Grew deposits; increased capital; generated
positive operating leverage
PITTSBURGH, April 14,
2023 /PRNewswire/ -- The PNC Financial Services
Group, Inc. (NYSE: PNC) today reported:
|
|
|
For the
quarter
|
|
|
|
|
|
|
In millions, except per
share data and as noted
|
1Q23
|
4Q22
|
1Q22
|
|
First Quarter
Highlights
|
|
|
|
|
|
Comparisons reflect
1Q23 vs. 4Q22
|
Financial
Results
|
|
|
|
|
Strong Balance Sheet
Positioning
|
Revenue
|
$
5,603
|
$
5,763
|
$
4,692
|
|
▪
Average deposits increased 0.3%; spot
deposits grew $0.5 billion
▪
Average loans increased 1%; spot loans
increased $0.5 billion
▪
ACL to total loans stable at 1.7%; net
loan charge-offs declined
▪
AOCI improved $1.1 billion, or 10%
▪
Tangible book value increased 7%
▪
CET1 capital ratio increased to 9.2%
Solid Income
Statement Results
▪
PPNR was relatively stable
▪
Efficiency ratio of 59%
▪
Revenue decreased 3%
▪
Expenses decreased 4%
▪
Positive operating leverage of
2%
|
Noninterest
expense
|
3,321
|
3,474
|
3,172
|
|
Pretax, pre-provision
earnings (PPNR) (non-GAAP)
|
2,282
|
2,289
|
1,520
|
|
Provision for
(recapture of) credit losses
|
235
|
408
|
(208)
|
|
Net income
|
1,694
|
1,548
|
1,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Common
Share
|
|
|
|
|
Diluted
earnings
|
$ 3.98
|
$ 3.47
|
$ 3.23
|
|
Average diluted common
shares outstanding
|
402
|
404
|
420
|
|
Book value
|
104.76
|
99.93
|
106.47
|
|
Tangible book value
(non-GAAP)
|
76.90
|
72.12
|
79.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet &
Credit Quality
|
|
|
|
Average loans
In billions
|
$
325.5
|
$
321.9
|
$
290.7
|
|
Average deposits
In billions
|
436.2
|
434.9
|
453.3
|
|
Accumulated other
comprehensive income (loss) (AOCI) In billions
|
(9.1)
|
(10.2)
|
(5.7)
|
|
Net loan
charge-offs
|
195
|
224
|
137
|
|
Allowance for credit
losses (ACL) to total loans
|
1.66 %
|
1.67 %
|
1.76 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected
Ratios
|
|
|
|
|
Return on average
common shareholders' equity
|
16.11 %
|
14.19 %
|
11.64 %
|
|
Return on average
assets
|
1.22
|
1.10
|
1.05
|
|
Net interest margin
(NIM) (non-GAAP)
|
2.84
|
2.92
|
2.28
|
|
Noninterest income to
total revenue
|
36
|
36
|
40
|
|
Efficiency
|
59
|
60
|
68
|
|
Common equity Tier 1
(CET1) capital ratio
|
9.2
|
9.1
|
9.9
|
|
Average PNC Bank
liquidity coverage ratio (LCR)
|
130
|
126
|
158
|
|
|
|
|
|
|
|
|
See non-GAAP
financial measures in the Consolidated Financial Highlights
accompanying this release.
|
From Bill Demchak, PNC
Chairman, President and Chief Executive Officer:
"PNC's first quarter results reflected the strength of our
balance sheet and the power of our national franchise. During a
quarter characterized by heightened market volatility, we grew
deposits, increased our capital position and drove strong financial
results. At the same time, we controlled expenses well, achieved
positive operating leverage and our credit quality metrics remained
solid. Looking ahead, PNC remains well positioned to deliver for
all stakeholders through the current environment and
beyond."
Income Statement Highlights
First quarter 2023 compared with fourth quarter
2022
- Net income of $1.7 billion
increased $146 million, or 9%.
- Total revenue of $5.6 billion
decreased $160 million, or 3%, as a
result of lower net interest income and noninterest income.
- Net interest income of $3.6
billion decreased $99 million,
or 3%, driven by two fewer days in the quarter and higher funding
costs, partially offset by higher yields on interest-earning
assets.
-
- Net interest margin of 2.84% decreased 8 basis points as higher
yields on interest-earning assets were more than offset by
increased funding costs.
- Noninterest income of $2.0
billion decreased $61 million,
or 3%.
-
- Fee income of $1.8 billion
decreased $72 million, or 4%, and
included lower merger and acquisition advisory activity as well as
seasonally lower consumer transaction volumes.
- Other noninterest income of $258
million increased $11 million,
or 4%.
- Noninterest expense of $3.3
billion decreased $153
million, or 4%, reflecting strong expense control.
- Provision for credit losses of $235
million in the first quarter included the impact of updated
economic assumptions as well as changes in portfolio composition
and quality. The fourth quarter of 2022 included a provision for
credit losses of $408 million.
- The effective tax rate was 17.2% for the first quarter and
17.7% for the fourth quarter.
Balance Sheet Highlights
First quarter 2023 compared with fourth quarter
2022 or March 31, 2023 compared with December 31,
2022
- Average loans of $325.5 billion
increased $3.6 billion, or 1%,
primarily driven by growth in commercial and consumer loans during
the fourth quarter of 2022. Loans at March
31, 2023 increased $0.5
billion.
-
- Average commercial loans of $224.6
billion increased $3.0 billion
driven by growth in PNC's corporate banking business during the
fourth quarter of 2022.
- Average consumer loans of $100.9
billion grew $0.6 billion and
included higher residential mortgage and home equity loans.
- Credit quality performance:
-
- Delinquencies of $1.3 billion
decreased $164 million, or 11%, as a
result of lower consumer and commercial loan delinquencies.
- Total nonperforming loans of $2.0
billion were stable.
- Net loan charge-offs of $195
million decreased $29 million,
or 13%, due to lower consumer and commercial net charge-offs.
- The allowance for credit losses of $5.4
billion was stable. The allowance for credit losses to total
loans was 1.66% at March 31, 2023
compared with 1.67% at December 31,
2022.
- Average deposits of $436.2
billion increased $1.3
billion, or 0.3%.
- Average investment securities of $143.4
billion were relatively stable.
- Average Federal Reserve Bank balances of $33.5 billion increased $3.5 billion, driven by higher borrowed funds and
deposits.
- PNC maintained a strong capital and liquidity position.
-
- On April 3, 2023, the PNC board
of directors declared a quarterly cash dividend on common stock of
$1.50 per share payable on
May 5, 2023.
- PNC returned $1.0 billion of
capital to shareholders, reflecting $0.6
billion of dividends on common shares and $0.4 billion of common share repurchases,
representing 2.4 million shares.
- The Basel III common equity Tier 1 capital ratio was an
estimated 9.2% at March 31, 2023 and
9.1% at December 31, 2022.
- PNC Financial Services Group (PNC) average LCR for the three
months ended March 31, 2023 was 108%,
exceeding the regulatory minimum requirement throughout the
quarter.
-
- PNC Bank average LCR for the three months ended March 31, 2023 was 130%.
Earnings
Summary
|
|
|
|
|
|
|
In millions, except
per share data
|
|
1Q23
|
|
4Q22
|
|
1Q22
|
Net income
|
|
$
1,694
|
|
$
1,548
|
|
$
1,429
|
Net income attributable
to diluted common shares
|
|
$
1,599
|
|
$
1,400
|
|
$
1,355
|
Diluted earnings per
common share
|
|
$
3.98
|
|
$
3.47
|
|
$
3.23
|
Average diluted common
shares outstanding
|
|
402
|
|
404
|
|
420
|
Cash dividends declared
per common share
|
|
$
1.50
|
|
$
1.50
|
|
$
1.25
|
|
|
|
|
|
|
|
The Consolidated Financial Highlights accompanying this news
release include additional information regarding reconciliations of
non-GAAP financial measures to reported (GAAP) amounts. This
information supplements results as reported in accordance with GAAP
and should not be viewed in isolation from, or as a substitute for,
GAAP results. Information in this news release, including the
financial tables, is unaudited.
CONSOLIDATED REVENUE
REVIEW
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
1Q23 vs
|
1Q23 vs
|
In
millions
|
1Q23
|
|
4Q22
|
|
1Q22
|
4Q22
|
1Q22
|
Net interest
income
|
$ 3,585
|
|
$ 3,684
|
|
$ 2,804
|
(3) %
|
28 %
|
Noninterest
income
|
2,018
|
|
2,079
|
|
1,888
|
(3) %
|
7 %
|
Total
revenue
|
$ 5,603
|
|
$ 5,763
|
|
$ 4,692
|
(3) %
|
19 %
|
|
|
|
|
|
|
|
|
Total revenue for the first quarter of 2023 decreased
$160 million from the fourth quarter
of 2022 as a result of lower net interest income and noninterest
income. Compared with the first quarter of 2022, total revenue
increased $911 million primarily due
to higher net interest income.
Net interest income of $3.6
billion for the first quarter of 2023 decreased $99 million from the fourth quarter of 2022
driven by two fewer days in the quarter and higher funding costs,
partially offset by higher yields on interest-earning assets.
Compared to the first quarter of 2022, net interest income
increased $781 million as a result of
higher interest-earning asset yields and balances, partially offset
by higher funding costs.
The net interest margin was 2.84% in the first quarter of 2023,
decreasing 8 basis points in comparison with the fourth quarter of
2022 as higher yields on interest-earning assets were more than
offset by increased funding costs. Compared to the first quarter of
2022, net interest margin increased 56 basis points reflecting the
benefit of higher yields on interest-earning assets.
Noninterest
Income
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
1Q23 vs
|
1Q23 vs
|
In
millions
|
1Q23
|
|
4Q22
|
|
1Q22
|
4Q22
|
1Q22
|
Asset management and
brokerage
|
$ 356
|
|
$ 345
|
|
$ 377
|
3 %
|
(6) %
|
Capital markets and
advisory
|
262
|
|
336
|
|
252
|
(22) %
|
4 %
|
Card and cash
management
|
659
|
|
671
|
|
620
|
(2) %
|
6 %
|
Lending and deposit
services
|
306
|
|
296
|
|
269
|
3 %
|
14 %
|
Residential and
commercial mortgage
|
177
|
|
184
|
|
159
|
(4) %
|
11 %
|
Other
|
258
|
|
247
|
|
211
|
4 %
|
22 %
|
Total noninterest
income
|
$
2,018
|
|
$
2,079
|
|
$
1,888
|
(3) %
|
7 %
|
|
Noninterest income for the first quarter of 2023 decreased
$61 million compared with the fourth
quarter of 2022. Asset management and brokerage fees increased
$11 million, reflecting the impact of
higher average equity markets and increased annuity sales. Capital
markets and advisory revenue decreased $74
million driven by lower merger and acquisition advisory
fees. Card and cash management fees decreased $12 million reflecting seasonally lower consumer
transaction volumes. Lending and deposit services increased
$10 million and included increased
client activity. Residential and commercial mortgage revenue
decreased $7 million largely due to
lower results from residential mortgage servicing rights valuation,
net of economic hedge. Other noninterest income increased $11
million.
Noninterest income for the first quarter of 2023 increased
$130 million from the first quarter
of 2022, as a result of business growth across the franchise as
well as higher private equity revenue, partially offset by the
impact of lower average equity markets.
CONSOLIDATED EXPENSE
REVIEW
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest
Expense
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
1Q23 vs
|
1Q23 vs
|
In
millions
|
1Q23
|
|
4Q22
|
|
1Q22
|
4Q22
|
1Q22
|
Personnel
|
$
1,826
|
|
$
1,943
|
|
$
1,717
|
(6) %
|
6 %
|
Occupancy
|
251
|
|
247
|
|
258
|
2 %
|
(3) %
|
Equipment
|
350
|
|
369
|
|
331
|
(5) %
|
6 %
|
Marketing
|
74
|
|
106
|
|
61
|
(30) %
|
21 %
|
Other
|
820
|
|
809
|
|
805
|
1 %
|
2 %
|
Total noninterest
expense
|
$
3,321
|
|
$
3,474
|
|
$
3,172
|
(4) %
|
5 %
|
|
Noninterest expense for the first quarter of 2023 declined
$153 million in comparison to the
fourth quarter of 2022 reflecting strong expense control. Personnel
costs decreased $117 million,
reflecting lower variable compensation related to decreased
business activity as well as seasonally lower benefits expense.
Equipment expense declined $19
million, primarily due to lower technology expense.
Marketing expense decreased $32
million, reflecting seasonality and the optimization of
spend. Other noninterest expense increased $11 million and included $25 million from a higher FDIC assessment rate,
which was partially offset by continued cost savings
initiatives.
Noninterest expense increased $149
million from the first quarter of 2022, due to higher
personnel costs, an increased FDIC assessment rate and continued
investments in technology and marketing to support business
growth.
The effective tax rate was 17.2% for the first quarter of 2023,
17.7% for the fourth quarter of 2022 and 17.3% for the first
quarter of 2022.
CONSOLIDATED BALANCE SHEET REVIEW
Average total assets were $562.3
billion in the first quarter of 2023 compared with
$557.2 billion in the fourth quarter
of 2022 and $550.1 billion in the
first quarter of 2022. The increase from the fourth quarter of 2022
was driven by increased loans outstanding and higher Federal
Reserve Bank balances. In comparison to the first quarter of 2022,
the increase was primarily attributable to higher loan and
securities balances, partially offset by lower Federal Reserve Bank
balances.
Loans
|
|
|
|
|
|
Change
|
Change
|
|
March 31,
2023
|
|
December 31,
2022
|
|
March 31,
2022
|
03/31/23 vs
|
03/31/23 vs
|
In
billions
|
|
|
12/31/22
|
03/31/22
|
Average
|
|
|
|
|
|
|
|
Commercial
|
$
224.6
|
|
$
221.6
|
|
$
195.6
|
1 %
|
15 %
|
Consumer
|
100.9
|
|
100.3
|
|
95.1
|
1 %
|
6 %
|
Average
loans
|
$
325.5
|
|
$
321.9
|
|
$
290.7
|
1 %
|
12 %
|
|
|
|
|
|
|
|
|
Quarter
end
|
|
|
|
|
|
|
|
Commercial
|
$
225.4
|
|
$
225.0
|
|
$
198.3
|
—
|
14 %
|
Consumer
|
101.1
|
|
101.0
|
|
96.2
|
—
|
5 %
|
Total loans
|
$
326.5
|
|
$
326.0
|
|
$
294.5
|
—
|
11 %
|
|
|
|
|
|
|
|
|
Average loans for the first quarter of 2023 were $325.5 billion, increasing $3.6 billion compared to the fourth quarter of
2022. Average commercial loans increased $3.0 billion driven by growth in PNC's corporate
banking business during the fourth quarter of 2022. Average
consumer loans grew $0.6 billion and
included higher residential mortgage and home equity loans. Loans
at March 31, 2023 increased $0.5
billion.
Average loans for the first quarter of 2023 increased
$34.8 billion in comparison to the
first quarter of 2022. Average commercial loans increased
$29.0 billion as a result of growth
in PNC's corporate banking, real estate and business credit
businesses. Average consumer loans increased $5.8 billion due to growth in residential
mortgage, home equity and credit card loans.
Investment
Securities
|
|
|
|
|
|
|
March 31,
2023
|
December 31,
2022
|
March 31,
2022
|
In
billions
|
Balance
|
Portfolio
Mix
|
Balance
|
Portfolio
Mix
|
Balance
|
Portfolio
Mix
|
Average
|
|
|
|
|
|
|
Available for
sale
|
$
48.2
|
|
$
49.7
|
|
$ 132.3
|
|
Held to
maturity
|
95.2
|
|
93.2
|
|
1.6
|
|
Average investment
securities
|
$ 143.4
|
|
$ 142.9
|
|
$ 133.9
|
|
|
|
|
|
|
|
|
Quarter
end
|
|
|
|
|
|
|
Available for
sale
|
$
43.2
|
31 %
|
$
44.1
|
32 %
|
$ 112.3
|
85 %
|
Held to
maturity
|
95.0
|
69 %
|
95.2
|
68 %
|
20.1
|
15 %
|
Total investment
securities
|
$ 138.2
|
|
$ 139.3
|
|
$ 132.4
|
|
|
|
|
|
|
|
|
Average investment securities for the first quarter of 2023 of
$143.4 billion were relatively stable
from the fourth quarter of 2022. Average investment securities
increased $9.5 billion from the first
quarter of 2022 reflecting net purchases, primarily of agency
residential mortgage-backed securities. Net unrealized losses on
available for sale securities were $3.8
billion at March 31, 2023, $4.4
billion at December 31, 2022 and $4.3 billion at March 31, 2022.
Average Federal Reserve Bank balances for the first quarter of
2023 were $33.5 billion, increasing
$3.5 billion from the fourth quarter
of 2022 driven by higher borrowed funds and deposits. Average
Federal Reserve Bank balances decreased $28.8 billion from the first quarter of 2022,
primarily due to higher loans outstanding.
Federal Reserve Bank balances at March 31, 2023 were
$32.5 billion, increasing
$5.6 billion from December 31,
2022.
Deposits
|
|
|
|
|
|
|
|
|
|
|
March 31,
2023
|
December 31,
2022
|
March 31,
2022
|
|
In
billions
|
Balance
|
IB
|
NIB
|
Balance
|
IB
|
NIB
|
Balance
|
IB
|
NIB
|
Average
|
|
|
|
|
|
|
|
|
|
Commercial
|
$
210.0
|
|
|
$
215.8
|
|
|
$
225.2
|
|
|
Consumer
|
226.2
|
|
|
219.1
|
|
|
228.1
|
|
|
Average
deposits
|
$
436.2
|
72 %
|
28 %
|
$
434.9
|
69 %
|
31 %
|
$
453.3
|
66 %
|
34 %
|
|
|
|
|
|
|
|
|
|
|
Quarter
end
|
|
|
|
|
|
|
|
|
|
Commercial
|
$
207.0
|
|
|
$
207.7
|
|
|
$
217.4
|
|
|
Consumer
|
229.8
|
|
|
228.6
|
|
|
232.8
|
|
|
Total
deposits
|
$
436.8
|
73 %
|
27 %
|
$
436.3
|
71 %
|
29 %
|
$
450.2
|
67 %
|
33 %
|
IB -
Interest-bearing
NIB -
Noninterest-bearing
|
|
|
|
|
|
|
|
|
|
|
Average deposits for the first quarter of 2023 were $436.2 billion, increasing $1.3 billion from the fourth quarter of 2022 due
to higher consumer time deposits, partially offset by seasonally
lower commercial deposits. Compared with the first quarter of 2022,
average deposits decreased $17.1
billion primarily due to lower commercial deposits
reflecting the impact of competitive pricing dynamics. In both
comparisons, noninterest-bearing balances decreased, due to the
continued shift into interest-bearing deposit products as interest
rates have risen. Deposits at March 31, 2023 of $436.8 billion, increased $0.5 billion from December 31, 2022.
Borrowed
Funds
|
|
|
|
|
|
Change
|
Change
|
|
March 31,
2023
|
|
December 31,
2022
|
|
March 31,
2022
|
03/31/23 vs
|
03/31/23 vs
|
In
billions
|
|
|
12/31/22
|
03/31/22
|
Average
|
$
63.0
|
|
$
59.2
|
|
$
30.3
|
6 %
|
108 %
|
Quarter end
|
$
60.8
|
|
$
58.7
|
|
$
26.6
|
4 %
|
129 %
|
|
|
|
|
|
|
|
|
Average borrowed funds of $63.0
billion in the first quarter of 2023 increased $3.8 billion from the fourth quarter of 2022,
driven by parent company senior debt issuances in January 2023. In comparison to the first quarter
of 2022, average borrowed funds increased $32.7 billion, reflecting increased Federal Home
Loan Bank borrowings and senior debt issuances.
Capital &
Liquidity
|
March 31,
2023
|
|
December 31,
2022
|
|
March 31,
2022
|
|
|
|
Common shareholders'
equity In billions
|
$
41.8
|
|
$
40.0
|
|
$
44.2
|
Accumulated other
comprehensive income (loss)
In
billions
|
$
(9.1)
|
|
$
(10.2)
|
|
$
(5.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
Basel III common equity
Tier 1 capital ratio *
|
9.2 %
|
|
9.1 %
|
|
9.9 %
|
Basel III common equity
Tier 1 fully implemented capital ratio *
|
9.1 %
|
|
8.9 %
|
|
9.7 %
|
Average PNC liquidity
coverage ratio
|
108 %
|
|
107 %
|
|
109 %
|
Average PNC Bank
liquidity coverage ratio
|
130 %
|
|
126 %
|
|
158 %
|
*
March 31, 2023 ratios are
estimated
|
|
|
|
|
|
|
|
|
|
|
|
PNC maintained a strong capital position. Common shareholders'
equity at March 31, 2023 increased $1.8
billion from December 31, 2022, driven by the benefit
of first quarter net income and an increase in accumulated other
comprehensive income, partially offset by dividends paid and share
repurchases during the first quarter.
As a Category III institution, PNC has elected to exclude
accumulated other comprehensive income related to both available
for sale securities and pension and other post-retirement plans
from CET1 capital. Accumulated other comprehensive income at
March 31, 2023 improved $1.1
billion compared to December 31, 2022, reflecting the
accretion of unrealized losses and the favorable impact of interest
rate changes on securities and swaps valuations. Accumulated other
comprehensive income decreased $3.4
billion from March 31, 2022, as a result of the
negative impact of higher interest rates on securities and swaps
valuations.
In the first quarter of 2023, PNC returned $1.0 billion of capital to shareholders,
reflecting $0.6 billion of dividends
on common shares and $0.4 billion of
common share repurchases, representing 2.4 million shares.
Consistent with the Stress Capital Buffer (SCB) framework, which
allows for capital return in amounts in excess of the SCB minimum
levels, our board of directors has authorized a repurchase
framework under the previously approved repurchase program of up to
100 million common shares, of which approximately 47% were still
available for repurchase at March 31, 2023. PNC's SCB for the
four-quarter period beginning October 1,
2022 is 2.9%.
Due to recent market volatility and increased economic
uncertainty, share repurchase activity is expected to be reduced in
the second quarter of 2023 compared to recent prior quarters. PNC
continues to evaluate and may adjust share repurchase activity, as
actual amounts and timing are dependent on market and economic
conditions as well as other factors.
On April 3, 2023, the PNC board of
directors declared a quarterly cash dividend on common stock of
$1.50 per share payable on
May 5, 2023.
At March 31, 2023, PNC was considered "well capitalized"
based on applicable U.S. regulatory capital ratio requirements. For
additional information regarding PNC's Basel III capital ratios,
see Capital Ratios in the Consolidated Financial Highlights. PNC
elected a five-year transition provision effective March 31, 2020 to delay until December 31, 2021 the full impact of the Current
Expected Credit Losses (CECL) standard on regulatory capital,
followed by a three-year transition period. Effective for the first
quarter of 2022, PNC is now in the three-year transition period,
and the full impact of the CECL standard is being phased-in to
regulatory capital through December 31,
2024. The fully implemented ratios reflect the full impact
of CECL and exclude the benefits of this transition provision.
CREDIT QUALITY
REVIEW
|
|
|
|
|
|
|
|
|
|
|
|
Credit
Quality
|
|
|
|
Change
|
Change
|
|
March 31,
2023
|
December 31,
2022
|
March 31,
2022
|
03/31/23 vs
|
03/31/23 vs
|
In
millions
|
12/31/22
|
03/31/22
|
Provision for
(recapture of) credit losses
|
$
235
|
$
408
|
$
(208)
|
$ (173)
|
$ 443
|
Net loan
charge-offs
|
$
195
|
$
224
|
$
137
|
(13) %
|
42 %
|
Allowance for credit
losses (a)
|
$ 5,413
|
$
5,435
|
$ 5,197
|
—
|
4 %
|
Total
delinquencies (b)
|
$ 1,326
|
$
1,490
|
$ 1,699
|
(11) %
|
(22) %
|
Nonperforming
loans
|
$ 2,010
|
$
1,985
|
$ 2,298
|
1 %
|
(13) %
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs to
average loans (annualized)
|
0.24 %
|
0.28 %
|
0.19 %
|
|
|
Allowance for credit
losses to total loans
|
1.66 %
|
1.67 %
|
1.76 %
|
|
|
Nonperforming loans to
total loans
|
0.62 %
|
0.61 %
|
0.78 %
|
|
|
(a) Excludes
allowances for investment securities and other financial
assets
(b) Total
delinquencies represent accruing loans more than 30 days past
due
|
Provision for credit losses of $235
million in the first quarter of 2023 included the impact of
updated economic assumptions as well as changes in portfolio
composition and quality. The fourth quarter of 2022 included a
provision for credit losses of $408
million.
Net loan charge-offs were $195
million in the first quarter of 2023, decreasing
$29 million from the fourth quarter
of 2022, due to lower consumer and commercial net charge-offs.
Compared to the first quarter of 2022, net charge-offs increased
$58 million, driven by higher
commercial net charge-offs, partially offset by a decline in
consumer net charge-offs.
The allowance for credit losses was $5.4
billion at both March 31, 2023 and December 31,
2022 and $5.2 billion at
March 31, 2022. The allowance for credit losses as a
percentage of total loans was 1.66% at March 31, 2023, 1.67%
at December 31, 2022 and 1.76% at March 31, 2022.
Nonperforming loans were $2.0
billion at March 31, 2023 and December 31, 2022.
Compared to March 31, 2022, nonperforming loans decreased
$288 million, due to lower consumer
and commercial nonperforming loans.
Delinquencies at March 31, 2023 of $1.3 billion decreased $164 million and $373
million compared to December 31, 2022 and
March 31, 2022, respectively. In both comparisons, the
decrease was a result of lower consumer and commercial loan
delinquencies.
BUSINESS SEGMENT
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
Business Segment
Income (Loss)
|
|
|
|
|
|
In
millions
|
1Q23
|
|
4Q22
|
|
1Q22
|
Retail
Banking
|
$ 647
|
|
$ 752
|
|
$ 340
|
Corporate &
Institutional Banking
|
1,059
|
|
982
|
|
956
|
Asset Management
Group
|
52
|
|
52
|
|
102
|
Other
|
(81)
|
|
(258)
|
|
10
|
Net income excluding
noncontrolling interests
|
$
1,677
|
|
$
1,528
|
|
$
1,408
|
|
|
|
|
|
|
Retail
Banking
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
1Q23 vs
|
|
1Q23 vs
|
In
millions
|
1Q23
|
|
4Q22
|
|
1Q22
|
|
4Q22
|
|
1Q22
|
Net interest
income
|
$
2,281
|
|
$
2,330
|
|
$
1,531
|
|
$ (49)
|
|
$ 750
|
Noninterest
income
|
$ 743
|
|
$ 749
|
|
$ 745
|
|
$
(6)
|
|
$
(2)
|
Noninterest
expense
|
$
1,927
|
|
$
1,892
|
|
$
1,892
|
|
$
35
|
|
$
35
|
Provision for
(recapture of) credit losses
|
$ 238
|
|
$ 193
|
|
$ (81)
|
|
$
45
|
|
$ 319
|
Earnings
|
$ 647
|
|
$ 752
|
|
$ 340
|
|
$ (105)
|
|
$ 307
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
97.4
|
|
$
96.6
|
|
$
93.2
|
|
$
0.8
|
|
$
4.2
|
Average
deposits
|
$
262.5
|
|
$
259.8
|
|
$
265.1
|
|
$
2.7
|
|
$ (2.6)
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs
In millions
|
$ 112
|
|
$ 108
|
|
$ 141
|
|
$
4
|
|
$ (29)
|
|
|
|
|
|
|
|
|
|
|
Retail Banking Highlights
First quarter 2023 compared with fourth quarter
2022
- Earnings decreased 14%, due to lower net interest income, a
higher provision for credit losses, increased noninterest expense
and a decline in noninterest income.
-
- Noninterest income decreased modestly, or 1%, and included
seasonal declines in consumer transaction volumes.
- Noninterest expense increased 2%, reflecting higher
branch-related occupancy expenses and increased technology
investments.
- Provision for credit losses of $238
million in the first quarter of 2023 included the impact of
changes in portfolio composition and quality as well as updated
economic assumptions.
- Average loans increased 1%, and included higher home equity and
commercial loans.
- Average deposits increased 1%, reflecting higher consumer time
deposits.
First quarter 2023 compared with first quarter
2022
- Earnings increased 90%, primarily driven by higher net interest
income, partially offset by a higher provision for credit losses
and increased noninterest expense.
-
- Noninterest income was relatively stable.
- Noninterest expense increased 2%, and included increased
technology investments and higher marketing spend.
- Average loans increased 5%, driven by growth in residential
mortgage, home equity and credit card loans.
- Average deposits decreased 1%, reflecting the impact of
inflationary pressures and competitive pricing dynamics.
Corporate &
Institutional Banking
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
1Q23 vs
|
|
1Q23 vs
|
In
millions
|
1Q23
|
|
4Q22
|
|
1Q22
|
|
4Q22
|
|
1Q22
|
Net interest
income
|
$
1,414
|
|
$
1,489
|
|
$
1,160
|
|
$ (75)
|
|
$ 254
|
Noninterest
income
|
$ 886
|
|
$ 962
|
|
$ 804
|
|
$ (76)
|
|
$
82
|
Noninterest
expense
|
$ 939
|
|
$ 990
|
|
$ 837
|
|
$ (51)
|
|
$ 102
|
Provision for
(recapture of) credit losses
|
$ (28)
|
|
$ 183
|
|
$
(118)
|
|
$ (211)
|
|
$
90
|
Earnings
|
$
1,059
|
|
$ 982
|
|
$ 956
|
|
$
77
|
|
$ 103
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
209.9
|
|
$
207.1
|
|
$
180.2
|
|
$
2.8
|
|
$ 29.7
|
Average
deposits
|
$
145.4
|
|
$
147.3
|
|
$
154.6
|
|
$ (1.9)
|
|
$ (9.2)
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs
(recoveries) In millions
|
$ 85
|
|
$ 100
|
|
$ (1)
|
|
$ (15)
|
|
$
86
|
|
|
|
|
|
|
|
|
|
|
Corporate & Institutional Banking Highlights
First quarter 2023 compared with fourth quarter
2022
- Earnings increased 8%, due to a provision recapture and lower
noninterest expense, partially offset by a decline in noninterest
income and lower net interest income.
-
- Noninterest income decreased 8%, reflecting a seasonal decline
in business activity, which included lower merger and acquisition
advisory fees.
- Noninterest expense decreased 5%, and included lower variable
compensation associated with decreased business activity.
- Average loans increased 1%, driven by growth in PNC's corporate
banking business during the fourth quarter of 2022.
- Average deposits decreased 1%, reflecting seasonal declines in
corporate deposits.
First quarter 2023 compared with first quarter
2022
- Earnings increased 11%, driven by higher net interest income
and noninterest income, partially offset by increased noninterest
expense and a lower provision recapture.
-
- Noninterest income increased 10%, and included higher capital
markets and advisory fees and growth in treasury management product
revenue.
- Noninterest expense increased 12%, due to continued investments
to support business growth.
- Average loans increased 16%, as a result of growth in PNC's
corporate banking, real estate and business credit businesses.
- Average deposits decreased 6%, and included the impact of
competitive pricing dynamics.
Asset Management
Group
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
1Q23 vs
|
|
1Q23 vs
|
In
millions
|
1Q23
|
|
4Q22
|
|
1Q22
|
|
4Q22
|
|
1Q22
|
Net interest
income
|
$
127
|
|
$
152
|
|
$
138
|
|
$ (25)
|
|
$ (11)
|
Noninterest
income
|
$
230
|
|
$
223
|
|
$
248
|
|
$
7
|
|
$ (18)
|
Noninterest
expense
|
$
280
|
|
$
291
|
|
$
251
|
|
$ (11)
|
|
$
29
|
Provision for credit
losses
|
$
9
|
|
$ 17
|
|
$
2
|
|
$
(8)
|
|
$
7
|
Earnings
|
$ 52
|
|
$ 52
|
|
$
102
|
|
—
|
|
$ (50)
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Discretionary client
assets under management
|
$
177
|
|
$
173
|
|
$
182
|
|
$
4
|
|
$
(5)
|
Nondiscretionary
client assets under administration
|
$
156
|
|
$
152
|
|
$
165
|
|
$
4
|
|
$
(9)
|
Client assets under
administration at quarter end
|
$
333
|
|
$
325
|
|
$
347
|
|
$
8
|
|
$ (14)
|
Brokerage client
account assets
|
$
4
|
|
$
4
|
|
$
5
|
|
—
|
|
$
(1)
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
14.6
|
|
$
14.5
|
|
$
13.4
|
|
$ 0.1
|
|
$ 1.2
|
Average
deposits
|
$
28.2
|
|
$
27.8
|
|
$
33.3
|
|
$ 0.4
|
|
$ (5.1)
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs
(recoveries) In millions
|
—
|
|
$ 18
|
|
$
2
|
|
$ (18)
|
|
$
(2)
|
|
|
|
|
|
|
|
|
|
|
Asset Management Group Highlights
First quarter 2023 compared with fourth quarter
2022
- Earnings were stable.
-
- Noninterest income increased 3%, reflecting the impact of
higher average equity markets.
- Noninterest expense decreased 4%, and included lower personnel
costs.
- Discretionary client assets under management increased 2%,
driven by higher spot equity markets.
- Average loans increased 1%, due to growth in residential
mortgage loans.
- Average deposits increased 1%, reflecting seasonal growth.
First quarter 2023 compared with first quarter
2022
- Earnings decreased 49%, due to higher noninterest expense,
lower noninterest income, a decrease in net interest income and an
increase in provision for credit losses.
-
- Noninterest income decreased 7%, primarily due to the impact of
lower average equity markets.
- Noninterest expense increased 12%, reflecting continued
investments to support business growth.
- Discretionary client assets under management decreased 3%,
driven by lower spot equity markets.
- Average loans increased 9%, due to growth in residential
mortgage loans.
- Average deposits decreased 15%, and included the impact of
client activity, competitive pricing dynamics and inflationary
pressures.
Other
The "Other" category, for the purposes of this release, includes
residual activities that do not meet the criteria for disclosure as
a separate reportable business, such as asset and liability
management activities, including net securities gains or losses,
ACL for investment securities, certain trading activities, certain
runoff consumer loan portfolios, private equity investments,
intercompany eliminations, certain corporate overhead, tax
adjustments that are not allocated to business segments, exited
businesses and differences between business segment performance
reporting and financial statement reporting under generally
accepted accounting principles.
CONFERENCE CALL AND SUPPLEMENTAL FINANCIAL
INFORMATION
PNC Chairman, President and Chief Executive Officer William S. Demchak and Executive Vice President
and Chief Financial Officer Robert Q.
Reilly will hold a conference call for investors today at
11:00 a.m. Eastern Time regarding the
topics addressed in this news release and the related earnings
materials. Dial-in numbers for the conference call are (877)
402-9134 and (303) 223-4377 (international) and Internet access to
the live audio listen-only webcast of the call is available at
www.pnc.com/investorevents. PNC's first quarter 2023 earnings
materials to accompany the conference call remarks will be
available at www.pnc.com/investorevents prior to the beginning of
the call. A telephone replay of the call will be available for one
week at (800) 633-8284 and (402) 977-9140 (international),
conference ID 22026071 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
|
Dollars in millions,
except per share data
|
|
March 31
|
|
December 31
|
|
March 31
|
|
|
2023
|
|
2022
|
|
2022
|
Revenue
|
|
|
|
|
|
|
Net interest
income
|
|
$ 3,585
|
|
$ 3,684
|
|
$ 2,804
|
Noninterest
income
|
|
2,018
|
|
2,079
|
|
1,888
|
Total
revenue
|
|
5,603
|
|
5,763
|
|
4,692
|
Provision for
(recapture of) credit losses
|
|
235
|
|
408
|
|
(208)
|
Noninterest
expense
|
|
3,321
|
|
3,474
|
|
3,172
|
Income before income
taxes and noncontrolling interests
|
|
$ 2,047
|
|
$ 1,881
|
|
$ 1,728
|
Income taxes
|
|
353
|
|
333
|
|
299
|
Net income
|
|
$ 1,694
|
|
$ 1,548
|
|
$ 1,429
|
Less:
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests
|
|
17
|
|
20
|
|
21
|
Preferred stock
dividends (a)
|
|
68
|
|
120
|
|
45
|
Preferred stock
discount accretion and redemptions
|
|
2
|
|
1
|
|
2
|
Net income attributable
to common shareholders
|
|
$ 1,607
|
|
$ 1,407
|
|
$ 1,361
|
Per Common
Share
|
|
|
|
|
|
|
Basic
|
|
$ 3.98
|
|
$ 3.47
|
|
$ 3.23
|
Diluted
|
|
$ 3.98
|
|
$ 3.47
|
|
$ 3.23
|
Cash dividends declared
per common share
|
|
$ 1.50
|
|
$ 1.50
|
|
$ 1.25
|
Effective tax rate
(b)
|
|
17.2 %
|
|
17.7 %
|
|
17.3 %
|
PERFORMANCE
RATIOS
|
|
|
|
|
|
|
Net interest margin
(c)
|
|
2.84 %
|
|
2.92 %
|
|
2.28 %
|
Noninterest income to
total revenue
|
|
36 %
|
|
36 %
|
|
40 %
|
Efficiency
(d)
|
|
59 %
|
|
60 %
|
|
68 %
|
Return on:
|
|
|
|
|
|
|
Average common
shareholders' equity
|
|
16.11 %
|
|
14.19 %
|
|
11.64 %
|
Average
assets
|
|
1.22 %
|
|
1.10 %
|
|
1.05 %
|
|
|
(a)
|
Dividends are payable
quarterly other than Series R and Series S preferred stock, which
are payable semiannually.
|
(b)
|
The effective income
tax rates are generally lower than the statutory rate due to the
relationship of pretax income to tax credits and earnings that are
not subject to tax.
|
(c)
|
Net interest margin is
the total yield on interest-earning assets minus the total rate on
interest-bearing liabilities and includes the benefit from use of
noninterest-bearing sources. To provide more meaningful comparisons
of net interest margins, we use net interest income on a
taxable-equivalent basis in calculating average yields used in the
calculation of net interest margin by increasing the interest
income earned on tax-exempt assets to make it fully equivalent to
interest income earned on taxable investments. This adjustment is
not permitted under generally accepted accounting principles (GAAP)
in the Consolidated Income Statement. The taxable-equivalent
adjustments to net interest income for the three months ended March
31, 2023, December 31, 2022 and March 31, 2022 were $38 million,
$36 million and $22 million, respectively.
|
(d)
|
Calculated as
noninterest expense divided by total revenue.
|
The PNC Financial
Services Group, Inc.
|
Consolidated
Financial Highlights
(Unaudited)
|
|
|
|
|
|
|
|
March 31
|
|
December 31
|
|
March 31
|
|
2023
|
|
2022
|
|
2022
|
BALANCE SHEET
DATA
|
|
|
|
|
|
Dollars in millions,
except per share data
|
|
|
|
|
|
Assets
|
$
561,777
|
|
$
557,263
|
|
$
541,246
|
Loans (a)
|
$
326,475
|
|
$
326,025
|
|
$
294,457
|
Allowance for loan and
lease losses
|
$
4,741
|
|
$
4,741
|
|
$
4,558
|
Interest-earning
deposits with banks
|
$
33,865
|
|
$
27,320
|
|
$
48,776
|
Investment
securities
|
$
138,239
|
|
$
139,334
|
|
$
132,411
|
Total
deposits
|
$
436,833
|
|
$
436,282
|
|
$
450,197
|
Borrowed funds
(a)
|
$
60,822
|
|
$
58,713
|
|
$
26,571
|
Allowance for unfunded
lending related commitments
|
$
672
|
|
$
694
|
|
$
639
|
Total shareholders'
equity
|
$
49,044
|
|
$
45,774
|
|
$
49,181
|
Common shareholders'
equity
|
$
41,809
|
|
$
40,028
|
|
$
44,170
|
Accumulated other
comprehensive income (loss)
|
$
(9,108)
|
|
$
(10,172)
|
|
$
(5,731)
|
Book value per common
share
|
$
104.76
|
|
$
99.93
|
|
$
106.47
|
Tangible book value per
common share (non-GAAP) (b)
|
$
76.90
|
|
$
72.12
|
|
$
79.68
|
Period end common
shares outstanding (In millions)
|
399
|
|
401
|
|
415
|
Loans to
deposits
|
75 %
|
|
75 %
|
|
65 %
|
Common shareholders'
equity to total assets
|
7.4 %
|
|
7.2 %
|
|
8.2 %
|
CLIENT ASSETS (In
billions)
|
|
|
|
|
|
Discretionary client
assets under management
|
$
177
|
|
$
173
|
|
$
182
|
Nondiscretionary client
assets under administration
|
156
|
|
152
|
|
165
|
Total client assets
under administration
|
333
|
|
325
|
|
347
|
Brokerage account
client assets
|
77
|
|
74
|
|
79
|
Total client
assets
|
$
410
|
|
$
399
|
|
$
426
|
CAPITAL
RATIOS
|
|
|
|
|
|
Basel III (c)
(d)
|
|
|
|
|
|
Common equity Tier
1
|
9.2 %
|
|
9.1 %
|
|
9.9 %
|
Common equity Tier 1
fully implemented (e)
|
9.1 %
|
|
8.9 %
|
|
9.7 %
|
Tier 1
risk-based
|
10.9 %
|
|
10.4 %
|
|
11.2 %
|
Total capital
risk-based
|
12.8 %
|
|
12.3 %
|
|
13.0 %
|
Leverage
|
8.5 %
|
|
8.2 %
|
|
8.2 %
|
Supplementary
leverage
|
7.2 %
|
|
6.9 %
|
|
7.0 %
|
ASSET
QUALITY
|
|
|
|
|
|
Nonperforming loans to
total loans
|
0.62 %
|
|
0.61 %
|
|
0.78 %
|
Nonperforming assets to
total loans, OREO and foreclosed assets
|
0.63 %
|
|
0.62 %
|
|
0.79 %
|
Nonperforming assets to
total assets
|
0.36 %
|
|
0.36 %
|
|
0.43 %
|
Net charge-offs to
average loans (for the three months ended) (annualized)
|
0.24 %
|
|
0.28 %
|
|
0.19 %
|
Allowance for loan and
lease losses to total loans
|
1.45 %
|
|
1.45 %
|
|
1.55 %
|
Allowance for credit
losses to total loans (f)
|
1.66 %
|
|
1.67 %
|
|
1.76 %
|
Allowance for loan and
lease losses to nonperforming loans
|
236 %
|
|
239 %
|
|
198 %
|
Total delinquencies
(In millions) (g)
|
$
1,326
|
|
$
1,490
|
|
$
1,699
|
|
|
(a)
|
Amounts include assets
and liabilities for which we have elected the fair value option.
Our 2022 Form 10-K included, and our first quarter 2023 Form 10-Q
will include, additional information regarding these Consolidated
Balance Sheet line items.
|
(b)
|
See the Tangible Book
Value per Common Share table on page 17 for additional
information.
|
(c)
|
All ratios are
calculated using the regulatory capital methodology applicable to
PNC during each period presented and calculated based on the
standardized approach. See Capital Ratios on page 16 for additional
information. The ratios as of March 31, 2023 are
estimated.
|
(d)
|
The ratios are
calculated to reflect PNC's election to adopt the CECL optional
five-year transition provision.
|
(e)
|
The fully implemented
ratios are calculated to reflect the full impact of CECL and
excludes the benefits of the five-year transition
provision.
|
(f)
|
Excludes allowances for
investment securities and other financial assets.
|
(g)
|
Total delinquencies
represent accruing loans more than 30 days past due.
|
The PNC Financial
Services Group, Inc.
|
Consolidated
Financial Highlights (Unaudited)
|
CAPITAL RATIOS
PNC's regulatory risk-based capital ratios in 2023 are
calculated using the standardized approach for determining
risk-weighted assets. Under the standardized approach for
determining credit risk-weighted assets, exposures are generally
assigned a pre-defined risk weight. Exposures to high volatility
commercial real estate, past due exposures and equity exposures are
generally subject to higher risk weights than other types of
exposures.
PNC elected a five-year transition provision effective
March 31, 2020 to delay until
December 31, 2021 the full impact of
the CECL standard on regulatory capital, followed by a three-year
transition period. Effective for the first quarter 2022, PNC is now
in the three-year transition period, and the full impact of the
CECL standard is being phased-in to regulatory capital through
December 31, 2024. See the table
below for the December 31, 2022, March 31, 2022 and
estimated March 31, 2023 ratios. For the full impact of PNC's
adoption of CECL, which excludes the benefits of the five-year
transition provision, see the March 31, 2023 and
December 31, 2022 (Fully Implemented) estimates presented in
the table below.
Our Basel III capital ratios may be impacted by changes to the
regulatory capital rules and additional regulatory guidance or
analysis.
Basel lll Common
Equity Tier 1 Capital Ratios
|
|
|
|
|
|
|
|
Basel III
(a)
|
|
|
|
|
March 31
2023
(estimated)
(b)
|
December 31
2022 (b)
|
|
March 31
2022
(b)
|
|
March 31, 2023
(Fully
Implemented)
(estimated)
(c)
|
December 31, 2022
(Fully
Implemented)
(estimated)
(c)
|
|
|
|
Dollars in
millions
|
|
Common stock, related
surplus and retained earnings, net of treasury stock
|
$
51,400
|
$
50,924
|
|
$
50,624
|
|
$
50,918
|
$
50,200
|
Less regulatory capital
adjustments:
|
|
|
|
|
|
|
|
Goodwill and
disallowed intangibles, net of deferred tax liabilities
|
(11,119)
|
(11,138)
|
|
(11,114)
|
|
(11,119)
|
(11,138)
|
All other
adjustments
|
(92)
|
(101)
|
|
(63)
|
|
(94)
|
(101)
|
Basel III Common equity
Tier 1 capital
|
$
40,189
|
$
39,685
|
|
$
39,447
|
|
$
39,705
|
$
38,961
|
Basel III standardized
approach risk-weighted assets (d)
|
$
435,873
|
$
435,537
|
|
$
397,455
|
|
$
436,067
|
$
435,581
|
Basel III Common equity
Tier 1 capital ratio
|
9.2 %
|
9.1 %
|
|
9.9 %
|
|
9.1 %
|
8.9 %
|
|
|
(a)
|
All ratios are
calculated using the regulatory capital methodology applicable to
PNC during each period presented.
|
(b)
|
The ratio is calculated
to reflect PNC's election to adopt the CECL optional five-year
transition provision.
|
(c)
|
The March 31, 2023 and
December 31, 2022 ratio is calculated to reflect the full impact of
CECL and excludes the benefits of the five-year transition
provision.
|
(d)
|
Basel III standardized
approach risk-weighted assets are based on the Basel III
standardized approach rules and include credit and market
risk-weighted assets.
|
The PNC Financial
Services Group, Inc.
|
Consolidated Financial
Highlights (Unaudited)
|
NON-GAAP MEASURES
Pretax
Pre-Provision Earnings (non-GAAP)
|
Three months
ended
|
|
March 31
|
|
December 31
|
|
March 31
|
Dollars in
millions
|
2023
|
|
2022
|
|
2022
|
Income before income
taxes and noncontrolling interests
|
$
2,047
|
|
$
1,881
|
|
$
1,728
|
Provision for
(recapture of) credit losses
|
235
|
|
408
|
|
(208)
|
Pretax pre-provision
earnings (non-GAAP)
|
$
2,282
|
|
$
2,289
|
|
$
1,520
|
Pretax pre-provision earnings is a non-GAAP measure and is based
on adjusting income before income taxes and noncontrolling
interests to exclude provision for (recapture of) credit losses. We
believe that pretax, pre-provision earnings is a useful tool to
help evaluate the ability to provide for credit costs through
operations and provides an additional basis to compare results
between periods by isolating the impact of provision for (recapture
of) credit losses, which can vary significantly between
periods.
Tangible Book
Value per Common Share (non-GAAP)
|
|
|
|
|
|
|
March 31
|
|
December 31
|
|
March 31
|
Dollars in millions,
except per share data
|
2023
|
|
2022
|
|
2022
|
Book value per common
share
|
$
104.76
|
|
$
99.93
|
|
$
106.47
|
Tangible book value per
common share
|
|
|
|
|
|
Common shareholders'
equity
|
$
41,809
|
|
$
40,028
|
|
$
44,170
|
Goodwill and other
intangible assets
|
(11,378)
|
|
(11,400)
|
|
(11,383)
|
Deferred tax
liabilities on goodwill and other intangible assets
|
260
|
|
261
|
|
269
|
Tangible common
shareholders' equity
|
$
30,691
|
|
$
28,889
|
|
$
33,056
|
Period-end common
shares outstanding (In millions)
|
399
|
|
401
|
|
415
|
Tangible book value per
common share (non-GAAP)
|
$
76.90
|
|
$
72.12
|
|
$
79.68
|
Tangible book value per common share is a non-GAAP measure and
is calculated based on tangible common shareholders' equity divided
by period-end common shares outstanding. We believe this non-GAAP
measure serves as a useful tool to help evaluate the strength and
discipline of a company's capital management strategies and as an
additional, conservative measure of total company value.
Taxable-Equivalent Net Interest Income
(non-GAAP)
|
Three months
ended
|
|
March 31
|
|
December 31
|
|
March 31
|
Dollars in
millions
|
2023
|
|
2022
|
|
2022
|
Net interest
income
|
$
3,585
|
|
$
3,684
|
|
$
2,804
|
Taxable-equivalent adjustments
|
38
|
|
36
|
|
22
|
Net interest income
(Fully Taxable-Equivalent - FTE)
|
$
3,623
|
|
$
3,720
|
|
$
2,826
|
The interest income earned on certain earning assets is
completely or partially exempt from federal income tax. As such,
these tax-exempt instruments typically yield lower returns than
taxable investments. To provide more meaningful comparisons of net
interest income, we use interest income on a taxable-equivalent
basis by increasing the interest income earned on tax-exempt assets
to make it fully equivalent to interest income earned on taxable
investments. This adjustment is not permitted under GAAP.
Taxable-equivalent net interest income is only used for calculating
net interest margin and net interest income shown elsewhere in this
presentation is GAAP net interest income.
Cautionary Statement Regarding Forward-Looking
Information
We make statements in this news release and related conference
call, and we may from time to time make other statements, regarding
our outlook for financial performance, such as earnings, revenues,
expenses, tax rates, capital and liquidity levels and ratios, asset
levels, asset quality, financial position, and other matters
regarding or affecting us and our future business and operations,
including our sustainability strategy, that are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act. Forward-looking statements are typically identified by
words such as "believe," "plan," "expect," "anticipate," "see,"
"look," "intend," "outlook," "project," "forecast," "estimate,"
"goal," "will," "should" and other similar words and
expressions.
Forward-looking statements are necessarily subject to numerous
assumptions, risks and uncertainties, which change over time.
Future events or circumstances may change our outlook and may also
affect the nature of the assumptions, risks and uncertainties to
which our forward-looking statements are subject.
Forward-looking statements speak only as of the date made. We
do not assume any duty and do not undertake any obligation to
update forward-looking statements. Actual results or future
events could differ, possibly materially, from those anticipated in
forward-looking statements, as well as from historical
performance. As a result, we caution against placing undue
reliance on any forward-looking statements.
Our forward-looking statements are subject to the following
principal risks and uncertainties.
- Our businesses, financial results and balance sheet values are
affected by business and economic conditions, including:
-
- Changes in interest rates and valuations in debt, equity and
other financial markets,
- Disruptions in the U.S. and global financial markets,
- Actions by the Federal Reserve Board, U.S. Treasury and other
government agencies, including those that impact money supply,
market interest rates and inflation,
- Changes in customer behavior due to changing business and
economic conditions or legislative or regulatory initiatives,
- Changes in customers', suppliers' and other counterparties'
performance and creditworthiness,
- Impacts of sanctions, tariffs and other trade policies of the
U.S. and its global trading partners,
- A continuation of recent turmoil in the banking industry,
responsive measures to mitigate and manage it and related
supervisory and regulatory actions and costs,
- Impacts of changes in federal, state and local governmental
policy, including on the regulatory landscape, capital markets,
taxes, infrastructure spending and social programs,
- PNC's ability to attract, recruit and retain skilled employees,
and
- Commodity price volatility.
- Our forward-looking financial statements are subject to the
risk that economic and financial market conditions will be
substantially different than those we are currently expecting and
do not take into account potential legal and regulatory
contingencies. These statements are based on our views that:
-
- The economy continues to expand in early 2023, but economic
growth is slowing in response to the ongoing Federal Reserve
monetary policy tightening to slow inflation. This has led to large
increases in both short- and long-term interest rates. With much
higher mortgage rates the housing market is already in contraction,
with steep drops in existing home sales and single-family housing
starts, and a modest decline in house prices. Other sectors where
interest rates play an outsized role, such as business investment
and consumer spending on durable goods, will contract over
2023.
- PNC's baseline outlook is for a recession starting in the
second half of 2023, with real GDP contracting less than 1% before
recovery starts in the first half of 2024 as the Federal Reserve
lowers interest rates in response to a deteriorating labor market
and slower inflation. The unemployment rate will increase
throughout 2023, peaking at above 5% in the second half of 2024.
Inflation will slow with the recession and be back to the Federal
Reserve's 2% long-term objective by mid-2024.
- PNC expects the FOMC to raise the federal funds rate by 25
basis points in May. This would bring the federal funds rate to a
range of 5.00% to 5.25% by early-May. PNC expects a federal funds
rate cut of 25 basis points in early 2024 as inflation moves toward
the FOMC's 2% long-term objective.
- PNC's ability to take certain capital actions, including
returning capital to shareholders, is subject to PNC meeting or
exceeding a stress capital buffer established by the Federal
Reserve Board in connection with the Federal Reserve Board's
Comprehensive Capital Analysis and Review (CCAR) process.
- PNC's regulatory capital ratios in the future will depend on,
among other things, the company's financial performance, the scope
and terms of final capital regulations then in effect and
management actions affecting the composition of PNC's balance
sheet. In addition, PNC's ability to determine, evaluate and
forecast regulatory capital ratios, and to take actions (such as
capital distributions) based on actual or forecasted capital
ratios, will be dependent at least in part on the development,
validation and regulatory review of related models and the
reliability of and risks resulting from extensive use of such
models.
Cautionary Statement Regarding Forward-Looking Information
(Continued)
- Legal and regulatory developments could have an impact on our
ability to operate our businesses, financial condition, results of
operations, competitive position, reputation, or pursuit of
attractive acquisition opportunities. Reputational impacts could
affect matters such as business generation and retention,
liquidity, funding, and ability to attract and retain employees.
These developments could include:
-
- Changes to laws and regulations, including changes affecting
oversight of the financial services industry; changes in the
enforcement and interpretation of such laws and regulations; and
changes in accounting and reporting standards.
- Unfavorable resolution of legal proceedings or other claims and
regulatory and other governmental investigations or other inquiries
resulting in monetary losses, costs, or alterations in our business
practices, and potentially causing reputational harm to PNC.
- Results of the regulatory examination and supervision process,
including our failure to satisfy requirements of agreements with
governmental agencies.
- Costs associated with obtaining rights in intellectual property
claimed by others and of adequacy of our intellectual property
protection in general.
- Business and operating results are affected by our ability to
identify and effectively manage risks inherent in our businesses,
including, where appropriate, through effective use of systems and
controls, third-party insurance, derivatives, and capital
management techniques, and to meet evolving regulatory capital and
liquidity standards.
- Our reputation and business and operating results may be
affected by our ability to appropriately meet or address
environmental, social or governance targets, goals, commitments or
concerns that may arise.
- We grow our business in part through acquisitions and new
strategic initiatives. Risks and uncertainties include those
presented by the nature of the business acquired and strategic
initiative, including in some cases those associated with our entry
into new businesses or new geographic or other markets and risks
resulting from our inexperience in those new areas, as well as
risks and uncertainties related to the acquisition transactions
themselves, regulatory issues, the integration of the acquired
businesses into PNC after closing or any failure to execute
strategic or operational plans.
- Competition can have an impact on customer acquisition, growth
and retention and on credit spreads and product pricing, which can
affect market share, deposits and revenues. Our ability to
anticipate and respond to technological changes can also impact our
ability to respond to customer needs and meet competitive
demands.
- Business and operating results can also be affected by
widespread manmade, natural and other disasters (including severe
weather events); health emergencies; dislocations; geopolitical
instabilities or events; terrorist activities; system failures or
disruptions; security breaches; cyberattacks; international
hostilities; or other extraordinary events beyond PNC's control
through impacts on the economy and financial markets generally or
on us or our counterparties, customers or third-party vendors and
service providers specifically.
We provide greater detail regarding these as well as other
factors in our 2022 Form 10-K, including in the Risk Factors and
Risk Management sections and the Legal Proceedings and Commitments
Notes of the Notes To Consolidated Financial Statements in that
report, and in our other subsequent SEC filings. Our
forward-looking statements may also be subject to other risks and
uncertainties, including those we may discuss elsewhere in this
news release or in our SEC filings, accessible on the SEC's website
at sec.gov and on our corporate website at 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:
Tim Miller
(412) 762-4550
media.relations@pnc.com
INVESTORS:
Bryan Gill
(412) 768-4143
investor.relations@pnc.com
View original content to download
multimedia:https://www.prnewswire.com/news-releases/pnc-reports-first-quarter-2023-net-income-of-1-7-billion-3-98-diluted-eps-301797548.html
SOURCE The PNC Financial Services Group, Inc.