Robert Q. Reilly
Executive Vice President and Chief Financial Officer at The PNC Financial Services Group
Thanks, Bill and good morning, everyone. Our balance sheet is, on Slide 3 and is presented on an average basis. During the quarter, loans increased by $2 billion or 1% and investment securities grew $6 billion or 5% and federal reserve cash balances declined $13 billion or 17%, reflecting higher securities and loan balances, as well as lower borrowed funds. Deposit balances averaged $453 billion and were relatively stable compared to the prior quarter.
Our tangible book value was $79.68 per common share as of March 31st, a 15% decline linked quarter, which was entirely driven by mark-to-market adjustments in our securities and swap portfolios as a result of higher interest rates. As a Category 3 institution, we opted out of recognizing AOCI and regulatory capital and as of March 31, 2022, our CET1 ratio was estimated to be 9.9%. Given our strong capital ratios, we continue to be well positioned with significant capital flexibility. And as Bill just mentioned, our Board recently approved a $0.25 increase to our quarterly cash dividend on common stock, raising the dividend to $1.50 per share. Additionally, during the first quarter, we completed share repurchases of $1.2 billion or 6.4 million shares.
Slide 4 shows our loans in more detail. Average loans increased $2 billion linked quarter and on a spot basis, loans grew $6 billion or 2%. PPP loan balances continue to decline and impacted first quarter growth by approximately $2 billion on both an average and spot base. Looking at loan growth, excluding the impact of PPP loans, average loans increased $4 billion or 1%, driven by $5 billion of growth in commercial and industrial loans, partially offset by a $1 billion decline in commercial real estate balances. And average consumer loans were stable linked quarter.
On a spot basis, loans grew $8 billion. Commercial loans grew $7 billion, driven by higher utilization, as well as new production within corporate banking and business credit businesses. Notably, in our C&IB segment, the utilization rate increased 85 basis points and our overall commitments were 2% higher compared to year-end 2021. And consumer loans increased $900 million as higher mortgage balances were partially offset by lower auto and credit card loans.
Moving to slide 5, average deposits of $453 billion remained stable compared to the fourth quarter. On the right, you can see total deposits at period end were $450 billion, a decline of $7 billion or 2% linked quarter. All of the decline was on the commercial side where deposits were $10 billion lower, primarily driven by seasonal cash deployment. Partially offsetting the commercial decline, consumer deposits increased $3 billion, reflecting seasonally higher balances related to tax refund payments. Overall, our rate paid on interest-bearing deposits remained stable at 4 basis points and importantly, we remain core-funded with a loan to deposit ratio of 65% at the end of the first quarter.
Slide 6 details the change in our average securities and federal reserve balances. We've maintained high levels of liquidity over the past year, while opportunistically purchasing securities. This trend continued into the first quarter as we added primarily U.S. treasuries and agency RMBS. As a result, average security balances increased by 5% or $6 billion compared to the fourth quarter of 2021 and now represent 27% of interest earning assets.
Slide 7 highlights the composition of our high-quality securities portfolio, as well as the balance changes from year end March 31st. During the first quarter, we added to our portfolio with net purchases of approximately $6 billion. However, the increase in rates during the first quarter resulted in higher net unrealized losses of approximately $6 billion, and accordingly, our period end balances remained relatively stable. To moderate the impact of rising rates and security values and correspondingly AOCI, we transferred approximately $20 billion of securities from our available for sale portfolio into held-to-maturity at quarter end. Importantly, fluctuations in AOCI do not have an impact on our earnings. However, we are mindful of the AOC impact on tangible book value and we'll continue to evaluate potential opportunities to further transfers.
Turning to the income statement on Slide 8. As you can see, first quarter 2022, reported EPS was $3.23, which included pretax integration cost of $31 million CAD. Excluding integration costs, adjusted EPS was $3.29. During the first quarter, integration costs reduced revenue by $16 million and increased expenses by $15 million. First quarter revenue was down $435 million or 8% compared with the fourth quarter.
Expenses declined $619 million or 16% linked quarter and excluding the impact of integration expenses, non-interest expense declined 7%. The first quarter provision recapture was $208 million, primarily reflecting the impact of improved COVID-19 related economic conditions and our effective tax rate was 17%. So, in total, net income was $1.4 billion in the first quarter.
Now let's discuss the key drivers of this performance in more detail. Slide 9 details our revenue trends. Total revenue for the first quarter of $4.7 billion declined $430 million linked quarter. Net interest income of $2.8 billion was down $58 million or 2%. Higher securities and loan balances, as well as increased security yields were more than offset by a $74 million decline in PPP revenue due to loan forgiveness activity and the impact of two fewer days in the quarter.
And net interest margin of 2.28% was up 1 basis point. As we recently announced and effective for the first quarter, we re-categorized the presentation of our noninterest income and provided an update to the related guidance. Consistent with those revisions, first quarter fee income was $1.7 billion, a decline of $296 million or 15% linked quarter. Looking at the detail of each revenue category, asset management and brokerage fees decreased $8 million or 2%, reflecting lower average equity markets.
Capital markets related fees declined $208 million or 45% driven by lower M&A advisory fees, mostly due to elevated fourth quarter transaction levels, but also some transaction activity in the first quarter. Card and Cash Management revenue decreased $26 million or 4%, driven by seasonally lower consumer spending activity. Lending and deposit services was essentially stable linked quarter, declining only $4 million. Residential and commercial mortgage non-interest income was $50 million lower, primarily due to decreased commercial mortgage activity. And finally, other non-interest income declined $81 million, primarily due to lower private equity related revenue and once again compares to elevated fourth quarter levels.
Turning to Slide 10, our first quarter expenses were down by $619 million or 16% linked quarter. Excluding the impact of integration expenses, non-interest expense declined $243 million or 7%. The majority of the decline was in lower personnel expense, primarily reflecting lower incentive compensation. We remain deliberate around our expense management. By year-end 2021, we achieved our objective to reduce BBVA USA's annual operating expense run rate by $900 million. And as we previously stated, we have a goal to reduce cost by $300 million in 2022 through our continuous improvement program and we're confident we will achieve our full year target. As you know, this program funds a significant portion of our ongoing business and technology investments.
Our credit metrics are presented on Slide 11. Nonperforming loans of $2.3 billion decreased $182 million or 7% compared to December 31st and continue to represent less than 1% of total loans. Total delinquencies were $1.7 billion on March 31st, but $286 million declined from year-end, reflecting lower consumer and commercial loan delinquencies. The majority of these decreases resulted from our progress in resolving BBVA USA conversion related administrative and operational delays. Net charge-offs for loans and leases were $137 million, an increase of $13 million linked quarter. Our annualized net charge-offs to average loans continues to be historically low at 19 basis points.
And during the first quarter, we reduced our allowance for credit losses by approximately $300 million and our reserves now total $5.2 billion or 1.8% of total loans. In summary, PNC reported a solid first quarter and we're well positioned for the remainder of 2022 as we continue to realize the potential of our coast to coast franchise. In regard to our view of the overall economy, we expect strong growth over the course of 2022, resulting in 3.7% average GDP growth. We also expect the Fed to raise rates by an additional cumulative 175 basis points through the remainder of this year to a range of 2% to 2.25% percent by year-end and all of this is consistent with the update in our recent 8-K filing.
Looking at the second quarter of 2022, compared to the first quarter of 2022, we expect average loan balances to be up 2% to 3%, which includes a $1.3 billion decline in PPP loans. We expect net interest income to be up 10% to 12%. We expect noninterest income to be up 6% to 8%, which results in total revenue increasing 9% to 11%. We expect total non-interest expense to be up 3% to 5% and we expect second quarter net charge-offs to be between $125 million and $175 million.
Considering our reported first quarter operating results, second quarter expectations and current economic forecast for the full year 2022 compared to the full year 2021, we expect average loan growth of approximately 10% and spot loan growth of 5%. We expect total revenue growth to be 9% to 11%. We expect expenses excluding integration expense to be up 4% to 6% and we now expect our effective tax rate to be approximately 19%.
And with that Bill and I are ready to take your questions.
