PR Newswire
PITTSBURGH, Oct. 15, 2021
PITTSBURGH, Oct. 15, 2021 /PRNewswire/ -- The PNC Financial Services Group, Inc. (NYSE: PNC) today reported:
For the quarter | ||||||||||||||||||||
In millions, except per share data and as noted | 3Q21 | 2Q21 | 3Q20 | Third Quarter Highlights | ||||||||||||||||
▪ 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 | ||||||||||||||||||||
Financial Results | ||||||||||||||||||||
Revenue | $ | 5,197 | $ | 4,667 | $ | 4,281 | ||||||||||||||
Noninterest expense | 3,587 | 3,050 | 2,531 | |||||||||||||||||
Pretax, pre-provision earnings (non-GAAP) | 1,610 | 1,617 | 1,750 | |||||||||||||||||
Integration costs | 243 | 111 | — | |||||||||||||||||
Pretax, pre-provision earnings excluding integration costs (non-GAAP) | 1,853 | 1,728 | — | |||||||||||||||||
Provision for (recapture of) credit losses | (203) | 302 | 52 | |||||||||||||||||
Net income | 1,490 | 1,103 | 1,532 | |||||||||||||||||
Per Common Share | ||||||||||||||||||||
Diluted earnings - as reported | $ | 3.30 | $ | 2.43 | $ | 3.39 | ||||||||||||||
Impact from integration costs (non-GAAP) | (0.45) | (0.21) | — | |||||||||||||||||
Diluted earnings - as adjusted (non-GAAP) | 3.75 | 2.64 | — | |||||||||||||||||
Book value | 121.16 | 120.25 | 117.44 | |||||||||||||||||
Tangible book value (non-GAAP) | 94.82 | 93.83 | 95.71 | |||||||||||||||||
Balance Sheet & Credit Quality | ||||||||||||||||||||
Average loans (in billions) | $ | 291.3 | $ | 255.6 | $ | 253.1 | ||||||||||||||
Average deposits (in billions) | 454.4 | 401.7 | 350.5 | |||||||||||||||||
Net loan charge-offs | 81 | 306 | 155 | |||||||||||||||||
Allowance for credit losses to total loans | 2.07 | % | 2.16 | % | 2.58 | % | ||||||||||||||
Selected Ratios | ||||||||||||||||||||
Return on average common equity | 10.95 | % | 8.32 | % | 11.76 | % | ||||||||||||||
Return on average assets | 1.06 | 0.88 | 1.32 | |||||||||||||||||
Net interest margin (non-GAAP) | 2.27 | 2.29 | 2.39 | |||||||||||||||||
Noninterest income to total revenue | 45 | 45 | 42 | |||||||||||||||||
Efficiency | 69 | 65 | 59 | |||||||||||||||||
Efficiency excluding integration costs (non-GAAP) | 64 | 63 | — | |||||||||||||||||
Common Equity Tier 1 capital ratio | 10.2 | 10.1 | 11.7 | |||||||||||||||||
Diluted earnings as adjusted is a non-GAAP measure calculated by excluding post-tax integration costs for BBVA USA. See this and other non-GAAP financial measures in the consolidated financial highlights accompanying this release. |
From Bill Demchak, PNC Chairman, President and Chief Executive Officer: | |||||||||||||
"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." | |||||||||||||
BBVA USA
Income Statement Highlights
Third quarter 2021 compared with second quarter 2021
Balance Sheet Highlights
Third quarter 2021 compared with second quarter 2021 or September 30, 2021 compared with June 30, 2021
Earnings Summary | ||||||||||||
In millions, except per share data | 3Q21 | 2Q21 | 3Q20 | |||||||||
Net income | $ | 1,490 | $ | 1,103 | $ | 1,532 | ||||||
Net income attributable to diluted common shares - as reported | $ | 1,408 | $ | 1,037 | $ | 1,447 | ||||||
Net income attributable to diluted common shares - as adjusted (non-GAAP) | $ | 1,600 | $ | 1,125 | — | |||||||
Diluted earnings per common share - as reported | $ | 3.30 | $ | 2.43 | $ | 3.39 | ||||||
Diluted earnings per common share - as adjusted (non-GAAP) | $ | 3.75 | $ | 2.64 | — | |||||||
Average diluted common shares outstanding | 426 | 427 | 426 | |||||||||
Cash dividends declared per common share | $ | 1.25 | $ | 1.25 | $ | 1.15 | ||||||
See non-GAAP financial measures included in the consolidated financial highlights accompanying this news release |
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 | |||||||||||||||
Revenue | Change | Change | |||||||||||||
3Q21 vs | 3Q21 vs | ||||||||||||||
In millions | 3Q21 | 2Q21 | 3Q20 | 2Q21 | 3Q20 | ||||||||||
Net interest income | $ | 2,856 | $ | 2,581 | $ | 2,484 | 11 | % | 15 | % | |||||
Noninterest income | 2,341 | 2,086 | 1,797 | 12 | % | 30 | % | ||||||||
Total revenue | $ | 5,197 | $ | 4,667 | $ | 4,281 | 11 | % | 21 | % | |||||
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 | Change | Change | |||||||||||||
3Q21 vs | 3Q21 vs | ||||||||||||||
In millions | 3Q21 | 2Q21 | 3Q20 | 2Q21 | 3Q20 | ||||||||||
Asset management | $ | 248 | $ | 239 | $ | 215 | 4 | % | 15 | % | |||||
Consumer services | 496 | 457 | 390 | 9 | % | 27 | % | ||||||||
Corporate services | 842 | 688 | 479 | 22 | % | 76 | % | ||||||||
Residential mortgage | 147 | 103 | 137 | 43 | % | 7 | % | ||||||||
Service charges on deposits | 159 | 131 | 119 | 21 | % | 34 | % | ||||||||
Other | 449 | 468 | 457 | (4) | % | (2) | % | ||||||||
$ | 2,341 | $ | 2,086 | $ | 1,797 | 12 | % | 30 | % | ||||||
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 | |||||||||||||||
Noninterest Expense | Change | Change | |||||||||||||
3Q21 vs | 3Q21 vs | ||||||||||||||
In millions | 3Q21 | 2Q21 | 3Q20 | 2Q21 | 3Q20 | ||||||||||
Personnel | $ | 1,986 | $ | 1,640 | $ | 1,410 | 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, | June 30, | September 30, | 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, | June 30, | September 30, | 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, | June 30, | September 30, | 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, | June 30, | September 30, | 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, | June 30, | September 30, | |||||||||
* | ||||||||||||
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, | June 30, | September 30, | ||||||||||||||
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
Third quarter 2021 compared with third quarter 2020
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
Third quarter 2021 compared with third quarter 2020
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
Third quarter 2021 compared with third quarter 2020
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 (estimated) (c) | June 30, 2021 (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 | June 30 | Per Common | ||||||||||||
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 | $ | 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.
Cautionary Statement Regarding Forward-Looking Information (Continued)
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
[email protected]
INVESTORS:
Bryan Gill
(412) 768-4143
[email protected]
View original content to download multimedia:https://www.prnewswire.com/news-releases/pnc-reports-third-quarter-2021-net-income-of-1-5-billion--3-30-diluted-eps-or-3-75-as-adjusted-301401156.html
SOURCE The PNC Financial Services Group, Inc.
We use cookies to tailor your experience, measure site performance and present relevant offers and advertisements. By clicking ‘Accept’ or any content on this site, you agree that cookies can be placed on your browser. You can view our privacy policy to learn more.
If you would like to get more data, alerts and access to Real Vision videos, join us as an Insider Tracking Advantage Ultra member