PNC Financial completes BBVA USA digital migration in Q3

PNC Financial’s auto portfolio shrank in the third quarter following a second-quarter spike brought on by the bank’s acquisition of BBVA USA which closed June 1.

The bank’s Q3 auto outstandings inched down 1.63% sequentially to $17.3 billion, remaining 15.1% higher than Q3 2020, according to the bank’s report. The sequential decline follows Q2’s 29% year-over-year increase in auto outstandings credited to the acquisition.

“Loan growth continues to be impacted by supply chain issues and continued run off of [Payment Protection Program] loans,” Chief Executive Bill Demchak said on Friday’s earnings call.

PNC’s total consumer portfolio continues to reflect strong credit performances despite decreasing 0.02% sequentially to $95 million. Although the bank did not break out auto-specific metrics on net charge-offs or delinquencies, auto accounts for 18% of the total consumer portfolio.

Total delinquencies on consumer loans increased 4 basis points (bps) to 0.48%, credited primarily to operational delays related to BBVA USA-acquired loans, Chief Financial Officer Robert Reilly said on the call. “Subsequent to quarter end, all of these operational delinquencies have been or are in the process of being resolved,” he said. The bank’s allowances for auto loans decreased 29 bps sequentially and 59 bps YoY to 2.11%.

Similarly, the net charge-off rate on consumer loans declined for the third consecutive quarter to 0.25%, down 8 bps following 0.33% in Q2, Reilly said.

Meanwhile, Q3 marked the final steps in the bank’s acquisition of BBVA USA which was fully converted to the PNC platform on Oct. 12, Demchak said, noting that this is the first quarter that fully reflects the addition of BBVA USA to PNC’s balance sheet.

Shares of PNC Financial Services [NYSE: PNC] were trading down 1.66% at $199.13 at market close. PNC Financial has a market capitalization of $84.6 billion.

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