PNC REPORTS SECOND QUARTER 2022 NET INCOME OF $1.5 BILLION, $3.39 DILUTED EPS OR $3.42 AS

5% loan growth; 22 basis point NIM expansion; 7% positive operating leverage

PITTSBURGH, July 15, 2022 /PRNewswire/ — The PNC Financial Services Group, Inc. (NYSE: PNC) today reported:

From Bill Demchak, PNC Chairman, President and Chief Executive Officer:

“PNC had a very strong second quarter. Loan growth exceeded our expectations, both net interest income and net interest margin increased meaningfully, fees rebounded and expenses remained well controlled. We’re gaining traction across our expanded footprint and are confident that our capital levels and strong credit quality position us for continued success.”

Income Statement Highlights

Second quarter 2022 compared with first quarter 2022

• Net income of $1.5 billion increased $67 million, or 5%, driven by growth in pretax, pre-provision earnings of 23%.
• Total revenue of $5.1 billion increased $424 million, or 9%, due to higher net interest income and noninterest income.
• Net interest income of $3.1 billion increased $247 million, or 9%, driven by higher yields on interest earning assets and increased loan balances, partially offset by higher funding costs.
• Net interest margin of 2.50% increased 22 basis points due to higher yields on interest earning assets.
• Noninterest income of $2.1 billion increased $177 million, or 9%.
• Fee income of $1.9 billion increased $211 million, or 13%, reflecting higher capital markets related revenue, increased card and cash management fees and higher lending and deposit services revenue.
• Other noninterest income of $177 million decreased $34 million, or 16%, and included negative Visa Class B fair value adjustments of $16 million related to litigation escrow funding and derivative valuation changes.
• Noninterest expense of $3.2 billion increased $72 million, or 2%, driven by increased business activity, annual employee merit increases and higher marketing spend.
• Provision for credit losses was $36 million in the second quarter. The first quarter of 2022 included a provision recapture of $208 million. 
• The effective tax rate was 18.5% for the second quarter and 17.3% for the first quarter.

Balance Sheet Highlights

Second quarter 2022 compared with first quarter 2022 or June 30, 2022 compared with March 31, 2022

• Average loans of $304.8 billion increased $14.1 billion, or 5%.
• Average commercial loans of $207.6 billion grew $12.0 billion driven primarily by growth in PNC’s corporate banking and business credit businesses of $11.1 billion and $1.7 billion, respectively, partially offset by PPP loan forgiveness.
• Average consumer loans of $97.2 billion increased $2.1 billion reflecting higher residential mortgage and home equity loans, partially offset by lower auto loans.
• Credit quality performance:
• Delinquencies of $1.5 billion decreased $188 million, or 11%, due to both lower consumer and commercial delinquencies, which included the resolution of BBVA USA conversion-related administrative and operational delays.
• Total nonperforming loans of $2.0 billion decreased $252 million, or 11%.
• Net loan charge-offs of $83 million decreased $54 million.
• The allowance for credit losses to total loans was 1.65% at June 30, 2022 compared with 1.76% at March 31, 2022.
• Average deposits of $446.5 billion decreased $6.8 billion, driven by lower commercial deposits.
• Deposits at June 30, 2022 of $440.8 billion decreased $9.4 billion as a result of lower consumer and commercial deposits.
• Average investment securities of $134.7 billion grew $0.8 billion, or 1%.
• Average Federal Reserve Bank balances of $39.3 billion decreased $23.0 billion, driven by higher loans outstanding and lower deposits.
• PNC maintained strong capital and liquidity positions.
• On July 1, 2022, the PNC board of directors declared a quarterly cash dividend on common stock of $1.50 per share payable on August 5, 2022.
• PNC returned $1.4 billion of capital to shareholders through $737 million of common share repurchases, representing 4.3 million shares, and $627 million of dividends on common shares.
• The Basel III common equity Tier 1 capital ratio was an estimated 9.6% at June 30, 2022 and 9.9% at March 31, 2022.
• The Liquidity Coverage Ratio at June 30, 2022 for PNC exceeded the regulatory minimum requirement.

Second quarter 2022 net income of $1.5 billion, or $3.39 per diluted common share, included integration costs of $14 million pretax resulting from the acquisition of BBVA USA. Excluding the impact of integration costs, adjusted diluted earnings per common share was $3.42. Financial results for the second quarter of 2022 included the full quarter benefit of the June 1, 2021 acquisition of BBVA USA.

The Consolidated Financial Highlights accompanying this news release include additional information regarding reconciliations of non-GAAP financial measures to reported (GAAP) amounts. This information supplements results as reported in accordance with GAAP and should not be viewed in isolation from, or as a substitute for, GAAP results. Effective for the first quarter of 2022, the presentation of noninterest income has been recategorized. Fee income, a non-GAAP financial measure, refers to noninterest income in the following categories: asset management and brokerage, capital markets related, card and cash management, lending and deposit services and residential and commercial mortgage. See a description of each updated noninterest income revenue category in PNC’s first quarter 2022 Form 10-Q. All periods presented herein reflect this change. Information in this news release, including the financial tables, is unaudited.

Total revenue for the second quarter of 2022 increased $424 million compared with the first quarter of 2022, reflecting higher net interest income and noninterest income. Compared with the second quarter of 2021, total revenue increased $449 million as a result of higher net interest income.

Net interest income of $3.1 billion for the second quarter of 2022 increased $247 million compared to the first quarter of 2022, driven by higher yields on interest earning assets and increased loan balances, partially offset by higher funding costs. In comparison with the second quarter of 2021, net interest income increased $470 million as a result of higher interest earning asset balances and yields, partially offset by higher funding costs.

The net interest margin was 2.50% in the second quarter of 2022, increasing 22 basis points and 21 basis points compared with the first quarter of 2022 and the second quarter of 2021, respectively. In both comparisons the increase was primarily due to higher yields on interest earning assets.