PITTSBURGH, Oct. 12, 2018 /PRNewswire/ -- The PNC Financial
Services Group, Inc. (NYSE: PNC) today reported:
|
For the
quarter
|
|
3Q18
|
2Q18
|
3Q17
|
Net
income $ millions
|
$1,400
|
|
$1,356
|
|
$1,126
|
|
Diluted earnings per
common share
|
$2.82
|
|
$2.72
|
|
$2.16
|
|
"PNC delivered another good,
consistent quarter. We grew average loans and deposits and
continued to add new clients. Net interest income and our margin
and fee income increased. We're experiencing success with our
national initiative to expand our middle market capabilities in
faster growing markets, and we launched our national retail digital
strategy with a high yield savings offer to be supported by an
ultra-thin retail network. Looking ahead, we're positioned to drive
growth and efficiency over the long term."
Bill
Demchak, PNC Chairman, President and Chief Executive
Officer
Income Statement Highlights
Third quarter 2018
compared with second quarter 2018
- Net income of $1.4 billion for
the third quarter increased $44
million, or 3 percent, compared with the second
quarter.
- Total revenue for the third quarter increased $33 million, or 1 percent, to $4.4 billion.
- Net interest income increased $53
million, or 2 percent, to $2.5
billion due to higher loan yields and securities balances
and the benefit of an additional day in the third quarter partially
offset by increased funding costs.
-
- Net interest margin increased 3 basis points to 2.99
percent.
- Noninterest income was $1.9
billion, a decrease of $20
million.
-
- Fee income grew $13 million, or 1
percent, to $1.6 billion led by
higher asset management revenue and consumer activity.
- Other noninterest income decreased $33
million to $301 million
primarily due to negative Visa Class B derivative fair value
adjustments of $32 million in the
third quarter compared with a benefit of $27
million in the second quarter partially offset by higher
revenue from private equity investments.
- Noninterest expense increased $24
million, or 1 percent, to $2.6
billion driven by higher business activity.
- Provision for credit losses was $88
million, an increase of $8
million reflecting a higher provision for consumer
loans.
- The effective tax rate was 15.7 percent for the third quarter
compared with 18.3 percent for the second quarter due to the timing
of deductions related to tax planning activities.
Balance Sheet Highlights
- Average loans increased $.7
billion in the third quarter to $223.3 billion compared with the second
quarter.
-
- Average commercial lending balances grew $.2 billion primarily in PNC's equipment finance
and business credit businesses. Loan growth was moderated by
substantial payoff volumes.
- Average consumer lending balances increased $.5 billion due to growth in auto, residential
mortgage, credit card and unsecured installment loans partially
offset by lower home equity and education loans.
- Overall credit quality remained strong.
-
- Nonperforming assets of $1.8
billion at September 30, 2018
decreased $29 million, or 2 percent,
compared with June 30, 2018.
- Net charge-offs were $91 million
for the third quarter compared with $109
million for the second quarter.
- Average deposits increased $1.5
billion, or 1 percent, to $262.5
billion in the third quarter compared with the second
quarter primarily due to seasonal growth in commercial
deposits.
- Average investment securities increased $3.3 billion, or 4 percent, to $80.8 billion in the third quarter compared with
the second quarter.
- PNC returned $.9 billion of
capital to shareholders in the third quarter through repurchases of
3.3 million common shares for $.5
billion and dividends on common shares of $.4 billion.
- The August quarterly cash dividend on common stock was raised
to 95 cents per share, an increase of
20 cents per share, or 27
percent.
- PNC maintained strong capital and liquidity positions.
-
- The Basel III common equity Tier 1 capital ratio was an
estimated 9.3 percent at September 30,
2018 and 9.5 percent at June 30,
2018.
- The Liquidity Coverage Ratio at September 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
|
|
3Q18
|
|
2Q18
|
|
3Q17
|
Net income
|
|
$
|
1,400
|
|
|
$
|
1,356
|
|
|
$
|
1,126
|
|
Net income
attributable to diluted common shares
|
|
$
|
1,317
|
|
|
$
|
1,282
|
|
|
$
|
1,042
|
|
Diluted earnings per
common share
|
|
$
|
2.82
|
|
|
$
|
2.72
|
|
|
$
|
2.16
|
|
Average diluted
common shares outstanding
|
|
467
|
|
|
472
|
|
|
483
|
|
Return on average
assets
|
|
1.47
|
%
|
|
1.45
|
%
|
|
1.20
|
%
|
Return on average
common equity
|
|
12.32
|
%
|
|
12.13
|
%
|
|
9.89
|
%
|
Book value per common
share
|
Quarter
end
|
$
|
93.22
|
|
|
$
|
92.26
|
|
|
$
|
89.05
|
|
Tangible book value
per common share (non-GAAP)
|
Quarter
end
|
$
|
73.11
|
|
|
$
|
72.25
|
|
|
$
|
69.72
|
|
Cash dividends
declared per common share
|
|
$
|
.95
|
|
|
$
|
.75
|
|
|
$
|
.75
|
|
|
|
|
|
|
|
|
The Consolidated Financial Highlights accompanying this news
release include additional information regarding reconciliations of
non-GAAP financial measures to reported amounts. Fee income, a
non-GAAP financial measure, refers to noninterest income in the
following categories: asset management, consumer services,
corporate services, residential mortgage and service charges on
deposits. Information in this news release including the financial
tables is unaudited.
CONSOLIDATED
REVENUE REVIEW
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
3Q18 vs
|
3Q18 vs
|
In
millions
|
3Q18
|
|
2Q18
|
|
3Q17
|
2Q18
|
3Q17
|
Net interest
income
|
$
|
2,466
|
|
|
$
|
2,413
|
|
|
$
|
2,345
|
|
2
|
%
|
5
|
%
|
Noninterest
income
|
1,891
|
|
|
1,911
|
|
|
1,780
|
|
(1)
|
%
|
6
|
%
|
Total
revenue
|
$
|
4,357
|
|
|
$
|
4,324
|
|
|
$
|
4,125
|
|
1
|
%
|
6
|
%
|
|
|
|
|
|
|
|
|
Total revenue for the third quarter of 2018 increased
$33 million compared with the second
quarter and $232 million compared
with the third quarter of 2017. Net interest income grew in both
comparisons and noninterest income increased over third quarter
2017.
Net interest income for the third quarter of 2018 increased
$53 million compared with the second
quarter and $121 million compared
with the third quarter of 2017. Higher loan and securities yields
and balances were partially offset by higher deposit and borrowing
costs in both comparisons reflecting the impact of interest rate
increases. Third quarter 2018 also benefited from an additional day
compared with the second quarter. The net interest margin increased
to 2.99 percent for the third quarter of 2018 compared with 2.96
percent for the second quarter and 2.91 percent for the third
quarter of 2017.
Noninterest
Income
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
3Q18 vs
|
3Q18 vs
|
In
millions
|
3Q18
|
|
2Q18
|
|
3Q17
|
2Q18
|
3Q17
|
Asset
management
|
$
|
486
|
|
|
$
|
456
|
|
|
$
|
421
|
|
7
|
%
|
15
|
%
|
Consumer
services
|
377
|
|
|
381
|
|
|
357
|
|
(1)
|
%
|
6
|
%
|
Corporate
services
|
465
|
|
|
487
|
|
|
404
|
|
(5)
|
%
|
15
|
%
|
Residential
mortgage
|
76
|
|
|
84
|
|
|
104
|
|
(10)
|
%
|
(27)
|
%
|
Service charges on
deposits
|
186
|
|
|
169
|
|
|
181
|
|
10
|
%
|
3
|
%
|
Other
|
301
|
|
|
334
|
|
|
313
|
|
(10)
|
%
|
(4)
|
%
|
|
$
|
1,891
|
|
|
$
|
1,911
|
|
|
$
|
1,780
|
|
(1)
|
%
|
6
|
%
|
|
|
|
|
|
|
|
|
Noninterest income for the third quarter of 2018 declined
$20 million compared with the second
quarter as fee income growth was more than offset by a decrease in
other noninterest income. Asset management revenue, including
earnings from PNC's equity investment in BlackRock, grew
$30 million and reflected higher
average equity markets. Corporate service fees declined
$22 million primarily due to a lower
benefit from commercial mortgage servicing rights valuation, net of
economic hedge, and lower loan syndication fees partially offset by
higher merger and acquisition advisory fees. Residential mortgage
revenue decreased $8 million
attributable to a lower benefit from mortgage servicing rights
valuation, net of economic hedge. Service charges on deposits grew
$17 million reflecting a seasonal
increase in consumer spending.
Other noninterest income for the third quarter of 2018 decreased
$33 million primarily due to negative
derivative fair value adjustments of $32
million related to Visa Class B common shares in the third
quarter compared with a benefit of $27
million in the second quarter partially offset by higher
revenue from private equity investments.
Noninterest income for the third quarter of 2018 increased
$111 million compared with the third
quarter of 2017. Asset management revenue increased $65 million and included the benefit of the lower
federal statutory income tax rate on BlackRock earnings and higher
equity markets. Consumer service fees grew $20 million driven by increased customer activity
reflected in debit card, brokerage and credit card fees. Corporate
service fees grew $61 million
primarily due to higher merger and acquisition advisory fees and
treasury management revenue. Residential mortgage revenue decreased
$28 million as a result of lower loan
sales and servicing revenue and a lower benefit from mortgage
servicing rights valuation, net of economic hedge.
CONSOLIDATED
EXPENSE REVIEW
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest
Expense
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
3Q18 vs
|
3Q18 vs
|
In
millions
|
3Q18
|
|
2Q18
|
|
3Q17
|
2Q18
|
3Q17
|
Personnel
|
$
|
1,413
|
|
|
$
|
1,356
|
|
|
$
|
1,286
|
|
4
|
%
|
10
|
%
|
Occupancy
|
195
|
|
|
203
|
|
|
204
|
|
(4)
|
%
|
(4)
|
%
|
Equipment
|
264
|
|
|
281
|
|
|
259
|
|
(6)
|
%
|
2
|
%
|
Marketing
|
71
|
|
|
75
|
|
|
62
|
|
(5)
|
%
|
15
|
%
|
Other
|
665
|
|
|
669
|
|
|
645
|
|
(1)
|
%
|
3
|
%
|
|
$
|
2,608
|
|
|
$
|
2,584
|
|
|
$
|
2,456
|
|
1
|
%
|
6
|
%
|
|
|
|
|
|
|
|
|
Noninterest expense for the third quarter of 2018 increased
$24 million compared with the second
quarter. Personnel expense increased $57
million primarily due to higher variable compensation
associated with increased business activity and an additional day
in the third quarter. This increase was partially offset by
declines in all other expense categories.
Noninterest expense for the third quarter of 2018 increased
$152 million compared with the third
quarter of 2017. Ongoing business investments were primarily
reflected in personnel expense, which increased $127 million and included higher variable
compensation related to revenue growth, increased staffing levels
and enhanced retail banking compensation, as well as higher
marketing expense supporting business growth.
The effective tax rate was 15.7 percent for the third quarter of
2018 compared with 18.3 percent for the second quarter due to the
timing of deductions related to tax planning activities. The
federal statutory tax rate was lowered to 21.0 percent effective
January 1, 2018. The effective tax
rate was 26.8 percent for the third quarter of 2017.
CONSOLIDATED BALANCE SHEET REVIEW
Average total assets
were $377.9 billion in the third
quarter of 2018 and increased 1 percent compared with $375.6 billion in the second quarter and
$373.4 billion in the third quarter
of 2017. Higher investment securities and loans were partially
offset by lower interest-earning deposits with banks in both
comparisons. Total assets were $380.1
billion at September 30, 2018,
$380.7 billion at June 30, 2018 and $375.2
billion at September 30,
2017.
Loans
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
3Q18 vs
|
3Q18 vs
|
In
billions
|
3Q18
|
|
2Q18
|
|
3Q17
|
2Q18
|
3Q17
|
Average
|
|
|
|
|
|
|
|
Commercial
lending
|
$
|
149.9
|
|
|
$
|
149.7
|
|
|
$
|
146.9
|
|
—
|
|
2
|
%
|
Consumer
lending
|
73.4
|
|
|
72.9
|
|
|
72.3
|
|
1
|
%
|
2
|
%
|
Average
loans
|
$
|
223.3
|
|
|
$
|
222.6
|
|
|
$
|
219.2
|
|
—
|
|
2
|
%
|
|
|
|
|
|
|
|
|
Quarter
end
|
|
|
|
|
|
|
|
Commercial
lending
|
$
|
149.4
|
|
|
$
|
149.6
|
|
|
$
|
148.5
|
|
—
|
|
1
|
%
|
Consumer
lending
|
73.7
|
|
|
73.3
|
|
|
72.6
|
|
1
|
%
|
2
|
%
|
Total
loans
|
$
|
223.1
|
|
|
$
|
222.9
|
|
|
$
|
221.1
|
|
—
|
|
1
|
%
|
|
|
|
|
|
|
|
|
Average loans for the third quarter of 2018 increased
$.7 billion compared with the second
quarter. Average commercial lending balances grew $.2 billion primarily in PNC's equipment finance
and business credit businesses. Loan growth was moderated by
substantial payoff volumes. Average consumer lending balances
increased $.5 billion due to growth
in auto, residential mortgage, credit card and unsecured
installment loans partially offset by lower home equity and
education loans. Total loans at September
30, 2018 grew $.2 billion
compared with June 30, 2018. Consumer
lending balances increased $.4
billion and commercial lending balances decreased
$.2 billion.
Third quarter 2018 average and period end loans increased
$4.1 billion and $2.0 billion, respectively, compared with third
quarter 2017 as a result of higher commercial loans and growth in
consumer lending balances.
Investment
Securities
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
3Q18 vs
|
3Q18 vs
|
In
billions
|
3Q18
|
|
2Q18
|
|
3Q17
|
2Q18
|
3Q17
|
Average
|
$
|
80.8
|
|
|
$
|
77.5
|
|
|
$
|
74.4
|
|
4
|
%
|
9
|
%
|
Quarter
end
|
$
|
80.8
|
|
|
$
|
80.1
|
|
|
$
|
75.0
|
|
1
|
%
|
8
|
%
|
|
|
|
|
|
|
|
|
Investment securities average balances for the third quarter of
2018 increased $3.3 billion and
period end balances increased $.7
billion compared with the second quarter due to net purchase
activity, primarily in agency residential mortgage-backed and US
Treasury securities. Third quarter 2018 average and period end
investment securities increased $6.4
billion and $5.8 billion,
respectively, compared with the third quarter of 2017. Net
unrealized losses on available for sale securities were
$.7 billion at September 30, 2018, reflecting the impact of
higher interest rates, compared with net unrealized losses of
$.4 billion at June 30, 2018 and net unrealized gains of
$.7 billion at September 30, 2017.
Average balances held with the Federal Reserve Bank decreased to
$18.8 billion for the third quarter
of 2018 from $20.7 billion in the
second quarter and $23.4 billion in
the third quarter of 2017 as investment of liquidity continued.
Deposits
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
3Q18 vs
|
3Q18 vs
|
In
billions
|
3Q18
|
|
2Q18
|
|
3Q17
|
2Q18
|
3Q17
|
Average
|
|
|
|
|
|
|
|
Noninterest-bearing
|
$
|
76.2
|
|
|
$
|
76.7
|
|
|
$
|
79.0
|
|
(1)
|
%
|
(4)
|
%
|
Interest-bearing
|
186.3
|
|
|
184.3
|
|
|
180.5
|
|
1
|
%
|
3
|
%
|
Average
deposits
|
$
|
262.5
|
|
|
$
|
261.0
|
|
|
$
|
259.5
|
|
1
|
%
|
1
|
%
|
|
|
|
|
|
|
|
|
Quarter
end
|
|
|
|
|
|
|
|
Noninterest-bearing
|
$
|
74.8
|
|
|
$
|
79.1
|
|
|
$
|
80.0
|
|
(5)
|
%
|
(7)
|
%
|
Interest-bearing
|
190.1
|
|
|
185.8
|
|
|
180.7
|
|
2
|
%
|
5
|
%
|
Total
deposits
|
$
|
264.9
|
|
|
$
|
264.9
|
|
|
$
|
260.7
|
|
—
|
|
2
|
%
|
|
|
|
|
|
|
|
|
Average deposits for the third quarter of 2018 increased
$1.5 billion compared with the second
quarter as seasonal growth in commercial deposits was partially
offset by lower consumer demand deposits attributable in part to
seasonal consumer spending. Deposit growth was in interest-bearing
balances, including certificates of deposit, and reflected rising
deposit rates. Deposits at September 30,
2018 were stable with June 30,
2018 and reflected a shift of commercial deposits to
interest-bearing from noninterest-bearing. Third quarter 2018
average and period end deposits increased $3.0 billion and $4.2
billion, respectively, compared with third quarter 2017
driven by overall deposit and customer growth.
Borrowed
Funds
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
3Q18 vs
|
3Q18 vs
|
In
billions
|
3Q18
|
|
2Q18
|
|
3Q17
|
2Q18
|
3Q17
|
Average
|
$
|
59.8
|
|
|
$
|
58.9
|
|
|
$
|
57.0
|
|
2
|
%
|
5
|
%
|
Quarter
end
|
$
|
58.0
|
|
|
$
|
59.3
|
|
|
$
|
57.6
|
|
(2)
|
%
|
1
|
%
|
|
|
|
|
|
|
|
|
Average borrowed funds for the third quarter of 2018 increased
$.9 billion compared with the
second quarter due to higher repurchase agreements, Federal Home
Loan Bank borrowings and subordinated debt partially offset by a
decrease in bank notes and senior debt. Borrowed funds at
September 30, 2018 decreased
$1.3 billion compared with
June 30, 2018 driven by lower Federal
Home Loan Bank borrowings reflecting the maturity of short-term
second quarter issuances. Third quarter 2018 average and period end
borrowed funds increased $2.8 billion
and $.4 billion, respectively,
compared with third quarter 2017.
Capital
|
|
|
|
|
|
|
|
9/30/2018
|
*
|
|
6/30/2018
|
|
9/30/2017
|
Common shareholders'
equity In billions
|
$
|
43.1
|
|
|
|
$
|
42.9
|
|
|
$
|
42.4
|
|
Basel III common
equity Tier 1 capital ratio
|
9.3
|
%
|
|
|
9.5
|
%
|
|
9.8
|
%
|
* Ratio
estimated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PNC maintained a strong capital position. Common shareholders'
equity at September 30, 2018
increased compared with June 30, 2018
due to third quarter net income partially offset by share
repurchases, dividends and lower accumulated other comprehensive
income reflecting the impact of higher rates on net unrealized
securities losses.
PNC returned $.9 billion of
capital to shareholders in the third quarter of 2018 through
repurchases of 3.3 million common shares for $.5 billion and dividends on common shares of
$.4 billion. Repurchases were made
under 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 October 4, 2018, the PNC board
of directors declared a quarterly cash dividend on common stock of
95 cents per share effective with the
November 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 September 30, 2017 was
calculated on the same basis. These ratios were calculated based on
the standardized approach for the risk-weighting of assets. See
Capital Ratios in the Consolidated Financial Highlights.
CREDIT QUALITY
REVIEW
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit
Quality
|
|
|
|
|
|
Change
|
Change
|
|
At or for the quarter
ended
|
9/30/18 vs
|
9/30/18 vs
|
In
millions
|
9/30/2018
|
|
6/30/2018
|
|
9/30/2017
|
6/30/18
|
9/30/17
|
Nonperforming
loans
|
$
|
1,694
|
|
|
$
|
1,719
|
|
|
$
|
1,873
|
|
(1)
|
%
|
(10)
|
%
|
Nonperforming
assets
|
$
|
1,825
|
|
|
$
|
1,854
|
|
|
$
|
2,067
|
|
(2)
|
%
|
(12)
|
%
|
Accruing loans past
due 90 days
or more
|
$
|
619
|
|
|
$
|
586
|
|
|
$
|
678
|
|
6
|
%
|
(9)
|
%
|
Net
charge-offs
|
$
|
91
|
|
|
$
|
109
|
|
|
$
|
106
|
|
(17)
|
%
|
(14)
|
%
|
Provision for credit
losses
|
$
|
88
|
|
|
$
|
80
|
|
|
$
|
130
|
|
10
|
%
|
(32)
|
%
|
Allowance for loan
and lease losses
|
$
|
2,584
|
|
|
$
|
2,581
|
|
|
$
|
2,605
|
|
—
|
|
(1)
|
%
|
|
|
|
|
|
|
|
|
Overall credit quality for the third quarter of 2018 remained
strong. Provision for credit losses for the third quarter increased
$8 million compared with the second
quarter. The provision for consumer loans increased primarily
attributable to credit card and auto loans while the provision for
commercial loans was a net benefit in the third quarter reflecting
lower specific loan reserves.
Nonperforming assets at September 30,
2018 decreased $29 million
compared with June 30, 2018 due to
lower nonperforming commercial loans and residential mortgage loans
partially offset by higher nonperforming auto and home equity
loans. Nonperforming assets decreased $242
million compared with September 30,
2017 as a result of lower nonperforming commercial loans,
lower other real estate owned and foreclosed and other assets, and
lower nonperforming commercial real estate and residential mortgage
loans partially offset by higher nonperforming auto and home equity
loans. Nonperforming assets to total assets were .48 percent at
September 30, 2018, .49 percent at
June 30, 2018, and .55 percent at
September 30, 2017.
Overall delinquencies at September 30,
2018 increased $67 million, or
5 percent, compared with June 30,
2018. Accruing loans past due 90 days or more increased
$33 million primarily in government
insured education loans and commercial loans. Accruing loans 30 to
59 days past due increased $32
million and included higher auto loan delinquencies related
to Hurricane Florence.
Net charge-offs for the third quarter of 2018 decreased
$18 million compared with the
second quarter with half of the decline attributable to lower
home equity loan net charge-offs, and decreased $15 million compared with the third quarter of
2017 due to lower commercial loan net charge-offs. Net charge-offs
for the third quarter of 2018 were .16 percent of average loans on
an annualized basis compared with .20 percent for the second
quarter and .19 percent for the third quarter of 2017.
The allowance for loan and lease losses to total loans was 1.16
percent at both September 30, 2018
and June 30, 2018 and 1.18 percent at
September 30, 2017. The allowance to
nonperforming loans was 153 percent at September 30, 2018, 150 percent at June 30, 2018 and 139 percent at September 30, 2017.
BUSINESS SEGMENT
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
Business Segment
Income
|
|
|
|
|
|
In
millions
|
3Q18
|
|
2Q18
|
|
3Q17
|
Retail
Banking
|
$
|
283
|
|
|
$
|
330
|
|
|
$
|
232
|
|
Corporate &
Institutional Banking
|
665
|
|
|
675
|
|
|
525
|
|
Asset Management
Group
|
61
|
|
|
49
|
|
|
47
|
|
Other, including
BlackRock
|
391
|
|
|
302
|
|
|
322
|
|
Net income
|
$
|
1,400
|
|
|
$
|
1,356
|
|
|
$
|
1,126
|
|
See accompanying
notes in Consolidated Financial Highlights
|
|
|
|
|
|
|
|
|
|
|
|
Retail
Banking
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
3Q18 vs
|
|
3Q18 vs
|
In
millions
|
3Q18
|
|
2Q18
|
|
3Q17
|
|
2Q18
|
|
3Q17
|
Net interest
income
|
$
|
1,305
|
|
|
$
|
1,277
|
|
|
$
|
1,176
|
|
|
$
|
28
|
|
$
|
129
|
Noninterest
income
|
$
|
622
|
|
|
$
|
678
|
|
|
$
|
643
|
|
|
$
|
(56)
|
|
$
|
(21)
|
Provision for credit
losses
|
$
|
113
|
|
|
$
|
72
|
|
|
$
|
77
|
|
|
$
|
41
|
|
$
|
36
|
Noninterest
expense
|
$
|
1,442
|
|
|
$
|
1,450
|
|
|
$
|
1,375
|
|
|
$
|
(8)
|
|
$
|
67
|
Earnings
|
$
|
283
|
|
|
$
|
330
|
|
|
$
|
232
|
|
|
$
|
(47)
|
|
$
|
51
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
|
74.1
|
|
|
$
|
73.7
|
|
|
$
|
72.5
|
|
|
$
|
.4
|
|
$
|
1.6
|
Average
deposits
|
$
|
161.8
|
|
|
$
|
162.6
|
|
|
$
|
159.5
|
|
|
$
|
(.8)
|
|
$
|
2.3
|
|
|
|
|
|
|
|
|
|
|
Retail Banking earnings for the third quarter of 2018 decreased
compared with the second quarter and increased compared with the
third quarter of 2017. Earnings benefited from the lower federal
statutory income tax rate compared with third quarter 2017.
Noninterest income decreased in both comparisons as a result of
negative derivative fair value adjustments related to Visa Class B
common shares and a lower benefit from residential mortgage
servicing rights valuation, net of economic hedge partially offset
by higher service charges on deposits. Additionally, consumer
service fees grew in the comparison to third quarter 2017,
including debit card, brokerage and credit card fees. Provision for
credit losses increased in both comparisons due to credit card loan
portfolio growth and, in the second quarter comparison, auto loan
portfolio growth. Noninterest expense decreased compared with the
second quarter reflecting lower occupancy costs and increased in
the comparison to third quarter 2017 as a result of higher
personnel costs, marketing activity and continued investments in
technology.
- Average loans increased 1 percent compared with the second
quarter and 2 percent compared with third quarter 2017 due to
growth in auto, residential mortgage, credit card and unsecured
installment loans partially offset by lower home equity, commercial
and education loans.
- Average deposits declined compared with the second quarter
primarily due to lower demand deposits attributable in part
to seasonal consumer spending. Certificates of deposit
increased in the comparison. Average deposits grew 1 percent
compared with third quarter 2017 as higher demand and savings
deposits were partially offset by lower money market deposits
reflecting a shift to relationship-based savings products and by a
decline in certificates of deposit.
- Net charge-offs were $96 million
for the third quarter of 2018 compared with $112 million in the second quarter and
$85 million in the third quarter of
2017.
- Residential mortgage loan origination volume was $2.1 billion for the third quarter of 2018
compared with $2.0 billion for the
second quarter and $2.5 billion for
the third quarter of 2017. Approximately 72 percent of third
quarter 2018 volume was for home purchase transactions compared
with 71 percent for the second quarter and 57 percent for the third
quarter of 2017.
- The residential mortgage servicing portfolio was $127 billion at September
30, 2018 compared with $124
billion at June 30, 2018 and
$129 billion at September 30, 2017. Residential mortgage loan
servicing acquisitions were $6
billion in the third quarter of 2018 compared with
$3 billion in the second quarter and
$2 billion in the third quarter of
2017.
- Approximately 66 percent of consumer customers used non-teller
channels for the majority of their transactions during the third
quarter of 2018 compared with 65 percent in the second quarter and
62 percent in the third quarter of 2017.
- Deposit transactions via ATM and mobile channels were 55
percent of total deposit transactions in the third quarter of 2018
compared with 54 percent in both the second quarter of 2018 and
third quarter of 2017.
Corporate &
Institutional Banking
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
3Q18 vs
|
|
3Q18 vs
|
In
millions
|
3Q18
|
|
2Q18
|
|
3Q17
|
|
2Q18
|
|
3Q17
|
Net interest
income
|
$
|
925
|
|
|
$
|
900
|
|
|
$
|
924
|
|
|
$
|
25
|
|
$
|
1
|
Noninterest
income
|
$
|
592
|
|
|
$
|
635
|
|
|
$
|
555
|
|
|
$
|
(43)
|
|
$
|
37
|
Provision for credit
losses (benefit)
|
$
|
(13)
|
|
|
$
|
15
|
|
|
$
|
62
|
|
|
$
|
(28)
|
|
$
|
(75)
|
Noninterest
expense
|
$
|
669
|
|
|
$
|
639
|
|
|
$
|
599
|
|
|
$
|
30
|
|
$
|
70
|
Earnings
|
$
|
665
|
|
|
$
|
675
|
|
|
$
|
525
|
|
|
$
|
(10)
|
|
$
|
140
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
|
137.4
|
|
|
$
|
137.0
|
|
|
$
|
134.3
|
|
|
$
|
.4
|
|
$
|
3.1
|
Average
deposits
|
$
|
88.1
|
|
|
$
|
85.8
|
|
|
$
|
87.5
|
|
|
$
|
2.3
|
|
$
|
.6
|
|
|
|
|
|
|
|
|
|
|
Corporate & Institutional Banking earnings for the third
quarter of 2018 decreased compared with the second quarter of 2018
and increased compared with the third quarter of 2017. Earnings
benefited from the lower federal statutory income tax rate compared
with third quarter 2017. Noninterest income declined from the
second quarter primarily due to lower revenue from commercial
mortgage banking activities, including a lower benefit from
commercial mortgage servicing rights valuation, net of economic
hedge, and lower net gains on commercial mortgage loans held for
sale. Capital markets-related revenue also declined from the second
quarter driven by lower customer-related derivative sales and lower
loan syndication fees partially offset by higher merger and
acquisition advisory fees. Noninterest income increased compared
with the third quarter of 2017 primarily due to higher merger and
acquisition advisory fees and growth in treasury management product
revenue partially offset by lower gains on asset sales. Provision
for credit losses was a benefit in the third quarter of 2018
reflecting lower specific loan reserves combined with overall
strong portfolio credit quality. Noninterest expense increased in
both comparisons due to continued investments in strategic
initiatives and variable costs associated with increased business
activity.
- Average loans increased modestly compared with the second
quarter primarily in PNC's equipment finance and business credit
businesses. Loan growth was moderated by substantial payoff
volumes. Average loans increased 2 percent compared with the third
quarter of 2017 driven by growth in PNC's corporate banking,
business credit and equipment finance businesses.
- Average deposits increased 3 percent over the second quarter
reflecting seasonal growth, and increased 1 percent compared with
the third quarter of 2017 due to growth in interest-bearing
deposits partially offset by a decrease in noninterest-bearing
demand deposits.
- Net charge-offs were $1 million
in the third quarter of 2018 compared with a net recovery position
of $2 million in the second quarter
of 2018 and net charge-offs of $22
million in the third quarter of 2017.
Asset Management
Group
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
3Q18 vs
|
|
3Q18 vs
|
In
millions
|
3Q18
|
|
2Q18
|
|
3Q17
|
|
2Q18
|
|
3Q17
|
Net interest
income
|
$
|
71
|
|
|
$
|
72
|
|
|
$
|
72
|
|
|
$
|
(1)
|
|
$
|
(1)
|
Noninterest
income
|
$
|
228
|
|
|
$
|
222
|
|
|
$
|
220
|
|
|
$
|
6
|
|
$
|
8
|
Provision for credit
losses
|
$
|
2
|
|
|
$
|
7
|
|
|
$
|
3
|
|
|
$
|
(5)
|
|
$
|
(1)
|
Noninterest
expense
|
$
|
217
|
|
|
$
|
223
|
|
|
$
|
214
|
|
|
$
|
(6)
|
|
$
|
3
|
Earnings
|
$
|
61
|
|
|
$
|
49
|
|
|
$
|
47
|
|
|
$
|
12
|
|
$
|
14
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Client assets under
administration at
quarter end
|
$
|
293
|
|
|
$
|
279
|
|
|
$
|
275
|
|
|
$
|
14
|
|
$
|
18
|
Average
loans
|
$
|
7.0
|
|
|
$
|
7.0
|
|
|
$
|
7.0
|
|
|
—
|
|
—
|
Average
deposits
|
$
|
12.3
|
|
|
$
|
12.3
|
|
|
$
|
12.2
|
|
|
—
|
|
$
|
.1
|
|
|
|
|
|
|
|
|
|
|
Asset Management Group earnings for the third quarter of 2018
increased in both comparisons. Earnings benefited from the lower
federal statutory income tax rate compared with third quarter 2017.
Noninterest income increased in both comparisons primarily due to
increases in the average equity markets. Provision for credit
losses declined from the second quarter reflecting higher second
quarter reserves on home equity loans. Noninterest expense
decreased compared with the second quarter primarily due to lower
legal reserves and increased over third quarter 2017 driven by
higher personnel related expenses.
- Client assets under administration at September 30, 2018 include discretionary client
assets under management of $159
billion and nondiscretionary client assets under
administration of $134 billion.
-
- Discretionary client assets under management increased
$10 billion compared with
June 30, 2018 primarily due to equity
market increases and net business activities, and increased
$13 billion compared with
September 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 investment in
BlackRock, and residual activities that do not meet the criteria
for disclosure as a separate reportable business, such as asset and
liability management activities including net securities gains or
losses, other-than-temporary impairment of investment securities
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)
402-9103 and (312) 281-1206 (international) and Internet access to
the live audio listen-only webcast of the call is available at
www.pnc.com/investorevents. PNC's third 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
21894303 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
|
|
Nine months
ended
|
Dollars in
millions, except per share data
|
|
September
30
|
|
June 30
|
|
September
30
|
|
September
30
|
|
September
30
|
|
|
2018
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
|
$
|
2,466
|
|
|
$
|
2,413
|
|
|
$
|
2,345
|
|
|
$
|
7,240
|
|
|
$
|
6,763
|
|
Noninterest
income
|
|
1,891
|
|
|
1,911
|
|
|
1,780
|
|
|
5,552
|
|
|
5,306
|
|
Total
revenue
|
|
4,357
|
|
|
4,324
|
|
|
4,125
|
|
|
12,792
|
|
|
12,069
|
|
Provision for credit
losses
|
|
88
|
|
|
80
|
|
|
130
|
|
|
260
|
|
|
316
|
|
Noninterest
expense
|
|
2,608
|
|
|
2,584
|
|
|
2,456
|
|
|
7,719
|
|
|
7,337
|
|
Income before income
taxes (benefit) and noncontrolling
interests
|
|
$
|
1,661
|
|
|
$
|
1,660
|
|
|
$
|
1,539
|
|
|
$
|
4,813
|
|
|
$
|
4,416
|
|
Net income
|
|
$
|
1,400
|
|
|
$
|
1,356
|
|
|
$
|
1,126
|
|
|
$
|
3,995
|
|
|
$
|
3,297
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests
|
|
11
|
|
|
10
|
|
|
12
|
|
|
31
|
|
|
39
|
|
Preferred stock
dividends (a)
|
|
63
|
|
|
55
|
|
|
63
|
|
|
181
|
|
|
181
|
|
Preferred stock
discount accretion and redemptions
|
|
1
|
|
|
1
|
|
|
1
|
|
|
3
|
|
|
24
|
|
Net income
attributable to common shareholders
|
|
$
|
1,325
|
|
|
$
|
1,290
|
|
|
$
|
1,050
|
|
|
$
|
3,780
|
|
|
$
|
3,053
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
Dividends and
undistributed earnings allocated to
nonvested restricted shares
|
6
|
|
|
5
|
|
|
5
|
|
|
16
|
|
|
15
|
|
Impact of BlackRock
earnings per share dilution
|
|
2
|
|
|
3
|
|
|
3
|
|
|
7
|
|
|
8
|
|
Net income
attributable to diluted common shares
|
|
$
|
1,317
|
|
|
$
|
1,282
|
|
|
$
|
1,042
|
|
|
$
|
3,757
|
|
|
$
|
3,030
|
|
Diluted earnings per
common share
|
|
$
|
2.82
|
|
|
$
|
2.72
|
|
|
$
|
2.16
|
|
|
$
|
7.96
|
|
|
$
|
6.21
|
|
Cash dividends
declared per common share
|
|
$
|
.95
|
|
|
$
|
.75
|
|
|
$
|
.75
|
|
|
$
|
2.45
|
|
|
$
|
1.85
|
|
Effective tax rate
(b)
|
|
15.7
|
%
|
|
18.3
|
%
|
|
26.8
|
%
|
|
17.0
|
%
|
|
25.3
|
%
|
|
|
(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 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
|
|
Nine months
ended
|
|
|
September
30
|
|
June 30
|
|
September
30
|
|
September
30
|
|
September
30
|
|
|
2018
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
PERFORMANCE
RATIOS
|
|
|
|
|
|
|
|
|
|
|
Net interest margin
(a)
|
|
2.99
|
%
|
|
2.96
|
%
|
|
2.91
|
%
|
|
2.95
|
%
|
|
2.84
|
%
|
Noninterest income to
total revenue
|
|
43
|
%
|
|
44
|
%
|
|
43
|
%
|
|
43
|
%
|
|
44
|
%
|
Efficiency
(b)
|
|
60
|
%
|
|
60
|
%
|
|
60
|
%
|
|
60
|
%
|
|
61
|
%
|
Return on:
|
|
|
|
|
|
|
|
|
|
|
Average common
shareholders' equity (c)
|
|
12.32
|
%
|
|
12.13
|
%
|
|
9.89
|
%
|
|
11.83
|
%
|
|
9.76
|
%
|
Average assets
(c)
|
|
1.47
|
%
|
|
1.45
|
%
|
|
1.20
|
%
|
|
1.42
|
%
|
|
1.19
|
%
|
BUSINESS SEGMENT
NET INCOME (LOSS) (c) (d)
|
|
|
|
|
|
|
|
|
|
|
In
millions
|
|
|
|
|
|
|
|
|
|
|
Retail
Banking
|
|
$
|
283
|
|
|
$
|
330
|
|
|
$
|
232
|
|
|
$
|
909
|
|
|
$
|
675
|
|
Corporate &
Institutional Banking
|
|
665
|
|
|
675
|
|
|
525
|
|
|
1,924
|
|
|
1,527
|
|
Asset Management
Group
|
|
61
|
|
|
49
|
|
|
47
|
|
|
178
|
|
|
146
|
|
Other, including
BlackRock (e)
|
|
391
|
|
|
302
|
|
|
322
|
|
|
984
|
|
|
949
|
|
Total net
income
|
|
$
|
1,400
|
|
|
$
|
1,356
|
|
|
$
|
1,126
|
|
|
$
|
3,995
|
|
|
$
|
3,297
|
|
|
|
(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 September 30, 2018,
June 30, 2018 and September 30, 2017 were $29 million,
$29 million and $55 million, respectively. The taxable equivalent
adjustments to net interest income for the nine months ended
September 30, 2018 and September 30, 2017 were $87 million and $161
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 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)
|
|
September
30
|
|
June 30
|
|
September
30
|
|
2018
|
|
2018
|
|
2017
|
BALANCE SHEET
DATA
|
|
|
|
|
|
Dollars in
millions, except per share data
|
|
|
|
|
|
Assets
|
$
|
380,080
|
|
|
$
|
380,711
|
|
|
$
|
375,191
|
|
Loans (a)
|
$
|
223,053
|
|
|
$
|
222,855
|
|
|
$
|
221,109
|
|
Allowance for loan
and lease losses
|
$
|
2,584
|
|
|
$
|
2,581
|
|
|
$
|
2,605
|
|
Interest-earning
deposits with banks
|
$
|
19,800
|
|
|
$
|
21,972
|
|
|
$
|
24,713
|
|
Investment
securities
|
$
|
80,804
|
|
|
$
|
80,125
|
|
|
$
|
74,994
|
|
Loans held for sale
(a)
|
$
|
1,108
|
|
|
$
|
1,325
|
|
|
$
|
1,764
|
|
Equity investments
(b)
|
$
|
12,446
|
|
|
$
|
12,430
|
|
|
$
|
11,009
|
|
Mortgage servicing
rights
|
$
|
2,136
|
|
|
$
|
2,045
|
|
|
$
|
1,854
|
|
Goodwill
|
$
|
9,218
|
|
|
$
|
9,218
|
|
|
$
|
9,163
|
|
Other assets
(a)
|
$
|
28,851
|
|
|
$
|
27,897
|
|
|
$
|
28,454
|
|
Noninterest-bearing
deposits
|
$
|
74,736
|
|
|
$
|
79,047
|
|
|
$
|
79,967
|
|
Interest-bearing
deposits
|
$
|
190,148
|
|
|
$
|
185,838
|
|
|
$
|
180,768
|
|
Total
deposits
|
$
|
264,884
|
|
|
$
|
264,885
|
|
|
$
|
260,735
|
|
Borrowed funds
(a)
|
$
|
57,955
|
|
|
$
|
59,222
|
|
|
$
|
57,564
|
|
Shareholders'
equity
|
$
|
47,058
|
|
|
$
|
46,904
|
|
|
$
|
46,388
|
|
Common shareholders'
equity
|
$
|
43,076
|
|
|
$
|
42,917
|
|
|
$
|
42,406
|
|
Accumulated other
comprehensive income (loss)
|
$
|
(1,260)
|
|
|
$
|
(940)
|
|
|
$
|
(22)
|
|
Book value per common
share
|
$
|
93.22
|
|
|
$
|
92.26
|
|
|
$
|
89.05
|
|
Tangible book value
per common share (Non-GAAP) (c)
|
$
|
73.11
|
|
|
$
|
72.25
|
|
|
$
|
69.72
|
|
Period end common
shares outstanding (millions)
|
462
|
|
|
465
|
|
|
476
|
|
Loans to
deposits
|
84
|
%
|
|
84
|
%
|
|
85
|
%
|
CLIENT ASSETS
(billions)
|
|
|
|
|
|
Discretionary client
assets under management
|
$
|
159
|
|
|
$
|
149
|
|
|
$
|
146
|
|
Nondiscretionary
client assets under administration
|
134
|
|
|
130
|
|
|
129
|
|
Total client assets
under administration
|
293
|
|
|
279
|
|
|
275
|
|
Brokerage account
client assets
|
51
|
|
|
49
|
|
|
48
|
|
Total client
assets
|
$
|
344
|
|
|
$
|
328
|
|
|
$
|
323
|
|
CAPITAL
RATIOS
|
|
|
|
|
|
Basel III (d) (e)
(f)
|
|
|
|
|
|
Common equity Tier
1
|
9.3
|
%
|
|
9.5
|
%
|
|
N/A
|
Tier 1
risk-based
|
10.5
|
%
|
|
10.7
|
%
|
|
N/A
|
Total capital
risk-based
|
12.7
|
%
|
|
12.6
|
%
|
|
N/A
|
Leverage
|
9.2
|
%
|
|
9.4
|
%
|
|
N/A
|
Supplementary leverage
|
7.6
|
%
|
|
7.8
|
%
|
|
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
|
.76
|
%
|
|
.77
|
%
|
|
.85
|
%
|
Nonperforming assets
to total loans, OREO, foreclosed and other assets
|
.82
|
%
|
|
.83
|
%
|
|
.93
|
%
|
Nonperforming assets
to total assets
|
.48
|
%
|
|
.49
|
%
|
|
.55
|
%
|
Net charge-offs to
average loans (for the three months ended) (annualized)
|
.16
|
%
|
|
.20
|
%
|
|
.19
|
%
|
Allowance for loan
and lease losses to total loans
|
1.16
|
%
|
|
1.16
|
%
|
|
1.18
|
%
|
Allowance for loan
and lease losses to nonperforming loans
|
153
|
%
|
|
150
|
%
|
|
139
|
%
|
Accruing loans past
due 90 days or more (in millions)
|
$
|
619
|
|
|
$
|
586
|
|
|
$
|
678
|
|
|
|
(a)
|
Amounts include
assets and liabilities for which we have elected the fair value
option. Our second quarter 2018 Form 10-Q included, and our third
quarter 2018 Form 10-Q will include, additional information
regarding these Consolidated Balance Sheet line items.
|
(b)
|
Amounts include our
equity interest in BlackRock. Amounts for the 2018 periods
reflected $.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
September 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
September 30, 2018, actual Basel III June 30, 2018, pro forma
Fully
Phased-In Basel III September 30, 2017 and actual September
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 (for PNC,
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
|
|
|
|
|
September
30
|
|
June 30
|
|
|
September
30
|
September
30
|
|
Dollars in
millions
|
2018
(estimated)
|
|
2018
|
|
|
2017
|
2017
|
|
Common stock, related
surplus and retained earnings, net of
treasury stock
|
$
|
44,336
|
|
|
$
|
43,857
|
|
|
|
$
|
42,426
|
|
$
|
42,426
|
|
|
Less regulatory
capital adjustments:
|
|
|
|
|
|
|
|
|
Goodwill and
disallowed intangibles, net of deferred tax
liabilities
|
(9,299)
|
|
|
(9,319)
|
|
|
|
(9,202)
|
|
(9,137)
|
|
|
Basel III total
threshold deductions
|
(4,034)
|
|
|
(3,408)
|
|
|
|
(1,731)
|
|
(1,166)
|
|
|
Accumulated other
comprehensive income (loss)
|
(1,007)
|
|
|
(757)
|
|
|
|
(117)
|
|
(94)
|
|
|
All other
adjustments
|
(322)
|
|
|
(167)
|
|
|
|
(163)
|
|
(161)
|
|
|
Basel III Common
equity Tier 1 capital
|
$
|
29,674
|
|
|
$
|
30,206
|
|
|
|
$
|
31,213
|
|
$
|
31,868
|
|
|
|
|
|
|
|
|
|
|
|
Basel III
standardized approach risk-weighted assets (c)
|
$
|
318,321
|
|
|
$
|
319,112
|
|
|
|
$
|
317,393
|
|
$
|
309,292
|
|
|
Basel III advanced
approaches risk-weighted assets (d)
|
$
|
274,072
|
|
|
$
|
280,883
|
|
|
|
$
|
285,517
|
|
N/A
|
|
Basel III Common
equity Tier 1 capital ratio
|
9.3
|
%
|
|
9.5
|
%
|
|
|
9.8
|
%
|
10.3
|
%
|
|
Risk weight and
associated rules utilized
|
Standardized
|
|
|
Standardized
|
Standardized
(with 2017
transition
adjustments)
|
|
|
|
(a)
|
2018 results are
calculated using the regulatory capital methodology applicable to
us during 2018 and reflects the full phase-in of all Basel III
adjustments to this metric applicable to PNC.
|
(b)
|
2017 Fully Phased-In
Basel III results are presented as pro forma estimates.
|
(c)
|
Basel III
standardized approach risk-weighted assets are based on the Basel
III standardized approach rules and include credit and market
risk-weighted assets.
|
(d)
|
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)
|
|
|
|
|
|
|
September
30
|
|
June 30
|
|
September
30
|
Dollars in
millions, except per share data
|
2018
|
|
2018
|
|
2017
|
Book value per common
share
|
$
|
93.22
|
|
|
$
|
92.26
|
|
|
$
|
89.05
|
|
Tangible book value
per common share
|
|
|
|
|
|
Common shareholders'
equity
|
$
|
43,076
|
|
|
$
|
42,917
|
|
|
$
|
42,406
|
|
Goodwill and Other
Intangible Assets
|
(9,489)
|
|
|
(9,511)
|
|
|
(9,503)
|
|
Deferred tax
liabilities on Goodwill and Other Intangible Assets
|
192
|
|
|
192
|
|
|
301
|
|
Tangible common
shareholders' equity
|
$
|
33,779
|
|
|
$
|
33,598
|
|
|
$
|
33,204
|
|
Period-end common
shares outstanding (millions)
|
462
|
|
|
465
|
|
|
476
|
|
Tangible book value
per common share (Non-GAAP)
|
$
|
73.11
|
|
|
$
|
72.25
|
|
|
$
|
69.72
|
|
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 recently 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 view that U.S.
economic growth has accelerated over the past two years and will
remain above its long-run trend for the remainder of 2018 and into
2019, 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 for the remainder of 2018 and into 2019. Further gradual
improvement in the labor market this year and next, including job
gains and rising wages, is another positive for consumer spending.
Trade restrictions are a growing downside risk to the forecast.
Inflation has accelerated to close to the Federal Open Market
Committee's 2 percent objective. Short-term interest rates and bond
yields are expected to rise throughout the remainder of 2018 and
into 2019; after the Federal Open Market Committee raised the
federal funds rate in September, our baseline forecast is for one
additional rate hike in December
2018, pushing the rate to a range of 2.25 to 2.50 percent by
the end of the year. PNC expects two 25 basis point increases in
the fed funds rate in 2019 (in June and September); this would take
the fed funds rate to a range of 2.75 to 3.00 percent by the end of
next year.
- 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.
- 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 2018 Form 10-Qs, 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.