The PNC Financial Services Group (PNC) Q2 2021 earnings summary

Executive summary

• Q2 net income from continuing operations was $1.1B, or $2.43 diluted EPS; acquisition-adjusted EPS was $4.50, excluding BBVA USA’s initial credit provision and integration costs.

• BBVA USA closed June 1; revenue grew 11% QoQ, driven by the acquisition and higher legacy fee income, while credit quality improved across legacy portfolios.

Financial highlights

• Revenue was $4.667B, up 11% QoQ and 14% YoY; net interest income was $2.581B, up 10% QoQ and 2% YoY.

• Noninterest income was $2.086B, up 11% QoQ and 35% YoY; fee income was $1.6B, up 16% QoQ, led by corporate and consumer services.

• Noninterest expense was $3.050B, up 18% QoQ and 21% YoY; included $101M integration costs, $179M BBVA USA operating expenses and $80M of added legal reserves.

• Provision for credit losses was $302M: a $704M recapture was more than offset by a $1.0B initial BBVA USA provision; adjusted EPS was $4.50 versus reported $2.43.

• Total assets were $554.2B; loans were $294.7B and deposits were $452.9B at June 30, with QoQ increases of 24% and 21%, respectively, primarily from the acquisition.

Outlook and guidance

• Cost savings of $900M are targeted for 2022; total merger and integration costs are expected to reach $980M, with the majority incurred in 2021.

• Customer, branch and systems conversion was expected in October 2021; successful conversion and future growth and efficiency gains were stated priorities.

• Economic outlook anticipated strong U.S. growth through 2021 and into 2022, inflation slowing in H2 2021, and the fed funds rate remaining at 0.00%–0.25% until mid-2023.