GAAP
financial measures in the consolidated financial highlights
accompanying this release.
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From Bill Demchak,
PNC Chairman, President and Chief Executive Officer:
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"In
the first quarter, PNC grew loans, deployed liquidity through
securities purchases, controlled expenses and maintained strong
credit quality. In addition to normal seasonality, fee income was
adversely impacted by a general slowdown in capital markets
activity; nevertheless, our financial results were solid. Based on
this performance, our strong capital levels and the board's
confidence in PNC's execution of its strategic priorities, we
increased the quarterly common stock dividend by 20% in
April."
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Income Statement
Highlights
First quarter 2022 compared with fourth quarter 2021
- Net income of $1.4 billion
increased $123 million, or 9%, driven
by lower integration costs and well-controlled expenses.
- Total revenue of $4.7 billion
decreased $435 million, or 8%,
primarily due to lower noninterest income.
- Net interest income of $2.8
billion decreased $58 million
as increased average securities balances, loans outstanding and
securities yields were more than offset by a decline in Paycheck
Protection Program (PPP) loan interest income and two fewer days in
the first quarter.
-
- Net interest margin of 2.28% increased 1 basis point.
- Noninterest income of $1.9
billion, which included $16
million of integration costs, decreased $377 million, or 17%.
-
- Fee income of $1.7 billion
decreased $296 million, or 15%,
largely due to a decline in capital markets related revenue and
seasonally lower business activity.
- Other noninterest income of $211
million decreased $81 million,
or 28%, primarily reflecting lower private equity revenue.
- Noninterest expense of $3.2
billion decreased $619
million, or 16%. Excluding the impact of integration
expenses, noninterest expense decreased 7% primarily driven by
lower personnel costs.
- The first quarter included a provision recapture of
$208 million, primarily reflecting
the impact of improved COVID-19 related economic conditions. The
fourth quarter included a provision recapture of $327 million.
- The effective tax rate was 17.3% for the first quarter and
21.5% for the fourth quarter.
Balance Sheet Highlights
First quarter 2022 compared with fourth quarter 2021 or
March 31, 2022 compared with December 31, 2021
- Average loans of $290.7 billion
increased $1.8 billion, or 1%.
-
- Average commercial loans increased $1.8
billion as growth in PNC corporate banking and business
credit businesses of $5.7 billion was
partially offset by PPP loan forgiveness of $2.2 billion and a decline in PNC's real estate
business of $1.6 billion.
- Average consumer loans of $95.1
billion were stable.
- Credit quality performance:
-
- Delinquencies of $1.7 billion
decreased $286 million, or 14%,
primarily due to progress resolving BBVA USA conversion-related administrative and
operational delays.
- Total nonperforming loans of $2.3
billion decreased $182
million, or 7%.
- Net loan charge-offs of $137
million increased $13
million.
- The allowance for credit losses to total loans was 1.76% at
March 31, 2022 compared with 1.92% at
December 31, 2021.
- Average deposits of $453.3
billion increased $0.5
billion, driven by growth in consumer deposits, partially
offset by commercial deposit outflows.
-
- Deposits at March 31, 2022 of
$450.2 billion decreased $7.1 billion as a result of lower commercial
deposits, primarily due to seasonal declines.
- Average investment securities of $133.9
billion grew $6.0 billion, or
5%.
-
- Investment securities at March 31,
2022 of $132.4 billion
decreased $0.6 billion, as net
purchases during the quarter were more than offset by net
unrealized losses on available for sale securities, reflecting the
impact of higher interest rates.
- Average Federal Reserve Bank balances of $62.3 billion decreased $12.8 billion, reflecting the impact of
securities purchases, lower borrowed funds and higher loans
outstanding.
- PNC maintained strong capital and liquidity positions.
-
- On April 1, 2022, the PNC board
of directors raised the quarterly cash dividend on common stock to
$1.50 per share, an increase of
25 cents per share, or 20%, effective
with the May 5, 2022 dividend
payment.
- PNC returned $1.7 billion of
capital to shareholders through $1.2
billion of common share repurchases, representing 6.4
million shares, and $0.5 billion of
dividends on common shares.
- The Basel III common equity Tier 1 capital ratio was an
estimated 9.9% at March 31, 2022 and
10.3% at December 31, 2021.
- The Liquidity Coverage Ratio at March
31, 2022 for PNC exceeded the regulatory minimum
requirement.
Earnings Summary
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In millions, except per share
data
|
|
1Q22
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4Q21
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1Q21
|
Net income
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$
1,429
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$
1,306
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$
1,826
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Net income attributable
to
diluted common shares -
as reported
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$
1,355
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$
1,214
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$
1,750
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Net income attributable
to
diluted common shares -
as adjusted (non-GAAP)
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$
1,379
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$
1,560
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$
1,755
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Diluted earnings per
common share - as reported
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$
3.23
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$
2.86
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$
4.10
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Diluted earnings per
common share - as adjusted (non-GAAP)
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$
3.29
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$
3.68
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$
4.11
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Average diluted common
shares outstanding
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420
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|
424
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|
426
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Cash dividends declared
per common share
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$
1.25
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$
1.25
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$
1.15
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See non-GAAP financial measures included in the
consolidated financial highlights accompanying this news
release
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First quarter 2022 net income of $1.4
billion, or $3.23 per diluted
common share, included integration costs of $31 million pretax resulting from the acquisition
of BBVA USA. Excluding the impact
of integration costs, adjusted diluted earnings per common share
was $3.29.
The Consolidated Financial Highlights accompanying this news
release include additional information regarding reconciliations of
non-GAAP financial measures to reported (GAAP) amounts. This
information supplements results as reported in accordance with GAAP
and should not be viewed in isolation from, or as a substitute for,
GAAP results. Effective for the first quarter of 2022, the
presentation of noninterest income has been recategorized. Fee
income, a non-GAAP financial measure, refers to noninterest income
in the following categories: asset management and brokerage,
capital markets related, card and cash management, lending and
deposit services and residential and commercial mortgage. See a
description of each updated noninterest income revenue category in
PNC's Current Report on Form 8-K filed on March 31, 2022. All periods presented herein
reflect this change. Information in this news release, including
the financial tables, is unaudited.
CONSOLIDATED REVENUE REVIEW
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Revenue
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Change
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Change
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1Q22 vs
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1Q22 vs
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In millions
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1Q22
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4Q21
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|
1Q21
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4Q21
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1Q21
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Net interest
income
|
$ 2,804
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$ 2,862
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$ 2,348
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(2)%
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19%
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Noninterest
income
|
1,888
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|
2,265
|
|
1,872
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(17)%
|
1%
|
Total
revenue
|
$ 4,692
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$ 5,127
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$ 4,220
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(8)%
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11%
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Total revenue for the first quarter of 2022 decreased
$435 million compared with the fourth
quarter of 2021 primarily due to lower noninterest income. Compared
with the first quarter of 2021, total revenue increased
$472 million largely reflecting the
acquisition of BBVA USA.
Net interest income of $2.8
billion for the first quarter of 2022 decreased $58 million compared to the fourth quarter of
2021 as increased average securities balances, loans outstanding
and securities yields were more than offset by a decline in PPP
loan interest income and two fewer days in the first quarter. PPP
loan interest income was $36 million
in the first quarter of 2022 compared to $110 million in the fourth quarter of 2021.
In comparison with the first quarter of 2021, net interest
income increased $456 million as a
result of higher interest earning assets, partially offset by lower
loan and securities yields.
The net interest margin was 2.28% in the first quarter of 2022
and 2.27% in both the fourth and first quarter of 2021.
Noninterest Income
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Change
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Change
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1Q22 vs
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1Q22 vs
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In millions
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1Q22
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|
4Q21
|
|
1Q21
|
4Q21
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1Q21
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Asset management and
brokerage
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$ 377
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$ 385
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$ 328
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(2)%
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15%
|
Capital markets
related
|
252
|
|
460
|
|
311
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(45)%
|
(19)%
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Card and cash
management
|
620
|
|
646
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|
492
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(4)%
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26%
|
Lending and deposit
services
|
269
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|
273
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|
254
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(1)%
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6%
|
Residential and
commercial mortgage
|
159
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|
209
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|
187
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(24)%
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(15)%
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Other
|
211
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|
292
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|
300
|
(28)%
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(30)%
|
|
$
1,888
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|
$
2,265
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|
$
1,872
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(17)%
|
1%
|
|
|
|
|
|
|
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|
Noninterest income for the first quarter of 2022 decreased
$377 million compared with the fourth
quarter of 2021. The first quarter of 2022 included $16 million of integration costs compared to
$47 million in the fourth quarter of
2021. Asset management and brokerage fees decreased $8 million primarily as a result of lower average
equity markets. Capital markets related revenue declined
$208 million primarily due to lower
merger and acquisition advisory fees, in part due to transactions
being delayed. Card and cash management revenue decreased
$26 million primarily due to
seasonally lower transaction volumes and activity. Lending and
deposit services declined $4 million
and included lower loan commitment fees as a result of higher
utilization rates. Residential and commercial mortgage revenue was
$50 million lower primarily due to
decreased revenue from commercial mortgage banking activities.
Other noninterest income decreased $81
million, primarily reflecting lower private equity
revenue.
Noninterest income for the first quarter of 2022 increased
$16 million compared with the first
quarter of 2021. Asset management and brokerage fees increased
$49 million primarily as a result of
higher average equity markets and the benefit of BBVA USA. Capital markets related revenue decreased
$59 million primarily due to a
decline in advisory business activity and decreased underwriting
fees. Card and cash management revenue grew $128 million due to the addition of BBVA
USA customers and higher treasury
management product revenue. Lending and deposit services increased
$15 million due to the benefit of
BBVA USA. Residential and
commercial mortgage revenue decreased $28
million and included lower revenue from commercial mortgage
banking activities. Other noninterest income decreased $89 million and included lower private equity
revenue and a net securities loss of $4
million in the first quarter of 2022 compared to a net
securities gain of $25 million in the
first quarter of 2021.
CONSOLIDATED EXPENSE REVIEW
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Noninterest Expense
|
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Change
|
Change
|
|
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|
|
1Q22 vs
|
1Q22 vs
|
In millions
|
1Q22
|
|
4Q21
|
|
1Q21
|
4Q21
|
1Q21
|
Personnel
|
$
1,717
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|
$
2,038
|
|
$
1,477
|
(16)%
|
16%
|
Occupancy
|
258
|
|
260
|
|
215
|
(1)%
|
20%
|
Equipment
|
331
|
|
437
|
|
293
|
(24)%
|
13%
|
Marketing
|
61
|
|
97
|
|
45
|
(37)%
|
36%
|
Other
|
805
|
|
959
|
|
544
|
(16)%
|
48%
|
|
$
3,172
|
|
$
3,791
|
|
$
2,574
|
(16)%
|
23%
|
|
|
|
|
|
|
|
|
Noninterest expense for the first quarter of 2022 decreased
$619 million compared with the fourth
quarter of 2021. Integration expenses were $15 million in the first quarter of 2022 and
$391 million in the fourth quarter of
2021. Excluding the impact of integration expenses, noninterest
expense was $3,157 million and
$3,400 million, respectively, for the
first quarter of 2022 and fourth quarter of 2021, decreasing
$243 million, or 7%, driven by a
decline in personnel costs reflecting lower incentive compensation
related to decreased business activity as well as seasonally lower
costs.
Noninterest expense increased $598
million in comparison with the first quarter of 2021
primarily driven by the addition of operating expenses from BBVA
USA.
The effective tax rate was 17.3% for the first quarter of 2022,
21.5% for the fourth quarter of 2021 and 16.9% for the first
quarter of 2021.
CONSOLIDATED BALANCE SHEET
REVIEW
Average total assets were $550.1
billion in the first quarter of 2022 compared with
$559.4 billion in the fourth quarter
of 2021 and $468.2 billion in the
first quarter of 2021. Compared to the fourth quarter of 2021, the
decrease resulted from lower Federal Reserve Bank balances. In
comparison to the first quarter of 2021, the increase was primarily
driven by the BBVA USA
acquisition.
Loans
|
|
|
|
|
|
Change
|
Change
|
|
March 31,
2022
|
|
December 31,
2021
|
|
March 31,
2021
|
03/31/22
vs
|
03/31/22
vs
|
In billions
|
|
|
12/31/21
|
03/31/21
|
Average
|
|
|
|
|
|
|
|
Commercial
|
$
195.6
|
|
$
193.8
|
|
$
164.9
|
1%
|
19%
|
Consumer
|
95.1
|
|
95.1
|
|
73.2
|
—
|
30%
|
Average
loans
|
$
290.7
|
|
$
288.9
|
|
$
238.1
|
1%
|
22%
|
|
|
|
|
|
|
|
|
Quarter end
|
|
|
|
|
|
|
|
Commercial
|
$
198.3
|
|
$
193.1
|
|
$
164.5
|
3%
|
21%
|
Consumer
|
96.2
|
|
95.3
|
|
72.5
|
1%
|
33%
|
Total loans
|
$
294.5
|
|
$
288.4
|
|
$
237.0
|
2%
|
24%
|
|
|
|
|
|
|
|
|
Average loans for the first quarter of 2022 were $290.7 billion, increasing $1.8 billion compared to the fourth quarter of
2021. Average commercial loans increased $1.8 billion as growth in PNC corporate banking
and business credit businesses of $5.7
billion was partially offset by PPP loan forgiveness of
$2.2 billion and a decline in PNC's
real estate business of $1.6 billion.
Average consumer loans of $95.1
billion were stable.
Average loans for the first quarter of 2022 increased
$52.6 billion compared to the first
quarter of 2021, reflecting the acquisition of BBVA USA and commercial loan growth, partially
offset by PPP loan forgiveness.
First quarter 2022 average and period-end PPP loans outstanding
were $2.5 billion and $1.8 billion, respectively.
Investment Securities
|
|
|
|
|
|
Change
|
Change
|
|
March 31,
2022
|
|
December 31,
2021
|
|
March 31,
2021
|
03/31/22
vs
|
03/31/22
vs
|
In billions
|
|
|
12/31/21
|
03/31/21
|
Average
|
$
133.9
|
|
$
127.8
|
|
$
86.4
|
5%
|
55%
|
Quarter end
|
$
132.4
|
|
$
133.0
|
|
$
98.3
|
—
|
35%
|
|
|
|
|
|
|
|
|
Average investment securities for the first quarter of 2022 were
$133.9 billion, increasing
$6.1 billion and $47.5 billion from the fourth quarter of 2021 and
first quarter of 2021, respectively, reflecting securities
purchases, primarily of U.S. Treasury and government agency
securities. Compared to the first quarter of 2021, the increase was
also attributable to BBVA USA.
Investment securities at March 31,
2022 of $132.4 billion
decreased $0.6 billion compared to
the fourth quarter of 2021, as net purchases during the quarter
were more than offset by net unrealized losses on available for
sale securities, reflecting the impact of higher interest rates.
Net unrealized losses on available for sale securities were
$4.3 billion at March 31, 2022, compared with net
unrealized gains of $0.7 billion at
December 31, 2021 and $2.0 billion at March 31,
2021. On March 31, 2022, PNC
transferred $20.0 billion of
available for sale securities, net of $1.3
billion of unrealized losses, to held to maturity
securities.
Average Federal Reserve Bank balances for the first quarter of
2022 were $62.3 billion, decreasing
$12.8 billion and $22.9 billion from the fourth quarter of 2021 and
the first quarter of 2021, respectively. The decrease in both
comparisons reflects the impact of securities purchases, lower
borrowed funds and higher loans outstanding. In comparison to the
first quarter of 2021, the decrease was partially offset by higher
deposits.
Deposits
|
|
|
|
|
|
Change
|
Change
|
|
March 31,
2022
|
|
December 31,
2021
|
|
March 31,
2021
|
03/31/22
vs
|
03/31/22
vs
|
In billions
|
|
|
12/31/21
|
03/31/21
|
Average
|
|
|
|
|
|
|
|
Noninterest-bearing
|
$
153.7
|
|
$
156.6
|
|
$
113.3
|
(2)%
|
36%
|
Interest-bearing
|
299.6
|
|
296.2
|
|
252.1
|
1%
|
19%
|
Average
deposits
|
$
453.3
|
|
$
452.8
|
|
$
365.4
|
—
|
24%
|
|
|
|
|
|
|
|
|
Quarter end
|
|
|
|
|
|
|
|
Noninterest-bearing
|
$
150.8
|
|
$
155.2
|
|
$
120.7
|
(3)%
|
25%
|
Interest-bearing
|
299.4
|
|
302.1
|
|
254.4
|
(1)%
|
18%
|
Total
deposits
|
$
450.2
|
|
$
457.3
|
|
$
375.1
|
(2)%
|
20%
|
|
|
|
|
|
|
|
|
Average deposits for the first quarter of 2022 were $453.3 billion, increasing $0.5 billion compared with the fourth quarter of
2021, driven by growth in consumer deposits, partially offset by
commercial deposit outflows. Compared with the first quarter of
2021, average deposits increased $87.9
billion primarily reflecting the acquisition of BBVA
USA.
Deposits at March 31, 2022 of $450.2
billion, decreased $7.1
billion from December 31, 2021 as a result of lower
commercial deposits, primarily due to seasonal declines.
Borrowed Funds
|
|
|
|
|
|
Change
|
Change
|
|
March 31,
2022
|
|
December 31,
2021
|
|
March 31,
2021
|
03/31/22
vs
|
03/31/22
vs
|
In billions
|
|
|
12/31/21
|
03/31/21
|
Average
|
$
30.3
|
|
$
34.3
|
|
$
35.2
|
(12)%
|
(14)%
|
Quarter end
|
$
26.6
|
|
$
30.8
|
|
$
33.0
|
(14)%
|
(19)%
|
|
|
|
|
|
|
|
|
Average borrowed funds of $30.3
billion in the first quarter of 2022 decreased $4.0 billion and $4.9
billion compared with the fourth quarter and first quarter
of 2021, respectively, reflecting lower bank notes and senior
debt.
Capital
|
March 31,
2022
|
|
|
December 31,
2021
|
|
March 31,
2021
|
|
*
|
|
|
Common shareholders'
equity In billions
|
$
44.2
|
|
|
$
50.7
|
|
$
50.3
|
Basel III common equity
Tier 1 capital ratio
|
9.9%
|
|
|
10.3%
|
|
12.6%
|
Basel III common equity
Tier 1 fully implemented capital ratio
|
9.7%
|
|
|
10.0%
|
|
12.3%
|
* Ratios
estimated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PNC maintained a strong capital position. Common shareholders'
equity at March 31, 2022 decreased $6.5
billion from December 31, 2021 as the benefit of first
quarter net income was more than offset by a decrease in
accumulated other comprehensive income, reflecting the impact of
higher rates on net unrealized securities losses, as well as share
repurchases and dividends paid in the first quarter.
In the first quarter of 2022, PNC returned $1.7 billion of capital to shareholders through
$1.2 billion of common share
repurchases, representing 6.4 million shares, and $0.5 billion of dividends on common shares.
Applying the Stress Capital Buffer (SCB) framework, which allows
for capital return in amounts up to the level of capital in excess
of the SCB minimum, our board of directors has recently authorized
a new repurchase framework, under the already approved
authorization for repurchases of up to 100 million common shares of
which approximately 64% were still available for repurchase at
March 31, 2022. This framework allows
for the continuation of our recent quarterly average share
repurchase levels as well as the flexibility to increase those
levels should conditions warrant.
On April 1, 2022, the PNC board of
directors raised the quarterly cash dividend on common stock to
$1.50 per share, an increase of
25 cents per share, or 20%, effective
with the May 5, 2022 dividend
payment.
For information regarding PNC's Basel III capital ratios, see
Capital Ratios in the Consolidated Financial Highlights. PNC
elected a five-year transition provision effective March 31, 2020 to delay until December 31, 2021 the full impact of the Current
Expected Credit Losses (CECL) standard on regulatory capital,
followed by a three-year transition period. Effective for the first
quarter 2022, PNC is now in the three-year transition period, and
the full impact of the CECL standard is being phased-in to
regulatory capital over the next three years. The fully implemented
ratios reflect the full impact of CECL and exclude the benefits of
this transition provision.
CREDIT QUALITY REVIEW
|
|
|
|
|
|
|
|
|
|
|
|
Credit Quality
|
|
|
|
Change
|
Change
|
|
March 31,
2022
|
December 31,
2021
|
March 31,
2021
|
1Q22 vs
|
1Q22 vs
|
In millions
|
4Q21
|
1Q21
|
Provision for
(recapture of) credit losses
|
$
(208)
|
$
(327)
|
$
(551)
|
$
119
|
$
343
|
Net loan
charge-offs
|
$
137
|
$
124
|
$
146
|
10%
|
(6)%
|
Allowance for credit
losses
|
$
5,197
|
$
5,530
|
$
5,221
|
(6)%
|
—
|
Total
delinquencies
|
$
1,699
|
$
1,985
|
$
1,146
|
(14)%
|
48%
|
Nonperforming
loans
|
$
2,298
|
$
2,480
|
$
2,138
|
(7)%
|
7%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs to
average loans (annualized)
|
0.19%
|
0.17%
|
0.25%
|
|
|
Allowance for credit
losses to total loans
|
1.76%
|
1.92%
|
2.20%
|
|
|
Nonperforming loans to
total loans
|
0.78%
|
0.86%
|
0.90%
|
|
|
Total delinquencies represent accruing loans more
than 30 days past due
|
The first quarter of 2022 included a provision recapture of
$208 million, primarily reflecting
the impact of improved COVID-19 related economic conditions. The
fourth quarter of 2021 included a provision recapture of
$327 million.
Net loan charge-offs were $137
million in the first quarter of 2022, increasing
$13 million from the fourth quarter
of 2021 driven by modest increases in both consumer and commercial
net loan charge-offs. Compared to the first quarter of 2021,
net loan charge-offs decreased $9
million.
The allowance for credit losses was $5.2
billion at March 31, 2022,
$5.5 billion at December 31, 2021 and $5.2
billion at March 31, 2021. The
allowance for credit losses as a percentage of total loans was
1.76% at March 31, 2022, 1.92% at
December 31, 2021 and 2.20% at
March 31, 2021.
Nonperforming loans were $2.3
billion at March 31, 2022,
decreasing $182 million compared to
December 31, 2021, driven by lower commercial nonperforming
loans. Nonperforming loans increased $160
million compared to March 31, 2021, due to
nonperforming loans from the BBVA USA acquisition.
Delinquencies at March 31, 2022 of $1.7 billion decreased $286 million compared to December 31, 2021,
reflecting lower consumer and commercial loan delinquencies of
$240 million and $46 million, respectively. The decrease in total
delinquencies was primarily due to progress resolving BBVA
USA conversion-related
administrative and operational delays. Compared to the first
quarter of 2021, total delinquencies increased $553 million related to delinquencies from the
BBVA USA acquisition.
BUSINESS SEGMENT RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
Business Segment Income
|
|
|
|
|
|
In millions
|
1Q22
|
|
4Q21
|
|
1Q21
|
Retail
Banking
|
$ 340
|
|
$ 362
|
|
$ 607
|
Corporate &
Institutional Banking
|
956
|
|
1,334
|
|
1,058
|
Asset Management
Group
|
102
|
|
106
|
|
99
|
Other
|
10
|
|
(509)
|
|
52
|
Net income excluding
noncontrolling interests
|
$
1,408
|
|
$
1,293
|
|
$
1,816
|
|
|
|
|
|
|
Retail Banking
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
1Q22 vs
|
|
1Q22 vs
|
In millions
|
1Q22
|
|
4Q21
|
|
1Q21
|
|
4Q21
|
|
1Q21
|
Net interest
income
|
$
1,531
|
|
$
1,634
|
|
$
1,362
|
|
$ (103)
|
|
$ 169
|
Noninterest
income
|
$ 745
|
|
$ 774
|
|
$ 654
|
|
$ (29)
|
|
$
91
|
Provision for
(recapture of) credit losses
|
$ (81)
|
|
$ 55
|
|
$
(257)
|
|
$ (136)
|
|
$ 176
|
Noninterest
expense
|
$
1,892
|
|
$
1,874
|
|
$
1,476
|
|
$
18
|
|
$ 416
|
Earnings
|
$ 340
|
|
$ 362
|
|
$ 607
|
|
$ (22)
|
|
$ (267)
|
|
|
|
|
|
|
|
|
|
|
In billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
93.2
|
|
$
95.0
|
|
$
77.6
|
|
$ (1.8)
|
|
$ 15.6
|
Average
deposits
|
$
265.1
|
|
$
262.8
|
|
$
208.2
|
|
$
2.3
|
|
$ 56.9
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs
(recoveries) In
millions
|
$ 141
|
|
$ 124
|
|
$ 108
|
|
$
17
|
|
$
33
|
|
|
|
|
|
|
|
|
|
|
Retail Banking
Highlights
First quarter 2022 compared with fourth quarter 2021
- Earnings decreased 6% due to lower net interest income, lower
noninterest income and higher noninterest expense, partially offset
by a provision recapture.
-
- Noninterest income decreased 4%, primarily driven by seasonally
lower card and cash management fees.
- Provision recapture of $81
million for the first quarter of 2022, reflecting the impact
of improved COVID-19 related economic conditions and changes in
portfolio composition. The fourth quarter included a provision for
credit losses of $55 million.
- Noninterest expense increased modestly, or 1%.
- Average loans decreased 2% as growth in residential mortgage
loans was more than offset by PPP loan forgiveness and a decline in
auto loans.
- Average deposits increased 1% driven by seasonal growth in
savings and demand deposits.
First quarter 2022 compared with first quarter 2021
- Earnings decreased 44%, primarily due to increased noninterest
expense and a lower provision recapture, partially offset by higher
net interest income and noninterest income.
-
- Noninterest income increased 14%, primarily driven by the
addition of BBVA USA
customers.
- Noninterest expense increased 28%, primarily reflecting
operating expenses from BBVA USA.
- Average loans and deposits increased 20% and 27%, respectively,
driven by the BBVA USA
acquisition.
Corporate & Institutional
Banking
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
1Q22 vs
|
|
1Q22 vs
|
In millions
|
1Q22
|
|
4Q21
|
|
1Q21
|
|
4Q21
|
|
1Q21
|
Net interest
income
|
$
1,160
|
|
$
1,228
|
|
$
1,001
|
|
$ (68)
|
|
$ 159
|
Noninterest
income
|
$ 804
|
|
$
1,053
|
|
$ 807
|
|
$ (249)
|
|
$
(3)
|
Provision for
(recapture of) credit losses
|
$
(118)
|
|
$
(369)
|
|
$
(282)
|
|
$ 251
|
|
$ 164
|
Noninterest
expense
|
$ 837
|
|
$ 975
|
|
$ 711
|
|
$ (138)
|
|
$ 126
|
Earnings
|
$ 956
|
|
$
1,334
|
|
$
1,058
|
|
$ (378)
|
|
$ (102)
|
|
|
|
|
|
|
|
|
|
|
In billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
180.2
|
|
$
176.8
|
|
$
148.5
|
|
$
3.4
|
|
$ 31.7
|
Average
deposits
|
$
154.6
|
|
$
160.4
|
|
$
136.3
|
|
$ (5.8)
|
|
$ 18.3
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs
(recoveries) In millions
|
$ (1)
|
|
$ (1)
|
|
$ 44
|
|
—
|
|
$ (45)
|
|
|
|
|
|
|
|
|
|
|
Corporate & Institutional
Banking Highlights
First quarter 2022 compared with fourth quarter 2021
- Earnings decreased 28%, primarily due to a lower provision
recapture and a decline in noninterest income, partially offset by
lower noninterest expense.
-
- Noninterest income decreased 24%, due to a decline in capital
markets related revenue, including lower merger and acquisition
advisory fees, as well as lower net gains on commercial mortgage
loans held for sale and a decline in mortgage servicing
income.
- Provision recapture of $118
million for the first quarter of 2022, primarily reflecting
the impact of improved COVID-19 related economic conditions. The
fourth quarter included a provision recapture of $369 million.
- Noninterest expense declined 14%, primarily due to lower
personnel costs as a result of decreased business activity.
- Average loans increased 2%, reflecting growth in PNC corporate
banking and business credit businesses, partially offset by a
decline in PNC's real estate business and PPP loan
forgiveness.
- Average deposits decreased 4%, primarily due to seasonal
declines in commercial deposits.
First quarter 2022 compared with first quarter 2021
- Earnings decreased 10%, as higher net interest income was more
than offset by a lower provision recapture and higher noninterest
expense.
-
- Noninterest income was largely stable as higher treasury
management product revenue was more than offset by lower advisory
business revenue, underwriting fees and commercial mortgage banking
activities.
- Noninterest expense increased 18%, reflecting operating
expenses from BBVA USA and
continued investments in strategic initiatives.
- Average loans increased 21%, reflecting the addition of BBVA
USA and growth in PNC's corporate
banking, business credit and real estate businesses, partially
offset by PPP loan forgiveness.
- Average deposits increased 13%, and included the addition of
BBVA USA.
Asset Management Group
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
1Q22 vs
|
|
1Q22 vs
|
In millions
|
1Q22
|
|
4Q21
|
|
1Q21
|
|
4Q21
|
|
1Q21
|
Net interest
income
|
$
138
|
|
$
130
|
|
$ 93
|
|
$
8
|
|
$
45
|
Noninterest
income
|
$
248
|
|
$
258
|
|
$
229
|
|
$ (10)
|
|
$
19
|
Provision for
(recapture of) credit losses
|
$
2
|
|
$
(15)
|
|
$ (9)
|
|
$
17
|
|
$
11
|
Noninterest
expense
|
$
251
|
|
$
265
|
|
$
202
|
|
$ (14)
|
|
$
49
|
Earnings
|
$
102
|
|
$
106
|
|
$ 99
|
|
$
(4)
|
|
$
3
|
|
|
|
|
|
|
|
|
|
|
In billions
|
|
|
|
|
|
|
|
|
|
Discretionary client assets under management
|
$
182
|
|
$
192
|
|
$
173
|
|
$ (10)
|
|
$
9
|
Nondiscretionary client assets under
administration
|
$
165
|
|
$
175
|
|
$
161
|
|
$ (10)
|
|
$
4
|
Client assets under
administration at quarter end
|
$
347
|
|
$
367
|
|
$
334
|
|
$ (20)
|
|
$
13
|
Brokerage client
account assets
|
$
5
|
|
$
5
|
|
—
|
|
—
|
|
$
5
|
|
|
|
|
|
|
|
|
|
|
In billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
13.4
|
|
$
12.9
|
|
$ 8.4
|
|
$ 0.5
|
|
$ 5.0
|
Average
deposits
|
$
33.3
|
|
$
29.3
|
|
$
20.6
|
|
$
4.0
|
|
$ 12.7
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs
(recoveries) In
millions
|
$
2
|
|
$
1
|
|
—
|
|
$
1
|
|
$
2
|
|
|
|
|
|
|
|
|
|
|
Asset Management Group
Highlights
First quarter 2022 compared with fourth quarter 2021
- Earnings decreased 4%, primarily due to an increase in
provision for credit losses.
-
- Noninterest income decreased 4%, reflecting the impact of lower
average equity markets.
- Noninterest expense declined 5%, due to lower operational loss
reserves.
- Discretionary client assets under management decreased 5%,
primarily driven by lower spot equity markets.
- Average loans increased 4%, driven by higher residential
mortgage loans.
- Average deposits increased 13%, and included seasonal growth in
interest-bearing deposits.
First quarter 2022 compared with first quarter 2021
- Earnings increased 3%, primarily due to the benefit of BBVA
USA.
-
- Noninterest income increased 8%, reflecting higher average
equity markets and the benefit of the BBVA USA acquisition.
- Noninterest expense increased 24%, largely due to the addition
of operating expenses from BBVA USA.
- Discretionary client assets under management increased 5%,
primarily driven by the addition of BBVA USA and higher spot equity markets.
- Average loans and deposits increased 60% and 62%, respectively,
reflecting the acquisition of BBVA USA and growth in residential mortgage and
transactional deposits.
Other
The "Other" category, for the purposes of this release, includes
residual activities that do not meet the criteria for disclosure as
a separate reportable business, such as asset and liability
management activities including net securities gains or losses,
other-than-temporary impairment of investment securities, certain
trading activities, certain runoff consumer loan portfolios,
private equity investments, intercompany eliminations, certain
corporate overhead, tax adjustments that are not allocated to
business segments, exited businesses, and differences between
business segment performance reporting and financial statement
reporting under generally accepted accounting principles.
CONFERENCE CALL AND SUPPLEMENTAL
FINANCIAL INFORMATION
PNC Chairman, President and Chief Executive Officer William S. Demchak and Executive Vice President
and Chief Financial Officer Robert Q.
Reilly will hold a conference call for investors today at
11:00 a.m. Eastern Time regarding the
topics addressed in this news release and the related financial
supplement. Dial-in numbers for the conference call are (877)
272-3520 and (312) 281-2958 (international) and Internet access to
the live audio listen-only webcast of the call is available at
www.pnc.com/investorevents. PNC's first quarter 2022, related
financial supplement, and presentation slides to accompany the
conference call remarks will be available at
www.pnc.com/investorevents prior to the beginning of the call. A
telephone replay of the call will be available for one week at
(800) 633-8284 and (402) 977-9140 (international), conference ID
22015678 and a replay of the audio webcast will be available on
PNC's website for 30 days.
The PNC Financial Services Group, Inc. is one of the largest
diversified financial services institutions in the United States, organized around its
customers and communities for strong relationships and local
delivery of retail and business banking including a full range of
lending products; specialized services for corporations and
government entities, including corporate banking, real estate
finance and asset-based lending; wealth management and asset
management. For information about PNC, visit www.pnc.com.
[TABULAR MATERIAL FOLLOWS]
The PNC Financial Services Group,
Inc.
|
Consolidated Financial Highlights
(Unaudited)
|
|
|
|
|
|
|
|
FINANCIAL RESULTS
|
|
Three months
ended
|
Dollars in millions, except per share
data
|
|
March 31
|
|
December
31
|
|
March 31
|
|
|
2022
|
|
2021
|
|
2021
|
Revenue
|
|
|
|
|
|
|
Net
interest income
|
|
$ 2,804
|
|
$ 2,862
|
|
$ 2,348
|
Noninterest income
|
|
1,888
|
|
2,265
|
|
1,872
|
Total revenue
|
|
4,692
|
|
5,127
|
|
4,220
|
Provision for
(recapture of) credit losses
|
|
(208)
|
|
(327)
|
|
(551)
|
Noninterest
expense
|
|
3,172
|
|
3,791
|
|
2,574
|
Income before income
taxes and noncontrolling interests
|
|
$ 1,728
|
|
$ 1,663
|
|
$ 2,197
|
Income taxes
|
|
299
|
|
357
|
|
371
|
Net income
|
|
$ 1,429
|
|
$ 1,306
|
|
$ 1,826
|
Less:
|
|
|
|
|
|
|
Net
income attributable to noncontrolling interests
|
|
21
|
|
13
|
|
10
|
Preferred stock dividends (a)
|
|
45
|
|
71
|
|
57
|
Preferred stock discount accretion and redemptions
|
|
2
|
|
2
|
|
1
|
Net income attributable
to common shareholders
|
|
$ 1,361
|
|
$ 1,220
|
|
$ 1,758
|
Per Common Share
|
|
|
|
|
|
|
Basic
|
|
$ 3.23
|
|
$ 2.87
|
|
$ 4.11
|
Diluted
|
|
$ 3.23
|
|
$ 2.86
|
|
$ 4.10
|
Cash dividends declared
per common share
|
|
$ 1.25
|
|
$ 1.25
|
|
$ 1.15
|
Effective tax rate
(b)
|
|
17.3%
|
|
21.5%
|
|
16.9%
|
PERFORMANCE RATIOS
|
|
|
|
|
|
|
Net interest margin
(c)
|
|
2.28%
|
|
2.27%
|
|
2.27%
|
Noninterest income to
total revenue
|
|
40%
|
|
44%
|
|
44%
|
Efficiency
(d)
|
|
68%
|
|
74%
|
|
61%
|
Return on:
|
|
|
|
|
|
|
Average common shareholders' equity
|
|
11.64%
|
|
9.61%
|
|
14.31%
|
Average assets
|
|
1.05%
|
|
0.93%
|
|
1.58%
|
|
|
(a)
|
Dividends are payable
quarterly other than Series R and Series S preferred stock, which
are payable semiannually.
|
(b)
|
The effective income
tax rates are generally lower than the statutory rate due to the
relationship of pretax income to tax credits and earnings that are
not subject to tax.
|
(c)
|
Net interest margin is
the total yield on interest-earning assets minus the total rate on
interest-bearing liabilities and includes the benefit from use of
noninterest-bearing sources. To provide more meaningful comparisons
of net interest margins, we use net interest income on a
taxable-equivalent basis in calculating average yields used in the
calculation of net interest margin by increasing the interest
income earned on tax-exempt assets to make it fully equivalent to
interest income earned on taxable investments. This adjustment is
not permitted under generally accepted accounting principles (GAAP)
in the Consolidated Income Statement. The taxable-equivalent
adjustments to net interest income for the three months ended March
31, 2022, December 31, 2021 and March 31, 2021 were $22 million,
$22 million and $15 million, respectively.
|
(d)
|
Calculated as
noninterest expense divided by total revenue.
|
The PNC Financial Services Group,
Inc.
|
Consolidated Financial Highlights
(Unaudited)
|
|
|
|
|
|
|
|
March 31
|
|
December
31
|
|
March 31
|
|
2022
|
|
2021
|
|
2021
|
BALANCE SHEET DATA
|
|
|
|
|
|
Dollars in millions, except per share
data
|
|
|
|
|
|
Assets
|
$
541,246
|
|
$
557,191
|
|
$
474,414
|
Loans (a)
|
$
294,457
|
|
$
288,372
|
|
$
237,013
|
Allowance for loan and
lease losses
|
$
4,558
|
|
$
4,868
|
|
$
4,714
|
Interest-earning
deposits with banks
|
$
48,776
|
|
$
74,250
|
|
$
86,161
|
Investment
securities
|
$
132,411
|
|
$
132,962
|
|
$
98,255
|
Total
deposits
|
$
450,197
|
|
$
457,278
|
|
$
375,067
|
Borrowed funds
(a)
|
$
26,571
|
|
$
30,784
|
|
$
33,030
|
Total shareholders'
equity
|
$
49,181
|
|
$
55,695
|
|
$
53,849
|
Common shareholders'
equity
|
$
44,170
|
|
$
50,685
|
|
$
50,331
|
Accumulated other
comprehensive income (loss)
|
$
(5,731)
|
|
$
409
|
|
$
1,290
|
Book value per common
share
|
$
106.47
|
|
$
120.61
|
|
$
118.47
|
Tangible book value per
common share (non-GAAP) (b)
|
$
79.68
|
|
$
94.11
|
|
$
96.57
|
Period end common
shares outstanding (in millions)
|
415
|
|
420
|
|
425
|
Loans to
deposits
|
65%
|
|
63%
|
|
63%
|
Common shareholders'
equity to total assets
|
8.2%
|
|
9.1%
|
|
10.6%
|
CLIENT ASSETS (billions)
|
|
|
|
|
|
Discretionary client
assets under management
|
$
182
|
|
$
192
|
|
$
173
|
Nondiscretionary client
assets under administration
|
165
|
|
175
|
|
161
|
Total client assets
under administration
|
347
|
|
367
|
|
334
|
Brokerage account
client assets
|
79
|
|
83
|
|
61
|
Total client
assets
|
$
426
|
|
$
450
|
|
$
395
|
CAPITAL RATIOS
|
|
|
|
|
|
Basel III (c)
(d)
|
|
|
|
|
|
Common equity Tier 1
|
9.9%
|
|
10.3%
|
|
12.6%
|
Common equity Tier 1 fully
implemented (e)
|
9.7%
|
|
10.0%
|
|
12.3%
|
Tier 1 risk-based
|
11.2%
|
|
11.6%
|
|
13.7%
|
Total capital risk-based
(f)
|
13.0%
|
|
13.5%
|
|
16.0%
|
Leverage
|
8.2%
|
|
8.2%
|
|
9.7%
|
Supplementary leverage
|
7.0%
|
|
7.0%
|
|
10.1%
|
ASSET QUALITY
|
|
|
|
|
|
Nonperforming loans to
total loans
|
0.78%
|
|
0.86%
|
|
0.90%
|
Nonperforming assets to
total loans, OREO and foreclosed assets
|
0.79%
|
|
0.87%
|
|
0.92%
|
Nonperforming assets to
total assets
|
0.43%
|
|
0.45%
|
|
0.46%
|
Net charge-offs to
average loans (for the three months ended) (annualized)
|
0.19%
|
|
0.17%
|
|
0.25%
|
Allowance for loan and
lease losses to total loans
|
1.55%
|
|
1.69%
|
|
1.99%
|
Allowance for credit
losses to total loans (g)
|
1.76%
|
|
1.92%
|
|
2.20%
|
Allowance for loan and
lease losses to nonperforming loans
|
198%
|
|
196%
|
|
220%
|
Total delinquencies
(in millions) (h)
|
$
1,699
|
|
$
1,985
|
|
$
1,146
|
|
|
(a)
|
Amounts include assets
and liabilities for which we have elected the fair value option.
Our 2021 Form 10-K included, and our first quarter 2022 Form 10-Q
will include, additional information regarding these Consolidated
Balance Sheet line items.
|
(b)
|
See the Tangible Book
Value per Common Share table on page 17 for additional
information.
|
(c)
|
All ratios are
calculated using the regulatory capital methodology applicable to
PNC during each period presented and calculated based on the
standardized approach. See Capital Ratios on page 15 for additional
information. The ratios as of March 31, 2022 are
estimated.
|
(d)
|
The ratios are
calculated to reflect PNC's election to adopt the CECL optional
five-year transition provision.
|
(e)
|
The fully implemented
ratios are calculated to reflect the full impact of CECL and
excludes the benefits of the five-year transition
provision.
|
(f)
|
The 2021 Basel III
Total risk-based capital ratios include nonqualifying trust
preferred capital securities of $20 million that were subject to a
phase-out period that ran through 2021.
|
(g)
|
Excludes allowances for
investment securities and other financial assets.
|
(h)
|
Total delinquencies
represent accruing loans more than 30 days past due.
|
The PNC Financial Services Group,
Inc.
|
|
Consolidated Financial Highlights
(Unaudited)
|
CAPITAL RATIOS
PNC's regulatory risk-based capital ratios in 2022 are
calculated using the standardized approach for determining
risk-weighted assets. Under the standardized approach for
determining credit risk-weighted assets, exposures are generally
assigned a pre-defined risk weight. Exposures to high volatility
commercial real estate, past due exposures and equity exposures are
generally subject to higher risk weights than other types of
exposures.
PNC elected a five-year transition provision effective
March 31, 2020 to delay until
December 31, 2021 the full impact of
the CECL standard on regulatory capital, followed by a three-year
transition period. Effective for the first quarter 2022, PNC is now
in the three-year transition period, and the full impact of the
CECL standard is being phased-in to regulatory capital over the
next three years. See the table below for the December 31,
2021, March 31, 2021 and estimated March 31, 2022 ratios.
For the full impact of PNC's adoption of CECL, which excludes the
benefits of the five-year transition provision, see the
March 31, 2022 and December 31, 2021 (Fully Implemented)
estimates presented in the table below.
Our Basel III capital ratios may be impacted by changes to the
regulatory capital rules and additional regulatory guidance or
analysis.
Basel lll Common Equity Tier 1 Capital
Ratios
|
|
|
|
|
|
|
|
Basel III
(a)
|
|
|
|
|
March 31
2022
(estimated)
(b)
|
December
31
2021 (b)
|
|
March 31
2021
(b)
|
|
March 31, 2022 (Fully
Implemented)
(estimated)
(c)
|
December 31, 2021
(Fully Implemented)
(estimated)
(c)
|
|
|
|
Dollars in millions
|
|
Common stock, related
surplus and retained earnings, net of treasury stock
|
$
50,624
|
$
51,242
|
|
$
50,095
|
|
$
49,900
|
$
50,277
|
Less regulatory capital
adjustments:
|
|
|
|
|
|
|
|
Goodwill and disallowed intangibles, net of deferred tax
liabilities
|
(11,114)
|
(11,137)
|
|
(9,300)
|
|
(11,114)
|
(11,137)
|
All
other adjustments
|
(63)
|
(39)
|
|
(36)
|
|
(68)
|
(45)
|
Basel III Common equity
Tier 1 capital
|
$
39,447
|
$
40,066
|
|
$
40,759
|
|
$
38,718
|
$
39,095
|
Basel III standardized
approach risk-weighted assets (d)
|
$
397,986
|
$
388,769
|
|
$
323,630
|
|
$ 398,268
|
$ 389,068
|
Basel III Common equity
Tier 1 capital ratio
|
9.9%
|
10.3%
|
|
12.6%
|
|
9.7%
|
10.0%
|
|
|
(a)
|
All ratios are
calculated using the regulatory capital methodology applicable to
PNC during each period presented.
|
(b)
|
The ratio is calculated
to reflect PNC's election to adopt the CECL optional five-year
transition provision.
|
(c)
|
The March 31, 2022 and
December 31, 2021 ratio is calculated to reflect the full impact of
CECL and excludes the benefits of the five-year transition
provision.
|
(d)
|
Basel III standardized
approach risk-weighted assets are based on the Basel III
standardized approach rules and include credit and market
risk-weighted assets.
|
The PNC Financial Services Group,
Inc.
|
|
Consolidated Financial Highlights
(Unaudited)
|
Pretax Pre-Provision Earnings
(non-GAAP)
Pretax Pre-Provision Earnings Excluding Integration
Costs (non-GAAP)
|
Three months
ended
|
|
March 31
|
|
December
31
|
|
March 31
|
Dollars in millions
|
2022
|
|
2021
|
|
2021
|
Income before income
taxes and noncontrolling interests
|
$
1,728
|
|
$
1,663
|
|
$
2,197
|
Provision for
(recapture of) credit losses
|
(208)
|
|
(327)
|
|
(551)
|
Pretax pre-provision
earnings (non-GAAP)
|
$
1,520
|
|
$
1,336
|
|
$
1,646
|
Integration
costs
|
31
|
|
438
|
|
6
|
Pretax pre-provision
earnings excluding integration costs (non-GAAP)
|
$
1,551
|
|
$
1,774
|
|
$
1,652
|
Pretax pre-provision earnings is a non-GAAP measure and is based
on adjusting income before income taxes and noncontrolling
interests to exclude provision for (recapture of) credit losses. We
believe that pretax, pre-provision earnings is a useful tool to
help evaluate the ability to provide for credit costs through
operations and provides an additional basis to compare results
between periods by isolating the impact of provision for (recapture
of) credit losses, which can vary significantly between
periods.
Pretax pre-provision earnings excluding integration costs is a
non-GAAP measure and is based on adjusting pretax pre-provision
earnings to exclude integration costs during the period. We believe
that pretax, pre-provision earnings excluding integration costs is
a useful tool in understanding PNC's results by providing greater
comparability between periods, as well as demonstrating the effect
of significant items.
Adjusted Diluted Earnings per Common Share Excluding
Integration Costs (non-GAAP)
|
Three months
ended
|
|
March 31
|
|
Per Common
|
|
December
31
|
|
Per Common
|
|
March 31
|
|
Per Common
|
Dollars in millions, except per share
data
|
2022
|
|
Share
|
|
2021
|
|
Share
|
|
2021
|
|
Share
|
Net income attributable
to common shareholders
|
$
1,361
|
|
|
|
$
1,220
|
|
|
|
$
1,758
|
|
|
Dividends and
undistributed earnings allocated to nonvested restricted
shares
|
(6)
|
|
|
|
(6)
|
|
|
|
(8)
|
|
|
Net income attributable
to diluted common shareholders
|
$
1,355
|
|
$
3.23
|
|
$
1,214
|
|
$
2.86
|
|
$
1,750
|
|
$
4.10
|
Integration costs after
tax (a)
|
24
|
|
0.06
|
|
346
|
|
0.82
|
|
5
|
|
0.01
|
Adjusted net income
attributable to diluted common shareholders excluding integration
costs (non-GAAP)
|
$
1,379
|
|
$
3.29
|
|
$
1,560
|
|
$
3.68
|
|
$
1,755
|
|
$
4.11
|
Average diluted common
shares outstanding
(in millions)
|
420
|
|
|
|
424
|
|
|
|
426
|
|
|
|
|
(a)
|
Statutory tax rate of
21% used to calculate impacts.
|
The adjusted diluted earnings per common share excluding
integration costs is a non-GAAP measure and excludes the
integration costs related to the BBVA USA acquisition. It is calculated based on
adjusting net income attributable to diluted common shareholders by
removing post-tax integration costs in the period. We believe this
non-GAAP measure serves as a useful tool in understanding PNC's
results by providing greater comparability between periods, as well
as demonstrating the effect of significant items.
The PNC Financial Services Group,
Inc.
|
|
Consolidated Financial Highlights
(Unaudited)
|
Tangible Book Value per Common Share
(non-GAAP)
|
|
|
|
|
|
|
March 31
|
|
December
31
|
|
March 31
|
Dollars in millions, except per share
data
|
2022
|
|
2021
|
|
2021
|
Book value per common
share
|
$
106.47
|
|
$
120.61
|
|
$
118.47
|
Tangible book value per
common share
|
|
|
|
|
|
Common shareholders' equity
|
$
44,170
|
|
$
50,685
|
|
$
50,331
|
Goodwill and other intangible assets
|
(11,383)
|
|
(11,406)
|
|
(9,489)
|
Deferred tax liabilities on goodwill and other intangible
assets
|
269
|
|
270
|
|
189
|
Tangible common shareholders'
equity
|
$
33,056
|
|
$
39,549
|
|
$
41,031
|
Period-end common
shares outstanding (in millions)
|
415
|
|
420
|
|
425
|
Tangible book value per
common share (non-GAAP)
|
$
79.68
|
|
$
94.11
|
|
$
96.57
|
Tangible book value per common share is a non-GAAP measure and
is calculated based on tangible common shareholders' equity divided
by period-end common shares outstanding. We believe this non-GAAP
measure serves as a useful tool to help evaluate the strength and
discipline of a company's capital management strategies and as an
additional, conservative measure of total company value.
Taxable-Equivalent Net Interest Income
(non-GAAP)
|
Three months
ended
|
|
March 31
|
|
December
31
|
|
March 31
|
Dollars in millions
|
2022
|
|
2021
|
|
2021
|
Net interest
income
|
$
2,804
|
|
$
2,862
|
|
$
2,348
|
Taxable-equivalent
adjustments
|
22
|
|
22
|
|
15
|
Net interest income
(Fully Taxable-Equivalent - FTE)
|
$
2,826
|
|
$
2,884
|
|
$
2,363
|
The interest income earned on certain earning assets is
completely or partially exempt from federal income tax. As such,
these tax-exempt instruments typically yield lower returns than
taxable investments. To provide more meaningful comparisons of net
interest income, we use interest income on a taxable-equivalent
basis by increasing the interest income earned on tax-exempt assets
to make it fully equivalent to interest income earned on taxable
investments. This adjustment is not permitted under GAAP. Taxable
equivalent net interest income is only used for calculating net
interest margin and net interest income shown elsewhere in this
presentation is GAAP net interest income.
Efficiency Ratio Excluding Integration Costs
(non-GAAP)
|
Three months
ended
|
|
March 31
|
|
December
31
|
|
March 31
|
Dollars in millions
|
2022
|
|
2021
|
|
2021
|
Noninterest
expense
|
$
3,172
|
|
$
3,791
|
|
$
2,574
|
Integration
expense
|
(15)
|
|
(391)
|
|
(6)
|
Noninterest expense
excluding integration expense (non-GAAP)
|
$
3,157
|
|
$
3,400
|
|
$
2,568
|
|
|
|
|
|
|
Total
revenue
|
$
4,692
|
|
$
5,127
|
|
$
4,220
|
Integration costs -
contra revenue
|
(16)
|
|
(47)
|
|
|
Total revenue excluding
integration costs - contra revenue (non-GAAP)
|
$
4,708
|
|
$
5,174
|
|
$
4,220
|
|
|
|
|
|
|
Efficiency ratio
(a)
|
68%
|
|
74%
|
|
61%
|
Efficiency ratio
excluding integration costs (non-GAAP) (b)
|
67%
|
|
66%
|
|
61%
|
|
|
(a)
|
Calculated as
noninterest expense divided by total revenue.
|
(b)
|
Calculated as
noninterest expense excluding integration expense divided by total
revenue excluding integration costs - contra revenue.
|
The efficiency ratio excluding integration costs is a non-GAAP
measure and excludes the integration costs related to the BBVA
USA acquisition. It is calculated
based on adjusting the efficiency ratio calculation by excluding
integration costs during the period from noninterest expense and
total revenue. We believe that this non-GAAP measure is a useful
tool for the purpose of evaluating PNC's results. The exclusion of
integration costs increases comparability across periods,
demonstrates the impact of significant items and provides a useful
measure for determining PNC's revenue and expenses that are core to
our business operations and expected to recur over time.
Cautionary Statement Regarding
Forward-Looking Information
We make statements in this news release and related conference
call, and we may from time to time make other statements, regarding
our outlook for financial performance, such as earnings, revenues,
expenses, tax rates, capital and liquidity levels and ratios, asset
levels, asset quality, financial position, and other matters
regarding or affecting us and our future business and operations
that are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act. Forward-looking
statements are typically identified by words such as "believe,"
"plan," "expect," "anticipate," "see," "look," "intend," "outlook,"
"project," "forecast," "estimate," "goal," "will," "should" and
other similar words and expressions.
Forward-looking statements are necessarily subject to numerous
assumptions, risks and uncertainties, which change over time.
Future events or circumstances may change our outlook and may also
affect the nature of the assumptions, risks and uncertainties to
which our forward-looking statements are subject.
Forward-looking statements speak only as of the date made. We
do not assume any duty and do not undertake any obligation to
update forward-looking statements. Actual results or future
events could differ, possibly materially, from those anticipated in
forward-looking statements, as well as from historical
performance. As a result, we caution against placing undue
reliance on any forward-looking statements.
Our forward-looking statements are subject to the following
principal risks and uncertainties.
- Our businesses, financial results and balance sheet values are
affected by business and economic conditions, including:
-
- Changes in interest rates and valuations in debt, equity and
other financial markets,
- Disruptions in the U.S. and global financial markets,
- Actions by the Federal Reserve Board, U.S. Treasury and other
government agencies, including those that impact money supply and
market interest rates and inflation,
- Changes in customer behavior due to changing business and
economic conditions or legislative or regulatory initiatives,
- Changes in customers', suppliers' and other counterparties'
performance and creditworthiness,
- Impacts of tariffs and other trade policies of the U.S. and its
global trading partners,
- The length and extent of the economic impacts of the COVID-19
pandemic,
- Impacts of changes in federal, state and local governmental
policy, including on the regulatory landscape, capital markets,
taxes, infrastructure spending and social programs, and
- Commodity price volatility.
- Our forward-looking financial statements are subject to the
risk that economic and financial market conditions will be
substantially different than those we are currently expecting and
do not take into account potential legal and regulatory
contingencies. These statements are based on our views that:
-
- The U.S. economy continues to recover from the pandemic-caused
recession in the first half of 2020. Growth is likely to remain
above the economy's long-run average throughout this year. Consumer
spending growth will remain solid in 2022 due to good underlying
fundamentals.
- Supply-chain difficulties will gradually ease over the course
of 2022. Labor shortages will remain a constraint this year,
although strong wage growth will support consumer spending.
- Inflation accelerated in the second half of 2021 to its fastest
pace in decades due to strong demand but limited supplies coming
out of the pandemic for some goods and services. Higher energy
prices are adding to inflationary pressures in the first half of
2022. Inflation will slow in the second half of 2022 as
pandemic-related supply and demand imbalances recede and energy
prices stabilize. However, inflation will also broaden throughout
the economy due to wage growth. Inflation will end 2022 above the
Federal Reserve's long-run objective of 2%.
- PNC expects the Federal Open Market Committee (FOMC) to raise
the federal funds rate by 0.50% in May, 0.25% in June, 0.50% in
July, 0.25% in September and 0.25% in December to reach a range of
2.00% to 2.25% by the end of the year. The FOMC will then further
increase the federal funds rate in 2023. Also, the Federal Reserve
will start to reduce its balance sheet in the next few months.
- Uncertainty about the outlook has increased with the Russian
invasion of Ukraine. It has
created upside risk to inflation this year, which could lead the
FOMC to tighten more aggressively than currently anticipated. In
addition, risks to growth are to the downside. The likelihood of a
recession in late 2022 or 2023 has increased.
- PNC's ability to take certain capital actions, including
returning capital to shareholders, is subject to PNC meeting or
exceeding a stress capital buffer established by the Federal
Reserve Board in connection with the Federal Reserve Board's
Comprehensive Capital Analysis and Review (CCAR) process.
- PNC's regulatory capital ratios in the future will depend on,
among other things, the company's financial performance, the scope
and terms of final capital regulations then in effect and
management actions affecting the composition of PNC's balance
sheet. In addition, PNC's ability to determine, evaluate and
forecast regulatory capital ratios, and to take actions (such as
capital distributions) based on actual or forecasted capital
ratios, will be dependent at least in part on the development,
validation and regulatory review of related models.
Cautionary Statement Regarding
Forward-Looking Information (Continued)
- Legal and regulatory developments could have an impact on our
ability to operate our businesses, financial condition, results of
operations, competitive position, reputation, or pursuit of
attractive acquisition opportunities. Reputational impacts could
affect matters such as business generation and retention,
liquidity, funding, and ability to attract and retain management.
These developments could include:
-
- Changes to laws and regulations, including changes affecting
oversight of the financial services industry, consumer protection,
bank capital and liquidity standards, pension, bankruptcy and other
industry aspects, and changes in accounting policies and
principles.
- Unfavorable resolution of legal proceedings or other claims and
regulatory and other governmental investigations or other
inquiries. These matters may result in monetary judgments or
settlements or other remedies, including fines, penalties,
restitution or alterations in our business practices, and in
additional expenses and collateral costs, and may cause
reputational harm to PNC.
- Results of the regulatory examination and supervision process,
including our failure to satisfy requirements of agreements with
governmental agencies.
- Impact on business and operating results of any costs
associated with obtaining rights in intellectual property claimed
by others and of adequacy of our intellectual property protection
in general.
- Business and operating results are affected by our ability to
identify and effectively manage risks inherent in our businesses,
including, where appropriate, through effective use of systems and
controls, third-party insurance, derivatives, and capital
management techniques, and to meet evolving regulatory capital and
liquidity standards.
- We grow our business in part through acquisitions and new
strategic initiatives. Risks and uncertainties include those
presented by the nature of the business acquired and strategic
initiative, including in some cases those associated with our entry
into new businesses or new geographic or other markets and risks
resulting from our inexperience in those new areas, as well as
risks and uncertainties related to the acquisition transactions
themselves, regulatory issues, and the integration of the acquired
businesses into PNC after closing. Many of these risks and
uncertainties are present in our acquisition and integration of
BBVA USA Bancshares, Inc.,
including its U.S. banking subsidiary, BBVA USA.
- Competition can have an impact on customer acquisition, growth
and retention and on credit spreads and product pricing, which can
affect market share, deposits and revenues. Our ability to
anticipate and respond to technological changes can also impact our
ability to respond to customer needs and meet competitive
demands.
- Business and operating results can also be affected by
widespread natural and other disasters, pandemics, dislocations,
terrorist activities, system failures, security breaches,
cyberattacks or international hostilities through impacts on the
economy and financial markets generally or on us or our
counterparties specifically.
We provide greater detail regarding these as well as other
factors in our 2021 Form 10-K, including in the Risk Factors and
Risk Management sections and the Legal Proceedings and Commitments
Notes of the Notes To Consolidated Financial Statements in that
report, and in our other subsequent SEC filings. Our
forward-looking statements may also be subject to other risks and
uncertainties, including those we may discuss elsewhere in this
news release or in our SEC filings, accessible on the SEC's website
at www.sec.gov and on our corporate website at
www.pnc.com/secfilings. We have included these web addresses as
inactive textual references only. Information on these websites is
not part of this document.
MEDIA:
Marcey
Zwiebel
(412) 762-4550
media.relations@pnc.com
INVESTORS:
Bryan
Gill
(412) 768-4143
investor.relations@pnc.com
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SOURCE The PNC Financial Services Group, Inc.