Fourth quarter 2023 net income was
$0.9 billion, $1.85 diluted EPS or $3.16 as adjusted
Grew revenue; increased average loans and
deposits
PITTSBURGH, Jan. 16,
2024 /PRNewswire/ -- The PNC Financial Services
Group, Inc. (NYSE: PNC) today reported:
|
|
|
For the
quarter
|
|
|
For the year
|
|
|
|
|
|
In millions, except per
share data and as noted
|
4Q23
|
3Q23
|
|
|
2023
|
2022
|
|
Fourth Quarter
Highlights
|
Financial
Results
|
|
|
|
|
|
|
|
Comparisons reflect
4Q23 vs. 3Q23
|
Revenue
|
$
5,361
|
$
5,233
|
|
|
$
21,490
|
$ 21,120
|
|
Income
Statement
▪
Revenue increased 2% due to strong
noninterest income growth
▪
Core noninterest expense increased
5% primarily reflecting higher
business activity
–
Core noninterest
expense excludes
$515 million related to the FDIC
special assessment and $150
million of workforce reduction
charges
▪
Provision for credit losses of $232
million
Balance Sheet
▪
Average loans increased 2%
▪
Average deposits grew modestly
▪
ACL to total loans of 1.7% was stable
▪
Net loan charge-offs were $200
million,
or 0.24% annualized to average loans
▪
AOCI improved $2.6 billion to
negative
$7.7 billion, reflecting favorable interest
rate movements
▪
TBV increased to $85.08
▪
CET1 capital ratio of 9.9%
– Repurchased $0.1 billion
of common
shares
|
Noninterest expense
(NIE)
|
4,074
|
3,245
|
|
|
14,012
|
13,170
|
|
Non-core NIE
adjustments
|
665
|
—
|
|
|
665
|
—
|
|
Core NIE
(non-GAAP)
|
3,409
|
3,245
|
|
|
13,347
|
13,170
|
|
Pretax, pre-provision
earnings - as adjusted (non-GAAP)
|
1,952
|
1,988
|
|
|
8,143
|
7,950
|
|
Provision for credit
losses
|
232
|
129
|
|
|
742
|
477
|
|
Net income
|
883
|
1,570
|
|
|
5,647
|
6,113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Common
Share
|
|
|
|
|
|
|
|
Diluted
earnings
|
$ 1.85
|
$ 3.60
|
|
|
$
12.79
|
$
13.85
|
|
Impact from non-core
NIE adjustments
|
1.31
|
—
|
|
|
1.31
|
—
|
|
Diluted earnings - as
adjusted (non-GAAP)
|
3.16
|
3.60
|
|
|
14.10
|
13.85
|
|
Average diluted common
shares outstanding
|
401
|
400
|
|
|
401
|
412
|
|
Book value
|
112.72
|
105.98
|
|
|
112.72
|
99.93
|
|
Tangible book value
(TBV) (non-GAAP)
|
85.08
|
78.16
|
|
|
85.08
|
72.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet &
Credit Quality
|
|
|
|
|
|
|
Average loans
In billions
|
$
324.6
|
$
319.5
|
|
|
$
323.5
|
$
307.7
|
|
Average
deposits In billions
|
423.9
|
422.5
|
|
|
427.1
|
443.4
|
|
Accumulated other
comprehensive income (loss) (AOCI)
In billions
|
(7.7)
|
(10.3)
|
|
|
(7.7)
|
(10.2)
|
|
Net loan
charge-offs
|
200
|
121
|
|
|
710
|
563
|
|
Allowance for credit
losses (ACL) to total loans
|
1.70 %
|
1.70 %
|
|
|
1.70 %
|
1.67 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected
Ratios
|
|
|
|
|
|
|
|
Return on average
common shareholders' equity
|
6.93 %
|
13.65 %
|
|
|
12.35 %
|
13.52 %
|
|
Return on average
assets
|
0.62
|
1.12
|
|
|
1.01
|
1.11
|
|
Net interest margin
(NIM) (non-GAAP)
|
2.66
|
2.71
|
|
|
2.76
|
2.65
|
|
Noninterest income to
total revenue
|
37
|
35
|
|
|
35
|
38
|
|
Efficiency
|
76
|
62
|
|
|
65
|
62
|
|
Efficiency - as
adjusted (non-GAAP)
|
64
|
62
|
|
|
62
|
62
|
|
Common equity Tier 1
(CET1) capital ratio
|
9.9
|
9.8
|
|
|
9.9
|
9.1
|
|
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 of the FDIC special
assessment for the recovery of losses related to the closures
of Silicon Valley Bank (SVB) and Signature Bank as well as
workforce reduction charges incurred in the fourth quarter of
2023. See this and other non-GAAP financial measures in the
Consolidated Financial Highlights accompanying this
release.
|
|
From Bill Demchak, PNC Chairman, President and Chief
Executive Officer:
"During a challenging year for the banking industry, PNC
demonstrated its strength and stability by growing customers,
deepening relationships and managing the balance sheet for
long-term success. We grew revenue, controlled core expenses, added
to our loan portfolio and maintained strong credit metrics. We are
well positioned for the year ahead to grow our businesses and
deliver value for our stakeholders."
Income Statement Highlights
Fourth quarter 2023 compared with third quarter
2023
- Total revenue of $5.4 billion
increased $128 million, or 2%, due to
higher noninterest income.
- Net interest income of $3.4
billion was relatively stable.
- Net interest margin of 2.66% decreased 5 basis points.
- Noninterest income of $2.0
billion increased $143
million, or 8%.
- Fee income of $1.8 billion
increased $99 million, or 6%,
primarily due to higher capital markets and advisory fees.
- Other noninterest income of $138
million increased $44 million,
or 47%, and included favorable valuation adjustments and gains on
sales. The fourth quarter also included negative Visa Class B
derivative fair value adjustments of $100
million primarily related to the extension of anticipated
litigation resolution timing. Visa Class B derivative fair value
adjustments were negative $51 million
in the third quarter.
- Noninterest expense of $4.1
billion increased $829
million, or 26%, and included $515
million related to the FDIC special assessment as well as
$150 million of workforce reduction
charges. Excluding the impact of these items, core noninterest
expense was $3.4 billion increasing
$164 million, or 5%, reflecting the
impact of increased business activity, seasonality and asset
impairments.
- Provision for credit losses was $232
million in the fourth quarter reflecting the impact of
portfolio activity. The third quarter of 2023 included a provision
for credit losses of $129
million.
- Net income of $0.9 billion
decreased $687 million, or 44% and
included $525 million of post-tax
expenses related to the FDIC special assessment and workforce
reduction charges.
- The effective tax rate was 16.3% for the fourth quarter and
15.5% for the third quarter.
Balance Sheet Highlights
Fourth quarter 2023 compared with third quarter
2023 or December 31, 2023 compared with September 30,
2023
- Average loans of $324.6 billion
increased $5.1 billion, or 2%.
- Average commercial loans of $222.6
billion increased $4.9
billion, driven by the acquisition of capital commitment
facilities from Signature Bridge Bank, N.A. on October 2, 2023, partially offset by lower
utilization of loan commitments and paydowns outpacing new
production.
- Average consumer loans of $102.0
billion were relatively stable.
- Credit quality performance:
- Delinquencies of $1.4 billion
increased $97 million, or 8%, due to
higher consumer and commercial loan delinquencies.
- Total nonperforming loans of $2.2
billion increased $57 million,
or 3%, due to higher commercial nonperforming loans, partially
offset by lower consumer nonperforming loans.
- Net loan charge-offs of $200
million increased $79 million,
reflecting higher commercial and consumer net loan
charge-offs.
- The allowance for credit losses of $5.5
billion was relatively unchanged. The allowance for credit
losses to total loans was 1.70% at both December 31, 2023 and September 30, 2023.
- Average deposits of $423.9
billion grew $1.4 billion as
seasonal growth in commercial deposits more than offset a modest
decline in consumer deposits.
- Deposits at December 31, 2023 of
$421.4 billion decreased $2.2 billion, or 1%, reflecting a decline in
commercial deposits at year end.
- Average investment securities of $137.4
billion decreased $2.3
billion, or 2%.
- Average Federal Reserve Bank balances of $42.2 billion increased $4.3 billion.
- Federal Reserve Bank balances at December 31, 2023 were $43.3 billion.
- Average borrowed funds of $72.9
billion increased $5.4
billion, or 8%, due to higher Federal Home Loan Bank
borrowings and parent company senior debt issuances.
- PNC maintained a strong capital and liquidity position.
- On January 4, 2024, the PNC
board of directors declared a quarterly cash dividend on common
stock of $1.55 per share payable on
February 5, 2024.
- PNC returned $0.7 billion of
capital to shareholders, reflecting $0.6
billion of dividends on common shares and $0.1 billion of common share repurchases,
representing 0.5 million shares.
- The Basel III common equity Tier 1 capital ratio was an
estimated 9.9% at December 31, 2023
and 9.8% at September 30, 2023.
- PNC's average LCR for the three months ended December 31, 2023 was 107%, exceeding the
regulatory minimum requirement throughout the quarter.
- PNC Bank average LCR for the three months ended December 31, 2023 was 127%.
Earnings
Summary
|
|
|
|
|
|
|
In millions, except
per share data
|
|
4Q23
|
|
3Q23
|
|
4Q22
|
Net income
|
|
$
883
|
|
$
1,570
|
|
$
1,548
|
Net income attributable
to
diluted common shares -
as reported
|
|
$
740
|
|
$
1,440
|
|
$
1,400
|
Net income attributable
to
diluted common shares -
as adjusted (non-GAAP)
|
|
$
1,265
|
|
$
1,440
|
|
$
1,400
|
Diluted earnings per
common share - as reported
|
|
$
1.85
|
|
$
3.60
|
|
$
3.47
|
Diluted earnings per
common share - as adjusted (non-GAAP)
|
|
$
3.16
|
|
$
3.60
|
|
$
3.47
|
Average diluted common
shares outstanding
|
|
401
|
|
400
|
|
404
|
Cash dividends declared
per common share
|
|
$
1.55
|
|
$
1.55
|
|
$
1.50
|
|
|
|
|
|
|
|
See non-GAAP
financial measures included in the Consolidated Financial
Highlights accompanying this news release
|
Fourth quarter 2023 net income of $0.9
billion, or $1.85 per diluted
common share, included $525 million
of post-tax expenses pertaining to the FDIC special assessment for
the recovery of losses related to the closure of SVB and Signature
Bank as well as workforce reduction charges. Excluding the impact
of these items, adjusted diluted earnings per common share was
$3.16.
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. Information in this news release, including the
financial tables, is unaudited.
CONSOLIDATED REVENUE
REVIEW
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
4Q23 vs
|
4Q23 vs
|
In
millions
|
4Q23
|
|
3Q23
|
|
4Q22
|
3Q23
|
4Q22
|
Net interest
income
|
$
3,403
|
|
$
3,418
|
|
$
3,684
|
—
|
(8) %
|
Noninterest
income
|
1,958
|
|
1,815
|
|
2,079
|
8 %
|
(6) %
|
Total
revenue
|
$
5,361
|
|
$
5,233
|
|
$
5,763
|
2 %
|
(7) %
|
|
|
|
|
|
|
|
|
Total revenue for the fourth quarter of 2023 increased
$128 million from the third quarter
of 2023 due to higher noninterest income. Compared with the fourth
quarter of 2022, total revenue declined $402
million due to lower net interest income and noninterest
income.
Net interest income of $3.4
billion for the fourth quarter of 2023 was relatively stable
compared to the third quarter of 2023. Net interest margin was
2.66% in the fourth quarter of 2023, decreasing 5 basis points in
comparison with the third quarter of 2023.
Compared to the fourth quarter of 2022, net interest income
decreased $281 million and net
interest margin declined 26 basis points. In both comparisons, the
benefit of higher interest-earning asset yields was more than
offset by increased funding costs.
Noninterest
Income
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
4Q23 vs
|
4Q23 vs
|
In
millions
|
4Q23
|
|
3Q23
|
|
4Q22
|
3Q23
|
4Q22
|
Asset management and
brokerage
|
$
360
|
|
$
348
|
|
$
345
|
3 %
|
4 %
|
Capital markets and
advisory
|
309
|
|
168
|
|
336
|
84 %
|
(8) %
|
Card and cash
management
|
688
|
|
689
|
|
671
|
—
|
3 %
|
Lending and deposit
services
|
314
|
|
315
|
|
296
|
—
|
6 %
|
Residential and
commercial mortgage
|
149
|
|
201
|
|
184
|
(26) %
|
(19) %
|
Other
|
138
|
|
94
|
|
247
|
47 %
|
(44) %
|
Total noninterest
income
|
$ 1,958
|
|
$ 1,815
|
|
$ 2,079
|
8 %
|
(6) %
|
|
Noninterest income for the fourth quarter of 2023 increased
$143 million compared with the third
quarter of 2023. Asset management and brokerage revenue increased
$12 million and included the impact
from favorable market conditions. Capital markets and advisory
revenue grew $141 million, driven by
higher merger and acquisition advisory fees. Residential and
commercial mortgage revenue declined $52
million due to a $61 million
decrease in mortgage servicing rights valuation, net of economic
hedge. Other noninterest income increased $44 million, and included positive valuation
adjustments and gains on sales. The fourth quarter also included
negative Visa Class B derivative fair value adjustments of
$100 million primarily related to the
extension of anticipated litigation resolution timing. Visa Class B
derivative fair value adjustments were negative $51 million in the third quarter.
Noninterest income for the fourth quarter of 2023 decreased
$121 million from the fourth quarter
of 2022. Asset management and brokerage revenue grew $15 million and included the impact from
favorable market conditions. Capital markets and advisory revenue
declined $27 million driven by lower
trading revenue. Card and cash management fees increased
$17 million due to growth in treasury
management product revenue. Lending and deposit services increased
$18 million, reflecting increased
customer activity. Residential and commercial mortgage revenue
declined $35 million primarily due to
a decrease in mortgage servicing rights valuation, net of economic
hedge. Other noninterest income decreased $109 million, primarily driven by lower private
equity revenue. The fourth quarter of 2022 also included negative
Visa Class B derivative fair value adjustments of $41 million.
CONSOLIDATED EXPENSE
REVIEW
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest
Expense
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
4Q23 vs
|
4Q23 vs
|
In
millions
|
4Q23
|
|
3Q23
|
|
4Q22
|
3Q23
|
4Q22
|
Personnel
|
$
1,983
|
|
$
1,773
|
|
$
1,943
|
12 %
|
2 %
|
Occupancy
|
243
|
|
244
|
|
247
|
—
|
(2) %
|
Equipment
|
365
|
|
347
|
|
369
|
5 %
|
(1) %
|
Marketing
|
74
|
|
93
|
|
106
|
(20) %
|
(30) %
|
Other
|
1,409
|
|
788
|
|
809
|
79 %
|
74 %
|
Total noninterest
expense
|
$
4,074
|
|
$
3,245
|
|
$
3,474
|
26 %
|
17 %
|
Non-core noninterest
expense adjustments
|
665
|
|
—
|
|
—
|
|
|
Core noninterest
expense (non-GAAP)
|
$
3,409
|
|
$
3,245
|
|
$
3,474
|
5 %
|
(2) %
|
See non-GAAP
financial measures included in the Consolidated Financial
Highlights accompanying this news release
|
Noninterest expense for the fourth quarter of 2023 increased
$829 million in comparison to the
third quarter of 2023, and included $515
million pertaining to the FDIC special assessment for the
recovery of losses related to the closure of SVB and Signature Bank
as well as $150 million of workforce
reduction charges. Excluding the impact of these items, core
noninterest expense was $3.4 billion
for the fourth quarter of 2023, increasing $164 million, or 5%, reflecting the impact of
increased business activity, seasonality and asset impairments.
Noninterest expense increased $600
million from the fourth quarter of 2022 due to the FDIC
special assessment and workforce reduction charges, partially
offset by a continued focus on expense management.
The effective tax rate was 16.3% for the fourth quarter of 2023,
15.5% for the third quarter of 2023 and 17.7% for the fourth
quarter of 2022.
CONSOLIDATED BALANCE SHEET REVIEW
Average total assets were $562.3
billion in the fourth quarter of 2023 compared with
$555.0 billion in the third quarter
of 2023 and $557.2 billion in the
fourth quarter of 2022. In both comparisons, the increase was
attributable to higher loans and Federal Reserve Bank balances,
partially offset by lower investment securities.
Average
Loans
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
4Q23 vs
|
4Q23 vs
|
In
billions
|
4Q23
|
|
3Q23
|
|
4Q22
|
3Q23
|
4Q22
|
Commercial
|
$
222.6
|
|
$
217.7
|
|
$
221.6
|
2 %
|
—
|
Consumer
|
102.0
|
|
101.8
|
|
100.3
|
—
|
2 %
|
Total
|
$
324.6
|
|
$
319.5
|
|
$
321.9
|
2 %
|
1 %
|
|
|
|
|
|
|
|
|
Average loans for the fourth quarter of 2023 increased
$5.1 billion compared to the third
quarter of 2023 and $2.7 billion in
comparison to the fourth quarter of 2022. Average commercial loans
increased $4.9 billion and
$1.0 billion compared to the third
quarter of 2023 and the fourth quarter of 2022, respectively,
driven by the acquisition of capital commitment facilities from
Signature Bridge Bank, N.A. on October
2, 2023, partially offset by lower utilization of loan
commitments and paydowns outpacing new production. Average consumer
loans were relatively stable compared to the third quarter of 2023.
Compared to the fourth quarter of 2022, average consumer loans
increased $1.7 billion reflecting
higher residential mortgage, home equity, and credit card
loans.
Average Investment
Securities
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
4Q23 vs
|
4Q23 vs
|
In
billions
|
4Q23
|
|
3Q23
|
|
4Q22
|
3Q23
|
4Q22
|
Available for
sale
|
$
46.1
|
|
$
46.5
|
|
$
49.7
|
(1) %
|
(7) %
|
Held to
maturity
|
91.3
|
|
93.2
|
|
93.2
|
(2) %
|
(2) %
|
Total
|
$
137.4
|
|
$
139.7
|
|
$
142.9
|
(2) %
|
(4) %
|
|
|
|
|
|
|
|
|
Average investment securities for the fourth quarter of 2023 of
$137.4 billion declined $2.3 billion and $5.5
billion from the third quarter of 2023 and the fourth
quarter of 2022, respectively, as limited purchase activity was
more than offset by portfolio paydowns and maturities. The
duration of the investment securities portfolio was 4.1 years at
December 31, 2023, 4.2 years at September 30, 2023 and
4.5 years at December 31, 2022.
Net unrealized losses on available for sale securities were
$3.6 billion at December 31, 2023 decreasing from $5.4 billion at September
30, 2023 and $4.4 billion at
December 31, 2022. In both
comparisons, the decrease primarily reflected the favorable impact
of interest rate movements.
Average Federal Reserve Bank balances for the fourth quarter of
2023 were $42.2 billion, increasing
$4.3 billion from the third quarter
of 2023, primarily due to higher borrowed funds and lower
investment securities, partially offset by higher loans
outstanding. Average Federal Reserve Bank balances increased
$12.2 billion from the fourth quarter
of 2022, primarily due to higher borrowed funds and a decline in
investment securities, partially offset by lower deposits.
Federal Reserve Bank balances at December 31, 2023 were $43.3 billion, increasing $2.2 billion from September 30, 2023.
Average
Deposits
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
4Q23 vs
|
4Q23 vs
|
In
billions
|
4Q23
|
|
3Q23
|
|
4Q22
|
3Q23
|
4Q22
|
Commercial
|
$
207.0
|
|
$
204.7
|
|
$
215.8
|
1 %
|
(4) %
|
Consumer
|
216.9
|
|
217.8
|
|
219.1
|
—
|
(1) %
|
Total
|
$
423.9
|
|
$
422.5
|
|
$
434.9
|
—
|
(3) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IB % of total avg.
deposits
|
75 %
|
|
74 %
|
|
69 %
|
|
|
NIB % of total avg.
deposits
|
25 %
|
|
26 %
|
|
31 %
|
|
|
IB -
Interest-bearing
NIB -
Noninterest-bearing
|
|
|
|
|
|
|
|
|
Average deposits for the fourth quarter of 2023 were
$423.9 billion, increasing
$1.4 billion from the third quarter
of 2023 as seasonal growth in commercial deposits more than offset
a modest decline in consumer deposits. Compared to the fourth
quarter of 2022, average deposits decreased $11.0 billion due to lower commercial and
consumer deposits, which included 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 due to the continued shift into
interest-bearing deposit products as interest rates have risen.
Deposits at December 31, 2023 of
$421.4 billion decreased $2.2 billion, or 1%, from September 30, 2023 reflecting a decline in
commercial deposits at year end.
Average Borrowed
Funds
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
4Q23 vs
|
4Q23 vs
|
In
billions
|
4Q23
|
|
3Q23
|
|
4Q22
|
3Q23
|
4Q22
|
Total
|
$
72.9
|
|
$
67.5
|
|
$
59.2
|
8 %
|
23 %
|
|
|
|
|
|
|
|
|
Average borrowed funds of $72.9
billion in the fourth quarter of 2023 increased $5.4 billion compared to the third quarter of
2023 and $13.7 billion compared to
the fourth quarter of 2022. In both comparisons, the increase was
due to higher Federal Home Loan Bank borrowings and parent company
senior debt issuances.
Capital
|
December 31,
2023
|
|
September 30,
2023
|
|
December 31,
2022
|
|
|
|
|
|
|
|
Common shareholders'
equity In billions
|
$
44.9
|
|
$
42.2
|
|
$
40.0
|
|
|
Accumulated other
comprehensive income (loss)
In
billions
|
$
(7.7)
|
|
$
(10.3)
|
|
$
(10.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basel III common equity
Tier 1 capital ratio *
|
9.9 %
|
|
9.8 %
|
|
9.1 %
|
|
|
Basel III common equity
Tier 1 fully implemented capital ratio
(estimated)
|
9.8 %
|
|
9.7 %
|
|
8.9 %
|
|
|
*December 31,
2023 ratio is estimated
|
|
|
|
|
|
|
|
|
|
|
PNC maintained a strong capital position. Common shareholders'
equity at December 31, 2023 increased $2.7 billion from September 30, 2023, driven
by an improvement in accumulated other comprehensive income and the
benefit of net income, partially offset by dividends paid and share
repurchases.
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
December 31, 2023 improved $2.6
billion from September 30, 2023 and $2.5 billion from December 31, 2022. In both
comparisons, the improvement reflected securities and swaps
valuation changes related to the favorable impact of interest rate
movements and the continued accretion of unrealized losses.
In the fourth quarter of 2023, PNC returned $0.7 billion of capital to shareholders,
reflecting $0.6 billion of dividends
on common shares and $0.1 billion of
common share repurchases, representing 0.5 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 45% were still
available for repurchase at December 31, 2023.
In light of the Federal banking agencies proposed rules to
adjust the Basel III capital framework, share repurchase activity
is expected to remain modest during the first quarter of 2024. 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 January 4, 2024, the PNC board
of directors declared a quarterly cash dividend on common stock of
$1.55 per share payable on
February 5, 2024.
At December 31, 2023, 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
|
|
December 31,
2023
|
September 30,
2023
|
December 31,
2022
|
12/31/23 vs
|
12/31/23 vs
|
In
millions
|
09/30/23
|
12/31/22
|
Provision for credit
losses
|
$
232
|
$
129
|
$
408
|
$
103
|
$
(176)
|
Net loan
charge-offs
|
$
200
|
$
121
|
$
224
|
65 %
|
(11) %
|
Allowance for credit
losses (a)
|
$
5,454
|
$
5,407
|
$
5,435
|
1 %
|
—
|
Total delinquencies
(b)
|
$
1,384
|
$
1,287
|
$
1,490
|
8 %
|
(7) %
|
Nonperforming
loans
|
$
2,180
|
$
2,123
|
$
1,985
|
3 %
|
10 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs to
average loans (annualized)
|
0.24 %
|
0.15 %
|
0.28 %
|
|
|
Allowance for credit
losses to total loans
|
1.70 %
|
1.70 %
|
1.67 %
|
|
|
Nonperforming loans to
total loans
|
0.68 %
|
0.67 %
|
0.61 %
|
|
|
(a) Excludes
allowances for investment securities and other financial
assets
(b) Total
delinquencies represent accruing loans more than 30 days past
due
|
Provision for credit losses was $232
million in the fourth quarter of 2023 reflecting the impact
of portfolio activity. The third quarter of 2023 included a
provision for credit losses of $129
million.
Net loan charge-offs of $200
million in the fourth quarter of 2023 increased $79 million compared to the third quarter of
2023, reflecting higher commercial and consumer net loan
charge-offs. Compared to the fourth quarter of 2022, net loan
charge-offs decreased $24 million,
primarily reflecting lower commercial net loan charge-offs.
The allowance for credit losses was $5.5
billion at December 31, 2023 and $5.4 billion at both September 30, 2023 and
December 31, 2022. The allowance for credit losses as a
percentage of total loans was 1.70% at both December 31, 2023
and September 30, 2023 and 1.67% at December 31,
2022.
Delinquencies at December 31, 2023 were $1.4 billion, increasing $97 million from September 30, 2023 due to
higher consumer and commercial loan delinquencies. Compared to
December 31, 2022, delinquencies decreased $106 million due to lower commercial and consumer
loan delinquencies.
Nonperforming loans at December 31,
2023 were $2.2 billion,
increasing $57 million from
September 30, 2023 and $195 million from December
31, 2022. In both comparisons, the increase was driven by
higher commercial nonperforming loans, partially offset by lower
consumer nonperforming loans.
BUSINESS SEGMENT
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
Business Segment
Income (Loss)
|
|
|
|
|
|
In
millions
|
4Q23
|
|
3Q23
|
|
4Q22
|
Retail
Banking
|
$ 1,073
|
|
$ 1,094
|
|
$
752
|
Corporate &
Institutional Banking
|
1,213
|
|
960
|
|
982
|
Asset Management
Group
|
72
|
|
73
|
|
52
|
Other
|
(1,494)
|
|
(573)
|
|
(258)
|
Net income excluding
noncontrolling interests
|
$
864
|
|
$ 1,554
|
|
$ 1,528
|
|
|
|
|
|
|
Retail
Banking
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
4Q23 vs
|
|
4Q23 vs
|
In
millions
|
4Q23
|
|
3Q23
|
|
4Q22
|
|
3Q23
|
|
4Q22
|
Net interest
income
|
$ 2,669
|
|
$ 2,576
|
|
$ 2,330
|
|
$
93
|
|
$
339
|
Noninterest
income
|
$
722
|
|
$
784
|
|
$
749
|
|
$
(62)
|
|
$
(27)
|
Noninterest
expense
|
$ 1,848
|
|
$ 1,876
|
|
$ 1,892
|
|
$
(28)
|
|
$
(44)
|
Provision for credit
losses
|
$
130
|
|
$
42
|
|
$
193
|
|
$
88
|
|
$
(63)
|
Earnings
|
$ 1,073
|
|
$ 1,094
|
|
$
752
|
|
$
(21)
|
|
$
321
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$ 97.4
|
|
$ 97.4
|
|
$ 96.6
|
|
—
|
|
$
0.8
|
Average
deposits
|
$ 251.3
|
|
$ 253.7
|
|
$ 259.8
|
|
$
(2.4)
|
|
$
(8.5)
|
|
|
|
|
|
|
|
|
|
|
Net loan charge-offs
In millions
|
$
128
|
|
$
114
|
|
$
108
|
|
$
14
|
|
$
20
|
|
|
|
|
|
|
|
|
|
|
Retail Banking Highlights
Fourth quarter 2023 compared with third quarter
2023
- Earnings decreased 2%, driven by a higher provision for credit
losses and lower noninterest income, partially offset by higher net
interest income and lower noninterest expense.
- Noninterest income decreased 8%, due to negative Visa Class B
derivative fair value adjustments of $100
million and lower residential mortgage banking activity,
partially offset by increased brokerage fees reflecting the impact
from favorable market conditions. The third quarter included
negative Visa Class B derivative fair value adjustments of
$51 million.
- Noninterest expense decreased 1%, primarily driven by a decline
in marketing spend.
- Provision for credit losses of $130
million in the fourth quarter of 2023 reflected the impact
of portfolio activity.
- Average loans were stable.
- Average deposits decreased 1%, as consumer spending levels have
remained elevated.
Fourth quarter 2023 compared with fourth quarter
2022
- Earnings increased 43%, primarily due to higher net interest
income.
- Noninterest income decreased 4%, driven by negative Visa Class
B derivative fair value adjustments, partially offset by higher
lending and deposit related customer activity and increased
brokerage fees. The fourth quarter of 2022 included negative Visa
Class B derivative fair value adjustments of $41 million.
- Noninterest expense decreased 2%, driven by lower personnel
expense and a continued focus on expense management.
- Average loans increased 1%, as growth in commercial, home
equity, and credit card loans was largely offset by declines in
residential real estate, education and other consumer loans.
- Average deposits decreased 3%, reflecting the impact of
quantitative tightening by the Federal Reserve and increased
customer spending.
Corporate &
Institutional Banking
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
4Q23 vs
|
|
4Q23 vs
|
In
millions
|
4Q23
|
|
3Q23
|
|
4Q22
|
|
3Q23
|
|
4Q22
|
Net interest
income
|
$ 1,642
|
|
$ 1,419
|
|
$ 1,489
|
|
$
223
|
|
$
153
|
Noninterest
income
|
$
995
|
|
$
835
|
|
$
962
|
|
$
160
|
|
$
33
|
Noninterest
expense
|
$
975
|
|
$
895
|
|
$
990
|
|
$
80
|
|
$
(15)
|
Provision for credit
losses
|
$
115
|
|
$
102
|
|
$
183
|
|
$
13
|
|
$
(68)
|
Earnings
|
$ 1,213
|
|
$
960
|
|
$
982
|
|
$
253
|
|
$
231
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$ 208.1
|
|
$ 202.8
|
|
$ 207.1
|
|
$
5.3
|
|
$
1.0
|
Average
deposits
|
$ 144.5
|
|
$ 141.7
|
|
$ 147.3
|
|
$
2.8
|
|
$
(2.8)
|
|
|
|
|
|
|
|
|
|
|
Net loan charge-offs
In millions
|
$
76
|
|
$
12
|
|
$
100
|
|
$
64
|
|
$
(24)
|
|
|
|
|
|
|
|
|
|
|
Corporate & Institutional Banking Highlights
Fourth quarter 2023 compared with third quarter
2023
- Earnings increased 26%, driven by higher net interest and
noninterest income, partially offset by higher noninterest expense
and an increase in provision for credit losses.
- Noninterest income increased 19%, due to higher capital markets
and advisory fees and gains on sales, partially offset by a
decrease in commercial mortgage servicing rights valuation, net of
economic hedge.
- Noninterest expense increased 9%, reflecting higher variable
compensation associated with increased business activity.
- Provision for credit losses of $115
million in the fourth quarter of 2023 reflected the impact
of portfolio activity.
- Average loans increased 3%, driven by the acquisition of
capital commitment facilities from Signature Bridge Bank, N.A. on
October 2, 2023, partially offset by
lower utilization of loan commitments and paydowns outpacing new
production.
- Average deposits increased 2%, reflecting seasonality.
Fourth quarter 2023 compared with fourth quarter
2022
- Earnings increased 24%, due to higher net interest and
noninterest income, a lower provision for credit losses and a
decline in noninterest expense.
- Noninterest income increased 3%, driven by higher capital
markets and advisory fees and growth in treasury management product
revenue, partially offset by lower commercial mortgage banking
activities.
- Noninterest expense decreased 2%, reflecting a continued focus
on expense management.
- Average loans modestly increased, driven by the acquisition of
capital commitment facilities from Signature Bridge Bank, N.A. on
October 2, 2023, partially offset by
lower utilization of loan commitments and paydowns outpacing new
production.
- Average deposits decreased 2%, and included the impact of
quantitative tightening by the Federal Reserve.
Asset Management
Group
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
4Q23 vs
|
|
4Q23 vs
|
In
millions
|
4Q23
|
|
3Q23
|
|
4Q22
|
|
3Q23
|
|
4Q22
|
Net interest
income
|
$ 156
|
|
$ 139
|
|
$ 152
|
|
$
17
|
|
$
4
|
Noninterest
income
|
$ 224
|
|
$ 223
|
|
$ 223
|
|
$
1
|
|
$
1
|
Noninterest
expense
|
$ 284
|
|
$ 271
|
|
$ 291
|
|
$
13
|
|
$
(7)
|
Provision for
(recapture of) credit losses
|
$
2
|
|
$
(4)
|
|
$
17
|
|
$
6
|
|
$
(15)
|
Earnings
|
$
72
|
|
$
73
|
|
$
52
|
|
$
(1)
|
|
$
20
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Discretionary client
assets under management
|
$ 189
|
|
$ 176
|
|
$ 173
|
|
$
13
|
|
$
16
|
Nondiscretionary
client assets under administration
|
$ 179
|
|
$ 170
|
|
$ 152
|
|
$
9
|
|
$
27
|
Client assets under
administration at quarter end
|
$ 368
|
|
$ 346
|
|
$ 325
|
|
$
22
|
|
$
43
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$ 16.1
|
|
$ 15.7
|
|
$ 14.5
|
|
$
0.4
|
|
$
1.6
|
Average
deposits
|
$ 28.2
|
|
$ 27.2
|
|
$ 27.8
|
|
$
1.0
|
|
$
0.4
|
|
|
|
|
|
|
|
|
|
|
Net loan charge-offs
(recoveries) In millions
|
$
(1)
|
|
—
|
|
$
18
|
|
$
(1)
|
|
$
(19)
|
|
|
|
|
|
|
|
|
|
|
Asset Management Group Highlights
Fourth quarter 2023 compared with third quarter
2023
- Earnings decreased 1%, primarily due to higher noninterest
expense and a provision for credit losses, partially offset by
higher net interest income.
- Noninterest income was largely stable.
- Noninterest expense increased 5%, and included higher personnel
costs and marketing spend.
- Discretionary client assets under management increased 7%,
driven by higher spot equity markets.
- Average loans increased 3%, due to growth in residential
mortgage loans.
- Average deposits increased 4%, reflecting growth in deposit
sweep balances.
Fourth quarter 2023 compared with fourth quarter
2022
- Earnings increased 38%, primarily driven by a lower provision
for credit losses, a decline in noninterest expense and higher net
interest income.
- Noninterest income was relatively stable.
- Noninterest expense decreased 2%, reflecting a continued focus
on expense management.
- Discretionary client assets under management increased 9%,
driven by higher spot equity markets.
- Average loans increased 11%, driven by growth in residential
mortgage loans.
- Average deposits increased 1%, reflecting growth in deposit
sweep and CD balances, partially offset by the impact of
quantitative tightening by the Federal Reserve and the 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, certain corporate overhead, tax
adjustments that are not allocated to business segments, exited
businesses and differences between business segment performance
reporting and financial statement reporting under generally
accepted accounting principles.
CONFERENCE CALL AND SUPPLEMENTAL FINANCIAL
INFORMATION
PNC Chairman, President 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
11:00 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 (800)
728-2056 and (312) 429-0440 (international) and Internet access to
the live audio listen-only webcast of the call is available at
www.pnc.com/investorevents. PNC's fourth quarter 2023 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 (800) 633-8284 and (402) 977-9140 (international),
Conference ID 22028514 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:
Timothy
Miller
(412) 762-4550
media.relations@pnc.com
INVESTORS:
Bryan Gill
(412) 768-4143
investor.relations@pnc.com
[TABULAR MATERIAL FOLLOWS]
The PNC Financial
Services Group, Inc.
|
Consolidated
Financial Highlights (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL
RESULTS
|
|
Three months
ended
|
|
|
|
Year ended
|
Dollars in millions,
except per share data
|
|
December 31
|
|
September 30
|
|
December 31
|
|
|
|
December 31
|
|
December 31
|
|
|
2023
|
|
2023
|
|
2022
|
|
|
|
2023
|
|
2022
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
|
$ 3,403
|
|
$ 3,418
|
|
$ 3,684
|
|
|
|
$
13,916
|
|
$
13,014
|
Noninterest
income
|
|
1,958
|
|
1,815
|
|
2,079
|
|
|
|
7,574
|
|
8,106
|
Total
revenue
|
|
5,361
|
|
5,233
|
|
5,763
|
|
|
|
21,490
|
|
21,120
|
Provision for credit
losses
|
|
232
|
|
129
|
|
408
|
|
|
|
742
|
|
477
|
Noninterest
expense
|
|
4,074
|
|
3,245
|
|
3,474
|
|
|
|
14,012
|
|
13,170
|
Income before income
taxes and noncontrolling interests
|
|
$ 1,055
|
|
$ 1,859
|
|
$ 1,881
|
|
|
|
$ 6,736
|
|
$ 7,473
|
Income taxes
|
|
172
|
|
289
|
|
333
|
|
|
|
1,089
|
|
1,360
|
Net income
|
|
$
883
|
|
$ 1,570
|
|
$ 1,548
|
|
|
|
$ 5,647
|
|
$ 6,113
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests
|
|
19
|
|
16
|
|
20
|
|
|
|
69
|
|
72
|
Preferred stock
dividends (a)
|
|
118
|
|
104
|
|
120
|
|
|
|
417
|
|
301
|
Preferred stock
discount accretion and redemptions
|
|
2
|
|
2
|
|
1
|
|
|
|
8
|
|
5
|
Net income attributable
to common shareholders
|
|
$
744
|
|
$ 1,448
|
|
$ 1,407
|
|
|
|
$ 5,153
|
|
$ 5,735
|
Per Common
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ 1.85
|
|
$ 3.60
|
|
$ 3.47
|
|
|
|
$ 12.80
|
|
$ 13.86
|
Diluted
|
|
$ 1.85
|
|
$ 3.60
|
|
$ 3.47
|
|
|
|
$ 12.79
|
|
$ 13.85
|
Cash dividends declared
per common share
|
|
$ 1.55
|
|
$ 1.55
|
|
$ 1.50
|
|
|
|
$ 6.10
|
|
$ 5.75
|
Effective tax rate
(b)
|
|
16.3 %
|
|
15.5 %
|
|
17.7 %
|
|
|
|
16.2 %
|
|
18.2 %
|
PERFORMANCE
RATIOS
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin
(c)
|
|
2.66 %
|
|
2.71 %
|
|
2.92 %
|
|
|
|
2.76 %
|
|
2.65 %
|
Noninterest income to
total revenue
|
|
37 %
|
|
35 %
|
|
36 %
|
|
|
|
35 %
|
|
38 %
|
Efficiency
(d)
|
|
76 %
|
|
62 %
|
|
60 %
|
|
|
|
65 %
|
|
62 %
|
Return on:
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common
shareholders' equity
|
|
6.93 %
|
|
13.65 %
|
|
14.19 %
|
|
|
|
12.35 %
|
|
13.52 %
|
Average
assets
|
|
0.62 %
|
|
1.12 %
|
|
1.10 %
|
|
|
|
1.01 %
|
|
1.11 %
|
|
(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
December 31, 2023, September 30, 2023 and
December 31, 2022 were $36 million, $36 million and $36
million, respectively. The taxable-equivalent adjustments to net
interest income for the twelve months ended December 31,
2023 and December 31, 2022 were $147 million and $112 million,
respectively.
|
(d)
|
Calculated as
noninterest expense divided by total revenue.
|
The PNC Financial
Services Group, Inc.
|
Consolidated
Financial Highlights (Unaudited)
|
|
|
|
|
|
|
|
December 31
|
|
September 30
|
|
December 31
|
|
2023
|
|
2023
|
|
2022
|
BALANCE SHEET
DATA
|
|
|
|
|
|
Dollars in millions,
except per share data and as noted
|
|
|
|
|
|
Assets
|
$
561,580
|
|
$
557,334
|
|
$
557,263
|
Loans (a)
|
$
321,508
|
|
$
318,416
|
|
$
326,025
|
Allowance for loan and
lease losses
|
$
4,791
|
|
$
4,767
|
|
$
4,741
|
Interest-earning
deposits with banks
|
$
43,804
|
|
$
41,484
|
|
$
27,320
|
Investment
securities
|
$
132,569
|
|
$
132,387
|
|
$
139,334
|
Total
deposits
|
$
421,418
|
|
$
423,609
|
|
$
436,282
|
Borrowed funds
(a)
|
$
72,737
|
|
$
66,167
|
|
$
58,713
|
Allowance for unfunded
lending related commitments
|
$
663
|
|
$
640
|
|
$
694
|
Total shareholders'
equity
|
$
51,105
|
|
$
49,454
|
|
$
45,774
|
Common shareholders'
equity
|
$
44,864
|
|
$
42,215
|
|
$
40,028
|
Accumulated other
comprehensive income (loss)
|
$
(7,712)
|
|
$
(10,261)
|
|
$
(10,172)
|
Book value per common
share
|
$
112.72
|
|
$
105.98
|
|
$
99.93
|
Tangible book value per
common share (non-GAAP) (b)
|
$
85.08
|
|
$
78.16
|
|
$
72.12
|
Period end common
shares outstanding (In millions)
|
398
|
|
398
|
|
401
|
Loans to
deposits
|
76 %
|
|
75 %
|
|
75 %
|
Common shareholders'
equity to total assets
|
8.0 %
|
|
7.6 %
|
|
7.2 %
|
CLIENT ASSETS (In
billions)
|
|
|
|
|
|
Discretionary client
assets under management
|
$
189
|
|
$
176
|
|
$
173
|
Nondiscretionary client
assets under administration
|
179
|
|
170
|
|
152
|
Total client assets
under administration
|
368
|
|
346
|
|
325
|
Brokerage account
client assets
|
80
|
|
78
|
|
74
|
Total client
assets
|
$
448
|
|
$
424
|
|
$
399
|
CAPITAL
RATIOS
|
|
|
|
|
|
Basel III (c)
(d)
|
|
|
|
|
|
Common equity
Tier 1
|
9.9 %
|
|
9.8 %
|
|
9.1 %
|
Common equity
Tier 1 fully implemented (e)
|
9.8 %
|
|
9.7 %
|
|
8.9 %
|
Tier 1
risk-based
|
11.3 %
|
|
11.5 %
|
|
10.4 %
|
Total capital
risk-based
|
13.2 %
|
|
13.4 %
|
|
12.3 %
|
Leverage
|
8.7 %
|
|
8.9 %
|
|
8.2 %
|
Supplementary leverage
|
7.2 %
|
|
7.6 %
|
|
6.9 %
|
ASSET
QUALITY
|
|
|
|
|
|
Nonperforming loans to
total loans
|
0.68 %
|
|
0.67 %
|
|
0.61 %
|
Nonperforming assets to
total loans, OREO and foreclosed assets
|
0.69 %
|
|
0.68 %
|
|
0.62 %
|
Nonperforming assets to
total assets
|
0.39 %
|
|
0.39 %
|
|
0.36 %
|
Net charge-offs to
average loans (for the three months ended) (annualized)
|
0.24 %
|
|
0.15 %
|
|
0.28 %
|
Allowance for loan and
lease losses to total loans
|
1.49 %
|
|
1.50 %
|
|
1.45 %
|
Allowance for credit
losses to total loans (f)
|
1.70 %
|
|
1.70 %
|
|
1.67 %
|
Allowance for loan and
lease losses to nonperforming loans
|
220 %
|
|
225 %
|
|
239 %
|
Total delinquencies
(In millions) (g)
|
$
1,384
|
|
$
1,287
|
|
$
1,490
|
|
|
(a)
|
Amounts include assets
and liabilities for which we have elected the fair value option.
Our 2023 Form 10-Qs included, and our 2023 Form 10-K 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 December 31, 2023 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 2023 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 September 30, 2023, December 31, 2022 and
estimated December 31, 2023 ratios. For the full impact of
PNC's adoption of CECL, which excludes the benefits of the
five-year transition provision, see the December 31, 2023
and September 30, 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
|
|
|
|
|
December 31
2023
(estimated)
(b)
|
September 30
2023 (b)
|
|
December 31
2022
(b)
|
|
December 31, 2023
(Fully
Implemented)
(estimated)
(c)
|
September 30, 2023
(Fully
Implemented)
(estimated)
(c)
|
|
|
|
Dollars in
millions
|
|
Common stock, related
surplus and retained earnings, net of treasury stock
|
$
53,059
|
$
52,958
|
|
$
50,924
|
|
$
52,576
|
$
52,476
|
Less regulatory capital
adjustments:
|
|
|
|
|
|
|
|
Goodwill and
disallowed intangibles, net of deferred tax liabilities
|
(10,999)
|
(11,083)
|
|
(11,138)
|
|
(10,999)
|
(11,083)
|
All other
adjustments
|
(86)
|
(99)
|
|
(101)
|
|
(86)
|
(101)
|
Basel III Common equity
Tier 1 capital
|
$
41,974
|
$
41,776
|
|
$
39,685
|
|
$
41,491
|
$
41,292
|
Basel III standardized
approach risk-weighted assets (d)
|
$
424,905
|
$
425,131
|
|
$
435,537
|
|
$
425,050
|
$
425,323
|
Basel III Common equity
Tier 1 capital ratio
|
9.9 %
|
9.8 %
|
|
9.1 %
|
|
9.8 %
|
9.7 %
|
|
|
(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 December 31, 2023
and September 30, 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
|
|
Year ended
|
|
December 31
|
|
September 30
|
|
December 31
|
|
December 31
|
Dollars in
millions
|
2023
|
|
2023
|
|
2023
|
|
2022
|
Noninterest
expense
|
$
4,074
|
|
$
3,245
|
|
$
14,012
|
|
$
13,170
|
Less non-core
noninterest expense adjustments:
|
|
|
|
|
|
|
|
FDIC special assessment
costs
|
515
|
|
|
|
515
|
|
|
Workforce reduction
charges
|
150
|
|
|
|
150
|
|
|
Total non-core
noninterest expense adjustments
|
$
665
|
|
|
|
$
665
|
|
|
Core noninterest
expense (non-GAAP)
|
$
3,409
|
|
$
3,245
|
|
$
13,347
|
|
$
13,170
|
|
|
|
|
|
|
|
|
Total
revenue
|
$
5,361
|
|
$
5,233
|
|
$
21,490
|
|
$
21,120
|
|
|
|
|
|
|
|
|
Efficiency ratio
(a)
|
76 %
|
|
62 %
|
|
65 %
|
|
62 %
|
Efficiency ratio - as
adjusted (non-GAAP) (b)
|
64 %
|
|
62 %
|
|
62 %
|
|
62 %
|
|
|
(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 related to the closures of Silicon Valley Bank (SVB) and
Signature Bank 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 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 related to the
closures of SVB and Signature Bank 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 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 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
|
|
Year ended
|
|
December 31
|
|
September 30
|
|
December 31
|
|
December 31
|
Dollars in
millions
|
2023
|
|
2023
|
|
2023
|
|
2022
|
Income before income
taxes and noncontrolling interests
|
$
1,055
|
|
$
1,859
|
|
$
6,736
|
|
$
7,473
|
Provision for credit
losses
|
232
|
|
129
|
|
742
|
|
477
|
Pretax pre-provision
earnings (non-GAAP)
|
$
1,287
|
|
$
1,988
|
|
$
7,478
|
|
$
7,950
|
Total non-core
noninterest expense adjustments
|
665
|
|
|
|
665
|
|
|
Pretax pre-provision
earnings - as adjusted (non-GAAP)
|
$
1,952
|
|
$
1,988
|
|
$
8,143
|
|
$
7,950
|
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 related to the closures of
SVB and Signature Bank 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
|
|
Year ended
|
|
December 31
|
|
Per Common
|
|
December 31
|
|
Per Common
|
|
Dollars in millions,
except per share data
|
2023
|
|
Share
|
|
2023
|
|
Share
|
|
Net income attributable
to common shareholders
|
$
744
|
|
|
|
$
5,153
|
|
|
|
Dividends and
undistributed earnings allocated to nonvested restricted
shares
|
(4)
|
|
|
|
(27)
|
|
|
|
Net income attributable
to diluted common shareholders
|
$
740
|
|
$
1.85
|
|
$
5,126
|
|
$
12.79
|
|
Total non-core
noninterest expense adjustments after tax (a)
|
525
|
|
$
1.31
|
|
525
|
|
$
1.31
|
|
Net income attributable
to diluted common shareholders - as adjusted (non-
GAAP)
|
$
1,265
|
|
$
3.16
|
|
$
5,651
|
|
$
14.10
|
|
Average diluted common
shares outstanding
(In
millions)
|
401
|
|
|
|
401
|
|
|
|
|
|
(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 related to the closures of SVB and Signature Bank 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)
|
|
|
|
|
|
|
December 31
|
|
September 30
|
|
December 31
|
Dollars in millions,
except per share data
|
2023
|
|
2023
|
|
2022
|
Book value per common
share
|
$
112.72
|
|
$
105.98
|
|
$
99.93
|
Tangible book value per
common share
|
|
|
|
|
|
Common shareholders'
equity
|
$
44,864
|
|
$
42,215
|
|
$
40,028
|
Goodwill and other
intangible assets
|
(11,244)
|
|
(11,337)
|
|
(11,400)
|
Deferred tax
liabilities on goodwill and other intangible assets
|
244
|
|
254
|
|
261
|
Tangible common
shareholders' equity
|
$
33,864
|
|
$
31,132
|
|
$
28,889
|
Period-end common
shares outstanding (In millions)
|
398
|
|
398
|
|
401
|
Tangible book value per
common share (non-GAAP)
|
$
85.08
|
|
$
78.16
|
|
$
72.12
|
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
|
|
Year ended
|
|
December 31
|
|
September 30
|
|
December 31
|
|
December 31
|
Dollars in
millions
|
2023
|
|
2023
|
|
2023
|
|
2022
|
Net interest
income
|
$
3,403
|
|
$
3,418
|
|
$
13,916
|
|
$
13,014
|
Taxable-equivalent
adjustments
|
36
|
|
36
|
|
147
|
|
112
|
Net interest income
(Fully Taxable-Equivalent - FTE) (non-GAAP)
|
$
3,439
|
|
$
3,454
|
|
$
14,063
|
|
$
13,126
|
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:
- Economic growth accelerated in the first three quarters of
2023, but Federal Reserve monetary policy tightening to slow
inflation is weighing on interest-rate sensitive industries.
Sectors where interest rates play an outsized role, such as
business investment and consumer spending on durable goods, will
contract in 2024.
- PNC's baseline outlook is for a mild recession starting in
mid-2024, with a small contraction in real GDP of less than 1%,
lasting into late 2024. The unemployment rate will increase
throughout 2024, peaking at close to 5% in early 2025. Inflation
will slow with weaker demand, moving back to the Federal Reserve's
2% objective by the second half of 2024.
- PNC expects the federal funds rate to remain unchanged in the
near term, between 5.25% and 5.50% through mid-2024, with federal
funds rate cuts starting in mid-2024 in response to the
recession.
- 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, the company'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 2022 Form 10-K and subsequent Form 10-Qs, including
in the Risk Factors and Risk Management sections and the Legal
Proceedings and Commitments Notes of the Notes To Consolidated
Financial Statements in those reports, and in our other 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.
View original content to download
multimedia:https://www.prnewswire.com/news-releases/pnc-reports-full-year-2023-net-income-of-5-6-billion-12-79-diluted-eps-or-14-10-as-adjusted-302035659.html
SOURCE The PNC Financial Services Group, Inc.