3% avg. loan growth; 32 basis point NIM
expansion; 7% positive operating leverage
PITTSBURGH, Oct. 14,
2022 /PRNewswire/ -- The PNC Financial Services
Group, Inc. (NYSE: PNC) today reported:
|
|
|
For the
quarter
|
|
|
In millions, except per
share data and as noted
|
3Q22
|
2Q22
|
3Q21
|
Third Quarter
Highlights
|
|
|
|
|
|
|
|
|
|
Financial
Results
|
|
|
|
Comparisons reflect
3Q22 vs. 2Q22
|
|
Revenue
|
$
5,549
|
$
5,116
|
$
5,197
|
▪
Operating leverage of 7%,
reflecting revenue growth of 8%
and expense growth of 1%
▪
Net interest income grew 14%
–
NIM increased 32 basis points
▪
Noninterest income increased
modestly
▪
Efficiency ratio improved to 59%
▪
PPNR increased 21%
▪
Average loans grew 3%, driven by
commercial and consumer loan
growth
▪
Average deposits decreased 2%
–
Spot deposits declined 0.6%
▪
Provision for credit losses of $241
million; allowance for credit losses
to total loans of 1.67%
▪
Net loan charge-offs were $119
million or 0.15% annualized to
average loans
▪
Tangible book value decreased
6%, due to the change in AOCI
▪
PNC returned $1.7 billion of
capital to shareholders
|
|
Noninterest
expense
|
3,280
|
3,244
|
3,587
|
Pretax, pre-provision
earnings (PPNR) (non-GAAP)
|
2,269
|
1,872
|
1,610
|
Integration
costs
|
1
|
14
|
243
|
PPNR excluding
integration costs (non-GAAP)
|
2,270
|
1,886
|
1,853
|
Provision for
(recapture of) credit losses
|
241
|
36
|
(203)
|
Net income
|
1,640
|
1,496
|
1,490
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Common
Share
|
|
|
|
Diluted earnings - as
reported
|
$ 3.78
|
$ 3.39
|
$ 3.30
|
Impact from integration
costs (non-GAAP)
|
—
|
0.03
|
0.45
|
Diluted earnings - as
adjusted (non-GAAP)
|
3.78
|
3.42
|
3.75
|
Average diluted common
shares outstanding
|
410
|
414
|
426
|
Book value
|
97.59
|
101.39
|
121.16
|
Tangible book value
(non-GAAP)
|
69.98
|
74.39
|
94.82
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet &
Credit Quality
|
|
|
Average loans
In billions
|
$
313.0
|
$
304.8
|
$
291.3
|
Average deposits
In billions
|
439.2
|
446.5
|
454.4
|
Accumulated other
comprehensive income (loss)
(AOCI) In billions
|
(10.5)
|
(8.4)
|
1.1
|
Net loan
charge-offs
|
119
|
83
|
81
|
Allowance for credit
losses to total loans
|
1.67 %
|
1.65 %
|
2.07 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected
Ratios
|
|
|
|
Return on average
common shareholders' equity
|
14.97 %
|
13.52 %
|
10.95 %
|
Return on average
assets
|
1.19
|
1.10
|
1.06
|
Net interest margin
(NIM) (non-GAAP)
|
2.82
|
2.50
|
2.27
|
Noninterest income to
total revenue
|
37
|
40
|
45
|
Efficiency
|
59
|
63
|
69
|
Common equity Tier 1
capital ratio
|
9.3
|
9.6
|
10.3
|
|
|
|
|
|
|
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.
|
From Bill Demchak, PNC
Chairman, President and Chief Executive Officer:
"Our third quarter results reflected continued strong
momentum across the expanded PNC footprint. We grew loans and
revenue, our net interest margin increased and expenses remained
well controlled, resulting in substantial positive operating
leverage. Our credit quality metrics and capital levels remain
solid and we continue to be well positioned for ongoing
success."
Income Statement Highlights
Third quarter 2022 compared with second quarter
2022
- Net income of $1.6 billion
increased $144 million, or 10%.
- Total revenue of $5.5 billion
increased $433 million, or 8%,
primarily due to higher net interest income.
- Net interest income of $3.5
billion increased $424
million, or 14%, driven by higher yields on interest-earning
assets and loan growth, partially offset by higher funding
costs.
-
- Net interest margin of 2.82% increased 32 basis points
primarily due to higher yields on interest-earning assets.
- Noninterest income of $2.1
billion increased modestly.
-
- Fee income of $1.8 billion
decreased $131 million, or 7%, driven
by lower capital markets related revenue as a result of elevated
merger and acquisition advisory activity in the second
quarter.
- Other noninterest income of $317
million increased $140
million, and included higher private equity revenue and
positive Visa Class B derivative fair value adjustments of
$13 million.
- Noninterest expense of $3.3
billion increased $36 million,
or 1%, reflecting increased personnel expense to support business
growth as well as one additional day in the quarter.
- Provision for credit losses was $241
million in the third quarter, reflecting slightly weaker
economic expectations which impacted our macroeconomic scenarios
and weightings. The second quarter of 2022 included a provision for
credit losses of $36 million.
- The effective tax rate was 19.1% for the third quarter and
18.5% for the second quarter.
Balance Sheet Highlights
Third quarter 2022 compared with second quarter
2022 or September 30, 2022 compared with June 30,
2022
- Average loans of $313.0 billion
increased $8.2 billion, or 3%.
-
- Average commercial loans of $214.1
billion grew $6.5 billion
driven by growth in PNC's corporate banking, real estate and
business credit businesses.
- Average consumer loans of $98.9
billion increased $1.7 billion
due to higher residential mortgage, home equity and credit card
loans, partially offset by lower auto loans.
- Credit quality performance:
-
- Delinquencies of $1.6 billion
increased $115 million, or 8%, as a
result of higher commercial delinquencies primarily due to
administrative delays, partially offset by lower consumer
delinquencies.
- Total nonperforming loans of $2.1
billion increased $22 million,
or 1%, as lower consumer nonperforming loans were more than offset
by higher commercial nonperforming loans.
- Net loan charge-offs of $119
million increased $36 million,
primarily driven by higher commercial net loan charge-offs.
- The allowance for credit losses to total loans was 1.67% at
September 30, 2022 compared with
1.65% at June 30, 2022.
- Average deposits of $439.2
billion decreased $7.3
billion, or 2%, driven by lower consumer deposits,
reflecting inflationary pressures and seasonally higher consumer
spending.
-
- Deposits at September 30, 2022 of
$438.2 billion decreased $2.6 billion, or 0.6%, as higher commercial
deposits were more than offset by lower consumer deposits.
- Average investment securities of $137.0
billion grew $2.3 billion, or
2%.
- Average Federal Reserve Bank balances of $31.5 billion decreased $7.8 billion, driven by increased loans
outstanding and lower deposits, partially offset by higher borrowed
funds.
-
- Federal Reserve Bank balances at September 30, 2022 were $39.8 billion.
- PNC maintained strong capital and liquidity positions.
-
- On October 3, 2022, the PNC board
of directors declared a quarterly cash dividend on common stock of
$1.50 per share payable on
November 5, 2022.
- PNC returned $1.7 billion of
capital to shareholders, an increase of $0.3
billion due to higher share repurchases. Capital return
during the third quarter was comprised of $1.1 billion of common share repurchases,
representing 6.7 million shares, and $0.6
billion of dividends on common shares.
- The Basel III common equity Tier 1 capital ratio was an
estimated 9.3% at September 30, 2022
and 9.6% at June 30, 2022.
- The Liquidity Coverage Ratio at September 30, 2022 for PNC exceeded the
regulatory minimum requirement.
Earnings
Summary
|
|
|
|
|
|
|
In millions, except
per share data
|
|
3Q22
|
|
2Q22
|
|
3Q21
|
Net income
|
|
$
1,640
|
|
$
1,496
|
|
$
1,490
|
Net income attributable
to
diluted common shares -
as reported
|
|
$
1,550
|
|
$
1,402
|
|
$
1,408
|
Net income attributable
to
diluted common shares -
as adjusted (non-GAAP)
|
|
$
1,551
|
|
$
1,413
|
|
$
1,600
|
Diluted earnings per
common share - as reported
|
|
$
3.78
|
|
$
3.39
|
|
$
3.30
|
Diluted earnings per
common share - as adjusted (non-GAAP)
|
|
$
3.78
|
|
$
3.42
|
|
$
3.75
|
Average diluted common
shares outstanding
|
|
410
|
|
414
|
|
426
|
Cash dividends declared
per common share
|
|
$
1.50
|
|
$
1.50
|
|
$
1.25
|
See non-GAAP
financial measures included in the Consolidated Financial
Highlights accompanying this news release
|
We continue to evaluate the impact to our business from
Hurricane Ian. Based on our assessment to date, we do not expect
Hurricane Ian to have a material impact on our operating results,
including credit losses.
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 second quarter 2022 Form 10-Q. All periods presented herein
reflect this change. Information in this news release, including
the financial tables, is unaudited.
CONSOLIDATED REVENUE
REVIEW
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
3Q22 vs
|
3Q22 vs
|
In
millions
|
3Q22
|
|
2Q22
|
|
3Q21
|
2Q22
|
3Q21
|
Net interest
income
|
$ 3,475
|
|
$ 3,051
|
|
$ 2,856
|
14 %
|
22 %
|
Noninterest
income
|
2,074
|
|
2,065
|
|
2,341
|
—
|
(11) %
|
Total
revenue
|
$ 5,549
|
|
$ 5,116
|
|
$ 5,197
|
8 %
|
7 %
|
|
|
|
|
|
|
|
|
Total revenue for the third quarter of 2022 increased
$433 million and $352 million compared with the second quarter of
2022 and the third quarter of 2021, respectively, driven by higher
net interest income.
Net interest income of $3.5
billion for the third quarter of 2022 increased $424 million and $619
million compared to the second quarter of 2022 and third
quarter of 2021, respectively. In both comparisons the increase was
driven by higher yields on interest-earning assets and loan growth,
partially offset by higher funding costs.
The net interest margin was 2.82% in the third quarter of 2022,
increasing 32 basis points and 55 basis points compared with the
second quarter of 2022 and the third quarter of 2021, respectively.
In both comparisons the increase was primarily due to higher yields
on interest-earning assets.
Noninterest
Income
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
3Q22 vs
|
3Q22 vs
|
In
millions
|
3Q22
|
|
2Q22
|
|
3Q21
|
2Q22
|
3Q21
|
Asset management and
brokerage
|
$ 357
|
|
$ 365
|
|
$ 375
|
(2) %
|
(5) %
|
Capital markets
related
|
299
|
|
409
|
|
482
|
(27) %
|
(38) %
|
Card and cash
management
|
671
|
|
671
|
|
663
|
—
|
1 %
|
Lending and deposit
services
|
287
|
|
282
|
|
305
|
2 %
|
(6) %
|
Residential and
commercial mortgage
|
143
|
|
161
|
|
248
|
(11) %
|
(42) %
|
Other
|
317
|
|
177
|
|
268
|
79 %
|
18 %
|
|
$
2,074
|
|
$
2,065
|
|
$
2,341
|
—
|
(11) %
|
|
|
|
|
|
|
|
|
Noninterest income for the third quarter of 2022 increased
$9 million compared with the second
quarter of 2022. Asset management and brokerage fees decreased
$8 million and included the impact of
lower average equity markets. Capital markets related revenue
decreased $110 million driven by
lower merger and acquisition advisory fees reflecting the impact of
elevated second quarter activity. Lending and deposit services
increased $5 million driven by higher
loan commitment fees. Residential and commercial mortgage revenue
decreased $18 million primarily due
to lower residential mortgage banking activities. Other noninterest
income increased $140 million and
included higher private equity revenue and positive Visa Class B
derivative fair value adjustments of $13
million. The second quarter of 2022 included negative Visa
Class B derivative fair value adjustments of $16 million.
Noninterest income for the third quarter of 2022 decreased
$267 million compared with the third
quarter of 2021, driven by lower merger and acquisition advisory
fees, a decline in residential and commercial mortgage banking
activities and lower private equity revenue, partially offset by
positive Visa Class B derivative fair value adjustments. The third
quarter of 2021 included negative Visa Class B derivative fair
value adjustments of $169 million and
integration costs of $8 million.
CONSOLIDATED EXPENSE
REVIEW
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest
Expense
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
3Q22 vs
|
3Q22 vs
|
In
millions
|
3Q22
|
|
2Q22
|
|
3Q21
|
2Q22
|
3Q21
|
Personnel
|
$
1,805
|
|
$
1,779
|
|
$
1,986
|
1 %
|
(9) %
|
Occupancy
|
241
|
|
246
|
|
248
|
(2) %
|
(3) %
|
Equipment
|
344
|
|
351
|
|
355
|
(2) %
|
(3) %
|
Marketing
|
93
|
|
95
|
|
103
|
(2) %
|
(10) %
|
Other
|
797
|
|
773
|
|
895
|
3 %
|
(11) %
|
|
$
3,280
|
|
$
3,244
|
|
$
3,587
|
1 %
|
(9) %
|
|
|
|
|
|
|
|
|
Noninterest expense for the third quarter of 2022 increased
$36 million compared with the second
quarter of 2022, reflecting increased personnel expense to support
business growth as well as one additional day in the quarter.
Noninterest expense decreased $307
million in comparison with the third quarter of 2021,
primarily due to lower integration expenses and a decline in
variable compensation related to lower merger and acquisition
advisory activity. Integration expenses were $235 million in the third quarter of 2021.
The effective tax rate was 19.1% for the third quarter of 2022,
18.5% for the second quarter of 2022 and 17.8% for the third
quarter of 2021.
CONSOLIDATED BALANCE SHEET REVIEW
Average total assets were $547.1
billion in the third quarter of 2022 compared with
$546.9 billion in the second quarter
of 2022 and $559.2 billion in the
third quarter of 2021. Compared to the third quarter of 2021, the
decrease was primarily attributable to lower Federal Reserve Bank
balances reflecting a decline in deposits, partially offset by
higher loan and securities balances.
Loans
|
|
|
|
|
|
Change
|
Change
|
|
September 30,
2022
|
|
June 30,
2022
|
|
September 30,
2021
|
09/30/22 vs
|
09/30/22 vs
|
In
billions
|
|
|
06/30/22
|
09/30/21
|
Average
|
|
|
|
|
|
|
|
Commercial
|
$
214.1
|
|
$
207.6
|
|
$
196.3
|
3 %
|
9 %
|
Consumer
|
98.9
|
|
97.2
|
|
95.0
|
2 %
|
4 %
|
Average
loans
|
$
313.0
|
|
$
304.8
|
|
$
291.3
|
3 %
|
7 %
|
|
|
|
|
|
|
|
|
Quarter
end
|
|
|
|
|
|
|
|
Commercial
|
$
215.6
|
|
$
212.5
|
|
$
195.2
|
1 %
|
10 %
|
Consumer
|
99.8
|
|
98.3
|
|
95.0
|
2 %
|
5 %
|
Total loans
|
$
315.4
|
|
$
310.8
|
|
$
290.2
|
1 %
|
9 %
|
|
|
|
|
|
|
|
|
Average loans for the third quarter of 2022 were $313.0 billion, increasing $8.2 billion compared to the second quarter of
2022. Average commercial loans increased $6.5 billion driven by growth in PNC's corporate
banking, real estate and business credit businesses. Average
consumer loans of $98.9 billion
increased $1.7 billion due to higher
residential mortgage, home equity and credit card loans, partially
offset by lower auto loans.
Average loans for the third quarter of 2022 increased
$21.7 billion compared to the third
quarter of 2021. Average commercial loans increased $17.8 billion primarily driven by growth in PNC's
corporate banking and business credit businesses, partially offset
by Paycheck Protection Program (PPP) loan forgiveness. Average
consumer loans increased $3.9 billion
largely due to growth in residential mortgage loans.
Investment
Securities
|
|
|
|
|
|
|
September 30,
2022
|
June 30,
2022
|
September 30,
2021
|
In
billions
|
Balance
|
Portfolio
Mix
|
Balance
|
Portfolio
Mix
|
Balance
|
Portfolio
Mix
|
Average
|
|
|
|
|
|
|
Available for
sale
|
$
52.1
|
|
$
66.6
|
|
$ 119.1
|
|
Held to
maturity
|
84.9
|
|
68.1
|
|
1.5
|
|
Average investment
securities
|
$ 137.0
|
|
$ 134.7
|
|
$ 120.6
|
|
|
|
|
|
|
|
|
Quarter
end
|
|
|
|
|
|
|
Available for
sale
|
$
45.8
|
34 %
|
$
53.0
|
40 %
|
$ 124.1
|
99 %
|
Held to
maturity
|
90.7
|
66 %
|
79.7
|
60 %
|
1.5
|
1 %
|
Total investment
securities
|
$ 136.5
|
|
$ 132.7
|
|
$ 125.6
|
|
|
|
|
|
|
|
|
Average investment securities for the third quarter of 2022 were
$137.0 billion, increasing
$2.3 billion from the second quarter
of 2022 reflecting net purchases, primarily of agency residential
mortgage-backed securities within the held to maturity portfolio.
Average investment securities increased $16.4 billion from the third quarter of 2021 due
to net purchase activity. Net unrealized losses on available for
sale securities were $4.8 billion at
September 30, 2022, compared with net unrealized losses of
$3.0 billion at June 30, 2022
and net unrealized gains of $1.7
billion at September 30, 2021.
Average Federal Reserve Bank balances for the third quarter of
2022 were $31.5 billion, decreasing
$7.8 billion from the second quarter
of 2022, driven by higher loans outstanding and lower deposits,
partially offset by higher borrowed funds. Average Federal Reserve
Bank balances decreased $48.6 billion
from the third quarter of 2021, primarily due to higher loans
outstanding, increased securities balances and lower deposits.
Federal Reserve Bank balances at September 30, 2022 were
$39.8 billion.
Deposits
|
|
|
|
Change
|
Change
|
|
September 30,
2022
|
June 30,
2022
|
September 30,
2021
|
09/30/22 vs
|
09/30/22 vs
|
In
billions
|
06/30/22
|
09/30/21
|
Average
|
|
|
|
|
|
Commercial
|
$
215.8
|
$
216.9
|
$
233.0
|
(1) %
|
(7) %
|
Consumer
|
$
223.4
|
$
229.6
|
$
221.4
|
(3) %
|
1 %
|
Average
deposits
|
$
439.2
|
$
446.5
|
$
454.4
|
(2) %
|
(3) %
|
|
|
|
|
|
|
Quarter
end
|
|
|
|
|
|
Commercial
|
$
216.0
|
$
214.3
|
$
227.7
|
1 %
|
(5) %
|
Consumer
|
$
222.2
|
$
226.5
|
$
221.2
|
(2) %
|
—
|
Total
deposits
|
$
438.2
|
$
440.8
|
$
448.9
|
(1) %
|
(2) %
|
|
|
|
|
|
|
Average deposits for the third quarter of 2022 were $439.2 billion, decreasing $7.3 billion compared with the second quarter of
2022, driven by lower consumer deposits, reflecting inflationary
pressures and seasonally higher consumer spending. Compared with
the third quarter of 2021, average deposits decreased $15.2 billion and included the repositioning
of certain BBVA USA portfolios. In
both comparisons, noninterest-bearing balances decreased due to
deposit outflows and the shift of commercial deposits to
interest-bearing as deposit rates have risen.
Deposits at September 30, 2022 of $438.2 billion, decreased $2.6 billion from June 30, 2022 as higher
commercial deposits were more than offset by lower consumer
deposits.
Borrowed
Funds
|
|
|
|
|
|
Change
|
Change
|
|
September 30,
2022
|
|
June 30,
2022
|
|
September 30,
2021
|
09/30/22 vs
|
09/30/22 vs
|
In
billions
|
|
|
06/30/22
|
09/30/21
|
Average
|
$
44.3
|
|
$
35.7
|
|
$
34.4
|
24 %
|
29 %
|
Quarter end
|
$
54.6
|
|
$
36.0
|
|
$
33.5
|
52 %
|
63 %
|
|
|
|
|
|
|
|
|
Average borrowed funds of $44.3
billion in the third quarter of 2022 increased $8.6 billion and $9.9
billion compared with the second quarter of 2022 and third
quarter of 2021, respectively, driven by increased Federal Home
Loan Bank borrowings. In comparison to the third quarter of 2021,
the increase was partially offset by lower bank notes and senior
debt.
Capital
|
September 30,
2022
|
*
|
|
June 30,
2022
|
|
September 30,
2021
|
|
|
|
Common shareholders'
equity In billions
|
$
39.4
|
|
|
$
41.6
|
|
$
51.3
|
Accumulated other
comprehensive income (loss)
In
billions
|
$
(10.5)
|
|
|
$
(8.4)
|
|
$
1.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basel III common equity
Tier 1 capital ratio
|
9.3 %
|
|
|
9.6 %
|
|
10.3 %
|
Basel III common equity
Tier 1 fully implemented capital ratio
|
9.1 %
|
|
|
9.4 %
|
|
10.0 %
|
* Ratios
estimated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PNC maintained a strong capital position. Common shareholders'
equity at September 30, 2022 decreased $2.2 billion from June 30, 2022 as the
benefit of third quarter net income was more than offset by the
decline in accumulated other comprehensive income, as well as share
repurchases and dividends paid in the third quarter.
As a Category III institution, PNC has elected to exclude
accumulated other comprehensive income when calculating Basel III
capital ratios. Accumulated other comprehensive income at
September 30, 2022 decreased
$2.1 billion and $11.6 billion from June
30, 2022 and September 30,
2021, respectively. In both comparisons the decrease
reflected the negative impact of higher interest rates on net
unrealized losses on securities and swaps.
In the third quarter of 2022, PNC returned $1.7 billion of capital to shareholders, an
increase of $0.3 billion from the
second quarter of 2022, due to higher share repurchases. Capital
return in the third quarter of 2022 was comprised of $1.1 billion of common share repurchases,
representing 6.7 million shares, and $0.6
billion of dividends on common shares. Consistent with the
Stress Capital Buffer (SCB) framework, which allows for capital
return in amounts in excess of the SCB minimum levels, our board of
directors has authorized a repurchase framework under the
previously approved repurchase program of up to 100 million common
shares, of which approximately 53% were still available for
repurchase at September 30, 2022. Under this framework, PNC
expects its quarterly repurchases to approximate $700 million to $750
million with the ability to adjust those levels as
conditions warrant. PNC's SCB for the four-quarter period
beginning October 1, 2022 is
2.9%.
On October 3, 2022, the PNC board
of directors declared a quarterly cash dividend on common stock of
$1.50 per share payable on
November 5, 2022.
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 of 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 through December 31,
2024. 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
|
|
September
30, 2022
|
June 30,
2022
|
September
30, 2021
|
09/30/22 vs
|
09/30/22 vs
|
In
millions
|
06/30/22
|
09/30/21
|
Provision for
(recapture of) credit losses
|
$
241
|
$
36
|
$
(203)
|
$ 205
|
$ 444
|
Net loan
charge-offs
|
$
119
|
$
83
|
$
81
|
43 %
|
47 %
|
Allowance for credit
losses (a)
|
$
5,263
|
$
5,143
|
$
6,001
|
2 %
|
(12) %
|
Total
delinquencies (b)
|
$
1,626
|
$
1,511
|
$
1,469
|
8 %
|
11 %
|
Nonperforming
loans
|
$
2,068
|
$
2,046
|
$
2,528
|
1 %
|
(18) %
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs to
average loans (annualized)
|
0.15 %
|
0.11 %
|
0.11 %
|
|
|
Allowance for credit
losses to total loans
|
1.67 %
|
1.65 %
|
2.07 %
|
|
|
Nonperforming loans to
total loans
|
0.66 %
|
0.66 %
|
0.87 %
|
|
|
(a) Excludes
allowances for investment securities and other financial
assets
(b) Total
delinquencies represent accruing loans more than 30 days past
due
|
Provision for credit losses was $241
million in the third quarter of 2022, reflecting slightly
weaker economic expectations which impacted our macroeconomic
scenarios and weightings. The second quarter of 2022 included a
provision for credit losses of $36
million.
Net loan charge-offs were $119
million in the third quarter of 2022, increasing
$36 million and $38 million from the second quarter of 2022 and
third quarter of 2021, respectively, primarily driven by higher
commercial loan net charge-offs.
The allowance for credit losses was $5.3
billion at September 30, 2022, $5.1 billion at June 30, 2022 and
$6.0 billion at September 30,
2021. The allowance for credit losses as a percentage of total
loans was 1.67% at September 30, 2022, 1.65% at June 30,
2022 and 2.07% at September 30, 2021.
Nonperforming loans were $2.1
billion at September 30, 2022, increasing $22 million compared to June 30, 2022, as
lower consumer nonperforming loans were more than offset by higher
commercial nonperforming loans. Nonperforming loans decreased
$460 million compared to
September 30, 2021, due to lower commercial and consumer
nonperforming loans.
Delinquencies at September 30, 2022 of $1.6 billion increased $115 million and $157
million compared to June 30, 2022 and
September 30, 2021, respectively. In both comparisons the
increase was the result of higher commercial loan delinquencies
primarily due to administrative delays, partially offset by lower
consumer loan delinquencies.
BUSINESS SEGMENT
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
Business Segment
Income (Loss)
|
|
|
|
|
|
In
millions
|
3Q22
|
|
2Q22
|
|
3Q21
|
Retail
Banking
|
$ 560
|
|
$ 322
|
|
$ 447
|
Corporate &
Institutional Banking
|
929
|
|
1,003
|
|
1,123
|
Asset Management
Group
|
90
|
|
86
|
|
114
|
Other
|
45
|
|
70
|
|
(210)
|
Net income excluding
noncontrolling interests
|
$
1,624
|
|
$
1,481
|
|
$
1,474
|
|
|
|
|
|
|
Retail
Banking
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
3Q22 vs
|
|
3Q22 vs
|
In
millions
|
3Q22
|
|
2Q22
|
|
3Q21
|
|
2Q22
|
|
3Q21
|
Net interest
income
|
$
2,017
|
|
$
1,662
|
|
$
1,713
|
|
$ 355
|
|
$ 304
|
Noninterest
income
|
$ 725
|
|
$ 748
|
|
$ 662
|
|
$ (23)
|
|
$
63
|
Provision for
(recapture of) credit losses
|
$ 92
|
|
$ 55
|
|
$
(113)
|
|
$
37
|
|
$ 205
|
Noninterest
expense
|
$
1,901
|
|
$
1,913
|
|
$
1,889
|
|
$ (12)
|
|
$
12
|
Earnings
|
$ 560
|
|
$ 322
|
|
$ 447
|
|
$ 238
|
|
$ 113
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
94.9
|
|
$
93.8
|
|
$
99.1
|
|
$
1.1
|
|
$
(4.2)
|
Average
deposits
|
$
264.4
|
|
$
268.4
|
|
$
262.0
|
|
$ (4.0)
|
|
$
2.4
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs
In millions
|
$ 98
|
|
$ 88
|
|
$ 82
|
|
$
10
|
|
$
16
|
|
|
|
|
|
|
|
|
|
|
Retail Banking Highlights
Third quarter 2022 compared with second quarter
2022
- Earnings increased 74%, primarily due to higher net interest
income.
-
- Noninterest income decreased 3%, primarily due to a decline in
residential mortgage banking activities.
- Provision for credit losses was $92
million for the third quarter of 2022, reflecting slightly
weaker economic expectations which impacted our macroeconomic
scenarios and weightings.
- Noninterest expense decreased modestly, or 1%.
- Average loans increased 1%, due to higher residential mortgage,
home equity and credit card loans, partially offset by lower auto
loans.
- Average deposits decreased 2%, reflecting inflationary
pressures and seasonally higher consumer spending.
Third quarter 2022 compared with third quarter
2021
- Earnings increased 25%, due to higher net interest income and
higher noninterest income, partially offset by a higher provision
for credit losses and higher noninterest expense.
-
- Noninterest income increased 10%, and included positive Visa
Class B derivative fair value adjustments of $13 million, partially offset by lower
residential mortgage revenue. The third quarter of 2021 included
negative Visa Class B derivative fair value adjustments of
$169 million.
- Noninterest expense increased modestly, or 1%, primarily
reflecting increased technology investments.
- Average loans decreased 4%, as growth in residential mortgage,
home equity and credit card loans was more than offset by PPP loan
forgiveness and lower auto loans.
- Average deposits increased 1%, due to higher savings and demand
deposits, partially offset by lower money market deposits.
Corporate &
Institutional Banking
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
3Q22 vs
|
|
3Q22 vs
|
In
millions
|
3Q22
|
|
2Q22
|
|
3Q21
|
|
2Q22
|
|
3Q21
|
Net interest
income
|
$
1,368
|
|
$
1,253
|
|
$
1,250
|
|
$ 115
|
|
$ 118
|
Noninterest
income
|
$ 887
|
|
$ 968
|
|
$
1,056
|
|
$ (81)
|
|
$ (169)
|
Provision for
(recapture of) credit losses
|
$ 150
|
|
$
(17)
|
|
$ (99)
|
|
$ 167
|
|
$ 249
|
Noninterest
expense
|
$ 890
|
|
$ 934
|
|
$ 980
|
|
$ (44)
|
|
$ (90)
|
Earnings
|
$ 929
|
|
$
1,003
|
|
$
1,123
|
|
$ (74)
|
|
$ (194)
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
199.9
|
|
$
193.0
|
|
$
175.8
|
|
$
6.9
|
|
$ 24.1
|
Average
deposits
|
$
145.4
|
|
$
146.2
|
|
$
163.1
|
|
$ (0.8)
|
|
$
(17.7)
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs
In millions
|
$ 33
|
|
$ 11
|
|
$ 13
|
|
$
22
|
|
$
20
|
|
|
|
|
|
|
|
|
|
|
Corporate & Institutional Banking Highlights
Third quarter 2022 compared with second quarter
2022
- Earnings decreased 7%, due to a higher provision for credit
losses and lower noninterest income, partially offset by higher net
interest income and lower noninterest expense.
-
- Noninterest income decreased 8%, primarily due to a decline in
capital markets related revenue driven by lower merger and
acquisition advisory fees reflecting the impact of elevated second
quarter activity.
- Provision for credit losses was $150
million for the third quarter of 2022, reflecting slightly
weaker economic expectations which impacted our macroeconomic
scenarios and weightings.
- Noninterest expense decreased 5%, largely due to a decline in
variable compensation associated with lower fee business
activity.
- Average loans increased 4%, driven primarily by growth in PNC's
corporate banking, real estate and business credit businesses.
- Average deposits were largely stable.
Third quarter 2022 compared with third quarter
2021
- Earnings decreased 17%, due to a higher provision for credit
losses and lower noninterest income, partially offset by higher net
interest income and lower noninterest expense.
-
- Noninterest income decreased 16%, primarily due to lower
capital markets related revenue largely driven by lower merger and
acquisition advisory activity.
- Noninterest expense decreased 9%, as a result of lower variable
compensation associated with lower fee business activity.
- Average loans increased 14%, primarily driven by growth PNC's
corporate banking and business credit businesses, partially offset
by PPP loan forgiveness.
- Average deposits decreased 11%, and included the repositioning
of certain BBVA USA
portfolios.
Asset Management
Group
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
3Q22 vs
|
|
3Q22 vs
|
In
millions
|
3Q22
|
|
2Q22
|
|
3Q21
|
|
2Q22
|
|
3Q21
|
Net interest
income
|
$
165
|
|
$
153
|
|
$
141
|
|
$
12
|
|
$
24
|
Noninterest
income
|
$
231
|
|
$
234
|
|
$
256
|
|
$
(3)
|
|
$ (25)
|
Provision for
(recapture of) credit losses
|
$
4
|
|
$
5
|
|
$ (6)
|
|
$
(1)
|
|
$
10
|
Noninterest
expense
|
$
274
|
|
$
270
|
|
$
255
|
|
$
4
|
|
$
19
|
Earnings
|
$ 90
|
|
$ 86
|
|
$
114
|
|
$
4
|
|
$ (24)
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Discretionary client
assets under management
|
$
166
|
|
$
167
|
|
$
183
|
|
$
(1)
|
|
$ (17)
|
Nondiscretionary
client assets under administration
|
$
148
|
|
$
153
|
|
$
170
|
|
$
(5)
|
|
$ (22)
|
Client assets under
administration at quarter end
|
$
314
|
|
$
320
|
|
$
353
|
|
$
(6)
|
|
$ (39)
|
Brokerage client
account assets
|
$
4
|
|
$
4
|
|
$
5
|
|
—
|
|
$
(1)
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
14.4
|
|
$
14.0
|
|
$
13.0
|
|
$ 0.4
|
|
$ 1.4
|
Average
deposits
|
$
29.3
|
|
$
31.7
|
|
$
29.3
|
|
$ (2.4)
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs
(recoveries) In millions
|
$ (2)
|
|
$ (1)
|
|
$ (1)
|
|
$
(1)
|
|
$
(1)
|
|
|
|
|
|
|
|
|
|
|
Asset Management Group Highlights
Third quarter 2022 compared with second quarter
2022
- Earnings increased 5%, primarily due to higher net interest
income.
-
- Noninterest income was relatively stable.
- Noninterest expense increased 1%, largely driven by higher
personnel expense reflecting the impact of additional headcount to
support business growth.
- Discretionary client assets under management decreased 1%, as
net inflows were more than offset by lower spot equity
markets.
- Average loans increased 3%, driven by higher residential
mortgage loans.
- Average deposits decreased 8%, and included the impact of
client activity and inflationary pressures.
Third quarter 2022 compared with third quarter
2021
- Earnings decreased 21%, as higher net interest income was more
than offset by lower noninterest income, higher noninterest expense
and an increase in the provision for credit losses.
-
- Noninterest income decreased 10%, primarily due to the impact
of lower average equity markets.
- Noninterest expense increased 7%, and included higher personnel
expense.
- Discretionary client assets under management decreased 9%,
driven by lower spot equity markets.
- Average loans increased 11%, due to growth in residential
mortgage loans.
- Average deposits were stable.
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)
402-9101 and (303) 223-4368 (international) and Internet access to
the live audio listen-only webcast of the call is available at
www.pnc.com/investorevents. PNC's third 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
22020242 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
|
|
|
|
Nine months
ended
|
|
|
Dollars in millions,
except per share data
|
|
September 30
|
|
June 30
|
|
September 30
|
|
|
|
September 30
|
|
September 30
|
|
|
|
|
2022
|
|
2022
|
|
2021
|
|
|
|
2022
|
|
2021
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
|
$ 3,475
|
|
$ 3,051
|
|
$ 2,856
|
|
|
|
$ 9,330
|
|
$ 7,785
|
|
|
Noninterest
income
|
|
2,074
|
|
2,065
|
|
2,341
|
|
|
|
6,027
|
|
6,299
|
|
|
Total
revenue
|
|
5,549
|
|
5,116
|
|
5,197
|
|
|
|
15,357
|
|
14,084
|
|
|
Provision for
(recapture of) credit losses
|
|
241
|
|
36
|
|
(203)
|
|
|
|
69
|
|
(452)
|
|
|
Noninterest
expense
|
|
3,280
|
|
3,244
|
|
3,587
|
|
|
|
9,696
|
|
9,211
|
|
|
Income before income
taxes and noncontrolling interests
|
|
$ 2,028
|
|
$ 1,836
|
|
$ 1,813
|
|
|
|
$ 5,592
|
|
$ 5,325
|
|
|
Income taxes
|
|
388
|
|
340
|
|
323
|
|
|
|
1,027
|
|
906
|
|
|
Net income
|
|
$ 1,640
|
|
$ 1,496
|
|
$ 1,490
|
|
|
|
$ 4,565
|
|
$ 4,419
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests
|
|
16
|
|
15
|
|
16
|
|
|
|
52
|
|
38
|
|
|
Preferred stock
dividends (a)
|
|
65
|
|
71
|
|
57
|
|
|
|
181
|
|
162
|
|
|
Preferred stock
discount accretion and redemptions
|
|
1
|
|
1
|
|
1
|
|
|
|
4
|
|
3
|
|
|
Net income attributable
to common shareholders
|
|
$ 1,558
|
|
$ 1,409
|
|
$ 1,416
|
|
|
|
$ 4,328
|
|
$ 4,216
|
|
|
Per Common
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ 3.78
|
|
$ 3.39
|
|
$ 3.31
|
|
|
|
$ 10.39
|
|
$ 9.84
|
|
|
Diluted
|
|
$ 3.78
|
|
$ 3.39
|
|
$ 3.30
|
|
|
|
$ 10.39
|
|
$ 9.83
|
|
|
Cash dividends declared
per common share
|
|
$ 1.50
|
|
$ 1.50
|
|
$ 1.25
|
|
|
|
$ 4.25
|
|
$ 3.55
|
|
|
Effective tax rate
(b)
|
|
19.1 %
|
|
18.5 %
|
|
17.8 %
|
|
|
|
18.4 %
|
|
17.0 %
|
|
|
PERFORMANCE
RATIOS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin
(c)
|
|
2.82 %
|
|
2.50 %
|
|
2.27 %
|
|
|
|
2.54 %
|
|
2.28 %
|
|
|
Noninterest income to
total revenue
|
|
37 %
|
|
40 %
|
|
45 %
|
|
|
|
39 %
|
|
45 %
|
|
|
Efficiency
(d)
|
|
59 %
|
|
63 %
|
|
69 %
|
|
|
|
63 %
|
|
65 %
|
|
|
Return on:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common
shareholders' equity
|
|
14.97 %
|
|
13.52 %
|
|
10.95 %
|
|
|
|
13.31 %
|
|
11.17 %
|
|
|
Average
assets
|
|
1.19 %
|
|
1.10 %
|
|
1.06 %
|
|
|
|
1.11 %
|
|
1.16 %
|
|
|
|
|
(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
September 30, 2022, June 30, 2022 and September 30,
2021 were $29 million, $25 million and $22 million,
respectively. The taxable-equivalent adjustments to net interest
income for the nine months ended September 30, 2022 and
September 30, 2021 were $76 million and $52 million,
respectively.
|
(d)
|
Calculated as
noninterest expense divided by total revenue.
|
The PNC Financial
Services Group, Inc.
|
Consolidated
Financial Highlights (Unaudited)
|
|
|
|
|
|
|
|
September 30
|
|
June 30
|
|
September 30
|
|
2022
|
|
2022
|
|
2021
|
BALANCE SHEET
DATA
|
|
|
|
|
|
Dollars in millions,
except per share data
|
|
|
|
|
|
Assets
|
$
559,477
|
|
$
540,786
|
|
$
553,515
|
Loans (a)
|
$
315,400
|
|
$
310,800
|
|
$
290,230
|
Allowance for loan and
lease losses
|
$
4,581
|
|
$
4,462
|
|
$
5,355
|
Interest-earning
deposits with banks
|
$
40,278
|
|
$
28,404
|
|
$
75,478
|
Investment
securities
|
$
136,451
|
|
$
132,732
|
|
$
125,606
|
Total
deposits
|
$
438,194
|
|
$
440,811
|
|
$
448,902
|
Borrowed funds
(a)
|
$
54,633
|
|
$
35,984
|
|
$
33,471
|
Allowance for unfunded
lending related commitments
|
$
682
|
|
$
681
|
|
$
646
|
Total shareholders'
equity
|
$
46,688
|
|
$
47,652
|
|
$
56,259
|
Common shareholders'
equity
|
$
39,444
|
|
$
41,648
|
|
$
51,250
|
Accumulated other
comprehensive income (loss)
|
$
(10,486)
|
|
$
(8,358)
|
|
$
1,079
|
Book value per common
share
|
$
97.59
|
|
$
101.39
|
|
$
121.16
|
Tangible book value per
common share (non-GAAP) (b)
|
$
69.98
|
|
$
74.39
|
|
$
94.82
|
Period end common
shares outstanding (In millions)
|
404
|
|
411
|
|
423
|
Loans to
deposits
|
72 %
|
|
71 %
|
|
65 %
|
Common shareholders'
equity to total assets
|
7.1 %
|
|
7.7 %
|
|
9.3 %
|
CLIENT ASSETS (In
billions)
|
|
|
|
|
|
Discretionary client
assets under management
|
$
166
|
|
$
167
|
|
$
183
|
Nondiscretionary client
assets under administration
|
148
|
|
153
|
|
170
|
Total client assets
under administration
|
314
|
|
320
|
|
353
|
Brokerage account
client assets
|
71
|
|
72
|
|
81
|
Total client
assets
|
$
385
|
|
$
392
|
|
$
434
|
CAPITAL
RATIOS
|
|
|
|
|
|
Basel III (c)
(d)
|
|
|
|
|
|
Common equity Tier
1
|
9.3 %
|
|
9.6 %
|
|
10.3 %
|
Common equity Tier 1
fully implemented (e)
|
9.1 %
|
|
9.4 %
|
|
10.0 %
|
Tier 1
risk-based
|
11.0 %
|
|
11.0 %
|
|
11.6 %
|
Total capital
risk-based (f)
|
12.9 %
|
|
12.9 %
|
|
13.6 %
|
Leverage
|
8.6 %
|
|
8.4 %
|
|
8.2 %
|
Supplementary
leverage
|
7.3 %
|
|
7.1 %
|
|
7.0 %
|
ASSET
QUALITY
|
|
|
|
|
|
Nonperforming loans to
total loans
|
0.66 %
|
|
0.66 %
|
|
0.87 %
|
Nonperforming assets to
total loans, OREO and foreclosed assets
|
0.67 %
|
|
0.67 %
|
|
0.88 %
|
Nonperforming assets to
total assets
|
0.38 %
|
|
0.38 %
|
|
0.46 %
|
Net charge-offs to
average loans (for the three months ended) (annualized)
|
0.15 %
|
|
0.11 %
|
|
0.11 %
|
Allowance for loan and
lease losses to total loans
|
1.45 %
|
|
1.44 %
|
|
1.85 %
|
Allowance for credit
losses to total loans (g)
|
1.67 %
|
|
1.65 %
|
|
2.07 %
|
Allowance for loan and
lease losses to nonperforming loans
|
222 %
|
|
218 %
|
|
212 %
|
Total delinquencies
(In millions) (h)
|
$
1,626
|
|
$
1,511
|
|
$
1,469
|
|
|
(a)
|
Amounts include assets
and liabilities for which we have elected the fair value option.
Our second quarter 2022 Form 10-Q included, and our third 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 18 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 16 for additional
information. The ratios as of September 30, 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 ratio includes 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 through
December 31, 2024. See the table
below for the June 30, 2022, September 30, 2021 and
estimated September 30, 2022 ratios. For the full impact of
PNC's adoption of CECL, which excludes the benefits of the
five-year transition provision, see the September 30,
2022 and June 30, 2022 (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)
|
|
|
|
|
September 30
2022
(estimated)
(b)
|
June 30
2022 (b)
|
|
September
30
2021
(b)
|
|
September 30,
2022
(Fully
Implemented)
(estimated)
(c)
|
June 30, 2022
(Fully
Implemented)
(estimated)
(c)
|
|
|
|
Dollars in
millions
|
|
Common stock, related
surplus and retained earnings,
net of treasury stock
|
$
50,653
|
$
50,730
|
|
$
51,228
|
|
$
49,930
|
$
50,007
|
Less regulatory capital
adjustments:
|
|
|
|
|
|
|
|
Goodwill and
disallowed intangibles, net of deferred
tax liabilities
|
(11,159)
|
(11,094)
|
|
(11,142)
|
|
(11,159)
|
(11,094)
|
All other
adjustments
|
(123)
|
(99)
|
|
(48)
|
|
(127)
|
(107)
|
Basel III Common equity
Tier 1 capital
|
$
39,371
|
$
39,537
|
|
$
40,038
|
|
$
38,644
|
$
38,806
|
Basel III standardized
approach risk-weighted assets (d)
|
$
423,347
|
$
413,432
|
|
$
389,911
|
|
$
423,494
|
$ 413,706
|
Basel III Common equity
Tier 1 capital ratio
|
9.3 %
|
9.6 %
|
|
10.3 %
|
|
9.1 %
|
9.4 %
|
|
|
(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 September 30, 2022
and June 30, 2022 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)
|
NON-GAAP MEASURES
Pretax
Pre-Provision Earnings (non-GAAP)
Pretax
Pre-Provision Earnings Excluding Integration Costs
(non-GAAP)
|
Three months
ended
|
|
September 30
|
|
June 30
|
|
September 30
|
Dollars in
millions
|
2022
|
|
2022
|
|
2021
|
Income before income
taxes and noncontrolling interests
|
$
2,028
|
|
$
1,836
|
|
$
1,813
|
Provision for
(recapture of) credit losses
|
241
|
|
36
|
|
(203)
|
Pretax pre-provision
earnings (non-GAAP)
|
$
2,269
|
|
$
1,872
|
|
$
1,610
|
Integration
costs
|
1
|
|
14
|
|
243
|
Pretax pre-provision
earnings excluding integration costs (non-GAAP)
|
$
2,270
|
|
$
1,886
|
|
$
1,853
|
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
|
|
September 30
|
|
Per Common
|
|
June 30
|
|
Per Common
|
|
September 30
|
|
Per Common
|
Dollars in millions,
except per share data
|
2022
|
|
Share
|
|
2022
|
|
Share
|
|
2021
|
|
Share
|
Net income attributable
to common shareholders
|
$
1,558
|
|
|
|
$
1,409
|
|
|
|
$
1,416
|
|
|
Dividends and
undistributed earnings allocated to
nonvested restricted shares
|
(8)
|
|
|
|
(7)
|
|
|
|
(8)
|
|
|
Net income attributable
to diluted common
shareholders
|
$
1,550
|
|
$
3.78
|
|
$
1,402
|
|
$
3.39
|
|
$
1,408
|
|
$
3.30
|
Integration costs after
tax (a)
|
1
|
|
—
|
|
11
|
|
0.03
|
|
192
|
|
0.45
|
Adjusted net income
attributable to diluted
common shareholders excluding integration costs
(non-GAAP)
|
$
1,551
|
|
$
3.78
|
|
$
1,413
|
|
$
3.42
|
|
$
1,600
|
|
$
3.75
|
Average diluted common
shares outstanding
(In
millions)
|
410
|
|
|
|
414
|
|
|
|
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)
|
|
|
|
|
|
|
September 30
|
|
June 30
|
|
September 30
|
Dollars in millions,
except per share data
|
2022
|
|
2022
|
|
2021
|
Book value per common
share
|
$
97.59
|
|
$
101.39
|
|
$
121.16
|
Tangible book value per
common share
|
|
|
|
|
|
Common shareholders'
equity
|
$
39,444
|
|
$
41,648
|
|
$
51,250
|
Goodwill and other
intangible assets
|
(11,423)
|
|
(11,360)
|
|
(11,419)
|
Deferred tax
liabilities on goodwill and other intangible assets
|
263
|
|
267
|
|
277
|
Tangible common
shareholders' equity
|
$
28,284
|
|
$
30,555
|
|
$
40,108
|
Period-end common
shares outstanding (In millions)
|
404
|
|
411
|
|
423
|
Tangible book value per
common share (non-GAAP)
|
$
69.98
|
|
$
74.39
|
|
$
94.82
|
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
|
|
September 30
|
|
June 30
|
|
September 30
|
Dollars in
millions
|
2022
|
|
2022
|
|
2021
|
Net interest
income
|
$
3,475
|
|
$
3,051
|
|
$
2,856
|
Taxable-equivalent
adjustments
|
29
|
|
25
|
|
22
|
Net interest income
(Fully Taxable-Equivalent - FTE)
|
$
3,504
|
|
$
3,076
|
|
$
2,878
|
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.
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,
including our sustainability strategy, 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,
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 impact of the Russia-Ukraine conflict, and associated sanctions or
other actions in response, on the global and U.S. economy,
- 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,
- PNC's ability to attract, recruit and retain skilled employees,
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:
-
- Although real GDP contracted in the first and second quarters
of 2022, the U.S. economy is not in recession. In particular, the
labor market remains extremely strong, with average monthly job
growth well above the pre-pandemic pace, and the unemployment rate
at a 50-year low. Supply-chain difficulties will continue to ease
into 2023. Labor shortages will remain a constraint into 2023,
although strong wage growth and the recent decline in energy prices
will support consumer spending.
- PNC expects economic growth will be below its long-term trend
in the near term as the Federal Reserve continues to tighten
monetary policy in an attempt to reduce inflationary pressures, but
does not expect a near-term recession. Recession risks over the
next few years are elevated, however, because of tighter monetary
policy.
- Inflation has started to slow, but remains near the strongest
pace in decades. Inflation should slow further due to softer
economic growth and a continued easing in supply-chain difficulties
and will return to the Federal Reserve's 2% long-run objective in
2024.
- The Federal Open Market Committee raised the federal funds rate
by 0.75 percentage point in September, to a range of 3.00% to
3.25%. PNC expects further increases in the federal funds rate
through the rest of this year, to a range of 4.25% to 4.50% at the
end of 2022. The federal funds rate is expected to peak between
4.50% and 4.75% in early 2023, before falling in early 2024 as
inflation ebbs and economic growth slows.
- 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 and the
reliability of and risks resulting from extensive use of such
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 employees.
These developments could include:
-
- Changes to laws and regulations, including changes affecting
oversight of the financial services industry; changes in the
enforcement and interpretation of such laws and regulations; and
changes in accounting policies and principles.
- Unfavorable resolution of legal proceedings or other claims and
regulatory and other governmental investigations or other inquiries
resulting in monetary losses, costs, or alterations in our business
practices, and potentially causing reputational harm to PNC.
- Results of the regulatory examination and supervision process,
including our failure to satisfy requirements of agreements with
governmental agencies.
- 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.
- Our reputation and business and operating results may be
affected by our ability to appropriately meet or address
environmental, social or governance targets, goals, commitments or
concerns that may arise.
- 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, the integration of the acquired
businesses into PNC after closing or any failure to execute
strategic or operational plans.
- 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 manmade, natural and other disasters (including severe
weather events); health emergencies; dislocations; geopolitical
instabilities or events; terrorist activities; system failures or
disruptions; security breaches; cyberattacks; international
hostilities; or other extraordinary events beyond PNC's control
through impacts on the economy and financial markets generally or
on us or our counterparties, customers or third-party vendors and
service providers specifically.
We provide greater detail regarding these as well as other
factors in our 2021 Form 10-K and in our subsequent Form 10-Q's,
including in the Risk Factors and Risk Management sections and the
Legal Proceedings and Commitments Notes of the Notes To
Consolidated Financial Statements in those reports, 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:
Timothy Miller
(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.