PITTSBURGH, July 13, 2018 /PRNewswire/ -- The PNC
Financial Services Group, Inc. (NYSE: PNC) today reported:
|
For the
quarter
|
|
2Q18
|
1Q18
|
2Q17
|
Net
income $ millions
|
$1,356
|
|
$1,239
|
|
$1,097
|
|
Diluted earnings per
common share
|
$2.72
|
|
$2.43
|
|
$2.10
|
|
"PNC's second quarter results were
strong. We grew fee income and net interest income, expanded our
margin, managed expenses well and maintained stable credit quality.
Our board recently increased the common stock dividend 27 percent
to an all-time high. We are continuing to invest in our businesses,
including our middle market expansion and digital offerings, and
remain focused on opportunities for growth and efficiency that will
create long-term value for our shareholders."
Bill Demchak, PNC Chairman,
President and Chief Executive Officer
Income Statement Highlights
Second quarter 2018 compared with first quarter 2018
- Net income of $1.4 billion for
the second quarter increased 9 percent compared with $1.2 billion for the first quarter, and PNC
generated positive operating leverage.
- Total revenue for the second quarter increased $213 million, or 5 percent, to $4.3 billion.
- Net interest income increased $52
million, or 2 percent, to $2.4
billion due to higher loan and securities yields and an
additional day in the second quarter partially offset by increased
funding costs.
-
- Net interest margin increased 5 basis points to 2.96
percent.
- Noninterest income increased $161
million, or 9 percent, to $1.9
billion.
-
- Growth in fee income of $72
million, or 5 percent, reflected seasonality and higher
business activity.
- Other noninterest income increased $89
million to $334 million due to
higher revenue from private equity investments, and benefits from
Visa Class B derivative fair value adjustments and commercial
mortgage loans held for sale.
- Noninterest expense increased $57
million, or 2 percent, to $2.6
billion.
- Provision for credit losses was $80
million, a decrease of $12
million reflecting a lower provision for commercial
loans.
Balance Sheet Highlights
- Average loans increased $1.6
billion, or 1 percent, in the second quarter to $222.7 billion compared with the first
quarter.
-
- Average commercial lending balances grew $1.5 billion primarily in PNC's corporate banking
and business credit businesses.
- Average consumer lending balances increased $.1 billion reflecting growth in auto,
residential mortgage and credit card loans substantially offset by
lower home equity and education loans.
- Overall credit quality remained strong.
-
- Nonperforming assets of $1.9
billion at June 30, 2018
decreased $150 million, or 7 percent,
compared with March 31, 2018.
- Net charge-offs were $109 million
for the second quarter compared with $113
million for the first quarter.
- Average deposits increased $.3
billion to $261.0 billion in
the second quarter compared with the first quarter as growth in
consumer deposits was partially offset by seasonally lower
commercial deposits.
- Average investment securities increased $2.8 billion, or 4 percent, to $77.5 billion in the second quarter compared with
the first quarter.
- Average balances held with the Federal Reserve Bank declined
$4.7 billion to $20.7 billion in the second quarter compared with
the first quarter.
- PNC completed common stock repurchase programs of $2.4 billion, and repurchased shares for
$.2 billion related to employee
benefit plans, for the four quarters ending with the second quarter
of 2018. A total of $4.1 billion of
capital was returned to shareholders over this period through
repurchases of 18.4 million common shares for $2.6 billion and dividends on common shares of
$1.5 billion.
-
- Capital returned to shareholders in the second quarter of 2018
totaled $1.2 billion through
repurchases of 5.7 million common shares for $.8 billion and dividends on common shares of
$.4 billion.
- PNC's board of directors raised the quarterly cash dividend on
common stock to 95 cents per share,
an increase of 20 cents per share, or
27 percent, effective with the August dividend.
- In June 2018 PNC announced share
repurchase programs of up to $2.0
billion for the four-quarter period beginning in the third
quarter of 2018, including repurchases of up to $.3 billion related to stock issuances under
employee benefit plans.
- PNC maintained strong capital and liquidity positions.
-
- The Basel III common equity Tier 1 capital ratio was an
estimated 9.5 percent at June 30,
2018 compared with 9.6 percent at March 31, 2018.
- The Liquidity Coverage Ratio at June 30,
2018 for both PNC and PNC Bank, N.A. continued to exceed the
regulatory minimum requirement of 100 percent.
Earnings
Summary
|
|
|
|
|
|
|
In millions,
except per share data
|
|
2Q18
|
|
1Q18
|
|
2Q17
|
Net income
|
|
$
|
1,356
|
|
|
$
|
1,239
|
|
|
$
|
1,097
|
|
Net income
attributable to diluted common shares
|
|
$
|
1,282
|
|
|
$
|
1,158
|
|
|
$
|
1,025
|
|
Diluted earnings per
common share
|
|
$
|
2.72
|
|
|
$
|
2.43
|
|
|
$
|
2.10
|
|
Average diluted
common shares outstanding
|
|
472
|
|
|
476
|
|
|
488
|
|
Return on average
assets
|
|
1.45
|
%
|
|
1.34
|
%
|
|
1.19
|
%
|
Return on average
common equity
|
|
12.13
|
%
|
|
11.04
|
%
|
|
9.88
|
%
|
Book value per common
share
|
Quarter
end
|
$
|
92.26
|
|
|
$
|
91.39
|
|
|
$
|
87.78
|
|
Tangible book value
per common share (non-GAAP)
|
Quarter
end
|
$
|
72.25
|
|
|
$
|
71.58
|
|
|
$
|
68.55
|
|
Cash dividends
declared per common share
|
|
$
|
.75
|
|
|
$
|
.75
|
|
|
$
|
.55
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
2Q18 vs
|
2Q18 vs
|
In
millions
|
2Q18
|
|
1Q18
|
|
2Q17
|
1Q18
|
2Q17
|
Net interest
income
|
$
|
2,413
|
|
|
$
|
2,361
|
|
|
$
|
2,258
|
|
2
|
%
|
7
|
%
|
Noninterest
income
|
1,911
|
|
|
1,750
|
|
|
1,802
|
|
9
|
%
|
6
|
%
|
Total
revenue
|
$
|
4,324
|
|
|
$
|
4,111
|
|
|
$
|
4,060
|
|
5
|
%
|
7
|
%
|
|
|
|
|
|
|
|
|
Total revenue for the second quarter of 2018 increased
$213 million compared with the first
quarter and $264 million compared
with the second quarter of 2017 as both net interest income and
noninterest income grew.
Net interest income for the second quarter of 2018 increased
$52 million compared with the first
quarter and $155 million compared
with the second quarter of 2017. Higher loan and securities yields
and balances were partially offset by higher borrowing and deposit
costs in both comparisons. An additional day in the second quarter
contributed to the increase over the first quarter.
The net interest margin increased to 2.96 percent for the second
quarter of 2018 compared with 2.91 percent for the first quarter
and 2.84 percent for the second quarter of 2017. Higher loan and
securities yields in the second quarter of 2018 were partially
offset by higher borrowing and deposit costs in both comparisons
reflecting the impact of interest rate increases.
Noninterest
Income
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
2Q18 vs
|
2Q18 vs
|
In
millions
|
2Q18
|
|
1Q18
|
|
2Q17
|
1Q18
|
2Q17
|
Asset
management
|
$
|
456
|
|
|
$
|
455
|
|
|
$
|
398
|
|
—
|
|
15
|
%
|
Consumer
services
|
381
|
|
|
357
|
|
|
360
|
|
7
|
%
|
6
|
%
|
Corporate
services
|
487
|
|
|
429
|
|
|
466
|
|
14
|
%
|
5
|
%
|
Residential
mortgage
|
84
|
|
|
97
|
|
|
104
|
|
(13)
|
%
|
(19)
|
%
|
Service charges on
deposits
|
169
|
|
|
167
|
|
|
170
|
|
1
|
%
|
(1)
|
%
|
Other
|
334
|
|
|
245
|
|
|
304
|
|
36
|
%
|
10
|
%
|
|
$
|
1,911
|
|
|
$
|
1,750
|
|
|
$
|
1,802
|
|
9
|
%
|
6
|
%
|
|
|
|
|
|
|
|
|
Noninterest income for the second quarter of 2018 increased
$161 million compared with the first
quarter due to strong fee income growth and higher other
noninterest income. Consumer service fees grew $24 million as a result of seasonally higher
debit card, merchant services and credit card activity. Corporate
service fees increased $58 million
and growth was broad based including higher merger and acquisition
advisory, treasury management and loan syndication fees as well as
a higher benefit from commercial mortgage servicing rights
valuation, net of economic hedge. Residential mortgage revenue
decreased $13 million reflecting
lower servicing and loan sales revenue.
Other noninterest income for the second quarter of 2018
increased $89 million compared with
the first quarter and included higher revenue from private equity
investments and commercial mortgage loans held for sale.
Additionally, second quarter 2018 included positive derivative fair
value adjustments of $27 million
related to Visa Class B common shares primarily due to developments
relevant to the litigation.
Noninterest income for the second quarter of 2018 increased
$109 million compared with the second
quarter of 2017. Asset management revenue, including earnings from
PNC's investment in BlackRock, increased $58
million reflecting higher equity markets. Consumer service
fees grew $21 million as a result of
higher customer activity, including brokerage, debit card and
credit card fees. Corporate service fees increased $21 million primarily attributable to growth in
treasury management and merger and acquisition advisory fees.
Residential mortgage revenue decreased $20
million due to lower loan sales and servicing revenue. Other
noninterest income increased $30
million reflecting the second quarter 2018 positive Visa
Class B derivative fair value adjustments partially offset by lower
net securities gains.
CONSOLIDATED
EXPENSE REVIEW
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest
Expense
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
2Q18 vs
|
2Q18 vs
|
In
millions
|
2Q18
|
|
1Q18
|
|
2Q17
|
1Q18
|
2Q17
|
Personnel
|
$
|
1,356
|
|
|
$
|
1,354
|
|
|
$
|
1,276
|
|
—
|
|
6
|
%
|
Occupancy
|
203
|
|
|
218
|
|
|
202
|
|
(7)
|
%
|
—
|
|
Equipment
|
281
|
|
|
273
|
|
|
281
|
|
3
|
%
|
—
|
|
Marketing
|
75
|
|
|
55
|
|
|
67
|
|
36
|
%
|
12
|
%
|
Other
|
669
|
|
|
627
|
|
|
653
|
|
7
|
%
|
2
|
%
|
|
$
|
2,584
|
|
|
$
|
2,527
|
|
|
$
|
2,479
|
|
2
|
%
|
4
|
%
|
|
|
|
|
|
|
|
|
Noninterest expense for the second quarter of 2018 increased
$57 million compared with the first
quarter due to seasonally higher business activity and marketing
costs and continued investments in strategic initiatives. These
increases were partially offset by seasonally lower occupancy
expense.
Noninterest expense for the second quarter of 2018 increased
$105 million compared with the second
quarter of 2017 primarily attributable to ongoing business
investments. Higher personnel expense reflected increased staffing
levels related to business growth and enhanced retail banking
compensation.
The effective tax rate was 18.3 percent for the second quarter
of 2018 and 17.0 percent for the first quarter reflecting the new
federal statutory tax rate of 21.0 percent. The increase in the
effective tax rate over the first quarter primarily resulted from
higher second quarter pretax earnings and the impact of higher
first quarter tax deductions related to stock-based compensation.
The effective tax rate was 26.0 percent for the second quarter of
2017.
CONSOLIDATED BALANCE SHEET REVIEW
Total assets were $380.7 billion
at June 30, 2018 compared with
$379.2 billion at March 31, 2018 and $372.2
billion at June 30, 2017.
Assets increased $1.5 billion
compared with March 31, 2018
primarily due to higher investment securities and loans
substantially offset by a decrease in interest-earning deposits
with banks. Assets grew 2 percent over June
30, 2017 reflecting loan growth and higher investment
securities.
Loans
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
2Q18 vs
|
2Q18 vs
|
In
billions
|
2Q18
|
|
1Q18
|
|
2Q17
|
1Q18
|
2Q17
|
Average
|
|
|
|
|
|
|
|
Commercial
lending
|
$
|
149.7
|
|
|
$
|
148.2
|
|
|
$
|
144.2
|
|
1
|
%
|
4
|
%
|
Consumer
lending
|
73.0
|
|
|
72.9
|
|
|
72.2
|
|
—
|
|
1
|
%
|
Average
loans
|
$
|
222.7
|
|
|
$
|
221.1
|
|
|
$
|
216.4
|
|
1
|
%
|
3
|
%
|
|
|
|
|
|
|
|
|
Quarter
end
|
|
|
|
|
|
|
|
Commercial
lending
|
$
|
149.6
|
|
|
$
|
148.9
|
|
|
$
|
145.7
|
|
—
|
|
3
|
%
|
Consumer
lending
|
73.2
|
|
|
72.7
|
|
|
72.3
|
|
1
|
%
|
1
|
%
|
Total
loans
|
$
|
222.8
|
|
|
$
|
221.6
|
|
|
$
|
218.0
|
|
1
|
%
|
2
|
%
|
|
|
|
|
|
|
|
|
Average loans for the second quarter of 2018 increased
$1.6 billion compared with the first
quarter. Average commercial lending balances grew $1.5 billion primarily in PNC's corporate banking
and business credit businesses. Average consumer lending balances
increased $.1 billion reflecting
growth in auto, residential mortgage and credit card loans
substantially offset by lower home equity and education loans.
Total loans at June 30, 2018 grew
$1.2 billion compared with
March 31, 2018. Commercial lending
balances increased $.7 billion and
consumer lending balances increased $.5
billion.
Second quarter 2018 average and period end loans increased
$6.3 billion and $4.8 billion, respectively, compared with second
quarter 2017 driven by broad-based commercial loan growth and an
increase in consumer lending balances.
Investment
Securities
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
2Q18 vs
|
2Q18 vs
|
In
billions
|
2Q18
|
|
1Q18
|
|
2Q17
|
1Q18
|
2Q17
|
Average
|
$
|
77.5
|
|
|
$
|
74.7
|
|
|
$
|
75.4
|
|
4
|
%
|
3
|
%
|
Quarter
end
|
$
|
80.1
|
|
|
$
|
74.5
|
|
|
$
|
76.4
|
|
8
|
%
|
5
|
%
|
|
|
|
|
|
|
|
|
Investment securities average balances for the second quarter of
2018 increased $2.8 billion and
period end balances increased $5.6
billion compared with the first quarter due to net purchase
activity, primarily in agency residential mortgage-backed and US
Treasury securities, in excess of paydowns. Second quarter 2018
average and period end investment securities increased $2.1 billion and $3.7
billion, respectively, compared with the second quarter of
2017. Net unrealized losses on available for sale securities were
$.4 billion at June 30, 2018 and reflected the impact of higher
interest rates compared with net unrealized losses of $.2 billion at March 31,
2018 and net unrealized gains of $.5
billion at June 30, 2017.
Average balances held with the Federal Reserve Bank decreased to
$20.7 billion for the second quarter
of 2018 compared with $25.4 billion
in the first quarter and $22.1
billion in the second quarter of 2017 as investment of
liquidity continued.
Deposits
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
2Q18 vs
|
2Q18 vs
|
In
billions
|
2Q18
|
|
1Q18
|
|
2Q17
|
1Q18
|
2Q17
|
Average
|
|
|
|
|
|
|
|
Noninterest-bearing
|
$
|
76.6
|
|
|
$
|
77.2
|
|
|
$
|
77.3
|
|
(1)
|
%
|
(1)
|
%
|
Interest-bearing
|
184.4
|
|
|
183.5
|
|
|
179.1
|
|
—
|
|
3
|
%
|
Average
deposits
|
$
|
261.0
|
|
|
$
|
260.7
|
|
|
$
|
256.4
|
|
—
|
|
2
|
%
|
|
|
|
|
|
|
|
|
Quarter
end
|
|
|
|
|
|
|
|
Noninterest-bearing
|
$
|
79.1
|
|
|
$
|
78.3
|
|
|
$
|
79.6
|
|
1
|
%
|
(1)
|
%
|
Interest-bearing
|
185.8
|
|
|
186.4
|
|
|
179.6
|
|
—
|
|
3
|
%
|
Total
deposits
|
$
|
264.9
|
|
|
$
|
264.7
|
|
|
$
|
259.2
|
|
—
|
|
2
|
%
|
|
|
|
|
|
|
|
|
Average deposits for the second quarter of 2018 increased
$.3 billion compared with the first
quarter as growth in consumer deposits was partially offset by
seasonally lower commercial deposits, reflected in the decline in
noninterest-bearing deposits. Deposits at June 30, 2018 grew $.2
billion compared with March 31,
2018. Second quarter 2018 average and period end deposits
increased $4.6 billion and
$5.7 billion, respectively, compared
with second quarter 2017 driven by overall deposit and customer
growth.
Borrowed
Funds
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
2Q18 vs
|
2Q18 vs
|
In
billions
|
2Q18
|
|
1Q18
|
|
2Q17
|
1Q18
|
2Q17
|
Average
|
$
|
59.0
|
|
|
$
|
59.7
|
|
|
$
|
57.6
|
|
(1)
|
%
|
2
|
%
|
Quarter
end
|
$
|
59.2
|
|
|
$
|
58.0
|
|
|
$
|
56.4
|
|
2
|
%
|
5
|
%
|
|
|
|
|
|
|
|
|
Average borrowed funds for the second quarter of 2018 declined
$.7 billion compared with the
first quarter due to the amount and timing of issuances and
maturities. Borrowed funds at June 30,
2018 increased $1.2 billion
compared with March 31, 2018 as a
result of an increase in primarily short-term Federal Home Loan
Bank borrowings near the end of the second quarter partially offset
by lower bank notes and senior debt. Second quarter 2018 average
and period end borrowed funds increased $1.4
billion and $2.8 billion,
respectively, compared with second quarter 2017 due to increases in
Federal Home Loan Bank borrowings and bank notes and senior debt
partially offset by lower subordinated debt.
Capital
|
|
|
|
|
|
|
|
6/30/2018
|
*
|
|
3/31/2018
|
|
6/30/2017
|
Common shareholders'
equity In billions
|
$
|
42.9
|
|
|
|
$
|
43.0
|
|
|
$
|
42.1
|
|
Basel III common
equity Tier 1 capital ratio
|
9.5
|
%
|
|
|
9.6
|
%
|
|
9.8
|
%
|
* Ratio
estimated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PNC maintained a strong capital position. Common shareholders'
equity at June 30, 2018 was
relatively stable with March 31, 2018
as the addition of second quarter net income was offset by share
repurchases, dividends and lower accumulated other comprehensive
income reflecting the impact of higher rates on net unrealized
securities losses. PNC returned $1.2
billion of capital to shareholders in the second quarter of
2018 through repurchases of 5.7 million common shares for
$.8 billion and dividends on common
shares of $.4 billion.
PNC completed common stock repurchase programs of $2.4 billion, and repurchased $.2 billion of the $.3
billion program related to stock issuances under employee
benefit plans, for the four-quarter period ending in the second
quarter of 2018. Capital returned to shareholders totaled
$4.1 billion over this period through
repurchases of 18.4 million common shares for $2.6 billion and dividends on common shares of
$1.5 billion.
In June 2018 PNC announced share
repurchase programs of up to $2.0
billion for the four-quarter period beginning in the third
quarter of 2018. These programs include repurchases of up to
$.3 billion related to stock
issuances under employee benefit plans.
On July 5, 2018, the PNC board of
directors raised the quarterly cash dividend on common stock to
95 cents per share, an increase of
20 cents per share, or 27 percent,
effective with the August 5, 2018
dividend payment date.
The Basel III common equity Tier 1 capital ratio, which includes
the full phase-in of all Basel III adjustments, became effective
for PNC as of January 1, 2018. The
ratio for June 30, 2017 was
calculated on the same basis. These ratios were calculated based on
the standardized approach. See Capital Ratios in the Consolidated
Financial Highlights.
CREDIT QUALITY
REVIEW
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit
Quality
|
|
|
|
|
|
Change
|
Change
|
|
At or for the quarter
ended
|
6/30/18 vs
|
6/30/18 vs
|
In
millions
|
6/30/2018
|
|
3/31/2018
|
|
6/30/2017
|
3/31/18
|
6/30/17
|
Nonperforming
loans
|
$
|
1,719
|
|
|
$
|
1,842
|
|
|
$
|
1,957
|
|
(7)
|
%
|
(12)
|
%
|
Nonperforming
assets
|
$
|
1,854
|
|
|
$
|
2,004
|
|
|
$
|
2,153
|
|
(7)
|
%
|
(14)
|
%
|
Accruing loans past
due 90 days or more
|
$
|
586
|
|
|
$
|
628
|
|
|
$
|
674
|
|
(7)
|
%
|
(13)
|
%
|
Net
charge-offs
|
$
|
109
|
|
|
$
|
113
|
|
|
$
|
110
|
|
(4)
|
%
|
(1)
|
%
|
Provision for credit
losses
|
$
|
80
|
|
|
$
|
92
|
|
|
$
|
98
|
|
(13)
|
%
|
(18)
|
%
|
Allowance for loan
and lease losses
|
$
|
2,581
|
|
|
$
|
2,604
|
|
|
$
|
2,561
|
|
(1)
|
%
|
1
|
%
|
|
|
|
|
|
|
|
|
Overall credit quality for the second quarter of 2018 remained
strong. Provision for credit losses for the second quarter
decreased $12 million compared with
the first quarter. A lower provision for commercial loans
reflecting lower specific reserves was partially offset by a higher
provision for consumer loans, which was attributable to the impact
of first quarter home equity loan reserve releases largely offset
by lower reserves for the remaining portfolio.
Nonperforming assets at June 30,
2018 decreased $150 million
compared with March 31, 2018
primarily due to declines in nonperforming commercial and
commercial real estate loans. In the comparison with June 30, 2017, nonperforming assets decreased
$299 million as a result of lower
commercial, residential mortgage and commercial real estate
nonperforming loans and lower other real estate owned and
foreclosed and other assets. Nonperforming assets to total assets
were .49 percent at June 30, 2018,
.53 percent at March 31, 2018 and .58
percent at June 30, 2017.
Overall delinquencies at June 30,
2018 decreased $28 million, or
2 percent, compared with March 31,
2018. Accruing loans past due 90 days or more declined
$42 million due to a decrease in
government insured residential mortgage and education loans.
Accruing loans 60 to 89 days past due increased $22 million largely attributable to commercial
loans.
Net charge-offs for the second quarter of 2018 decreased
$4 million compared with the first
quarter and $1 million compared with
the second quarter of 2017. Net charge-offs for the second quarter
of 2018 were .20 percent of average loans on an annualized basis
compared with .21 percent for the first quarter and .20 percent for
the second quarter of 2017.
The allowance for loan and lease losses to total loans was 1.16
percent at June 30, 2018, 1.18
percent at March 31, 2018 and 1.17
percent at June 30, 2017. The
allowance to nonperforming loans was 150 percent at June 30, 2018, 141 percent at March 31, 2018 and 131 percent at June 30, 2017.
BUSINESS SEGMENT
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
Business Segment
Income
|
|
|
|
|
|
In
millions
|
2Q18
|
|
1Q18
|
|
2Q17
|
Retail
Banking
|
$
|
330
|
|
|
$
|
296
|
|
|
$
|
230
|
|
Corporate &
Institutional Banking
|
675
|
|
|
584
|
|
|
518
|
|
Asset Management
Group
|
49
|
|
|
68
|
|
|
52
|
|
Other, including
BlackRock
|
302
|
|
|
291
|
|
|
297
|
|
Net income
|
$
|
1,356
|
|
|
$
|
1,239
|
|
|
$
|
1,097
|
|
See accompanying
notes in Consolidated Financial Highlights
|
|
|
|
|
|
|
|
|
|
|
|
Retail
Banking
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
2Q18 vs
|
|
2Q18 vs
|
In
millions
|
2Q18
|
|
1Q18
|
|
2Q17
|
|
1Q18
|
|
2Q17
|
Net interest
income
|
$
|
1,277
|
|
|
$
|
1,218
|
|
|
$
|
1,139
|
|
|
$
|
59
|
|
|
$
|
138
|
|
Noninterest
income
|
$
|
678
|
|
|
$
|
635
|
|
|
$
|
645
|
|
|
$
|
43
|
|
|
$
|
33
|
|
Provision for credit
losses
|
$
|
72
|
|
|
$
|
69
|
|
|
$
|
50
|
|
|
$
|
3
|
|
|
$
|
22
|
|
Noninterest
expense
|
$
|
1,450
|
|
|
$
|
1,395
|
|
|
$
|
1,370
|
|
|
$
|
55
|
|
|
$
|
80
|
|
Earnings
|
$
|
330
|
|
|
$
|
296
|
|
|
$
|
230
|
|
|
$
|
34
|
|
|
$
|
100
|
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
|
73.7
|
|
|
$
|
73.5
|
|
|
$
|
72.3
|
|
|
$
|
.2
|
|
|
$
|
1.4
|
|
Average
deposits
|
$
|
162.6
|
|
|
$
|
160.0
|
|
|
$
|
160.2
|
|
|
$
|
2.6
|
|
|
$
|
2.4
|
|
|
|
|
|
|
|
|
|
|
|
Retail Banking earnings for the second quarter of 2018 increased
in both comparisons. Noninterest income for the second quarter of
2018 included positive derivative fair value adjustments of
$27 million related to Visa Class B
common shares primarily due to developments relevant to the
litigation. Higher noninterest income also reflected growth in
consumer services fees, including seasonally higher debit card,
merchant services and credit card fees compared with the first
quarter, and higher brokerage, debit and credit card fees compared
with the second quarter of 2017. In both comparisons noninterest
income included lower residential mortgage servicing fee income and
loan sales revenue. Provision for credit losses increased compared
with the second quarter of 2017 reflecting the impact of a second
quarter 2017 benefit related to certain home equity lines of
credit reaching draw period end dates and to residential mortgage
loans. Noninterest expense increased in both comparisons as a
result of higher personnel, marketing activity, customer
transaction-related expenses and continued investments in
technology.
- Average loans increased 2 percent compared with second quarter
2017 due to growth in residential mortgage, auto and credit card
loans partially offset by lower home equity and education
loans.
- Average deposits grew in both comparisons due to higher demand
and savings deposits which were partially offset by lower money
market deposits, reflecting a shift to relationship-based savings
products. Certificates of deposit declined due to the continued net
runoff of maturing accounts.
- Net charge-offs were $112 million
for the second quarter of 2018 compared with $100 million in the first quarter and
$87 million in the second quarter of
2017.
- Residential mortgage loan origination volume was $2.0 billion for the second quarter of 2018
compared with $1.7 billion for the
first quarter and $2.2 billion for
the second quarter of 2017. Approximately 71 percent of second
quarter 2018 volume was for home purchase transactions compared
with 56 percent for the first quarter and 61 percent for the second
quarter of 2017.
- The residential mortgage servicing portfolio was $124 billion at June 30,
2018 compared with $125
billion at March 31, 2018 and
$131 billion at June 30, 2017. Residential mortgage loan
servicing acquisitions were $3
billion for second quarter 2018 compared with $1 billion for the first quarter and $8 billion for the second quarter of 2017.
- Approximately 65 percent of consumer customers used non-teller
channels for the majority of their transactions during the second
quarter of 2018 compared with 64 percent in the first quarter and
62 percent in the second quarter of 2017.
- Deposit transactions via ATM and mobile channels were 54
percent of total deposit transactions in the second and first
quarters of 2018 compared with 52 percent in the second quarter of
2017.
Corporate &
Institutional Banking
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
2Q18 vs
|
|
2Q18 vs
|
In
millions
|
2Q18
|
|
1Q18
|
|
2Q17
|
|
1Q18
|
|
2Q17
|
Net interest
income
|
$
|
900
|
|
|
$
|
882
|
|
|
$
|
890
|
|
|
$
|
18
|
|
|
$
|
10
|
|
Noninterest
income
|
$
|
635
|
|
|
$
|
547
|
|
|
$
|
588
|
|
|
$
|
88
|
|
|
$
|
47
|
|
Provision for credit
losses
|
$
|
15
|
|
|
$
|
41
|
|
|
$
|
87
|
|
|
$
|
(26)
|
|
|
$
|
(72)
|
|
Noninterest
expense
|
$
|
639
|
|
|
$
|
626
|
|
|
$
|
602
|
|
|
$
|
13
|
|
|
$
|
37
|
|
Earnings
|
$
|
675
|
|
|
$
|
584
|
|
|
$
|
518
|
|
|
$
|
91
|
|
|
$
|
157
|
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
|
137.0
|
|
|
$
|
135.5
|
|
|
$
|
131.5
|
|
|
$
|
1.5
|
|
|
$
|
5.5
|
|
Average
deposits
|
$
|
85.8
|
|
|
$
|
87.9
|
|
|
$
|
83.7
|
|
|
$
|
(2.1)
|
|
|
$
|
2.1
|
|
|
|
|
|
|
|
|
|
|
|
Corporate & Institutional Banking earnings for the second
quarter of 2018 increased compared with the first quarter of 2018
and the second quarter of 2017. Noninterest income increased in
both comparisons primarily due to higher capital markets-related
revenue, including merger and acquisition advisory fees, and growth
in treasury management product revenue. Higher revenue from
commercial mortgage banking activities also contributed to the
increase over the first quarter. Provision for credit losses
decreased in both comparisons as a result of lower specific loan
reserves. Additionally, second quarter 2017 included an initial
provision for the loan and lease portfolio obtained in the
acquisition of a commercial and vendor finance business.
Noninterest expense increased in both comparisons largely due to
investments in strategic initiatives and variable costs associated
with increased business activity.
- Average loans increased 1 percent compared with the first
quarter and 4 percent compared with the second quarter of 2017
primarily driven by commercial loan growth in PNC's corporate
banking, business credit and equipment finance businesses.
- Average deposits decreased 2 percent from the first quarter as
a result of seasonal declines, and increased 3 percent compared
with the second quarter of 2017 due to growth in interest-bearing
deposits partially offset by a decrease in noninterest-bearing
demand deposits.
- Net charge-offs were in a net recovery position of $2 million in the second quarter of 2018 compared
with net charge-offs of $9 million in
the first quarter and $21 million in
the second quarter of 2017.
- PNC has formalized plans to expand its middle market business
into the Boston and Phoenix markets in 2019, following expansion
into the Denver, Houston and Nashville markets in 2018.
Asset Management
Group
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
2Q18 vs
|
|
2Q18 vs
|
In
millions
|
2Q18
|
|
1Q18
|
|
2Q17
|
|
1Q18
|
|
2Q17
|
Net interest
income
|
$
|
72
|
|
|
$
|
74
|
|
|
$
|
73
|
|
|
$
|
(2)
|
|
|
$
|
(1)
|
|
Noninterest
income
|
$
|
222
|
|
|
$
|
226
|
|
|
$
|
217
|
|
|
$
|
(4)
|
|
|
$
|
5
|
|
Provision for credit
losses (benefit)
|
$
|
7
|
|
|
$
|
(7)
|
|
|
$
|
(7)
|
|
|
$
|
14
|
|
|
$
|
14
|
|
Noninterest
expense
|
$
|
223
|
|
|
$
|
218
|
|
|
$
|
215
|
|
|
$
|
5
|
|
|
$
|
8
|
|
Earnings
|
$
|
49
|
|
|
$
|
68
|
|
|
$
|
52
|
|
|
$
|
(19)
|
|
|
$
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Client assets under
administration at
quarter end
|
$
|
279
|
|
|
$
|
277
|
|
|
$
|
266
|
|
|
$
|
2
|
|
|
$
|
13
|
|
Average
loans
|
$
|
7.0
|
|
|
$
|
7.0
|
|
|
$
|
7.0
|
|
|
|
—
|
|
|
—
|
|
Average
deposits
|
$
|
12.3
|
|
|
$
|
12.5
|
|
|
$
|
12.4
|
|
|
$
|
(.2)
|
|
|
$
|
(.1)
|
|
|
|
|
|
|
|
|
|
|
|
Asset Management Group earnings for the second quarter of 2018
decreased in both comparisons. Noninterest income declined compared
with the first quarter primarily due to decreases in the average
equity markets and increased compared with second quarter 2017
reflecting higher average equity markets. Noninterest expense
increased over both prior periods due to higher legal reserves and
continued investments in technology. Provision for credit losses
increased in both comparisons as a result of higher reserves on
home equity loans.
- Client assets under administration at June 30, 2018 included discretionary client
assets under management of $149
billion and nondiscretionary client assets under
administration of $130 billion.
-
- Discretionary client assets under management increased
$1 billion compared with March 31, 2018 primarily due to higher equity
markets at June 30, 2018 and net
business activities, and increased $8
billion compared with June 30,
2017 primarily attributable to equity market increases.
Other, including BlackRock
The "Other, including BlackRock" category, for the purposes of
this release, includes earnings and gains or losses related to
PNC's equity interest in BlackRock, 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 and certain trading activities,
discontinued consumer loan portfolios, private equity investments,
intercompany eliminations, most corporate overhead, tax adjustments
that are not allocated to business segments, exited businesses,
integration costs, 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 9:30
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 (877) 272-3515 and (303) 223-4398
(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 2018 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 21890497 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
|
|
|
2018
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
|
$
|
2,413
|
|
|
$
|
2,361
|
|
|
$
|
2,258
|
|
|
$
|
4,774
|
|
|
$
|
4,418
|
|
Noninterest
income
|
|
1,911
|
|
|
1,750
|
|
|
1,802
|
|
|
3,661
|
|
|
3,526
|
|
Total
revenue
|
|
4,324
|
|
|
4,111
|
|
|
4,060
|
|
|
8,435
|
|
|
7,944
|
|
Provision for credit
losses
|
|
80
|
|
|
92
|
|
|
98
|
|
|
172
|
|
|
186
|
|
Noninterest
expense
|
|
2,584
|
|
|
2,527
|
|
|
2,479
|
|
|
5,111
|
|
|
4,881
|
|
Income before income
taxes (benefit) and noncontrolling
interests
|
|
$
|
1,660
|
|
|
$
|
1,492
|
|
|
$
|
1,483
|
|
|
$
|
3,152
|
|
|
$
|
2,877
|
|
Net income
|
|
$
|
1,356
|
|
|
$
|
1,239
|
|
|
$
|
1,097
|
|
|
$
|
2,595
|
|
|
$
|
2,171
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to noncontrolling
interests
|
|
10
|
|
|
10
|
|
|
10
|
|
|
20
|
|
|
27
|
|
Preferred stock dividends (a)
|
|
55
|
|
|
63
|
|
|
55
|
|
|
118
|
|
|
118
|
|
Preferred stock discount accretion and
redemptions
|
|
1
|
|
|
1
|
|
|
2
|
|
|
2
|
|
|
23
|
|
Net income
attributable to common shareholders
|
|
$
|
1,290
|
|
|
$
|
1,165
|
|
|
$
|
1,030
|
|
|
$
|
2,455
|
|
|
$
|
2,003
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
Dividends and
undistributed earnings allocated to
nonvested restricted
shares
|
5
|
|
|
5
|
|
|
4
|
|
|
10
|
|
|
10
|
|
Impact of BlackRock
earnings per share dilution
|
|
3
|
|
|
2
|
|
|
1
|
|
|
5
|
|
|
5
|
|
Net income
attributable to diluted common shares
|
|
$
|
1,282
|
|
|
$
|
1,158
|
|
|
$
|
1,025
|
|
|
$
|
2,440
|
|
|
$
|
1,988
|
|
Diluted earnings per
common share
|
|
$
|
2.72
|
|
|
$
|
2.43
|
|
|
$
|
2.10
|
|
|
$
|
5.15
|
|
|
$
|
4.05
|
|
Cash dividends
declared per common share
|
|
$
|
.75
|
|
|
$
|
.75
|
|
|
$
|
.55
|
|
|
$
|
1.50
|
|
|
$
|
1.10
|
|
Effective tax rate
(b)
|
|
18.3
|
%
|
|
17.0
|
%
|
|
26.0
|
%
|
|
17.7
|
%
|
|
24.5
|
%
|
|
|
(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 first and second quarter 2018 results
reflected the change in the statutory federal income tax rate from
35% to 21%, effective as of January 1, 2018, as a result of the new
federal tax legislation.
|
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
|
|
|
2018
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
PERFORMANCE
RATIOS
|
|
|
|
|
|
|
|
|
|
|
Net interest margin
(a)
|
|
2.96
|
%
|
|
2.91
|
%
|
|
2.84
|
%
|
|
2.94
|
%
|
|
2.81
|
%
|
Noninterest income to
total revenue
|
|
44
|
%
|
|
43
|
%
|
|
44
|
%
|
|
43
|
%
|
|
44
|
%
|
Efficiency
(b)
|
|
60
|
%
|
|
61
|
%
|
|
61
|
%
|
|
61
|
%
|
|
61
|
%
|
Return on:
|
|
|
|
|
|
|
|
|
|
|
Average common
shareholders' equity (c)
|
|
12.13
|
%
|
|
11.04
|
%
|
|
9.88
|
%
|
|
11.59
|
%
|
|
9.69
|
%
|
Average assets
(c)
|
|
1.45
|
%
|
|
1.34
|
%
|
|
1.19
|
%
|
|
1.39
|
%
|
|
1.19
|
%
|
BUSINESS SEGMENT
NET INCOME (LOSS) (c) (d)
|
|
|
|
|
|
|
|
|
|
|
In
millions
|
|
|
|
|
|
|
|
|
|
|
Retail
Banking
|
|
$
|
330
|
|
|
$
|
296
|
|
|
$
|
230
|
|
|
$
|
626
|
|
|
$
|
443
|
|
Corporate &
Institutional Banking
|
|
675
|
|
|
584
|
|
|
518
|
|
|
1,259
|
|
|
1,002
|
|
Asset Management
Group
|
|
49
|
|
|
68
|
|
|
52
|
|
|
117
|
|
|
99
|
|
Other, including
BlackRock (e)
|
|
302
|
|
|
291
|
|
|
297
|
|
|
593
|
|
|
627
|
|
Total net
income
|
|
$
|
1,356
|
|
|
$
|
1,239
|
|
|
$
|
1,097
|
|
|
$
|
2,595
|
|
|
$
|
2,171
|
|
|
|
(a)
|
Calculated as
annualized taxable-equivalent net interest income divided by
average earning assets. To provide more meaningful comparisons of
net interest margins, we use net interest income on a
taxable-equivalent basis in calculating net interest margin by
increasing the interest income earned on tax-exempt assets to make
it fully equivalent to interest income earned on taxable
investments. This adjustment is not permitted under 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, 2018,
March 31, 2018 and June 30, 2017 were $29 million, $29
million and $54 million, respectively. The taxable equivalent
adjustments to net interest income for the six months ended June
30, 2018 and June 30, 2017 were $58 million and $106 million,
respectively. Taxable equivalent amounts for the 2018 periods were
calculated using a statutory federal income tax rate of 21%,
reflecting the enactment of the new federal tax legislation
effective January 1, 2018. Amounts for the 2017 periods were
calculated using the previously applicable statutory federal income
tax rate of 35%.
|
(b)
|
Calculated as
noninterest expense divided by total revenue.
|
(c)
|
The first and second
quarter 2018 results reflected the change in the statutory federal
income tax rate from 35% to 21%, effective as of January 1, 2018,
as a result of the new federal tax legislation.
|
(d)
|
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.
|
(e)
|
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
|
|
2018
|
|
2018
|
|
2017
|
BALANCE SHEET
DATA
|
|
|
|
|
|
Dollars in
millions, except per share data
|
|
|
|
|
|
Assets
|
$
|
380,711
|
|
|
$
|
379,161
|
|
|
$
|
372,190
|
|
Loans (a)
|
$
|
222,855
|
|
|
$
|
221,614
|
|
|
$
|
218,034
|
|
Allowance for loan
and lease losses
|
$
|
2,581
|
|
|
$
|
2,604
|
|
|
$
|
2,561
|
|
Interest-earning
deposits with banks
|
$
|
21,972
|
|
|
$
|
28,821
|
|
|
$
|
22,482
|
|
Investment
securities
|
$
|
80,125
|
|
|
$
|
74,562
|
|
|
$
|
76,431
|
|
Loans held for sale
(a)
|
$
|
1,325
|
|
|
$
|
965
|
|
|
$
|
2,030
|
|
Equity investments
(b)
|
$
|
12,430
|
|
|
$
|
12,008
|
|
|
$
|
10,819
|
|
Mortgage servicing
rights
|
$
|
2,045
|
|
|
$
|
1,979
|
|
|
$
|
1,867
|
|
Goodwill
|
$
|
9,218
|
|
|
$
|
9,218
|
|
|
$
|
9,163
|
|
Other assets
(a)
|
$
|
27,897
|
|
|
$
|
27,949
|
|
|
$
|
28,886
|
|
Noninterest-bearing
deposits
|
$
|
79,047
|
|
|
$
|
78,303
|
|
|
$
|
79,550
|
|
Interest-bearing
deposits
|
$
|
185,838
|
|
|
$
|
186,401
|
|
|
$
|
179,626
|
|
Total
deposits
|
$
|
264,885
|
|
|
$
|
264,704
|
|
|
$
|
259,176
|
|
Borrowed funds
(a)
|
$
|
59,222
|
|
|
$
|
58,039
|
|
|
$
|
56,406
|
|
Shareholders'
equity
|
$
|
46,904
|
|
|
$
|
46,969
|
|
|
$
|
46,084
|
|
Common shareholders'
equity
|
$
|
42,917
|
|
|
$
|
42,983
|
|
|
$
|
42,103
|
|
Accumulated other
comprehensive income (loss)
|
$
|
(940)
|
|
|
$
|
(699)
|
|
|
$
|
(98)
|
|
Book value per common
share
|
$
|
92.26
|
|
|
$
|
91.39
|
|
|
$
|
87.78
|
|
Tangible book value
per common share (Non-GAAP) (c)
|
$
|
72.25
|
|
|
$
|
71.58
|
|
|
$
|
68.55
|
|
Period end common
shares outstanding (millions)
|
465
|
|
|
470
|
|
|
480
|
|
Loans to
deposits
|
84
|
%
|
|
84
|
%
|
|
84
|
%
|
CLIENT ASSETS
(billions)
|
|
|
|
|
|
Discretionary client
assets under management
|
$
|
149
|
|
|
$
|
148
|
|
|
$
|
141
|
|
Nondiscretionary
client assets under administration
|
130
|
|
|
129
|
|
|
125
|
|
Total client assets
under administration
|
279
|
|
|
277
|
|
|
266
|
|
Brokerage account
client assets
|
49
|
|
|
49
|
|
|
46
|
|
Total client
assets
|
$
|
328
|
|
|
$
|
326
|
|
|
$
|
312
|
|
CAPITAL
RATIOS
|
|
|
|
|
|
Basel III (d) (e)
(f)
|
|
|
|
|
|
Common equity Tier
1
|
9.5
|
%
|
|
9.6
|
%
|
|
N/A
|
|
Tier 1
risk-based
|
10.7
|
%
|
|
10.8
|
%
|
|
N/A
|
|
Total capital
risk-based
|
12.6
|
%
|
|
12.8
|
%
|
|
N/A
|
|
Leverage
|
9.4
|
%
|
|
9.4
|
%
|
|
N/A
|
|
Supplementary
leverage
|
7.8
|
%
|
|
7.9
|
%
|
|
N/A
|
|
Fully Phased-In
Basel III (Non-GAAP)
|
|
|
|
|
|
Common equity Tier
1
|
N/A
|
|
|
N/A
|
|
|
9.8
|
%
|
Transitional Basel
III (e)
|
|
|
|
|
|
Common equity Tier
1
|
N/A
|
|
|
N/A
|
|
|
10.3
|
%
|
Tier 1
risk-based
|
N/A
|
|
|
N/A
|
|
|
11.6
|
%
|
Total capital
risk-based
|
N/A
|
|
|
N/A
|
|
|
13.7
|
%
|
Leverage
|
N/A
|
|
|
N/A
|
|
|
9.9
|
%
|
Common shareholders'
equity to total assets
|
11.3
|
%
|
|
11.3
|
%
|
|
11.3
|
%
|
ASSET
QUALITY
|
|
|
|
|
|
Nonperforming loans
to total loans
|
.77
|
%
|
|
.83
|
%
|
|
.90
|
%
|
Nonperforming assets
to total loans, OREO, foreclosed and other assets
|
.83
|
%
|
|
.90
|
%
|
|
.99
|
%
|
Nonperforming assets
to total assets
|
.49
|
%
|
|
.53
|
%
|
|
.58
|
%
|
Net charge-offs to
average loans (for the three months ended) (annualized)
|
.20
|
%
|
|
.21
|
%
|
|
.20
|
%
|
Allowance for loan
and lease losses to total loans
|
1.16
|
%
|
|
1.18
|
%
|
|
1.17
|
%
|
Allowance for loan
and lease losses to nonperforming loans
|
150
|
%
|
|
141
|
%
|
|
131
|
%
|
Accruing loans past
due 90 days or more (in millions)
|
$
|
586
|
|
|
$
|
628
|
|
|
$
|
674
|
|
|
|
(a)
|
Amounts include
assets and liabilities for which we have elected the fair value
option. Our first quarter 2018 Form 10-Q included, and our second
quarter 2018 Form 10-Q will include, additional information
regarding these Consolidated Balance Sheet line items.
|
(b)
|
Amounts include our
equity interest in BlackRock. The amount at March 31, 2018 included
$.6 billion of trading and available for sale securities, primarily
money market funds, that were reclassified to Equity investments on
January 1, 2018 in accordance with the adoption of Accounting
Standards Update 2016-01, Financial Instruments - Overall:
Recognition and Measurement of Financial Assets and Financial
Liabilities.
|
(c)
|
See the Tangible Book
Value per Common Share table on page 17 for additional
information.
|
(d)
|
The ratios as of
June 30, 2018 are estimated.
|
(e)
|
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.
|
(f)
|
The 2018 Basel III
ratios for Common equity Tier 1 capital, Tier 1 risk-based capital,
Leverage and Supplementary leverage reflect the full phase-in of
all Basel III adjustments to these metrics applicable to PNC. The
2018 Basel III Total risk-based capital ratios include $80 million
of nonqualifying trust preferred capital securities 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 2018 and
2017 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. With the exception of certain nonqualifying trust
preferred capital securities included in PNC's Total risk-based
capital, the transitions and multi-year phase-in of the definition
of capital under the Basel III rules were completed as of January
1, 2018. Accordingly, we refer to the capital ratios calculated
using the definition of capital in effect as of January 1, 2018
and, for the risk-based ratios, standardized risk-weighted assets,
as the Basel III ratios. We refer to the capital ratios calculated
using the phased-in Basel III provisions in effect for 2017 and,
for the risk-based ratios, standardized approach risk-weighted
assets, as the 2017 Transitional Basel III ratios.
|
|
We provide
information below regarding PNC's estimated Basel III June 30,
2018, actual Basel III March 31, 2018, pro forma Fully Phased-In
Basel III June 30, 2017 and actual June 30, 2017 Transitional
Basel III Common equity Tier 1 ratios. Under the Basel III rules
applicable to PNC, significant common stock investments in
unconsolidated financial institutions (primarily BlackRock),
mortgage servicing rights and deferred tax assets must be deducted
from capital (subject to a phase-in schedule that ended December
31, 2017 and 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 (subject to a phase-in
schedule that ended December 31, 2017) 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
|
|
Basel III
(a)
|
|
|
Fully Phased-In
Basel III (Non-
GAAP) (b)
|
|
|
2017 Transitional
Basel III (a)
|
|
|
|
June 30
|
|
March 31
|
|
|
June 30
|
|
|
June 30
|
|
Dollars in
millions
|
2018
(estimated)
|
|
2018
|
|
|
2017
|
|
|
2017
|
|
Common stock, related
surplus and retained earnings, net of
treasury stock
|
$
|
43,857
|
|
|
$
|
43,681
|
|
|
|
$
|
42,200
|
|
|
|
$
|
42,200
|
|
|
Less regulatory
capital adjustments:
|
|
|
|
|
|
|
|
|
|
|
Goodwill and
disallowed intangibles, net of deferred tax
liabilities
|
(9,319)
|
|
|
(9,343)
|
|
|
|
(9,225)
|
|
|
|
(9,156)
|
|
|
Basel III total
threshold deductions
|
(3,430)
|
|
|
(3,272)
|
|
|
|
(1,702)
|
|
|
|
(1,144)
|
|
|
Accumulated other
comprehensive income (loss) (c)
|
(757)
|
|
|
(645)
|
|
|
|
(209)
|
|
|
|
(167)
|
|
|
All other
adjustments
|
(167)
|
|
|
(121)
|
|
|
|
(181)
|
|
|
|
(179)
|
|
|
Basel III Common
equity Tier 1 capital
|
$
|
30,184
|
|
|
$
|
30,300
|
|
|
|
$
|
30,883
|
|
|
|
$
|
31,554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basel III
standardized approach risk-weighted assets (d)
|
$
|
319,143
|
|
|
$
|
314,922
|
|
|
|
$
|
314,389
|
|
|
|
$
|
306,379
|
|
|
Basel III advanced
approaches risk-weighted assets (e)
|
280,993
|
|
|
$
|
280,385
|
|
|
|
$
|
282,472
|
|
|
|
N/A
|
|
|
Basel III Common
equity Tier 1 capital ratio
|
9.5
|
%
|
|
9.6
|
%
|
|
|
9.8
|
%
|
|
|
10.3
|
%
|
|
Risk weight and
associated rules utilized
|
Standardized
|
|
|
Standardized
|
|
|
Standardized
(with 2017
transition
adjustments)
|
|
|
|
(a)
|
All ratios are
calculated using the regulatory capital methodology applicable to
PNC during each period presented and calculated based on the
standardized approach.
|
(b)
|
2017 Fully Phased-In
Basel III results are presented as Pro forma estimates.
|
(c)
|
Represents net
adjustments related to accumulated other comprehensive income
(loss) for securities currently and those transferred from
available for sale, as well as pension and other postretirement
plans.
|
(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.
|
(e)
|
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. We anticipate additional refinements through the parallel
run qualification phase.
|
Our Basel III capital ratios may be impacted by 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
|
2018
|
|
2018
|
|
2017
|
Book value per common
share
|
$
|
92.26
|
|
|
$
|
91.39
|
|
|
$
|
87.78
|
|
Tangible book value
per common share
|
|
|
|
|
|
Common shareholders'
equity
|
$
|
42,917
|
|
|
$
|
42,983
|
|
|
$
|
42,103
|
|
Goodwill and Other
Intangible Assets
|
(9,511)
|
|
|
(9,533)
|
|
|
(9,527)
|
|
Deferred tax
liabilities on Goodwill and Other Intangible Assets
|
192
|
|
|
192
|
|
|
302
|
|
Tangible common
shareholders' equity
|
$
|
33,598
|
|
|
$
|
33,642
|
|
|
$
|
32,878
|
|
Period-end common
shares outstanding (in millions)
|
465
|
|
|
470
|
|
|
480
|
|
Tangible book value
per common share (Non-GAAP)
|
$
|
72.25
|
|
|
$
|
71.58
|
|
|
$
|
68.55
|
|
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 and do not undertake 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 newly enacted tax
legislation, changing business and economic conditions or
legislative or regulatory initiatives.
- Changes in customers', suppliers' and other counterparties'
performance and creditworthiness.
- 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 current view that
the U.S. economic growth will accelerate somewhat in 2018, in light
of stimulus from corporate and personal income tax cuts passed in
late 2017 that are expected to support business investment and
consumer spending, respectively. We expect an increase in federal
government spending will also support economic growth in 2018.
Further gradual improvement in the labor market this year,
including job gains and rising wages, is another positive for
consumer spending. Other sources of growth for the U.S. economy in
2018 will be the global economic expansion and the housing market,
although trade restrictions are a growing downside risk to the
forecast. Although inflation slowed in 2017, it should pick up as
the labor market continues to tighten. Short-term interest rates
and bond yields are expected to rise throughout 2018; after the
Federal Open Market Committee raised the federal funds rate in
June, our baseline forecast is for one additional rate hike in
September 2018, pushing the rate to a
range of 2.00% to 2.25% by the end of the year. Longer-term rates
are also expected to increase as the Federal Reserve slowly reduces
the size of its balance sheet and the federal government borrows
more. Long-term rates will rise more slowly than short-term rates,
so we anticipate that the yield curve will flatten but not
invert.
- 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 (particularly
those implementing the international regulatory capital framework
developed by the Basel Committee on Banking Supervision (Basel
Committee), 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 approval 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 resulting from legislative and regulatory reforms,
including changes affecting oversight of the financial services
industry, consumer protection, pension, bankruptcy and other
industry aspects, and changes in accounting policies and
principles.
- Changes to regulations governing bank capital and liquidity
standards, including due to the Dodd-Frank Act and initiatives of
the Basel Committee.
- 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. Acquisition
risks and uncertainties include those presented by the nature of
the business acquired, 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 2017 Form 10-K and our first quarter 2018 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:
PNC Media Relations
(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.