PNC Financial reported first quarter earnings before the bell on Thursday along with Goldman Sachs, Morgan Stanley, Wells Fargo and Citigroup. $PNC earnings fell 22% to $1.43 billion from $1.83 billion last year but beat analysts expectations. Revenue rose 11% for the quarter to $4.69 billion bolstered by PNC’s acquisition of BBVA USA.
PNC Financial Services Group Inc NYSE: PNC · Reported Before Open Thursday
$3.23 EPS Beat $2.77 Expected AND $4.69 Billion Missed $4.72 Billion Revenue Forecast
PNC Q1 2022
Q1 2022 earnings before the bell; conference call at 10 a.m. ET Thursday
- First-quarter earnings fell 22% to $1.43 billion, or $3.23 a share, from $1.83 billion, or $4.10 a share, last year. Analysts were looking for $2.77 per share, according to FactSet.
- Revenue rose 11% for the quarter, to $4.69 billion, from $4.22 billion a year earlier, bolstered by PNC’s acquisition of BBVA USA and compared to analyst estimates of $4.72 billion.
- Costs for integrating the new business amounted to $16 million during the first quarter
- Capital-markets-related income fell to $252 million, for a decline of 19%
- PNC recaptured $208 million of provisions for credit losses because economic conditions have improved as the pandemic has receded.
- The bank raised its quarterly cash dividend on common stock to $1.50 per share, an increase of 25 cents, or 20%, which is effective with the May 5 payment.
- The bank has a debt-to-equity ratio of 0.55, a current ratio of 0.78 and a quick ratio of 0.78 with a market capitalization of $73.23 billion, a PE ratio of 13.79, a PEG ratio of 2.22 and a beta of 1.26
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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