Generated positive operating leverage;
grew NII and NIM; maintained 2.5% SCB
requirement
Increased quarterly common stock dividend
5 cents to $1.60 per share on July 2,
2024
PITTSBURGH, July 16,
2024 /PRNewswire/ -- The PNC Financial Services
Group, Inc. (NYSE: PNC) today reported:
|
For the
quarter
|
|
|
In millions, except per
share data and as noted
|
2Q24
|
1Q24
|
2Q23
|
|
Second Quarter
Highlights
|
Financial
Results
|
|
|
|
|
Comparisons reflect
2Q24 vs. 1Q24
|
Net interest income
(NII)
|
$
3,302
|
$
3,264
|
$
3,510
|
|
Income
Statement
|
Noninterest
income
|
2,109
|
1,881
|
1,783
|
|
▪ Generated
positive operating
leverage; PPNR increased 13%
|
Revenue
|
5,411
|
5,145
|
5,293
|
|
Noninterest
expense
|
3,357
|
3,334
|
3,372
|
|
▪ Revenue
increased 5%
|
Pretax, pre-provision
earnings (PPNR) (non-GAAP)
|
2,054
|
1,811
|
1,921
|
|
– NII and NIM
increased
|
Provision for credit
losses
|
235
|
155
|
146
|
|
▪
Noninterest expense increased 1%
|
Net income
|
1,477
|
1,344
|
1,500
|
|
▪ Gain on
Visa share exchange of
$754 million substantially offset by
other significant items, resulting in a
9 cent benefit to EPS
|
|
|
|
|
|
|
|
|
|
|
Per Common
Share
|
|
|
|
|
Diluted earnings per
share (EPS)
|
$ 3.39
|
$ 3.10
|
$ 3.36
|
|
Balance
Sheet
|
Average diluted common
shares outstanding
|
400
|
400
|
401
|
|
▪ Average
loans and deposits were
relatively stable
|
Book value
|
116.70
|
113.30
|
105.67
|
|
Tangible book value
(TBV) (non-GAAP)
|
89.12
|
85.70
|
77.80
|
|
▪ Average
securities increased 4%
|
|
|
|
|
|
▪ Net loan
charge-offs were $262
million, or 0.33% annualized to
average loans
|
|
|
|
|
|
Balance Sheet &
Credit Quality
|
|
|
|
Average loans
In billions
|
$
319.9
|
$
320.6
|
$
324.5
|
|
▪ ACL to
total loans stable at 1.7%
|
Average
securities In billions
|
141.3
|
135.4
|
141.0
|
|
▪ AOCI
improved $0.6 billion, including
securities repositioning impact
|
Average
deposits In billions
|
417.2
|
420.2
|
425.7
|
|
Accumulated other
comprehensive income (loss) (AOCI)
In
billions
|
(7.4)
|
(8.0)
|
(9.5)
|
|
▪ TBV per
share increased 4%
|
Net loan
charge-offs
|
262
|
243
|
194
|
|
▪
Maintained strong capital position
|
Allowance for credit
losses (ACL) to total loans
|
1.67 %
|
1.68 %
|
1.68 %
|
|
– CET1 capital
ratio of 10.2%
|
|
|
|
|
|
– Maintained
regulatory minimum
Stress Capital Buffer (SCB) of
2.5%
|
|
|
|
|
|
Selected
Ratios
|
|
|
|
|
Return on average
common shareholders' equity
|
12.16 %
|
11.39 %
|
13.01 %
|
|
– Increased
quarterly common stock
dividend 5 cents to $1.60 per
share on July 2, 2024
|
Return on average
assets
|
1.05
|
0.97
|
1.08
|
|
Net interest margin
(NIM) (non-GAAP)
|
2.60
|
2.57
|
2.79
|
|
Noninterest income to
total revenue
|
39
|
37
|
34
|
|
|
Efficiency
|
62
|
65
|
64
|
|
|
Common equity Tier 1
(CET1) capital ratio
|
10.2
|
10.1
|
9.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See non-GAAP
financial measures in the Consolidated Financial Highlights
accompanying this release.
|
|
|
|
|
|
From Bill Demchak,
PNC Chairman and Chief Executive Officer:
|
"PNC delivered
strong results in the second quarter; generating positive operating
leverage through revenue growth and well controlled expenses while
adding customers, and strengthening our capital levels.
Importantly, net interest income and net interest margin increased,
marking the beginning of our growth trajectory towards expected
record NII in 2025. In June, the Federal Reserve announced the
results of the annual stress test and PNC's start-to-trough CET1
ratio depletion was 1.6%, the best in our peer group. And earlier
this month, our board approved a 5 cent increase to our quarterly
common stock dividend."
|
Significant Items
In the second quarter of 2024, PNC participated in the Visa
exchange program, allowing PNC to monetize 50% of its Visa Class
B-1 shares and converting its remaining holdings into 1.8 million
of Visa Class B-2 shares. The exchange resulted in a gain of
$754 million. The second quarter of
2024 also included Visa Class B-2 derivative fair value adjustments
of negative $116 million, primarily
related to the extension of anticipated litigation resolution
timing, and a $120 million expense
related to a PNC Foundation contribution. During the quarter, PNC
also repositioned the investment securities portfolio, selling
available-for-sale securities with a market value of $3.8 billion and a weighted average yield of
approximately 1.5%. The sale of securities resulted in a loss of
$497 million. PNC redeployed the sale
proceeds into available-for-sale securities with a market value of
$3.8 billion and a weighted average
yield of approximately 5.5%. The combined net income impact of
these significant items was $35
million, or $0.09 per common
share.
Income Statement
Impact of Significant Items
|
|
In
millions
|
2Q24
|
|
|
Noninterest
Income
|
|
Significant items
impacting Other Noninterest Income
|
|
Gain on exchange of
Visa Class B-1 shares
|
$
754
|
Visa Class B-2
derivative fair value adjustments
|
(116)
|
Loss on sale of
securities
|
(497)
|
Noninterest income
increase from significant items
|
$
141
|
|
|
Noninterest
Expense
|
|
Significant items
impacting Other Noninterest Expense
|
|
Contribution to PNC
Foundation
|
$
120
|
Noninterest expense
increase from significant items
|
$
120
|
|
|
Net Income and
EPS
|
|
Pretax, pre-provision
impact of significant items
|
$
21
|
Tax impact of
significant items
|
14
|
Net Income increase
from significant items
|
$
35
|
EPS impact of
significant items
|
$
0.09
|
|
Tax impact of
significant items includes the benefit of shares donated to the PNC
Foundation, partially offset by the tax impact of pretax,
pre-provision significant items at a statutory tax rate of
21%.
|
Income Statement Highlights
Second quarter 2024 compared with first quarter
2024
- Total revenue of $5.4 billion
increased $266 million, or 5%, due to
higher noninterest and net interest income.
- Net interest income of $3.3
billion increased $38 million,
or 1%, reflecting higher yields on interest-earning assets.
- Net interest margin of 2.60% increased 3 basis points.
- Noninterest income of $2.1
billion increased $228
million, or 12%.
- Fee income of $1.8 billion
increased $31 million, or 2%,
primarily due to seasonally higher card and cash management fees
and increased capital markets and advisory activity, partially
offset by lower residential mortgage revenue.
- Other noninterest income of $332
million increased $197 million
reflecting the impact of $141 million
of significant items in the second quarter of 2024.
- Noninterest expense of $3.4
billion increased $23 million,
or 1%, and included a $120 million
PNC Foundation contribution expense in the second quarter of 2024,
while the first quarter included a $130
million FDIC special assessment expense.
- Provision for credit losses was $235
million in the second quarter, primarily reflecting the
impact of portfolio activity. The first quarter of 2024 included a
provision for credit losses of $155
million.
- The effective tax rate was 18.8% for both the second and first
quarter.
Balance Sheet Highlights
Second quarter 2024 compared with first quarter
2024 or June 30, 2024 compared with March 31,
2024
- Average loans of $319.9 billion
were stable, reflecting average commercial loans of $219.1 billion and average consumer loans of
$100.8 billion.
- Credit quality performance:
- Delinquencies of $1.3 billion
were stable.
- Total nonperforming loans of $2.5
billion increased $123
million, or 5%, primarily due to higher commercial
nonperforming loans.
- Net loan charge-offs of $262
million increased $19 million,
primarily due to higher commercial real estate net loan
charge-offs.
- The allowance for credit losses of $5.4
billion was relatively stable. The allowance for credit
losses to total loans was 1.67% at June 30,
2024 and 1.68% at March 31,
2024.
- Average investment securities of $141.3
billion increased $5.9
billion, or 4%, reflecting net purchase activity, primarily
of U.S. Treasury securities.
- Average Federal Reserve Bank balances of $40.7 billion decreased $7.1 billion, primarily reflecting net securities
purchases.
- Average deposits of $417.2
billion were relatively stable and included seasonal
declines in corporate deposits.
- Average borrowed funds of $77.5
billion increased $1.9
billion, or 2%, reflecting parent company senior debt
issuances.
- PNC maintained a strong capital and liquidity position.
- Based on the results of the Federal Reserve's 2024 annual
stress test, PNC's SCB for the four-quarter period beginning
October 1, 2024 will remain at the
regulatory minimum of 2.5%.
- On July 2, 2024, the PNC board of
directors raised the quarterly cash dividend on common stock to
$1.60 per share, an increase of
5 cents per share. The dividend is
payable on August 5, 2024 to
shareholders of record at the close of business July 15, 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 0.7 million shares.
- The Basel III common equity Tier 1 capital ratio was an
estimated 10.2% at June 30, 2024 and
was 10.1% at March 31, 2024.
- PNC's average LCR for the three months ended June 30, 2024 was 108%, exceeding the regulatory
minimum requirement throughout the quarter.
Earnings
Summary
|
|
|
|
|
|
|
In millions, except
per share data
|
|
2Q24
|
|
1Q24
|
|
2Q23
|
Net income
|
|
$ 1,477
|
|
$ 1,344
|
|
$ 1,500
|
Net income attributable
to diluted common shares
|
|
$ 1,355
|
|
$ 1,240
|
|
$ 1,347
|
Diluted earnings per
common share
|
|
$
3.39
|
|
$
3.10
|
|
$
3.36
|
Average diluted common
shares outstanding
|
|
400
|
|
400
|
|
401
|
Cash dividends declared
per common share
|
|
$
1.55
|
|
$
1.55
|
|
$
1.50
|
|
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
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
2Q24 vs
|
2Q24 vs
|
In
millions
|
2Q24
|
|
1Q24
|
|
2Q23
|
1Q24
|
2Q23
|
Net interest
income
|
$
3,302
|
|
$
3,264
|
|
$
3,510
|
1 %
|
(6) %
|
Noninterest
income
|
2,109
|
|
1,881
|
|
1,783
|
12 %
|
18 %
|
Total
revenue
|
$
5,411
|
|
$
5,145
|
|
$
5,293
|
5 %
|
2 %
|
|
|
|
|
|
|
|
|
Total revenue for the second quarter of 2024 increased
$266 million from the first quarter
of 2024 and $118 million compared
with the second quarter of 2023. In both comparisons, the increase
was driven by higher noninterest income. The linked quarter
increase also reflected the benefit of higher net interest
income.
Net interest income of $3.3
billion increased $38 million
from the first quarter of 2024, reflecting higher yields on
interest-earning assets. Net interest margin was 2.60% in the
second quarter of 2024, increasing 3 basis points from the first
quarter of 2024.
Compared to the second quarter of 2023, net interest income
decreased $208 million and net
interest margin declined 19 basis points, as the benefit of higher
interest-earning asset yields was more than offset by increased
funding costs and lower loan balances.
Noninterest
Income
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
2Q24 vs
|
2Q24 vs
|
In
millions
|
2Q24
|
|
1Q24
|
|
2Q23
|
1Q24
|
2Q23
|
Asset management and
brokerage
|
$
364
|
|
$
364
|
|
$
348
|
—
|
5 %
|
Capital markets and
advisory
|
272
|
|
259
|
|
213
|
5 %
|
28 %
|
Card and cash
management
|
706
|
|
671
|
|
697
|
5 %
|
1 %
|
Lending and deposit
services
|
304
|
|
305
|
|
298
|
—
|
2 %
|
Residential and
commercial mortgage
|
131
|
|
147
|
|
98
|
(11) %
|
34 %
|
Fee income
|
1,777
|
|
1,746
|
|
1,654
|
2 %
|
7 %
|
Other
|
332
|
|
135
|
|
129
|
146 %
|
157 %
|
Total noninterest
income
|
$ 2,109
|
|
$ 1,881
|
|
$ 1,783
|
12 %
|
18 %
|
|
Noninterest income for the second quarter of 2024 increased
$228 million compared with the first
quarter of 2024. Capital markets and advisory revenue increased
$13 million, driven by higher merger
and acquisition advisory activity and increased loan syndication
revenue, partially offset by lower underwriting fees. Card and cash
management fees grew $35 million
reflecting seasonally higher consumer transaction volumes and
higher treasury management product revenue. Residential and
commercial mortgage revenue decreased $16
million primarily due to lower residential mortgage
activity. Other noninterest income increased $197 million primarily reflecting the impact of
$141 million of significant items in
the second quarter of 2024.
Noninterest income for the second quarter of 2024, increased
$326 million from the second quarter
of 2023. Fee income increased $123
million driven by growth across all categories. Other
noninterest income increased $203
million primarily reflecting the impact of $141 million of significant items in the second
quarter of 2024. The second quarter of 2023 also included negative
Visa derivative fair value adjustments of $83 million.
CONSOLIDATED EXPENSE
REVIEW
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest
Expense
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
2Q24 vs
|
2Q24 vs
|
In
millions
|
2Q24
|
|
1Q24
|
|
2Q23
|
1Q24
|
2Q23
|
Personnel
|
$
1,782
|
|
$
1,794
|
|
$
1,846
|
(1) %
|
(3) %
|
Occupancy
|
236
|
|
244
|
|
244
|
(3) %
|
(3) %
|
Equipment
|
356
|
|
341
|
|
349
|
4 %
|
2 %
|
Marketing
|
93
|
|
64
|
|
109
|
45 %
|
(15) %
|
Other
|
890
|
|
891
|
|
824
|
—
|
8 %
|
Total noninterest
expense
|
$
3,357
|
|
$
3,334
|
|
$
3,372
|
1 %
|
—
|
|
Noninterest expense for the second quarter of 2024 increased
$23 million compared to the first
quarter of 2024 and reflected PNC's continued focus on expense
management. The modest increase was driven by the timing of
marketing spend and higher equipment expense, partially offset by
seasonally lower incentive compensation. Other noninterest expense
included a $120 million PNC
Foundation contribution expense in the second quarter of 2024,
while the first quarter of 2024 included a $130 million FDIC special assessment expense.
Noninterest expense of $3.4
billion for the second quarter of 2024, which included a
$120 million PNC Foundation
contribution expense, decreased $15
million compared with the second quarter of 2023, reflecting
a continued focus on expense management.
The effective tax rate was 18.8% for both the second and first
quarter of 2024 and 15.5% for the second quarter of 2023.
CONSOLIDATED BALANCE SHEET REVIEW
Average total assets of $563.0
billion were relatively stable in comparison to both the
first quarter of 2024 and the second quarter of 2023.
Average
Loans
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
2Q24 vs
|
2Q24 vs
|
In
billions
|
2Q24
|
|
1Q24
|
|
2Q23
|
1Q24
|
2Q23
|
Commercial
|
$
219.1
|
|
$
219.2
|
|
$
223.2
|
—
|
(2) %
|
Consumer
|
100.8
|
|
101.4
|
|
101.3
|
(1) %
|
(1) %
|
Total
|
$
319.9
|
|
$
320.6
|
|
$
324.5
|
—
|
(1) %
|
|
|
|
|
|
|
|
|
Average loans for the second quarter of 2024 were stable
compared to the first quarter of 2024 and included a modest decline
in consumer balances reflecting lower residential real estate and
home equity loans.
Average loans for the second quarter of 2024 decreased
$4.6 billion in comparison to the
second quarter of 2023. Average commercial loans declined
$4.1 billion from the second quarter
of 2023, driven by lower utilization of loan commitments. Average
consumer loans decreased $0.5 billion
and included lower home equity balances.
Average Investment
Securities
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
2Q24 vs
|
2Q24 vs
|
In
billions
|
2Q24
|
|
1Q24
|
|
2Q23
|
1Q24
|
2Q23
|
Available for
sale
|
$
53.4
|
|
$
46.0
|
|
$
46.6
|
16 %
|
15 %
|
Held to
maturity
|
87.9
|
|
89.4
|
|
94.4
|
(2) %
|
(7) %
|
Total
|
$
141.3
|
|
$
135.4
|
|
$
141.0
|
4 %
|
—
|
|
|
|
|
|
|
|
|
Average investment securities of $141.3
billion in the second quarter of 2024 increased $5.9 billion and $0.3
billion from the first quarter of 2024 and the second
quarter of 2023, respectively. In both comparisons, the increase
reflected net purchase activity, primarily of U.S. Treasury
securities, partially offset by portfolio paydowns and maturities.
The duration of the investment securities portfolio was 3.5 years
at June 30, 2024, 4.1 years at March 31, 2024 and 4.3
years at June 30, 2023.
Net unrealized losses on available-for-sale securities were
$3.7 billion at June 30, 2024,
decreasing from $4.0 billion at
March 31, 2024 and $4.2 billion
at June 30, 2023. In both comparisons, the decrease primarily
reflected the impact of securities repositioning during the second
quarter of 2024.
Average Federal Reserve Bank balances for the second quarter of
2024 were $40.7 billion, decreasing
$7.1 billion from the first quarter
of 2024 primarily reflecting net securities purchases. Compared to
the second quarter of 2023, average Federal Reserve Bank balances
increased $10.1 billion primarily due
to higher borrowed funds outstanding and lower loan balances,
partially offset by lower deposit balances.
Average
Deposits
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
2Q24 vs
|
2Q24 vs
|
In
billions
|
2Q24
|
|
1Q24
|
|
2Q23
|
1Q24
|
2Q23
|
Commercial
|
$
199.7
|
|
$
202.5
|
|
$
204.1
|
(1) %
|
(2) %
|
Consumer
|
217.5
|
|
217.6
|
|
221.6
|
—
|
(2) %
|
Total
|
$
417.2
|
|
$
420.2
|
|
$
425.7
|
(1) %
|
(2) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IB % of total avg.
deposits
|
77 %
|
|
76 %
|
|
73 %
|
|
|
NIB % of total avg.
deposits
|
23 %
|
|
24 %
|
|
27 %
|
|
|
IB -
Interest-bearing
NIB -
Noninterest-bearing
|
Totals may not sum
due to rounding
|
|
|
|
|
|
|
|
|
Average deposits for the second quarter of 2024 of $417.2 billion were relatively stable compared to
the first quarter of 2024 and included a modest decline in
commercial balances reflecting seasonal declines in corporate
deposits. Compared to the second quarter of 2023, average deposits
decreased $8.5 billion due to lower
commercial and consumer deposits.
Average Borrowed
Funds
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
2Q24 vs
|
2Q24 vs
|
In
billions
|
2Q24
|
|
1Q24
|
|
2Q23
|
1Q24
|
2Q23
|
Total
|
$
77.5
|
|
$
75.6
|
|
$
65.7
|
2 %
|
18 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Avg. borrowed funds to
avg. liabilities
|
15 %
|
|
15 %
|
|
13 %
|
|
|
|
|
|
|
|
|
|
|
Average borrowed funds of $77.5
billion in the second quarter of 2024 increased $1.9 billion compared to the first quarter of
2024 reflecting parent company senior debt issuances. Compared to
the second quarter of 2023, borrowed funds increased $11.8 billion primarily driven by parent company
senior debt issuances.
Capital
|
June 30,
2024
|
|
March 31,
2024
|
|
June 30,
2023
|
|
|
|
Common shareholders'
equity In billions
|
$
46.4
|
|
$
45.1
|
|
$
42.1
|
Accumulated other
comprehensive income (loss)
In
billions
|
$
(7.4)
|
|
$
(8.0)
|
|
$
(9.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
Basel III common equity
Tier 1 capital ratio *
|
10.2 %
|
|
10.1 %
|
|
9.5 %
|
Basel III common equity
Tier 1 fully implemented capital ratio (estimated)
|
10.1 %
|
|
10.0 %
|
|
9.4 %
|
*June 30, 2024
ratio is estimated
|
|
|
|
|
|
|
PNC maintained a strong capital position. Common shareholders'
equity at June 30, 2024 increased $1.3
billion from March 31, 2024, driven by net income and
an improvement in accumulated other comprehensive 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
June 30, 2024 improved $0.6
billion from March 31, 2024 and included the impact of
securities repositioning. Compared to June 30, 2023,
accumulated other comprehensive income improved $2.1 billion, reflecting the benefit of paydowns
and maturities as well as the impact of securities
repositioning.
In the second quarter of 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 0.7 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 43% were still
available for repurchase at June 30, 2024.
In light of the Federal banking agencies' proposed rules to
adjust the Basel III capital framework, third 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.
Based on the results of the Federal Reserve's 2024 annual stress
test, PNC's SCB for the four-quarter period beginning October 1, 2024 will remain at the regulatory
minimum of 2.5%.
On July 2, 2024, the PNC board of
directors raised the quarterly cash dividend on common stock to
$1.60 per share, an increase of
5 cents per share. The dividend is
payable on August 5, 2024 to
shareholders of record at the close of business July 15, 2024.
At June 30, 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
|
|
June 30,
2024
|
March 31,
2024
|
June 30,
2023
|
06/30/24 vs
|
06/30/24 vs
|
In
millions
|
03/31/24
|
06/30/23
|
Provision for credit
losses (a)
|
$
235
|
$
155
|
$
146
|
$
80
|
$
89
|
Net loan charge-offs
(a)
|
$
262
|
$
243
|
$
194
|
8 %
|
35 %
|
Allowance for credit
losses (b)
|
$
5,353
|
$
5,365
|
$
5,400
|
—
|
(1) %
|
Total delinquencies
(c)
|
$
1,272
|
$
1,275
|
$
1,212
|
—
|
5 %
|
Nonperforming
loans
|
$
2,503
|
$
2,380
|
$
1,913
|
5 %
|
31 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs to
average loans (annualized)
|
0.33 %
|
0.30 %
|
0.24 %
|
|
|
Allowance for credit
losses to total loans
|
1.67 %
|
1.68 %
|
1.68 %
|
|
|
Nonperforming loans to
total loans
|
0.78 %
|
0.74 %
|
0.59 %
|
|
|
|
(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 $235
million in the second quarter of 2024, primarily reflecting
the impact of portfolio activity. The first quarter of 2024
included a provision for credit losses of $155 million.
Net loan charge-offs were $262
million in the second quarter of 2024, increasing
$19 million compared to the first
quarter of 2024, primarily due to higher commercial real estate net
loan charge-offs. Compared to the second quarter of 2023, net loan
charge-offs increased $68 million
driven by higher commercial and consumer net loan charge-offs.
The allowance for credit losses was $5.4
billion at June 30, 2024, March 31, 2024 and
June 30, 2023. The allowance for credit losses as a percentage
of total loans was 1.67% at June 30, 2024, and 1.68% at both
March 31, 2024 and June 30, 2023.
Delinquencies at June 30, 2024 were $1.3 billion, stable from March 31, 2024.
Compared to June 30, 2023, delinquencies increased
$60 million due to higher consumer
and commercial loan delinquencies.
Nonperforming loans at June 30,
2024 were $2.5 billion,
increasing $123 million from
March 31, 2024, due to higher
commercial nonperforming loans. Compared to June 30, 2023, nonperforming loans increased
$590 million, reflecting higher
commercial nonperforming loans, partially offset by lower consumer
nonperforming loans.
BUSINESS SEGMENT
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
Business Segment
Income (Loss)
|
|
|
|
|
|
In
millions
|
2Q24
|
|
1Q24
|
|
2Q23
|
Retail
Banking
|
$ 1,715
|
|
$ 1,085
|
|
$
954
|
Corporate &
Institutional Banking
|
1,046
|
|
1,121
|
|
817
|
Asset Management
Group
|
103
|
|
97
|
|
63
|
Other
|
(1,405)
|
|
(973)
|
|
(351)
|
Net income excluding
noncontrolling interests
|
$ 1,459
|
|
$ 1,330
|
|
$ 1,483
|
|
|
|
|
|
|
Retail
Banking
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
2Q24 vs
|
|
2Q24 vs
|
In
millions
|
2Q24
|
|
1Q24
|
|
2Q23
|
|
1Q24
|
|
2Q23
|
Net interest
income
|
$ 2,709
|
|
$ 2,617
|
|
$ 2,448
|
|
$
92
|
|
$
261
|
Noninterest
income
|
$ 1,409
|
|
$
764
|
|
$
702
|
|
$
645
|
|
$
707
|
Noninterest
expense
|
$ 1,841
|
|
$ 1,837
|
|
$ 1,904
|
|
$
4
|
|
$
(63)
|
Provision for
(recapture of) credit losses
|
$
27
|
|
$
118
|
|
$
(14)
|
|
$
(91)
|
|
$
41
|
Earnings
|
$ 1,715
|
|
$ 1,085
|
|
$
954
|
|
$
630
|
|
$
761
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$ 96.5
|
|
$ 97.2
|
|
$ 97.6
|
|
$
(0.7)
|
|
$
(1.1)
|
Average
deposits
|
$ 249.7
|
|
$ 249.0
|
|
$ 257.3
|
|
$
0.7
|
|
$
(7.6)
|
|
|
|
|
|
|
|
|
|
|
Net loan
charge-offs In millions
|
$
138
|
|
$
139
|
|
$
109
|
|
$
(1)
|
|
$
29
|
|
|
|
|
|
|
|
|
|
|
Retail Banking Highlights
Second quarter 2024 compared with first quarter
2024
- Earnings increased 58%, primarily driven by higher noninterest
and net interest income as well as a lower provision for credit
losses.
- Noninterest income increased 84%, and included a gain of
$754 million related to one half of
PNC's total exchanged Visa shares. The second quarter of 2024 also
included Visa derivative fair value adjustments of negative
$116 million primarily related to the
extension of anticipated litigation resolution timing. Visa
derivative fair value adjustments were negative $7 million in the first quarter of 2024.
- Noninterest expense was stable.
- Provision for credit losses of $27
million in the second quarter of 2024 reflected the impact
of portfolio activity.
- Average loans decreased 1% reflecting lower residential real
estate and home equity loans.
- Average deposits were stable.
- Second quarter 2024 compared with second quarter
2023
- Earnings increased 80%, primarily due to higher noninterest and
net interest income as well as lower noninterest expense.
- Noninterest income increased 101%, and included the
aforementioned second quarter of 2024 Visa exchange impacts and
derivative fair value adjustments. The second quarter of 2023
included Visa derivative fair value adjustments of negative
$83 million.
- Noninterest expense decreased 3%, reflecting a continued focus
on expense management, partially offset by higher technology
investment.
- Average loans decreased 1%, and included lower residential
mortgage and home equity loans.
- Average deposits decreased 3%, and included the impact of
increased customer spending.
Corporate &
Institutional Banking
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
2Q24 vs
|
|
2Q24 vs
|
In
millions
|
2Q24
|
|
1Q24
|
|
2Q23
|
|
1Q24
|
|
2Q23
|
Net interest
income
|
$ 1,560
|
|
$ 1,549
|
|
$ 1,381
|
|
$
11
|
|
$
179
|
Noninterest
income
|
$
942
|
|
$
888
|
|
$
821
|
|
$
54
|
|
$
121
|
Noninterest
expense
|
$
911
|
|
$
922
|
|
$
921
|
|
$
(11)
|
|
$
(10)
|
Provision for credit
losses
|
$
228
|
|
$
47
|
|
$
209
|
|
$
181
|
|
$
19
|
Earnings
|
$ 1,046
|
|
$ 1,121
|
|
$
817
|
|
$
(75)
|
|
$
229
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$ 204.0
|
|
$ 204.2
|
|
$ 208.1
|
|
$
(0.2)
|
|
$
(4.1)
|
Average
deposits
|
$ 139.9
|
|
$ 142.7
|
|
$ 141.0
|
|
$
(2.8)
|
|
$
(1.1)
|
|
|
|
|
|
|
|
|
|
|
Net loan
charge-offs In millions
|
$
129
|
|
$
108
|
|
$
93
|
|
$
21
|
|
$
36
|
|
|
|
|
|
|
|
|
|
|
Corporate & Institutional Banking Highlights
Second quarter 2024 compared with first quarter
2024
- Earnings decreased 7%, driven by a higher provision for credit
losses, partially offset by higher noninterest and net interest
income as well as lower noninterest expense.
- Noninterest income increased 6%, reflecting higher merger and
acquisition advisory activity and higher treasury management
product revenue.
- Noninterest expense decreased 1%, reflecting a continued focus
on expense management.
- Provision for credit losses of $228
million in the second quarter of 2024 reflected the impact
of portfolio activity.
- Average loans were stable.
- Average deposits decreased 2%, reflecting seasonal declines in
corporate deposits.
Second quarter 2024 compared with second quarter
2023
- Earnings increased 28% driven by higher net interest and
noninterest income as well as lower noninterest expense.
- Noninterest income increased 15%, reflecting business growth
across the franchise.
- Noninterest expense decreased 1%, reflecting a continued focus
on expense management.
- Average loans decreased 2%, driven by lower utilization of loan
commitments.
- Average deposits decreased less than 1%.
Asset Management
Group
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
2Q24 vs
|
|
2Q24 vs
|
In
millions
|
2Q24
|
|
1Q24
|
|
2Q23
|
|
1Q24
|
|
2Q23
|
Net interest
income
|
$ 163
|
|
$ 157
|
|
$ 125
|
|
$
6
|
|
$
38
|
Noninterest
income
|
$ 235
|
|
$ 230
|
|
$ 228
|
|
$
5
|
|
$
7
|
Noninterest
expense
|
$ 261
|
|
$ 265
|
|
$ 280
|
|
$
(4)
|
|
$
(19)
|
Provision for
(recapture of) credit losses
|
$
2
|
|
$
(5)
|
|
$ (10)
|
|
$
7
|
|
$
12
|
Earnings
|
$ 103
|
|
$
97
|
|
$
63
|
|
$
6
|
|
$
40
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Discretionary client
assets under management
|
$ 196
|
|
$ 195
|
|
$ 176
|
|
$
1
|
|
$
20
|
Nondiscretionary
client assets under administration
|
$ 208
|
|
$ 199
|
|
$ 168
|
|
$
9
|
|
$
40
|
Client assets under
administration at quarter end
|
$ 404
|
|
$ 394
|
|
$ 344
|
|
$
10
|
|
$
60
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$ 16.6
|
|
$ 16.3
|
|
$ 15.1
|
|
$
0.3
|
|
$
1.5
|
Average
deposits
|
$ 27.9
|
|
$ 28.7
|
|
$ 27.3
|
|
$
(0.8)
|
|
$
0.6
|
|
|
|
|
|
|
|
|
|
|
Net loan charge-offs
(recoveries) In millions
|
—
|
|
—
|
|
$
(2)
|
|
—
|
|
$
2
|
|
|
|
|
|
|
|
|
|
|
Asset Management Group Highlights
Second quarter 2024 compared with first quarter
2024
- Earnings increased 6%, reflecting higher net interest and
noninterest income and lower noninterest expense, partially offset
by a provision for credit losses.
- Noninterest income increased 2%, and included the impact of
higher average equity markets.
- Noninterest expense decreased 2%, driven by lower personnel
expense and a continued focus on expense management.
- Discretionary client assets under management increased 1%,
reflecting higher spot equity markets.
- Average loans increased 2%, primarily due to growth in
residential mortgage loans.
- Average deposits decreased 3%, driven by the timing of client
annual income tax payments.
Second quarter 2024 compared with second quarter
2023
- Earnings increased 63%, due to higher net interest income,
lower noninterest expense and higher noninterest income, partially
offset by a provision for credit losses.
- Noninterest income increased 3%, reflecting higher average
equity markets.
- Noninterest expense decreased 7%, reflecting a continued focus
on expense management.
- Discretionary client assets under management increased 11%,
reflecting higher spot equity markets.
- Average loans increased 10%, primarily driven by growth in
residential mortgage loans.
- Average deposits increased 2%, reflecting growth in CD and
deposit sweep balances.
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 second 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 13746966 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
|
|
|
|
Six months
ended
|
Dollars in millions,
except per share data
|
|
June 30
|
|
March 31
|
|
June 30
|
|
|
|
June 30
|
|
June 30
|
|
|
2024
|
|
2024
|
|
2023
|
|
|
|
2024
|
|
2023
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
|
$ 3,302
|
|
$ 3,264
|
|
$ 3,510
|
|
|
|
$ 6,566
|
|
$ 7,095
|
Noninterest
income
|
|
2,109
|
|
1,881
|
|
1,783
|
|
|
|
3,990
|
|
3,801
|
Total
revenue
|
|
5,411
|
|
5,145
|
|
5,293
|
|
|
|
10,556
|
|
10,896
|
Provision for credit
losses
|
|
235
|
|
155
|
|
146
|
|
|
|
390
|
|
381
|
Noninterest
expense
|
|
3,357
|
|
3,334
|
|
3,372
|
|
|
|
6,691
|
|
6,693
|
Income before income
taxes and noncontrolling interests
|
|
$ 1,819
|
|
$ 1,656
|
|
$ 1,775
|
|
|
|
$ 3,475
|
|
$ 3,822
|
Income taxes
|
|
342
|
|
312
|
|
275
|
|
|
|
654
|
|
628
|
Net income
|
|
$ 1,477
|
|
$ 1,344
|
|
$ 1,500
|
|
|
|
$ 2,821
|
|
$ 3,194
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests
|
|
18
|
|
14
|
|
17
|
|
|
|
32
|
|
34
|
Preferred stock
dividends (a)
|
|
95
|
|
81
|
|
127
|
|
|
|
176
|
|
195
|
Preferred stock
discount accretion and redemptions
|
|
2
|
|
2
|
|
2
|
|
|
|
4
|
|
4
|
Net income attributable
to common shareholders
|
|
$ 1,362
|
|
$ 1,247
|
|
$ 1,354
|
|
|
|
$ 2,609
|
|
$ 2,961
|
Per Common
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ 3.39
|
|
$ 3.10
|
|
$ 3.36
|
|
|
|
$ 6.49
|
|
$ 7.35
|
Diluted
|
|
$ 3.39
|
|
$ 3.10
|
|
$ 3.36
|
|
|
|
$ 6.48
|
|
$ 7.34
|
Cash dividends declared
per common share
|
|
$ 1.55
|
|
$ 1.55
|
|
$ 1.50
|
|
|
|
$ 3.10
|
|
$ 3.00
|
Effective tax rate
(b)
|
|
18.8 %
|
|
18.8 %
|
|
15.5 %
|
|
|
|
18.8 %
|
|
16.4 %
|
PERFORMANCE
RATIOS
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin
(c)
|
|
2.60 %
|
|
2.57 %
|
|
2.79 %
|
|
|
|
2.58 %
|
|
2.81 %
|
Noninterest income to
total revenue
|
|
39 %
|
|
37 %
|
|
34 %
|
|
|
|
38 %
|
|
35 %
|
Efficiency
(d)
|
|
62 %
|
|
65 %
|
|
64 %
|
|
|
|
63 %
|
|
61 %
|
Return on:
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common
shareholders' equity
|
|
12.16 %
|
|
11.39 %
|
|
13.01 %
|
|
|
|
11.78 %
|
|
14.53 %
|
Average
assets
|
|
1.05 %
|
|
0.97 %
|
|
1.08 %
|
|
|
|
1.01 %
|
|
1.15 %
|
|
|
(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
June 30, 2024, March 31, 2024 and June 30, 2023
were $34 million, $34 million and $37 million, respectively.
The taxable-equivalent adjustments to net interest income for the
six months ended June 30, 2024 and June 30, 2023 were $68
million and $75 million, respectively.
|
(d)
|
Calculated as
noninterest expense divided by total revenue.
|
The PNC Financial
Services Group, Inc.
|
Consolidated
Financial Highlights (Unaudited)
|
|
|
|
|
|
|
|
June 30
|
|
March 31
|
|
June 30
|
|
2024
|
|
2024
|
|
2023
|
BALANCE SHEET
DATA
|
|
|
|
|
|
Dollars in millions,
except per share data and as noted
|
|
|
|
|
|
Assets
|
$
556,519
|
|
$
566,162
|
|
$
558,207
|
Loans (a)
|
$
321,429
|
|
$
319,781
|
|
$
321,761
|
Allowance for loan and
lease losses
|
$
4,636
|
|
$
4,693
|
|
$
4,737
|
Interest-earning
deposits with banks
|
$
33,039
|
|
$
53,612
|
|
$
38,259
|
Investment
securities
|
$
138,645
|
|
$
130,460
|
|
$
135,661
|
Total
deposits
|
$
416,391
|
|
$
425,624
|
|
$
427,489
|
Borrowed funds
(a)
|
$
71,391
|
|
$
72,707
|
|
$
65,384
|
Allowance for unfunded
lending related commitments
|
$
717
|
|
$
672
|
|
$
663
|
Total shareholders'
equity
|
$
52,642
|
|
$
51,340
|
|
$
49,320
|
Common shareholders'
equity
|
$
46,397
|
|
$
45,097
|
|
$
42,083
|
Accumulated other
comprehensive income (loss)
|
$
(7,446)
|
|
$
(8,042)
|
|
$
(9,525)
|
Book value per common
share
|
$
116.70
|
|
$
113.30
|
|
$
105.67
|
Tangible book value per
common share (non-GAAP) (b)
|
$
89.12
|
|
$
85.70
|
|
$
77.80
|
Period end common
shares outstanding (In millions)
|
398
|
|
398
|
|
398
|
Loans to
deposits
|
77 %
|
|
75 %
|
|
75 %
|
Common shareholders'
equity to total assets
|
8.3 %
|
|
8.0 %
|
|
7.5 %
|
CLIENT ASSETS (In
billions)
|
|
|
|
|
|
Discretionary client
assets under management
|
$
196
|
|
$
195
|
|
$
176
|
Nondiscretionary client
assets under administration
|
208
|
|
199
|
|
168
|
Total client assets
under administration
|
404
|
|
394
|
|
344
|
Brokerage account
client assets
|
83
|
|
83
|
|
80
|
Total client
assets
|
$
487
|
|
$
477
|
|
$
424
|
CAPITAL
RATIOS
|
|
|
|
|
|
Basel III (c)
(d)
|
|
|
|
|
|
Common equity Tier
1
|
10.2 %
|
|
10.1 %
|
|
9.5 %
|
Common equity Tier 1
fully implemented (e)
|
10.1 %
|
|
10.0 %
|
|
9.4 %
|
Tier 1
risk-based
|
11.6 %
|
|
11.6 %
|
|
11.2 %
|
Total capital
risk-based
|
13.5 %
|
|
13.4 %
|
|
13.1 %
|
Leverage
|
8.9 %
|
|
8.7 %
|
|
8.8 %
|
Supplementary
leverage
|
7.4 %
|
|
7.3 %
|
|
7.4 %
|
ASSET
QUALITY
|
|
|
|
|
|
Nonperforming loans to
total loans
|
0.78 %
|
|
0.74 %
|
|
0.59 %
|
Nonperforming assets to
total loans, OREO and foreclosed assets
|
0.79 %
|
|
0.76 %
|
|
0.61 %
|
Nonperforming assets to
total assets
|
0.46 %
|
|
0.43 %
|
|
0.35 %
|
Net charge-offs to
average loans (for the three months ended) (annualized)
|
0.33 %
|
|
0.30 %
|
|
0.24 %
|
Allowance for loan and
lease losses to total loans
|
1.44 %
|
|
1.47 %
|
|
1.47 %
|
Allowance for credit
losses to total loans (f)
|
1.67 %
|
|
1.68 %
|
|
1.68 %
|
Allowance for loan and
lease losses to nonperforming loans
|
185 %
|
|
197 %
|
|
248 %
|
Total delinquencies
(In millions) (g)
|
$
1,272
|
|
$
1,275
|
|
$
1,212
|
|
|
(a)
|
Amounts include assets
and liabilities for which we have elected the fair value option.
Our first quarter 2024 Form 10-Q included, and our second 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 16 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 15 for
additional information. The ratios as of June 30, 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 March 31, 2024, June 30, 2023 and estimated
June 30, 2024 ratios. For the full impact of PNC's adoption of
CECL, which excludes the benefits of the five-year transition
provision, see the June 30, 2024 and March 31, 2024
(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
|
|
|
|
|
June 30
2024
(estimated)
(b)
|
March 31
2024 (b)
|
|
June 30
2023
(b)
|
|
June 30, 2024
(Fully
Implemented)
(estimated)
(c)
|
March 31, 2024
(Fully
Implemented)
(estimated)
(c)
|
|
|
|
Dollars in
millions
|
|
Common stock, related
surplus and retained earnings,
net of treasury stock
|
$
54,084
|
$
53,380
|
|
$
52,091
|
|
$
53,843
|
$
53,139
|
Less regulatory capital
adjustments:
|
|
|
|
|
|
|
|
Goodwill and
disallowed intangibles, net of deferred
tax liabilities
|
(10,965)
|
(10,982)
|
|
(11,101)
|
|
(10,965)
|
(10,982)
|
All other
adjustments
|
(102)
|
(88)
|
|
(89)
|
|
(104)
|
(90)
|
Basel III Common equity
Tier 1 capital
|
$
43,017
|
$
42,310
|
|
$
40,901
|
|
$
42,774
|
$
42,067
|
Basel III standardized
approach risk-weighted assets (d)
|
$
423,339
|
$
420,342
|
|
$
429,634
|
|
$
423,430
|
$
420,397
|
Basel III Common equity
Tier 1 capital ratio
|
10.2 %
|
10.1 %
|
|
9.5 %
|
|
10.1 %
|
10.0 %
|
|
|
(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 June 30, 2024 and
March 31, 2024 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
Pretax
Pre-Provision Earnings (non-GAAP)
|
Three months
ended
|
|
June 30
|
|
March 31
|
|
June 30
|
Dollars in
millions
|
2024
|
|
2024
|
|
2023
|
Income before income
taxes and noncontrolling interests
|
$
1,819
|
|
$
1,656
|
|
$
1,775
|
Provision for credit
losses
|
235
|
|
155
|
|
146
|
Pretax pre-provision
earnings (non-GAAP)
|
$
2,054
|
|
$
1,811
|
|
$
1,921
|
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.
Tangible Book
Value per Common Share (non-GAAP)
|
|
|
|
|
|
|
June 30
|
|
March 31
|
|
June 30
|
Dollars in millions,
except per share data
|
2024
|
|
2024
|
|
2023
|
Book value per common
share
|
$
116.70
|
|
$
113.30
|
|
$
105.67
|
Tangible book value per
common share
|
|
|
|
|
|
Common shareholders'
equity
|
$
46,397
|
|
$
45,097
|
|
$
42,083
|
Goodwill and other
intangible assets
|
(11,206)
|
|
(11,225)
|
|
(11,357)
|
Deferred tax
liabilities on goodwill and other intangible assets
|
241
|
|
242
|
|
256
|
Tangible common
shareholders' equity
|
$
35,432
|
|
$
34,114
|
|
$
30,982
|
Period-end common
shares outstanding (In millions)
|
398
|
|
398
|
|
398
|
Tangible book value per
common share (non-GAAP)
|
$
89.12
|
|
$
85.70
|
|
$
77.80
|
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
|
|
June 30
|
|
March 31
|
|
June 30
|
Dollars in
millions
|
2024
|
|
2024
|
|
2023
|
Net interest
income
|
$
3,302
|
|
$
3,264
|
|
$
3,510
|
Taxable-equivalent
adjustments
|
34
|
|
34
|
|
37
|
Net interest income
(Fully Taxable-Equivalent - FTE) (non-GAAP)
|
$
3,336
|
|
$
3,298
|
|
$
3,547
|
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:
- Job and income gains will continue to support consumer spending
growth this year, but PNC's baseline forecast is for slower
economic growth in 2024 as higher interest rates remain a drag on
the economy.
- Real GDP growth this year will be close to trend at around 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, gradually moving back to the Federal Reserve's 2%
long-term objective.
- With slowing inflation PNC expects two federal funds rate cuts
of 25 basis points each at the Federal Open Market Committee's
September and December meetings, with the rate ending this year in
a range between 4.75% and 5.00%. PNC expects multiple federal funds
rate cuts in 2025 as inflation continues to ease.
- 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 and in our first quarter 2023 Form
10-Q, 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
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.