PITTSBURGH, Jan. 18, 2022 /PRNewswire/ -- The PNC Financial
Services Group, Inc. (NYSE: PNC) today reported:
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For the
quarter
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For the
year
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In millions, except
per share data and as noted
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4Q21
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3Q21
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2021
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2020
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Fourth Quarter
Highlights
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▪ Diluted EPS as
adjusted was
$3.68, excluding $438 million of
pre-tax integration costs related
to BBVA USA
▪ Approximately
95% of
integration costs incurred to
date
▪ Revenue
decreased 1% linked
quarter, reflecting lower
noninterest income which
included the negative impact of
$47 million of integration costs
▪ Expenses
increased 6% linked
quarter, including integration
expenses of $391 million and
higher personnel costs
▪ Provision
recapture of $327
million
▪ Average loans
decreased 1%
linked quarter as commercial
loan growth was more than
offset by $4.7 billion of PPP loan
forgiveness
▪ Average
deposits declined
modestly linked quarter due to
legacy BBVA USA commercial
deposit outflows reflecting the
impact of strategic repricing
decisions
▪ Net loan
charge-offs of $124
million or 0.17% of annualized
average loans
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Financial
Results
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Revenue
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$
5,127
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$
5,197
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$ 19,211
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$ 16,901
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Noninterest
expense
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3,791
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3,587
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13,002
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10,297
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Pretax, pre-provision
earnings (non-GAAP)
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1,336
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1,610
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6,209
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6,604
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Integration
costs
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438
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243
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798
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7
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Pretax, pre-provision
earnings excluding
integration costs (non-GAAP)
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1,774
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1,853
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7,007
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6,611
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Provision for
(recapture of) credit losses
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(327)
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(203)
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(779)
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3,175
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Net income from
continuing operations
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1,306
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1,490
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5,725
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3,003
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Per Common
Share
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Diluted earnings from
continuing operations -
as reported
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$
2.86
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$
3.30
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$
12.70
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$
6.36
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Impact from
integration costs (non-GAAP)
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0.82
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0.45
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1.48
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0.01
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Diluted earnings from
continuing operations -
as adjusted (non-GAAP)
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3.68
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3.75
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14.18
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6.37
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Book value
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120.61
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121.16
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120.61
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119.11
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Tangible book value
(non-GAAP)
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94.11
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94.82
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94.11
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97.43
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Balance Sheet
& Credit Quality
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Average loans (in
billions)
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$
288.9
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$
291.3
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$
268.7
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$
252.6
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Average deposits
(in billions)
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452.8
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454.4
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418.9
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333.8
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Net loan
charge-offs
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124
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81
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657
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832
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Allowance for credit
losses to total loans
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1.92%
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2.07%
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1.92%
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2.46%
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Selected
Ratios
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Return on average
common equity
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9.61%
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10.95%
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10.78%
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15.21%
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Return on average
assets
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0.92
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1.06
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1.09
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1.68
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Net interest margin
(non-GAAP)
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2.27
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2.27
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2.29
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2.53
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Noninterest income to
total revenue
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44
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45
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45
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41
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Efficiency
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74
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69
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68
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61
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Efficiency excluding
integration costs (non-
GAAP)
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66
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64
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64
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61
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Common Equity Tier 1
capital ratio
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10.2
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10.3
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10.2
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12.2
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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.
In May 2020, PNC
divested its entire 22.4% equity investment in BlackRock Inc. The
after-tax gain on sale of $4.3
billion and BlackRock's historical results are reported as 2020
discontinued operations.
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From Bill Demchak,
PNC Chairman, President and Chief Executive Officer:
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"2021 was a
pivotal year for PNC. We delivered solid financial results, closed
and converted BBVA USA in less
than a year, launched our overdraft solution Low Cash
ModeSM and announced an $88 billion plan to expand
economic opportunities for minorities and low- and moderate-income
individuals and communities. While the
acquisition of BBVA USA significantly increased our loan and
deposit balances, we also organically grew
revenue, and maintained solid credit quality metrics and a strong
capital position. We continue to execute on
our strategic priorities through our Main Street model, by building
and deepening relationships in new and
existing markets."
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BBVA USA
- PNC acquired BBVA USA on
June 1, 2021, adding approximately
2.6 million customers, 9,000 employees and over 600 branches across
seven states. Full year 2021 financial results include the addition
of BBVA USA operations since
June 1, 2021.
- Since the announcement of the acquisition, PNC has incurred
$925 million of merger and
integration costs, including $120
million in write-offs of capitalized items, or approximately
95% of the $980 million
expected.
Income Statement Highlights
Fourth quarter 2021
compared with third quarter 2021
- Net income of $1.3 billion
decreased $184 million, or 12%.
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- Integration costs of $438 million
pre-tax increased $195 million.
- Total revenue of $5.1 billion
decreased $70 million, or 1%.
- Net interest income of $2.9
billion increased $6 million
primarily driven by higher securities balances.
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- Net interest margin of 2.27% was stable.
- Noninterest income of $2.3
billion decreased $76 million,
or 3%, and included the negative impact of $47 million of integration costs.
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- Fee income of $1.8 billion
decreased $67 million, or 4%, as
continued high levels of corporate service business activity was
more than offset by a decline in residential mortgage revenue,
lower service charges on deposits, and integration costs of
$28 million reflecting fee waivers
for BBVA USA customers related to
conversion.
- Other noninterest income of $440
million decreased $9 million,
or 2%, and included integration costs of $19
million related to BBVA USA
lease exits.
- Noninterest expense of $3.8
billion increased $204
million, or 6%, including integration expenses of
$391 million and higher personnel
costs which reflected an increase to PNC's minimum wage.
- The fourth quarter of 2021 included a provision recapture of
$327 million, reflecting continued
improvements in the economic environment. The third quarter
included a provision recapture of $203
million.
- The effective tax rate was 21.5% for the fourth quarter, 17.8%
for the third quarter and 18.1% for full year 2021.
Balance Sheet Highlights
Fourth quarter 2021
compared with third quarter 2021 or December 31, 2021 compared
with September 30, 2021
- Average loans of $288.9 billion
decreased $2.4 billion, or 1%, driven by Paycheck Protection
Program (PPP) loan forgiveness of $4.7
billion.
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- Excluding the impact of PPP loan forgiveness, average
commercial loans increased $2.2
billion driven by growth in PNC corporate banking and
business credit businesses.
- Average consumer loans of $95.1
billion increased modestly driven by growth in residential
mortgage loans, largely offset by declines in home equity and auto
loans.
- Credit quality performance:
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- Delinquencies of $2.0 billion
increased $516 million, or 35%,
primarily due to BBVA USA
conversion-related administrative and operational delays
which should largely be resolved within the first half of
2022.
- Total nonperforming loans of $2.5
billion were stable.
- Net loan charge-offs of $124
million increased $43 million
driven by higher consumer loan net charge-offs, reflecting BBVA
USA conversion-related impacts and
seasonality.
- The allowance for credit losses to total loans was 1.92% at
December 31, 2021 compared with 2.07%
at September 30, 2021.
- Average deposits of $452.8
billion decreased $1.6
billion, as growth in commercial and consumer deposits was
more than offset by legacy BBVA USA commercial deposit outflows reflecting the
impact of strategic repricing decisions in the third quarter.
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- Deposits of $457.3 billion
increased $8.4 billion as a result of
growth in consumer deposits.
- Average investment securities of $127.8
billion increased $7.3
billion, or 6%.
- Average Federal Reserve Bank balances of $75.1 billion decreased $5.0 billion, primarily reflecting increased
securities purchases.
- PNC maintained strong capital and liquidity positions.
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- On January 5, 2022, the PNC board
of directors declared a quarterly cash dividend on common stock of
$1.25 per share payable on
February 5, 2022.
- The Basel III common equity Tier 1 capital ratio was an
estimated 10.2% at December 31, 2021
and 10.3% at September 30, 2021.
- The Liquidity Coverage Ratio at December
31, 2021 for PNC exceeded the regulatory minimum
requirement.
Earnings
Summary
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In millions,
except per share data
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4Q21
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3Q21
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4Q20
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Net income
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$
1,306
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$
1,490
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$
1,456
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Net income
attributable to
diluted common shares
- as reported
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$
1,214
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$
1,408
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$
1,387
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Net income
attributable to
diluted common shares
- as adjusted (non-GAAP)
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$
1,560
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$
1,600
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$
1,393
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Diluted earnings per
common share - as reported
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$
2.86
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$
3.30
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$
3.26
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Diluted earnings per
common share - as adjusted (non-GAAP)
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$
3.68
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$
3.75
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$
3.27
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Average diluted
common shares outstanding
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424
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426
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426
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Cash dividends
declared per common share
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$
1.25
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$
1.25
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$
1.15
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See non-GAAP
financial measures included in the consolidated financial
highlights accompanying this news release
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Fourth quarter 2021 net income of $1.3
billion, or $2.86 per diluted
common share, included integration costs of $438 million pretax resulting from the
acquisition of BBVA USA. Excluding
the impact of integration costs, adjusted diluted earnings per
common share was $3.68.
The Consolidated Financial Highlights accompanying this news
release include additional information regarding reconciliations of
non-GAAP financial measures to reported (GAAP) amounts. This
information supplements results as reported in accordance with GAAP
and should not be viewed in isolation from, or as a substitute for,
GAAP results. Fee income, a non-GAAP financial measure, refers to
noninterest income in the following categories: asset management,
consumer services, corporate services, residential mortgage and
service charges on deposits. Information in this news release,
including the financial tables, is unaudited.
CONSOLIDATED
REVENUE REVIEW
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Revenue
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Change
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Change
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4Q21 vs
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4Q21 vs
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In
millions
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4Q21
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3Q21
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4Q20
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3Q21
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4Q20
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Net interest
income
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$
2,862
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$
2,856
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$
2,424
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—
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18%
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Noninterest
income
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2,265
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2,341
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1,784
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(3)%
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27%
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Total
revenue
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$
5,127
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$
5,197
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$
4,208
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(1)%
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22%
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Total revenue for the fourth quarter of 2021 decreased
$70 million compared with the third
quarter of 2021 due to lower noninterest income. Compared with the
fourth quarter of 2020 total revenue increased $919 million primarily due to the acquisition of
BBVA USA and growth in noninterest
income.
Net interest income of $2.9
billion for the fourth quarter of 2021 increased
$6 million compared to the third
quarter of 2021 primarily driven by higher securities balances. In
comparison with the fourth quarter of 2020, net interest income
increased $438 million as a result of
higher interest earning assets, partially offset by lower
securities yields.
The net interest margin was 2.27% for both the fourth and third
quarter of 2021 and 2.32% in the fourth quarter of 2020. Compared
to the fourth quarter of 2020, the decrease was driven by lower
securities yields.
Noninterest
Income
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Change
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Change
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4Q21 vs
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4Q21 vs
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In
millions
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4Q21
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3Q21
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4Q20
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3Q21
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4Q20
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Asset
management
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$
251
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$
248
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$
221
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1%
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14%
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Consumer
services
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508
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496
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387
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2%
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31%
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Corporate
services
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839
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842
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650
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—
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29%
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Residential
mortgage
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101
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147
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99
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(31)%
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2%
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Service charges on
deposits
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126
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159
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134
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(21)%
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(6)%
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Other
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440
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449
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293
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(2)%
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50%
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$
2,265
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$
2,341
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$
1,784
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(3)%
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27%
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Noninterest income for the fourth quarter of 2021 decreased
$76 million compared with the third
quarter of 2021. Asset management revenue grew $3 million primarily as a result of higher
average equity markets. Consumer services increased $12 million due to higher brokerage fees and
increased credit card activity. Corporate services decreased
$3 million and included continued
strong merger and acquisition advisory fees and $17 million of integration costs related to
treasury management fee waivers for BBVA USA customers during conversion. Residential
mortgage revenue decreased $46
million due to lower results from residential mortgage
servicing rights valuation, net of economic hedge, and lower loan
sales revenue. Service charges on deposits decreased $33 million primarily due to the impact of
converting BBVA USA customers to
PNC products and overdraft pricing structure as well as
conversion-related fee waivers of $11
million. Other noninterest income decreased $9 million, reflecting lower private equity
revenue and integration costs of $19
million related to BBVA USA
lease exits. In addition, the fourth quarter included a positive
Visa Class B derivative fair value adjustment of $1 million compared to a negative Visa Class B
derivative fair value adjustment of $169
million in the third quarter.
Noninterest income for the fourth quarter of 2021 increased
$481 million compared with the fourth
quarter of 2020. Asset management revenue grew $30 million as a result of higher average equity
markets and the benefit of BBVA USA. Consumer services increased $121 million driven by the addition of BBVA
USA customers, growth in
transaction volumes and higher brokerage fees. Corporate services
increased $189 million driven by
higher merger and acquisition advisory fees, increased treasury
management product revenue and the benefit of BBVA USA. Service charges on deposits decreased
$8 million as the addition of BBVA
USA was more than offset by the
impact of Low Cash ModeSM and conversion-related
fee waivers. Other noninterest income increased $147 million and included higher private equity
revenue.
CONSOLIDATED
EXPENSE REVIEW
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Noninterest
Expense
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Change
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Change
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4Q21 vs
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4Q21 vs
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In
millions
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4Q21
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3Q21
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4Q20
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3Q21
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4Q20
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Personnel
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$
2,038
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$
1,986
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$
1,521
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3%
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34%
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Occupancy
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260
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248
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215
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5%
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21%
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Equipment
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437
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355
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296
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23%
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48%
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Marketing
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97
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|
103
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64
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(6)%
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52%
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Other
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959
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895
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612
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7%
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57%
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$
3,791
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$
3,587
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$
2,708
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6%
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40%
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Noninterest expense for the fourth quarter of 2021 increased
$204 million compared with the third
quarter of 2021. Integration expenses were $391 million in the fourth quarter of 2021 and
$235 million in the third quarter of
2021. Excluding the impact of integration expenses, noninterest
expense was $3,400 million and
$3,352 million, respectively, for the
fourth and third quarter of 2021, increasing primarily due to
personnel costs, reflecting higher employee benefits expense and an
increase to PNC's minimum wage. In addition, personnel costs
related to incentive compensation remained elevated during the
fourth quarter of 2021 due to continued high levels of business
activity.
Noninterest expense increased $1,083
million in comparison with the fourth quarter of 2020
primarily driven by operating and integration expenses related to
the BBVA USA acquisition, and
increased business activity.
The effective tax rate was 21.5% for the fourth quarter of 2021,
17.8% for the third quarter of 2021 and 17.0% for the fourth
quarter of 2020. The full year 2021 effective tax rate was
18.1%.
CONSOLIDATED BALANCE SHEET REVIEW
Average total assets were $560.3
billion in the fourth quarter of 2021 compared with
$559.2 billion in the third quarter
of 2021 and $465.0 billion in the
fourth quarter of 2020. Compared to the fourth quarter of 2020, the
increase was primarily driven by the BBVA USA acquisition.
Loans
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Change
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Change
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|
December 31,
2021
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September 30,
2021
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December 31,
2020
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12/31/21
vs
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12/31/21
vs
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In
billions
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09/30/21
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12/31/20
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Average
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Commercial
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$
193.8
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$
196.3
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$
170.3
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(1)%
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14%
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Consumer
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95.1
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95.0
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75.5
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—
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26%
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Average
loans
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$
288.9
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$
291.3
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$
245.8
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(1)%
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18%
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Quarter
end
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Commercial
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$
193.1
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$
195.2
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$
167.2
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(1)%
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15%
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Consumer
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95.3
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95.0
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74.7
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—
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28%
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Total
loans
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$
288.4
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$
290.2
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$
241.9
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(1)%
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19%
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Average loans for the fourth quarter of 2021 were $288.9 billion, decreasing $2.4 billion compared to the third quarter of
2021. Average commercial loans decreased $2.5 billion driven by PPP loan forgiveness of
$4.7 billion, partially offset by
growth in PNC corporate banking and business credit businesses.
Average consumer loans of $95.1
billion increased modestly driven by growth in residential
mortgage loans largely offset by declines in home equity and auto
loans.
Average loans for the fourth quarter of 2021 increased
$43.1 billion compared to the fourth
quarter of 2020, reflecting the acquisition of BBVA USA.
Fourth quarter 2021 average and period-end PPP loans outstanding
were $4.6 billion and $3.4 billion, respectively.
Investment
Securities
|
|
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Change
|
Change
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|
December 31,
2021
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September 30,
2021
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December 31,
2020
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12/31/21
vs
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12/31/21
vs
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In
billions
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09/30/21
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12/31/20
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Average
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$
127.8
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$
120.6
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$
85.7
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6%
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49%
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Quarter
end
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$
133.0
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$
125.6
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$
88.8
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6%
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50%
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|
|
|
|
|
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Average investment securities for the fourth quarter of 2021
were $127.8 billion, increasing
$7.2 billion and $42.1 billion from the third quarter of 2021 and
fourth quarter of 2020, respectively, reflecting increased purchase
activity, primarily of U.S. Treasury and government agency
securities. Compared to the fourth quarter of 2020, the increase
was also attributable to BBVA USA.
Net unrealized gains on available for sale securities were
$0.7 billion at December 31,
2021, $1.7 billion at
September 30, 2021 and $3.2
billion at December 31, 2020.
Average Federal Reserve Bank balances for the fourth quarter of
2021 were $75.1 billion, decreasing
$5.0 billion from the third quarter
of 2021, primarily reflecting increased securities purchases.
Compared to the fourth quarter of 2020, average Federal Reserve
Bank balances decreased $1.0
billion.
Deposits
|
|
|
|
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|
Change
|
Change
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|
December 31,
2021
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|
September 30,
2021
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|
December 31,
2020
|
12/31/21
vs
|
12/31/21
vs
|
In
billions
|
|
|
09/30/21
|
12/31/20
|
Average
|
|
|
|
|
|
|
|
Noninterest-bearing
|
$
156.6
|
|
$
155.9
|
|
$
109.9
|
—
|
42%
|
Interest-bearing
|
296.2
|
|
298.5
|
|
249.5
|
(1)%
|
19%
|
Average
deposits
|
$
452.8
|
|
$
454.4
|
|
$
359.4
|
—
|
26%
|
|
|
|
|
|
|
|
|
Quarter
end
|
|
|
|
|
|
|
|
Noninterest-bearing
|
$
155.2
|
|
$
156.3
|
|
$
112.6
|
(1)%
|
38%
|
Interest-bearing
|
302.1
|
|
292.6
|
|
252.7
|
3%
|
20%
|
Total
deposits
|
$
457.3
|
|
$
448.9
|
|
$
365.3
|
2%
|
25%
|
|
|
|
|
|
|
|
|
Average deposits for the fourth quarter of 2021 were
$452.8 billion, decreasing
$1.6 billion compared with the third
quarter of 2021, as growth in commercial and consumer deposits was
more than offset by legacy BBVA USA commercial deposit outflows reflecting the
impact of strategic repricing decisions in the third quarter.
Compared with the fourth quarter of 2020, average deposits
increased $93.4 billion primarily
reflecting the acquisition of BBVA USA.
Deposits at December 31, 2021 of $457.3 billion, increased $8.4 billion from September 30, 2021 as a
result of growth in consumer deposits.
Borrowed
Funds
|
|
|
|
|
|
Change
|
Change
|
|
December 31,
2021
|
|
September 30,
2021
|
|
December 31,
2020
|
12/31/21
vs
|
12/31/21
vs
|
In
billions
|
|
|
09/30/21
|
12/31/20
|
Average
|
$
34.4
|
|
$
34.4
|
|
$
38.2
|
—
|
(10)%
|
Quarter
end
|
$
30.8
|
|
$
33.5
|
|
$
37.2
|
(8)%
|
(17)%
|
|
|
|
|
|
|
|
|
Average borrowed funds of $34.4
billion in the fourth quarter of 2021 were stable compared
with the third quarter of 2021. Compared with the fourth quarter of
2020, average borrowed funds decreased $3.8
billion reflecting the use of excess liquidity.
Borrowed funds at December 31, 2021 of $30.8 billion, decreased $2.7 billion primarily due to lower bank notes
and senior debt.
Capital
|
December 31,
2021
|
|
|
September 30,
2021
|
|
December 31,
2020
|
|
*
|
|
|
Common shareholders'
equity In billions
|
$
50.7
|
|
|
$
51.3
|
|
$
50.5
|
Basel III common
equity Tier 1 capital ratio
|
10.2%
|
|
|
10.3%
|
|
12.2%
|
Basel III common
equity Tier 1 fully
implemented capital ratio
|
10.0%
|
|
|
10.0%
|
|
11.8%
|
* Ratios
estimated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PNC maintained a strong capital position. Common shareholders'
equity at December 31, 2021 decreased $0.6 billion from September 30, 2021 as
fourth quarter net income was more than offset by a decrease in
accumulated other comprehensive income, reflecting the impact of
higher rates on net unrealized securities gains, as well as share
repurchases and dividends paid in the fourth quarter.
In the fourth quarter of 2021, PNC returned $1.1 billion of capital to shareholders through
$0.6 billion of common share
repurchases, representing 2.9 million shares, and $0.5 billion of dividends on common 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 January 5, 2022, the PNC board
of directors declared a quarterly cash dividend on common stock of
$1.25 per share payable on
February 5, 2022.
For information regarding PNC's Basel III capital ratios, see
Capital Ratios in the Consolidated Financial Highlights. PNC
elected a five-year transition provision effective March 31, 2020 to delay 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
4Q21 vs
3Q21
|
Change
4Q21 vs
4Q20
|
In
millions
|
December 31,
2021
|
September 30,
2021
|
December 31,
2020
|
Provision for
(recapture of) credit losses
|
$
(327)
|
$
(203)
|
$
(254)
|
$ (124)
|
$
(73)
|
Net loan
charge-offs
|
$
124
|
$
81
|
$
229
|
53%
|
(46)%
|
Allowance for credit
losses
|
$
5,530
|
$
6,001
|
$
5,945
|
(8)%
|
(7)%
|
Total
delinquencies
|
$
1,985
|
$
1,469
|
$
1,363
|
35%
|
46%
|
Nonperforming
loans
|
$
2,480
|
$
2,528
|
$
2,286
|
(2)%
|
8%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs to
average loans (annualized)
|
0.17%
|
0.11%
|
0.37%
|
|
|
Allowance for credit
losses to total loans
|
1.92%
|
2.07%
|
2.46%
|
|
|
Nonperforming loans
to total loans
|
0.86%
|
0.87%
|
0.94%
|
|
|
Total
delinquencies represent accruing loans more than 30 days past
due
Total
delinquencies as of September 30, 2021 have been revised to
align the delinquency methodology of residential real
estate loans attributable to BBVA USA to PNC's methodology, which
resulted in a increase of $73 million at September
30, 2021
|
The fourth quarter of 2021 included a provision recapture of
$327 million, reflecting continued
improvements in the economic environment. The third quarter
included a provision recapture of $203
million.
Net loan charge-offs were $124
million in the fourth quarter of 2021, increasing
$43 million from the third quarter of
2021 driven by higher consumer loan net charge-offs, reflecting
BBVA USA conversion-related
impacts and seasonality. Compared to the fourth quarter of 2020,
net loan charge-offs decreased $105
million driven by lower commercial and industrial net loan
charge-offs.
The allowance for credit losses was $5.5
billion at December 31, 2021, $6.0 billion September 30, 2021 and
$5.9 billion at December 31,
2020. The allowance for credit losses as a percentage of total
loans was 1.92% at December 31, 2021, 2.07% at
September 30, 2021 and 2.46% at December 31, 2020.
Nonperforming loans were $2.5
billion at both December 31, 2021 and
September 30, 2021. Nonperforming loans increased $194 million compared to December 31, 2020,
primarily due to nonperforming loans from the BBVA USA acquisition, partially offset by lower
consumer nonperforming loans.
Delinquencies at December 31, 2021 of $2.0 billion increased $516 million compared to September 30, 2021,
reflecting higher commercial loan delinquencies of $244 million and consumer loan delinquencies of
$272 million. The increase in total
delinquencies was primarily driven by BBVA USA conversion-related administrative and
operational delays which should largely be resolved within the
first half of 2022. Compared to the fourth quarter of 2020, total
delinquencies increased $622 million
also primarily related to conversion-related administrative and
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
|
4Q21
|
|
3Q21
|
|
4Q20
|
Retail
Banking
|
$
362
|
|
$
447
|
|
$
336
|
Corporate &
Institutional Banking
|
1,334
|
|
1,123
|
|
992
|
Asset Management
Group
|
106
|
|
114
|
|
82
|
Other
|
(509)
|
|
(210)
|
|
32
|
Net income excluding
noncontrolling interests
|
$
1,293
|
|
$
1,474
|
|
$
1,442
|
|
|
|
|
|
|
Retail
Banking
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
4Q21 vs
|
|
4Q21 vs
|
In
millions
|
4Q21
|
|
3Q21
|
|
4Q20
|
|
3Q21
|
|
4Q20
|
Net interest
income
|
$
1,634
|
|
$
1,713
|
|
$
1,380
|
|
$
(79)
|
|
$
254
|
Noninterest
income
|
$
774
|
|
$
662
|
|
$
473
|
|
$
112
|
|
$
301
|
Provision for
(recapture of) credit losses
|
$
55
|
|
$
(113)
|
|
$
(81)
|
|
$
168
|
|
$
136
|
Noninterest
expense
|
$
1,874
|
|
$
1,889
|
|
$
1,482
|
|
$
(15)
|
|
$
392
|
Earnings
|
$
362
|
|
$
447
|
|
$
336
|
|
$
(85)
|
|
$
26
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
Loans
|
$
95.0
|
|
$
99.1
|
|
$
79.7
|
|
$
(4.1)
|
|
$
15.3
|
Average
Deposits
|
$
262.8
|
|
$
262.0
|
|
$
200.8
|
|
$
0.8
|
|
$
62.0
|
|
|
|
|
|
|
|
|
|
|
Net charge
offs In millions
|
$
124
|
|
$
82
|
|
$
136
|
|
$
42
|
|
$
(12)
|
|
|
|
|
|
|
|
|
|
|
Retail Banking Highlights
Fourth quarter 2021
compared with third quarter 2021
- Earnings decreased 19%, due to a provision for credit losses
and lower net interest income, partially offset by higher
noninterest income and lower noninterest expense.
-
- Noninterest income increased 17%, due to a positive fair value
adjustment related to the Visa Class B derivative of $1 million compared to a negative adjustment of
$169 million in the third quarter. In
addition, the fourth quarter included lower residential mortgage
revenue and service charges on deposits, partially offset by higher
consumer service fees.
- Provision for credit losses was $55
million for the fourth quarter of 2021 driven in part by
increased expected losses in the credit card and auto loan
portfolios. The third quarter included a provision recapture of
$113 million.
- Noninterest expense decreased 1%, driven by lower marketing
activity.
- Average loans decreased 4% driven by PPP loan forgiveness and a
decline in home equity and auto loans.
- Average deposits increased modestly due to higher demand
deposits.
Fourth quarter 2021 compared with fourth quarter 2020
- Earnings increased 8% and included the benefit of BBVA
USA.
-
- Noninterest income increased 64%, and included a positive fair
value adjustment of $1 million
related to the Visa Class B derivative compared to a negative Visa
Class B derivative fair value adjustment of $173 million in the fourth quarter of 2020. In
addition, the fourth quarter of 2021 included the benefit of BBVA
USA customers, growth in
transaction volumes and higher brokerage fees.
- Noninterest expense increased 26%, primarily driven by
operating expenses related to the addition of BBVA USA.
- Average loans and deposits increased 19% and 31%, respectively,
reflecting the impact of the BBVA USA acquisition.
Corporate &
Institutional Banking
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
4Q21 vs
|
|
4Q21 vs
|
In
millions
|
4Q21
|
|
3Q21
|
|
4Q20
|
|
3Q21
|
|
4Q20
|
Net interest
income
|
$
1,228
|
|
$
1,250
|
|
$
994
|
|
$
(22)
|
|
$
234
|
Noninterest
income
|
$
1,053
|
|
$
1,056
|
|
$
919
|
|
$
(3)
|
|
$
134
|
Provision for
(recapture of) credit losses
|
$
(369)
|
|
$
(99)
|
|
$
(166)
|
|
$
(270)
|
|
$
(203)
|
Noninterest
expense
|
$
975
|
|
$
980
|
|
$
801
|
|
$
(5)
|
|
$
174
|
Earnings
|
$
1,334
|
|
$
1,123
|
|
$
992
|
|
$
211
|
|
$
342
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
Loans
|
$
176.8
|
|
$
175.8
|
|
$
154.2
|
|
$
1.0
|
|
$
22.6
|
Average
Deposits
|
$
160.4
|
|
$
163.1
|
|
$
138.8
|
|
$
(2.7)
|
|
$
21.6
|
|
|
|
|
|
|
|
|
|
|
Net
charge-offs In millions
|
$
(1)
|
|
$
13
|
|
$
99
|
|
$
(14)
|
|
$
(100)
|
|
|
|
|
|
|
|
|
|
|
Corporate & Institutional Banking
Highlights
Fourth quarter 2021 compared with third
quarter 2021
- Earnings increased 19%, primarily due to a larger provision
recapture.
-
- Noninterest income and noninterest expense were largely stable,
reflecting continued elevated business activity in both
periods.
- Provision recapture of $369
million for the fourth quarter of 2021, reflecting continued
improvements in the economic environment and portfolio
changes.
- Average loans increased 1%, driven by growth in PNC corporate
banking and business credit businesses, partially offset by PPP
loan forgiveness and a decline in PNC's real estate business.
- Average deposits decreased 2%, due to BBVA USA legacy deposit outflows reflecting the
impact of strategic repricing decisions, partially offset by
seasonal growth.
Fourth quarter 2021 compared with fourth quarter 2020
- Earnings increased 34%, due to the addition of BBVA
USA, a larger provision recapture
and higher noninterest income.
-
- Noninterest income increased 15%, driven by the addition of
BBVA USA, higher treasury
management product revenue and growth in capital markets-related
revenue, led by an increase in merger and acquisition advisory
fees.
- Noninterest expense increased 22%, reflecting operating
expenses from BBVA USA and higher
variable costs as a result of increased business activity.
- Average loans increased 15%, reflecting the addition of BBVA
USA and growth in PNC's business
credit and corporate banking businesses, partially offset by PPP
loan forgiveness and a decline in PNC's real estate business.
- Average deposits increased 16%, driven by the addition of BBVA
USA.
Asset Management
Group
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
4Q21 vs
|
|
4Q21 vs
|
In
millions
|
4Q21
|
|
3Q21
|
|
4Q20
|
|
3Q21
|
|
4Q20
|
Net interest
income
|
$
130
|
|
$
141
|
|
$
91
|
|
$
(11)
|
|
$
39
|
Noninterest
income
|
$
258
|
|
$
256
|
|
$
225
|
|
$
2
|
|
$
33
|
Provision for
(recapture of) credit losses
|
$
(15)
|
|
$
(6)
|
|
$
(2)
|
|
$
(9)
|
|
$
(13)
|
Noninterest
expense
|
$
265
|
|
$
255
|
|
$
211
|
|
$
10
|
|
$
54
|
Earnings
|
$
106
|
|
$
114
|
|
$
82
|
|
$
(8)
|
|
$
24
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Discretionary client
assets under management
|
$
192
|
|
$
183
|
|
$
170
|
|
$
9
|
|
$
22
|
Nondiscretionary
client assets under administration
|
$
175
|
|
$
170
|
|
$
154
|
|
$
5
|
|
$
21
|
Client assets under
administration at quarter end
|
$
367
|
|
$
353
|
|
$
324
|
|
$
14
|
|
$
43
|
Brokerage client
account assets
|
$
5
|
|
$
5
|
|
—
|
|
—
|
|
$
5
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
Loans
|
$
12.9
|
|
$
13.0
|
|
$
8.2
|
|
$
(0.1)
|
|
$
4.7
|
Average
Deposits
|
$
29.3
|
|
$
29.3
|
|
$
19.6
|
|
—
|
|
$
9.7
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs
(recoveries) In millions
|
$
1
|
|
$
(1)
|
|
$
1
|
|
$
2
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Asset Management Group Highlights
Fourth quarter
2021 compared with third quarter 2021
- Earnings decreased 7%, primarily due to lower net interest
income and higher noninterest expense, partially offset by an
increased provision recapture.
-
- Noninterest income increased 1%, due to the impact of higher
average equity markets.
- Noninterest expense increased 4%, due to higher personnel
expenses and higher operational loss reserves.
- Discretionary client assets under management increased 5%,
primarily driven by higher spot equity markets.
Fourth quarter 2021 compared with fourth quarter 2020
- Earnings increased 29%, primarily due to the benefit of BBVA
USA.
-
- Noninterest income increased 15%, due to the impact of the BBVA
USA acquisition and higher average
equity markets.
- Noninterest expense increased 26%, due to the impact of the
BBVA USA acquisition and higher
operational loss reserves.
- Discretionary client assets under management increased 13%,
primarily driven by higher spot equity markets and the addition of
BBVA USA.
- Average loans and deposits increased 57% and 49%, 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
9:30 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)
885-9643 and (773) 790-4245 (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 2021 and full year
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 21999390 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
|
|
|
2021
|
|
2021
|
|
2020
|
|
|
|
2021
|
|
2020
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
|
$
2,862
|
|
$
2,856
|
|
$
2,424
|
|
|
|
$
10,647
|
|
$
9,946
|
Noninterest
income
|
|
2,265
|
|
2,341
|
|
1,784
|
|
|
|
8,564
|
|
6,955
|
Total
revenue
|
|
5,127
|
|
5,197
|
|
4,208
|
|
|
|
19,211
|
|
16,901
|
Provision for
(recapture of) credit losses
|
|
(327)
|
|
(203)
|
|
(254)
|
|
|
|
(779)
|
|
3,175
|
Noninterest
expense
|
|
3,791
|
|
3,587
|
|
2,708
|
|
|
|
13,002
|
|
10,297
|
Income from
continuing operations before income taxes and
noncontrolling interests
|
|
$
1,663
|
|
$
1,813
|
|
$
1,754
|
|
|
|
$
6,988
|
|
$
3,429
|
Income taxes from
continuing operations
|
|
357
|
|
323
|
|
298
|
|
|
|
1,263
|
|
426
|
Net income from continuing operations
|
|
$
1,306
|
|
$
1,490
|
|
$
1,456
|
|
|
|
$
5,725
|
|
$
3,003
|
Income from
discontinued operations before taxes
|
|
|
|
|
|
|
|
|
|
|
|
$
5,777
|
Income taxes from
discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
1,222
|
Net income from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
$
4,555
|
Net income
|
|
$
1,306
|
|
$
1,490
|
|
$
1,456
|
|
|
|
$
5,725
|
|
$
7,558
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests
|
|
13
|
|
16
|
|
14
|
|
|
|
51
|
|
41
|
Preferred stock
dividends (a)
|
|
71
|
|
57
|
|
48
|
|
|
|
233
|
|
229
|
Preferred stock
discount accretion and redemptions
|
|
2
|
|
1
|
|
1
|
|
|
|
5
|
|
4
|
Net income
attributable to common shareholders
|
|
$
1,220
|
|
$
1,416
|
|
$
1,393
|
|
|
|
$
5,436
|
|
$
7,284
|
Per Common
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings from
continuing operations
|
|
$
2.87
|
|
$
3.31
|
|
$
3.26
|
|
|
|
$
12.71
|
|
$
6.37
|
Basic earnings from
discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
10.62
|
Total basic
earnings
|
|
$
2.87
|
|
$
3.31
|
|
$
3.26
|
|
|
|
$
12.71
|
|
$
16.99
|
Diluted earnings from
continuing operations
|
|
$
2.86
|
|
$
3.30
|
|
$
3.26
|
|
|
|
$
12.70
|
|
$
6.36
|
Diluted earnings from
discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
10.60
|
Total diluted
earnings
|
|
$
2.86
|
|
$
3.30
|
|
$
3.26
|
|
|
|
$
12.70
|
|
$
16.96
|
Cash dividends
declared per common share
|
|
$
1.25
|
|
$
1.25
|
|
$
1.15
|
|
|
|
$
4.90
|
|
$
4.60
|
Effective tax rate
from continuing operations (b)
|
|
21.5%
|
|
17.8%
|
|
17.0%
|
|
|
|
18.1%
|
|
12.4%
|
PERFORMANCE
RATIOS
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin
(c)
|
|
2.27%
|
|
2.27%
|
|
2.32%
|
|
|
|
2.29%
|
|
2.53%
|
Noninterest income to
total revenue
|
|
44%
|
|
45%
|
|
42%
|
|
|
|
45%
|
|
41%
|
Efficiency
(d)
|
|
74%
|
|
69%
|
|
64%
|
|
|
|
68%
|
|
61%
|
Return on:
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common
shareholders' equity
|
|
9.61%
|
|
10.95%
|
|
11.16%
|
|
|
|
10.78%
|
|
15.21%
|
Average
assets
|
|
0.92%
|
|
1.06%
|
|
1.24%
|
|
|
|
1.09%
|
|
1.68%
|
|
|
(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, 2021, September 30, 2021 and
December 31, 2020 were $22 million, $22 million and $17
million, respectively. The taxable equivalent adjustments to net
interest income for the twelve months ended December 31, 2021
and December 31, 2020 were $74 million and $75 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
|
|
2021
|
|
2021
|
|
2020
|
BALANCE SHEET
DATA
|
|
|
|
|
|
Dollars in
millions, except per share data
|
|
|
|
|
|
Assets
|
$
558,448
|
|
$
553,515
|
|
$
466,679
|
Loans (a)
|
$
288,372
|
|
$
290,230
|
|
$
241,928
|
Allowance for loan
and lease losses
|
$
4,868
|
|
$
5,355
|
|
$
5,361
|
Investment
securities
|
$
132,962
|
|
$
125,606
|
|
$
88,799
|
Total
deposits
|
$
457,278
|
|
$
448,902
|
|
$
365,345
|
Borrowed funds
(a)
|
$
30,784
|
|
$
33,471
|
|
$
37,195
|
Total shareholders'
equity
|
$
55,695
|
|
$
56,259
|
|
$
54,010
|
Common shareholders'
equity
|
$
50,685
|
|
$
51,250
|
|
$
50,493
|
Accumulated other
comprehensive income
|
$
409
|
|
$
1,079
|
|
$
2,770
|
Book value per common
share
|
$
120.61
|
|
$
121.16
|
|
$
119.11
|
Tangible book value
per common share (non-GAAP) (b)
|
$
94.11
|
|
$
94.82
|
|
$
97.43
|
Period end common
shares outstanding (in millions)
|
420
|
|
423
|
|
424
|
Loans to
deposits
|
63%
|
|
65%
|
|
66%
|
Common shareholders'
equity to total assets
|
9.1%
|
|
9.3%
|
|
10.8%
|
CLIENT ASSETS
(billions)
|
|
|
|
|
|
Discretionary client
assets under management
|
$
192
|
|
$
183
|
|
$
170
|
Nondiscretionary
client assets under administration
|
175
|
|
170
|
|
154
|
Total client assets
under administration
|
367
|
|
353
|
|
324
|
Brokerage account
client assets
|
83
|
|
81
|
|
59
|
Total client
assets
|
$
450
|
|
$
434
|
|
$
383
|
CAPITAL
RATIOS
|
|
|
|
|
|
Basel III (c)
(d)
|
|
|
|
|
|
Common equity Tier
1
|
10.2%
|
|
10.3%
|
|
12.2%
|
Common equity Tier 1
fully implemented (e)
|
10.0%
|
|
10.0%
|
|
11.8%
|
Tier 1
risk-based
|
11.5%
|
|
11.6%
|
|
13.2%
|
Total capital
risk-based (f)
|
13.4%
|
|
13.6%
|
|
15.6%
|
Leverage
|
8.2%
|
|
8.2%
|
|
9.5%
|
Supplementary leverage
|
6.9%
|
|
7.0%
|
|
9.9%
|
ASSET
QUALITY
|
|
|
|
|
|
Nonperforming loans
to total loans
|
0.86%
|
|
0.87%
|
|
0.94%
|
Nonperforming assets
to total loans, OREO and foreclosed assets
|
0.87%
|
|
0.88%
|
|
0.97%
|
Nonperforming assets
to total assets
|
0.45%
|
|
0.46%
|
|
0.50%
|
Net charge-offs to
average loans (for the three months ended) (annualized)
|
0.17%
|
|
0.11%
|
|
0.37%
|
Allowance for loan
and lease losses to total loans
|
1.69%
|
|
1.85%
|
|
2.22%
|
Allowance for credit
losses to total loans (g)
|
1.92%
|
|
2.07%
|
|
2.46%
|
Allowance for loan
and lease losses to nonperforming loans
|
196%
|
|
212%
|
|
235%
|
Total delinquencies
(in millions) (h)
|
$
1,985
|
|
$
1,469
|
|
$
1,363
|
|
|
(a)
|
Amounts include
assets and liabilities for which we have elected the fair value
option. Our 2021 Form 10-Qs included, and our 2021 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 17 for additional
information.
|
(c)
|
All ratios are
calculated using the regulatory capital methodology applicable to
PNC during each period presented and calculated based on the
standardized approach. See Capital Ratios on page 15 for additional
information. The ratios as of December 31, 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.
|
(h)
|
Total delinquencies
represent accruing loans more than 30 days past due. Amounts as of
September 30, 2021 have been revised to align the methodology of
acquired residential real estate loans attributable to BBVA to
PNC's methodology, which resulted in an increase of $73 million as
of September 30, 2021. This change was made as a result of the
conversion of bank systems completed in October 2021.
|
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
September 30, 2021, December 31, 2020 and estimated
December 31, 2021 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, 2021 and
September 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)
|
|
|
|
|
December
31
2021
(estimated)
(b)
|
September
30
2021 (b)
|
|
December
31
2020
(b)
|
|
December 31, 2021
(Fully
Implemented)
(estimated)
(c)
|
September 30,
2021
(Fully
Implemented)
(estimated)
(c)
|
|
|
|
Dollars in
millions
|
|
Common stock, related
surplus and retained earnings,
net of treasury stock
|
$
51,243
|
$
51,228
|
|
$
48,958
|
|
$
50,277
|
$
50,171
|
Less regulatory
capital adjustments:
|
|
|
|
|
|
|
|
Goodwill and
disallowed intangibles, net of deferred
tax liabilities
|
(11,136)
|
(11,142)
|
|
(9,193)
|
|
(11,136)
|
(11,142)
|
All other
adjustments
|
(43)
|
(48)
|
|
(30)
|
|
(48)
|
(53)
|
Basel III Common
equity Tier 1 capital
|
$
40,064
|
$
40,038
|
|
$
39,735
|
|
$
39,093
|
$
38,976
|
Basel III
standardized approach risk-weighted assets (d)
|
$
391,099
|
$ 389,911
|
|
$
326,772
|
|
$
391,194
|
$
389,887
|
Basel III Common
equity Tier 1 capital ratio
|
10.2%
|
10.3%
|
|
12.2%
|
|
10.0%
|
10.0%
|
|
|
(a)
|
All ratios are
calculated using the regulatory capital methodology applicable to
PNC during each period presented.
|
(b)
|
The ratio is
calculated to reflect PNC's election to adopt the CECL optional
five-year transition provision.
|
(c)
|
The December 31,
2021 and September 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)
|
Three months
ended
|
|
Year ended
|
|
December
31
|
|
September
30
|
|
December
31
|
|
December
31
|
Dollars in
millions
|
2021
|
|
2021
|
|
2021
|
|
2020
|
Income from
continuing operations before income taxes and
noncontrolling interests
|
$
1,663
|
|
$
1,813
|
|
$
6,988
|
|
$
3,429
|
Provision for
(recapture of) credit losses
|
(327)
|
|
(203)
|
|
(779)
|
|
3,175
|
Pretax pre-provision
earnings (non-GAAP)
|
$
1,336
|
|
$
1,610
|
|
$
6,209
|
|
$
6,604
|
Integration
costs
|
438
|
|
243
|
|
798
|
|
7
|
Pretax pre-provision
earnings excluding integration costs (non-
GAAP)
|
$
1,774
|
|
$
1,853
|
|
$
7,007
|
|
$
6,611
|
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.
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
|
2021
|
|
Share
|
|
2021
|
|
Share
|
|
2020
|
|
Share
|
Net income from
continuing operations
attributable to common shareholders
|
$
1,220
|
|
|
|
$
1,416
|
|
|
|
$
1,393
|
|
|
Dividends and
undistributed earnings allocated to
nonvested restricted shares
|
(6)
|
|
|
|
(8)
|
|
|
|
(6)
|
|
|
Net income from
continuing operations
attributable to diluted common shareholders
|
$
1,214
|
|
$
2.86
|
|
$
1,408
|
|
$
3.30
|
|
$
1,387
|
|
$
3.26
|
Integration costs
after tax (a)
|
346
|
|
0.82
|
|
192
|
|
0.45
|
|
6
|
|
0.01
|
Adjusted net income
from continuing operations
attributable to diluted common shareholders
excluding integration costs (non-GAAP)
|
$
1,560
|
|
$
3.68
|
|
$
1,600
|
|
$
3.75
|
|
$
1,393
|
|
$
3.27
|
Average diluted
common shares outstanding
(in
millions)
|
424
|
|
|
|
426
|
|
|
|
426
|
|
|
|
Year ended
|
|
December
31
|
|
Per Common
|
|
December
31
|
|
Per Common
|
Dollars in
millions, except per share data
|
2021
|
|
Share
|
|
2020
|
|
Share
|
Net income from
continuing operations
attributable to common shareholders
|
$
5,436
|
|
|
|
$
2,729
|
|
|
Dividends and
undistributed earnings allocated to
nonvested restricted shares
|
(27)
|
|
|
|
(13)
|
|
|
Net income from
continuing operations
attributable to diluted common shareholders
|
$
5,409
|
|
$
12.70
|
|
$
2,716
|
|
$
6.36
|
Integration costs
after tax (a)
|
630
|
|
1.48
|
|
6
|
|
0.01
|
Adjusted net income
from continuing operations
attributable to diluted common shareholders
excluding integration costs (non-GAAP)
|
$
6,039
|
|
$
14.18
|
|
$
2,722
|
|
$
6.37
|
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 from continuing operations 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
|
2021
|
|
2021
|
|
2020
|
Book value per common
share
|
$
120.61
|
|
$
121.16
|
|
$
119.11
|
Tangible book value
per common share
|
|
|
|
|
|
Common shareholders'
equity
|
$
50,685
|
|
$
51,250
|
|
$
50,493
|
Goodwill and other
intangible assets
|
(11,406)
|
|
(11,419)
|
|
(9,381)
|
Deferred tax
liabilities on goodwill and other intangible assets
|
270
|
|
277
|
|
188
|
Tangible common
shareholders' equity
|
$
39,549
|
|
$
40,108
|
|
$
41,300
|
Period-end common
shares outstanding (in millions)
|
420
|
|
423
|
|
424
|
Tangible book value
per common share (non-GAAP)
|
$
94.11
|
|
$
94.82
|
|
$
97.43
|
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
|
2021
|
|
2021
|
|
2021
|
|
2020
|
Net interest
income
|
$
2,862
|
|
$
2,856
|
|
$
10,647
|
|
$
9,946
|
Taxable-equivalent
adjustments
|
22
|
|
22
|
|
74
|
|
75
|
Net interest income
(Fully Taxable-Equivalent - FTE)
|
$
2,884
|
|
$
2,878
|
|
$
10,721
|
|
$
10,021
|
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
|
2021
|
|
2021
|
|
2021
|
|
2020
|
Noninterest
expense
|
$
3,791
|
|
$
3,587
|
|
$
13,002
|
|
$
10,297
|
Integration
expense
|
(391)
|
|
(235)
|
|
(733)
|
|
(7)
|
Noninterest expense
excluding integration expense (non-GAAP)
|
$
3,400
|
|
$
3,352
|
|
$
12,269
|
|
$
10,290
|
|
|
|
|
|
|
|
|
Total
revenue
|
$
5,127
|
|
$
5,197
|
|
$
19,211
|
|
$
16,901
|
Integration costs -
contra revenue
|
(47)
|
|
(8)
|
|
(65)
|
|
|
Total revenue
excluding integration costs - contra revenue (non-
GAAP)
|
$
5,174
|
|
$
5,205
|
|
$
19,276
|
|
$
16,901
|
|
|
|
|
|
|
|
|
Efficiency ratio
(a)
|
74%
|
|
69%
|
|
68%
|
|
61%
|
Efficiency ratio
excluding integration costs (non-GAAP) (b)
|
66%
|
|
64%
|
|
64%
|
|
61%
|
|
|
(a)
|
Calculated as
noninterest expense divided by total revenue.
|
(b)
|
Calculated as
noninterest expense excluding integration expense divided by total
revenue excluding integration costs - contra revenue.
|
The efficiency ratio excluding integration costs is a non-GAAP
measure and excludes the integration costs related to the BBVA
USA acquisition. It is calculated
based on adjusting the efficiency ratio calculation by excluding
integration costs during the period from noninterest expense and
total revenue. We believe that this non-GAAP measure is a useful
tool for the purpose of evaluating PNC's results. The exclusion of
integration costs increases comparability across periods,
demonstrates the impact of significant items and provides a useful
measure for determining PNC's revenue and expenses that are core to
our business operations and expected to recur over time.
Cautionary Statement Regarding Forward-Looking
Information
We make statements in this news release and related conference
call, and we may from time to time make other statements, regarding
our outlook for financial performance, such as earnings, revenues,
expenses, tax rates, capital and liquidity levels and ratios, asset
levels, asset quality, financial position, and other matters
regarding or affecting us and our future business and operations
that are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act. Forward-looking
statements are typically identified by words such as "believe,"
"plan," "expect," "anticipate," "see," "look," "intend," "outlook,"
"project," "forecast," "estimate," "goal," "will," "should" and
other similar words and expressions.
Forward-looking statements are necessarily subject to numerous
assumptions, risks and uncertainties, which change over time.
Future events or circumstances may change our outlook and may also
affect the nature of the assumptions, risks and uncertainties to
which our forward-looking statements are subject.
Forward-looking statements speak only as of the date made. We
do not assume any duty and do not undertake any obligation to
update forward-looking statements. Actual results or future
events could differ, possibly materially, from those anticipated in
forward-looking statements, as well as from historical
performance. As a result, we caution against placing undue
reliance on any forward-looking statements.
Our forward-looking statements are subject to the following
principal risks and uncertainties.
- Our businesses, financial results and balance sheet values are
affected by business and economic conditions, including:
-
- Changes in interest rates and valuations in debt, equity and
other financial markets,
- Disruptions in the U.S. and global financial markets,
- Actions by the Federal Reserve Board, U.S. Treasury and other
government agencies, including those that impact money supply,
market interest rates and inflation,
- Changes in customer behavior due to changing business and
economic conditions or legislative or regulatory initiatives,
- Changes in customers', suppliers' and other counterparties'
performance and creditworthiness,
- Impacts of tariffs and other trade policies of the U.S. and its
global trading partners,
- The length and extent of the economic impacts of the COVID-19
pandemic,
- Impacts of changes in federal, state and local governmental
policy, including on the regulatory landscape, capital markets,
taxes, infrastructure spending and social programs, and
- Commodity price volatility.
- Our forward-looking financial statements are subject to the
risk that economic and financial market conditions will be
substantially different than those we are currently expecting and
do not take into account potential legal and regulatory
contingencies. These statements are based on our 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.
- COVID-19 variants and supply chain difficulties were drags on
economic growth in the second half of 2021. Growth picked up
towards the end of 2021 and supply chains will begin to normalize
and will remain solid into 2022. Employment in December 2021 was still down by more than 3
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 the second half of 2021 due to strong
demand in specific segments and supply chain disruptions. Inflation
remains high but should slow somewhat in 2022 as reopening-related
imbalances between supply and demand fade.
- PNC expects the Federal Open Market Committee (FOMC) to keep
the fed funds rate in its current range of 0.00 to 0.25 percent
until May 2022. The FOMC will
gradually increase the fed funds rate through the rest of 2022 and
into 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. going forward may not perform as we 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. 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.