PITTSBURGH, July 17, 2019 /PRNewswire/ -- The PNC
Financial Services Group, Inc. (NYSE: PNC) today reported:
|
For the
quarter
|
|
2Q19
|
1Q19
|
2Q18
|
Net
income $ millions
|
$1,374
|
|
$1,271
|
|
$1,356
|
|
Diluted earnings per
common share
|
$2.88
|
|
$2.61
|
|
$2.72
|
|
|
|
"PNC had a successful
second quarter. Loan growth was strong, both net interest income
and noninterest income increased, expenses were well managed and we
generated positive operating leverage. The strength of our capital
position and consistent performance supports our recently announced
21 percent common stock dividend increase. We are continuing to
invest in our businesses to expand and deepen customer
relationships, including in new markets, to drive long-term
shareholder value."
Bill Demchak, PNC Chairman,
President and Chief Executive Officer
|
Income Statement Highlights
Second quarter 2019 compared with first quarter 2019
- Net income was $1.4 billion, an
increase of $103 million, or 8
percent.
- Total revenue of $4.4 billion
grew $153 million, or 4 percent.
- Net interest income of $2.5
billion increased $23 million,
or 1 percent, reflecting higher loan and securities balances and an
additional day in the second quarter partially offset by lower
asset yields and higher borrowing and deposit balances.
-
- Net interest margin decreased 7 basis points to 2.91
percent.
- Noninterest income of $1.9
billion increased $130
million, or 7 percent.
-
- Fee income grew $71 million, or 5
percent, to $1.6 billion due to
seasonally higher business activity.
- Other noninterest income of $367
million increased $59 million
and reflected higher capital markets-related revenue and asset
gains.
- Noninterest expense of $2.6
billion increased $33 million,
or 1 percent.
- Provision for credit losses was $180
million, a decrease of $9
million, or 5 percent, as a lower provision for the consumer
loan portfolio was partially offset by a higher provision for the
commercial lending portfolio.
- The effective tax rate was 16.6 percent for the second quarter
and 16.3 percent for the first quarter.
Balance Sheet Highlights
- Average loans increased $6.3
billion, or 3 percent, to $234.8
billion in the second quarter compared with the first
quarter.
-
- Average commercial lending balances grew $5.4 billion primarily in PNC's corporate banking
and business credit businesses.
- Average consumer lending balances increased $.9 billion due to growth in residential
mortgage, auto, credit card and unsecured installment loans
partially offset by lower home equity and education loans.
- Overall credit quality remained strong.
-
- Nonperforming assets of $1.9
billion at June 30, 2019
increased $65 million, or 4 percent,
compared with March 31, 2019.
- Net charge-offs were $142 million
for the second quarter compared with $136
million for the first quarter.
- The allowance for loan and lease losses to total loans was 1.15
percent at June 30, 2019 and 1.16
percent at March 31, 2019.
- Average deposits increased $5.7
billion, or 2 percent, to $272.9
billion in the second quarter compared with the first
quarter due to growth in both commercial and consumer
deposits.
- Average investment securities increased $1.3 billion, or 2 percent, to $83.6 billion in the second quarter compared with
the first quarter.
- Average balances held with the Federal Reserve of $13.2 billion decreased $1.5 billion compared with the first
quarter.
- PNC's board of directors raised the quarterly cash dividend on
common stock to $1.15 per share, an
increase of 20 cents per share, or 21
percent, effective with the August dividend.
- In June 2019 PNC announced share
repurchase programs of up to $4.3
billion for the four-quarter period beginning in the third
quarter of 2019.
- PNC completed common stock repurchase programs of $2.6 billion and repurchased shares for
$.2 billion related to employee
benefit plans for the four quarters ending with the second quarter
of 2019. A total of $4.5 billion of
capital was returned to shareholders over this period through
repurchases of 21.4 million common shares for $2.8 billion and dividends on common shares of
$1.7 billion.
-
- Capital returned to shareholders in the second quarter of 2019
totaled $1.2 billion through
repurchases of 6.0 million shares for $802
million and dividends on common shares of $431 million.
- PNC maintained a strong capital position.
-
- The Basel III common equity Tier 1 capital ratio was an
estimated 9.7 percent at June 30,
2019 and 9.8 percent at March 31,
2019.
Earnings
Summary
|
|
|
|
|
|
|
In millions,
except per share data
|
|
2Q19
|
|
1Q19
|
|
2Q18
|
Net income
|
|
$
|
1,374
|
|
|
$
|
1,271
|
|
|
$
|
1,356
|
|
Net income
attributable to diluted common shares
|
|
$
|
1,300
|
|
|
$
|
1,189
|
|
|
$
|
1,282
|
|
Diluted earnings per
common share
|
|
$
|
2.88
|
|
|
$
|
2.61
|
|
|
$
|
2.72
|
|
Average diluted
common shares outstanding
|
|
452
|
|
|
456
|
|
|
472
|
|
Return on average
assets
|
|
1.39
|
%
|
|
1.34
|
%
|
|
1.45
|
%
|
Return on average
common equity
|
|
11.75
|
%
|
|
11.13
|
%
|
|
12.13
|
%
|
Book value per common
share
|
Quarter
end
|
$
|
101.53
|
|
|
$
|
98.47
|
|
|
$
|
92.26
|
|
Tangible book value
per common share (non-GAAP)
|
Quarter
end
|
$
|
80.76
|
|
|
$
|
78.07
|
|
|
$
|
72.25
|
|
Cash dividends
declared per common share
|
|
$
|
.95
|
|
|
$
|
.95
|
|
|
$
|
.75
|
|
|
|
|
|
|
|
|
The Consolidated Financial Highlights accompanying this news
release include additional information regarding reconciliations of
non-GAAP financial measures to reported amounts. Fee income, a
non-GAAP financial measure, refers to noninterest income in the
following categories: asset management, consumer services,
corporate services, residential mortgage and service charges on
deposits. Information in this news release, including the financial
tables, is unaudited.
CONSOLIDATED
REVENUE REVIEW
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
2Q19 vs
|
2Q19 vs
|
In
millions
|
2Q19
|
|
1Q19
|
|
2Q18
|
1Q19
|
2Q18
|
Net interest
income
|
$
|
2,498
|
|
|
$
|
2,475
|
|
|
$
|
2,413
|
|
1
|
%
|
4
|
%
|
Noninterest
income
|
1,941
|
|
|
1,811
|
|
|
1,911
|
|
7
|
%
|
2
|
%
|
Total
revenue
|
$
|
4,439
|
|
|
$
|
4,286
|
|
|
$
|
4,324
|
|
4
|
%
|
3
|
%
|
|
|
|
|
|
|
|
|
Total revenue for the second quarter of 2019 increased
$153 million compared with the first
quarter and $115 million compared
with the second quarter of 2018. Both net interest income and
noninterest income increased in the comparisons.
Net interest income for the second quarter of 2019 increased
$23 million compared with the first
quarter reflecting higher loan and securities balances and an
additional day in the second quarter partially offset by lower
asset yields and higher borrowing and deposit balances. In the
comparison with the second quarter of 2018, net interest income
increased $85 million as higher loan
and securities yields and balances were partially offset by higher
deposit and borrowing costs. The net interest margin declined to
2.91 percent for the second quarter of 2019 compared with 2.98
percent for the first quarter driven by lower loan yields and
higher deposit costs. The margin was 2.96 percent for the second
quarter of 2018.
Noninterest
Income
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
2Q19 vs
|
2Q19 vs
|
In
millions
|
2Q19
|
|
1Q19
|
|
2Q18
|
1Q19
|
2Q18
|
Asset
management
|
$
|
445
|
|
|
$
|
437
|
|
|
$
|
456
|
|
2
|
%
|
(2)
|
%
|
Consumer
services
|
392
|
|
|
371
|
|
|
381
|
|
6
|
%
|
3
|
%
|
Corporate
services
|
484
|
|
|
462
|
|
|
487
|
|
5
|
%
|
(1)
|
%
|
Residential
mortgage
|
82
|
|
|
65
|
|
|
84
|
|
26
|
%
|
(2)
|
%
|
Service charges on
deposits
|
171
|
|
|
168
|
|
|
169
|
|
2
|
%
|
1
|
%
|
Other
|
367
|
|
|
308
|
|
|
334
|
|
19
|
%
|
10
|
%
|
|
$
|
1,941
|
|
|
$
|
1,811
|
|
|
$
|
1,911
|
|
7
|
%
|
2
|
%
|
|
|
|
|
|
|
|
|
Noninterest income for the second quarter of 2019 increased
$130 million compared with the first
quarter due to increases in all categories of fee income and higher
other noninterest income. Asset management revenue, including
earnings from PNC's equity investment in BlackRock, increased
$8 million reflecting higher average
equity markets. Consumer services increased $21 million primarily due to seasonally higher
debit card and merchant services revenue. Corporate services
increased $22 million driven by
higher treasury management product revenue and loan syndication
fees. Residential mortgage revenue increased $17 million as positive adjustments for
residential mortgage servicing rights valuation, net of economic
hedge, and higher loan sales revenue were partially offset by lower
servicing fee income. Other noninterest income increased
$59 million primarily as a result of
higher capital markets-related revenue and asset gains, which
included a gain on the sale of the retirement recordkeeping
business and the impact of negative derivative fair value
adjustments related to Visa Class B common shares of $16 million in the second quarter compared with
$31 million in the first quarter.
Noninterest income for the second quarter of 2019 increased
$30 million compared with the second
quarter of 2018. Asset management revenue, including earnings from
PNC's equity investment in BlackRock, declined $11 million. Consumer services increased
$11 million driven by higher debit
and credit card revenue. Corporate services decreased $3 million as higher treasury management product
revenue was more than offset by lower loan syndication fees and a
lower benefit from commercial mortgage servicing rights valuation,
net of economic hedge. Other noninterest income increased
$33 million reflecting the gain on
the sale of the retirement recordkeeping business and higher net
securities gains partially offset by the impact of negative Visa
Class B derivative fair value adjustments in the second quarter of
2019 compared with positive adjustments in the second quarter of
2018.
CONSOLIDATED
EXPENSE REVIEW
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest
Expense
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
2Q19 vs
|
2Q19 vs
|
In
millions
|
2Q19
|
|
1Q19
|
|
2Q18
|
1Q19
|
2Q18
|
Personnel
|
$
|
1,365
|
|
|
$
|
1,414
|
|
|
$
|
1,356
|
|
(3)
|
%
|
1
|
%
|
Occupancy
|
212
|
|
|
215
|
|
|
203
|
|
(1)
|
%
|
4
|
%
|
Equipment
|
298
|
|
|
273
|
|
|
281
|
|
9
|
%
|
6
|
%
|
Marketing
|
83
|
|
|
65
|
|
|
75
|
|
28
|
%
|
11
|
%
|
Other
|
653
|
|
|
611
|
|
|
669
|
|
7
|
%
|
(2)
|
%
|
|
$
|
2,611
|
|
|
$
|
2,578
|
|
|
$
|
2,584
|
|
1
|
%
|
1
|
%
|
|
|
|
|
|
|
|
|
Noninterest expense for the second quarter of 2019 increased
$33 million compared with the first
quarter. Equipment expense increased due to asset write-offs
associated with the sale of the retirement recordkeeping business.
Higher marketing and other expense reflected costs for business
initiatives including PNC's national retail digital strategy. These
increases were partially offset by lower personnel expense related
to incentive compensation.
Noninterest expense for the second quarter of 2019 increased
$27 million compared with the second
quarter of 2018 as a result of the asset write-offs and ongoing
business investments reflected in higher personnel, occupancy and
marketing expense. These increases were offset in part by a
decrease in FDIC insurance due to the elimination of the
surcharge.
The effective tax rate was 16.6 percent for the second quarter
of 2019, 16.3 percent for the first quarter of 2019 and 18.3
percent for the second quarter of 2018.
CONSOLIDATED BALANCE SHEET REVIEW
Average total assets of $397.0
billion in the second quarter of 2019 increased 3 percent
compared with $385.9 billion in the
first quarter of 2019 driven by loan growth, an increase in other
assets reflecting higher unsettled securities sales, and higher
investment securities. Average total assets increased 6 percent
compared with $375.6 billion in the
second quarter of 2018 primarily due to higher loans and investment
securities. Total assets were $405.8
billion at June 30, 2019,
$392.8 billion at March 31, 2019 and $380.7
billion at June 30, 2018.
Loans
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
2Q19 vs
|
2Q19 vs
|
In
billions
|
2Q19
|
|
1Q19
|
|
2Q18
|
1Q19
|
2Q18
|
Average
|
|
|
|
|
|
|
|
Commercial
lending
|
$
|
160.1
|
|
|
$
|
154.7
|
|
|
$
|
149.7
|
|
3
|
%
|
7
|
%
|
Consumer
lending
|
74.7
|
|
|
73.8
|
|
|
72.9
|
|
1
|
%
|
2
|
%
|
Average
loans
|
$
|
234.8
|
|
|
$
|
228.5
|
|
|
$
|
222.6
|
|
3
|
%
|
5
|
%
|
|
|
|
|
|
|
|
|
Quarter
end
|
|
|
|
|
|
|
|
Commercial
lending
|
$
|
161.6
|
|
|
$
|
158.4
|
|
|
$
|
149.6
|
|
2
|
%
|
8
|
%
|
Consumer
lending
|
75.6
|
|
|
73.9
|
|
|
73.3
|
|
2
|
%
|
3
|
%
|
Total
loans
|
$
|
237.2
|
|
|
$
|
232.3
|
|
|
$
|
222.9
|
|
2
|
%
|
6
|
%
|
|
|
|
|
|
|
|
|
Average loans for the second quarter of 2019 grew $6.3 billion compared with the first quarter.
Average commercial lending balances increased $5.4 billion primarily in PNC's corporate banking
and business credit businesses. Average consumer lending balances
increased $.9 billion due to growth
in residential mortgage, auto, credit card and unsecured
installment loans partially offset by lower home equity and
education loans. Total loans at June 30,
2019 grew $4.9 billion
compared with March 31, 2019 as
commercial lending balances increased $3.2
billion and consumer lending balances increased $1.7 billion.
Second quarter 2019 average and period end loans increased
$12.2 billion and $14.3 billion, respectively, compared with second
quarter 2018 driven by growth in both commercial and consumer
lending balances.
Investment
Securities
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
2Q19 vs
|
2Q19 vs
|
In
billions
|
2Q19
|
|
1Q19
|
|
2Q18
|
1Q19
|
2Q18
|
Average
|
$
|
83.6
|
|
|
$
|
82.3
|
|
|
$
|
77.5
|
|
2
|
%
|
8
|
%
|
Quarter
end
|
$
|
88.3
|
|
|
$
|
83.9
|
|
|
$
|
80.1
|
|
5
|
%
|
10
|
%
|
|
|
|
|
|
|
|
|
Average investment securities for the second quarter of 2019
increased $1.3 billion and period end
balances increased $4.4 billion
compared with the first quarter due to net purchase activity of
primarily agency residential mortgage-backed securities near the
end of the second quarter. Second quarter 2019 average and
period-end investment securities increased $6.1 billion and $8.2
billion, respectively, compared with the second quarter of
2018. Net unrealized gains on available for sale securities were
$1.2 billion at June 30, 2019 compared with $.5 billion at March 31,
2019 and net unrealized losses of $.4
billion at June 30, 2018.
Average balances held with the Federal Reserve Bank decreased to
$13.2 billion in the second quarter
of 2019 from $14.7 billion in the
first quarter and $20.7 billion in
the second quarter of 2018 as investment of liquidity continued.
Balances held with the Federal Reserve were $18.1 billion at June 30,
2019, $15.0 billion at
March 31, 2019, and $21.6 billion at June 30,
2018.
Deposits
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
2Q19 vs
|
2Q19 vs
|
In
billions
|
2Q19
|
|
1Q19
|
|
2Q18
|
1Q19
|
2Q18
|
Average
|
|
|
|
|
|
|
|
Noninterest-bearing
|
$
|
71.7
|
|
|
$
|
71.4
|
|
|
$
|
76.6
|
|
—
|
|
(6)
|
%
|
Interest-bearing
|
201.2
|
|
|
195.8
|
|
|
184.4
|
|
3
|
%
|
9
|
%
|
Average
deposits
|
$
|
272.9
|
|
|
$
|
267.2
|
|
|
$
|
261.0
|
|
2
|
%
|
5
|
%
|
|
|
|
|
|
|
|
|
Quarter
end
|
|
|
|
|
|
|
|
Noninterest-bearing
|
$
|
69.9
|
|
|
$
|
71.6
|
|
|
$
|
79.1
|
|
(2)
|
%
|
(12)
|
%
|
Interest-bearing
|
203.4
|
|
|
199.6
|
|
|
185.8
|
|
2
|
%
|
9
|
%
|
Total
deposits
|
$
|
273.3
|
|
|
$
|
271.2
|
|
|
$
|
264.9
|
|
1
|
%
|
3
|
%
|
|
|
|
|
|
|
|
|
Average deposits for the second quarter of 2019 increased
$5.7 billion compared with the first
quarter due to growth in both commercial and consumer deposits.
Deposits at June 30, 2019 increased
$2.1 billion over March 31, 2019 as growth in commercial deposits
was partially offset by seasonally lower consumer demand deposits.
Second quarter 2019 average and period-end deposits increased
$11.9 billion and $8.4 billion, respectively, compared with second
quarter 2018. Growth in interest-bearing deposits in the
comparisons was attributable to higher commercial deposits, in part
reflecting a shift from noninterest-bearing, and higher consumer
deposits, including from the national retail digital strategy.
Borrowed
Funds
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
2Q19 vs
|
2Q19 vs
|
In
billions
|
2Q19
|
|
1Q19
|
|
2Q18
|
1Q19
|
2Q18
|
Average
|
$
|
62.3
|
|
|
$
|
59.8
|
|
|
$
|
58.9
|
|
4
|
%
|
6
|
%
|
Quarter
end
|
$
|
69.0
|
|
|
$
|
59.8
|
|
|
$
|
59.2
|
|
15
|
%
|
17
|
%
|
|
|
|
|
|
|
|
|
Average borrowed funds for the second quarter of 2019 increased
$2.5 billion compared with the first
quarter due to higher bank notes and senior debt and Federal Home
Loan Bank borrowings. Borrowed funds at June
30, 2019 increased $9.2
billion compared with March 31,
2019 as a result of an increase in primarily short-term
Federal Home Loan Bank borrowings near the end of the second
quarter. Average and period-end borrowed funds for the second
quarter of 2019 increased $3.4
billion and $9.8 billion,
respectively, compared with the second quarter of 2018 due to
increases in Federal Home Loan Bank borrowings and federal funds
purchased, which were partially offset by lower bank notes and
senior debt in the average balance comparison.
Capital
|
|
|
|
|
|
|
|
6/30/2019
|
*
|
|
3/31/2019
|
|
6/30/2018
|
Common shareholders'
equity In billions
|
$
|
45.3
|
|
|
|
$
|
44.5
|
|
|
$
|
42.9
|
|
Basel III common
equity Tier 1 capital ratio
|
9.7
|
%
|
|
|
9.8
|
%
|
|
9.5
|
%
|
* Ratio
estimated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PNC maintained a strong capital position. Common shareholders'
equity at June 30, 2019 increased
$.8 billion compared with
March 31, 2019 due to second quarter
net income partially offset by share repurchases and dividends, and
to higher accumulated other comprehensive income related to net
unrealized securities gains.
PNC returned $1.2 billion of
capital to shareholders in the second quarter of 2019 through
repurchases of 6.0 million common shares for $802 million and dividends on common shares of
$431 million. PNC completed common
stock repurchase programs of $2.6
billion and repurchased $.2
billion related to employee benefit plans for the four
quarter period ending in the second quarter of 2019. Capital
returned to shareholders totaled $4.5
billion over this period through repurchases of 21.4 million
common shares for $2.8 billion and
dividends on common shares of $1.7
billion.
In June 2019 PNC announced share
repurchase programs of up to $4.3
billion for the four quarter period beginning in the third
quarter of 2019. Repurchases will be made under a new 100 million
share repurchase authorization effective July 1, 2019.
On July 9, 2019, the PNC board of
directors raised the quarterly cash dividend on common stock to
$1.15 per share, an increase of
20 cents per share, or 21 percent,
effective with the August 5, 2019
dividend payment date.
The Basel III common equity Tier 1 capital ratio was calculated
based on the standardized approach for the risk-weighting of
assets. See Capital Ratios in the Consolidated Financial
Highlights.
CREDIT QUALITY
REVIEW
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit
Quality
|
|
|
|
|
|
Change
|
Change
|
|
At or for the quarter
ended
|
6/30/19 vs
|
6/30/19 vs
|
In
millions
|
6/30/2019
|
|
3/31/2019
|
|
6/30/2018
|
3/31/19
|
6/30/18
|
Nonperforming
loans
|
$
|
1,724
|
|
|
$
|
1,653
|
|
|
$
|
1,719
|
|
4
|
%
|
—
|
|
Nonperforming
assets
|
$
|
1,850
|
|
|
$
|
1,785
|
|
|
$
|
1,854
|
|
4
|
%
|
—
|
|
Accruing loans past
due 90 days or more
|
$
|
524
|
|
|
$
|
590
|
|
|
$
|
586
|
|
(11)
|
%
|
(11)
|
%
|
Net
charge-offs
|
$
|
142
|
|
|
$
|
136
|
|
|
$
|
109
|
|
4
|
%
|
30
|
%
|
Provision for credit
losses
|
$
|
180
|
|
|
$
|
189
|
|
|
$
|
80
|
|
(5)
|
%
|
125
|
%
|
Allowance for loan
and lease losses
|
$
|
2,721
|
|
|
$
|
2,692
|
|
|
$
|
2,581
|
|
1
|
%
|
5
|
%
|
|
|
|
|
|
|
|
|
Overall credit quality for the second quarter of 2019 remained
strong. Provision for credit losses for the second quarter
decreased $9 million compared with
the first quarter. A lower provision for the consumer loan
portfolio driven by auto loans was partially offset by a higher
provision for the commercial lending portfolio reflecting loan
growth and reserve increases attributable to certain commercial
credits.
Nonperforming assets at June 30,
2019 increased $65 million
compared with March 31, 2019
primarily due to higher nonperforming commercial and commercial
real estate loans partially offset by lower nonperforming home
equity loans. Nonperforming assets were relatively stable with
June 30, 2018 as higher nonperforming
loans in the commercial lending portfolio were offset by lower
nonperforming consumer loans. Nonperforming assets to total assets
were .46 percent at June 30, 2019,
.45 percent at March 31, 2019 and .49
percent at June 30, 2018.
Overall delinquencies at June 30,
2019 declined $127 million, or
9 percent, compared with March 31,
2019. Accruing loans 30 to 59 days past due decreased
$84 million reflecting lower
commercial lending portfolio delinquencies as well as lower past
due residential mortgage loans offset by higher past due auto
loans. Accruing loans past due 60 to 89 days increased $23 million primarily due to consumer loans.
Accruing loans past due 90 days or more decreased $66 million across consumer loan categories and
in commercial loans.
Net charge-offs for the second quarter of 2019 increased
$6 million compared with the first
quarter due to higher commercial loan net charge-offs partially
offset by lower consumer loan net charge-offs. Compared with second
quarter 2018, net charge-offs increased $33
million driven by higher commercial loan net charge-offs.
Net charge-offs were .24 percent of average loans on an annualized
basis for both the second and first quarters of 2019 and .20
percent for the second quarter of 2018.
The allowance for loan and lease losses to total loans was 1.15
percent at June 30, 2019 compared
with 1.16 percent at both March 31,
2019 and June 30, 2018. The
allowance to nonperforming loans of 158 percent at June 30, 2019 decreased compared with 163 percent
at March 31, 2019 and increased
compared with 150 percent at June 30,
2018.
BUSINESS SEGMENT
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
Business Segment
Income
|
|
|
|
|
|
In
millions
|
2Q19
|
|
1Q19
|
|
2Q18
|
Retail
Banking
|
$
|
325
|
|
|
$
|
264
|
|
|
$
|
274
|
|
Corporate &
Institutional Banking
|
602
|
|
|
552
|
|
|
652
|
|
Asset Management
Group
|
80
|
|
|
45
|
|
|
43
|
|
Other, including
BlackRock
|
367
|
|
|
410
|
|
|
387
|
|
Net income
|
$
|
1,374
|
|
|
$
|
1,271
|
|
|
$
|
1,356
|
|
See accompanying
notes in Consolidated Financial Highlights
|
|
|
|
|
|
|
|
|
|
|
|
Retail
Banking
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
2Q19 vs
|
|
2Q19 vs
|
In
millions
|
2Q19
|
|
1Q19
|
|
2Q18
|
|
1Q19
|
|
2Q18
|
Net interest
income
|
$
|
1,376
|
|
|
$
|
1,349
|
|
|
$
|
1,277
|
|
|
$
|
27
|
|
|
$
|
99
|
|
Noninterest
income
|
$
|
657
|
|
|
$
|
595
|
|
|
$
|
678
|
|
|
$
|
62
|
|
|
$
|
(21)
|
|
Provision for credit
losses
|
$
|
81
|
|
|
$
|
128
|
|
|
$
|
72
|
|
|
$
|
(47)
|
|
|
$
|
9
|
|
Noninterest
expense
|
$
|
1,527
|
|
|
$
|
1,468
|
|
|
$
|
1,521
|
|
|
$
|
59
|
|
|
$
|
6
|
|
Earnings
|
$
|
325
|
|
|
$
|
264
|
|
|
$
|
274
|
|
|
$
|
61
|
|
|
$
|
51
|
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
|
76.3
|
|
|
$
|
75.2
|
|
|
$
|
73.7
|
|
|
$
|
1.1
|
|
|
$
|
2.6
|
|
Average
deposits
|
$
|
168.8
|
|
|
$
|
165.1
|
|
|
$
|
162.6
|
|
|
$
|
3.7
|
|
|
$
|
6.2
|
|
|
|
|
|
|
|
|
|
|
|
Retail Banking earnings for the second quarter of 2019 increased
in both comparisons. Noninterest income increased compared with the
first quarter due to growth in consumer services, including
seasonally higher debit card and merchant services fees, higher
residential mortgage revenue attributable to favorable residential
mortgage servicing rights valuation adjustments, net of economic
hedge, and to increased loan sales, and lower negative derivative
fair value adjustments related to Visa Class B common shares.
Noninterest income decreased compared with the second quarter of
2018 due to the negative impact of Visa derivative fair value
adjustments partially offset by growth in consumer services,
including higher debit and credit card fees. Provision for credit
losses decreased compared with the first quarter as a result of
lower auto loan portfolio reserves. Noninterest expense increased
in both comparisons due to higher marketing, including expenses
related to the national retail digital strategy, an increase in
customer-related transaction costs, and increased ATM expense
driven by checking product simplification.
- Average loans increased 1 percent compared with first quarter
2019 and 4 percent compared with second quarter 2018 due to growth
in residential mortgage, auto, credit card and unsecured
installment loans partially offset by lower home equity and
education loans.
- Average deposits grew 2 percent compared with first quarter
2019 and 4 percent compared with second quarter 2018 as a result of
increases in savings, demand and certificates of deposit partially
offset by lower money market deposits reflecting a shift to
relationship-based savings products.
- Net charge-offs were $120 million
for the second quarter of 2019 compared with $132 million in the first quarter and
$112 million in the second quarter of
2018.
- Residential mortgage loan origination volume increased to
$2.9 billion for the second quarter
of 2019 compared with $1.7 billion
for the first quarter and $2.0
billion for the second quarter of 2018. Approximately 54
percent of second quarter 2019 volume was for home purchase
transactions compared with 56 percent and 71 percent for the first
quarter of 2019 and second quarter of 2018, respectively.
- The third party residential mortgage servicing portfolio was
$124 billion at June 30, 2019 compared with $123 billion at March 31,
2019 and $124 billion at
June 30, 2018. Residential mortgage
loan servicing acquisitions were $5
billion for second quarter 2019 compared with $1 billion for the first quarter and $3 billion for the second quarter of 2018.
- Approximately 69 percent of consumer customers used non-teller
channels for the majority of their transactions during the second
quarter of 2019 compared with 68 percent in the first quarter and
65 percent in the second quarter of 2018.
- Deposit transactions via ATM and mobile channels were 56
percent of total deposit transactions in the second quarter of 2019
compared with 57 percent in the first quarter and 54 percent in the
second quarter of 2018.
Corporate &
Institutional Banking
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
2Q19 vs
|
|
2Q19 vs
|
In
millions
|
2Q19
|
|
1Q19
|
|
2Q18
|
|
1Q19
|
|
2Q18
|
Net interest
income
|
$
|
917
|
|
|
$
|
898
|
|
|
$
|
900
|
|
|
$
|
19
|
|
|
$
|
17
|
|
Noninterest
income
|
$
|
661
|
|
|
$
|
576
|
|
|
$
|
635
|
|
|
$
|
85
|
|
|
$
|
26
|
|
Provision for credit
losses
|
$
|
100
|
|
|
$
|
71
|
|
|
$
|
15
|
|
|
$
|
29
|
|
|
$
|
85
|
|
Noninterest
expense
|
$
|
698
|
|
|
$
|
686
|
|
|
$
|
668
|
|
|
$
|
12
|
|
|
$
|
30
|
|
Earnings
|
$
|
602
|
|
|
$
|
552
|
|
|
$
|
652
|
|
|
$
|
50
|
|
|
$
|
(50)
|
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
|
147.2
|
|
|
$
|
141.9
|
|
|
$
|
137.0
|
|
|
$
|
5.3
|
|
|
$
|
10.2
|
|
Average
deposits
|
$
|
90.5
|
|
|
$
|
88.6
|
|
|
$
|
85.8
|
|
|
$
|
1.9
|
|
|
$
|
4.7
|
|
|
|
|
|
|
|
|
|
|
|
Corporate & Institutional Banking earnings for the second
quarter of 2019 increased compared with the first quarter of 2019
and decreased compared with the second quarter of 2018. Noninterest
income increased in both comparisons primarily due to broad-based
growth in capital markets-related revenue and treasury management
product revenue. The comparison to the first quarter also benefited
from higher revenue from commercial mortgage banking activities.
Provision for credit losses in the second quarter of 2019 increased
compared with the first quarter reflecting portfolio growth and
reserve increases attributable to certain commercial credits.
Noninterest expense increased in both comparisons largely due to
investments in strategic initiatives and variable costs associated
with increased business activity.
- Average loans increased 4 percent compared with the first
quarter and 7 percent compared with the second quarter of 2018
primarily driven by commercial loan growth in PNC's corporate
banking and business credit businesses. Multifamily agency
warehouse lending activity and commercial real estate lending also
contributed to the loan growth over the first quarter.
- Average deposits increased 2 percent compared with the first
quarter and 6 percent compared with the second quarter of 2018 due
to growth in interest-bearing deposits including a shift from
noninterest-bearing demand deposits.
- Net charge-offs were $23 million
in the second quarter of 2019 compared with $5 million in the first quarter of 2019 and a net
recovery position of $2 million in
the second quarter of 2018.
- PNC has formalized plans to expand its middle market business
into the Portland and Seattle markets in 2020, following expansion
into the Boston and Phoenix markets in 2019.
Asset Management
Group
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
2Q19 vs
|
|
2Q19 vs
|
In
millions
|
2Q19
|
|
1Q19
|
|
2Q18
|
|
1Q19
|
|
2Q18
|
Net interest
income
|
$
|
68
|
|
|
$
|
70
|
|
|
$
|
72
|
|
|
$
|
(2)
|
|
|
$
|
(4)
|
|
Noninterest
income
|
$
|
286
|
|
|
$
|
217
|
|
|
$
|
222
|
|
|
$
|
69
|
|
|
$
|
64
|
|
Provision for credit
losses (benefit)
|
—
|
|
|
$
|
(1)
|
|
|
$
|
7
|
|
|
$
|
1
|
|
|
$
|
(7)
|
|
Noninterest
expense
|
$
|
249
|
|
|
$
|
230
|
|
|
$
|
231
|
|
|
$
|
19
|
|
|
$
|
18
|
|
Earnings
|
$
|
80
|
|
|
$
|
45
|
|
|
$
|
43
|
|
|
$
|
35
|
|
|
$
|
37
|
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Client assets under
administration at
quarter end
|
$
|
294
|
|
|
$
|
288
|
|
|
$
|
279
|
|
|
$
|
6
|
|
|
$
|
15
|
|
Average
loans
|
$
|
6.7
|
|
|
$
|
6.8
|
|
|
$
|
7.0
|
|
|
$
|
(.1)
|
|
|
$
|
(.3)
|
|
Average
deposits
|
$
|
12.7
|
|
|
$
|
12.9
|
|
|
$
|
12.3
|
|
|
$
|
(.2)
|
|
|
$
|
.4
|
|
|
|
|
|
|
|
|
|
|
|
Asset Management Group earnings for the second quarter of 2019
increased in both comparisons. Noninterest income increased as a
result of the gain on sale of the retirement recordkeeping business
and due to increases in the average equity markets. Noninterest
expense increased due to costs associated with the sale
transaction, including asset write-offs.
Client assets under administration at June 30, 2019 included discretionary client
assets under management of $162
billion and nondiscretionary client assets under
administration of $132 billion.
Discretionary client assets under management increased $4 billion compared with March 31, 2019 and $13
billion compared with June 30,
2018 primarily attributable to equity market increases and,
in the second quarter 2018 comparison, net business activities.
The Asset Management Group entered into a definitive agreement
on May 7, 2019 to divest components
of its PNC Capital Advisors investment management business,
including its PNC family of proprietary mutual funds of
approximately $19 billion in assets
under management as of June 30, 2019.
The transaction is expected to close in the fourth quarter of
2019.
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 investment in BlackRock, and 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, other-than-temporary
impairment of investment securities, certain trading activities,
certain non-strategic runoff consumer loan portfolios, private
equity investments, intercompany eliminations, certain corporate
overhead, tax adjustments that are not allocated to business
segments, exited businesses, and differences between business
segment performance reporting and financial statement reporting
under generally accepted accounting principles.
CONFERENCE CALL AND SUPPLEMENTAL FINANCIAL
INFORMATION
PNC Chairman, President and Chief Executive Officer William S. Demchak and Chief Financial Officer
Robert Q. Reilly will hold a
conference call for investors today at 10:30
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) 682-8921 and (303) 223-2694
(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 2019 earnings release, related financial
supplement, and presentation slides to accompany the conference
call remarks will be available at www.pnc.com/investorevents prior
to the beginning of the call. A telephone replay of the call will
be available for one week at (800) 633-8284 and (402) 977-9140
(international), conference ID 21925572 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.
[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
|
|
|
2019
|
|
2019
|
|
2018
|
|
|
2019
|
|
2018
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
|
$
|
2,498
|
|
|
$
|
2,475
|
|
|
$
|
2,413
|
|
|
|
$
|
4,973
|
|
|
$
|
4,774
|
|
Noninterest
income
|
|
1,941
|
|
|
1,811
|
|
|
1,911
|
|
|
|
3,752
|
|
|
3,661
|
|
Total
revenue
|
|
4,439
|
|
|
4,286
|
|
|
4,324
|
|
|
|
8,725
|
|
|
8,435
|
|
Provision for credit
losses
|
|
180
|
|
|
189
|
|
|
80
|
|
|
|
369
|
|
|
172
|
|
Noninterest
expense
|
|
2,611
|
|
|
2,578
|
|
|
2,584
|
|
|
|
5,189
|
|
|
5,111
|
|
Income before income
taxes and noncontrolling interests
|
|
$
|
1,648
|
|
|
$
|
1,519
|
|
|
$
|
1,660
|
|
|
|
$
|
3,167
|
|
|
$
|
3,152
|
|
Net income
|
|
$
|
1,374
|
|
|
$
|
1,271
|
|
|
$
|
1,356
|
|
|
|
$
|
2,645
|
|
|
$
|
2,595
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests
|
|
12
|
|
|
10
|
|
|
10
|
|
|
|
22
|
|
|
20
|
|
Preferred stock
dividends (a)
|
|
55
|
|
|
63
|
|
|
55
|
|
|
|
118
|
|
|
118
|
|
Preferred stock
discount accretion and redemptions
|
|
1
|
|
|
1
|
|
|
1
|
|
|
|
2
|
|
|
2
|
|
Net income
attributable to common shareholders
|
|
$
|
1,306
|
|
|
$
|
1,197
|
|
|
$
|
1,290
|
|
|
|
$
|
2,503
|
|
|
$
|
2,455
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
Dividends and
undistributed earnings allocated to
nonvested restricted shares
|
|
4
|
|
|
5
|
|
|
5
|
|
|
|
9
|
|
|
10
|
|
Impact of BlackRock
earnings per share dilution
|
|
2
|
|
|
3
|
|
|
3
|
|
|
|
5
|
|
|
5
|
|
Net income
attributable to diluted common shares
|
|
$
|
1,300
|
|
|
$
|
1,189
|
|
|
$
|
1,282
|
|
|
|
$
|
2,489
|
|
|
$
|
2,440
|
|
Diluted earnings per
common share
|
|
$
|
2.88
|
|
|
$
|
2.61
|
|
|
$
|
2.72
|
|
|
|
$
|
5.49
|
|
|
$
|
5.15
|
|
Cash dividends
declared per common share
|
|
$
|
.95
|
|
|
$
|
.95
|
|
|
$
|
.75
|
|
|
|
$
|
1.90
|
|
|
$
|
1.50
|
|
Effective tax rate
(b)
|
|
16.6
|
%
|
|
16.3
|
%
|
|
18.3
|
%
|
|
|
16.5
|
%
|
|
17.7
|
%
|
|
(a)
|
Dividends are payable
quarterly other than the Series O, Series R and Series S preferred
stock, which are payable semiannually, with the Series O payable in
different quarters than the Series R and Series S preferred
stock.
|
(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.
|
The PNC Financial
Services Group, Inc.
|
Consolidated
Financial Highlights (Unaudited)
|
|
|
Three months
ended
|
|
|
Six months
ended
|
|
|
June 30
|
|
March 31
|
|
June 30
|
|
|
June 30
|
|
June 30
|
|
|
2019
|
|
2019
|
|
2018
|
|
|
2019
|
|
2018
|
PERFORMANCE
RATIOS
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin
(a)
|
|
2.91
|
%
|
|
2.98
|
%
|
|
2.96
|
%
|
|
|
2.94
|
%
|
|
2.94
|
%
|
Noninterest income to
total revenue
|
|
44
|
%
|
|
42
|
%
|
|
44
|
%
|
|
|
43
|
%
|
|
43
|
%
|
Efficiency
(b)
|
|
59
|
%
|
|
60
|
%
|
|
60
|
%
|
|
|
59
|
%
|
|
61
|
%
|
Return on:
|
|
|
|
|
|
|
|
|
|
|
|
Average common
shareholders' equity
|
|
11.75
|
%
|
|
11.13
|
%
|
|
12.13
|
%
|
|
|
11.45
|
%
|
|
11.59
|
%
|
Average
assets
|
|
1.39
|
%
|
|
1.34
|
%
|
|
1.45
|
%
|
|
|
1.36
|
%
|
|
1.39
|
%
|
BUSINESS SEGMENT
NET INCOME (c)
|
|
|
|
|
|
|
|
|
|
|
|
In
millions
|
|
|
|
|
|
|
|
|
|
|
|
Retail
Banking
|
|
$
|
325
|
|
|
$
|
264
|
|
|
$
|
274
|
|
|
|
$
|
589
|
|
|
$
|
523
|
|
Corporate &
Institutional Banking
|
|
602
|
|
|
552
|
|
|
652
|
|
|
|
1,154
|
|
|
1,215
|
|
Asset Management
Group
|
|
80
|
|
|
45
|
|
|
43
|
|
|
|
125
|
|
|
105
|
|
Other, including
BlackRock (d)
|
|
367
|
|
|
410
|
|
|
387
|
|
|
|
777
|
|
|
752
|
|
Total net
income
|
|
$
|
1,374
|
|
|
$
|
1,271
|
|
|
$
|
1,356
|
|
|
|
$
|
2,645
|
|
|
$
|
2,595
|
|
|
(a)
|
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 interest income on a
taxable-equivalent basis in calculating net interest 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, 2019, March 31, 2019 and June 30, 2018 were
$27 million, $27 million and $29 million, respectively. The taxable
equivalent adjustments to net interest income for the six months
ended June 30, 2019 and June 30, 2018 were $54 million
and $58 million, respectively.
|
(b)
|
Calculated as
noninterest expense divided by total revenue.
|
(c)
|
Our business
information is presented based on our internal management reporting
practices. Net interest income in business segment results reflect
PNC's internal funds transfer pricing methodology. Assets receive a
funding charge and liabilities and capital receive a funding credit
based on a transfer pricing methodology that incorporates product
repricing characteristics, tenor and other
factors.
|
(d)
|
Includes earnings and
gains or losses related to PNC's equity interest in BlackRock and
residual activities that do not meet the criteria for disclosure as
a separate reportable business. We provide additional information
on these activities in our Form 10-K and Form 10-Q filings with the
SEC.
|
The PNC Financial
Services Group, Inc.
|
Consolidated
Financial Highlights (Unaudited)
|
|
June 30
|
|
March 31
|
|
June 30
|
|
2019
|
|
2019
|
|
2018
|
BALANCE SHEET
DATA
|
|
|
|
|
|
Dollars in
millions, except per share data
|
|
|
|
|
|
Assets
|
$
|
405,761
|
|
|
$
|
392,837
|
|
|
$
|
380,711
|
|
Loans (a)
|
$
|
237,215
|
|
|
$
|
232,293
|
|
|
$
|
222,855
|
|
Allowance for loan
and lease losses
|
$
|
2,721
|
|
|
$
|
2,692
|
|
|
$
|
2,581
|
|
Interest-earning
deposits with banks
|
$
|
18,362
|
|
|
$
|
15,261
|
|
|
$
|
21,972
|
|
Investment
securities
|
$
|
88,303
|
|
|
$
|
83,869
|
|
|
$
|
80,125
|
|
Loans held for sale
(a)
|
$
|
1,144
|
|
|
$
|
686
|
|
|
$
|
1,325
|
|
Equity investments
(b)
|
$
|
13,001
|
|
|
$
|
12,567
|
|
|
$
|
12,430
|
|
Mortgage servicing
rights
|
$
|
1,627
|
|
|
$
|
1,812
|
|
|
$
|
2,045
|
|
Goodwill
|
$
|
9,221
|
|
|
$
|
9,218
|
|
|
$
|
9,218
|
|
Other assets
(a)
|
$
|
34,193
|
|
|
$
|
34,761
|
|
|
$
|
27,897
|
|
Noninterest-bearing
deposits
|
$
|
69,867
|
|
|
$
|
71,606
|
|
|
$
|
79,047
|
|
Interest-bearing
deposits
|
$
|
203,393
|
|
|
$
|
199,615
|
|
|
$
|
185,838
|
|
Total
deposits
|
$
|
273,260
|
|
|
$
|
271,221
|
|
|
$
|
264,885
|
|
Borrowed funds
(a)
|
$
|
69,025
|
|
|
$
|
59,860
|
|
|
$
|
59,222
|
|
Total shareholders'
equity
|
$
|
49,340
|
|
|
$
|
48,536
|
|
|
$
|
46,904
|
|
Common shareholders'
equity
|
$
|
45,349
|
|
|
$
|
44,546
|
|
|
$
|
42,917
|
|
Accumulated other
comprehensive income (loss)
|
$
|
631
|
|
|
$
|
(5)
|
|
|
$
|
(940)
|
|
Book value per common
share
|
$
|
101.53
|
|
|
$
|
98.47
|
|
|
$
|
92.26
|
|
Tangible book value
per common share (Non-GAAP) (c)
|
$
|
80.76
|
|
|
$
|
78.07
|
|
|
$
|
72.25
|
|
Period end common
shares outstanding (millions)
|
447
|
|
|
452
|
|
|
465
|
|
Loans to
deposits
|
87
|
%
|
|
86
|
%
|
|
84
|
%
|
Common shareholders'
equity to total assets
|
11.2
|
%
|
|
11.3
|
%
|
|
11.3
|
%
|
CLIENT ASSETS
(billions)
|
|
|
|
|
|
Discretionary client
assets under management
|
$
|
162
|
|
|
$
|
158
|
|
|
$
|
149
|
|
Nondiscretionary
client assets under administration
|
132
|
|
|
130
|
|
|
130
|
|
Total client assets
under administration
|
294
|
|
|
288
|
|
|
279
|
|
Brokerage account
client assets
|
52
|
|
|
51
|
|
|
49
|
|
Total client
assets
|
$
|
346
|
|
|
$
|
339
|
|
|
$
|
328
|
|
CAPITAL
RATIOS
|
|
|
|
|
|
Basel III
(d)
|
|
|
|
|
|
Common equity Tier
1
|
9.7
|
%
|
|
9.8
|
%
|
|
9.5
|
%
|
Tier 1
risk-based
|
10.9
|
%
|
|
10.9
|
%
|
|
10.7
|
%
|
Total capital
risk-based (e)
|
12.8
|
%
|
|
13.0
|
%
|
|
12.6
|
%
|
Leverage
|
9.6
|
%
|
|
9.6
|
%
|
|
9.4
|
%
|
Supplementary leverage
|
8.0
|
%
|
|
8.0
|
%
|
|
7.8
|
%
|
ASSET
QUALITY
|
|
|
|
|
|
Nonperforming loans
to total loans
|
.73
|
%
|
|
.71
|
%
|
|
.77
|
%
|
Nonperforming assets
to total loans, OREO and foreclosed assets
|
.78
|
%
|
|
.77
|
%
|
|
.83
|
%
|
Nonperforming assets
to total assets
|
.46
|
%
|
|
.45
|
%
|
|
.49
|
%
|
Net charge-offs to
average loans (for the three months ended) (annualized)
|
.24
|
%
|
|
.24
|
%
|
|
.20
|
%
|
Allowance for loan
and lease losses to total loans
|
1.15
|
%
|
|
1.16
|
%
|
|
1.16
|
%
|
Allowance for loan
and lease losses to nonperforming loans
|
158
|
%
|
|
163
|
%
|
|
150
|
%
|
Accruing loans past
due 90 days or more (in millions)
|
$
|
524
|
|
|
$
|
590
|
|
|
$
|
586
|
|
|
(a)
|
Amounts include
assets and liabilities for which we have elected the fair value
option. Our first quarter 2019 Form 10-Q included, and our second
quarter 2019 Form 10-Q will include, additional information
regarding these Consolidated Balance Sheet line items.
|
(b)
|
Amounts include our
equity interest in BlackRock.
|
(c)
|
See the Tangible Book
Value per Common Share table on page 18 for additional
information.
|
(d)
|
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 17 for additional
information. The ratios as of June 30, 2019 are
estimated.
|
(e)
|
The 2019 and 2018
Basel III Total risk-based capital ratios include nonqualifying
trust preferred capital securities of $60 million and $80 million,
respectively, that are subject to a phase-out period that runs
through 2021.
|
The PNC Financial Services Group,
Inc.
|
Consolidated
Financial Highlights (Unaudited)
|
|
CAPITAL
RATIOS
|
|
Because PNC remains
in the parallel run qualification phase for the advanced
approaches, PNC's regulatory risk-based capital ratios in 2019 and
2018 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.
|
|
We provide
information below regarding PNC's Basel III Common equity Tier 1
capital ratios. Under the Basel III rules applicable to PNC,
significant common stock investments in unconsolidated financial
institutions (for PNC, primarily BlackRock), mortgage servicing
rights and deferred tax assets must be deducted from capital (net
of associated deferred tax liabilities) to the extent they
individually exceed 10%, or in the aggregate exceed 15%, of the
institution's adjusted common equity Tier 1 capital. Also, Basel
III regulatory capital includes accumulated other comprehensive
income (loss) related to securities currently, and those
transferred from, available for sale, as well as pension and other
postretirement plans.
|
|
|
|
|
|
|
Basel III
Common Equity Tier 1 Capital Ratios (a)
|
|
|
|
|
|
|
June 30
|
|
March 31
|
|
June 30
|
Dollars in
millions
|
2019
(estimated)
|
|
2019
|
|
2018
|
Common stock, related
surplus and retained earnings, net of treasury stock
|
$
|
44,718
|
|
|
$
|
44,552
|
|
|
$
|
43,857
|
|
Less regulatory
capital adjustments:
|
|
|
|
|
|
Goodwill and
disallowed intangibles, net of deferred tax liabilities
|
(9,252)
|
|
|
(9,260)
|
|
|
(9,319)
|
|
Basel III total
threshold deductions
|
(2,909)
|
|
|
(3,074)
|
|
|
(3,408)
|
|
Accumulated other
comprehensive income (loss)
|
471
|
|
|
1
|
|
|
(757)
|
|
All other
adjustments
|
(184)
|
|
|
(163)
|
|
|
(167)
|
|
Basel III Common
equity Tier 1 capital
|
$
|
32,844
|
|
|
$
|
32,056
|
|
|
$
|
30,206
|
|
Basel III
standardized approach risk-weighted assets (b)
|
$
|
337,824
|
|
|
$
|
328,128
|
|
|
$
|
319,112
|
|
Basel III advanced
approaches risk-weighted assets (c)
|
$
|
309,999
|
|
|
$
|
298,889
|
|
|
$
|
280,883
|
|
Basel III Common
equity Tier 1 capital ratio
|
9.7
|
%
|
|
9.8
|
%
|
|
9.5
|
%
|
|
(a)
|
All ratios are
calculated using the regulatory capital methodology applicable to
PNC during each period presented.
|
(b)
|
Basel III
standardized approach risk-weighted assets are based on the Basel
III standardized approach rules and include credit and market
risk-weighted assets.
|
(c)
|
Basel III advanced
approaches risk-weighted assets are based on the Basel III advanced
approaches rules, and include credit, market and operational
risk-weighted assets. During the parallel run qualification phase,
PNC has refined the data, models and internal processes used as
part of the advanced approaches for determining risk-weighted
assets.
|
Our Basel III capital ratios may be impacted by changes to the
regulatory capital rules, additional regulatory guidance or
analysis, and, in the case of those ratios calculated using the
advanced approaches, may be subject to variability based on the
ongoing evolution, validation and regulatory approval of PNC's
models that are integral to the calculation of advanced approaches
risk-weighted assets as PNC moves through the parallel run approval
process.
The PNC Financial Services Group,
Inc.
|
Consolidated
Financial Highlights (Unaudited)
|
|
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.
|
|
Tangible Book
Value per Common Share (Non-GAAP)
|
|
|
|
|
|
|
June 30
|
|
March 31
|
|
June 30
|
Dollars in
millions, except per share data
|
2019
|
|
2019
|
|
2018
|
Book value per common
share
|
$
|
101.53
|
|
|
$
|
98.47
|
|
|
$
|
92.26
|
|
Tangible book value
per common share
|
|
|
|
|
|
Common shareholders'
equity
|
$
|
45,349
|
|
|
$
|
44,546
|
|
|
$
|
42,917
|
|
Goodwill and other
intangible assets
|
(9,442)
|
|
|
(9,450)
|
|
|
(9,511)
|
|
Deferred tax
liabilities on Goodwill and other intangible assets
|
191
|
|
|
190
|
|
|
192
|
|
Tangible common
shareholders' equity
|
$
|
36,098
|
|
|
$
|
35,286
|
|
|
$
|
33,598
|
|
Period-end common
shares outstanding (millions)
|
447
|
|
|
452
|
|
|
465
|
|
Tangible book value
per common share (Non-GAAP)
|
$
|
80.76
|
|
|
$
|
78.07
|
|
|
$
|
72.25
|
|
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 earnings, revenues, expenses, tax rates, capital
and liquidity levels and ratios, asset levels, asset quality,
financial position, and other matters regarding or affecting PNC
and its future business and operations 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 subject to numerous assumptions,
risks and uncertainties, which change over time.
Forward-looking statements speak only as of the date made. We
do not assume any duty 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.
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 the
following:
-
- 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 and
market interest rates.
- Changes in customer behavior due to recently enacted tax
legislation, changing business and economic conditions or
legislative or regulatory initiatives.
- Changes in customers', suppliers' and other counterparties'
performance and creditworthiness.
- Impacts of tariffs and other trade policies of the U.S. and its
global trading partners.
- Slowing or reversal of the current U.S. economic
expansion.
- 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:
-
- U.S. economic growth has accelerated over the past two years to
above its long-run trend. However, growth is expected to slow over
the course of 2019 and into 2020.
- We expect that further gradual improvement in the labor market
this year, including job gains and rising wages, will be another
positive for consumer spending.
- Slower global economic growth, trade restrictions and
geopolitical concerns are downside risks to the forecast.
- Inflation has slowed in early 2019, to below the FOMC's 2
percent objective, but is expected to gradually increase over the
next two years.
- Our baseline forecast is for two 0.25 percentage point cuts to
the federal funds rate in July and October
2019, taking the rate to a range of 1.75 to 2.00 percent by
the end of 2019.
- PNC's ability to take certain capital actions, including
returning capital to shareholders, is subject to review by the
Federal Reserve Board as part of PNC's comprehensive capital plan
for the applicable period in connection with the Federal Reserve
Board's Comprehensive Capital Analysis and Review (CCAR) process
and to the acceptance of such capital plan and non-objection to
such capital actions by the Federal Reserve Board.
- PNC's regulatory capital ratios in the future will depend on,
among other things, the company's financial performance, the scope
and terms of final capital regulations then in effect and
management actions affecting the composition of PNC's balance
sheet. In addition, PNC's ability to determine, evaluate and
forecast regulatory capital ratios, and to take actions (such as
capital distributions) based on actual or forecasted capital
ratios, will be dependent at least in part on the development,
validation and regulatory review of related models.
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 management.
These developments could include:
-
- Changes to laws and regulations, including changes affecting
oversight of the financial services industry, consumer protection,
bank capital and liquidity standards, pension, bankruptcy and other
industry aspects, and changes in accounting policies and
principles.
- Unfavorable resolution of legal proceedings or other claims and
regulatory and other governmental investigations or other
inquiries. These matters may result in monetary judgments or
settlements or other remedies, including fines, penalties,
restitution or alterations in our business practices, and in
additional expenses and collateral costs, and may cause
reputational harm to PNC.
- Results of the regulatory examination and supervision process,
including our failure to satisfy requirements of agreements with
governmental agencies.
- Impact on business and operating results of any 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.
- Business and operating results also include impacts relating to
our equity interest in BlackRock, Inc. and rely to a significant
extent on information provided to us by BlackRock. Risks and
uncertainties that could affect BlackRock are discussed in more
detail by BlackRock in its SEC filings.
- 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, and the integration of the acquired
businesses into PNC after closing.
- 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 natural and other disasters, pandemics, dislocations,
terrorist activities, system failures, security breaches,
cyberattacks or international hostilities through impacts on the
economy and financial markets generally or on us or our
counterparties specifically.
We provide greater detail regarding these as well as other
factors in our 2018 Form 10-K and first quarter 2019 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.
MEDIA:
Marcey Zwiebel
(412) 762-4550
media.relations@pnc.com
INVESTORS:
Bryan Gill
(412) 768-4143
investor.relations@pnc.com
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SOURCE PNC Financial Services Group, Inc.