PITTSBURGH, April 22 /PRNewswire-FirstCall/ -- The PNC
Financial Services Group, Inc. (NYSE: PNC) today reported net
income of $671 million, or
$.66 per diluted common share, for
the first quarter of 2010. Net income would have been $744 million, or $1.31 per diluted common share, for the quarter
excluding $.50 per diluted common
share related to the redemption of TARP preferred shares and
$73 million, or $.15 per diluted common share, for after-tax
integration costs.
“PNC began 2010 by delivering strong financial results fueled by
well-diversified revenue, exceptional expense management and
improved credit costs,” said James E.
Rohr, chairman and chief executive officer. “We began to see
signs that the pace of credit deterioration had eased at the end of
2009, which is reflected in our lower first quarter provision for
credit losses. During the quarter we redeemed our TARP preferred
shares and improved the quality of our capital structure by issuing
common equity. While there is still uncertainty about the economic
environment and potential regulatory changes, we believe PNC is
well positioned for another good year.”
Reported net income for the first quarter of 2009 was
$530 million, or $1.03 per diluted common share, and $1.1 billion, or $2.17 per diluted common share, for the fourth
quarter of 2009. Net income would have been $563 million, or $1.11 per diluted common share, for the first
quarter of 2009 excluding after-tax integration costs of
$33 million, or $.08 per diluted common share. Fourth quarter
2009 net income would have been $521
million, or $.90 per diluted
common share, excluding a $687
million after-tax gain, or $1.49 per diluted common share, related to the
BlackRock acquisition of Barclays Global Investors and $101 million, or $.22 per diluted common share, of after-tax
integration costs.
HIGHLIGHTS
- PNC remains committed to responsible lending to support
economic growth. Loans and commitments originated and renewed
totaled approximately $32 billion in
the first quarter. Since its inception, PNC has funded
approximately 3,200 refinances totaling $.6
billion through the Home Affordable Refinance Program and
has sent approximately 80,700 solicitations to eligible borrowers
under the Home Affordable Modification Program through March 31, 2010. Trial Modification Plan offers
under the Home Affordable Modification Program have been extended
to approximately 21,700 eligible borrowers.
- Loans totaled $157 billion at
March 31, 2010 and decreased a
nominal $.3 billion since year end.
An increase in loans of $3.5 billion
from consolidating Market Street Funding LLC, a variable interest
entity, and the securitized credit card portfolio was offset by
soft customer loan demand combined with loan repayments and payoffs
in the distressed assets portfolio.
- Deposits declined by $4.4 billion
or 2 percent since year end as PNC continued to reduce
nonrelationship certificates of deposit and other time deposits and
effectively managed deposit pricing, reducing the rate paid on
deposits to .81 percent in the first quarter of 2010 from .93
percent in the fourth quarter of 2009.
- The company remained core funded with a loan to deposit ratio
of 86 percent at March 31, 2010,
providing a strong bank liquidity position to support growth and
stability.
- Pretax pre-provision earnings of $1.7
billion were more than double the provision for credit
losses of $.8 billion in the first
quarter of 2010 driven by well-diversified revenue performance,
exceptional expense management and reduced credit costs.
- Total revenue was $3.8 billion
for the quarter and reflected strong net interest income of
$2.4 billion due to the benefit of
deposit repricing. The net interest margin increased 19 basis
points to 4.24 percent compared with the fourth quarter of 2009 due
to the impact of deposit repricing and a reduction in low-rate
interest-earning deposits with banks.
- Expenses of $2.1 billion in the
first quarter declined 4 percent compared with the linked quarter
reflecting further progress in integrating the National City
Corporation acquisition.
- The overall annualized cost savings goal related to the
National City acquisition of $1.5
billion is expected to be achieved in the fourth quarter of
2010, earlier than 2011 as previously anticipated. As of
mid-April 2010, PNC had successfully
completed the conversion of more than 4 million customers at over
1,000 National City branches to the PNC platform. Remaining branch
conversions are scheduled to be completed in June 2010.
- The pace of credit quality deterioration during the first
quarter continued to ease. Nonperforming assets increased
$.2 billion from year end 2009 to
$6.5 billion as of March 31, 2010, a lower increase compared with
$.7 billion in the fourth quarter.
Loan loss reserves increased by 5 percent primarily due to the
consolidation of the securitized credit card portfolio. The
allowance for loan and lease losses was increased to $5.3 billion, or 3.38 percent of total loans, as
of March 31, 2010.
- The company announced a definitive agreement to sell PNC Global
Investment Servicing Inc. for $2.3
billion in cash and anticipates closing the transaction in
the third quarter of 2010 subject to regulatory approvals and
certain other closing conditions. Upon completion of the sale, PNC
expects to report an after-tax gain of approximately $455 million and to further improve its capital
structure. Results of operations for PNC Global Investment
Servicing are presented as income from discontinued operations, net
of income taxes, and the business is no longer a reportable
business segment.
- Common capital was strengthened during the first quarter with a
$3.45 billion common equity offering.
The estimated Tier 1 common equity ratio increased by 160 basis
points to 7.6 percent at March 31,
2010 from 6.0 percent at December 31,
2009. On a pro forma basis at March
31, 2010, PNC’s Tier 1 common capital ratio would have been
an estimated 8.3 percent based on completion of the sale of PNC
Global Investment Servicing.
- PNC redeemed all of the $7.6
billion of preferred shares held by the U.S. Treasury under
the Troubled Asset Relief Program (TARP) Capital Purchase Program
in February 2010 using net proceeds
from the common equity offering and a $2
billion senior note offering and other available funds.
CONSOLIDATED REVENUE REVIEW
Revenue of $3.8 billion for the
first quarter of 2010 was well diversified, led by net interest
income of $2.4 billion compared with
$2.3 billion for the first and fourth
quarters of 2009. The net interest margin increased to 4.24 percent
for the first quarter of 2010 compared with 3.81 percent for the
first quarter of 2009 and 4.05 percent for the fourth quarter of
2009. The increases in net interest income and the margin for both
periods of comparison reflected the company’s successful deposit
pricing strategy as well as the benefit to the margin of a
reduction in low-rate interest-earning deposits with banks. The
interest rate paid on deposits declined to .81 percent for the
first quarter of 2010 compared with 1.44 percent for first quarter
2009 and .93 percent for the fourth quarter of 2009. PNC’s deposit
strategy included the retention and repricing at lower rates of
relationship-based certificates of deposit and the planned run off
of maturing non-relationship certificates of deposit.
Noninterest income totaled $1.4
billion for the first quarters of 2010 and 2009 and
$2.5 billion for the fourth quarter
of 2009. Asset management fees grew $40
million, or 18 percent, compared with the linked quarter due
to improved markets and client growth. Residential mortgage fees
increased $40 million, or 37 percent,
over fourth quarter 2009 due to higher loan servicing and loan
sales revenue. Service charges on deposits declined 15 percent
compared with fourth quarter 2009 primarily due to seasonal
declines in overdraft charges. Consumer service fees decreased 6
percent on a linked quarter basis due to lower brokerage fees,
seasonal declines in transaction related fees and the impact of the
consolidation of the securitized credit card portfolio. Other
noninterest income of $240 million in
the first quarter of 2010 included market-driven revenue and
valuations associated with equity management, customer-related
trading and other assets, and gains on sales of loans and other
real estate owned. Fourth quarter 2009 included a $1.1 billion gain recognized on PNC’s portion of
the increase in BlackRock’s equity resulting from the value of
BlackRock shares issued in connection with BlackRock’s acquisition
of Barclays Global Investors. The net effect to first quarter 2010
noninterest income of net securities gains and other-than-temporary
impairment losses on securities was a decrease of $26 million compared with the fourth quarter of
2009.
Noninterest income was essentially flat compared with the prior
year first quarter as higher asset management and corporate service
fees and an increase in the net effect of net securities gains and
other-than-temporary impairment losses on securities were
substantially offset by declines in revenue related to residential
mortgage servicing activities, consumer service fees and service
charges on deposits.
CONSOLIDATED EXPENSE REVIEW
Noninterest expense for the first quarter of 2010 was
$2.1 billion, a reduction of 2
percent compared with the first quarter of 2009 and a reduction of
4 percent compared with the fourth quarter of 2009. The decline in
noninterest expense was primarily due to the impact of higher cost
savings related to the National City acquisition in both
comparisons and lower integration costs compared with the linked
quarter. The overall multi-year annualized acquisition cost savings
goal is $1.5 billion, which the
company expects to achieve in the fourth quarter of 2010, earlier
than the original 2011 timeframe. Integration costs in noninterest
expense were $102 million for the
first quarter of 2010, $52 million
for the first quarter of 2009 and $155
million for the fourth quarter 2009.
CONSOLIDATED BALANCE SHEET REVIEW
Total assets were $265 billion at
March 31, 2010 compared with
$286 billion at March 31, 2009 and $270
billion at December 31, 2009.
The decrease compared with March 31,
2009 was primarily due to declines in loans and
interest-earning deposits with banks as PNC invested a portion of
its available liquidity in low risk investment securities. The
decrease compared with the linked quarter end was primarily
attributable to lower interest-earning deposits with banks.
Average loans of $159 billion for
the quarter decreased $15 billion, or
9 percent, compared with the year-earlier first quarter and
increased $.6 billion compared with
the fourth quarter of 2009. The decrease in average loans compared
with first quarter 2009 was primarily due to reduced loan demand,
paydowns, lower utilization levels and net charge-offs leading to
declines of 18 percent in commercial loans and 12 percent in both
commercial real estate loans and residential mortgage loans.
Average loans in the first quarter of 2010 were increased by the
impact of the consolidation of Market Street and the securitized
credit card portfolio, including $3.5
billion of loans, pursuant to new accounting guidance
effective January 1, 2010. PNC is
committed to providing credit and liquidity to qualified borrowers.
Total loan originations and new commitments and renewals were
approximately $32 billion in the
first quarter of 2010 compared with $26
billion in the first quarter of 2009 and $27 billion in the fourth quarter of 2009.
Included in these amounts were originations for first mortgages of
$2.0 billion in the first quarter of
2010, $6.9 billion in the first
quarter of 2009 and $2.3 billion in
the fourth quarter of 2009.
Loans held for sale averaged $2.5
billion in the first quarter of 2010 compared with
$4.5 billion for the first quarter of
2009 and $2.9 billion in the fourth
quarter of 2009. The decrease from first quarter 2009 was primarily
due to lower residential mortgage loan originations during
subsequent quarters.
Average investment securities for the first quarter of 2010 were
$57 billion, an increase of
$7.0 billion, or 14 percent, compared
with the first quarter of 2009 and an increase of $1.1 billion, or 2 percent, compared with the
fourth quarter of 2009. The increase in securities over first
quarter 2009 reflected net investments of a portion of available
liquidity in lower risk assets, primarily U.S. Treasury and
government agency securities. The linked quarter increase in
securities was largely related to the Market Street consolidation.
The March 31, 2010 investment
securities balance included a net unrealized pretax loss of
$1.6 billion representing the
difference between fair value and amortized cost compared with net
unrealized pretax losses of $4.4
billion at March 31, 2009 and
$2.3 billion at December 31, 2009. The improvement in the net
unrealized pretax loss compared with March
31, 2009 was due to improved liquidity in non-agency
residential and commercial mortgage-backed securities markets.
Average deposits of $183 billion
declined $9.1 billion, or 5 percent,
compared with the first quarter of 2009 and $3.2 billion, or 2 percent, compared with the
linked quarter. The decline from the prior year first quarter
occurred as PNC decreased high-cost nonrelationship certificates of
deposit and other time deposits and grew transaction deposits
reflecting customer preferences for liquidity. In the linked
quarter comparison, average deposits decreased due to the
withdrawal of corporate client balances in noninterest-bearing
demand deposits, the continued reduction of nonrelationship
certificates of deposit and lower time deposits in foreign offices,
partially offset by increased balances of interest-bearing
transaction accounts.
Average borrowed funds for the first quarter of 2010 were
$42 billion, a decrease of
$5.6 billion, or 12 percent, compared
with the first quarter of 2009 and an increase of $2.7 billion, or 7 percent, compared with the
fourth quarter of 2009. The decrease from the prior year first
quarter was primarily due to maturities of Federal Home Loan Bank
borrowings. In February 2010, PNC
issued $2.0 billion of senior notes
which proceeds were used toward redemption of the $7.6 billion of TARP preferred shares. Other
borrowed funds increased in the linked quarter comparison due to
the impact of the Market Street and securitized credit card
portfolio consolidations.
PNC enhanced the quality of its capital during the first quarter
of 2010. Common shareholders’ equity grew to $26 billion at March 31,
2010 compared with $19 billion
at March 31, 2009 and $22 billion at December
31, 2009. During the first quarter of 2010 PNC raised
$3.45 billion in new common equity
through the issuance of 63.9 million common shares at an offering
price of $54 per share. On
February 10, 2010, net proceeds from
the common equity and senior notes offerings combined with other
available funds were used to redeem all of the $7.6 billion of preferred shares issued to the
U.S. Treasury under the TARP Capital Purchase Program. In
connection with the redemption of the TARP preferred shares,
accretion of the remaining issuance discount was accelerated and
resulted in a $250 million reduction
of net income attributable to common shareholders or a $.50 reduction in earnings per diluted common
share. PNC paid $89 million in
dividends to the U.S. Treasury on the TARP preferred shares in the
first quarter of 2010, or $.18 per
diluted common share, and $421
million since the shares were issued in December 2008.
PNC increased the Tier 1 common equity ratio to an estimated 7.6
percent at March 31, 2010 from 6.0
percent at December 31, 2009 and 4.9
percent at March 31, 2009 largely as
a result of the common equity issuance and retained earnings. The
Tier 1 risk-based capital ratio decreased to an estimated 9.9
percent at March 31, 2010 from 11.4
percent at December 31, 2009 and 10.0
percent at March 31, 2009 primarily
due to redemption of the TARP preferred shares partially offset by
the common equity issuance and retained earnings. On a pro forma
basis assuming completion of the sale of PNC Global Investment
Servicing, PNC’s Tier 1 common capital ratio would have been an
estimated 8.3 percent and the Tier 1 risk-based capital ratio would
have been an estimated 10.6 percent at March
31, 2010. The PNC board of directors recently declared a
quarterly common stock cash dividend of 10
cents per share payable on April 24,
2010.
ASSET QUALITY REVIEW
The pace of credit quality deterioration continued to slow in
the first quarter of 2010. Nonperforming assets were $6.5 billion at March 31,
2010 reflecting a nominal increase compared with
$6.3 billion at December 31, 2009 and $3.5
billion at March 31, 2009. The
increase of $224 million from year
end was lower than the increase in nonperforming assets in the past
three consecutive quarters of $672
million, $988 million and
$1.1 billion, respectively.
Nonperforming assets to total assets were 2.46 percent at
March 31, 2010 compared with 2.34
percent at December 31, 2009 and 1.23
percent at March 31, 2009.
Accruing loans past due 90 days or more were $.8 billion at March 31,
2010 and declined 5 percent from December 31, 2009. Accruing loans past due 30 to
89 days were $2.5 billion at
March 31, 2010, a 3 percent increase
compared with year end reflecting higher commercial real estate
loan delinquencies somewhat offset by lower commercial loan
delinquencies.
The provision for credit losses was $751
million for the first quarter of 2010 compared with
$1.049 billion for the fourth quarter
of 2009 and $880 million in the first
quarter of 2009. The $298 million
decrease in the provision compared with the linked quarter
primarily resulted from lower additional reserves required for
commercial loans. Net charge-offs for the first quarter of 2010
were $691 million, or 1.77 percent of
average loans on an annualized basis, compared with $835 million, or 2.09 percent, for the fourth
quarter of 2009 and $431 million, or
1.01 percent, for the first quarter of 2009. The decrease in net
charge-offs of $144 million compared
with the fourth quarter was primarily due to lower commercial loan
and commercial real estate loan net charge-offs.
The company increased the allowance for loan and lease losses
during the first quarter to $5.3
billion at March 31, 2010 from
$5.1 billion at December 31, 2009 and $4.3
billion at March 31, 2009. The
linked quarter increase was primarily due to consolidation of the
securitized credit card portfolio. The allowance for loan and lease
losses to total loans increased to 3.38 percent at March 31, 2010 compared with 3.22 percent at
December 31, 2009 and 2.51 percent at
March 31, 2009. The allowance to
nonperforming loans was 92 percent at March
31, 2010, 89 percent at December 31,
2009 and 145 percent at March 31,
2009.
BUSINESS SEGMENT RESULTS
Retail Banking
Retail Banking earned $24 million
for the quarter compared with earnings of $50 million for the year-ago quarter and a loss
of $25 million for the fourth quarter
of 2009. Earnings declined from the prior year first quarter as a
result of increased credit costs, lower interest credits assigned
to deposits, and a decline in fees which was partially offset by
well-managed expenses. The increase in earnings over the prior
quarter was primarily the result of lower credit costs. Retail
Banking continued to maintain its focus on growing customers and
deposits, customer and employee satisfaction, investing in the
business for future growth, as well as disciplined expense
management during this period of market and economic uncertainty.
The deposit strategy of Retail Banking is to remain disciplined on
pricing while targeting specific products and markets for
growth.
Retail Banking overview:
- Success in implementing Retail Banking’s deposit strategy
resulted in growth in average transaction deposits of $3.1 billion, or 4 percent, compared with the
prior year first quarter and $1.4
billion, or 2 percent, compared with the linked quarter.
Excluding approximately $1.9 billion
of average transaction deposits from first quarter 2009 balances
related to branch divestitures, average transaction deposits
increased $5.0 billion, or 7 percent,
over the prior year first quarter. The growth in transaction
deposits was more than offset by planned run off of higher rate
certificates of deposit net of successful retention of customer
relationships. Required branch divestitures also impacted the
year-over-year quarter comparison. A continued decline in
certificates of deposit is expected in 2010.
- Retail Banking continued to focus on expanding and deepening
customer relationships. Checking relationships declined by 5,000
during the first quarter of 2010, a better than expected result and
primarily due to the impact of branch conversion activities in many
markets. Customer retention was stronger than anticipated and
helped to offset lower acquisition of new relationships in branch
conversion markets. Markets not impacted by conversion activities
had strong first quarter checking relationship results. Active
online bill payment and online banking customers grew by 6 percent
and 1 percent, respectively, during the first quarter.
- Average loans increased $2.2
billion, or 4 percent, over the year-ago quarter and
increased $2.5 billion, or 4 percent,
compared with the fourth quarter of 2009. The increases in both
comparisons were driven by the consolidation of the securitized
credit card portfolio and increased education loans partially
offset by lower commercial, home equity and residential mortgage
loans.
- Net interest income for the first quarter of 2010 declined by
$50 million compared with the first
quarter of 2009 and increased by $38
million compared with the linked quarter. In both
comparisons net interest income benefited from the consolidation of
the securitized credit card portfolio, higher demand deposits and
increased education loans, and was negatively impacted by lower
interest credits assigned to deposits, reflective of the rate
environment.
- Noninterest income declined $31
million over the first quarter of 2009 and $57 million compared with the linked quarter. In
both comparisons fees declined due to the consolidation of the
securitized credit card portfolio, decreases in service charges on
deposits related to lower overdraft charges, and lower brokerage
fees. The linked quarter comparison was negatively impacted by
seasonal declines in transaction related fees. The prior year first
quarter comparison was further reduced by the impact of branch
divestitures but benefited from growth in transaction
volume-related fees.
- Noninterest expense for the first quarter declined $78 million from the prior year first quarter and
$36 million from the linked quarter.
Expenses were well managed as continued investments in distribution
channels were more than offset by reductions in expenses from
acquisitions and the required branch divestitures.
- Provision for credit losses was $340
million for the first quarter of 2010 compared with
$304 million in the first quarter of
2009 and $409 million in the prior
quarter. The fourth quarter of 2009 included increased reserves
required for small commercial loans and the credit card
portfolio.
- Retail Banking had 2,461 branches and an ATM network of 6,467
machines at March 31, 2010. During
the first quarter of 2010, PNC opened 3 traditional branches,
consolidated 55 branches and had a net reduction of 6 ATMs. The
reduction in branches and ATMs mainly resulted from branch
consolidations following the second National City customer
conversion in February 2010.
Corporate & Institutional Banking
Corporate & Institutional Banking earned $360 million in the first quarter of 2010
compared with $359 million in the
first quarter of 2009 and $415
million in the fourth quarter of 2009. Earnings in both
comparisons were adversely impacted by a decrease in net interest
income but benefited from a lower provision for credit losses and
higher noninterest income.
Corporate & Institutional Banking overview:
- Net interest income for the first quarter of 2010 was
$877 million, a decrease of
$146 million compared with the first
quarter of 2009 and a decrease of $132
million compared with the fourth quarter of 2009. Both
comparisons were impacted by a decline in average loans and lower
interest credits assigned to deposits. The decrease in the linked
quarter comparison was also due to lower average deposits.
- Corporate service fees were $242
million in the first quarter of 2010 compared with
$218 million in the first quarter of
2009 and $235 million in the fourth
quarter of 2009. Both increases reflected first quarter 2010 fees
associated with commercial mortgage special servicing. Merger and
acquisition advisory fees increased in the year-over-year
comparison and decreased compared with the fourth quarter of
2009.
- Other noninterest income was $129
million in the first quarter of 2010 compared to
$49 million in the first quarter of
2009 and $133 million in the fourth
quarter of 2009. The increase from a year ago was due to a
reduction in reserves for the DUS lending program, a benefit from
the impact of lower credit spreads on the valuations of customer
derivative activity and higher underwriting revenue partially
offset by a decline in valuation gains on commercial mortgage and
multi-family held for sale loan portfolios.
- Noninterest expense was $445
million in the first quarter of 2010 compared with
$430 million in the first quarter of
2009 and $444 million in the fourth
quarter of 2009. The increase over first quarter 2009 was primarily
due to higher compensation expense related to increased sales
activity, FDIC costs for higher deposit balances and credit-related
expenses.
- Provision for credit losses was $236
million in the first quarter of 2010 compared with
$287 million in the first quarter of
2009 and $283 million in the fourth
quarter of 2009. The 2010 provision was driven by continued
deterioration in commercial real estate loans. The decline compared
with the year-ago first quarter was primarily from lower loan
balances and the linked quarter decrease was largely due to
improved performance in the middle market portfolio. Net
charge-offs for the first quarter of 2010 were $271 million compared with $167 million in the first quarter of 2009 and
$341 million in fourth quarter of
2009. Net charge-offs showed signs of slowing in the middle market
and asset-based lending portfolios.
- Average loans were $66 billion
for the first quarter of 2010 compared with $78 billion in the first quarter of 2009 and
$67 billion in the fourth quarter of
2009. The first quarter of 2010 included an increase in loans from
the consolidation of Market Street. Excluding Market Street,
average loans decreased $13 billion,
or 17 percent, compared with the prior year first quarter and
$2 billion, or 3 percent, compared
with the linked quarter. Declines in utilization levels among
middle market and large corporate clients continued to result in
lower loan balances although the trend has slowed. Commercial real
estate loans decreased compared with the linked quarter driven by
payoffs and paydowns and exiting select customer relationships.
- Average deposits were $42 billion
in the first quarter of 2010, an increase of $9.7 billion, or 30 percent, compared with the
first quarter of 2009 as customers continued to move balances from
off-balance sheet sweep products to noninterest-bearing demand
deposits and from the impact of the return of deposits from
National City customers who had previously moved funds to other
institutions.
- The commercial mortgage servicing portfolio was $282 billion at March 31,
2010 compared with $269
billion at March 31, 2009 and
$287 billion at December 31, 2009. The increase compared with a
year ago reflected the continued growth in the agency and
conventional servicing portfolios which was somewhat offset by a
decline in the commercial mortgage-backed securities servicing
portfolio. The servicing portfolio declined from year end primarily
due to prepayment activity, scheduled maturities and other
servicing transfers.
Asset Management Group
Asset Management Group earned $39
million for the first quarters of 2010 and 2009 and
$23 million for the fourth quarter of
2009. Assets under administration were $209
billion as of March 31, 2010.
Strong revenue for the first quarter of $228
million reflected increased assets under management driven
by increases in asset values and continued new business generation.
Earnings grew 70 percent over the linked quarter as a result of a
lower provision for credit losses and strong asset management fees.
Flat earnings relative to the first quarter of 2009 reflected
higher asset management fees and lower expenses and provision for
credit losses offset by reduced net interest income from lower
yields on loans. During the quarter, the business successfully
executed the first and largest of its National City trust system
conversions.
Asset Management Group overview:
- Assets under administration increased to $209 billion at March 31,
2010 compared with $205
billion at December 31, 2009
and declined from $216 billion at
March 31, 2009. Discretionary assets
under management increased to $105
billion at March 31, 2010
compared with $103 billion at
December 31, 2009 and $96 billion at March 31,
2009. The year over year growth in discretionary assets was
more than offset by a decrease in nondiscretionary assets as a
result of an exit of a noncore product offering and other National
City integration impacts.
- Noninterest income of $164
million for the quarter increased $10
million, or 6 percent, compared with the first quarter of
2009, and $13 million, or 9 percent,
compared with the linked quarter. The growth from the previous
quarters was primarily due to continued client expansion and the
improved equity markets.
- Net interest income for the first quarter decreased
$32 million, or 33 percent, compared
with the first quarter of 2009, and $3
million, or 4 percent, compared with the linked quarter. The
decreases were primarily due to a reduction in higher yield
loans.
- Noninterest expense of $157
million in the first quarter of 2010 decreased by
$13 million, or 8 percent, from the
year-ago quarter and increased 1 percent compared with the linked
quarter. The year-over-year decline is attributable to disciplined
expense management as well as integration-related initiatives.
- Provision for credit losses was $9
million for the first quarter of 2010 compared with
$17 million for the first quarter of
2009 and $25 million for the fourth
quarter of 2009. The decrease in the provision compared with the
fourth quarter was attributable to improved credit quality. Credit
quality indicators remained stable and reserves as a percent of
total loans were consistent with the linked quarter.
- Average deposits for the quarter decreased $461 million, or 6 percent, from the prior year
first quarter and increased $110
million, or 2 percent, from the linked quarter. The decrease
from first quarter 2009 was due to a strategic exit of higher rate
certificates of deposit. Average loan balances decreased
$304 million, or 4 percent, from the
prior year first quarter and $103
million, or 2 percent, compared with the linked quarter.
Home equity loans grew in the first quarter 2009 comparison while
commercial loans and residential mortgages declined in both
comparisons.
Residential Mortgage Banking
Residential Mortgage Banking earned $82
million in the first quarter of 2010 compared with
$227 million in the first quarter of
2009 and $25 million in the fourth
quarter of 2009. Earnings decreased from first quarter 2009 due to
lower net hedging gains on mortgage servicing rights and loan sales
revenue. The linked quarter increase in earnings was driven by
higher noninterest income from loan servicing and loan sales
revenues and lower noninterest expense.
Residential Mortgage Banking overview:
- Total loan originations were $2.0
billion for the first quarter of 2010 compared with
$6.9 billion in the first quarter of
2009 and $2.3 billion in the fourth
quarter of 2009. Lower mortgage rates in the first quarter of 2009
resulted in high loan application and origination volumes. Loans
continued to be primarily originated through direct channels under
FNMA, FHLMC and FHA/VA agency guidelines.
- Residential mortgage loans serviced for others totaled
$141 billion at March 31, 2010 compared with $168 billion at March 31,
2009 and $145 billion at
December 31, 2009. Payoffs continued
to outpace new direct loan origination volume during the quarter.
The decline from a year earlier also reflected the sale of
$7.9 billion of servicing in the
fourth quarter of 2009.
- Noninterest income was $157
million in the first quarter of 2010 compared with
$437 million in the first quarter of
2009 and $105 million in the fourth
quarter of 2009. The year over year quarter decline was due to
lower net hedging gains on mortgage servicing rights and reduced
loan sales revenue related to strong loan origination refinance
volume in the first quarter of 2009. The linked quarter increase in
noninterest income reflected higher loan servicing revenue
primarily driven by higher fourth quarter costs associated with
repurchasing government-insured loans as well as lower payoff
volume.
- Net interest income was $80
million in the first quarter of 2010 compared with
$91 million in the first quarter of
2009 and $71 million in the fourth
quarter of 2009. The decrease compared with the first quarter of
2009 resulted from lower residential mortgage loans held for sale.
The linked quarter increase was primarily due to interest earned on
repurchased government-insured loans.
- Noninterest expense declined to $124
million in the first quarter of 2010 compared with
$173 million in the first quarter of
2009 and $142 million in the fourth
quarter of 2009 as lower loan origination volume drove a reduction
in expenses.
- The fair value of mortgage servicing rights was $1.3 billion at March 31,
2010 compared with $1.0
billion at March 31, 2009 and
$1.3 billion at December 31, 2009.
Distressed Assets Portfolio
Distressed Assets Portfolio segment had earnings of $72 million for the first quarter of 2010
compared with earnings of $3 million
for the first quarter of 2009 and a loss of $88 million in the fourth quarter of 2009.
Earnings improved primarily due to lower provision for credit
losses and higher net interest income on impaired loans.
Distressed Assets Portfolio overview:
- Average loans declined to $18
billion in the first quarter of 2010 compared with
$23 billion in the first quarter of
2009 and $19 billion for the fourth
quarter of 2009. The decrease in the linked quarter comparison was
primarily driven by paydowns. The comparison to first quarter 2009
was also impacted by portfolio management activities including loan
sales and efforts to encourage customers to refinance or pay off
consumer loan balances.
- Net interest income was $338
million for the first quarter of 2010 compared with
$331 million for the first quarter of
2009 and $218 million for the fourth
quarter of 2009. The increases in both comparisons were driven by
higher accretion on impaired loans due to improved cash collection
results which more than offset the decline in average loans.
- Noninterest income reflected a loss of $1 million for the first quarter of 2010 compared
with revenue of $13 million in first
quarter 2009 and $3 million in the
linked quarter. The decline in both comparisons was due to an
increase in recourse reserves for brokered home equity loans
sold.
- Noninterest expense for first quarter 2010 of $58 million declined $22
million compared with first quarter 2009 primarily due to
lower other real estate owned related expenses and losses.
Noninterest expense increased $9
million compared with fourth quarter 2009 as the linked
quarter included $12 million of net
gains on other real estate owned sales.
- The provision for credit losses was $165
million in the first quarter of 2010 compared with
$259 million in first quarter 2009
and $314 million in the fourth
quarter of 2009. The declines were largely driven by the consumer
loan portfolio in both comparisons.
- Loans in this segment require special servicing and management
oversight given current loan performance and market conditions.
Consequently, the business activities of this segment are focused
on maximizing value within a defined risk profile, including
selling assets when the terms and conditions are appropriate.
Other, including BlackRock
The “Other, including BlackRock” category, for the purposes of
this release, includes earnings and gains or losses related to
PNC’s equity interest in BlackRock, asset and liability management
activities including net securities gains or losses, other than
temporary impairment of debt securities and certain trading
activities, equity management activities, integration costs, exited
businesses, differences between business segment performance
reporting and financial statement reporting under generally
accepted accounting principles, corporate overhead and intercompany
eliminations. As a result of its pending sale, Global Investment
Servicing is no longer a reportable business segment, and business
segment results are presented on the basis of continuing operations
before noncontrolling interests.
PNC recorded earnings of $71
million in “Other, including BlackRock” for the first
quarter of 2010 compared with a loss of $158
million for the first quarter of 2009 and earnings of
$753 million for the fourth quarter
of 2009. First quarter 2010 earnings included BlackRock equity
earnings reflecting BlackRock’s acquisition of Barclays Global
Investors and higher results from equity management and alternative
investments compared with both 2009 quarters and higher trading
results compared with first quarter 2009. The first quarter 2009
loss reflected the after-tax impact of other-than-temporary
impairment charges and alternative investment writedowns and equity
management losses. Fourth quarter 2009 earnings included a
$687 million after-tax gain related
to the BlackRock acquisition of Barclays Global Investors.
After-tax integration costs were higher in the first quarter of
2010 compared with the year-ago first quarter, and lower than the
linked quarter.
CONFERENCE CALL AND SUPPLEMENTAL FINANCIAL
INFORMATION
PNC Chairman and Chief Executive Officer James E. Rohr and Executive Vice President and
Chief Financial Officer Richard J.
Johnson will hold a conference call for investors today at
8:30 a.m. Eastern Time regarding the
topics addressed in this news release and the related financial
supplement. Dial-in numbers for the conference call are (800)
990-2718 or (706) 643-0187 (international), conference ID 66991424.
The related financial supplement and presentation slides to
accompany the conference call remarks may be found at
www.pnc.com/investorevents. A taped replay of the call will be
available for one week at (800) 642-1687 or (706) 645-9291
(international), conference ID 66991424.
In addition, Internet access to the call (listen only) and to
PNC’s first quarter 2010 earnings release, supplemental financial
information and presentation slides will be available at
www.pnc.com/investorevents. A replay of the webcast will be
available on PNC’s website for 30 days.
The PNC Financial Services Group, Inc. (www.pnc.com) is one of
the nation’s largest diversified financial services organizations
providing retail and business banking; residential mortgage
banking; specialized services for corporations and government
entities, including corporate banking, real estate finance and
asset-based lending; wealth management; asset management and global
fund services.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION
We make statements in this news release and in the conference
call regarding this news release, and we may from time to time make
other statements, regarding our outlook or expectations for
earnings, revenues, expenses, capital levels, liquidity levels,
asset quality and/or other matters regarding or affecting PNC 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,” “intend,” “outlook,” “estimate,”
“forecast,” “will,” “project” and other similar words and
expressions. Forward-looking statements are subject to
numerous assumptions, risks and uncertainties, which change over
time.
Forward-looking statements speak only as of the date they are
made. We do not assume any duty and do not undertake to update our
forward-looking statements. Actual results or future events
could differ, possibly materially, from those that we anticipated
in our forward-looking statements, and future results could differ
materially from our historical performance.
Our forward-looking statements are subject to the following
principal risks and uncertainties. We provide greater detail
regarding some of these factors in our 2009 Form 10-K, including in
the Risk Factors and Risk Management sections of that report, and
in our subsequent SEC filings. Our forward-looking statements
may also be subject to other risks and uncertainties, including
those that we may discuss elsewhere in this news release or in our
filings with the SEC, accessible on the SEC’s website at
www.sec.gov and on or through 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.
- Our businesses and financial results are affected by business
and economic conditions, both generally and specifically in the
principal markets in which we operate. In particular, our
businesses and financial results may be impacted by:
- Changes in interest rates and valuations in the debt, equity
and other financial markets.
- Disruptions in the liquidity and other functioning of financial
markets, including such disruptions in the markets for real estate
and other assets commonly securing financial products.
- Actions by the Federal Reserve and other government agencies,
including those that impact money supply and market interest
rates.
- Changes in our customers’, suppliers’ and other counterparties’
performance in general and their creditworthiness in
particular.
- Changes in levels of unemployment.
- Changes in customer preferences and behavior, whether as a
result of changing business and economic conditions,
climate-related physical changes or legislative and regulatory
initiatives, or other factors.
- A continuation of turbulence in significant portions of the US
and global financial markets, particularly if it worsens, could
impact our performance, both directly by affecting our revenues and
the value of our assets and liabilities and indirectly by affecting
our counterparties and the economy generally.
- Our business and financial performance could be impacted as the
financial industry restructures in the current environment, both by
changes in the creditworthiness and performance of our
counterparties and by changes in the competitive and regulatory
landscape.
- Given current economic and financial market conditions, our
forward-looking financial statements are subject to the risk that
these conditions will be substantially different than we are
currently expecting. These statements are based on our
current expectations that interest rates will remain low in the
first half of 2010 but will move upward in the second half of the
year and our view that the moderate economic recovery that began
last year will extend through 2010.
- Legal and regulatory developments could have an impact on our
ability to operate our businesses or our financial condition or
results of operations or our competitive position or reputation.
Reputational impacts, in turn, could affect matters such as
business generation and retention, our ability to attract and
retain management, liquidity, and funding. These legal and
regulatory developments could include:
- Changes resulting from legislative and regulatory responses to
the current economic and financial industry environment.
- Other legislative and regulatory reforms, including broad-based
restructuring of financial industry regulation as well as changes
to laws and regulations involving tax, pension, bankruptcy,
consumer protection, and other aspects of the financial institution
industry.
- Increased litigation risk from recent regulatory and other
governmental developments.
- Unfavorable resolution of legal proceedings or other claims and
regulatory and other governmental inquiries.
- The results of the regulatory examination and supervision
process, including our failure to satisfy the requirements of
agreements with governmental agencies.
- Changes in accounting policies and principles.
- Changes resulting from legislative and regulatory initiatives
relating to climate change that have or may have a negative impact
on our customers’ demand for or use of our products and services in
general and their creditworthiness in particular.
- Changes to regulations governing bank capital, including as a
result of the so-called “Basel 3” initiatives.
- Our business and operating results are affected by our ability
to identify and effectively manage risks inherent in our
businesses, including, where appropriate, through the effective use
of third-party insurance, derivatives, and capital management
techniques, and by our ability to meet evolving regulatory capital
standards.
- The adequacy of our intellectual property protection, and the
extent of any costs associated with obtaining rights in
intellectual property claimed by others, can impact our business
and operating results.
- Our ability to anticipate and respond to technological changes
can have an impact on our ability to respond to customer needs and
to meet competitive demands.
- Our ability to implement our business initiatives and
strategies could affect our financial performance over the next
several years.
- Competition can have an impact on customer acquisition, growth
and retention, as well as on our credit spreads and product
pricing, which can affect market share, deposits and revenues.
- Our business and operating results can also be affected by
widespread natural disasters, terrorist activities or international
hostilities, either as a result of the impact on the economy and
capital and other financial markets generally or on us or on our
customers, suppliers or other counterparties specifically.
- Also, risks and uncertainties that could affect the results
anticipated in forward-looking statements or from historical
performance relating to our equity interest in BlackRock, Inc. are
discussed in more detail in BlackRock’s filings with the SEC,
including in the Risk Factors sections of BlackRock’s reports.
BlackRock’s SEC filings are accessible on the SEC’s website and on
or through BlackRock’s website at www.blackrock.com. This
material is referenced for informational purposes only and should
not be deemed to constitute a part of this document.
In addition, our acquisition of National City Corporation
(“National City”) on December 31,
2008 presents us with a number of risks and uncertainties
related both to the acquisition itself and to the integration of
the acquired businesses into PNC. These risks and
uncertainties include the following:
- The anticipated benefits of the transaction, including
anticipated cost savings and strategic gains, may be significantly
harder or take longer to achieve than expected or may not be
achieved in their entirety as a result of unexpected factors or
events.
- Our ability to achieve anticipated results from this
transaction is dependent on the state going forward of the economic
and financial markets, which have been under significant stress.
Specifically, we may incur more credit losses from National
City’s loan portfolio than expected. Other issues related to
achieving anticipated financial results include the possibility
that deposit attrition or attrition in key client, partner and
other relationships may be greater than expected.
- Legal proceedings or other claims made and governmental
investigations currently pending against National City, as well as
others that may be filed, made or commenced relating to National
City’s business and activities before the acquisition, could
adversely impact our financial results.
- Our ability to achieve anticipated results is also dependent on
our ability to bring National City’s systems, operating models, and
controls into conformity with ours and to do so on our planned time
schedule. The integration of National City’s business and
operations into PNC, which includes conversion of National City’s
different systems and procedures, may take longer than anticipated
or be more costly than anticipated or have unanticipated adverse
results relating to National City’s or PNC’s existing businesses.
PNC’s ability to integrate National City successfully may be
adversely affected by the fact that this transaction has resulted
in PNC entering several markets where PNC did not previously have
any meaningful retail presence.
In addition to the National City transaction, we grow our
business from time to time by acquiring other financial services
companies. Acquisitions in general present us with risks, in
addition to those presented by the nature of the business acquired,
similar to some or all of those described above relating to the
National City acquisition.
CONTACTS:
|
|
|
|
MEDIA:
|
|
Brian E. Goerke
|
|
(412) 762-4550
|
|
corporate.communications@pnc.com
|
|
|
|
INVESTORS:
|
|
William H. Callihan
|
|
(412) 762-8257
|
|
investor.relations@pnc.com
|
|
|
|
|
|
|
|
[TABULAR MATERIAL
FOLLOWS]
|
|
|
The PNC Financial Services Group,
Inc.
|
Consolidated Financial
Highlights (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL RESULTS
|
Three months ended
|
|
Dollars in millions, except per share
data
|
March 31
|
December 31
|
|
March 31
|
|
|
2010
|
2009
|
|
2009
|
|
Revenue
|
|
|
|
|
|
Net interest income
|
$2,379
|
$2,346
|
|
$2,320
|
|
Noninterest income
|
1,384
|
2,540
|
(a)
|
1,366
|
|
Total
revenue
|
3,763
|
4,886
|
|
3,686
|
|
Noninterest expense
|
2,113
|
2,209
|
|
2,158
|
|
Pretax,
pre-provision earnings (b)
|
$1,650
|
$2,677
|
|
$1,528
|
|
|
|
|
|
|
|
Provision for credit losses
|
$751
|
$1,049
|
|
$880
|
|
|
|
|
|
|
|
Income from continuing operations before
noncontrolling interests (c)
|
$648
|
$1,103
|
|
$520
|
|
|
|
|
|
|
|
Income from discontinued operations, net of income
taxes (d)
|
$23
|
$4
|
|
$10
|
|
|
|
|
|
|
|
Net income
|
$671
|
$1,107
|
|
$530
|
|
|
|
|
|
|
|
Net income attributable to common
shareholders
|
$333
|
$1,011
|
|
$460
|
|
|
|
|
|
|
|
Diluted earnings per common share
|
|
|
|
|
|
Continuing operations
|
$.61
|
$2.16
|
|
$1.01
|
|
Discontinued operations (d)
|
.05
|
.01
|
(e)
|
.02
|
|
Net income
|
$.66
|
$2.17
|
|
$1.03
|
|
As adjusted (f)
|
$1.31
|
$.90
|
|
$1.11
|
|
|
|
|
|
|
|
Cash dividends declared per common
share
|
$.10
|
$.10
|
|
$.66
|
|
|
|
|
|
|
|
Total preferred dividends declared
|
$93
|
$119
|
|
$51
|
|
TARP Capital Purchase Program preferred dividends
(g)
|
$89
|
$95
|
|
$47
|
|
Impact of TARP Capital Purchase Program preferred
dividends per diluted common share
|
$.18
|
$.21
|
|
$.11
|
|
|
|
|
|
|
|
Certain prior period amounts included in
these Consolidated Financial Highlights have been reclassified to
conform with the current period presentation.
|
|
|
|
(a) Includes a $1.076 billion gain related
to BlackRock's acquisition of Barclays Global Investors (BGI) on
December 1, 2009.
|
|
|
|
(b) PNC believes that pretax, pre-provision
earnings is useful as a tool to help evaluate its ability to
provide for credit costs through operations.
|
|
|
|
(c) See page 18 for a reconciliation of
business segment earnings to income from continuing operations
before noncontrolling interests.
|
|
|
|
(d) Includes results of operations for PNC
Global Investment Servicing Inc. (GIS) for all periods presented.
On February 2, 2010, we entered into a definitive agreement
to sell GIS. Subject to regulatory approvals and certain
other closing conditions, the transaction is expected to close in
the third quarter of 2010.
|
|
|
|
(e) Includes the impact of $18 million of
deferred income taxes provided on the difference in the stock
investment and tax basis of GIS, a US subsidiary.
|
|
|
|
(f) See reconciliation to "as reported"
diluted earnings per share on page 16.
|
|
|
|
(g) PNC redeemed the TARP preferred stock on
February 10, 2010.
|
|
|
|
|
|
|
|
|
The PNC Financial Services Group,
Inc.
|
Consolidated Financial
Highlights
(Unaudited)
|
|
|
|
|
RECONCILIATIONS OF "AS REPORTED" (GAAP) NET
INCOME, NET INCOME
ATTRIBUTABLE TO COMMON SHAREHOLDERS AND DILUTED
EPS TO
"AS ADJUSTED" AMOUNTS
|
|
|
|
In millions, except per share data
|
|
|
|
|
|
THREE MONTHS ENDED
|
March 31,
2010
|
|
|
|
|
|
|
|
|
|
Net
Income
|
|
|
|
|
|
|
|
Income
|
|
|
|
Attributable
to
|
|
|
|
|
|
|
|
Taxes
|
|
Net
|
|
Common
|
|
Diluted
|
|
|
|
Pretax
|
|
(Benefit) (a)
|
|
Income
|
|
Shareholders
|
|
EPS
|
|
|
Net income, as reported
|
|
|
|
|
$671
|
|
$333
|
|
$.66
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Integration costs
|
$113
|
|
$(40)
|
|
73
|
|
73
|
|
.15
|
|
|
TARP preferred stock accelerated discount
accretion
|
|
|
|
|
|
|
250
|
|
.50
|
|
|
Net income, as adjusted
|
|
|
|
|
$744
|
|
$656
|
|
$1.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2009
|
|
|
|
|
|
|
|
|
|
Net
Income
|
|
|
|
|
|
|
|
Income
|
|
|
|
Attributable
to
|
|
|
|
|
|
|
|
Taxes
|
|
Net
|
|
Common
|
|
Diluted
|
|
|
|
Pretax
|
|
(Benefit) (a)
|
|
Income
|
|
Shareholders
|
|
EPS
|
|
|
Net income, as reported
|
|
|
|
|
$1,107
|
|
$1,011
|
|
$2.17
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Integration costs
|
$155
|
|
$(54)
|
|
101
|
|
101
|
|
.22
|
|
|
Gain on BlackRock/BGI
transaction
|
(1,076)
|
|
389
|
|
(687)
|
|
(687)
|
|
(1.49)
|
|
|
Net income, as adjusted
|
|
|
|
|
$521
|
|
$425
|
|
$.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2009
|
|
|
|
|
|
|
|
|
|
Net
Income
|
|
|
|
|
|
|
|
Income
|
|
|
|
Attributable
to
|
|
|
|
|
|
|
|
Taxes
|
|
Net
|
|
Common
|
|
Diluted
|
|
|
|
Pretax
|
|
(Benefit) (a)
|
|
Income
|
|
Shareholders
|
|
EPS
|
|
|
Net income, as reported
|
|
|
|
|
$530
|
|
$460
|
|
$1.03
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Integration costs
|
$52
|
|
$(19)
|
|
33
|
|
33
|
|
.08
|
|
|
Net income, as adjusted
|
|
|
|
|
$563
|
|
$493
|
|
$1.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
These tables represent
reconciliations of certain “As Reported” (GAAP) amounts to “As
Adjusted” amounts for the TARP preferred stock accelerated discount
accretion, integration costs and the gain on the BlackRock/BGI
transaction. We have provided these adjusted amounts and
reconciliations so that investors, analysts, regulators and others
will be better able to evaluate the impact of these respective
items on the results for and as of the periods presented. We
believe that information as adjusted for the impact of the
specified items may be useful due to the extent to which the items
are not indicative of ongoing operations. Adjusted
information supplements our results as reported in accordance with
GAAP and should not be viewed in isolation from, or as a substitute
for, GAAP results.
|
|
|
|
(a) Calculated using a marginal federal
income tax rate of 35%. The after-tax gain on the
BlackRock/BGI transaction also reflects the impact of state income
taxes.
|
|
|
|
|
|
|
|
|
|
|
|
|
The PNC Financial Services Group,
Inc.
|
Consolidated Financial
Highlights (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31
|
|
December 31
|
|
March 31
|
|
|
|
|
2010
|
|
2009
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
PERFORMANCE RATIOS
|
|
|
|
|
|
|
|
From continuing operations
|
|
|
|
|
|
|
|
|
Noninterest income to total revenue
(a)
|
37
|
%
|
52
|
%
|
37
|
%
|
|
|
Efficiency (b)
|
56
|
|
45
|
|
59
|
|
|
From net income
|
|
|
|
|
|
|
|
|
Net interest margin (c)
|
4.24
|
%
|
4.05
|
%
|
3.81
|
%
|
|
|
Return on:
|
|
|
|
|
|
|
|
|
Average common shareholders'
equity
|
5.37
|
|
17.79
|
|
10.23
|
|
|
|
Average assets
|
1.02
|
|
1.62
|
|
.77
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL RATIOS
|
|
|
|
|
|
|
|
Tier 1 risk-based - as reported (d)
|
9.9
|
%
|
11.4
|
%
|
10.0
|
%
|
|
Tier 1 risk-based - pro forma (e)
|
10.6
|
|
|
|
|
|
|
Tier 1 common - as reported (d)
|
7.6
|
|
6.0
|
|
4.9
|
|
|
Tier 1 common - pro forma (e)
|
8.3
|
|
|
|
|
|
|
Total risk-based (d)
|
13.4
|
|
15.0
|
|
13.6
|
|
|
Leverage (d)
|
8.9
|
|
10.1
|
|
8.9
|
|
|
Common shareholders' equity to assets
|
10.0
|
|
8.2
|
|
6.5
|
|
|
|
|
|
|
|
|
|
|
|
ASSET QUALITY RATIOS
|
|
|
|
|
|
|
|
Nonperforming loans to total loans
|
3.66
|
%
|
3.60
|
%
|
1.73
|
%
|
|
Nonperforming assets to total loans and foreclosed
and other assets
|
4.14
|
|
3.99
|
|
2.05
|
|
|
Nonperforming assets to total assets
|
2.46
|
|
2.34
|
|
1.23
|
|
|
Net charge-offs to average loans (for the three
months ended) (annualized)
|
1.77
|
|
2.09
|
|
1.01
|
|
|
Allowance for loan and lease losses to total
loans
|
3.38
|
|
3.22
|
|
2.51
|
|
|
Allowance for loan and lease losses to
nonperforming loans
|
92
|
|
89
|
|
145
|
|
|
|
|
|
|
|
|
|
|
|
(a) Calculated as noninterest income
divided by the sum of net interest income and noninterest income.
|
|
|
|
(b) Calculated as noninterest expense
divided by the sum of net interest income and noninterest income.
|
|
|
|
|
|
|
|
|
|
|
|
(c) Calculated as annualized
taxable-equivalent net interest income divided by average earning
assets. 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
margins for all earning assets, we use net interest income on a
taxable-equivalent basis in calculating 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 GAAP in the
Consolidated Income Statement. The taxable-equivalent adjustments
to net interest income for the three months ended March 31, 2010,
December 31, 2009, and March 31, 2009 were $18 million, $18
million, and $15 million, respectively.
|
|
|
|
(d) The ratios as of March 31,
2010 are estimated.
|
|
|
|
(e) The following represents a
reconciliation of certain risk-based capital and ratios at March
31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
Dollars in billions
|
|
Tier 1 risk-based (d)
|
|
Tier 1 common (d)
|
|
|
Ratios – as reported
|
|
9.9
|
%
|
7.6
|
%
|
|
Capital – as reported
|
|
$22.9
|
|
$17.6
|
|
|
Adjustment:
|
|
|
|
|
|
|
Net impact of pending 2010 sale of GIS
(f)
|
|
1.6
|
|
1.6
|
|
|
Capital – pro forma
|
|
$24.5
|
|
$19.2
|
|
|
Ratios – pro forma
|
|
10.6
|
%
|
8.3
|
%
|
|
(f) The estimated net
impact of this pending sale is as follows:
|
|
|
|
|
|
|
|
In billions
|
|
|
Sales price
|
$2.3
|
|
Less:
|
|
|
Book equity / intercompany
debt
|
(1.5)
|
|
Pretax gain
|
.8
|
|
Income taxes
|
(.3)
|
|
After-tax gain
|
.5
|
|
Elimination of net intangible assets:
|
|
|
Goodwill and other intangible
assets
|
1.3
|
|
Eligible deferred income taxes on
goodwill and other intangible assets
|
(.2)
|
|
Net intangible
assets
|
1.1
|
|
Estimated net impact of pending sale of
GIS
|
$1.6
|
|
We believe that the disclosure
of these ratios reflecting the estimated impact of the pending sale
of GIS provides additional meaningful information regarding the
risk-based capital ratios at that date and the impact of this event
on these ratios.
|
|
|
|
The PNC Financial Services Group,
Inc.
|
Consolidated Financial
Highlights (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At or for the three months
ended
|
|
|
|
|
March 31
|
|
December 31
|
|
March 31
|
|
|
|
|
2010
|
|
2009
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE SHEET DATA
|
|
|
|
|
|
|
|
Dollars in millions, except per share
data
|
|
|
|
|
|
|
|
Assets
|
$265,396
|
|
$269,863
|
|
$286,422
|
|
|
Loans (a) (b)
|
157,266
|
|
157,543
|
|
171,373
|
|
|
Allowance for loan and lease losses (a)
|
5,319
|
|
5,072
|
|
4,299
|
|
|
Interest-earning deposits with banks
(a)
|
607
|
|
4,488
|
|
14,783
|
|
|
Investment securities (a)
|
57,606
|
|
56,027
|
|
46,253
|
|
|
Loans held for sale (b)
|
2,691
|
|
2,539
|
|
4,045
|
|
|
Goodwill and other intangible assets
|
12,714
|
|
12,909
|
|
12,178
|
|
|
Equity investments (a)
|
10,256
|
|
10,254
|
|
8,215
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing deposits
|
43,122
|
|
44,384
|
|
40,610
|
|
|
Interest-bearing deposits
|
139,401
|
|
142,538
|
|
154,025
|
|
|
Total deposits
|
182,523
|
|
186,922
|
|
194,635
|
|
|
Transaction deposits
|
126,420
|
|
126,244
|
|
118,869
|
|
|
Borrowed funds (a)
|
42,461
|
|
39,261
|
|
48,459
|
|
|
Shareholders’ equity
|
26,818
|
|
29,942
|
|
26,477
|
|
|
Common shareholders’ equity
|
26,466
|
|
22,011
|
|
18,546
|
|
|
Accumulated other comprehensive loss
|
1,288
|
|
1,962
|
|
3,289
|
|
|
|
|
|
|
|
|
|
|
|
Book value per common share
|
50.32
|
|
47.68
|
|
41.67
|
|
|
Common shares outstanding (millions)
|
526
|
|
462
|
|
445
|
|
|
Loans to deposits
|
86
|
%
|
84
|
%
|
88
|
%
|
|
|
|
|
|
|
|
|
|
|
ASSETS UNDER ADMINISTRATION
(billions)
|
|
|
|
|
|
|
|
Discretionary assets under management
|
$105
|
|
$103
|
|
$96
|
|
|
Nondiscretionary assets under
administration
|
104
|
|
102
|
|
120
|
|
|
Total assets under administration
|
$209
|
|
$205
|
|
$216
|
|
|
|
|
|
|
|
|
|
|
|
BUSINESS SEGMENT EARNINGS (LOSS)
(millions) (c)
(d)
|
|
|
|
|
|
|
|
Retail Banking
|
$24
|
|
$(25)
|
|
$50
|
|
|
Corporate & Institutional Banking
|
360
|
|
415
|
|
359
|
|
|
Asset Management Group
|
39
|
|
23
|
|
39
|
|
|
Residential Mortgage Banking
|
82
|
|
25
|
|
227
|
|
|
Distressed Assets Portfolio
|
72
|
|
(88)
|
|
3
|
|
|
Other, including BlackRock (d) (e) (f)
|
71
|
|
753
|
|
(158)
|
|
|
|
Earnings from continuing operations before
noncontrolling interests
|
$648
|
|
$1,103
|
|
$520
|
|
|
|
|
|
|
|
|
|
|
|
(a) Amounts include consolidated
variable interest entities. Some March 31, 2010 amounts include
consolidated variable interest entities that we consolidated
effective January 1, 2010 based on guidance in ASU 2009-17,
Consolidations. Our first quarter 2010 Form 10-Q will include
additional information regarding these Consolidated Balance Sheet
line items.
|
|
|
|
(b) Amounts include items for
which PNC has elected the fair value option. Our first
quarter 2010 Form 10-Q will include additional information
regarding these Consolidated Balance Sheet line items.
|
|
|
|
(c) Our business information is
presented based on our management accounting practices and
our management structure. We refine our methodologies from
time to time as our management accounting practices are enhanced
and our businesses and management structure change. Certain
prior period amounts have been reclassified to reflect current
methodologies and our current business and management structure.
As a result of its pending sale, GIS is no longer a
reportable business segment. Amounts are presented on a
continuing operations before noncontrolling interests basis and
exclude the earnings attributable to GIS.
|
|
|
|
(d) We consider BlackRock to be
a separate reportable business segment but have combined its
results with Other for this presentation. Our first quarter
2010 Form 10-Q will include additional information regarding
BlackRock.
|
|
|
|
(e) Includes earnings and gains
or losses related to PNC's equity interest in BlackRock,
integration costs, asset and liability management activities
including net securities gains or losses, other than temporary
impairment of debt securities and certain trading activities,
equity management activities, exited businesses, differences
between business segment performance reporting and financial
statement reporting under generally accepted accounting principles
(GAAP), corporate overhead and intercompany eliminations.
|
|
(f) The $1.076 billion gain
($687 million after-tax) related to BlackRock's acquisition of BGI
was included in this business segment for the fourth quarter 2009.
|
|
|
|
|
|
|
|
|
|
SOURCE The PNC Financial Services Group, Inc.