Grew liquidity and capital; reduced expenses;
credit quality stable
PITTSBURGH, April 16,
2024 /PRNewswire/ -- The PNC Financial Services
Group, Inc. (NYSE: PNC) today reported:
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For the
quarter
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In millions, except per
share data and as noted
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1Q24
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4Q23
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1Q23
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First Quarter
Highlights
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Financial
Results
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Comparisons reflect
1Q24 vs. 4Q23
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Revenue
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$
5,145
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$
5,361
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$
5,603
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Income
Statement
▪
Revenue decreased 4%
▪
Core noninterest expenses declined 6%
▪
Generated positive operating
leverage; efficiency improved
▪
Provision for credit losses of
$155 million
Balance Sheet
▪
Average loans decreased 1%
▪
Average deposits decreased 1%
–
Spot deposits increased 1%
▪
ACL to total loans stable at
1.7%
▪
Net loan charge-offs were
$243 million,
or 0.30% annualized to average loans
▪
AOCI was negative $8.0 billion, compared
to
negative $7.7 billion, reflecting higher interest rates
▪
TBV per share increased to $85.70
▪
Federal Reserve Bank balances
averaged
$47.8 billion, an increase of $5.6 billion
▪
Maintained strong capital position
–
CET1 capital ratio of 10.1%
–
Repurchased $0.1 billion of common
shares
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Noninterest expense
(NIE)
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3,334
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4,074
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3,321
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Non-core NIE
adjustments
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130
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665
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—
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Core NIE
(non-GAAP)
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3,204
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3,409
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3,321
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Pretax, pre-provision
earnings - as adjusted (non-GAAP)
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1,941
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1,952
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2,282
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Provision for credit
losses
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155
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232
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235
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Net income
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1,344
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883
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1,694
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Per Common
Share
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Diluted
earnings
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$ 3.10
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$ 1.85
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$ 3.98
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Impact from non-core
NIE adjustments
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0.26
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1.31
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—
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Diluted earnings - as
adjusted (non-GAAP)
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3.36
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3.16
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3.98
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Average diluted common
shares outstanding
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400
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401
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402
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Book value
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113.30
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112.72
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104.76
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Tangible book value
(TBV) (non-GAAP)
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85.70
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85.08
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76.90
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Balance Sheet &
Credit Quality
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Average loans
In billions
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$
320.6
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$
324.6
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$
325.5
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Average
deposits In billions
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420.2
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423.9
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436.2
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Accumulated other
comprehensive income (loss) (AOCI) In
billions
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(8.0)
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(7.7)
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(9.1)
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Net loan
charge-offs
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243
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200
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195
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Allowance for credit
losses (ACL) to total loans
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1.68 %
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1.70 %
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1.66 %
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Selected
Ratios
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Return on average
common shareholders' equity
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11.39 %
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6.93 %
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16.11 %
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Return on average
assets
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0.97
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0.62
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1.22
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Net interest margin
(NIM) (non-GAAP)
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2.57
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2.66
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2.84
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Noninterest income to
total revenue
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37
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37
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36
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Efficiency
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65
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76
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59
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Efficiency - as
adjusted (non-GAAP)
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62
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64
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59
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Common equity Tier 1
(CET1) capital ratio
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10.1
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9.9
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9.2
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Core NIE is a
non-GAAP measure calculated by excluding non-core NIE adjustments
from noninterest
expense. Non-core NIE adjustments include the pre-tax impact from
the FDIC special assessment for the
recovery of Silicon Valley Bank and Signature Bank ($130 million in
1Q24 and $515 million in 4Q23); 4Q23
also excludes charges related to the workforce reduction ($150
million). See this and other non-GAAP financial
measures in the Consolidated Financial Highlights accompanying this
release.
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From Bill Demchak, PNC
Chairman and Chief Executive Officer:
"PNC delivered solid first quarter results generating net
income of $1.3 billion which included
an additional $130 million pre-tax
FDIC special assessment. During the quarter, we grew customers,
reduced expenses, increased spot deposits, maintained stable credit
quality and continued to build upon our strong liquidity and
capital positions. The strength of our balance sheet, diverse
business mix, and the quality of our people, position us well for
continued growth across our franchise as the year
progresses."
Income Statement Highlights
First quarter 2024 compared with fourth quarter
2023
- Total revenue of $5.1 billion
decreased $216 million, or 4%, due to
lower net interest income and noninterest income.
- Net interest income of $3.3
billion decreased $139
million, or 4%, reflecting increased funding costs, lower
loan balances and one fewer day in the quarter.
- Net interest margin of 2.57% decreased 9 basis points.
- Noninterest income of $1.9
billion decreased $77 million,
or 4%.
- Fee income of $1.7 billion
decreased $74 million, or 4%,
primarily due to lower capital markets and advisory activity and a
seasonal decline in card and cash management fees.
- Other noninterest income of $135
million decreased $3
million.
- Noninterest expense of $3.3
billion decreased $740
million, or 18%, and included non-core noninterest expenses
of $130 million in the first quarter
and $665 million in the fourth
quarter.
- Core noninterest expense of $3.2
billion decreased $205
million, or 6%, driven by lower or stable expenses across
all categories, reflecting a continued focus on expense
management.
- Provision for credit losses was $155
million in the first quarter, reflecting portfolio activity
and improved macroeconomic factors. The fourth quarter of 2023
included a provision for credit losses of $232 million.
- The effective tax rate was 18.8% for the first quarter and
16.3% for the fourth quarter.
Balance Sheet Highlights
First quarter 2024 compared with fourth quarter
2023 or March 31, 2024 compared with December 31,
2023
- Average loans of $320.6 billion
decreased $4.0 billion, or 1%.
- Average commercial loans of $219.2
billion decreased $3.4
billion, or 2%, driven by lower utilization of loan
commitments and paydowns outpacing new production.
- Average consumer loans of $101.4
billion declined less than 1%.
- Credit quality performance:
- Delinquencies of $1.3 billion
decreased $109 million, or 8%, driven
by lower consumer and commercial loan delinquencies.
- Total nonperforming loans of $2.4
billion increased $200
million, or 9%, primarily due to higher commercial real
estate nonperforming loans.
- Net loan charge-offs of $243
million increased $43 million,
primarily due to higher commercial net loan charge-offs.
- The allowance for credit losses of $5.4
billion was relatively unchanged. The allowance for credit
losses to total loans was 1.68% at March 31,
2024, and 1.70% at December 31,
2023.
- Average deposits of $420.2
billion decreased $3.8
billion, or 1%, reflecting seasonally lower commercial
deposits.
- Deposits at March 31, 2024, of
$425.6 billion increased $4.2 billion, or 1%, reflecting higher commercial
and consumer deposits balances.
- Average investment securities of $135.4
billion decreased $2.0
billion, or 1%.
- Average Federal Reserve Bank balances of $47.8 billion increased $5.6 billion.
- Federal Reserve Bank balances at March
31, 2024, of $53.2 billion
increased $9.9 billion, or 23%,
reflecting higher period end deposits.
- Average borrowed funds of $75.6
billion increased $2.7
billion, or 4%, primarily due to parent company senior debt
issuances early in the quarter.
- PNC maintained a strong capital and liquidity position.
- On April 3, 2024, the PNC board
of directors declared a quarterly cash dividend on common stock of
$1.55 per share to be paid on
May 6, 2024 to shareholders of record
at the close of business April 15,
2024.
- PNC returned $0.8 billion of
capital to shareholders, reflecting more than $0.6 billion of dividends on common shares and
more than $0.1 billion of common
share repurchases, representing 0.9 million shares.
- The Basel III common equity Tier 1 capital ratio was an
estimated 10.1% at March 31, 2024 and
9.9% at December 31, 2023.
- PNC's average LCR for the three months ended March 31, 2024, was 107%, exceeding the
regulatory minimum requirement throughout the quarter.
Earnings
Summary
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In millions, except
per share data
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1Q24
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4Q23
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1Q23
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Net income
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$
1,344
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$
883
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$
1,694
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Net income attributable
to
diluted common shares -
as reported
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$
1,240
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$
740
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$
1,599
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Net income attributable
to
diluted common shares -
as adjusted (non-GAAP)
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$
1,343
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$
1,265
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$
1,599
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Diluted earnings per
common share - as reported
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$
3.10
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$
1.85
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$
3.98
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Diluted earnings per
common share - as adjusted (non-GAAP)
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$
3.36
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$
3.16
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$
3.98
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Average diluted common
shares outstanding
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400
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401
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402
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Cash dividends declared
per common share
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$
1.55
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$
1.55
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$
1.50
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See non-GAAP
financial measures included in the Consolidated Financial
Highlights accompanying this news release
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First quarter 2024 net income of $1.3
billion, or $3.10 per diluted
common share, included $103 million
of post-tax expenses pertaining to the increased FDIC special
assessment. Excluding the impact of this item, adjusted diluted
earnings per common share was $3.36.
The Consolidated Financial Highlights accompanying this news
release include additional information regarding reconciliations of
non-GAAP financial measures to reported (GAAP) amounts. This
information supplements results as reported in accordance with GAAP
and should not be viewed in isolation from, or as a substitute for,
GAAP results. Fee income, a non-GAAP financial measure, refers to
noninterest income in the following categories: asset management
and brokerage, capital markets and advisory, card and cash
management, lending and deposit services, and residential and
commercial mortgage. Information in this news release, including
the financial tables, is unaudited.
CONSOLIDATED REVENUE
REVIEW
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Revenue
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Change
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Change
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1Q24 vs
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1Q24 vs
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In
millions
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1Q24
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4Q23
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1Q23
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4Q23
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1Q23
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Net interest
income
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$
3,264
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$
3,403
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$
3,585
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(4) %
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(9) %
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Noninterest
income
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1,881
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1,958
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2,018
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(4) %
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(7) %
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Total
revenue
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$
5,145
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$
5,361
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$
5,603
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(4) %
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(8) %
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Total revenue for the first quarter of 2024 decreased
$216 million from the fourth quarter
of 2023 and $458 million compared
with the first quarter of 2023. In both comparisons, the decline
was due to lower net interest income and noninterest
income.
Net interest income of $3.3
billion decreased $139 million
compared to the fourth quarter of 2023, reflecting increased
funding costs, lower loan balances and one fewer day in the
quarter. Net interest margin was 2.57% in the first quarter of
2024, decreasing 9 basis points in comparison with the fourth
quarter of 2023, primarily as a result of higher funding costs.
Compared to the first quarter of 2023, net interest income
decreased $321 million and net
interest margin declined 27 basis points, as the benefit of higher
interest-earning asset yields was more than offset by increased
funding costs.
Noninterest
Income
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Change
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Change
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1Q24 vs
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1Q24 vs
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In
millions
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1Q24
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4Q23
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1Q23
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4Q23
|
1Q23
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Asset management and
brokerage
|
$
364
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$
360
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$
356
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1 %
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2 %
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Capital markets and
advisory
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259
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|
309
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262
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(16) %
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(1) %
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Card and cash
management
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671
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|
688
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659
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(2) %
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2 %
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Lending and deposit
services
|
305
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|
314
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|
306
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(3) %
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—
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Residential and
commercial mortgage
|
147
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|
149
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177
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(1) %
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(17) %
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Fee income
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1,746
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1,820
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1,760
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(4) %
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(1) %
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Other
|
135
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|
138
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258
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(2) %
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(48) %
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Total noninterest
income
|
$ 1,881
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$ 1,958
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|
$ 2,018
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(4) %
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(7) %
|
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Noninterest income for the first quarter of 2024 decreased
$77 million compared with the fourth
quarter of 2023. Asset management and brokerage revenue increased
$4 million and included the impact of
favorable equity markets. Capital markets and advisory revenue
declined $50 million, driven by lower
merger and acquisition advisory activity, partially offset by
higher underwriting fees. Card and cash management fees decreased
$17 million as seasonally lower
consumer transaction volumes were partially offset by higher
treasury management fees. Lending and deposit services declined
$9 million reflecting the reduction
of certain checking product fees. Residential and commercial
mortgage revenue decreased $2 million
reflecting lower residential mortgage activity. Other noninterest
income decreased $3 million, and
included lower gains on sales. The first quarter also included
negative Visa Class B derivative fair value adjustments of
$7 million. Visa Class B derivative
fair value adjustments were negative $100
million in the fourth quarter.
Noninterest income for the first quarter of 2024, decreased
$137 million from the first quarter
of 2023. Fee income declined $14
million, as growth in card and cash management and asset
management and brokerage fees were more than offset by lower
residential and commercial mortgage revenue. Other noninterest
income decreased $123 million
primarily driven by a decline in private equity revenue. The first
quarter of 2023 also included negative Visa Class B derivative fair
value adjustments of $45
million.
CONSOLIDATED EXPENSE
REVIEW
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Noninterest
Expense
|
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Change
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Change
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1Q24 vs
|
1Q24 vs
|
In
millions
|
1Q24
|
|
4Q23
|
|
1Q23
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4Q23
|
1Q23
|
Personnel
|
$
1,794
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$
1,983
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$
1,826
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(10) %
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(2) %
|
Occupancy
|
244
|
|
243
|
|
251
|
—
|
(3) %
|
Equipment
|
341
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|
365
|
|
350
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(7) %
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(3) %
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Marketing
|
64
|
|
74
|
|
74
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(14) %
|
(14) %
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Other
|
891
|
|
1,409
|
|
820
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(37) %
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9 %
|
Total noninterest
expense
|
$
3,334
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|
$
4,074
|
|
$
3,321
|
(18) %
|
—
|
Non-core noninterest
expense adjustments
|
130
|
|
665
|
|
—
|
|
|
Core noninterest
expense (non-GAAP)
|
$
3,204
|
|
$
3,409
|
|
$
3,321
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(6) %
|
(4) %
|
See non-GAAP
financial measures included in the Consolidated Financial
Highlights accompanying this news release
|
Noninterest expense for the first quarter of 2024 decreased
$740 million in comparison to the
fourth quarter of 2023. The first quarter of 2024 included non-core
noninterest expenses of $130 million
related to the increased FDIC special assessment and the fourth
quarter of 2023 included $515
million pertaining to the FDIC special assessment as well as
$150 million of workforce reduction
charges. Excluding the impact of these items, core noninterest
expense was $3.2 billion for the
first quarter of 2024, decreasing $205
million, or 6%, from the fourth quarter of 2023 driven by
lower or stable expenses across all categories, reflecting a
continued focus on expense management.
Noninterest expense of $3.3
billion for the first quarter of 2024, which included a
$130 million FDIC special assessment,
was stable compared with the first quarter of 2023. Excluding the
impact of this item, core noninterest expense was $3.2 billion for the first quarter of 2024,
decreasing $117 million, or 4%, from
the first quarter of 2023.
The effective tax rate was 18.8% for the first quarter of 2024,
16.3% for the fourth quarter of 2023 and 17.2% for the first
quarter of 2023.
CONSOLIDATED BALANCE SHEET REVIEW
Average total assets were $562.8
billion in the first quarter of 2024, relatively stable in
comparison to both the fourth quarter of 2023 and the first quarter
of 2023.
Average
Loans
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
1Q24 vs
|
1Q24 vs
|
In
billions
|
1Q24
|
|
4Q23
|
|
1Q23
|
4Q23
|
1Q23
|
Commercial
|
$
219.2
|
|
$
222.6
|
|
$
224.6
|
(2) %
|
(2) %
|
Consumer
|
101.4
|
|
102.0
|
|
100.9
|
(1) %
|
—
|
Total
|
$
320.6
|
|
$
324.6
|
|
$
325.5
|
(1) %
|
(2) %
|
|
|
|
|
|
|
|
|
Average loans for the first quarter of 2024 decreased
$4.0 billion compared to the fourth
quarter of 2023. Average commercial loans decreased $3.4 billion driven by lower utilization of loan
commitments and paydowns outpacing new production. Average
consumer loans declined $0.6 billion
compared to the fourth quarter of 2023, primarily driven by lower
credit card and home equity balances.
Average loans for the first quarter of 2024 decreased
$4.9 billion in comparison to the
first quarter of 2023. Average commercial loans decreased
$5.3 billion compared to the first
quarter of 2023, driven by lower utilization of loan commitments.
Average consumer loans were relatively stable.
Average Investment
Securities
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
1Q24 vs
|
1Q24 vs
|
In
billions
|
1Q24
|
|
4Q23
|
|
1Q23
|
4Q23
|
1Q23
|
Available for
sale
|
$
46.0
|
|
$
46.1
|
|
$
48.2
|
—
|
(5) %
|
Held to
maturity
|
89.4
|
|
91.3
|
|
95.2
|
(2) %
|
(6) %
|
Total
|
$
135.4
|
|
$
137.4
|
|
$
143.4
|
(1) %
|
(6) %
|
|
|
|
|
|
|
|
|
Average investment securities of $135.4
billion in the first quarter of 2024 declined $2.0 billion and $8.0
billion from the fourth quarter of 2023 and the first
quarter of 2023, respectively. In both comparisons, limited
purchase activity was more than offset by portfolio paydowns and
maturities. The duration of the investment securities portfolio was
4.0 years at March 31, 2024, 4.1 years at December 31,
2023 and 4.4 years at March 31, 2023.
Net unrealized losses on available for sale securities were
$4.0 billion at March 31, 2024
increasing from $3.6 billion at
December 31, 2023 and $3.8
billion at March 31, 2023. In both comparisons, the
increase primarily reflected the impact of higher interest
rates.
Average Federal Reserve Bank balances for the first quarter of
2024 were $47.8 billion, increasing
$5.6 billion from the fourth quarter
of 2023 and $14.3 billion from the
first quarter of 2023. In both comparisons, the increase reflected
lower loans and securities balances as well as higher average
borrowed funds.
Federal Reserve Bank balances at March 31, 2024 were $53.2
billion, increasing $9.9
billion from December 31,
2023.
Average
Deposits
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
1Q24 vs
|
1Q24 vs
|
In
billions
|
1Q24
|
|
4Q23
|
|
1Q23
|
4Q23
|
1Q23
|
Commercial
|
$
202.5
|
|
$
207.0
|
|
$
210.0
|
(2) %
|
(4) %
|
Consumer
|
217.6
|
|
216.9
|
|
226.2
|
—
|
(4) %
|
Total
|
$
420.2
|
|
$
423.9
|
|
$
436.2
|
(1) %
|
(4) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IB % of total avg.
deposits
|
76 %
|
|
75 %
|
|
72 %
|
|
|
NIB % of total avg.
deposits
|
24 %
|
|
25 %
|
|
28 %
|
|
|
IB -
Interest-bearing
NIB -
Noninterest-bearing
|
Totals may not sum
due to rounding
|
|
|
|
|
|
|
|
|
Average deposits for the first quarter of 2024 were $420.2 billion, decreasing $3.8 billion from the fourth quarter of 2023
driven by seasonally lower commercial deposits. Compared to the
first quarter of 2023, average deposits decreased $16.1 billion due to lower consumer and
commercial deposits, reflecting the impact of quantitative
tightening by the Federal Reserve and increased customer spending.
Noninterest-bearing balances as a percentage of average deposits
decreased in both comparisons reflecting growth in interest-bearing
deposits as a result of the higher interest rate environment, as
well as a slowing pace of decline in noninterest-bearing balances
in the comparison to fourth quarter 2023.
Deposits at March 31, 2024, were
$425.6 billion and increased
$4.2 billion, or 1%, from
December 31, 2023, reflecting higher
commercial and consumer deposits.
Average Borrowed
Funds
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
1Q24 vs
|
1Q24 vs
|
In
billions
|
1Q24
|
|
4Q23
|
|
1Q23
|
4Q23
|
1Q23
|
Total
|
$
75.6
|
|
$
72.9
|
|
$
63.0
|
4 %
|
20 %
|
|
|
|
|
|
|
|
|
Average borrowed funds of $75.6
billion in the first quarter of 2024 increased $2.7 billion compared to the fourth quarter of
2023 and $12.6 billion compared to
the first quarter of 2023. In both comparisons, the increase was
driven primarily by parent company senior debt issuances.
Capital
|
March 31,
2024
|
|
December 31,
2023
|
|
March 31,
2023
|
|
|
|
Common shareholders'
equity In billions
|
$
45.1
|
|
$
44.9
|
|
$
41.8
|
Accumulated other
comprehensive income (loss)
In
billions
|
$
(8.0)
|
|
$
(7.7)
|
|
$
(9.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Basel III common equity
Tier 1 capital ratio *
|
10.1 %
|
|
9.9 %
|
|
9.2 %
|
Basel III common equity
Tier 1 fully implemented capital ratio (estimated)
|
10.0 %
|
|
9.8 %
|
|
9.1 %
|
*March 31, 2024
ratio is estimated
|
|
|
|
|
|
|
PNC maintained a strong capital position. Common shareholders'
equity at March 31, 2024 increased $0.2
billion from December 31, 2023, driven by the benefit
of net income, partially offset by dividends paid and share
repurchases as well as a decline in accumulated other comprehensive
income.
As a Category III institution, PNC has elected to exclude
accumulated other comprehensive income related to both available
for sale securities and pension and other post-retirement plans
from CET1 capital. Accumulated other comprehensive income at
March 31, 2024 declined $0.3
billion from December 31, 2023 due to securities and
swaps valuation changes as the benefit of paydowns and maturities
was more than offset by the impact of higher interest rates.
Compared to March 31, 2023, accumulated other
comprehensive income improved $1.1
billion, reflecting the benefit of paydowns and
maturities.
In the first quarter of 2024, PNC returned $0.8 billion of capital to shareholders,
reflecting more than $0.6 billion of
dividends on common shares and more than $0.1 billion of common share repurchases,
representing 0.9 million shares. Consistent with the Stress Capital
Buffer (SCB) framework, which allows for capital return in amounts
in excess of the SCB minimum levels, our board of directors has
authorized a repurchase framework under the previously approved
repurchase program of up to 100 million common shares, of which
approximately 44% were still available for repurchase at
March 31, 2024.
In light of the Federal banking agencies proposed rules to
adjust the Basel III capital framework, second quarter 2024 share
repurchase activity is expected to approximate recent quarterly
average share repurchase levels. PNC continues to evaluate the
potential impact of the proposed rules and may adjust share
repurchase activity depending on market and economic conditions, as
well as other factors.
PNC's SCB for the four-quarter period beginning October 1, 2023 is the regulatory minimum of
2.5%.
On April 3, 2024, the PNC board of
directors declared a quarterly cash dividend on common stock of
$1.55 per share to be paid on
May 6, 2024 to shareholders of record
at the close of business April 15,
2024.
At March 31, 2024, PNC was considered "well capitalized"
based on applicable U.S. regulatory capital ratio requirements. For
additional information regarding PNC's Basel III capital ratios,
see Capital Ratios in the Consolidated Financial Highlights. PNC
elected a five-year transition provision effective March 31, 2020 to delay until December 31, 2021 the full impact of the Current
Expected Credit Losses (CECL) standard on regulatory capital,
followed by a three-year transition period. Effective for the first
quarter of 2022, PNC is now in the three-year transition period,
and the full impact of the CECL standard is being phased-in to
regulatory capital through December 31,
2024. The fully implemented ratios reflect the full impact
of CECL and exclude the benefits of this transition provision.
CREDIT QUALITY
REVIEW
|
|
|
|
|
|
|
|
|
|
|
|
Credit
Quality
|
|
|
|
Change
|
Change
|
|
March 31,
2024
|
December 31,
2023
|
March 31,
2023
|
03/31/24 vs
|
03/31/24 vs
|
In
millions
|
12/31/23
|
03/31/23
|
Provision for credit
losses (a)
|
$
155
|
$
232
|
$
235
|
$
(77)
|
$
(80)
|
Net loan charge-offs
(a)
|
$
243
|
$
200
|
$
195
|
22 %
|
25 %
|
Allowance for credit
losses (b)
|
$
5,365
|
$
5,454
|
$
5,413
|
(2) %
|
(1) %
|
Total delinquencies
(c)
|
$
1,275
|
$
1,384
|
$
1,326
|
(8) %
|
(4) %
|
Nonperforming
loans
|
$
2,380
|
$
2,180
|
$
2,010
|
9 %
|
18 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs to
average loans (annualized)
|
0.30 %
|
0.24 %
|
0.24 %
|
|
|
Allowance for credit
losses to total loans
|
1.68 %
|
1.70 %
|
1.66 %
|
|
|
Nonperforming loans to
total loans
|
0.74 %
|
0.68 %
|
0.62 %
|
|
|
(a) Represents
amounts for the three months ended for each respective
period
(b) Excludes
allowances for investment securities and other financial
assets
(c) Total
delinquencies represent accruing loans more than 30 days past
due
|
Provision for credit losses was $155
million in the first quarter of 2024, reflecting portfolio
activity and improved macroeconomic factors. The fourth quarter of
2023 included a provision for credit losses of
$232 million.
Net loan charge-offs were $243
million in the first quarter of 2024, increasing
$43 million compared to the fourth
quarter of 2023 and $48 million
compared to the first quarter of 2023. In both comparisons, the
increase was driven by higher commercial and consumer net loan
charge-offs.
The allowance for credit losses was $5.4
billion at March 31, 2024, $5.5
billion at December 31, 2023 and $5.4 billion at March 31, 2023. The
allowance for credit losses as a percentage of total loans was
1.68% at March 31, 2024, 1.70% at December 31, 2023 and
1.66% at March 31, 2023.
Delinquencies at March 31, 2024 were $1.3 billion, decreasing $109 million from December 31, 2023 due to
lower consumer and commercial loan delinquencies. Compared to
March 31, 2023, delinquencies decreased $51 million due to lower commercial loan
delinquencies.
Nonperforming loans at March 31,
2024 were $2.4 billion,
increasing $200 million from
December 31, 2023, primarily due to
higher commercial real estate nonperforming loans. Compared to
March 31, 2023, nonperforming loans
increased $370 million, reflecting
higher commercial nonperforming loans, partially offset by lower
consumer nonperforming loans.
BUSINESS SEGMENT
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
Business Segment
Income (Loss)
|
|
|
|
|
|
In
millions
|
1Q24
|
|
4Q23
|
|
1Q23
|
Retail
Banking
|
$ 1,085
|
|
$ 1,073
|
|
$
647
|
Corporate &
Institutional Banking
|
1,121
|
|
1,213
|
|
1,059
|
Asset Management
Group
|
97
|
|
72
|
|
52
|
Other
|
(973)
|
|
(1,494)
|
|
(81)
|
Net income excluding
noncontrolling interests
|
$ 1,330
|
|
$
864
|
|
$ 1,677
|
|
|
|
|
|
|
Retail
Banking
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
1Q24 vs
|
|
1Q24 vs
|
In
millions
|
1Q24
|
|
4Q23
|
|
1Q23
|
|
4Q23
|
|
1Q23
|
Net interest
income
|
$ 2,617
|
|
$ 2,669
|
|
$ 2,281
|
|
$
(52)
|
|
$
336
|
Noninterest
income
|
$
764
|
|
$
722
|
|
$
743
|
|
$
42
|
|
$
21
|
Noninterest
expense
|
$ 1,837
|
|
$ 1,848
|
|
$ 1,927
|
|
$
(11)
|
|
$
(90)
|
Provision for credit
losses
|
$
118
|
|
$
130
|
|
$
238
|
|
$
(12)
|
|
$
(120)
|
Earnings
|
$ 1,085
|
|
$ 1,073
|
|
$
647
|
|
$
12
|
|
$
438
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$ 97.2
|
|
$ 97.4
|
|
$ 97.4
|
|
$
(0.2)
|
|
$
(0.2)
|
Average
deposits
|
$ 249.0
|
|
$ 251.3
|
|
$ 262.5
|
|
$
(2.3)
|
|
$
(13.5)
|
|
|
|
|
|
|
|
|
|
|
Net loan
charge-offs In millions
|
$
139
|
|
$
128
|
|
$
112
|
|
$
11
|
|
$
27
|
|
|
|
|
|
|
|
|
|
|
Retail Banking Highlights
First quarter 2024 compared with fourth quarter
2023
- Earnings increased 1%, as higher noninterest income, a lower
provision for credit losses and lower noninterest expense were
partially offset by lower net interest income.
- Noninterest income increased 6%, reflecting lower negative Visa
Class B derivative fair value adjustments, partially offset by
lower residential mortgage banking activity and a seasonal decline
in card and cash management fees. Visa Class B derivative fair
value adjustments were negative $7
million in the first quarter of 2024 compared to negative
$100 million in the fourth quarter of
2023.
- Noninterest expense decreased 1%, reflecting a continued focus
on expense management partially offset by higher technology
investment.
- Provision for credit losses of $118
million in the first quarter of 2024 reflected the impact of
portfolio activity and improved macroeconomic factors.
- Average loans were stable.
- Average deposits decreased 1%, reflecting the impact of
continued inflationary pressures and competitive pricing
dynamics.
First quarter 2024 compared with first quarter
2023
- Earnings increased 68%, primarily due to higher revenue, a
lower provision for credit losses as well as lower noninterest
expense.
- Noninterest income increased 3%, reflecting lower negative Visa
Class B derivative fair value adjustments, partially offset by
lower card and cash management fees. The first quarter of 2023
included negative Visa Class B derivative fair value adjustments of
$45 million.
- Noninterest expense decreased 5%, and included lower personnel
expense.
- Average loans were stable.
- Average deposits decreased 5%, reflecting the impact of
quantitative tightening by the Federal Reserve and competitive
pricing dynamics.
Corporate &
Institutional Banking
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
1Q24 vs
|
|
1Q24 vs
|
In
millions
|
1Q24
|
|
4Q23
|
|
1Q23
|
|
4Q23
|
|
1Q23
|
Net interest
income
|
$ 1,549
|
|
$ 1,642
|
|
$ 1,414
|
|
$
(93)
|
|
$
135
|
Noninterest
income
|
$
888
|
|
$
995
|
|
$
886
|
|
$
(107)
|
|
$
2
|
Noninterest
expense
|
$
922
|
|
$
975
|
|
$
939
|
|
$
(53)
|
|
$
(17)
|
Provision for
(recapture of) credit losses
|
$
47
|
|
$
115
|
|
$
(28)
|
|
$
(68)
|
|
$
75
|
Earnings
|
$ 1,121
|
|
$ 1,213
|
|
$ 1,059
|
|
$
(92)
|
|
$
62
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$ 204.2
|
|
$ 208.1
|
|
$ 209.9
|
|
$
(3.9)
|
|
$
(5.7)
|
Average
deposits
|
$ 142.7
|
|
$ 144.5
|
|
$ 145.4
|
|
$
(1.8)
|
|
$
(2.7)
|
|
|
|
|
|
|
|
|
|
|
Net loan
charge-offs In millions
|
$
108
|
|
$
76
|
|
$
85
|
|
$
32
|
|
$
23
|
|
|
|
|
|
|
|
|
|
|
Corporate & Institutional Banking Highlights
First quarter 2024 compared with fourth quarter
2023
- Earnings decreased 8%, driven by lower noninterest and net
interest income, partially offset by lower provision for credit
losses and lower noninterest expense.
- Noninterest income decreased 11%, due to lower capital markets
and advisory fees and gains on sales.
- Noninterest expense decreased 5%, driven by lower business
activity and a continued focus on expense management.
- Provision for credit losses of $47
million in the first quarter of 2024 reflected portfolio
activity and improved macroeconomic factors.
- Average loans decreased 2%, driven by lower utilization of loan
commitments and paydowns outpacing new production.
- Average deposits decreased 1%, reflecting seasonal declines in
corporate deposits.
First quarter 2024 compared with first quarter
2023
- Earnings increased 6%, due to higher net interest income and a
decline in noninterest expense, partially offset by a higher
provision for credit losses.
- Noninterest income remained stable, as higher treasury
management product revenue was largely offset by lower commercial
mortgage banking activity.
- Noninterest expense decreased 2%, reflecting a continued focus
on expense management.
- Average loans decreased 3%, driven by lower utilization of loan
commitments.
- Average deposits decreased 2%, reflecting the impact of
quantitative tightening by the Federal Reserve and competitive
pricing dynamics.
Asset Management
Group
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
1Q24 vs
|
|
1Q24 vs
|
In
millions
|
1Q24
|
|
4Q23
|
|
1Q23
|
|
4Q23
|
|
1Q23
|
Net interest
income
|
$ 157
|
|
$ 156
|
|
$ 127
|
|
$
1
|
|
$
30
|
Noninterest
income
|
$ 230
|
|
$ 224
|
|
$ 230
|
|
$
6
|
|
—
|
Noninterest
expense
|
$ 265
|
|
$ 284
|
|
$ 280
|
|
$
(19)
|
|
$
(15)
|
Provision for
(recapture of) credit losses
|
$
(5)
|
|
$
2
|
|
$
9
|
|
$
(7)
|
|
$
(14)
|
Earnings
|
$
97
|
|
$
72
|
|
$
52
|
|
$
25
|
|
$
45
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Discretionary client
assets under management
|
$ 195
|
|
$ 189
|
|
$ 177
|
|
$
6
|
|
$
18
|
Nondiscretionary
client assets under administration
|
$ 199
|
|
$ 179
|
|
$ 156
|
|
$
20
|
|
$
43
|
Client assets under
administration at quarter end
|
$ 394
|
|
$ 368
|
|
$ 333
|
|
$
26
|
|
$
61
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$ 16.3
|
|
$ 16.1
|
|
$ 14.6
|
|
$
0.2
|
|
$
1.7
|
Average
deposits
|
$ 28.7
|
|
$ 28.2
|
|
$ 28.2
|
|
$
0.5
|
|
$
0.5
|
|
|
|
|
|
|
|
|
|
|
Net loan charge-offs
(recoveries) In millions
|
—
|
|
$
(1)
|
|
—
|
|
$
1
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Asset Management Group Highlights
First quarter 2024 compared with fourth quarter
2023
- Earnings increased 35%, reflecting lower noninterest expense
and higher noninterest income.
- Noninterest income increased 3%, reflecting higher average
equity markets.
- Noninterest expense decreased 7%, driven by lower personnel
expense.
- Discretionary client assets under management increased 3%,
driven by higher spot equity markets.
- Average loans increased 1%, primarily due to growth in
residential mortgage loans.
- Average deposits increased 2%, and included growth in CD and
deposit sweep balances.
First quarter 2024 compared with first quarter
2023
- Earnings increased 87%, due to higher net interest income, a
decline in noninterest expense and a provision recapture.
- Noninterest income was stable.
- Noninterest expense decreased 5%, reflecting a continued focus
on expense management.
- Discretionary client assets under management increased 10%,
primarily driven by higher spot equity markets.
- Average loans increased 12%, primarily driven by growth in
residential mortgage loans.
- Average deposits increased 2%, reflecting growth in CD and
deposit sweep balances, partially offset by the impact of
quantitative tightening by the Federal Reserve and redeployment of
funds to assets under management.
Other
The "Other" category, for the purposes of this release, includes
residual activities that do not meet the criteria for disclosure as
a separate reportable business, such as asset and liability
management activities, including net securities gains or losses,
ACL for investment securities, certain trading activities, certain
runoff consumer loan portfolios, private equity investments,
intercompany eliminations, corporate overhead net of allocations,
tax adjustments that are not allocated to business segments, exited
businesses and the residual impact from funds transfer pricing
operations.
CONFERENCE CALL AND SUPPLEMENTAL FINANCIAL
INFORMATION
PNC Chairman and Chief Executive Officer William S. Demchak and Executive Vice President
and Chief Financial Officer Robert Q.
Reilly will hold a conference call for investors today at
10:00 a.m. Eastern Time regarding the
topics addressed in this news release and the related earnings
materials. Dial-in numbers for the conference call are (866)
604-1697 and (215) 268-9875 (international) and Internet access to
the live audio listen-only webcast of the call is available at
www.pnc.com/investorevents. PNC's first quarter 2024 earnings
materials to accompany the conference call remarks will be
available at www.pnc.com/investorevents prior to the beginning
of the call. A telephone replay of the call will be available for
one week at (877) 660-6853 and (201) 612-7415 (international),
Access ID 13744434 and a replay of the audio webcast will be
available on PNC's website for 30 days.
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.
CONTACTS
|
|
|
|
|
|
MEDIA:
|
|
INVESTORS:
|
Timothy
Miller
|
|
Bryan Gill
|
(412)
762-4550
|
|
(412)
768-4143
|
media.relations@pnc.com
|
|
investor.relations@pnc.com
|
[TABULAR MATERIAL FOLLOWS]
The PNC Financial
Services Group, Inc.
|
Consolidated
Financial Highlights (Unaudited)
|
|
|
|
|
|
|
|
FINANCIAL
RESULTS
|
|
Three months
ended
|
Dollars in millions,
except per share data
|
|
March 31
|
|
December 31
|
|
March 31
|
|
|
2024
|
|
2023
|
|
2023
|
Revenue
|
|
|
|
|
|
|
Net interest
income
|
|
$ 3,264
|
|
$ 3,403
|
|
$ 3,585
|
Noninterest
income
|
|
1,881
|
|
1,958
|
|
2,018
|
Total
revenue
|
|
5,145
|
|
5,361
|
|
5,603
|
Provision for credit
losses
|
|
155
|
|
232
|
|
235
|
Noninterest
expense
|
|
3,334
|
|
4,074
|
|
3,321
|
Income before income
taxes and noncontrolling interests
|
|
$ 1,656
|
|
$ 1,055
|
|
$ 2,047
|
Income taxes
|
|
312
|
|
172
|
|
353
|
Net income
|
|
$ 1,344
|
|
$
883
|
|
$ 1,694
|
Less:
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests
|
|
14
|
|
19
|
|
17
|
Preferred stock
dividends (a)
|
|
81
|
|
118
|
|
68
|
Preferred stock
discount accretion and redemptions
|
|
2
|
|
2
|
|
2
|
Net income attributable
to common shareholders
|
|
$ 1,247
|
|
$
744
|
|
$ 1,607
|
Per Common
Share
|
|
|
|
|
|
|
Basic
|
|
$ 3.10
|
|
$ 1.85
|
|
$ 3.98
|
Diluted
|
|
$ 3.10
|
|
$ 1.85
|
|
$ 3.98
|
Cash dividends declared
per common share
|
|
$ 1.55
|
|
$ 1.55
|
|
$ 1.50
|
Effective tax rate
(b)
|
|
18.8 %
|
|
16.3 %
|
|
17.2 %
|
PERFORMANCE
RATIOS
|
|
|
|
|
|
|
Net interest margin
(c)
|
|
2.57 %
|
|
2.66 %
|
|
2.84 %
|
Noninterest income to
total revenue
|
|
37 %
|
|
37 %
|
|
36 %
|
Efficiency
(d)
|
|
65 %
|
|
76 %
|
|
59 %
|
Return on:
|
|
|
|
|
|
|
Average common
shareholders' equity
|
|
11.39 %
|
|
6.93 %
|
|
16.11 %
|
Average
assets
|
|
0.97 %
|
|
0.62 %
|
|
1.22 %
|
|
|
(a)
|
Dividends are payable
quarterly, other than Series S preferred stock, which is payable
semiannually.
|
(b)
|
The effective income
tax rates are generally lower than the statutory rate due to the
relationship of pretax income to tax credits and earnings that are
not subject to tax.
|
(c)
|
Net interest margin is
the total yield on interest-earning assets minus the total rate on
interest-bearing liabilities and includes the benefit from use of
noninterest-bearing sources. To provide more meaningful comparisons
of net interest margins, we use net interest income on a
taxable-equivalent basis in calculating average yields used in the
calculation of net interest margin by increasing the interest
income earned on tax-exempt assets to make it fully equivalent to
interest income earned on taxable investments. This adjustment is
not permitted under generally accepted accounting principles (GAAP)
in the Consolidated Income Statement. The taxable-equivalent
adjustments to net interest income for the three months ended March
31, 2024, December 31, 2023 and March 31, 2023 were $34 million,
$36 million and $38 million, respectively.
|
(d)
|
Calculated as
noninterest expense divided by total revenue.
|
The PNC Financial
Services Group, Inc.
|
Consolidated
Financial Highlights
(Unaudited)
|
|
|
|
|
|
|
|
March 31
|
|
December 31
|
|
March 31
|
|
2024
|
|
2023
|
|
2023
|
BALANCE SHEET
DATA
|
|
|
|
|
|
Dollars in millions,
except per share data and as noted
|
|
|
|
|
|
Assets
|
$
566,162
|
|
$
561,580
|
|
$
561,777
|
Loans (a)
|
$
319,781
|
|
$
321,508
|
|
$
326,475
|
Allowance for loan and
lease losses
|
$
4,693
|
|
$
4,791
|
|
$
4,741
|
Interest-earning
deposits with banks
|
$
53,612
|
|
$
43,804
|
|
$
33,865
|
Investment
securities
|
$
130,460
|
|
$
132,569
|
|
$
138,239
|
Total
deposits
|
$
425,624
|
|
$
421,418
|
|
$
436,833
|
Borrowed funds
(a)
|
$
72,707
|
|
$
72,737
|
|
$
60,822
|
Allowance for unfunded
lending related commitments
|
$
672
|
|
$
663
|
|
$
672
|
Total shareholders'
equity
|
$
51,340
|
|
$
51,105
|
|
$
49,044
|
Common shareholders'
equity
|
$
45,097
|
|
$
44,864
|
|
$
41,809
|
Accumulated other
comprehensive income (loss)
|
$
(8,042)
|
|
$
(7,712)
|
|
$
(9,108)
|
Book value per common
share
|
$
113.30
|
|
$
112.72
|
|
$
104.76
|
Tangible book value per
common share (non-GAAP) (b)
|
$
85.70
|
|
$
85.08
|
|
$
76.90
|
Period end common
shares outstanding (In millions)
|
398
|
|
398
|
|
399
|
Loans to
deposits
|
75 %
|
|
76 %
|
|
75 %
|
Common shareholders'
equity to total assets
|
8.0 %
|
|
8.0 %
|
|
7.4 %
|
CLIENT ASSETS (In
billions)
|
|
|
|
|
|
Discretionary client
assets under management
|
$
195
|
|
$
189
|
|
$
177
|
Nondiscretionary client
assets under administration
|
199
|
|
179
|
|
156
|
Total client assets
under administration
|
394
|
|
368
|
|
333
|
Brokerage account
client assets
|
83
|
|
80
|
|
77
|
Total client
assets
|
$
477
|
|
$
448
|
|
$
410
|
CAPITAL
RATIOS
|
|
|
|
|
|
Basel III (c)
(d)
|
|
|
|
|
|
Common equity Tier
1
|
10.1 %
|
|
9.9 %
|
|
9.2 %
|
Common equity Tier 1
fully implemented (e)
|
10.0 %
|
|
9.8 %
|
|
9.1 %
|
Tier 1
risk-based
|
11.5 %
|
|
11.4 %
|
|
10.9 %
|
Total capital
risk-based
|
13.4 %
|
|
13.2 %
|
|
12.8 %
|
Leverage
|
8.7 %
|
|
8.7 %
|
|
8.5 %
|
Supplementary
leverage
|
7.3 %
|
|
7.2 %
|
|
7.2 %
|
ASSET
QUALITY
|
|
|
|
|
|
Nonperforming loans to
total loans
|
0.74 %
|
|
0.68 %
|
|
0.62 %
|
Nonperforming assets to
total loans, OREO and foreclosed assets
|
0.76 %
|
|
0.69 %
|
|
0.63 %
|
Nonperforming assets to
total assets
|
0.43 %
|
|
0.39 %
|
|
0.36 %
|
Net charge-offs to
average loans (for the three months ended) (annualized)
|
0.30 %
|
|
0.24 %
|
|
0.24 %
|
Allowance for loan and
lease losses to total loans
|
1.47 %
|
|
1.49 %
|
|
1.45 %
|
Allowance for credit
losses to total loans (f)
|
1.68 %
|
|
1.70 %
|
|
1.66 %
|
Allowance for loan and
lease losses to nonperforming loans
|
197 %
|
|
220 %
|
|
236 %
|
Total delinquencies
(In millions) (g)
|
$
1,275
|
|
$
1,384
|
|
$
1,326
|
|
|
(a)
|
Amounts include assets
and liabilities for which we have elected the fair value option.
Our 2023 Form 10-K included, and our first quarter 2024 Form 10-Q
will include, additional information regarding these Consolidated
Balance Sheet line items.
|
(b)
|
See the Tangible Book
Value per Common Share table on page 18 for additional
information.
|
(c)
|
All ratios are
calculated using the regulatory capital methodology applicable to
PNC during each period presented and calculated based on the
standardized approach. See Capital Ratios on page 16 for additional
information. The ratios as of March 31, 2024 are
estimated.
|
(d)
|
The ratios are
calculated to reflect PNC's election to adopt the CECL optional
five-year transition provision.
|
(e)
|
The estimated fully
implemented ratios are calculated to reflect the full impact of
CECL and exclude the benefits of the five-year transition
provision.
|
(f)
|
Excludes allowances for
investment securities and other financial assets.
|
(g)
|
Total delinquencies
represent accruing loans more than 30 days past due.
|
The PNC Financial
Services Group,
Inc.
Consolidated Financial Highlights (Unaudited)
|
CAPITAL RATIOS
PNC's regulatory risk-based capital ratios in 2024 are
calculated using the standardized approach for determining
risk-weighted assets. Under the standardized approach for
determining credit risk-weighted assets, exposures are generally
assigned a pre-defined risk weight. Exposures to high volatility
commercial real estate, past due exposures and equity exposures are
generally subject to higher risk weights than other types of
exposures.
PNC elected a five-year transition provision effective
March 31, 2020 to delay until December
31, 2021 the full impact of the CECL standard on regulatory
capital, followed by a three-year transition period. Effective for
the first quarter 2022, PNC is now in the three-year
transition period, and the full impact of the CECL standard is
being phased-in to regulatory capital through December 31,
2024. See the table below for the December 31, 2023,
March 31, 2023 and estimated March 31, 2024 ratios. For
the full impact of PNC's adoption of CECL, which excludes the
benefits of the five-year transition provision, see the
March 31, 2024 and December 31, 2023 (Fully Implemented)
estimates presented in the table below.
Our Basel III capital ratios may be impacted by changes to the
regulatory capital rules and additional regulatory guidance or
analysis.
Basel lll Common
Equity Tier 1 Capital Ratios (a)
|
|
|
|
|
|
|
|
Basel III
|
|
|
|
|
March 31
2024
(estimated)
(b)
|
December 31
2023 (b)
|
|
March 31
2023
(b)
|
|
March 31, 2024
(Fully Implemented)
(estimated)
(c)
|
December 31, 2023
(Fully Implemented)
(estimated)
(c)
|
|
|
|
Dollars in
millions
|
|
Common stock, related
surplus and retained earnings, net of treasury stock
|
$
53,380
|
$
53,059
|
|
$
51,400
|
|
$
53,139
|
$
52,576
|
Less regulatory capital
adjustments:
|
|
|
|
|
|
|
|
Goodwill and
disallowed intangibles, net of deferred tax liabilities
|
(10,983)
|
(11,000)
|
|
(11,119)
|
|
(10,983)
|
(11,000)
|
All other
adjustments
|
(87)
|
(85)
|
|
(92)
|
|
(89)
|
(86)
|
Basel III Common equity
Tier 1 capital
|
$
42,310
|
$
41,974
|
|
$
40,189
|
|
$
42,067
|
$
41,490
|
Basel III standardized
approach risk-weighted assets (d)
|
$
420,475
|
$
424,408
|
|
$
435,827
|
|
$
420,532
|
$
424,546
|
Basel III Common equity
Tier 1 capital ratio
|
10.1 %
|
9.9 %
|
|
9.2 %
|
|
10.0 %
|
9.8 %
|
|
|
(a)
|
All ratios are
calculated using the regulatory capital methodology applicable to
PNC during each period presented.
|
(b)
|
The ratios are
calculated to reflect PNC's election to adopt the CECL optional
five-year transition provisions.
|
(c)
|
The March 31, 2024 and
December 31, 2023 ratios are calculated to reflect the full impact
of CECL and exclude the benefits of the five-year transition
provisions.
|
(d)
|
Basel III standardized
approach risk-weighted assets are based on the Basel III
standardized approach rules and include credit and market
risk-weighted assets.
|
The PNC Financial
Services Group,
Inc.
Consolidated Financial Highlights (Unaudited)
|
NON-GAAP MEASURES
Core Noninterest
Expense (non-GAAP)
Efficiency Ratio
- as adjusted (non-GAAP)
|
Three months
ended
|
|
March 31
|
|
December 31
|
|
March 31
|
Dollars in
millions
|
2024
|
|
2023
|
|
2023
|
Noninterest
expense
|
$
3,334
|
|
$
4,074
|
|
$
3,321
|
Less non-core
noninterest expense adjustments:
|
|
|
|
|
|
FDIC special assessment
costs
|
130
|
|
515
|
|
|
Workforce reduction
charges
|
|
|
150
|
|
|
Total non-core
noninterest expense adjustments
|
$
130
|
|
$
665
|
|
|
Core noninterest
expense (non-GAAP)
|
$
3,204
|
|
$
3,409
|
|
$
3,321
|
|
|
|
|
|
|
Total
revenue
|
$
5,145
|
|
$
5,361
|
|
$
5,603
|
|
|
|
|
|
|
Efficiency ratio
(a)
|
65 %
|
|
76 %
|
|
59 %
|
Efficiency ratio - as
adjusted (non-GAAP) (b)
|
62 %
|
|
64 %
|
|
59 %
|
|
|
(a)
|
Calculated as
noninterest expense divided by total revenue.
|
(b)
|
Calculated as core
noninterest expense divided by total revenue.
|
Core noninterest expense is a non-GAAP measure calculated based
on noninterest expense less costs related to the FDIC special
assessment as well as restructuring expenses incurred as part of
the workforce reduction executed in the fourth quarter of 2023. We
believe this non-GAAP measure to be a useful tool for comparison of
operating expenses incurred during the normal course of business.
The exclusion of FDIC special assessment costs and workforce
reduction charges increases comparability across periods,
demonstrates the impact of significant items and provides a useful
measure for determining PNC's expenses that are core to our
business operations and expected to recur over time.
The efficiency ratio - as adjusted is a non-GAAP measure and
excludes non-core noninterest expense adjustments comprised of
costs related to the FDIC special assessment as well as
restructuring expenses incurred as part of the workforce reduction
executed in the fourth quarter of 2023. It is calculated based on
adjusting the efficiency ratio calculation to use core noninterest
expense which excludes the non-core noninterest expense
adjustments. We believe that this non-GAAP measure is a useful tool
for the purpose of evaluating PNC's results.
The PNC Financial
Services Group, Inc.
|
|
Consolidated
Financial Highlights (Unaudited)
|
|
|
|
Pretax
Pre-Provision Earnings (non-GAAP)
Pretax
Pre-Provision Earnings - as adjusted (non-GAAP)
|
Three months
ended
|
|
March 31
|
|
December 31
|
|
March 31
|
Dollars in
millions
|
2024
|
|
2023
|
|
2023
|
Income before income
taxes and noncontrolling interests
|
$
1,656
|
|
$
1,055
|
|
$
2,047
|
Provision for credit
losses
|
155
|
|
232
|
|
235
|
Pretax pre-provision
earnings (non-GAAP)
|
$
1,811
|
|
$
1,287
|
|
$
2,282
|
Total non-core
noninterest expense adjustments
|
130
|
|
665
|
|
|
Pretax pre-provision
earnings - as adjusted (non-GAAP)
|
$
1,941
|
|
$
1,952
|
|
$
2,282
|
Pretax pre-provision earnings is a non-GAAP measure and is based
on adjusting income before income taxes and noncontrolling
interests to exclude provision for credit losses. We believe that
pretax, pre-provision earnings is a useful tool to help evaluate
the ability to provide for credit costs through operations and
provides an additional basis to compare results between periods by
isolating the impact of provision for credit losses, which can vary
significantly between periods.
Pretax pre-provision earnings - as adjusted is a non-GAAP
measure and is based on adjusting pretax pre-provision earnings to
exclude non-core noninterest expense adjustments comprised of costs
related to the FDIC special assessment as well as restructuring
expenses incurred as part of the workforce reduction executed in
the fourth quarter of 2023. We believe that this non-GAAP measure
is a useful tool in understanding PNC's results by providing
greater comparability between periods, as well as demonstrating the
effect of significant items.
Diluted Earnings
per Common Share - as adjusted (non-GAAP)
|
Three months
ended
|
|
March 31
|
|
Per Common
|
|
December 31
|
|
Per Common
|
|
March 31
|
|
Per Common
|
Dollars in millions,
except per share data
|
2024
|
|
Share
|
|
2023
|
|
Share
|
|
2023
|
|
Share
|
Net income attributable
to common shareholders
|
$
1,247
|
|
|
|
$
744
|
|
|
|
$
1,607
|
|
|
Dividends and
undistributed earnings allocated to nonvested restricted
shares
|
(7)
|
|
|
|
(4)
|
|
|
|
(8)
|
|
|
Net income attributable
to diluted common shareholders
|
$
1,240
|
|
$
3.10
|
|
$
740
|
|
$
1.85
|
|
$
1,599
|
|
$
3.98
|
Total non-core
noninterest expense adjustments after tax (a)
|
103
|
|
$
0.26
|
|
525
|
|
$
1.31
|
|
|
|
|
Net income attributable
to diluted common shareholders - as adjusted
(non-GAAP)
|
$
1,343
|
|
$
3.36
|
|
$
1,265
|
|
$
3.16
|
|
$
1,599
|
|
$
3.98
|
Average diluted common
shares outstanding
(In
millions)
|
400
|
|
|
|
401
|
|
|
|
402
|
|
|
|
|
(a)
|
Statutory tax rate of
21% used to calculate impacts.
|
The diluted earnings per common share - as adjusted is a
non-GAAP measure and excludes non-core noninterest expense
adjustments comprised of costs related to the FDIC special
assessment as well as restructuring expenses incurred as part of
the workforce reduction executed in the fourth quarter of 2023. It
is calculated based on adjusting net income attributable to diluted
common shareholders by removing post-tax non-core noninterest
expense adjustments in the period. We believe this non-GAAP measure
serves as a useful tool in understanding PNC's results by providing
greater comparability between periods, as well as demonstrating the
effect of significant items.
The PNC Financial
Services Group, Inc.
|
|
Consolidated
Financial Highlights (Unaudited)
|
|
|
|
Tangible Book
Value per Common Share (non-GAAP)
|
|
|
|
|
|
|
March 31
|
|
December 31
|
|
March 31
|
Dollars in millions,
except per share data
|
2024
|
|
2023
|
|
2023
|
Book value per common
share
|
$
113.30
|
|
$
112.72
|
|
$
104.76
|
Tangible book value per
common share
|
|
|
|
|
|
Common shareholders'
equity
|
$
45,097
|
|
$
44,864
|
|
$
41,809
|
Goodwill and other
intangible assets
|
(11,225)
|
|
(11,244)
|
|
(11,378)
|
Deferred tax
liabilities on goodwill and other intangible assets
|
242
|
|
244
|
|
260
|
Tangible common
shareholders' equity
|
$
34,114
|
|
$
33,864
|
|
$
30,691
|
Period-end common
shares outstanding (In millions)
|
398
|
|
398
|
|
399
|
Tangible book value per
common share (non-GAAP)
|
$
85.70
|
|
$
85.08
|
|
$
76.90
|
Tangible book value per common share is a non-GAAP measure and
is calculated based on tangible common shareholders' equity divided
by period-end common shares outstanding. We believe this non-GAAP
measure serves as a useful tool to help evaluate the strength and
discipline of a company's capital management strategies and as an
additional, conservative measure of total company value.
Taxable-Equivalent Net Interest Income
(non-GAAP)
|
Three months
ended
|
|
March 31
|
|
December 31
|
|
March 31
|
Dollars in
millions
|
2024
|
|
2023
|
|
2023
|
Net interest
income
|
$
3,264
|
|
$
3,403
|
|
$
3,585
|
Taxable-equivalent
adjustments
|
34
|
|
36
|
|
38
|
Net interest income
(Fully Taxable-Equivalent - FTE) (non-GAAP)
|
$
3,298
|
|
$
3,439
|
|
$
3,623
|
The interest income earned on certain earning assets is
completely or partially exempt from federal income tax. As such,
these tax-exempt instruments typically yield lower returns than
taxable investments. To provide more meaningful comparisons of net
interest income, we use interest income on a taxable-equivalent
basis by increasing the interest income earned on tax-exempt assets
to make it fully equivalent to interest income earned on taxable
investments. This adjustment is not permitted under GAAP.
Taxable-equivalent net interest income is only used for calculating
net interest margin. Net interest income shown elsewhere in this
presentation is GAAP net interest income.
Cautionary Statement Regarding Forward-Looking
Information
We make statements in this news release and related conference
call, and we may from time to time make other statements, regarding
our outlook for financial performance, such as earnings, revenues,
expenses, tax rates, capital and liquidity levels and ratios, asset
levels, asset quality, financial position, and other matters
regarding or affecting us and our future business and operations,
including our sustainability strategy, that are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act. Forward-looking statements are typically identified by
words such as "believe," "plan," "expect," "anticipate," "see,"
"look," "intend," "outlook," "project," "forecast," "estimate,"
"goal," "will," "should" and other similar words and
expressions.
Forward-looking statements are necessarily subject to numerous
assumptions, risks and uncertainties, which change over time.
Future events or circumstances may change our outlook and may also
affect the nature of the assumptions, risks and uncertainties to
which our forward-looking statements are subject. Forward-looking
statements speak only as of the date made. We do not assume any
duty and do not undertake any obligation to update forward-looking
statements. Actual results or future events could differ, possibly
materially, from those anticipated in forward-looking statements,
as well as from historical performance. As a result, we caution
against placing undue reliance on any forward-looking
statements.
Our forward-looking statements are subject to the following
principal risks and uncertainties.
- Our businesses, financial results and balance sheet values are
affected by business and economic conditions, including:
- Changes in interest rates and valuations in debt, equity and
other financial markets,
- Disruptions in the U.S. and global financial markets,
- Actions by the Federal Reserve Board, U.S. Treasury and other
government agencies, including those that impact money supply,
market interest rates and inflation,
- Changes in customer behavior due to changing business and
economic conditions or legislative or regulatory initiatives,
- Changes in customers', suppliers' and other counterparties'
performance and creditworthiness,
- Impacts of sanctions, tariffs and other trade policies of the
U.S. and its global trading partners,
- Impacts of changes in federal, state and local governmental
policy, including on the regulatory landscape, capital markets,
taxes, infrastructure spending and social programs,
- Our ability to attract, recruit and retain skilled employees,
and
- Commodity price volatility.
- Our forward-looking financial statements are subject to the
risk that economic and financial market conditions will be
substantially different than those we are currently expecting and
do not take into account potential legal and regulatory
contingencies. These statements are based on our views that:
- PNC's baseline forecast is for slower economic growth in 2024
as consumer spending growth slows and higher interest rates remain
a drag on the economy. The ongoing strength of the labor market
will continue to support consumer spending. The Federal Open Market
Committee is indicating that it will start to cut the federal funds
rate later this year, with rate cuts supporting economic growth
toward the end of 2024.
- GDP growth this year will be close to trend at below 2%, and
the unemployment rate will increase modestly to somewhat above 4%
by the end of 2024. Inflation will continue to slow as wage
pressures abate, moving back to the Federal Reserve's 2% long-term
objective by the first half of 2025.
- PNC expects the federal funds rate to remain unchanged in the
first part of 2024, between 5.25% and 5.50%, with federal funds
rate cuts starting in mid-2024 with easing inflationary pressures.
PNC expects two federal funds rate cuts in 2024, with the rate
ending this year in a range between 4.75% and 5.00%.
- PNC's ability to take certain capital actions, including
returning capital to shareholders, is subject to PNC meeting or
exceeding minimum capital levels, including a stress capital buffer
established by the Federal Reserve Board in connection with the
Federal Reserve Board's Comprehensive Capital Analysis and Review
(CCAR) process.
- PNC's regulatory capital ratios in the future will depend on,
among other things, PNC's financial performance, the scope and
terms of final capital regulations then in effect and management
actions affecting the composition of PNC's balance sheet. In
addition, PNC's ability to determine, evaluate and forecast
regulatory capital ratios, and to take actions (such as capital
distributions) based on actual or forecasted capital ratios, will
be dependent at least in part on the development, validation and
regulatory review of related models and the reliability of and
risks resulting from extensive use of such models.
Cautionary Statement Regarding Forward-Looking Information
(Continued)
- Legal and regulatory developments could have an impact on our
ability to operate our businesses, financial condition, results of
operations, competitive position, reputation, or pursuit of
attractive acquisition opportunities. Reputational impacts could
affect matters such as business generation and retention,
liquidity, funding, and ability to attract and retain employees.
These developments could include:
- Changes to laws and regulations, including changes affecting
oversight of the financial services industry, changes in the
enforcement and interpretation of such laws and regulations, and
changes in accounting and reporting standards.
- Unfavorable resolution of legal proceedings or other claims and
regulatory and other governmental investigations or other inquiries
resulting in monetary losses, costs, or alterations in our business
practices, and potentially causing reputational harm to PNC.
- Results of the regulatory examination and supervision process,
including our failure to satisfy requirements of agreements with
governmental agencies.
- Costs associated with obtaining rights in intellectual property
claimed by others and of adequacy of our intellectual property
protection in general.
- Business and operating results are affected by our ability to
identify and effectively manage risks inherent in our businesses,
including, where appropriate, through effective use of systems and
controls, third-party insurance, derivatives, and capital
management techniques, and to meet evolving regulatory capital and
liquidity standards.
- Our reputation and business and operating results may be
affected by our ability to appropriately meet or address
environmental, social or governance targets, goals, commitments or
concerns that may arise.
- We grow our business in part through acquisitions and new
strategic initiatives. Risks and uncertainties include those
presented by the nature of the business acquired and strategic
initiative, including in some cases those associated with our entry
into new businesses or new geographic or other markets and risks
resulting from our inexperience in those new areas, as well as
risks and uncertainties related to the acquisition transactions
themselves, regulatory issues, the integration of the acquired
businesses into PNC after closing or any failure to execute
strategic or operational plans.
- Competition can have an impact on customer acquisition, growth
and retention and on credit spreads and product pricing, which can
affect market share, deposits and revenues. Our ability to
anticipate and respond to technological changes can also impact our
ability to respond to customer needs and meet competitive
demands.
- Business and operating results can also be affected by
widespread manmade, natural and other disasters (including severe
weather events), health emergencies, dislocations, geopolitical
instabilities or events, terrorist activities, system failures or
disruptions, security breaches, cyberattacks, international
hostilities, or other extraordinary events beyond PNC's control
through impacts on the economy and financial markets generally or
on us or our counterparties, customers or third-party vendors and
service providers specifically.
We provide greater detail regarding these as well as other
factors in our 2023 Form 10-K, including in the Risk Factors and
Risk Management sections and the Legal Proceedings and Commitments
Notes of the Notes To Consolidated Financial Statements in that
report, and in our subsequent SEC filings. Our forward-looking
statements may also be subject to other risks and uncertainties,
including those we may discuss elsewhere in this news release or in
our SEC filings, accessible on the SEC's website at
www.sec.gov and on our corporate website at
www.pnc.com/secfilings. We have included these web addresses as
inactive textual references only. Information on these websites is
not part of this document.
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SOURCE The PNC Financial Services Group, Inc.