Fourth quarter net income was $1.5 billion, $3.47
diluted EPS or $3.49 as adjusted
3% avg. loan growth; 4% revenue increase; 10 basis
point NIM expansion
PITTSBURGH, Jan. 18,
2023 /PRNewswire/ -- The PNC Financial Services
Group, Inc. (NYSE: PNC) today reported:
|
|
|
For the
quarter
|
|
For the year
|
|
|
|
|
|
In millions, except per
share data and as noted
|
4Q22
|
3Q22
|
|
2022
|
2021
|
Fourth Quarter
Highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Results
|
|
|
|
|
|
Comparisons reflect
4Q22 vs. 3Q22
|
Revenue
|
$
5,763
|
$
5,549
|
|
$ 21,120
|
$ 19,211
|
▪
Net interest income grew 6%
–
NIM increased 10 basis points
▪
Noninterest income increased $5
million
–
Fee income grew 4%
▪
Revenue increased 4%
▪
Expenses increased 6%
▪
PPNR increased 1%
▪
Average loans grew 3%, driven by
commercial and consumer loan growth
▪
Deposits were relatively
stable
–
Average deposits declined 1%
–
Spot deposits decreased 0.4%
▪
Provision for credit losses of $408
million
–
ACL build of $172 million
▪
Net loan charge-offs were $224 million or
0.28% annualized to average loans
▪
Tangible book value increased
3%
▪
PNC returned $1.2 billion of capital to
shareholders
|
Noninterest
expense
|
3,474
|
3,280
|
|
13,170
|
13,002
|
Pretax, pre-provision
earnings (PPNR) (non-GAAP)
|
2,289
|
2,269
|
|
7,950
|
6,209
|
Integration
costs
|
9
|
1
|
|
55
|
798
|
PPNR excluding
integration costs (non-GAAP)
|
2,298
|
2,270
|
|
8,005
|
7,007
|
Provision for
(recapture of) credit losses
|
408
|
241
|
|
477
|
(779)
|
Net income
|
1,548
|
1,640
|
|
6,113
|
5,725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Common
Share
|
|
|
|
|
|
Diluted earnings - as
reported
|
$
3.47
|
$
3.78
|
|
$13.85
|
$
12.70
|
Impact from integration
costs (non-GAAP)
|
0.02
|
—
|
|
0.11
|
1.48
|
Diluted earnings - as
adjusted (non-GAAP)
|
3.49
|
3.78
|
|
13.96
|
14.18
|
Average diluted common
shares outstanding
|
404
|
410
|
|
412
|
426
|
Book value
|
99.93
|
97.59
|
|
99.93
|
120.61
|
Tangible book
value (non-GAAP)
|
72.12
|
69.98
|
|
72.12
|
94.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet &
Credit Quality
|
|
|
|
|
Average loans
In billions
|
$
321.9
|
$
313.0
|
|
$
307.7
|
$
268.7
|
Average
deposits In billions
|
434.9
|
439.2
|
|
443.4
|
418.9
|
Accumulated other
comprehensive income (loss) (AOCI) In
billions
|
(10.2)
|
(10.5)
|
|
(10.2)
|
0.4
|
Net loan
charge-offs
|
224
|
119
|
|
563
|
657
|
Allowance for credit
losses (ACL) to total loans
|
1.67 %
|
1.67 %
|
|
1.67 %
|
1.92 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected
Ratios
|
|
|
|
|
|
Return on average
common shareholders' equity
|
14.19 %
|
14.97 %
|
|
13.52 %
|
10.78 %
|
Return on average
assets
|
1.10
|
1.19
|
|
1.11
|
1.09
|
Net interest margin
(NIM) (non-GAAP)
|
2.92
|
2.82
|
|
2.65
|
2.29
|
Noninterest income to
total revenue
|
36
|
37
|
|
38
|
45
|
Efficiency
|
60
|
59
|
|
62
|
68
|
Efficiency excluding
integration costs (non-GAAP)
|
60
|
59
|
|
62
|
64
|
Common equity Tier 1
capital ratio
|
9.1
|
9.3
|
|
9.1
|
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:
"By focusing on serving customers and communities, PNC
delivered strong results in 2022. Capitalizing on opportunities
across our coast to coast franchise, we grew loans and generated
record revenue during a rapidly rising rate environment. At the
same time, we controlled expenses and delivered substantial
positive operating leverage. Our credit quality metrics remained
strong and our solid capital position allowed us to return
$6 billion of capital to shareholders
throughout the year. As we enter 2023, we are well positioned to
continue generating value for our stakeholders."
Income Statement Highlights
Fourth quarter 2022 compared with third quarter
2022
- Net income of $1.5 billion
decreased $92 million, or 6%, and
included a higher provision for credit losses.
- Total revenue of $5.8 billion
increased $214 million, or 4%,
primarily due to higher net interest income.
- Net interest income of $3.7
billion increased $209
million, or 6%, driven by higher interest-earning asset
yields and balances, partially offset by higher funding costs.
-
- Net interest margin of 2.92% increased 10 basis points due to
higher interest-earning asset yields, partially offset by higher
funding costs.
- Noninterest income of $2.1
billion increased $5
million.
-
- Fee income of $1.8 billion
increased $75 million, or 4%, and
included higher capital markets and advisory revenue.
- Other noninterest income of $247
million decreased $70 million
driven by negative Visa Class B derivative fair value adjustments
of $41 million related to litigation
escrow funding and other valuation changes. The third quarter of
2022 included positive Visa Class B derivative fair value
adjustments of $13 million.
- Noninterest expense of $3.5
billion increased $194
million, or 6%, primarily due to increased personnel costs,
reflecting higher variable compensation related to increased
business activity and market impacts on long-term incentive
compensation as well as seasonally elevated medical benefits
expense.
- Provision for credit losses of $408
million in the fourth quarter included the impact of a
weaker economic outlook and continued loan growth. The third
quarter of 2022 included a provision for credit losses of
$241 million.
- The effective tax rate was 17.7% for the fourth quarter and
19.1% for the third quarter.
Balance Sheet Highlights
Fourth quarter 2022 compared with third quarter
2022 or December 31, 2022 compared with September 30,
2022
- Average loans of $321.9 billion
increased $8.9 billion, or 3%.
-
- Average commercial loans of $221.6
billion increased $7.5 billion
driven by growth in PNC's corporate banking, real estate and
business credit businesses.
- Average consumer loans of $100.3
billion grew $1.4 billion due
to higher residential mortgage, home equity and credit card loans,
partially offset by lower auto loans.
- Credit quality performance:
-
- Delinquencies of $1.5 billion
decreased $136 million, or 8%, as a
result of lower commercial delinquencies.
- Total nonperforming loans of $2.0
billion decreased $83 million,
or 4%, driven by lower commercial and consumer nonperforming
loans.
- Net loan charge-offs of $224
million increased $105 million
and included the impact of one large commercial loan credit.
- The allowance for credit losses of $5.4
billion increased $172
million. The allowance for credit losses to total loans was
1.67% at both December 31, 2022 and
September 30, 2022.
- Average deposits of $434.9
billion were relatively stable.
- Average investment securities of $142.9
billion grew $5.9 billion, or
4%, reflecting net purchases.
- Average Federal Reserve Bank balances of $30.0 billion decreased $1.5 billion.
-
- Federal Reserve Bank balances at December 31, 2022 of $26.9
billion decreased $12.9
billion, driven by higher loans outstanding.
- PNC maintained strong capital and liquidity positions.
-
- On January 4, 2023, the PNC board
of directors declared a quarterly cash dividend on common stock of
$1.50 per share. The dividend, with a
payment date of February 5, 2023,
will be payable the next business day.
- PNC returned $1.2 billion of
capital to shareholders, reflecting $0.6
billion of common share repurchases, representing 3.8
million shares, and $0.6 billion of
dividends on common shares.
- The Basel III common equity Tier 1 capital ratio was an
estimated 9.1% at December 31, 2022
and 9.3% at September 30, 2022.
- The Liquidity Coverage Ratio at December
31, 2022 for PNC exceeded the regulatory minimum
requirement.
Earnings
Summary
|
|
|
|
|
|
|
In millions, except
per share data
|
|
4Q22
|
|
3Q22
|
|
4Q21
|
Net income
|
|
$
1,548
|
|
$
1,640
|
|
$
1,306
|
Net income attributable
to
diluted common shares -
as reported
|
|
$
1,400
|
|
$
1,550
|
|
$
1,214
|
Net income attributable
to
diluted common shares -
as adjusted (non-GAAP)
|
|
$
1,408
|
|
$
1,551
|
|
$
1,560
|
Diluted earnings per
common share - as reported
|
|
$
3.47
|
|
$
3.78
|
|
$
2.86
|
Diluted earnings per
common share - as adjusted (non-GAAP)
|
|
$
3.49
|
|
$
3.78
|
|
$
3.68
|
Average diluted common
shares outstanding
|
|
404
|
|
410
|
|
424
|
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
|
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 and advisory, card and cash management, lending and
deposit services and residential and commercial mortgage. See a
description of each noninterest income revenue category in PNC's
third quarter 2022 Form 10-Q. In the fourth quarter of 2022, PNC
updated the name of the fee income line item "capital markets
related" to "capital markets and advisory." This update did not
impact the components of the category. All periods presented herein
reflect these changes. Information in this news release, including
the financial tables, is unaudited.
CONSOLIDATED REVENUE
REVIEW
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
4Q22 vs
|
4Q22 vs
|
In
millions
|
4Q22
|
|
3Q22
|
|
4Q21
|
3Q22
|
4Q21
|
Net interest
income
|
$ 3,684
|
|
$ 3,475
|
|
$ 2,862
|
6 %
|
29 %
|
Noninterest
income
|
2,079
|
|
2,074
|
|
2,265
|
—
|
(8) %
|
Total
revenue
|
$ 5,763
|
|
$ 5,549
|
|
$ 5,127
|
4 %
|
12 %
|
|
|
|
|
|
|
|
|
Total revenue for the fourth quarter of 2022 increased
$214 million and $636 million compared with the third quarter of
2022 and the fourth quarter of 2021, respectively, driven by higher
net interest income.
Net interest income of $3.7
billion for the fourth quarter of 2022 increased
$209 million and $822 million compared to the third quarter of
2022 and fourth quarter of 2021, respectively. In both comparisons,
the increase was driven by higher interest-earning asset yields and
balances, partially offset by higher funding costs.
The net interest margin was 2.92% in the fourth quarter of 2022,
increasing 10 basis points and 65 basis points compared with the
third quarter of 2022 and the fourth quarter of 2021, respectively.
In both comparisons, the increase was due to higher
interest-earning asset yields, partially offset by higher funding
costs.
Noninterest
Income
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
4Q22 vs
|
4Q22 vs
|
In
millions
|
4Q22
|
|
3Q22
|
|
4Q21
|
3Q22
|
4Q21
|
Asset management and
brokerage
|
$ 345
|
|
$ 357
|
|
$ 385
|
(3) %
|
(10) %
|
Capital markets and
advisory
|
336
|
|
299
|
|
460
|
12 %
|
(27) %
|
Card and cash
management
|
671
|
|
671
|
|
646
|
—
|
4 %
|
Lending and deposit
services
|
296
|
|
287
|
|
273
|
3 %
|
8 %
|
Residential and
commercial mortgage
|
184
|
|
143
|
|
209
|
29 %
|
(12) %
|
Other
|
247
|
|
317
|
|
292
|
(22) %
|
(15) %
|
Total noninterest
income
|
$
2,079
|
|
$
2,074
|
|
$
2,265
|
—
|
(8) %
|
|
|
|
|
|
|
|
|
Note: Integration
costs related to noninterest income were $5 million for the fourth
quarter of 2022, $1 million
for the third
quarter of 2022 and $47 million for the fourth quarter of
2021.
|
Noninterest income for the fourth quarter of 2022 increased
$5 million compared with the third
quarter of 2022. Asset management and brokerage fees decreased
$12 million, reflecting the impact of
lower average equity markets. Capital markets and advisory revenue
increased $37 million driven by
higher merger and acquisition advisory fees, partially offset by
lower loan syndication revenue. Lending and deposit services
increased $9 million driven by higher
loan commitment fees. Residential and commercial mortgage revenue
increased $41 million due to higher
results from residential mortgage servicing rights valuation, net
of economic hedge, partially offset by lower commercial mortgage
banking activities. Other noninterest income decreased $70 million driven by negative Visa Class B
derivative fair value adjustments of $41
million related to litigation escrow funding and other
valuation changes. The third quarter of 2022 included positive Visa
Class B derivative fair value adjustments of $13 million.
Noninterest income for the fourth quarter of 2022 decreased
$186 million compared with the fourth
quarter of 2021, as lower results from market sensitive fee
businesses and negative Visa Class B derivative fair value
adjustments more than offset the benefit of business growth and
lower integration costs. The fourth quarter of 2021 included
positive Visa Class B derivative fair value adjustments of
$1 million.
CONSOLIDATED EXPENSE
REVIEW
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest
Expense
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
4Q22 vs
|
4Q22 vs
|
In
millions
|
4Q22
|
|
3Q22
|
|
4Q21
|
3Q22
|
4Q21
|
Personnel
|
$
1,943
|
|
$
1,805
|
|
$
2,038
|
8 %
|
(5) %
|
Occupancy
|
247
|
|
241
|
|
260
|
2 %
|
(5) %
|
Equipment
|
369
|
|
344
|
|
437
|
7 %
|
(16) %
|
Marketing
|
106
|
|
93
|
|
97
|
14 %
|
9 %
|
Other
|
809
|
|
797
|
|
959
|
2 %
|
(16) %
|
Total noninterest
expense
|
$
3,474
|
|
$
3,280
|
|
$
3,791
|
6 %
|
(8) %
|
|
|
|
|
|
|
|
|
Note: Integration
expenses were $4 million for the fourth quarter of 2022, $0 for the
third quarter of 2022 and
$391 million for the
fourth quarter of 2021.
|
Noninterest expense for the fourth quarter of 2022 increased
$194 million compared with the third
quarter of 2022. Personnel costs increased $138 million, reflecting higher variable
compensation related to increased business activity and market
impacts on long-term incentive compensation as well as seasonally
elevated medical benefits expense. Equipment and occupancy expense
increased $25 million and
$6 million, respectively, and
included the impact of impairments. Marketing expense increased
$13 million reflecting the timing of
annual spend.
Noninterest expense decreased $317
million in comparison with the fourth quarter of 2021,
due to lower integration expenses and a decline in variable
compensation related to lower business activity, partially offset
by continued investments to support business growth.
The effective tax rate was 17.7% for the fourth quarter of 2022,
19.1% for the third quarter of 2022 and 21.5% for the fourth
quarter of 2021.
CONSOLIDATED BALANCE SHEET REVIEW
Average total assets were $557.2
billion in the fourth quarter of 2022 compared with
$547.1 billion in the third quarter
of 2022 and $559.4 billion in the
fourth quarter of 2021. Compared to the third quarter of 2022, the
increase was primarily attributable to higher loan balances.
Loans
|
|
|
|
|
|
Change
|
Change
|
|
December 31,
2022
|
|
September 30,
2022
|
|
December 31,
2021
|
12/31/22 vs
|
12/31/22 vs
|
In
billions
|
|
|
09/30/22
|
12/31/21
|
Average
|
|
|
|
|
|
|
|
Commercial
|
$
221.6
|
|
$
214.1
|
|
$
193.8
|
4 %
|
14 %
|
Consumer
|
100.3
|
|
98.9
|
|
95.1
|
1 %
|
5 %
|
Average
loans
|
$
321.9
|
|
$
313.0
|
|
$
288.9
|
3 %
|
11 %
|
|
|
|
|
|
|
|
|
Quarter
end
|
|
|
|
|
|
|
|
Commercial
|
$
225.0
|
|
$
215.6
|
|
$
193.1
|
4 %
|
17 %
|
Consumer
|
101.0
|
|
99.8
|
|
95.3
|
1 %
|
6 %
|
Total loans
|
$
326.0
|
|
$
315.4
|
|
$
288.4
|
3 %
|
13 %
|
|
|
|
|
|
|
|
|
Average loans for the fourth quarter of 2022 were $321.9 billion, increasing $8.9 billion compared to the third quarter of
2022. Average commercial loans increased $7.5 billion driven by growth in PNC's corporate
banking, real estate and business credit businesses. Average
consumer loans grew $1.4 billion due
to higher residential mortgage, home equity and credit card loans,
partially offset by lower auto loans.
Average loans for the fourth quarter of 2022 increased
$33.0 billion compared to the fourth
quarter of 2021. Average commercial loans increased $27.8 billion driven by growth in PNC's corporate
banking and business credit businesses. Average consumer loans
increased $5.2 billion primarily due
to growth in residential mortgage loans.
Investment
Securities
|
|
|
|
|
|
|
December 31,
2022
|
September 30,
2022
|
December 31,
2021
|
In
billions
|
Balance
|
Portfolio
Mix
|
Balance
|
Portfolio
Mix
|
Balance
|
Portfolio
Mix
|
Average
|
|
|
|
|
|
|
Available for
sale
|
$
49.7
|
|
$
52.1
|
|
$ 126.4
|
|
Held to
maturity
|
93.2
|
|
84.9
|
|
1.4
|
|
Average investment
securities
|
$ 142.9
|
|
$ 137.0
|
|
$ 127.8
|
|
|
|
|
|
|
|
|
Quarter
end
|
|
|
|
|
|
|
Available for
sale
|
$
44.1
|
32 %
|
$
45.8
|
34 %
|
$ 131.5
|
99 %
|
Held to
maturity
|
95.2
|
68 %
|
90.7
|
66 %
|
1.5
|
1 %
|
Total investment
securities
|
$ 139.3
|
|
$ 136.5
|
|
$ 133.0
|
|
|
|
|
|
|
|
|
Average investment securities for the fourth quarter of 2022
were $142.9 billion, increasing
$5.9 billion and $15.1 billion from the third quarter of 2022 and
fourth quarter of 2021, respectively, reflecting net purchases,
primarily of agency residential mortgage-backed securities within
the held to maturity portfolio. Net unrealized losses on available
for sale securities were $4.4 billion at December 31,
2022 and $4.8 billion at
September 30, 2022, compared with net unrealized gains of
$0.7 billion at December 31,
2021.
Average Federal Reserve Bank balances for the fourth quarter of
2022 were $30.0 billion, decreasing
$1.5 billion from the third quarter
of 2022. Average Federal Reserve Bank balances decreased
$45.1 billion from the fourth quarter
of 2021, primarily due to the redeployment of liquidity into higher
interest-earning assets.
Federal Reserve Bank balances at December 31, 2022 were
$26.9 billion, decreasing
$12.9 billion from September 30,
2022, driven by higher loans outstanding.
Deposits
|
|
|
|
Change
|
Change
|
|
|
December 31,
2022
|
September 30,
2022
|
December 31,
2021
|
12/31/22 vs
|
12/31/22 vs
|
|
In
billions
|
09/30/22
|
12/31/21
|
|
Average
|
|
|
|
|
|
|
Commercial
|
$
215.8
|
$
215.8
|
$
231.0
|
—
|
(7) %
|
|
Consumer
|
219.1
|
223.4
|
221.8
|
(2) %
|
(1) %
|
|
Average
deposits
|
$
434.9
|
$
439.2
|
$
452.8
|
(1) %
|
(4) %
|
|
|
|
|
|
|
|
|
Quarter
end
|
|
|
|
|
|
|
Commercial
|
$
207.7
|
$
216.0
|
$
227.6
|
(4) %
|
(9) %
|
|
Consumer
|
228.6
|
222.2
|
229.7
|
3 %
|
—
|
|
Total
deposits
|
$
436.3
|
$
438.2
|
$
457.3
|
—
|
(5) %
|
|
|
|
|
|
|
|
Average deposits for the fourth quarter of 2022 were
$434.9 billion, decreasing
$4.3 billion compared with the third
quarter of 2022 due to lower consumer deposits. The decrease in
consumer deposits reflected the impact of inflationary pressures
and competitive pricing dynamics. Compared with the fourth quarter
of 2021, average deposits decreased $17.9
billion driven by lower commercial deposits, which were
impacted by competitive pricing dynamics. 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 December 31, 2022 of $436.3 billion, decreased $1.9 billion from September 30, 2022 due to
a decline in commercial deposits at year end, partially offset by
an increase in consumer deposits reflecting higher time
deposits.
Borrowed
Funds
|
|
|
|
|
|
Change
|
Change
|
|
December 31,
2022
|
|
September 30,
2022
|
|
December 31,
2021
|
12/31/22 vs
|
12/31/22 vs
|
In
billions
|
|
|
09/30/22
|
12/31/21
|
Average
|
$
59.2
|
|
$
44.3
|
|
$
34.3
|
34 %
|
73 %
|
Quarter end
|
$
58.7
|
|
$
54.6
|
|
$
30.8
|
8 %
|
91 %
|
|
|
|
|
|
|
|
|
Average borrowed funds of $59.2
billion in the fourth quarter of 2022 increased $14.9 billion and $24.9
billion compared with the third quarter of 2022 and fourth
quarter of 2021, respectively, driven by Federal Home Loan Bank
borrowings near the end of the third quarter. In comparison to
September 30, 2022, the increase was also driven by higher
senior debt.
Capital
|
December 31,
2022
|
*
|
|
September 30,
2022
|
|
December 31,
2021
|
|
|
|
Common shareholders'
equity In billions
|
$
40.0
|
|
|
$
39.4
|
|
$
50.7
|
Accumulated other
comprehensive income (loss)
In
billions
|
$
(10.2)
|
|
|
$
(10.5)
|
|
$
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basel III common equity
Tier 1 capital ratio
|
9.1 %
|
|
|
9.3 %
|
|
10.3 %
|
Basel III common equity
Tier 1 fully implemented capital ratio
|
8.9 %
|
|
|
9.1 %
|
|
10.0 %
|
* Ratios
estimated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PNC maintained a strong capital position. Common shareholders'
equity at December 31, 2022 increased $0.6 billion from September 30, 2022, driven
by the benefit of fourth quarter net income and an increase in
accumulated other comprehensive income, partially offset by share
repurchases and dividends paid in the fourth 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
December 31, 2022 improved
$0.3 billion compared to September 30, 2022, and included the accretion of
unrealized losses on securities and swaps. Accumulated other
comprehensive income decreased $10.6
billion compared to December 31,
2021, driven by the negative impact of higher interest rates
on securities and swaps valuations.
In the fourth quarter of 2022, PNC returned $1.2 billion of capital to shareholders,
comprising $0.6 billion of common
share repurchases, representing 3.8 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 49% were still
available for repurchase at December 31, 2022. Under this
framework, PNC expects quarterly repurchases of up to $500 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 January 4, 2023, the PNC board
of directors declared a quarterly cash dividend on common stock of
$1.50 per share. The dividend, with a
payment date of February 5, 2023,
will be payable the next business day.
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
|
|
|
December 31,
2022
|
September 30,
2022
|
December 31,
2021
|
12/31/22 vs
|
12/31/22 vs
|
|
In
millions
|
09/30/22
|
12/31/21
|
|
Provision for
(recapture of) credit losses
|
$
408
|
$
241
|
$
(327)
|
$ 167
|
$ 735
|
|
Net loan
charge-offs
|
$
224
|
$
119
|
$
124
|
88 %
|
81 %
|
|
Allowance for credit
losses (a)
|
$
5,435
|
$
5,263
|
$
5,530
|
3 %
|
(2) %
|
|
Total
delinquencies (b)
|
$
1,490
|
$
1,626
|
$
1,985
|
(8) %
|
(25) %
|
|
Nonperforming
loans
|
$
1,985
|
$
2,068
|
$
2,480
|
(4) %
|
(20) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs to
average loans (annualized)
|
0.28 %
|
0.15 %
|
0.17 %
|
|
|
|
Allowance for credit
losses to total loans
|
1.67 %
|
1.67 %
|
1.92 %
|
|
|
|
Nonperforming loans to
total loans
|
0.61 %
|
0.66 %
|
0.86 %
|
|
|
|
|
|
|
|
|
|
|
(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 of $408
million in the fourth quarter of 2022 included the impact of
a weaker economic outlook and continued loan growth. The third
quarter of 2022 included a provision for credit losses of
$241 million.
Net loan charge-offs were $224
million in the fourth quarter of 2022, increasing
$105 million and $100 million from the third quarter of 2022 and
fourth quarter of 2021, respectively, and included the impact of
one large commercial loan credit.
The allowance for credit losses was $5.4
billion at December 31, 2022, $5.3 billion at September 30, 2022 and
$5.5 billion at December 31,
2021. The allowance for credit losses as a percentage of total
loans was 1.67% at both December 31, 2022 and
September 30, 2022 and 1.92% at December 31, 2021.
Nonperforming loans were $2.0
billion at December 31, 2022, decreasing $83 million and $495
million compared to September 30, 2022 and
December 31, 2021, respectively, driven by lower commercial
and consumer nonperforming loans.
Delinquencies at December 31, 2022 of $1.5 billion decreased $136 million and $495
million compared to September 30, 2022 and
December 31, 2021, respectively. In both comparisons, the
decrease reflected lower commercial loan delinquencies. Compared to
December 31, 2021, the decrease was also driven by lower
consumer loan delinquencies.
BUSINESS SEGMENT
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
Business Segment
Income (Loss)
|
|
|
|
|
|
In
millions
|
4Q22
|
|
3Q22
|
|
4Q21
|
Retail
Banking
|
$ 752
|
|
$ 560
|
|
$ 362
|
Corporate &
Institutional Banking
|
982
|
|
929
|
|
1,334
|
Asset Management
Group
|
52
|
|
90
|
|
106
|
Other
|
(258)
|
|
45
|
|
(509)
|
Net income excluding
noncontrolling interests
|
$
1,528
|
|
$
1,624
|
|
$
1,293
|
|
|
|
|
|
|
Retail
Banking
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
4Q22 vs
|
|
4Q22 vs
|
In
millions
|
4Q22
|
|
3Q22
|
|
4Q21
|
|
3Q22
|
|
4Q21
|
Net interest
income
|
$
2,330
|
|
$
2,017
|
|
$
1,634
|
|
$ 313
|
|
$ 696
|
Noninterest
income
|
$ 749
|
|
$ 725
|
|
$ 774
|
|
$
24
|
|
$
(25)
|
Noninterest
expense
|
$
1,892
|
|
$
1,901
|
|
$
1,874
|
|
$
(9)
|
|
$
18
|
Provision for credit
losses
|
$ 193
|
|
$ 92
|
|
$ 55
|
|
$ 101
|
|
$ 138
|
Earnings
|
$ 752
|
|
$ 560
|
|
$ 362
|
|
$ 192
|
|
$ 390
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
96.6
|
|
$
94.9
|
|
$
95.0
|
|
$
1.7
|
|
$
1.6
|
Average
deposits
|
$
259.8
|
|
$
264.4
|
|
$
262.8
|
|
$ (4.6)
|
|
$
(3.0)
|
|
|
|
|
|
|
|
|
|
|
Net
charge-offs In millions
|
$ 108
|
|
$ 98
|
|
$ 124
|
|
$
10
|
|
$ (16)
|
|
|
|
|
|
|
|
|
|
|
Retail Banking Highlights
Fourth quarter 2022 compared with third quarter
2022
- Earnings increased 34%, primarily due to higher net interest
income, partially offset by a higher provision for credit
losses.
-
- Noninterest income increased 3%, reflecting higher residential
mortgage banking activities.
- Noninterest expense was relatively stable.
- Provision for credit losses of $193
million in the fourth quarter of 2022 included the impact of
a weaker economic outlook.
- Average loans increased 2%, 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 competitive pricing dynamics.
Fourth quarter 2022 compared with fourth quarter
2021
- Earnings increased 108%, reflecting higher net interest income,
partially offset by a higher provision for credit losses.
-
- Noninterest income decreased 3%, driven by negative Visa Class
B derivative fair value adjustments of $41
million related to litigation escrow funding and other
valuation changes. The fourth quarter of 2021 included positive
Visa Class B derivative fair value adjustments of $1 million.
- Noninterest expense was relatively stable.
- Average loans increased 2%, driven by growth in residential
mortgage loans.
- Average deposits decreased modestly, or 1%.
Corporate &
Institutional Banking
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
4Q22 vs
|
|
4Q22 vs
|
In
millions
|
4Q22
|
|
3Q22
|
|
4Q21
|
|
3Q22
|
|
4Q21
|
Net interest
income
|
$
1,489
|
|
$
1,368
|
|
$
1,228
|
|
$ 121
|
|
$ 261
|
Noninterest
income
|
$ 962
|
|
$ 887
|
|
$
1,053
|
|
$
75
|
|
$
(91)
|
Noninterest
expense
|
$ 990
|
|
$ 890
|
|
$ 975
|
|
$ 100
|
|
$
15
|
Provision for
(recapture of) credit losses
|
$ 183
|
|
$ 150
|
|
$
(369)
|
|
$
33
|
|
$ 552
|
Earnings
|
$ 982
|
|
$ 929
|
|
$
1,334
|
|
$
53
|
|
$
(352)
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
207.1
|
|
$
199.9
|
|
$
176.8
|
|
$
7.2
|
|
$ 30.3
|
Average
deposits
|
$
147.3
|
|
$
145.4
|
|
$
160.4
|
|
$
1.9
|
|
$
(13.1)
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs
(recoveries) In millions
|
$ 100
|
|
$ 33
|
|
$ (1)
|
|
$
67
|
|
$ 101
|
|
|
|
|
|
|
|
|
|
|
Corporate & Institutional Banking Highlights
Fourth quarter 2022 compared with third quarter
2022
- Earnings increased 6%, due to higher net interest income and
noninterest income, partially offset by higher noninterest expense
and a higher provision for credit losses.
-
- Noninterest income increased 8%, and included higher merger and
acquisition advisory fees, lower commercial mortgage banking
activities and a decline in loan syndication revenue.
- Noninterest expense increased 11%, reflecting higher variable
compensation associated with increased business activity.
- Provision for credit losses of $183
million in the fourth quarter of 2022 included the impact of
a weaker economic outlook and continued loan growth.
- Average loans increased 4%, driven by growth in PNC's corporate
banking, real estate and business credit businesses.
- Average deposits increased modestly, or 1%, reflecting seasonal
growth.
Fourth quarter 2022 compared with fourth quarter
2021
- Earnings decreased 26%, as higher net interest income was more
than offset by a higher provision for credit losses, lower
noninterest income and higher noninterest expense.
-
- Noninterest income decreased 9%, primarily due to lower merger
and acquisition advisory fees.
- Noninterest expense increased 2%, due to continued investments
to support business growth, partially offset by lower variable
compensation associated with decreased business activity.
- Average loans increased 17%, primarily driven by growth in
PNC's corporate banking, business credit and real estate
businesses, partially offset by Paycheck Protection Program loan
forgiveness.
- Average deposits decreased 8%, and included the impact of
competitive pricing dynamics.
Asset Management
Group
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
4Q22 vs
|
|
4Q22 vs
|
In
millions
|
4Q22
|
|
3Q22
|
|
4Q21
|
|
3Q22
|
|
4Q21
|
Net interest
income
|
$
152
|
|
$
165
|
|
$
130
|
|
$ (13)
|
|
$
22
|
Noninterest
income
|
$
223
|
|
$
231
|
|
$
258
|
|
$
(8)
|
|
$
(35)
|
Noninterest
expense
|
$
291
|
|
$
274
|
|
$
265
|
|
$
17
|
|
$
26
|
Provision for
(recapture of) credit losses
|
$ 17
|
|
$
4
|
|
$
(15)
|
|
$
13
|
|
$
32
|
Earnings
|
$ 52
|
|
$ 90
|
|
$
106
|
|
$ (38)
|
|
$ (54)
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Discretionary client
assets under management
|
$
173
|
|
$
166
|
|
$
192
|
|
$
7
|
|
$ (19)
|
Nondiscretionary
client assets under administration
|
$
152
|
|
$
148
|
|
$
175
|
|
$
4
|
|
$ (23)
|
Client assets under
administration at quarter end
|
$
325
|
|
$
314
|
|
$
367
|
|
$
11
|
|
$ (42)
|
Brokerage client
account assets
|
$
4
|
|
$
4
|
|
$
5
|
|
—
|
|
$
(1)
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
14.5
|
|
$
14.4
|
|
$
12.9
|
|
$ 0.1
|
|
$ 1.6
|
Average
deposits
|
$
27.8
|
|
$
29.3
|
|
$
29.3
|
|
$
(1.5)
|
|
(1.5)
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs
(recoveries) In millions
|
$ 18
|
|
$ (2)
|
|
$
1
|
|
$
20
|
|
$
17
|
|
|
|
|
|
|
|
|
|
|
Asset Management Group Highlights
Fourth quarter 2022 compared with third quarter
2022
- Earnings decreased 42%, driven by lower net interest and
noninterest income as well as higher noninterest expense and an
increase in the provision for credit losses.
-
- Noninterest income decreased 3%, reflecting the impact of lower
average equity markets.
- Noninterest expense increased 6%, and included higher personnel
costs.
- Provision for credit losses of $17
million in the fourth quarter of 2022 included the impact of
a weaker economic outlook and charge-offs related to certain
acquired loans.
- Discretionary client assets under management increased 4%,
primarily driven by higher spot equity markets.
- Average loans were relatively stable.
- Average deposits decreased 5%, reflecting the impact of
competitive pricing dynamics and inflationary pressures.
Fourth quarter 2022 compared with fourth quarter
2021
- Earnings decreased 51%, as higher net interest income was more
than offset by lower noninterest income, an increase in the
provision for credit losses and higher noninterest expense.
-
- Noninterest income decreased 14%, primarily due to the impact
of lower average equity markets.
- Noninterest expense increased 10%, reflecting continued
investments to support business growth.
- Discretionary client assets under management decreased 10%,
driven by lower spot equity markets.
- Average loans increased 12%, due to growth in residential
mortgage loans.
- Average deposits decreased 5%, and included the impact of
client activity, competitive pricing dynamics and inflationary
pressures.
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
9:00 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)
224-6304 and (303) 223-0120 (international) and Internet access to
the live audio listen-only webcast of the call is available at
www.pnc.com/investorevents. PNC's fourth 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
22021446 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
|
|
|
|
Year ended
|
|
|
Dollars in millions,
except per share data
|
|
December 31
|
|
September 30
|
|
December 31
|
|
|
|
December 31
|
|
December 31
|
|
|
|
|
2022
|
|
2022
|
|
2021
|
|
|
|
2022
|
|
2021
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
|
$ 3,684
|
|
$ 3,475
|
|
$ 2,862
|
|
|
|
$
13,014
|
|
$
10,647
|
|
|
Noninterest
income
|
|
2,079
|
|
2,074
|
|
2,265
|
|
|
|
8,106
|
|
8,564
|
|
|
Total
revenue
|
|
5,763
|
|
5,549
|
|
5,127
|
|
|
|
21,120
|
|
19,211
|
|
|
Provision for
(recapture of) credit losses
|
|
408
|
|
241
|
|
(327)
|
|
|
|
477
|
|
(779)
|
|
|
Noninterest
expense
|
|
3,474
|
|
3,280
|
|
3,791
|
|
|
|
13,170
|
|
13,002
|
|
|
Income before income
taxes and noncontrolling interests
|
|
$ 1,881
|
|
$ 2,028
|
|
$ 1,663
|
|
|
|
$ 7,473
|
|
$ 6,988
|
|
|
Income taxes
|
|
333
|
|
388
|
|
357
|
|
|
|
1,360
|
|
1,263
|
|
|
Net income
|
|
$ 1,548
|
|
$ 1,640
|
|
$ 1,306
|
|
|
|
$ 6,113
|
|
$ 5,725
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests
|
|
20
|
|
16
|
|
13
|
|
|
|
72
|
|
51
|
|
|
Preferred stock
dividends (a)
|
|
120
|
|
65
|
|
71
|
|
|
|
301
|
|
233
|
|
|
Preferred stock
discount accretion and redemptions
|
|
1
|
|
1
|
|
2
|
|
|
|
5
|
|
5
|
|
|
Net income attributable
to common shareholders
|
|
$ 1,407
|
|
$ 1,558
|
|
$ 1,220
|
|
|
|
$ 5,735
|
|
$ 5,436
|
|
|
Per Common
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ 3.47
|
|
$ 3.78
|
|
$ 2.87
|
|
|
|
$ 13.86
|
|
$ 12.71
|
|
|
Diluted
|
|
$ 3.47
|
|
$ 3.78
|
|
$ 2.86
|
|
|
|
$ 13.85
|
|
$ 12.70
|
|
|
Cash dividends declared
per common share
|
|
$ 1.50
|
|
$ 1.50
|
|
$ 1.25
|
|
|
|
$ 5.75
|
|
$ 4.80
|
|
|
Effective tax rate
(b)
|
|
17.7 %
|
|
19.1 %
|
|
21.5 %
|
|
|
|
18.2 %
|
|
18.1 %
|
|
|
PERFORMANCE
RATIOS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin
(c)
|
|
2.92 %
|
|
2.82 %
|
|
2.27 %
|
|
|
|
2.65 %
|
|
2.29 %
|
|
|
Noninterest income to
total revenue
|
|
36 %
|
|
37 %
|
|
44 %
|
|
|
|
38 %
|
|
45 %
|
|
|
Efficiency
(d)
|
|
60 %
|
|
59 %
|
|
74 %
|
|
|
|
62 %
|
|
68 %
|
|
|
Return on:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common
shareholders' equity
|
|
14.19 %
|
|
14.97 %
|
|
9.61 %
|
|
|
|
13.52 %
|
|
10.78 %
|
|
|
Average
assets
|
|
1.10 %
|
|
1.19 %
|
|
0.93 %
|
|
|
|
1.11 %
|
|
1.09 %
|
|
|
(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
December 31, 2022, September 30, 2022 and December 31, 2021 were
$36 million, $29 million and $22 million, respectively. The
taxable-equivalent adjustments to net interest income for the
twelve months ended December 31, 2022 and December 31, 2021 were
$112 million and $74 million, respectively.
|
(d)
|
Calculated as
noninterest expense divided by total revenue.
|
The PNC Financial
Services Group, Inc.
|
Consolidated
Financial Highlights (Unaudited)
|
|
|
|
|
|
|
|
December 31
|
|
September 30
|
|
December 31
|
|
2022
|
|
2022
|
|
2021
|
BALANCE SHEET
DATA
|
|
|
|
|
|
Dollars in millions,
except per share data
|
|
|
|
|
|
Assets
|
$
557,263
|
|
$
559,477
|
|
$
557,191
|
Loans (a)
|
$
326,025
|
|
$
315,400
|
|
$
288,372
|
Allowance for loan and
lease losses
|
$
4,741
|
|
$
4,581
|
|
$
4,868
|
Interest-earning
deposits with banks
|
$
27,320
|
|
$
40,278
|
|
$
74,250
|
Investment
securities
|
$
139,334
|
|
$
136,451
|
|
$
132,962
|
Total
deposits
|
$
436,282
|
|
$
438,194
|
|
$
457,278
|
Borrowed funds
(a)
|
$
58,713
|
|
$
54,633
|
|
$
30,784
|
Allowance for unfunded
lending related commitments
|
$
694
|
|
$
682
|
|
$
662
|
Total shareholders'
equity
|
$
45,774
|
|
$
46,688
|
|
$
55,695
|
Common shareholders'
equity
|
$
40,028
|
|
$
39,444
|
|
$
50,685
|
Accumulated other
comprehensive income (loss)
|
$
(10,172)
|
|
$
(10,486)
|
|
$
409
|
Book value per common
share
|
$
99.93
|
|
$
97.59
|
|
$
120.61
|
Tangible book value per
common share (non-GAAP) (b)
|
$
72.12
|
|
$
69.98
|
|
$
94.11
|
Period end common
shares outstanding (In millions)
|
401
|
|
404
|
|
420
|
Loans to
deposits
|
75 %
|
|
72 %
|
|
63 %
|
Common shareholders'
equity to total assets
|
7.2 %
|
|
7.1 %
|
|
9.1 %
|
CLIENT ASSETS (In
billions)
|
|
|
|
|
|
Discretionary client
assets under management
|
$
173
|
|
$
166
|
|
$
192
|
Nondiscretionary client
assets under administration
|
152
|
|
148
|
|
175
|
Total client assets
under administration
|
325
|
|
314
|
|
367
|
Brokerage account
client assets
|
74
|
|
71
|
|
83
|
Total client
assets
|
$
399
|
|
$
385
|
|
$
450
|
CAPITAL
RATIOS
|
|
|
|
|
|
Basel III (c)
(d)
|
|
|
|
|
|
Common equity Tier
1
|
9.1 %
|
|
9.3 %
|
|
10.3 %
|
Common equity Tier 1
fully implemented (e)
|
8.9 %
|
|
9.1 %
|
|
10.0 %
|
Tier 1
risk-based
|
10.4 %
|
|
11.0 %
|
|
11.6 %
|
Total capital
risk-based (f)
|
12.3 %
|
|
12.9 %
|
|
13.5 %
|
Leverage
|
8.2 %
|
|
8.6 %
|
|
8.2 %
|
Supplementary
leverage
|
7.0 %
|
|
7.3 %
|
|
7.0 %
|
ASSET
QUALITY
|
|
|
|
|
|
Nonperforming loans to
total loans
|
0.61 %
|
|
0.66 %
|
|
0.86 %
|
Nonperforming assets to
total loans, OREO and foreclosed assets
|
0.62 %
|
|
0.67 %
|
|
0.87 %
|
Nonperforming assets to
total assets
|
0.36 %
|
|
0.38 %
|
|
0.45 %
|
Net charge-offs to
average loans (for the three months ended) (annualized)
|
0.28 %
|
|
0.15 %
|
|
0.17 %
|
Allowance for loan and
lease losses to total loans
|
1.45 %
|
|
1.45 %
|
|
1.69 %
|
Allowance for credit
losses to total loans (g)
|
1.67 %
|
|
1.67 %
|
|
1.92 %
|
Allowance for loan and
lease losses to nonperforming loans
|
239 %
|
|
222 %
|
|
196 %
|
Total delinquencies
(In millions) (h)
|
$
1,490
|
|
$
1,626
|
|
$
1,985
|
|
|
(a)
|
Amounts include assets
and liabilities for which we have elected the fair value option.
Our 2022 Form 10-Qs included, and our 2022 Form 10-K 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 December 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 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 September 30, 2022, December 31, 2021 and
estimated December 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 December 31, 2022
and September 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)
|
|
|
|
|
|
December 31
2022
(estimated)
(b)
|
September 30
2022 (b)
|
|
December 31
2021
(b)
|
|
December 31, 2022
(Fully
Implemented)
(estimated)
(c)
|
September 30, 2022
(Fully
Implemented)
(estimated)
(c)
|
|
|
|
|
Dollars in
millions
|
|
Common stock, related
surplus and retained earnings,
net of treasury stock
|
$
50,924
|
$
50,654
|
|
$
51,242
|
|
$
50,200
|
$
49,930
|
|
Less regulatory capital
adjustments:
|
|
|
|
|
|
|
|
|
Goodwill and
disallowed intangibles, net of deferred
tax liabilities
|
(11,138)
|
(11,159)
|
|
(11,137)
|
|
(11,138)
|
(11,159)
|
|
All other
adjustments
|
(108)
|
(123)
|
|
(39)
|
|
(109)
|
(127)
|
|
Basel III Common equity
Tier 1 capital
|
$
39,678
|
$
39,372
|
|
$
40,066
|
|
$
38,953
|
$
38,644
|
|
Basel III standardized
approach risk-weighted assets (d)
|
$
435,848
|
$
423,446
|
|
$
388,769
|
|
$
435,892
|
$
423,593
|
|
Basel III Common equity
Tier 1 capital ratio
|
9.1 %
|
9.3 %
|
|
10.3 %
|
|
8.9 %
|
9.1 %
|
|
|
|
(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 December 31, 2022
and September 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
|
|
Year ended
|
|
December 31
|
|
September 30
|
|
December 31
|
|
December 31
|
Dollars in
millions
|
2022
|
|
2022
|
|
2022
|
|
2021
|
Income before income
taxes and noncontrolling interests
|
$
1,881
|
|
$
2,028
|
|
$
7,473
|
|
$
6,988
|
Provision for
(recapture of) credit losses
|
408
|
|
241
|
|
477
|
|
(779)
|
Pretax pre-provision
earnings (non-GAAP)
|
$
2,289
|
|
$
2,269
|
|
$
7,950
|
|
$
6,209
|
Integration
costs
|
9
|
|
1
|
|
55
|
|
798
|
Pretax pre-provision
earnings excluding integration costs (non-GAAP)
|
$
2,298
|
|
$
2,270
|
|
$
8,005
|
|
$
7,007
|
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.
The PNC Financial
Services Group, Inc.
|
|
Consolidated
Financial Highlights (Unaudited)
|
Adjusted Diluted
Earnings per Common Share
Excluding Integration Costs (non-GAAP)
|
Three months
ended
|
|
December 31
|
|
Per Common
|
|
September 30
|
|
Per Common
|
|
December 31
|
|
Per Common
|
Dollars in millions,
except per share data
|
2022
|
|
Share
|
|
2022
|
|
Share
|
|
2021
|
|
Share
|
Net income attributable
to common shareholders
|
$
1,407
|
|
|
|
$
1,558
|
|
|
|
$
1,220
|
|
|
Dividends and
undistributed earnings allocated to
nonvested restricted shares
|
(7)
|
|
|
|
(8)
|
|
|
|
(6)
|
|
|
Net income attributable
to diluted common
shareholders
|
$
1,400
|
|
$
3.47
|
|
$
1,550
|
|
$
3.78
|
|
$
1,214
|
|
$
2.86
|
Integration costs after
tax (a)
|
8
|
|
0.02
|
|
1
|
|
—
|
|
346
|
|
0.82
|
Adjusted net income
attributable to diluted
common shareholders excluding integration costs
(non-GAAP)
|
$
1,408
|
|
$
3.49
|
|
$
1,551
|
|
$
3.78
|
|
$
1,560
|
|
$
3.68
|
Average diluted common
shares outstanding
(In
millions)
|
404
|
|
|
|
410
|
|
|
|
424
|
|
|
|
Year ended
|
|
December 31
|
|
Per Common
|
|
December 31
|
|
Per Common
|
Dollars in millions,
except per share data
|
2022
|
|
Share
|
|
2021
|
|
Share
|
Net income attributable
to common shareholders
|
$
5,735
|
|
|
|
$
5,436
|
|
|
Dividends and
undistributed earnings allocated to
nonvested restricted shares
|
(27)
|
|
|
|
(27)
|
|
|
Net income attributable
to diluted common
shareholders
|
$
5,708
|
|
$
13.85
|
|
$
5,409
|
|
$
12.70
|
Integration costs after
tax (a)
|
44
|
|
0.11
|
|
630
|
|
1.48
|
Adjusted net income
attributable to diluted
common shareholders excluding integration costs (non-GAAP)
|
$
5,752
|
|
$
13.96
|
|
$
6,039
|
|
$
14.18
|
Average diluted common
shares outstanding
(In
millions)
|
412
|
|
|
|
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.
Tangible Book
Value per Common Share (non-GAAP)
|
|
|
|
|
|
|
December 31
|
|
September 30
|
|
December 31
|
Dollars in millions,
except per share data
|
2022
|
|
2022
|
|
2021
|
Book value per common
share
|
$
99.93
|
|
$
97.59
|
|
$
120.61
|
Tangible book value per
common share
|
|
|
|
|
|
Common shareholders'
equity
|
$
40,028
|
|
$
39,444
|
|
$
50,685
|
Goodwill and other
intangible assets
|
(11,400)
|
|
(11,423)
|
|
(11,406)
|
Deferred tax
liabilities on goodwill and other intangible assets
|
261
|
|
263
|
|
270
|
Tangible common
shareholders' equity
|
$
28,889
|
|
$
28,284
|
|
$
39,549
|
Period-end common
shares outstanding (In millions)
|
401
|
|
404
|
|
420
|
Tangible book value per
common share (non-GAAP)
|
$
72.12
|
|
$
69.98
|
|
$
94.11
|
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.
The PNC Financial
Services Group, Inc.
|
|
Consolidated
Financial Highlights (Unaudited)
|
Taxable-Equivalent Net Interest Income
(non-GAAP)
|
Three months
ended
|
|
Year ended
|
|
December 31
|
|
September 30
|
|
December 31
|
|
December 31
|
Dollars in
millions
|
2022
|
|
2022
|
|
2022
|
|
2021
|
Net interest
income
|
$
3,684
|
|
$
3,475
|
|
$
13,014
|
|
$
10,647
|
Taxable-equivalent
adjustments
|
36
|
|
29
|
|
112
|
|
74
|
Net interest income
(Fully Taxable-Equivalent - FTE)
|
$
3,720
|
|
$
3,504
|
|
$
13,126
|
|
$
10,721
|
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
|
|
Year ended
|
|
December 31
|
|
September 30
|
|
December 31
|
|
December 31
|
Dollars in
millions
|
2022
|
|
2022
|
|
2022
|
|
2021
|
Noninterest
expense
|
$
3,474
|
|
$
3,280
|
|
$
13,170
|
|
$
13,002
|
Integration
expense
|
(4)
|
|
|
|
(28)
|
|
(733)
|
Noninterest expense
excluding integration expense (non-GAAP)
|
$
3,470
|
|
$
3,280
|
|
$
13,142
|
|
$
12,269
|
|
|
|
|
|
|
|
|
Total
revenue
|
$
5,763
|
|
$
5,549
|
|
$
21,120
|
|
$
19,211
|
Integration costs -
contra revenue
|
(5)
|
|
(1)
|
|
(27)
|
|
(65)
|
Total revenue excluding
integration costs - contra revenue (non-GAAP)
|
$
5,768
|
|
$
5,550
|
|
$
21,147
|
|
$
19,276
|
|
|
|
|
|
|
|
|
Efficiency ratio
(a)
|
60 %
|
|
59 %
|
|
62 %
|
|
68 %
|
Efficiency ratio
excluding integration costs (non-GAAP) (b)
|
60 %
|
|
59 %
|
|
62 %
|
|
64 %
|
(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,
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:
-
- The economy continues to expand in early 2023, but economic
growth is slowing in response to the ongoing Federal Reserve
monetary policy tightening to slow inflation. This has led to large
increases in both short- and long-term interest rates. The housing
market is already in steep decline as much higher mortgage rates
have led to significant drops in housing starts, home sales, and
house prices. Other sectors where interest rates play an outsized
role, such as business investment and consumer spending on durable
goods, will contract in 2023.
- PNC's baseline outlook is for a recession starting in the
spring of 2023, with real GDP contracting a modest 1% before
recovery starts in early 2024 as the Federal Reserve lowers
interest rates in response to a deteriorating labor market and
slower inflation. The unemployment rate will increase throughout
2023, peaking at above 5% in the first half of 2024. Inflation will
slow with the recession and be back to the Federal Reserve's 2%
long-term objective by early 2024.
- PNC expects the Federal Open Market Committee (FOMC) to
increase the federal funds rate by an additional 50 basis points,
with a 25-basis point increase in both February and March. This
would bring the federal funds rate to a range of 4.75% to 5.00% by
mid-March. PNC expects a federal funds rate cut of 25 basis points
in December 2023 as inflation moves
toward the FOMC's 2% long-term objective and the economy enters
into recession.
- 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 and reporting standards.
- 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:
Tim 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.