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PNC Financial reported betetr than third quarter revenues before the bell on Friday along with Goldman Sachs.  $PNC closed the BVA USA Bancshares acquisition June 1 and is the biggest driver of balance sheet growth this year. The Bank reported after Citigroup, Bank of AmericaWells Fargo, Morgan Stanley and JPMorgan

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PNC Financial Services Group Inc NYSE: PNC · Report Before Open Friday

$3.61 EPS Expected AND $5.05 billion Revenue Forecast

Earnings

PNC Financial announces Q3 Net Income Of $1.5 Billion, $3.30 Diluted EPS Or $3.75 As Adjusted versus projections of $3.61 per share and compares with $1.46 billion, or $3.39 per share, in last year's third quarter. Revenues for the quarter rose 21.5% to $5.20 billion from $4.28 billion last year and over expected to be $5.05 billion, up 17.9% from the year-ago quarter. Analysts will be watching to how BBVA USA integration is going.

The acquisition of BBVA USA Bancshares was the biggest driver of balance sheet growth this year. PNC closed the acquisition June 1, 2021. The acquisition will increase the loan portfolio size by around $66 billion or 27%. Apart from the acquisition, vaccine-driven recovery will also likely drive loan growth. The acquisition will likely improve the portfolio yield as it will soak up PNC’s excess liquidity. 

PNC now has a low-fee bank account that has received certification from the Cities for Financial Empowerment (CFE) Fund. The account will only charge customers $5 per month and have no charges for overdrafts or insufficient funds.

Market Reaction 198.95 ▼ 3.55 (1.75%)

Highlights

CEO/Chairman Bill Demchak said, "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."

Loans decreased 2%, reflecting PPP loan forgiveness and a decrease in BBVA (MC:BBVA) USA legacy loan portfolios; PNC closed on the acquisition of BBVA USA in June. PNC states that it remains on track to realize $900 million in cost savings.

The company benefited from a recapture of $203M in credit loss provisions.

Dividends and Share Purchases

The board of directors of The PNC Financial Services Group declared a quarterly cash dividend on the common stock of $1.25 per share. The dividend will be payable Nov. 5, 2021, to shareholders of record at the close of business Oct. 15, 2021.

BBVA

In the second quarter of 2020 PNC sold their passive equity stake in BlackRock. In November, announced thier plan to redeploy those proceeds to acquire BBVA USA. PNC in November said it would acquire the U.S. banking operations of Spain's BBVA for $11.6 billion cash, making it the biggest regional bank by assets under management in the U.S. The transaction closed June 12021 and will increase PNC's total assets by an estimated $102 billion, creating the fifth largest bank by assets.

Overall linked quarter balance sheet growth was driven by the acquisition, of course, which contributed $60 billion in loans, $18 billion of investment securities, and $82 billion of deposits at quarter end. Excluding those additions during the quarter, legacy PNC loan balances declined $3 billion, investment securities increased $10 billion and deposits declined by $4 billion, and I'll cover the drivers in more detail over the next few slides. We ended the quarter with a tangible book value of $93.83 per share and an estimated CET 1 ratio of 10%, substantially above the levels we anticipated at the time of the deal announcement. As a result, we're well-positioned with significant capital flexibility. - Rob Reilly -- Chief Financial Officer

About PNC

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.

Source: PNC Earnings Release 

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