PNC Financial reported second quarter earnings before the bell on Friday along with Wells Fargo and Citigroup. $PNC net income of $1.5 billion, or $3.39 per diluted share topped Wall Street’s average EPS estimate of $3.14. Revenue topped $5.1 billion, up 10% from the second quarter of 2021 on higher net interest income, which increased 18%. Analysts expected revenue to range between $5.05 billion to $5.18 billion. PNC stock fell to $147.26 USD −3.70 (- 2.45%) with nerves about the US economy going forward.
PNC Financial Services Group Inc NYSE: PNC · Reported Before Open Friday
$3.23 EPS Beat $2.77 Expected AND $4.69 Billion Missed $4.72 Billion Revenue Forecast
PNC Q2 2022
Q2 2022 earnings before the bell; conference call at 10 a.m. ET Friday
- Second quarter earnings 2022 net income of $1.5 billion, or $3.39 per diluted share. That compares with profit of $1.1 billion, or $2.43, during the same quarter in 2021, and topped Wall Street’s average EPS estimate of $3.14.
- Total revenue topped $5.1 billion, up 10% from the second quarter of 2021, as PNC cited higher net interest income, which increased 18%. Analysts expected revenue to range between $5.05 billion to $5.18 billion.
- Average loans for the three months ended June 30 were $304.8 billion, a 19% increase over 2021 that was driven primarily by growth in PNC’s corporate banking and business credit businesses.
- Average consumer loans jumped 22% year-over-year, but the bump-up was just 2% compared with the first quarter.
- Average total assets were $544 billion, compared with $504.4 billion for second-quarter 2021, largely due to BBVA, PNC said. Still, assets slipped from $550.1 billion in the first quarter of 2022.
- Noninterest expenses, at $3.2 billion, rose 6% from a year ago with increases in personnel and occupancy, as well as a 28% jump in PNC’s marketing spend
Bill Demchak, chairman, president and CEO, called it a “very strong” quarter.
“Loan growth exceeded our expectations, both net interest income and net interest margin increased meaningfully, fees rebounded and expenses remained well controlled,” Demchak said in PNC’s earnings release. “We’re gaining traction across our expanded footprint and are confident that our capital levels and strong credit quality position us for continued success.”
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 increased the loan portfolio size by around $66 billion or 27%.
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.
BBBA and BlackRock
In the second quarter of 2020 PNC sold their passive equity stake in BlackRock. In November, announced their 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 1, 2021, and increased 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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