PITTSBURGH, Oct. 15, 2021 /PRNewswire/ -- The PNC Financial
Services Group, Inc. (NYSE: PNC) today reported:
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For the
quarter
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In millions, except
per share data and as noted
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3Q21
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2Q21
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3Q20
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Third Quarter
Highlights
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▪ Converted BBVA
USA customers, employees, systems and branches as of October 12,
2021
– Third quarter
results reflect full quarter benefit from BBVA USA
– Second quarter
results include one month impact of BBVA USA which closed on June
1, 2021
▪ Diluted EPS as
adjusted was $3.75, excluding $243 million of pre-tax integration
costs related to BBVA USA
▪ Revenue
increased 11% linked quarter driven by the full quarter benefit of
BBVA USA and strong fee income growth
▪ Expenses
increased 18% linked quarter. PNC legacy expenses increased 3%
linked quarter, reflecting increased business activity
▪ Provision
recapture of $203 million, reflecting improved credit quality and
changes in portfolio composition
▪ Average loans
and deposits increased 14% and 13%, respectively, linked quarter
due to the full quarter benefit of BBVA USA
▪ Strong credit
performance; net loan charge-offs of $81 million, decreased $225
million linked quarter
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Financial
Results
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Revenue
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$
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5,197
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$
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4,667
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$
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4,281
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Noninterest
expense
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3,587
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3,050
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2,531
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Pretax, pre-provision
earnings (non-GAAP)
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1,610
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1,617
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1,750
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Integration
costs
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243
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111
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—
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Pretax, pre-provision
earnings excluding integration costs (non-GAAP)
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1,853
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1,728
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—
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Provision for
(recapture of) credit losses
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(203)
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302
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52
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Net income
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1,490
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1,103
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1,532
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Per Common
Share
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Diluted earnings - as
reported
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$
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3.30
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$
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2.43
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$
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3.39
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Impact from
integration costs (non-GAAP)
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(0.45)
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(0.21)
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—
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Diluted earnings - as
adjusted (non-GAAP)
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3.75
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2.64
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—
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Book value
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121.16
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120.25
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117.44
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Tangible book value
(non-GAAP)
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94.82
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93.83
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95.71
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Balance Sheet
& Credit Quality
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Average loans (in
billions)
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$
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291.3
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$
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255.6
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$
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253.1
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Average deposits
(in billions)
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454.4
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401.7
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350.5
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Net loan
charge-offs
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81
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306
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155
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Allowance for credit
losses to total loans
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2.07
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%
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2.16
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%
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2.58
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%
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Selected
Ratios
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Return on average
common equity
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10.95
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%
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8.32
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%
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11.76
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%
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Return on average
assets
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1.06
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0.88
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1.32
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Net interest margin
(non-GAAP)
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2.27
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2.29
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2.39
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Noninterest income to
total revenue
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45
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45
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42
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Efficiency
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69
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65
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59
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Efficiency excluding
integration costs (non-GAAP)
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64
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63
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—
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Common Equity Tier 1
capital ratio
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10.2
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10.1
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11.7
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Diluted earnings
as adjusted is a non-GAAP measure calculated by excluding post-tax
integration costs for BBVA USA. See this and other non-GAAP
financial measures in the consolidated financial highlights
accompanying this release.
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From Bill Demchak,
PNC Chairman, President and Chief Executive Officer:
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"In the third quarter PNC delivered solid financial results
reflecting revenue growth and strong credit quality performance.
While average loans increased due to the full quarter benefit of
BBVA USA, period-end loans decreased modestly due to Paycheck
Protection Program loan forgiveness activity. Importantly, we have
completed the conversion of BBVA USA, providing all existing and
new PNC customers with access to our coast-to-coast franchise. With
the significant expansion of our footprint and the continued
execution of our strategic priorities, we see substantial
opportunities to leverage our best-in-class products and services,
and deliver enhanced shareholder value for years to
come."
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BBVA USA
- As of October 12, 2021, PNC has
converted approximately 2.6 million customers, 9,000 employees and
nearly 600 branches across seven states, merging BBVA USA into PNC Bank. PNC acquired BBVA
USA on June
1, 2021.
- Third quarter financial results reflect the full quarter
benefit of BBVA USA. Second
quarter financial results include the impact of BBVA USA operations for the month of June 2021.
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- Net interest income attributable to BBVA USA was $532
million in the third quarter of 2021 and included a
significant increase in premium amortization expense related to
certain BBVA USA investment
securities. In the second quarter of 2021, net interest income
attributable to BBVA USA was
$236 million and included a
$30 million benefit from purchase
accounting accretion.
- Noninterest income attributable to BBVA USA was $213
million in the third quarter of 2021, increasing
$133 million compared with the second
quarter of 2021.
- Noninterest expense attributable to BBVA USA was $506
million in the third quarter of 2021, increasing
$327 million compared with the second
quarter of 2021.
- Merger and integration costs in the third quarter of 2021 were
$243 million, increasing $132 million compared with the second quarter of
2021. Since the announcement of the acquisition, PNC has incurred
approximately half of the $980
million of expected merger and integration costs.
- PNC remains on track to realize $900
million in cost saves.
Income Statement Highlights
Third quarter 2021 compared with second quarter 2021
- Net income of $1.5 billion
increased $387 million, or 35%.
- Total revenue of $5.2 billion
increased $530 million, or 11%,
reflecting the full quarter benefit of BBVA USA and higher noninterest income.
- Net interest income of $2.9
billion increased $275
million, or 11%, driven by higher interest earning asset
balances reflecting the full quarter benefit of BBVA USA, partially offset by lower yields.
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- Net interest margin of 2.27% decreased 2 basis points.
- Noninterest income of $2.3
billion increased $255
million, or 12%.
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- Fee income of $1.9 billion
increased $274 million, or 17%,
driven by the full quarter benefit of BBVA USA, record merger and acquisition advisory
fees and higher residential mortgage revenue.
- Other noninterest income of $449
million declined $19 million,
or 4%, and included higher private equity revenue as well as a
negative Visa Class B derivative fair value adjustment of
$169 million primarily related to the
extension of anticipated litigation resolution timing.
- Noninterest expense of $3.6
billion increased $537
million, or 18%, and included a full quarter of BBVA
USA operating expenses, increased
integration expenses, higher incentive compensation related to
increased business activity and increased marketing.
- The third quarter of 2021 included a provision recapture of
$203 million, reflecting continued
improvements in credit quality and changes in portfolio
composition. The second quarter included a provision for credit
losses of $302 million, primarily
driven by the establishment of an initial provision for credit
losses related to the BBVA USA
acquisition.
- The effective tax rate was 17.8% for the third quarter and
16.1% for the second quarter.
Balance Sheet Highlights
Third quarter 2021 compared with second quarter 2021 or
September 30, 2021 compared with
June 30, 2021
- Average loans of $291.3 billion
increased $35.7 billion, or 14%,
reflecting the full quarter benefit of BBVA USA.
- Loans of $290.2 billion at
September 30, 2021 decreased
$4.5 billion, or 2%.
-
- Commercial loans of $195.2
billion decreased $4.4
billion, or 2%, driven by $4.8
billion of Paycheck Protection Program (PPP) loan
forgiveness and a decrease in BBVA USA legacy loan portfolios, partially offset
by growth in PNC legacy corporate banking, business credit and
multifamily agency warehouse lending.
- Consumer loans of $95.0 billion
remained relatively stable, as growth in residential mortgage loans
was offset primarily by declines in home equity and auto
loans.
- Credit quality performance:
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- Delinquencies of $1.4 billion
increased $106 million, or 8%,
largely due to commercial loans past due 30 to 59 days primarily
reflecting operational delays.
- Total nonperforming loans of $2.5
billion decreased $251
million, or 9%.
- Net loan charge-offs of $81
million decreased $225
million. The second quarter included net loan charge-offs of
$248 million related to the purchase
accounting treatment for certain loans that were previously
charged-off by BBVA USA.
- The allowance for credit losses to total loans was 2.07% at
September 30, 2021 compared with
2.16% at June 30, 2021.
- Average deposits of $454.4
billion increased $52.7
billion, or 13%, primarily due to the full quarter benefit
of BBVA USA.
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- Deposits of $448.9 billion at
September 30, 2021 decreased
$4.0 billion, or 1%, due to BBVA
USA legacy commercial deposit
outflows reflecting the impact of strategic repricing decisions,
partially offset by growth in PNC legacy deposits.
- Average investment securities of $120.6
billion, increased $12.1
billion, or 11%, driven by the full quarter benefit of BBVA
USA.
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- Investment securities of $125.6
billion at September 30, 2021
decreased $0.9 billion, or 1%.
- Average Federal Reserve Bank balances were $80.1 billion, increasing $1.8 billion.
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- Federal Reserve Bank balances at September 30, 2021 were $75.1 billion, an increase of $3.2 billion reflecting increased liquidity.
- PNC maintained strong capital and liquidity positions.
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- On October 1, 2021, the PNC board
of directors declared a quarterly cash dividend on common stock of
$1.25 per share payable on
November 5, 2021.
- The Basel III common equity Tier 1 capital ratio was an
estimated 10.2% at September 30, 2021
and 10.1% at June 30, 2021.
- The Liquidity Coverage Ratio at September 30, 2021 for PNC exceeded the
regulatory minimum requirement.
Earnings
Summary
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In millions,
except per share data
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3Q21
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2Q21
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3Q20
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Net income
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$
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1,490
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$
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1,103
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$
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1,532
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Net income
attributable to
diluted common shares
- as reported
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$
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1,408
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$
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1,037
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$
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1,447
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Net income
attributable to
diluted common shares
- as adjusted (non-GAAP)
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$
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1,600
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$
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1,125
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—
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Diluted earnings per
common share - as reported
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$
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3.30
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$
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2.43
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$
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3.39
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Diluted earnings per
common share - as adjusted (non-GAAP)
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$
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3.75
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$
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2.64
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—
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Average diluted
common shares outstanding
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426
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427
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426
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Cash dividends
declared per common share
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$
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1.25
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$
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1.25
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$
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1.15
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See non-GAAP
financial measures included in the consolidated financial
highlights accompanying this news release
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Third quarter 2021 net income of $1.5
billion, or $3.30 per diluted
common share, included integration costs of $243 million pretax resulting from the
acquisition of BBVA USA. Excluding
the impact of integration costs, adjusted diluted earnings per
common share was $3.75.
The Consolidated Financial Highlights accompanying this news
release include additional information regarding reconciliations of
non-GAAP financial measures to reported (GAAP) amounts. This
information supplements results as reported in accordance with GAAP
and should not be viewed in isolation from, or as a substitute for,
GAAP results. Fee income, a non-GAAP financial measure, refers to
noninterest income in the following categories: asset management,
consumer services, corporate services, residential mortgage and
service charges on deposits. Information in this news release,
including the financial tables, is unaudited.
CONSOLIDATED
REVENUE REVIEW
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Revenue
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Change
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Change
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3Q21 vs
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3Q21 vs
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In
millions
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3Q21
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2Q21
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3Q20
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2Q21
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3Q20
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Net interest
income
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$
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2,856
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$
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2,581
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$
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2,484
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11
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%
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15
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%
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Noninterest
income
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2,341
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2,086
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1,797
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12
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%
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30
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%
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Total
revenue
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$
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5,197
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$
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4,667
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$
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4,281
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11
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%
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21
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%
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Total revenue for the third quarter of 2021 increased
$530 million compared with the second
quarter of 2021 and $916 million
compared with the third quarter of 2020. In both comparisons, the
increase was largely due to the acquisition of BBVA USA and growth in noninterest income as a
result of increased business activity. For the third quarter of
2021, net interest income attributable to BBVA USA was $532
million and included a significant increase in premium
amortization related to certain BBVA USA investment securities. In the second
quarter of 2021, net interest income attributable to BBVA
USA was $236 million and included a $30 million benefit from purchase accounting
accretion. Total noninterest income attributable to BBVA
USA was $213 million in the third quarter of 2021,
increasing $133 million from the
second quarter of 2021.
Net interest income of $2.9
billion for the third quarter of 2021 increased $275 million compared to the second quarter
driven by higher interest earning assets reflecting the full
quarter benefit of BBVA USA,
partially offset by lower yields. In comparison with the third
quarter of 2020, net interest income increased $372 million as a result of interest earning
assets acquired in the BBVA USA
acquisition and higher securities balances, partially offset by
lower securities yields.
The net interest margin was 2.27% in the third quarter of 2021,
2.29% in the second quarter of 2021 and 2.39% in the third quarter
of 2020. In both comparisons the decrease was largely due to lower
securities yields.
Noninterest
Income
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Change
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Change
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3Q21 vs
|
3Q21 vs
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In
millions
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3Q21
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2Q21
|
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3Q20
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2Q21
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3Q20
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Asset
management
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$
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248
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$
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239
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$
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215
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4
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%
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15
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%
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Consumer
services
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496
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|
457
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390
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9
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%
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27
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%
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Corporate
services
|
842
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688
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479
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22
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%
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76
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%
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Residential
mortgage
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147
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|
103
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137
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43
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%
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7
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%
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Service charges on
deposits
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159
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|
|
131
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|
|
119
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|
21
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%
|
34
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%
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Other
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449
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468
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|
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457
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(4)
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%
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(2)
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%
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$
|
2,341
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|
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$
|
2,086
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|
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$
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1,797
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12
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%
|
30
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%
|
|
|
|
|
|
|
|
|
Noninterest income for the third quarter of 2021 increased
$255 million compared with the second
quarter of 2021. Asset management revenue grew $9 million primarily as a result of the full
quarter benefit of BBVA USA and
higher average equity markets. Consumer services increased
$39 million driven by growth in
transaction volumes, primarily due to the addition of BBVA
USA customers. Corporate services
was $154 million higher and included
record merger and acquisition advisory fees and the full quarter
benefit of BBVA USA. Residential
mortgage revenue increased $44
million reflecting higher loan sales revenue and servicing
fees. Service charges on deposits increased $28 million and included the full quarter benefit
of BBVA USA and the effect of Low
Cash ModeSM. Other noninterest income decreased
$19 million and included higher
private equity revenue as well as a negative Visa Class B
derivative fair value adjustment of $169
million primarily related to the extension of anticipated
litigation resolution timing. The second quarter included a
negative Visa Class B derivative fair value adjustment of
$13 million.
Noninterest income for the third quarter of 2021 increased
$544 million compared with the third
quarter of 2020. Asset management revenue grew $33 million as a result of higher average equity
markets and the benefit of BBVA USA. Consumer services was $106 million higher driven by growth in
transaction volumes and the addition of BBVA USA customers. Corporate services increased
$363 million driven by record merger
and acquisition advisory fees and higher treasury management
product revenue. Service charges on deposits increased $40 million primarily driven by the addition of
BBVA USA customers. Other
noninterest income decreased $8
million and included a negative fair value adjustment
related to the Visa Class B derivative, higher private equity
revenue and the benefit of BBVA USA.
CONSOLIDATED
EXPENSE REVIEW
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Noninterest
Expense
|
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|
|
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Change
|
Change
|
|
|
|
|
|
|
3Q21 vs
|
3Q21 vs
|
In
millions
|
3Q21
|
|
2Q21
|
|
3Q20
|
2Q21
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3Q20
|
Personnel
|
$
|
1,986
|
|
|
$
|
1,640
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|
|
$
|
1,410
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|
21
|
%
|
41
|
%
|
Occupancy
|
248
|
|
|
217
|
|
|
205
|
|
14
|
%
|
21
|
%
|
Equipment
|
355
|
|
|
326
|
|
|
292
|
|
9
|
%
|
22
|
%
|
Marketing
|
103
|
|
|
74
|
|
|
67
|
|
39
|
%
|
54
|
%
|
Other
|
895
|
|
|
793
|
|
|
557
|
|
13
|
%
|
61
|
%
|
|
$
|
3,587
|
|
|
$
|
3,050
|
|
|
$
|
2,531
|
|
18
|
%
|
42
|
%
|
|
|
|
|
|
|
|
|
Noninterest expense for the third quarter of 2021 increased
$537 million compared with the second
quarter of 2021. The third quarter of 2021 included a full quarter
of operating expenses related to BBVA USA of $506
million and integration expenses of $235 million. The second quarter of 2021 included
$179 million of BBVA USA operating expenses and integration
expenses of $101 million. PNC legacy
noninterest expense was $2,846
million and $2,770 million,
respectively, for the third and second quarter of 2021, increasing
primarily due to higher incentive compensation, as a result of
increased business activity, and increased marketing.
Noninterest expense increased $1,056
million in comparison with the third quarter of 2020
primarily driven by operating and integration expenses related to
the BBVA USA acquisition, and
increased business and marketing activity.
The effective tax rate was 17.8% for the third quarter of 2021,
16.1% for the second quarter of 2021 and 9.8% for the third quarter
of 2020. The third quarter of 2020 included tax credit benefits and
the favorable resolution of certain tax matters.
CONSOLIDATED BALANCE SHEET REVIEW
Average total assets were $559.2
billion in the third quarter of 2021 compared with
$504.4 billion in the second quarter
of 2021 and $462.1 billion in the
third quarter of 2020. In both comparisons the increase was
primarily driven by the BBVA USA
acquisition.
Total assets were $553.5 billion
at September 30, 2021, $554.2 billion at June 30,
2021 and $461.8 billion at
September 30, 2020. Compared to the
third quarter of 2020, balance sheet growth was primarily driven by
the BBVA USA acquisition.
Loans
|
|
|
|
|
|
Change
|
Change
|
|
September 30,
2021
|
|
June 30,
2021
|
|
September 30,
2020
|
09/30/21
vs
|
09/30/21
vs
|
In
billions
|
|
|
06/30/21
|
09/30/20
|
Average
|
|
|
|
|
|
|
|
Commercial
|
$
|
196.3
|
|
|
$
|
175.8
|
|
|
$
|
175.6
|
|
12
|
%
|
12
|
%
|
Consumer
|
95.0
|
|
|
79.8
|
|
|
77.5
|
|
19
|
%
|
23
|
%
|
Average
loans
|
$
|
291.3
|
|
|
$
|
255.6
|
|
|
$
|
253.1
|
|
14
|
%
|
15
|
%
|
|
|
|
|
|
|
|
|
Quarter
end
|
|
|
|
|
|
|
|
Commercial
|
$
|
195.2
|
|
|
$
|
199.6
|
|
|
$
|
172.7
|
|
(2)
|
%
|
13
|
%
|
Consumer
|
95.0
|
|
|
95.1
|
|
|
76.6
|
|
—
|
|
24
|
%
|
Total
loans
|
$
|
290.2
|
|
|
$
|
294.7
|
|
|
$
|
249.3
|
|
(2)
|
%
|
16
|
%
|
|
|
|
|
|
|
|
|
Average loans for the third quarter of 2021 were $291.3 billion, increasing $35.7 billion and $38.2
billion, respectively, compared to the second quarter of
2021 and third quarter of 2020, reflecting the acquisition of BBVA
USA.
Loans were $290.2 billion at
September 30, 2021, decreasing
$4.5 billion compared with
June 30, 2021. Commercial loans
decreased $4.4 billion compared with
the second quarter of 2021 driven by $4.8
billion of PPP loan forgiveness and a decrease in BBVA
USA legacy loan portfolios,
partially offset by growth in PNC legacy corporate banking,
business credit and multifamily agency warehouse lending. Consumer
loans remained relatively stable from the second quarter of 2021,
as growth in residential mortgage loans was offset primarily by
declines in home equity and auto loans.
Loans at September 30, 2021
increased $40.9 billion compared with
September 30, 2020, reflecting the
impact of the BBVA USA
acquisition, partially offset by lower utilization of loan
commitments by commercial customers and PPP loan
forgiveness.
PPP loans outstanding were $6.8
billion at September 30, 2021,
$11.6 billion at June 30, 2021 and $12.9
billion at September 30,
2020.
Investment
Securities
|
|
|
|
|
|
Change
|
Change
|
|
September 30,
2021
|
|
June 30,
2021
|
|
September 30,
2020
|
09/30/21
vs
|
09/30/21
vs
|
In
billions
|
|
|
06/30/21
|
09/30/20
|
Average
|
$
|
120.6
|
|
|
$
|
108.5
|
|
|
$
|
90.5
|
|
11
|
%
|
33
|
%
|
Quarter
end
|
$
|
125.6
|
|
|
$
|
126.5
|
|
|
$
|
91.2
|
|
(1)
|
%
|
38
|
%
|
|
|
|
|
|
|
|
|
Average investment securities for the third quarter of 2021 were
$120.6 billion, increasing
$12.1 billion and $30.1 billion, respectively, from the second
quarter of 2021 and third quarter of 2020 driven by BBVA
USA. Compared to the third quarter
of 2020, the increase was also attributable to increased purchase
activity.
Investment securities at September 30,
2021 decreased $0.9 billion
from June 30, 2021 due to sales and
prepayments exceeding purchases during the quarter. Compared to
September 30, 2020, investment
securities increased $34.4 billion
reflecting increased purchase activity and investment securities
from BBVA USA. Net unrealized
gains on available for sale securities were $1.7 billion at September
30, 2021, $2.0 billion at
June 30, 2021 and $3.4 billion at September
30, 2020.
Average Federal Reserve Bank balances for the third quarter of
2021 were $80.1 billion, increasing
$1.8 billion and $20.1 billion, respectively, from the second
quarter of 2021 and the third quarter of 2020. The increase
compared to the third quarter of 2020 was primarily due to deposit
growth.
Federal Reserve Bank balances at September 30, 2021 of $75.1 billion increased $3.2 billion from $71.9
billion at June 30, 2021
primarily due to increased liquidity. Federal Reserve Bank balances
increased $4.5 billion from
$70.6 billion at September 30, 2020.
Deposits
|
|
|
|
|
|
Change
|
Change
|
|
September 30,
2021
|
|
June 30,
2021
|
|
September 30,
2020
|
09/30/21
vs
|
09/30/21
vs
|
In
billions
|
|
|
06/30/21
|
09/30/20
|
Average
|
|
|
|
|
|
|
|
Noninterest-bearing
|
$
|
155.9
|
|
|
$
|
132.3
|
|
|
$
|
101.9
|
|
18
|
%
|
53
|
%
|
Interest-bearing
|
298.5
|
|
|
269.4
|
|
|
248.6
|
|
11
|
%
|
20
|
%
|
Average
deposits
|
$
|
454.4
|
|
|
$
|
401.7
|
|
|
$
|
350.5
|
|
13
|
%
|
30
|
%
|
|
|
|
|
|
|
|
|
Quarter
end
|
|
|
|
|
|
|
|
Noninterest-bearing
|
$
|
156.3
|
|
|
$
|
154.2
|
|
|
$
|
107.3
|
|
1
|
%
|
46
|
%
|
Interest-bearing
|
292.6
|
|
|
298.7
|
|
|
247.8
|
|
(2)
|
%
|
18
|
%
|
Total
deposits
|
$
|
448.9
|
|
|
$
|
452.9
|
|
|
$
|
355.1
|
|
(1)
|
%
|
26
|
%
|
|
|
|
|
|
|
|
|
Average deposits for the third quarter of 2021 were $454.4 billion, increasing $52.7 billion and $103.9
billion, respectively, compared with the second quarter of
2021 and third quarter of 2020 reflecting the acquisition of BBVA
USA.
Deposits at September 30, 2021
decreased $4.0 billion compared with
June 30, 2021 due to BBVA
USA legacy commercial deposit
outflows reflecting the impact of strategic repricing decisions,
partially offset by growth in PNC legacy deposits. Compared to
September 30, 2020, deposits
increased $93.8 billion, reflecting
deposits from BBVA USA and overall
growth in commercial and consumer liquidity.
Borrowed
Funds
|
|
|
|
|
|
Change
|
Change
|
|
September 30,
2021
|
|
June 30,
2021
|
|
September 30,
2020
|
09/30/21
vs
|
09/30/21
vs
|
In
billions
|
|
|
06/30/21
|
09/30/20
|
Average
|
$
|
34.4
|
|
|
$
|
34.1
|
|
|
$
|
43.3
|
|
1
|
%
|
(21)
|
%
|
Quarter
end
|
$
|
33.5
|
|
|
$
|
34.8
|
|
|
$
|
42.1
|
|
(4)
|
%
|
(20)
|
%
|
|
|
|
|
|
|
|
|
Average borrowed funds for the third quarter of 2021 were
$34.4 billion, increasing
$0.3 billion compared with the second
quarter of 2021. Compared with the third quarter of 2020, average
borrowed funds decreased $8.9 billion
reflecting the use of excess liquidity.
Borrowed funds at September 30,
2021 decreased $1.3 billion
and $8.6 billion compared with
June 30, 2021 and September 30, 2020, respectively. In both
comparisons the reduction reflected the use of excess
liquidity.
Capital
|
September 30,
2021
|
|
|
June 30,
2021
|
|
September 30,
2020
|
|
*
|
|
|
Common shareholders'
equity In billions
|
$
|
51.3
|
|
|
|
$
|
51.1
|
|
|
$
|
49.8
|
|
Basel III common
equity Tier 1 capital ratio
|
10.2
|
%
|
|
|
10.1
|
%
|
|
11.7
|
%
|
Basel III common
equity Tier 1 fully implemented capital ratio
|
10.0
|
%
|
|
|
9.9
|
%
|
|
11.3
|
%
|
* Ratios
estimated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PNC maintained a strong capital position. Common shareholders'
equity at September 30, 2021
increased $0.2 billion from
June 30, 2021 as third quarter net
income was substantially offset by dividends, share
repurchases and lower accumulated other comprehensive income
reflecting the impact of higher rates on net unrealized securities
gains.
In the third quarter of 2021, PNC returned $0.9 billion of capital to shareholders through
$0.5 billion of dividends on common
shares and $0.4 billion of common
share repurchases representing 2.1 million shares. Repurchases were
made under the share repurchase programs of up to $2.9 billion for the four-quarter period
beginning in the third quarter of 2021.
On October 1, 2021, the PNC
board of directors declared a quarterly cash dividend on common
stock of $1.25 per share payable on
November 5, 2021.
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 for two years the full
impact of the Current Expected Credit Losses (CECL) standard on
regulatory capital, followed by a three-year transition period. The
fully implemented ratios reflect the full impact of CECL and
exclude the benefits of this transition provision.
CREDIT QUALITY
REVIEW
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit
Quality
|
|
|
|
|
|
Change
3Q21 vs
2Q21
|
Change
3Q21 vs
3Q20
|
In
millions
|
September 30,
2021
|
|
June 30,
2021
|
|
September 30,
2020
|
Provision for
(recapture of) credit losses
|
$
|
(203)
|
|
|
$
|
302
|
|
|
$
|
52
|
|
$
|
(505)
|
|
$
|
(255)
|
|
Net loan
charge-offs
|
$
|
81
|
|
|
$
|
306
|
|
|
$
|
155
|
|
(74)
|
%
|
(48)
|
%
|
Allowance for credit
losses
|
$
|
6,001
|
|
|
$
|
6,375
|
|
|
$
|
6,440
|
|
(6)
|
%
|
(7)
|
%
|
Accruing loans past
due 90 days or more
|
$
|
492
|
|
|
$
|
527
|
|
|
$
|
448
|
|
(7)
|
%
|
10
|
%
|
Nonperforming
loans
|
$
|
2,528
|
|
|
$
|
2,779
|
|
|
$
|
2,085
|
|
(9)
|
%
|
21
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs to
average loans (annualized)
|
0.11
|
%
|
|
0.48
|
%
|
|
0.24
|
%
|
|
|
Allowance for credit
losses to total loans
|
2.07
|
%
|
|
2.16
|
%
|
|
2.58
|
%
|
|
|
Nonperforming loans
to total loans
|
0.87
|
%
|
|
0.94
|
%
|
|
0.84
|
%
|
|
|
|
|
|
|
|
|
|
|
The third quarter of 2021 included a provision recapture of
$203 million, reflecting continued
improvements in credit quality and changes in portfolio
composition. The second quarter included a provision for credit
losses of $302 million, primarily
driven by the establishment of an initial provision for credit
losses related to the BBVA USA
acquisition.
Net loan charge-offs were $81
million in the third quarter of 2021, decreasing
$225 million and $74 million from the second quarter of 2021 and
third quarter of 2020, respectively. The second quarter of 2021
included net loan charge-offs of $248
million primarily related to the purchase accounting
treatment for certain loans that were previously charged-off by
BBVA USA. For the third quarter of
2021, commercial and consumer net loan charge-offs were
$21 million and $60 million, respectively.
The allowance for credit losses was $6.0
billion at September 30, 2021
and $6.4 billion at both June 30, 2021 and September 30, 2020. The allowance for credit
losses as a percentage of total loans was 2.07% at September 30, 2021, 2.16% at June 30, 2021 and 2.58% at September 30, 2020.
Nonperforming loans at September 30,
2021 of $2.5 billion decreased
$251 million compared to June 30, 2021, primarily due to lower
nonperforming loans in the commercial real estate and commercial
and industrial portfolios. Nonperforming loans increased
$443 million compared to September 30, 2020, primarily due to
nonperforming loans acquired in the BBVA USA acquisition.
Overall delinquencies at September 30,
2021 of $1.4 billion,
increased $106 million compared to
June 30, 2021 and $158 million compared to September 30, 2020. In both comparisons, the
increase was largely due to commercial loans past due 30 to 59 days
primarily reflecting operational delays. Under the CARES Act credit
reporting rules and guidance from regulatory agencies, certain
loans modified due to pandemic-related hardships were considered
current during their modification period and not reported as past
due.
BUSINESS SEGMENT
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
Business Segment
Income
|
|
|
|
|
|
In
millions
|
3Q21
|
|
2Q21
|
|
3Q20
|
Retail
Banking
|
$
|
447
|
|
|
$
|
232
|
|
|
$
|
530
|
|
Corporate &
Institutional Banking
|
1,123
|
|
|
809
|
|
|
670
|
|
Asset Management
Group
|
114
|
|
|
87
|
|
|
91
|
|
Other
|
(210)
|
|
|
(37)
|
|
|
228
|
|
Net income excluding
noncontrolling interest
|
$
|
1,474
|
|
|
$
|
1,091
|
|
|
$
|
1,519
|
|
See accompanying
notes in Consolidated Financial Highlights
|
|
|
|
|
|
|
|
|
|
|
|
Retail
Banking
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
3Q21 vs
|
|
3Q21 vs
|
In
millions
|
3Q21
|
|
2Q21
|
|
3Q20
|
|
2Q21
|
|
3Q20
|
Net interest
income
|
$
|
1,713
|
|
|
$
|
1,497
|
|
|
$
|
1,383
|
|
|
$
|
216
|
|
|
$
|
330
|
|
Noninterest
income
|
$
|
662
|
|
|
$
|
706
|
|
|
$
|
673
|
|
|
$
|
(44)
|
|
|
$
|
(11)
|
|
Provision for
(recapture of) credit losses
|
$
|
(113)
|
|
|
$
|
214
|
|
|
$
|
(157)
|
|
|
$
|
(327)
|
|
|
$
|
44
|
|
Noninterest
expense
|
$
|
1,889
|
|
|
$
|
1,677
|
|
|
$
|
1,512
|
|
|
$
|
212
|
|
|
$
|
377
|
|
Earnings
|
$
|
447
|
|
|
$
|
232
|
|
|
$
|
530
|
|
|
$
|
215
|
|
|
$
|
(83)
|
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Loans
|
$
|
99.1
|
|
|
$
|
84.3
|
|
|
$
|
81.8
|
|
|
$
|
14.8
|
|
|
$
|
17.3
|
|
Deposits
|
$
|
262.0
|
|
|
$
|
233.2
|
|
|
$
|
197.9
|
|
|
$
|
28.8
|
|
|
$
|
64.1
|
|
Quarter
end
|
|
|
|
|
|
|
|
|
|
Loans
|
$
|
97.3
|
|
|
$
|
100.7
|
|
|
$
|
80.7
|
|
|
$
|
(3.4)
|
|
|
$
|
16.6
|
|
Deposits
|
$
|
261.7
|
|
|
$
|
260.8
|
|
|
$
|
198.7
|
|
|
$
|
0.9
|
|
|
$
|
63.0
|
|
|
|
|
|
|
|
|
|
|
|
Net charge
offs In millions
|
$
|
82
|
|
|
$
|
79
|
|
|
$
|
125
|
|
|
$
|
3
|
|
|
$
|
(43)
|
|
|
|
|
|
|
|
|
|
|
|
Retail Banking Highlights
Third quarter 2021 compared with second quarter 2021
- Earnings increased 93%, due to the full quarter benefit of BBVA
USA and a provision recapture,
partially offset by lower noninterest income.
-
- Noninterest income decreased 6%, primarily due to a negative
fair value adjustment of $169 million
related to the Visa Class B derivative, partially offset by the
full quarter benefit of BBVA USA
and higher residential mortgage revenue. The second quarter of 2021
included a negative Visa Class B derivative fair value adjustment
of $13 million.
- Provision recapture of $113
million at September 30, 2021
reflected changes in portfolio composition and continued
improvements in credit quality. The second quarter included a
provision for credit losses of $214
million, primarily related to the acquisition of BBVA
USA.
- Noninterest expense increased 13%, driven by the full quarter
impact of BBVA USA related
operating expenses and increased marketing activity.
- Average loans and deposits increased 18% and 12%, respectively,
reflecting the full quarter benefit of BBVA USA.
-
- Period-end loans decreased 3%, driven by PPP loan forgiveness
as well as lower home equity and auto loans, partially offset by
higher residential mortgage loans.
- Period-end deposits increased modestly driven by growth in
demand and savings deposits.
Third quarter 2021 compared with third quarter 2020
- Earnings decreased 16% and included the benefit of BBVA
USA.
-
- Noninterest income declined 2%, primarily due to a negative
Visa Class B derivative fair value adjustment, partially offset by
higher consumer services fees and service charges on deposits,
reflecting the addition of BBVA USA customers.
- Noninterest expense increased 25%, driven by operating expenses
related to BBVA USA and increased
marketing activity.
- Average and period-end loans both increased 21%. Average and
period-end deposits both increased 32%. In all comparisons, the
increase reflected the impact of the BBVA USA acquisition.
Corporate &
Institutional Banking
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
3Q21 vs
|
|
3Q21 vs
|
In
millions
|
3Q21
|
|
2Q21
|
|
3Q20
|
|
2Q21
|
|
3Q20
|
Net interest
income
|
$
|
1,250
|
|
|
$
|
1,092
|
|
|
$
|
1,025
|
|
|
$
|
158
|
|
|
$
|
225
|
|
Noninterest
income
|
$
|
1,056
|
|
|
$
|
867
|
|
|
$
|
723
|
|
|
$
|
189
|
|
|
$
|
333
|
|
Provision for
(recapture of) credit losses
|
$
|
(99)
|
|
|
$
|
104
|
|
|
$
|
211
|
|
|
$
|
(203)
|
|
|
$
|
(310)
|
|
Noninterest
expense
|
$
|
980
|
|
|
$
|
813
|
|
|
$
|
663
|
|
|
$
|
167
|
|
|
$
|
317
|
|
Earnings
|
$
|
1,123
|
|
|
$
|
809
|
|
|
$
|
670
|
|
|
$
|
314
|
|
|
$
|
453
|
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Loans
|
$
|
175.8
|
|
|
$
|
157.7
|
|
|
$
|
159.5
|
|
|
$
|
18.1
|
|
|
$
|
16.3
|
|
Deposits
|
$
|
163.1
|
|
|
$
|
145.0
|
|
|
$
|
133.1
|
|
|
$
|
18.1
|
|
|
$
|
30.0
|
|
Quarter
end
|
|
|
|
|
|
|
|
|
|
Loans
|
$
|
176.4
|
|
|
$
|
177.5
|
|
|
$
|
156.6
|
|
|
$
|
(1.1)
|
|
|
$
|
19.8
|
|
Deposits
|
$
|
157.8
|
|
|
$
|
164.1
|
|
|
$
|
137.3
|
|
|
$
|
(6.3)
|
|
|
$
|
20.5
|
|
|
|
|
|
|
|
|
|
|
|
Net
charge-offs In millions
|
$
|
13
|
|
|
$
|
233
|
|
|
$
|
32
|
|
|
$
|
(220)
|
|
|
$
|
(19)
|
|
|
|
|
|
|
|
|
|
|
|
Corporate & Institutional Banking Highlights
Third quarter 2021 compared with second quarter 2021
- Earnings increased 39%, including the full quarter benefit of
BBVA USA, record merger and
acquisition advisory fees and a provision recapture.
-
- Noninterest income increased 22%, primarily due to record
merger and acquisition advisory fees and increased treasury
management product revenue.
- Provision recapture of $99
million at September 30, 2021
reflected continued improvements in credit quality. The second
quarter included a provision for credit losses of $104 million, primarily related to the
acquisition of BBVA USA.
- Noninterest expense increased 21%, due to the full quarter
impact of BBVA USA operating
expenses and higher variable costs as a result of elevated business
activity.
- Average loans and deposits increased 11% and 12%, respectively,
reflecting the full quarter benefit of BBVA USA.
-
- Period-end loans decreased 1%, driven by a decline in BBVA
USA legacy loan portfolios and PPP
loan forgiveness, partially offset by growth in PNC legacy
corporate banking, business credit and multifamily agency warehouse
lending.
- Period-end deposits decreased 4%, due to BBVA USA legacy deposit outflows reflecting the
impact of strategic repricing decisions, partially offset by growth
in PNC legacy deposits.
Third quarter 2021 compared with third quarter 2020
- Earnings increased 68%, and included record merger and
acquisition advisory fees, the benefit of BBVA USA and a provision recapture.
-
- Noninterest income increased 46%, driven by record merger and
acquisition advisory fees and increased treasury management product
revenue.
- Noninterest expense increased 48%, reflecting operating
expenses related to BBVA USA and
higher variable costs as a result of elevated business
activity.
- Average loans increased 10%, and included the acquisition of
BBVA USA.
-
- Period-end loans increased 13%, reflecting the acquisition of
BBVA USA and growth in PNC's
business credit business, partially offset by PPP loan forgiveness
and declines in PNC's real estate and corporate banking
businesses.
- Average and period-end deposits increased 23% and 15%,
respectively, primarily due to the acquisition of BBVA USA.
Asset Management
Group
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
3Q21 vs
|
|
3Q21 vs
|
In
millions
|
3Q21
|
|
2Q21
|
|
3Q20
|
|
2Q21
|
|
3Q20
|
Net interest
income
|
$
|
141
|
|
|
$
|
112
|
|
|
$
|
89
|
|
|
$
|
29
|
|
|
$
|
52
|
|
Noninterest
income
|
$
|
256
|
|
|
$
|
244
|
|
|
$
|
221
|
|
|
$
|
12
|
|
|
$
|
35
|
|
Provision for
(recapture of) credit losses
|
$
|
(6)
|
|
|
$
|
23
|
|
|
$
|
(19)
|
|
|
$
|
(29)
|
|
|
$
|
13
|
|
Noninterest
expense
|
$
|
255
|
|
|
$
|
219
|
|
|
$
|
211
|
|
|
$
|
36
|
|
|
$
|
44
|
|
Earnings
|
$
|
114
|
|
|
$
|
87
|
|
|
$
|
91
|
|
|
$
|
27
|
|
|
$
|
23
|
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Discretionary client
assets under management
|
$
|
183
|
|
|
$
|
183
|
|
|
$
|
158
|
|
|
—
|
|
|
$
|
25
|
|
Nondiscretionary
client assets under administration
|
$
|
170
|
|
|
$
|
172
|
|
|
$
|
142
|
|
|
$
|
(2)
|
|
|
$
|
28
|
|
Client assets under
administration at quarter end
|
$
|
353
|
|
|
$
|
355
|
|
|
$
|
300
|
|
|
$
|
(2)
|
|
|
$
|
53
|
|
Brokerage client
account assets
|
$
|
5
|
|
|
$
|
5
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Loans
|
$
|
13.0
|
|
|
$
|
10.0
|
|
|
$
|
7.9
|
|
|
$
|
3.0
|
|
|
$
|
5.1
|
|
Deposits
|
$
|
29.3
|
|
|
$
|
23.4
|
|
|
$
|
19.1
|
|
|
$
|
5.9
|
|
|
$
|
10.2
|
|
Quarter
end
|
|
|
|
|
|
|
|
|
|
Loans
|
$
|
13.1
|
|
|
$
|
12.9
|
|
|
$
|
8.1
|
|
|
$
|
0.2
|
|
|
$
|
5.0
|
|
Deposits
|
$
|
29.3
|
|
|
$
|
28.7
|
|
|
$
|
18.8
|
|
|
$
|
0.6
|
|
|
$
|
10.5
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs
(recoveries) In millions
|
$
|
(1)
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
(3)
|
|
|
$
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
Asset Management Group Highlights
Third quarter 2021 compared with second quarter 2021
- Earnings increased 31%, and included the full quarter benefit
of BBVA USA.
-
- Noninterest income increased 5%, due to the full quarter
benefit of BBVA USA and higher
average equity markets.
- Noninterest expense increased 16%, due to the full quarter
impact of BBVA USA related
operating expenses and higher operational loss reserves.
- Discretionary client assets under management remained
consistent with the prior quarter.
- Average loans and deposits increased 30% and 25%, respectively,
reflecting the full quarter benefit of BBVA USA.
Third quarter 2021 compared with third quarter 2020
- Earnings increased 25%, primarily due to the impact of BBVA
USA and higher average equity
markets.
-
- Noninterest income increased 16%, driven by higher average
equity markets and the benefit of BBVA USA.
- Noninterest expense increased 21%, due to the impact of
operating expenses related to BBVA USA and higher operational loss reserves.
- Discretionary client assets under management increased 16%,
primarily driven by higher spot equity markets.
- Average loans and deposits increased 65% and 53%, respectively,
reflecting the acquisition of BBVA USA.
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)
272-3568 and (312) 429-1278 (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 2021 earnings
release, 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
21997580 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
|
|
|
2021
|
|
2021
|
|
2020
|
|
|
|
2021
|
|
2020
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
|
$
|
2,856
|
|
|
$
|
2,581
|
|
|
$
|
2,484
|
|
|
|
|
$
|
7,785
|
|
|
$
|
7,522
|
|
Noninterest
income
|
|
2,341
|
|
|
2,086
|
|
|
1,797
|
|
|
|
|
6,299
|
|
|
5,171
|
|
Total
revenue
|
|
5,197
|
|
|
4,667
|
|
|
4,281
|
|
|
|
|
14,084
|
|
|
12,693
|
|
Provision for
(recapture of) credit losses
|
|
(203)
|
|
|
302
|
|
|
52
|
|
|
|
|
(452)
|
|
|
3,429
|
|
Noninterest
expense
|
|
3,587
|
|
|
3,050
|
|
|
2,531
|
|
|
|
|
9,211
|
|
|
7,589
|
|
Income from
continuing operations before income taxes and noncontrolling
interests
|
|
$
|
1,813
|
|
|
$
|
1,315
|
|
|
$
|
1,698
|
|
|
|
|
$
|
5,325
|
|
|
$
|
1,675
|
|
Income taxes from
continuing operations
|
|
323
|
|
|
212
|
|
|
166
|
|
|
|
|
906
|
|
|
128
|
|
Net income from continuing operations
|
|
$
|
1,490
|
|
|
$
|
1,103
|
|
|
$
|
1,532
|
|
|
|
|
$
|
4,419
|
|
|
$
|
1,547
|
|
Income from
discontinued operations before taxes
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,777
|
|
Income taxes from
discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
1,222
|
|
Net income from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,555
|
|
Net income
|
|
$
|
1,490
|
|
|
$
|
1,103
|
|
|
$
|
1,532
|
|
|
|
|
$
|
4,419
|
|
|
$
|
6,102
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests
|
|
16
|
|
|
12
|
|
|
13
|
|
|
|
|
38
|
|
|
27
|
|
Preferred stock
dividends (a)
|
|
57
|
|
|
48
|
|
|
63
|
|
|
|
|
162
|
|
|
181
|
|
Preferred stock
discount accretion and redemptions
|
|
1
|
|
|
1
|
|
|
1
|
|
|
|
|
3
|
|
|
3
|
|
Net income
attributable to common shareholders
|
|
$
|
1,416
|
|
|
$
|
1,042
|
|
|
$
|
1,455
|
|
|
|
|
$
|
4,216
|
|
|
$
|
5,891
|
|
Per Common
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings from
continuing operations
|
|
$
|
3.31
|
|
|
$
|
2.43
|
|
|
$
|
3.40
|
|
|
|
|
$
|
9.84
|
|
|
$
|
3.11
|
|
Basic earnings from
discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
10.61
|
|
Total basic
earnings
|
|
$
|
3.31
|
|
|
$
|
2.43
|
|
|
$
|
3.40
|
|
|
|
|
$
|
9.84
|
|
|
$
|
13.73
|
|
Diluted earnings from
continuing operations
|
|
$
|
3.30
|
|
|
$
|
2.43
|
|
|
$
|
3.39
|
|
|
|
|
$
|
9.83
|
|
|
$
|
3.11
|
|
Diluted earnings from
discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
10.59
|
|
Total diluted
earnings
|
|
$
|
3.30
|
|
|
$
|
2.43
|
|
|
$
|
3.39
|
|
|
|
|
$
|
9.83
|
|
|
$
|
13.70
|
|
Cash dividends
declared per common share
|
|
$
|
1.25
|
|
|
$
|
1.25
|
|
|
$
|
1.15
|
|
|
|
|
$
|
3.65
|
|
|
$
|
3.45
|
|
Effective tax rate
from continuing operations (b)
|
|
17.8
|
%
|
|
16.1
|
%
|
|
9.8
|
%
|
|
|
|
17.0
|
%
|
|
7.6
|
%
|
|
|
(a)
|
Dividends are payable
quarterly other than Series R and Series S preferred stock, which
are payable semiannually. On September 13, 2021, PNC issued
1,500,000 depositary shares of Series T preferred stock with a $1
par value. Beginning on December 15, dividends will be paid on the
Series T on a quarterly basis (March 15, June 15, September 15 and
December 15 of each year).
|
(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.
|
The PNC Financial
Services Group, Inc.
|
Consolidated
Financial Highlights (Unaudited)
|
|
|
Three months
ended
|
|
|
|
Nine months
ended
|
|
|
September
30
|
|
June 30
|
|
September
30
|
|
|
|
September
30
|
|
September
30
|
|
|
2021
|
|
2021
|
|
2020
|
|
|
|
2021
|
|
2020
|
PERFORMANCE
RATIOS
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin
(a)
|
|
2.27
|
%
|
|
2.29
|
%
|
|
2.39
|
%
|
|
|
|
2.28
|
%
|
|
2.57
|
%
|
Noninterest income to
total revenue
|
|
45
|
%
|
|
45
|
%
|
|
42
|
%
|
|
|
|
45
|
%
|
|
41
|
%
|
Efficiency
(b)
|
|
69
|
%
|
|
65
|
%
|
|
59
|
%
|
|
|
|
65
|
%
|
|
60
|
%
|
Return on:
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common
shareholders' equity
|
|
10.95
|
%
|
|
8.32
|
%
|
|
11.76
|
%
|
|
|
|
11.17
|
%
|
|
16.57
|
%
|
Average
assets
|
|
1.06
|
%
|
|
0.88
|
%
|
|
1.32
|
%
|
|
|
|
1.16
|
%
|
|
1.83
|
%
|
BUSINESS SEGMENT
NET INCOME (LOSS) (c)
|
|
|
|
|
|
|
|
|
|
|
|
|
In
millions
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
Banking
|
|
$
|
447
|
|
|
$
|
232
|
|
|
$
|
530
|
|
|
|
|
$
|
1,286
|
|
|
$
|
508
|
|
Corporate &
Institutional Banking
|
|
1,123
|
|
|
809
|
|
|
670
|
|
|
|
|
2,990
|
|
|
682
|
|
Asset Management
Group
|
|
114
|
|
|
87
|
|
|
91
|
|
|
|
|
300
|
|
|
173
|
|
Other (d)
|
|
(210)
|
|
|
(37)
|
|
|
228
|
|
|
|
|
(195)
|
|
|
157
|
|
Net income from
continuing operations excluding noncontrolling interests
|
|
$
|
1,474
|
|
|
$
|
1,091
|
|
|
$
|
1,519
|
|
|
|
|
$
|
4,381
|
|
|
$
|
1,520
|
|
|
|
(a)
|
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, 2021, June 30, 2021 and September 30,
2020 were $22 million, $15 million and $17 million, respectively.
The taxable equivalent adjustments to net interest income for the
nine months ended September 30, 2021 and September 30,
2020 were $52 million and $58 million, respectively.
|
(b)
|
Calculated as
noninterest expense divided by total revenue.
|
(c)
|
Our business
information is presented based on our internal management reporting
practices. Net interest income in business segment results reflect
PNC's internal funds transfer pricing methodology. Assets receive a
funding charge and liabilities and capital receive a funding credit
based on a transfer pricing methodology that incorporates product
repricing characteristics, tenor and other factors.
|
(d)
|
Includes earnings and
gains or losses related to residual activities that do not meet the
criteria for disclosure as a separate reportable business. We
provide additional information on these activities in our Form 10-K
and Form 10-Q filings with the SEC.
|
The PNC Financial
Services Group, Inc.
|
Consolidated
Financial Highlights (Unaudited)
|
|
September
30
|
|
June 30
|
|
September
30
|
|
2021
|
|
2021
|
|
2020
|
BALANCE SHEET
DATA
|
|
|
|
|
|
Dollars in
millions, except per share data
|
|
|
|
|
|
Assets
|
$
|
553,515
|
|
|
$
|
554,212
|
|
|
$
|
461,817
|
|
Loans (a)
|
$
|
290,230
|
|
|
$
|
294,704
|
|
|
$
|
249,279
|
|
Allowance for loan
and lease losses
|
$
|
5,355
|
|
|
$
|
5,730
|
|
|
$
|
5,751
|
|
Interest-earning
deposits with banks
|
$
|
75,478
|
|
|
$
|
72,447
|
|
|
$
|
70,959
|
|
Investment
securities
|
$
|
125,606
|
|
|
$
|
126,543
|
|
|
$
|
91,185
|
|
Loans held for sale
(a)
|
$
|
2,121
|
|
|
$
|
2,227
|
|
|
$
|
1,787
|
|
Equity
investments
|
$
|
7,737
|
|
|
$
|
7,521
|
|
|
$
|
4,938
|
|
Mortgage servicing
rights
|
$
|
1,833
|
|
|
$
|
1,793
|
|
|
$
|
1,113
|
|
Goodwill
|
$
|
10,885
|
|
|
$
|
10,958
|
|
|
$
|
9,233
|
|
Other assets
(a)
|
$
|
36,137
|
|
|
$
|
35,025
|
|
|
$
|
32,445
|
|
Noninterest-bearing
deposits
|
$
|
156,305
|
|
|
$
|
154,190
|
|
|
$
|
107,281
|
|
Interest-bearing
deposits
|
$
|
292,597
|
|
|
$
|
298,693
|
|
|
$
|
247,798
|
|
Total
deposits
|
$
|
448,902
|
|
|
$
|
452,883
|
|
|
$
|
355,079
|
|
Borrowed funds
(a)
|
$
|
33,471
|
|
|
$
|
34,813
|
|
|
$
|
42,110
|
|
Allowance for
unfunded lending related commitments
|
$
|
646
|
|
|
$
|
645
|
|
|
$
|
689
|
|
Total shareholders'
equity
|
$
|
56,259
|
|
|
$
|
54,627
|
|
|
$
|
53,276
|
|
Common shareholders'
equity
|
$
|
51,250
|
|
|
$
|
51,107
|
|
|
$
|
49,760
|
|
Accumulated other
comprehensive income
|
$
|
1,079
|
|
|
$
|
1,463
|
|
|
$
|
2,997
|
|
Book value per common
share
|
$
|
121.16
|
|
|
$
|
120.25
|
|
|
$
|
117.44
|
|
Tangible book value
per common share (non-GAAP) (b)
|
$
|
94.82
|
|
|
$
|
93.83
|
|
|
$
|
95.71
|
|
Period end common
shares outstanding (in millions)
|
423
|
|
|
425
|
|
|
424
|
|
Loans to
deposits
|
65
|
%
|
|
65
|
%
|
|
70
|
%
|
Common shareholders'
equity to total assets
|
9.3
|
%
|
|
9.2
|
%
|
|
10.8
|
%
|
CLIENT ASSETS
(billions)
|
|
|
|
|
|
Discretionary client
assets under management
|
$
|
183
|
|
|
$
|
183
|
|
|
$
|
158
|
|
Nondiscretionary
client assets under administration
|
170
|
|
|
172
|
|
|
142
|
|
Total client assets
under administration
|
353
|
|
|
355
|
|
|
300
|
|
Brokerage account
client assets
|
81
|
|
|
88
|
|
|
55
|
|
Total client
assets
|
$
|
434
|
|
|
$
|
443
|
|
|
$
|
355
|
|
CAPITAL
RATIOS
|
|
|
|
|
|
Basel III (c)
(d)
|
|
|
|
|
|
Common equity Tier
1
|
10.2
|
%
|
|
10.1
|
%
|
|
11.7
|
%
|
Common equity Tier 1
fully implemented (e)
|
10.0
|
%
|
|
9.9
|
%
|
|
11.3
|
%
|
Tier 1
risk-based
|
11.5
|
%
|
|
11.1
|
%
|
|
12.8
|
%
|
Total capital
risk-based (f)
|
13.6
|
%
|
|
13.2
|
%
|
|
15.2
|
%
|
Leverage
|
8.2
|
%
|
|
8.7
|
%
|
|
9.4
|
%
|
Supplementary leverage
|
6.9
|
%
|
|
7.3
|
%
|
|
9.5
|
%
|
ASSET
QUALITY
|
|
|
|
|
|
Nonperforming loans
to total loans
|
0.87
|
%
|
|
0.94
|
%
|
|
0.84
|
%
|
Nonperforming assets
to total loans, OREO and foreclosed assets
|
0.88
|
%
|
|
0.96
|
%
|
|
0.86
|
%
|
Nonperforming assets
to total assets
|
0.46
|
%
|
|
0.51
|
%
|
|
0.47
|
%
|
Net charge-offs to
average loans (for the three months ended) (annualized)
|
0.11
|
%
|
|
0.48
|
%
|
|
0.24
|
%
|
Allowance for loan
and lease losses to total loans
|
1.85
|
%
|
|
1.94
|
%
|
|
2.31
|
%
|
Allowance for credit
losses to total loans (g)
|
2.07
|
%
|
|
2.16
|
%
|
|
2.58
|
%
|
Allowance for loan
and lease losses to nonperforming loans
|
212
|
%
|
|
206
|
%
|
|
276
|
%
|
Accruing loans past
due 90 days or more (in millions)
|
$
|
492
|
|
|
$
|
527
|
|
|
$
|
448
|
|
(a)
|
Amounts include
assets and liabilities for which we have elected the fair value
option. Our second quarter 2021 Form 10-Q included, and our third
quarter 2021 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 20 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 18 for additional
information. The ratios as of September 30, 2021 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 and 2020
Basel III Total risk-based capital ratios include nonqualifying
trust preferred capital securities of $20 million and $40 million,
respectively, that are subject to a phase-out period that runs
through 2021.
|
(g)
|
Excludes allowances
for investment securities and other financial assets.
|
The PNC Financial
Services Group, Inc.
|
|
Consolidated
Financial Highlights (Unaudited)
|
CAPITAL RATIOS
As of January 1, 2020, the 2019
Tailoring Rules became effective for PNC. The most significant
changes involve PNC's election to exclude specific accumulated
other comprehensive income items from common equity Tier 1 capital
and higher thresholds used to calculate common equity Tier 1
capital deductions. Effective January 1,
2020, PNC must deduct from common equity Tier 1 capital
investments in unconsolidated financial institutions, mortgage
servicing rights and deferred tax assets (in each case, net of
associated deferred tax liabilities) to the extent such items
individually exceed 25% of the institution's adjusted common equity
Tier 1 capital.
PNC's regulatory risk-based capital ratios in 2021 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.
During 2020, regulators adopted a final rule permitting banks
that have adopted the CECL standard to delay for two years CECL's
full impact on regulatory capital, relative to the incurred loss
methodology's impact on regulatory capital, followed by a three
year transition period. PNC elected to adopt this optional
five-year transition provision effective as of March 31, 2020. See the table below for the
June 30, 2021, September 30, 2020 and estimated
September 30, 2021 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, 2021 and
June 30, 2021 (Fully Implemented) estimates presented in the
table below.
Our Basel III capital ratios may be impacted by changes to the
regulatory capital rules and additional regulatory guidance or
analysis.
Basel lll
Common Equity Tier 1 Capital Ratios
|
|
|
|
|
|
|
|
Basel III
(a)
|
|
|
|
|
September
30
2021
(estimated)
(b)
|
June 30
2021 (b)
|
|
September
30
2020
(b)
|
|
September 30,
2021
(Fully Implemented)
(estimated)
(c)
|
June 30, 2021
(Fully Implemented)
(estimated)
(c)
|
|
|
|
Dollars in
millions
|
|
Common stock, related
surplus and retained earnings, net of treasury stock
|
$
|
51,228
|
|
$
|
50,775
|
|
|
$
|
48,122
|
|
|
$
|
50,171
|
|
$
|
49,645
|
|
Less regulatory
capital adjustments:
|
|
|
|
|
|
|
|
Goodwill and
disallowed intangibles, net of deferred tax liabilities
|
(11,142)
|
|
(11,231)
|
|
|
(9,208)
|
|
|
(11,142)
|
|
(11,231)
|
|
All other
adjustments
|
(48)
|
|
(27)
|
|
|
(63)
|
|
|
(53)
|
|
(33)
|
|
Basel III Common
equity Tier 1 capital
|
$
|
40,038
|
|
$
|
39,517
|
|
|
$
|
38,851
|
|
|
$
|
38,976
|
|
$
|
38,381
|
|
Basel III
standardized approach risk-weighted assets (d)
|
$
|
390,682
|
|
$
|
389,429
|
|
|
$
|
331,748
|
|
|
$
|
390,667
|
|
$
|
388,957
|
|
Basel III Common
equity Tier 1 capital ratio
|
10.2
|
%
|
10.1
|
%
|
|
11.7
|
%
|
|
10.0
|
%
|
9.9
|
%
|
|
|
(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, 2021 and June 30, 2021 ratio is calculated
to reflect the full impact of CECL and excludes the benefits of the
five-year transition provision.
|
(d)
|
Basel III
standardized approach risk-weighted assets are based on the Basel
III standardized approach rules and include credit and market
risk-weighted assets.
|
The PNC Financial
Services Group, Inc.
|
|
Consolidated
Financial Highlights (Unaudited)
|
|
|
|
NON-GAAP
MEASURES
|
|
|
Pretax
Pre-Provision Earnings (non-GAAP)
Pretax
Pre-Provision Earnings Excluding Integration Costs
(non-GAAP)
|
|
|
|
|
|
|
September
30
|
|
June 30
|
|
September
30
|
Dollars in
millions
|
2021
|
|
2021
|
|
2020
|
Income from
continuing operations before income taxes and noncontrolling
interests
|
$
|
1,813
|
|
|
$
|
1,315
|
|
|
$
|
1,698
|
|
Provision for
(recapture of) credit losses (a)
|
(203)
|
|
|
302
|
|
|
52
|
|
Pretax pre-provision
earnings (non-GAAP)
|
$
|
1,610
|
|
|
$
|
1,617
|
|
|
$
|
1,750
|
|
Integration
costs
|
243
|
|
|
111
|
|
|
NA
|
Pretax pre-provision
earnings excluding integration costs (non-GAAP)
|
$
|
1,853
|
|
|
$
|
1,728
|
|
|
NA
|
|
|
(a)
|
Provision for
(recapture of) credit losses for the three months ended June 30,
2021 includes a $1.0 billion initial provision for credit losses
related to BBVA USA.
|
Pretax pre-provision earnings is a non-GAAP measure and is based
on adjusting income from continuing operations 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)
|
|
|
|
|
|
September
30
|
|
Per Common
Share
|
|
June 30
|
|
Per Common
Share
|
Dollars in
millions, except per share data
|
2021
|
|
|
2021
|
|
Net income
attributable to diluted common shareholders
|
$
|
1,408
|
|
|
$
|
3.30
|
|
|
$
|
1,037
|
|
|
$
|
2.43
|
|
Integration costs
after tax (a)
|
192
|
|
|
0.45
|
|
|
88
|
|
|
0.21
|
|
Adjusted net income
attributable to diluted common shareholders
excluding integration costs (non-GAAP)
|
$
|
1,600
|
|
|
$
|
3.75
|
|
|
$
|
1,125
|
|
|
$
|
2.64
|
|
Average diluted
common shares outstanding (in millions)
|
426
|
|
|
|
|
427
|
|
|
|
|
|
(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. This non-GAAP
measure was updated from the Q2 2021 earnings release to only
adjust for integration costs to provide for a better
quarter-over-quarter comparison as Q2 2021 included a significant
initial provision for credit losses for BBVA USA that will not be taken in future quarters.
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
|
2021
|
|
2021
|
|
2020
|
Book value per common
share
|
$
|
121.16
|
|
|
$
|
120.25
|
|
|
$
|
117.44
|
|
Tangible book value
per common share
|
|
|
|
|
|
Common shareholders'
equity
|
$
|
51,250
|
|
|
$
|
51,107
|
|
|
$
|
49,760
|
|
Goodwill and other
intangible assets
|
(11,419)
|
|
|
(11,515)
|
|
|
(9,396)
|
|
Deferred tax
liabilities on goodwill and other intangible assets
|
277
|
|
|
284
|
|
|
187
|
|
Tangible common
shareholders' equity
|
$
|
40,108
|
|
|
$
|
39,876
|
|
|
$
|
40,551
|
|
Period-end common
shares outstanding (in millions)
|
423
|
|
|
425
|
|
|
424
|
|
Tangible book value
per common share (non-GAAP)
|
$
|
94.82
|
|
|
$
|
93.83
|
|
|
$
|
95.71
|
|
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)
|
|
|
|
|
|
|
September
30
|
|
June 30
|
|
September
30
|
Dollars in
millions
|
2021
|
|
2021
|
|
2020
|
Net interest
income
|
$
|
2,856
|
|
|
$
|
2,581
|
|
|
$
|
2,484
|
|
Taxable-equivalent
adjustments
|
22
|
|
|
15
|
|
|
17
|
|
Net interest income
(Fully Taxable-Equivalent - FTE)
|
$
|
2,878
|
|
|
$
|
2,596
|
|
|
$
|
2,501
|
|
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)
|
|
|
|
|
September
30
|
|
June 30
|
Dollars in
millions
|
2021
|
|
2021
|
Noninterest
expense
|
$
|
3,587
|
|
|
$
|
3,050
|
|
Integration
expense
|
(235)
|
|
|
(101)
|
|
Noninterest expense
excluding integration expense (non-GAAP)
|
$
|
3,352
|
|
|
$
|
2,949
|
|
|
|
|
|
Total
revenue
|
$
|
5,197
|
|
|
$
|
4,667
|
|
Integration costs -
contra revenue
|
(8)
|
|
|
(10)
|
|
Total revenue
excluding integration costs - contra revenue
(non-GAAP)
|
$
|
5,205
|
|
|
$
|
4,677
|
|
|
|
|
|
Efficiency ratio
(a)
|
69
|
%
|
|
65
|
%
|
Efficiency ratio
excluding integration costs (non-GAAP) (b)
|
64
|
%
|
|
63
|
%
|
(a)
|
Calculated as
noninterest expense divided by total revenue.
|
(b)
|
Calculated as
noninterest expense excluding integration expense divided by total
revenue excluding integration costs - contra revenue.
|
The efficiency ratio excluding integration costs is a non-GAAP
measure and excludes the integration costs related to the BBVA
USA acquisition. It is calculated
based on adjusting the efficiency ratio calculation by excluding
integration costs during the period from noninterest expense and
total revenue. We believe that this non-GAAP measure is a useful
tool for the purpose of evaluating PNC's results. The exclusion of
integration costs increases comparability across periods,
demonstrates the impact of significant items and provides a useful
measure for determining PNC's revenue and expenses that are core to
our business operations and expected to recur over time.
Cautionary Statement Regarding Forward-Looking
Information
We make statements in this news release and related conference
call, and we may from time to time make other statements, regarding
our outlook for financial performance, such as earnings, revenues,
expenses, tax rates, capital and liquidity levels and ratios, asset
levels, asset quality, financial position, and other matters
regarding or affecting us and our future business and operations
that are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act. Forward-looking
statements are typically identified by words such as "believe,"
"plan," "expect," "anticipate," "see," "look," "intend," "outlook,"
"project," "forecast," "estimate," "goal," "will," "should" and
other similar words and expressions.
Forward-looking statements are necessarily subject to numerous
assumptions, risks and uncertainties, which change over time.
Future events or circumstances may change our outlook and may also
affect the nature of the assumptions, risks and uncertainties to
which our forward-looking statements are subject.
Forward-looking statements speak only as of the date made. We
do not assume any duty and do not undertake any obligation to
update forward-looking statements. Actual results or future
events could differ, possibly materially, from those anticipated in
forward-looking statements, as well as from historical
performance. As a result, we caution against placing undue
reliance on any forward-looking statements.
Our forward-looking statements are subject to the following
principal risks and uncertainties.
- Our businesses, financial results and balance sheet values are
affected by business and economic conditions, including:
-
- Changes in interest rates and valuations in debt, equity and
other financial markets,
- Disruptions in the U.S. and global financial markets,
- Actions by the Federal Reserve Board, U.S. Treasury and other
government agencies, including those that impact money supply,
market interest rates and inflation,
- Changes in customer behavior due to changing business and
economic conditions or legislative or regulatory initiatives,
- Changes in customers', suppliers' and other counterparties'
performance and creditworthiness,
- Impacts of tariffs and other trade policies of the U.S. and its
global trading partners,
- The length and extent of the economic impacts of the COVID-19
pandemic,
- The impact of the results of the 2020 U.S. elections, including
on the regulatory landscape, capital markets, tax policy,
infrastructure spending and social programs, and
- Commodity price volatility.
- Our forward-looking financial statements are subject to the
risk that economic and financial market conditions will be
substantially different than those we are currently expecting and
do not take into account potential legal and regulatory
contingencies. These statements are based on our view that:
-
- The U.S. economy is in an economic recovery, following a very
severe but very short economic contraction in the first half of
2020 due to the COVID-19 pandemic and public health measures to
contain it.
- With the passage of the American Rescue Plan Act of 2021 and
continued vaccine distribution, economic growth picked up in the
first half of 2021, and real GDP returned to its pre-pandemic level
in the second quarter of 2021. The Delta variant and supply chain
difficulties have been drags on growth in the second half of 2021,
although the economy continues to expand. Growth will pick up at
the end of 2021 as the impact of the Delta variant fades and supply
chains normalize and will remain solid into 2022. Employment in
September 2021 was still down by
almost 5 million from before the pandemic; PNC expects employment
to return to its pre-pandemic level in mid-2022.
- Compared to the spring of 2020 (when prices were falling),
inflation accelerated in mid-2021 due to strong demand in specific
segments and supply chain disruptions. Inflation has started to
slow on a month-over-month basis but will remain elevated in the
near term.
- PNC expects the Federal Open Market Committee to keep the fed
funds rate in its current range of 0.00 to 0.25 percent until
mid-2023.
- PNC's ability to take certain capital actions, including
returning capital to shareholders, is subject to PNC meeting or
exceeding a stress capital buffer established by the Federal
Reserve Board in connection with the Federal Reserve Board's
Comprehensive Capital Analysis and Review (CCAR) process.
- PNC's regulatory capital ratios in the future will depend on,
among other things, the company's financial performance, the scope
and terms of final capital regulations then in effect and
management actions affecting the composition of PNC's balance
sheet. In addition, PNC's ability to determine, evaluate and
forecast regulatory capital ratios, and to take actions (such as
capital distributions) based on actual or forecasted capital
ratios, will be dependent at least in part on the development,
validation and regulatory review of related models.
Cautionary Statement Regarding Forward-Looking Information
(Continued)
- Legal and regulatory developments could have an impact on our
ability to operate our businesses, financial condition, results of
operations, competitive position, reputation, or pursuit of
attractive acquisition opportunities. Reputational impacts could
affect matters such as business generation and retention,
liquidity, funding, and ability to attract and retain management.
These developments could include:
-
- Changes to laws and regulations, including changes affecting
oversight of the financial services industry, consumer protection,
bank capital and liquidity standards, pension, bankruptcy and other
industry aspects, and changes in accounting policies and
principles.
- Unfavorable resolution of legal proceedings or other claims and
regulatory and other governmental investigations or other
inquiries. These matters may result in monetary judgments or
settlements or other remedies, including fines, penalties,
restitution or alterations in our business practices, and in
additional expenses and collateral costs, and may cause
reputational harm to PNC.
- Results of the regulatory examination and supervision process,
including our failure to satisfy requirements of agreements with
governmental agencies.
- Impact on business and operating results of any costs
associated with obtaining rights in intellectual property claimed
by others and of adequacy of our intellectual property protection
in general.
- Business and operating results are affected by our ability to
identify and effectively manage risks inherent in our businesses,
including, where appropriate, through effective use of systems and
controls, third-party insurance, derivatives, and capital
management techniques, and to meet evolving regulatory capital and
liquidity standards.
- Our acquisition of BBVA USA
Bancshares, Inc. presents us with risks and uncertainties related
to the integration of the acquired business into PNC
including:
-
- The business of BBVA USA
Bancshares, Inc., including its U.S. banking subsidiary, BBVA
USA, going forward may not perform
as we currently project or in a manner consistent with historical
performance. As a result, the anticipated benefits, including
estimated cost savings, of the transaction may be significantly
more difficult or take longer to achieve than expected or may not
be achieved in their entirety as a result of unexpected factors or
events, including those that are outside of our control.
- The integration of BBVA USA
Bancshares, Inc., including its U.S. banking subsidiary, BBVA
USA, with that of PNC and PNC Bank
may be more difficult to achieve than anticipated or have
unanticipated adverse results relating to BBVA USA Bancshares, Inc., including its U.S.
banking subsidiary, BBVA USA, or
our existing businesses. Our ability to integrate BBVA USA Bancshares, Inc., including its U.S.
banking subsidiary, BBVA USA,
successfully may be adversely affected by the fact that this
transaction results in us entering several geographic markets where
we did not previously have any meaningful presence.
- In addition to the BBVA USA
Bancshares, Inc. transaction, we grow our business in part through
acquisitions and new strategic initiatives. Risks and uncertainties
include those presented by the nature of the business acquired and
strategic initiative, including in some cases those associated with
our entry into new businesses or new geographic or other markets
and risks resulting from our inexperience in those new areas, as
well as risks and uncertainties related to the acquisition
transactions themselves, regulatory issues, and the integration of
the acquired businesses into PNC after closing.
- Competition can have an impact on customer acquisition, growth
and retention and on credit spreads and product pricing, which can
affect market share, deposits and revenues. Our ability to
anticipate and respond to technological changes can also impact our
ability to respond to customer needs and meet competitive
demands.
- Business and operating results can also be affected by
widespread natural and other disasters, pandemics, dislocations,
terrorist activities, system failures, security breaches,
cyberattacks or international hostilities through impacts on the
economy and financial markets generally or on us or our
counterparties specifically.
We provide greater detail regarding these as well as other
factors in our 2020 Form 10-K and in our subsequent Form 10-Qs,
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:
Marcey Zwiebel
(412) 762-4550
media.relations@pnc.com
INVESTORS:
Bryan Gill
(412) 768-4143
investor.relations@pnc.com
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SOURCE The PNC Financial Services Group, Inc.