PITTSBURGH,
Oct. 16, 2019 /PRNewswire/ -- The PNC
Financial Services Group, Inc. (NYSE: PNC) today
reported:
|
For the
quarter
|
|
3Q19
|
2Q19
|
3Q18
|
Net income $
millions
|
$1,392
|
|
$1,374
|
|
$1,400
|
|
Diluted earnings per
common share
|
$2.94
|
|
$2.88
|
|
$2.82
|
|
|
|
"PNC delivered
excellent results in the third quarter. Our loan growth was strong
in both commercial and consumer average loans and we saw good
deposit inflows and customer growth including from our national
strategies. Net interest income and fee income increased and we
managed expenses well even as we continued to make investments. We
are pleased with our performance and expect that continued
execution of our strategies will drive differentiated growth across
our franchise and generate long-term value for our
shareholders."
Bill Demchak, PNC
Chairman, President and Chief Executive Officer
|
Income Statement Highlights
Third quarter 2019 compared with second quarter
2019
- Net income was $1.4
billion, an increase of $18
million, or 1 percent.
- Total revenue of $4.5
billion grew $54 million, or 1
percent.
- Net interest income of $2.5
billion increased slightly by $6
million due to the benefits of higher loan and securities
balances, lower borrowing costs and an additional day partially
offset by lower loan and securities yields.
-
- Net interest margin decreased 7 basis points to 2.84
percent.
- Noninterest income of $2.0
billion increased $48 million,
or 2 percent.
-
- Fee income of $1.6 billion
grew $73 million, or 5 percent,
driven by an increase in residential mortgage revenue, higher asset
management revenue and seasonally higher consumer activity
partially offset by lower corporate service fees.
- Other noninterest income of $342
million decreased $25 million
reflecting lower asset gains partially offset by higher revenue
from private equity investments.
- Noninterest expense of $2.6
billion increased $12 million
and the efficiency ratio improved to 58 percent for the third
quarter from 59 percent in the second quarter.
- Provision for credit losses of $183 million increased $3
million, or 2 percent, as a higher provision for the
consumer lending portfolio was substantially offset by a lower
provision for the commercial lending portfolio.
- The effective tax rate was 17.5 percent for the third
quarter and 16.6 percent for the second quarter.
Balance Sheet Highlights
- Average loans increased $2.8
billion, or 1 percent, to $237.7
billion in the third quarter compared with the second
quarter.
-
- Average commercial lending balances grew $1.3 billion, or 1 percent, primarily in PNC's
real estate business, including an increase in multifamily agency
warehouse lending balances of $.7
billion, and in PNC's corporate banking
business.
- Average consumer lending balances increased $1.5 billion, or 2 percent, due to growth in
residential mortgage, auto, credit card and unsecured installment
loans partially offset by lower home equity and education
loans.
- Overall credit quality remained strong.
-
- Nonperforming assets of $1.8
billion at September 30, 2019
decreased slightly by $3 million
compared with June 30,
2019.
- Net charge-offs were $155
million for the third quarter compared with $142 million for the second quarter.
- The allowance for loan and lease losses to total loans
was 1.15 percent at both September 30,
2019 and June 30,
2019.
- Average deposits increased $6.2
billion, or 2 percent, to $279.1
billion in the third quarter compared with the second
quarter driven by seasonal growth in commercial
deposits.
- Average investment securities increased $1.5 billion, or 2 percent, to $85.2 billion in the third quarter compared with
the second quarter.
- Average balances held with the Federal Reserve of
$15.3 billion increased $2.1 billion compared with the second
quarter.
- PNC returned $1.5 billion
of capital to shareholders in the third quarter through repurchases
of 7.5 million common shares for $1.0
billion and dividends on common shares of $.5 billion.
- The August quarterly cash dividend on common stock was
raised to $1.15 per share, an
increase of 20 cents per share, or 21
percent.
- PNC maintained a strong capital position.
-
- The Basel III common equity Tier 1 capital ratio was an
estimated 9.6 percent at September 30,
2019 and 9.7 percent at June 30,
2019.
Earnings Summary
|
|
|
|
|
|
|
In millions, except per share
data
|
|
3Q19
|
|
|
2Q19
|
|
|
3Q18
|
Net income
|
|
$
|
1,392
|
|
|
$
|
1,374
|
|
|
$
|
1,400
|
|
Net income
attributable to diluted common shares
|
|
$
|
1,307
|
|
|
$
|
1,300
|
|
|
$
|
1,317
|
|
Diluted earnings per
common share
|
|
$
|
2.94
|
|
|
$
|
2.88
|
|
|
$
|
2.82
|
|
Average diluted
common shares outstanding
|
|
445
|
|
|
452
|
|
|
467
|
|
Return on average
assets
|
|
1.36
|
%
|
|
1.39
|
%
|
|
1.47
|
%
|
Return on average
common equity
|
|
11.56
|
%
|
|
11.75
|
%
|
|
12.32
|
%
|
Book value per common
share
|
Quarter end
|
$
|
103.37
|
|
|
$
|
101.53
|
|
|
$
|
93.22
|
|
Tangible book value
per common share (non-GAAP)
|
Quarter end
|
$
|
82.37
|
|
|
$
|
80.76
|
|
|
$
|
73.11
|
|
Cash dividends
declared per common share
|
|
$
|
1.15
|
|
|
$
|
.95
|
|
|
$
|
.95
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
3Q19 vs
|
3Q19 vs
|
In millions
|
3Q19
|
|
|
2Q19
|
|
|
3Q18
|
|
2Q19
|
3Q18
|
Net interest
income
|
$
|
2,504
|
|
|
$
|
2,498
|
|
|
$
|
2,466
|
|
—
|
|
2
|
%
|
Noninterest
income
|
1,989
|
|
|
1,941
|
|
|
1,891
|
|
2
|
%
|
5
|
%
|
Total
revenue
|
$
|
4,493
|
|
|
$
|
4,439
|
|
|
$
|
4,357
|
|
1
|
%
|
3
|
%
|
|
|
|
|
|
|
|
|
Total revenue for the third quarter of 2019 increased
$54 million compared with the second
quarter and $136 million compared
with the third quarter of 2018 due to higher noninterest income and
net interest income.
Net interest income for the third quarter of 2019
increased slightly by $6 million
compared with the second quarter reflecting the benefits of higher
loan and securities balances, lower borrowing costs and an
additional day partially offset by lower loan and securities
yields. In comparison with the third quarter of 2018, net interest
income increased $38 million due to
higher loan and securities balances and higher loan yields
partially offset by higher deposit costs and higher deposit and
borrowing balances. The net interest margin declined to 2.84
percent for the third quarter of 2019 from 2.91 percent for the
second quarter driven primarily by lower commercial loan yields,
and decreased from 2.99 percent in the third quarter of 2018 as
higher deposit costs were partially offset by higher loan
yields.
Noninterest Income
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
3Q19 vs
|
3Q19 vs
|
In millions
|
3Q19
|
|
|
2Q19
|
|
|
3Q18
|
|
2Q19
|
3Q18
|
Asset
management
|
$
|
464
|
|
|
$
|
445
|
|
|
$
|
486
|
|
4
|
%
|
(5)
|
%
|
Consumer
services
|
402
|
|
|
392
|
|
|
377
|
|
3
|
%
|
7
|
%
|
Corporate
services
|
469
|
|
|
484
|
|
|
465
|
|
(3)
|
%
|
1
|
%
|
Residential
mortgage
|
134
|
|
|
82
|
|
|
76
|
|
63
|
%
|
76
|
%
|
Service charges on
deposits
|
178
|
|
|
171
|
|
|
186
|
|
4
|
%
|
(4)
|
%
|
Other
|
342
|
|
|
367
|
|
|
301
|
|
(7)
|
%
|
14
|
%
|
|
$
|
1,989
|
|
|
$
|
1,941
|
|
|
$
|
1,891
|
|
2
|
%
|
5
|
%
|
|
|
|
|
|
|
|
|
Noninterest income for the third quarter of 2019 increased
$48 million compared with the second
quarter as fee income growth of 5 percent was partially offset by
lower other noninterest income. Asset management revenue increased
$19 million reflecting higher
earnings from PNC's equity investment in BlackRock. Consumer
services increased $10 million due to
higher brokerage revenue and seasonally higher debit and credit
card fees. Corporate services decreased $15
million primarily as a result of a lower benefit from
commercial mortgage servicing rights valuation, net of economic
hedge, and lower merger and acquisition advisory fees. Residential
mortgage revenue increased $52
million due to a higher benefit from residential mortgage
servicing rights valuation, net of economic hedge, and higher loan
sales revenue from increased origination volumes. Service charges
on deposits grew $7 million
reflecting a seasonal increase in consumer spending. Other
noninterest income decreased $25
million primarily as a result of the second quarter gain on
the sale of the retirement recordkeeping business and lower net
securities gains partially offset by higher revenue from private
equity investments.
Noninterest income for the third quarter of 2019 increased
$98 million compared with the third
quarter of 2018, including fee income growth of $57 million, or 4 percent. Residential mortgage
revenue increased $58 million due to
a higher benefit from residential mortgage servicing rights
valuation, net of economic hedge, and higher loan sales revenue.
Consumer services increased $25
million driven by higher debit card, credit card and
brokerage revenue. Asset management revenue declined $22 million primarily due to lower yielding
assets under management and lower earnings from PNC's equity
investment in BlackRock. Service charges on deposits decreased
$8 million and included a reduction
of ATM fees charged. Other noninterest income increased
$41 million reflecting higher capital
markets-related revenue, the benefit of lower negative Visa Class B
derivative fair value adjustments of $8
million in the third quarter of 2019 compared with
$32 million in the third quarter of
2018 and higher net gains on commercial mortgage loans held for
sale partially offset by lower revenue from private equity
investments.
CONSOLIDATED EXPENSE REVIEW
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest Expense
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
3Q19 vs
|
3Q19 vs
|
In millions
|
3Q19
|
|
|
2Q19
|
|
|
3Q18
|
|
2Q19
|
3Q18
|
Personnel
|
$
|
1,400
|
|
|
$
|
1,365
|
|
|
$
|
1,413
|
|
3
|
%
|
(1)
|
%
|
Occupancy
|
206
|
|
|
212
|
|
|
195
|
|
(3)
|
%
|
6
|
%
|
Equipment
|
291
|
|
|
298
|
|
|
264
|
|
(2)
|
%
|
10
|
%
|
Marketing
|
76
|
|
|
83
|
|
|
71
|
|
(8)
|
%
|
7
|
%
|
Other
|
650
|
|
|
653
|
|
|
665
|
|
—
|
|
(2)
|
%
|
|
$
|
2,623
|
|
|
$
|
2,611
|
|
|
$
|
2,608
|
|
—
|
|
1
|
%
|
|
|
|
|
|
|
|
|
Noninterest expense for the third quarter of 2019
increased $12 million compared with
the second quarter. Personnel expense increased $35 million primarily due to higher compensation
associated with business activity and an additional day. This
increase was partially offset by declines in all other expense
categories.
Noninterest expense for the third quarter of 2019
increased $15 million compared with
the third quarter of 2018. Lower personnel expense related to
variable compensation and lower FDIC insurance due to the surcharge
elimination were more than offset by ongoing business investments
reflected in higher equipment, occupancy and marketing
expense.
The effective tax rate was 17.5 percent for the third
quarter of 2019, 16.6 percent for the second quarter of 2019 and
15.7 percent for the third quarter of 2018.
CONSOLIDATED BALANCE SHEET REVIEW
Average total assets of $406.7
billion in the third quarter of 2019 increased 2 percent
compared with $397.0 billion in the
second quarter of 2019 primarily due to loan growth, higher
balances held with the Federal Reserve Bank and higher investment
securities. Average total assets increased 8 percent compared with
$377.9 billion in the third quarter
of 2018 reflecting higher loans, investment securities and other
assets including resale agreements. Total assets were $408.9 billion at September 30, 2019, $405.8
billion at June 30, 2019 and
$380.1 billion at September 30, 2018.
Loans
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
3Q19 vs
|
3Q19 vs
|
In billions
|
3Q19
|
|
|
2Q19
|
|
|
3Q18
|
|
2Q19
|
3Q18
|
Average
|
|
|
|
|
|
|
|
Commercial
lending
|
$
|
161.5
|
|
|
$
|
160.2
|
|
|
$
|
149.9
|
|
1
|
%
|
8
|
%
|
Consumer
lending
|
76.2
|
|
|
74.7
|
|
|
73.4
|
|
2
|
%
|
4
|
%
|
Average
loans
|
$
|
237.7
|
|
|
$
|
234.9
|
|
|
$
|
223.3
|
|
1
|
%
|
6
|
%
|
|
|
|
|
|
|
|
|
Quarter end
|
|
|
|
|
|
|
|
Commercial
lending
|
$
|
160.2
|
|
|
$
|
161.6
|
|
|
$
|
149.5
|
|
(1)
|
%
|
7
|
%
|
Consumer
lending
|
77.2
|
|
|
75.6
|
|
|
73.5
|
|
2
|
%
|
5
|
%
|
Total
loans
|
$
|
237.4
|
|
|
$
|
237.2
|
|
|
$
|
223.0
|
|
—
|
|
6
|
%
|
|
|
|
|
|
|
|
|
Average loans for the third quarter of 2019 grew
$2.8 billion compared with the second
quarter. Average commercial lending balances increased $1.3 billion primarily in PNC's real estate
business, including an increase in multifamily agency warehouse
lending balances of $.7 billion, and
in PNC's corporate banking business. Average consumer lending
balances increased $1.5 billion due
to growth in residential mortgage, auto, credit card and unsecured
installment loans partially offset by lower home equity and
education loans. Total loans at September
30, 2019 grew $.2 billion
compared with June 30, 2019. Growth
in consumer lending balances of $1.6
billion was substantially offset by a decrease of
$1.4 billion in the commercial
lending portfolio driven by lower multifamily agency warehouse
lending balances of $1.1 billion and
the sale of franchise finance loans.
Third quarter 2019 average and period end loans increased
$14.4 billion compared with third
quarter 2018 driven by growth in both commercial and consumer
lending.
Investment Securities
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
3Q19 vs
|
3Q19 vs
|
In billions
|
3Q19
|
|
|
2Q19
|
|
|
3Q18
|
|
2Q19
|
3Q18
|
Average
|
$
|
85.2
|
|
|
$
|
83.7
|
|
|
$
|
80.8
|
|
2
|
%
|
5
|
%
|
Quarter
end
|
$
|
87.9
|
|
|
$
|
88.3
|
|
|
$
|
80.8
|
|
—
|
|
9
|
%
|
|
|
|
|
|
|
|
|
Average investment securities for the third quarter of
2019 increased $1.5 billion compared
with the second quarter due to net purchase activity primarily of
agency residential mortgage-backed securities partially offset by
net sales of U.S. Treasury securities. Investment securities at
September 30, 2019 decreased
$.4 billion compared with
June 30, 2019. Third quarter 2019
average and period-end investment securities increased $4.4 billion and $7.1
billion, respectively, compared with the third quarter of
2018. Net unrealized gains on available for sale securities were
$1.4 billion at September 30, 2019 and $1.2 billion at June 30,
2019 compared with net unrealized losses of $.7 billion at September
30, 2018.
Average balances held with the Federal Reserve Bank
increased to $15.3 billion in the
third quarter of 2019 from $13.2
billion in the second quarter and decreased from
$18.8 billion in the third quarter of
2018. Balances held with the Federal Reserve were $18.8 billion at September
30, 2019, $18.1 billion at
June 30, 2019 and $19.6 billion at September
30, 2018.
Deposits
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
3Q19 vs
|
3Q19 vs
|
In billions
|
3Q19
|
|
|
2Q19
|
|
|
3Q18
|
|
2Q19
|
3Q18
|
Average
|
|
|
|
|
|
|
|
Noninterest-bearing
|
$
|
72.1
|
|
|
$
|
71.7
|
|
|
$
|
76.2
|
|
1
|
%
|
(5)
|
%
|
Interest-bearing
|
207.0
|
|
|
201.2
|
|
|
186.3
|
|
3
|
%
|
11
|
%
|
Average
deposits
|
$
|
279.1
|
|
|
$
|
272.9
|
|
|
$
|
262.5
|
|
2
|
%
|
6
|
%
|
|
|
|
|
|
|
|
|
Quarter end
|
|
|
|
|
|
|
|
Noninterest-bearing
|
$
|
74.1
|
|
|
$
|
69.9
|
|
|
$
|
74.8
|
|
6
|
%
|
(1)
|
%
|
Interest-bearing
|
211.5
|
|
|
203.4
|
|
|
190.1
|
|
4
|
%
|
11
|
%
|
Total
deposits
|
$
|
285.6
|
|
|
$
|
273.3
|
|
|
$
|
264.9
|
|
5
|
%
|
8
|
%
|
|
|
|
|
|
|
|
|
Average deposits for the third quarter of 2019 increased
$6.2 billion compared with the second
quarter driven by seasonal growth in commercial deposits. Deposits
at September 30, 2019 increased
$12.3 billion over June 30, 2019 and included $3.9 billion of balances for a new sweep deposit
product for asset management clients previously held off-balance
sheet primarily in PNC proprietary money market mutual funds. Third
quarter 2019 average and period-end deposits increased $16.6 billion and $20.7
billion, respectively, compared with third quarter 2018, and
the decrease in noninterest-bearing deposits reflected a shift to
interest-bearing.
Borrowed Funds
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
3Q19 vs
|
3Q19 vs
|
In billions
|
3Q19
|
|
|
2Q19
|
|
|
3Q18
|
|
2Q19
|
3Q18
|
Average
|
$
|
63.9
|
|
|
$
|
62.3
|
|
|
$
|
59.8
|
|
3
|
%
|
7
|
%
|
Quarter
end
|
$
|
61.4
|
|
|
$
|
69.0
|
|
|
$
|
58.0
|
|
(11)
|
%
|
6
|
%
|
|
|
|
|
|
|
|
|
Average borrowed funds for the third quarter of 2019
increased $1.6 billion compared with
the second quarter due to higher Federal Home Loan Bank borrowings
partially offset by lower federal funds purchased. Borrowed funds
at September 30, 2019 decreased
$7.6 billion compared with
June 30, 2019 as a result of lower
short-term Federal Home Loan Bank borrowings. Average and
period-end borrowed funds for the third quarter of 2019 increased
$4.1 billion and $3.4 billion, respectively, compared with the
third quarter of 2018 primarily due to increases in Federal Home
Loan Bank borrowings.
Capital
|
|
|
|
|
|
|
9/30/2019
|
*
|
|
6/30/2019
|
|
|
9/30/2018
|
|
Common shareholders'
equity In
billions
|
$
|
45.4
|
|
|
$
|
45.3
|
|
|
$
|
43.1
|
|
Basel III common
equity Tier 1 capital ratio
|
9.6
|
%
|
|
9.7
|
%
|
|
9.3
|
%
|
* Ratio estimated
|
|
|
|
|
|
|
|
|
|
|
|
PNC maintained a strong capital position. Common
shareholders' equity at September 30,
2019 increased $.1 billion
compared with June 30, 2019
reflecting an increase in accumulated other comprehensive income
related to net unrealized securities gains, as third quarter net
income was more than offset by share repurchases and
dividends.
PNC returned $1.5 billion of
capital to shareholders in the third quarter of 2019 through
repurchases of 7.5 million common shares for $1.0 billion and dividends on common shares of
$.5 billion. Repurchases were made
under share repurchase programs of up to $4.3 billion for the four-quarter period
beginning in the third quarter of 2019. A new 100 million share
repurchase authorization became effective July 1, 2019. For the nine months ended
September 30, 2019, capital returned
to shareholders totaled $3.9 billion
through repurchases of 19.4 million common shares for $2.5 billion and dividends on common shares of
$1.4 billion.
On October 3, 2019, the PNC
board of directors declared a quarterly cash dividend on common
stock of $1.15 per share effective
with the November 5, 2019 dividend
payment date.
The Basel III common equity Tier 1 capital ratio was
calculated based on the standardized approach for the
risk-weighting of assets. See Capital Ratios in the Consolidated
Financial Highlights.
CREDIT QUALITY REVIEW
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Quality
|
|
|
|
|
|
Change
|
Change
|
|
At or for the quarter
ended
|
9/30/19 vs
|
9/30/19 vs
|
In millions
|
9/30/2019
|
|
|
6/30/2019
|
|
|
9/30/2018
|
|
6/30/19
|
9/30/18
|
Nonperforming
loans
|
$
|
1,728
|
|
|
$
|
1,724
|
|
|
$
|
1,694
|
|
—
|
|
2
|
%
|
Nonperforming
assets
|
$
|
1,847
|
|
|
$
|
1,850
|
|
|
$
|
1,825
|
|
—
|
|
1
|
%
|
Accruing loans past
due 90 days or more
|
$
|
532
|
|
|
$
|
524
|
|
|
$
|
619
|
|
2
|
%
|
(14)
|
%
|
Net
charge-offs
|
$
|
155
|
|
|
$
|
142
|
|
|
$
|
91
|
|
9
|
%
|
70
|
%
|
Provision for credit
losses
|
$
|
183
|
|
|
$
|
180
|
|
|
$
|
88
|
|
2
|
%
|
108
|
%
|
Allowance for loan
and lease losses
|
$
|
2,738
|
|
|
$
|
2,721
|
|
|
$
|
2,584
|
|
1
|
%
|
6
|
%
|
|
|
|
|
|
|
|
|
Overall credit quality for the third quarter of 2019
remained strong. Provision for credit losses for the third quarter
increased $3 million compared with
the second quarter. A higher provision for the consumer loan
portfolio driven by higher auto loan and credit card reserves was
substantially offset by a lower provision for the commercial
lending portfolio reflecting the sale of franchise finance loans
and comparatively lower loan growth.
Nonperforming assets at September
30, 2019 decreased slightly by $3
million compared with June 30,
2019 with lower nonperforming loans in the consumer lending
and commercial real estate portfolios offset by higher
nonperforming commercial loans. Nonperforming assets increased
$22 million compared with
September 30, 2018 due to higher
nonperforming commercial loans partially offset by lower
nonperforming loans in the consumer lending portfolio.
Nonperforming assets to total assets were .45 percent at
September 30, 2019, .46 percent at
June 30, 2019 and .48 percent at
September 30, 2018.
Overall delinquencies at September
30, 2019 increased $39
million, or 3 percent, compared with June 30, 2019 primarily due to an increase in
past due auto and credit card loans. Overall delinquencies at
September 30, 2019 decreased
$80 million, or 6 percent, compared
with September 30, 2018 driven by
lower government insured residential mortgage and education loans
90 days or more past due. In the comparison with September 30, 2018, auto loan and credit card
delinquencies increased.
Net charge-offs for the third quarter of 2019 increased
$13 million compared with the second
quarter primarily due to higher auto loan net charge-offs. Compared
with third quarter 2018, net charge-offs increased $64 million as both consumer and commercial net
charge-offs increased. Net charge-offs were .26 percent of average
loans on an annualized basis for the third quarter of 2019 compared
with .24 percent for the second quarter of 2019 and .16 percent for
the third quarter of 2018.
The allowance for loan and lease losses to total loans was
1.15 percent at both September 30,
2019 and June 30, 2019 and
1.16 percent at September 30, 2018.
The allowance to nonperforming loans was 158 percent at both
September 30, 2019 and June 30, 2019 and increased compared with 153
percent at September 30,
2018.
BUSINESS SEGMENT RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
Business Segment Income
|
|
|
|
|
|
In millions
|
3Q19
|
|
|
2Q19
|
|
|
3Q18
|
|
Retail
Banking
|
$
|
347
|
|
|
$
|
325
|
|
|
$
|
228
|
|
Corporate &
Institutional Banking
|
645
|
|
|
602
|
|
|
642
|
|
Asset Management
Group
|
46
|
|
|
80
|
|
|
55
|
|
Other, including
BlackRock
|
354
|
|
|
367
|
|
|
475
|
|
Net income
|
$
|
1,392
|
|
|
$
|
1,374
|
|
|
$
|
1,400
|
|
See accompanying notes in Consolidated Financial
Highlights
|
|
|
|
|
|
|
|
|
|
|
|
Retail Banking
|
|
|
|
|
|
|
Change
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
3Q19 vs
|
|
|
3Q19 vs
|
|
In millions
|
3Q19
|
|
|
2Q19
|
|
|
3Q18
|
|
|
2Q19
|
|
|
3Q18
|
|
Net interest
income
|
$
|
1,393
|
|
|
$
|
1,376
|
|
|
$
|
1,305
|
|
|
$
|
17
|
|
|
$
|
88
|
|
Noninterest
income
|
$
|
744
|
|
|
$
|
657
|
|
|
$
|
622
|
|
|
$
|
87
|
|
|
$
|
122
|
|
Provision for credit
losses
|
$
|
147
|
|
|
$
|
81
|
|
|
$
|
113
|
|
|
$
|
66
|
|
|
$
|
34
|
|
Noninterest
expense
|
$
|
1,536
|
|
|
$
|
1,527
|
|
|
$
|
1,514
|
|
|
$
|
9
|
|
|
$
|
22
|
|
Earnings
|
$
|
347
|
|
|
$
|
325
|
|
|
$
|
228
|
|
|
$
|
22
|
|
|
$
|
119
|
|
|
|
|
|
|
|
|
|
|
|
In billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
|
77.7
|
|
|
$
|
76.3
|
|
|
$
|
74.1
|
|
|
$
|
1.4
|
|
|
$
|
3.6
|
|
Average
deposits
|
$
|
168.8
|
|
|
$
|
168.8
|
|
|
$
|
161.8
|
|
|
—
|
|
|
$
|
7.0
|
|
|
|
|
|
|
|
|
|
|
|
Retail Banking earnings for the third quarter of 2019
increased in both comparisons. Noninterest income increased in both
comparisons due to higher residential mortgage revenue attributable
to a higher benefit from residential mortgage servicing rights
valuation, net of economic hedge, and increased loan sales revenue,
growth in consumer services, including brokerage and debit and
credit card fees, and a benefit from improvement in negative
derivative fair value adjustments related to Visa Class B common
shares. Growth in service charges on deposits also contributed to
the increase compared with the second quarter. Provision for credit
losses increased in both comparisons as a result of higher auto
loan and credit card portfolio reserves attributable in part to
loan growth. Noninterest expense increased in both comparisons
primarily due to higher personnel and equipment expense and,
compared with third quarter 2018, increased ATM expense resulting
from enhanced checking product benefits and higher marketing,
including expenses related to retail national expansion.
- Average loans increased 2 percent compared with second
quarter 2019 and 5 percent compared with third quarter 2018 due to
growth in residential mortgage, auto, credit card and unsecured
installment loans partially offset by lower home equity and
education loans.
- Average deposits were stable with the second quarter and
increased 4 percent compared with third quarter 2018 due to
increases in savings, noninterest-bearing demand and certificates
of deposit partially offset by lower money market deposits
reflecting a shift to relationship-based savings
products.
- Net charge-offs were $128
million for the third quarter of 2019 compared with
$120 million in the second quarter
and $96 million in the third quarter
of 2018.
- Residential mortgage loan origination volume increased to
$3.4 billion for the third quarter of
2019 compared with $2.9 billion for
the second quarter and $2.1 billion
for the third quarter of 2018. Approximately 44 percent of third
quarter 2019 volume was for home purchase transactions compared
with 54 percent and 72 percent for the second quarter of 2019 and
third quarter of 2018, respectively.
- The third party residential mortgage servicing portfolio
was $123 billion at September 30, 2019 compared with $124 billion at June 30,
2019 and $127 billion at
September 30, 2018. Residential
mortgage loan servicing acquisitions were $3
billion for third quarter 2019 compared with $5 billion for the second quarter and
$6 billion for the third quarter of
2018.
- Approximately 70 percent of consumer customers used
non-teller channels for the majority of their transactions during
the third quarter of 2019 compared with 69 percent in the second
quarter and 66 percent in the third quarter of 2018.
- Deposit transactions via ATM and mobile channels were 58
percent of total deposit transactions in the third quarter of 2019
compared with 56 percent in the second quarter and 55 percent in
the third quarter of 2018.
Corporate & Institutional
Banking
|
|
|
|
|
|
Change
|
|
|
Change
|
|
|
|
|
|
|
|
|
3Q19 vs
|
|
|
3Q19 vs
|
|
In millions
|
3Q19
|
|
|
2Q19
|
|
|
3Q18
|
|
|
2Q19
|
|
|
3Q18
|
|
Net interest
income
|
$
|
930
|
|
|
$
|
917
|
|
|
$
|
925
|
|
|
$
|
13
|
|
|
$
|
5
|
|
Noninterest
income
|
$
|
654
|
|
|
$
|
661
|
|
|
$
|
592
|
|
|
$
|
(7)
|
|
|
$
|
62
|
|
Provision for credit
losses (benefit)
|
$
|
48
|
|
|
$
|
100
|
|
|
$
|
(13)
|
|
|
$
|
(52)
|
|
|
$
|
61
|
|
Noninterest
expense
|
$
|
703
|
|
|
$
|
698
|
|
|
$
|
698
|
|
|
$
|
5
|
|
|
$
|
5
|
|
Earnings
|
$
|
645
|
|
|
$
|
602
|
|
|
$
|
642
|
|
|
$
|
43
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
|
|
In billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
|
148.6
|
|
|
$
|
147.2
|
|
|
$
|
137.4
|
|
|
$
|
1.4
|
|
|
$
|
11.2
|
|
Average
deposits
|
$
|
95.8
|
|
|
$
|
90.5
|
|
|
$
|
88.1
|
|
|
$
|
5.3
|
|
|
$
|
7.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate & Institutional Banking earnings for the
third quarter of 2019 increased in both comparisons. Noninterest
income decreased compared with the second quarter primarily due to
lower capital markets-related revenue partially offset by higher
gains on asset sales and higher revenue from commercial mortgage
banking activities. Noninterest income increased compared with the
third quarter of 2018 driven by broad-based growth in revenue from
commercial mortgage banking activities, capital-markets related
revenue and treasury management product revenue. Provision for
credit losses in the third quarter of 2019 decreased compared with
the second quarter reflecting the sale of franchise finance loans
and comparatively lower loan growth. Noninterest expense increased
in both comparisons largely due to investments in strategic
initiatives.
- Average loans increased 1 percent compared with the
second quarter and 8 percent compared with the third quarter of
2018 primarily driven by loan growth in PNC's corporate banking and
real estate businesses, including an increase in multifamily agency
warehouse lending. The comparison with the third quarter of 2018
also benefited from growth in PNC's business credit
business.
- Average deposits increased 6 percent over the second
quarter reflecting seasonal growth and increased 9 percent compared
with the third quarter of 2018. Growth was in interest-bearing
deposits, including a shift from noninterest-bearing demand
deposits in the comparison with the third quarter of
2018.
- Net charge-offs were $30
million in the third quarter of 2019 compared with
$23 million in the second quarter and
$1 million in the third quarter of
2018.
Asset Management
Group
|
|
|
|
|
|
|
Change
|
|
|
Change
|
|
|
|
|
|
|
|
|
3Q19 vs
|
|
|
3Q19 vs
|
|
In
millions
|
3Q19
|
|
|
2Q19
|
|
|
3Q18
|
|
|
2Q19
|
|
|
3Q18
|
|
Net interest
income
|
$
|
70
|
|
|
$
|
68
|
|
|
$
|
71
|
|
|
$
|
2
|
|
|
$
|
(1)
|
|
Noninterest
income
|
$
|
216
|
|
|
$
|
286
|
|
|
$
|
228
|
|
|
$
|
(70)
|
|
|
$
|
(12)
|
|
Provision for credit
losses (benefit)
|
$
|
(1)
|
|
|
—
|
|
|
$
|
2
|
|
|
$
|
(1)
|
|
|
$
|
(3)
|
|
Noninterest
expense
|
$
|
228
|
|
|
$
|
249
|
|
|
$
|
225
|
|
|
$
|
(21)
|
|
|
$
|
3
|
|
Earnings
|
$
|
46
|
|
|
$
|
80
|
|
|
$
|
55
|
|
|
$
|
(34)
|
|
|
$
|
(9)
|
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Client assets under
administration at
quarter end
|
$
|
298
|
|
|
$
|
294
|
|
|
$
|
293
|
|
|
$
|
4
|
|
|
$
|
5
|
|
Average
loans
|
$
|
6.9
|
|
|
$
|
6.7
|
|
|
$
|
7.0
|
|
|
$
|
.2
|
|
|
$
|
(.1)
|
|
Average
deposits
|
$
|
13.6
|
|
|
$
|
12.7
|
|
|
$
|
12.3
|
|
|
$
|
.9
|
|
|
$
|
1.3
|
|
|
|
|
|
|
|
|
|
|
|
Asset Management Group earnings for the third quarter of
2019 decreased in both comparisons. Noninterest income declined
from the second quarter as a result of the gain on sale of the
retirement recordkeeping business in the second quarter.
Additionally, lower noninterest income in both comparisons
reflected lower fee revenue resulting from the sale of the
retirement recordkeeping business as well as the impact of lower
yielding assets under management. Noninterest expense decreased
compared with the second quarter primarily due to costs associated
with the retirement recordkeeping sale.
Client assets under administration at September 30, 2019 included discretionary client
assets under management of $163
billion and nondiscretionary client assets under
administration of $135 billion.
Discretionary client assets under management increased $1 billion compared with June 30, 2019 and $4
billion compared with September 30,
2018 primarily attributable to increases in equity
markets.
The Asset Management Group entered into a definitive
agreement in May 2019 to divest
components of its PNC Capital Advisors investment management
business, including its PNC family of proprietary mutual funds
totaling approximately $16 billion in
assets under management as of September 30,
2019. The transaction is expected to close in the fourth
quarter of 2019.
Other, including BlackRock
The "Other, including BlackRock" category, for the
purposes of this release, includes earnings and gains or losses
related to PNC's equity investment in BlackRock, and residual
activities that do not meet the criteria for disclosure as a
separate reportable business, such as asset and liability
management activities including net securities gains or losses,
other-than-temporary impairment of investment securities, certain
trading activities, certain non-strategic runoff consumer loan
portfolios, private equity investments, intercompany eliminations,
certain corporate overhead, tax adjustments that are not allocated
to business segments, exited businesses, and differences between
business segment performance reporting and financial statement
reporting under generally accepted accounting
principles.
CONFERENCE CALL AND SUPPLEMENTAL FINANCIAL
INFORMATION
PNC Chairman, President and Chief Executive Officer
William S. Demchak and Chief
Financial Officer Robert Q. Reilly
will hold a conference call for investors today at 10:30 a.m. Eastern Time regarding the topics
addressed in this news release and the related financial
supplement. Dial-in numbers for the conference call are (800)
616-4018 and (416) 981-0147 (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 2019 earnings
release, related financial supplement, and presentation slides to
accompany the conference call remarks will be available at
www.pnc.com/investorevents prior to the beginning of the call. A
telephone replay of the call will be available for one week at
(800) 633-8284 and (402) 977-9140 (international), conference ID
21929702 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
|
|
|
2019
|
|
2019
|
|
2018
|
|
|
2019
|
|
2018
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
|
$
|
2,504
|
|
|
$
|
2,498
|
|
|
$
|
2,466
|
|
|
|
$
|
7,477
|
|
|
$
|
7,240
|
|
Noninterest
income
|
|
1,989
|
|
|
1,941
|
|
|
1,891
|
|
|
|
5,741
|
|
|
5,552
|
|
Total
revenue
|
|
4,493
|
|
|
4,439
|
|
|
4,357
|
|
|
|
13,218
|
|
|
12,792
|
|
Provision for credit
losses
|
|
183
|
|
|
180
|
|
|
88
|
|
|
|
552
|
|
|
260
|
|
Noninterest
expense
|
|
2,623
|
|
|
2,611
|
|
|
2,608
|
|
|
|
7,812
|
|
|
7,719
|
|
Income before income
taxes and noncontrolling interests
|
|
$
|
1,687
|
|
|
$
|
1,648
|
|
|
$
|
1,661
|
|
|
|
$
|
4,854
|
|
|
$
|
4,813
|
|
Net income
|
|
$
|
1,392
|
|
|
$
|
1,374
|
|
|
$
|
1,400
|
|
|
|
$
|
4,037
|
|
|
$
|
3,995
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests
|
|
13
|
|
|
12
|
|
|
11
|
|
|
|
35
|
|
|
31
|
|
Preferred stock
dividends (a)
|
|
63
|
|
|
55
|
|
|
63
|
|
|
|
181
|
|
|
181
|
|
Preferred stock
discount accretion and redemptions
|
|
1
|
|
|
1
|
|
|
1
|
|
|
|
3
|
|
|
3
|
|
Net income
attributable to common shareholders
|
|
$
|
1,315
|
|
|
$
|
1,306
|
|
|
$
|
1,325
|
|
|
|
$
|
3,818
|
|
|
$
|
3,780
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
Dividends and
undistributed earnings allocated to
nonvested restricted shares
|
|
6
|
|
|
4
|
|
|
6
|
|
|
|
15
|
|
|
16
|
|
Impact of BlackRock
earnings per share dilution
|
|
2
|
|
|
2
|
|
|
2
|
|
|
|
7
|
|
|
7
|
|
Net income
attributable to diluted common shares
|
|
$
|
1,307
|
|
|
$
|
1,300
|
|
|
$
|
1,317
|
|
|
|
$
|
3,796
|
|
|
$
|
3,757
|
|
Diluted earnings per
common share
|
|
$
|
2.94
|
|
|
$
|
2.88
|
|
|
$
|
2.82
|
|
|
|
$
|
8.42
|
|
|
$
|
7.96
|
|
Cash dividends
declared per common share
|
|
$
|
1.15
|
|
|
$
|
.95
|
|
|
$
|
.95
|
|
|
|
$
|
3.05
|
|
|
$
|
2.45
|
|
Effective tax rate
(b)
|
|
17.5
|
%
|
|
16.6
|
%
|
|
15.7
|
%
|
|
|
16.8
|
%
|
|
17.0
|
%
|
(a)
|
Dividends are payable
quarterly other than the Series O, Series R and Series S preferred
stock, which are payable semiannually, with the Series O payable in
different quarters than the Series R and Series S preferred
stock.
|
(b)
|
The effective income
tax rates are generally lower than the statutory rate due to the
relationship of pretax income to tax credits and earnings that are
not subject to tax.
|
The PNC Financial
Services Group, Inc.
|
Consolidated
Financial Highlights (Unaudited)
|
|
|
Three months
ended
|
|
|
Nine months
ended
|
|
|
September
30
|
|
June 30
|
|
September
30
|
|
|
September
30
|
|
September
30
|
|
|
2019
|
|
2019
|
|
2018
|
|
|
2019
|
|
2018
|
PERFORMANCE
RATIOS
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin
(a)
|
|
2.84
|
%
|
|
2.91
|
%
|
|
2.99
|
%
|
|
|
2.91
|
%
|
|
2.95
|
%
|
Noninterest income to
total revenue
|
|
44
|
%
|
|
44
|
%
|
|
43
|
%
|
|
|
43
|
%
|
|
43
|
%
|
Efficiency
(b)
|
|
58
|
%
|
|
59
|
%
|
|
60
|
%
|
|
|
59
|
%
|
|
60
|
%
|
Return on:
|
|
|
|
|
|
|
|
|
|
|
|
Average common
shareholders' equity
|
|
11.56
|
%
|
|
11.75
|
%
|
|
12.32
|
%
|
|
|
11.48
|
%
|
|
11.83
|
%
|
Average
assets
|
|
1.36
|
%
|
|
1.39
|
%
|
|
1.47
|
%
|
|
|
1.36
|
%
|
|
1.42
|
%
|
BUSINESS SEGMENT
NET INCOME (c)
|
|
|
|
|
|
|
|
|
|
|
|
In
millions
|
|
|
|
|
|
|
|
|
|
|
|
Retail
Banking
|
|
$
|
347
|
|
|
$
|
325
|
|
|
$
|
228
|
|
|
|
$
|
936
|
|
|
$
|
751
|
|
Corporate &
Institutional Banking
|
|
645
|
|
|
602
|
|
|
642
|
|
|
|
1,799
|
|
|
1,857
|
|
Asset Management
Group
|
|
46
|
|
|
80
|
|
|
55
|
|
|
|
171
|
|
|
160
|
|
Other, including
BlackRock (d)
|
|
354
|
|
|
367
|
|
|
475
|
|
|
|
1,131
|
|
|
1,227
|
|
Total net
income
|
|
$
|
1,392
|
|
|
$
|
1,374
|
|
|
$
|
1,400
|
|
|
|
$
|
4,037
|
|
|
$
|
3,995
|
|
(a)
|
Net interest margin
is the total yield on interest-earning assets minus the total rate
on interest-bearing liabilities and includes the benefit from use
of noninterest-bearing sources. To provide more meaningful
comparisons of net interest margins, we use interest income on a
taxable-equivalent basis in calculating net interest yields used in
the calculation of net interest margin by increasing the interest
income earned on tax-exempt assets to make it fully equivalent to
interest income earned on taxable investments. This adjustment is
not permitted under generally accepted accounting principles (GAAP)
in the Consolidated Income Statement. The taxable-equivalent
adjustments to net interest income for the three months ended
September 30, 2019, June 30, 2019 and September 30, 2018 were $25
million, $27 million and $29 million, respectively. The taxable
equivalent adjustments to net interest income for the nine months
ended September 30, 2019 and September 30, 2018 were $79 million
and $87 million, respectively.
|
(b)
|
Calculated as
noninterest expense divided by total revenue.
|
(c)
|
Our business
information is presented based on our internal management reporting
practices. Net interest income in business segment results reflect
PNC's internal funds transfer pricing methodology. Assets receive a
funding charge and liabilities and capital receive a funding credit
based on a transfer pricing methodology that incorporates product
repricing characteristics, tenor and other factors.
|
(d)
|
Includes earnings and
gains or losses related to PNC's equity interest in BlackRock and
residual activities that do not meet the criteria for disclosure as
a separate reportable business. We provide additional information
on these activities in our Form 10-K and Form 10-Q filings with the
SEC.
|
The PNC Financial
Services Group, Inc.
|
Consolidated
Financial Highlights (Unaudited)
|
|
September
30
|
|
June 30
|
|
September
30
|
|
2019
|
|
2019
|
|
2018
|
BALANCE SHEET
DATA
|
|
|
|
|
|
Dollars in
millions, except per share data
|
|
|
|
|
|
Assets
|
$
|
408,916
|
|
|
$
|
405,761
|
|
|
$
|
380,080
|
|
Loans (a)
|
$
|
237,377
|
|
|
$
|
237,215
|
|
|
$
|
223,053
|
|
Allowance for loan
and lease losses
|
$
|
2,738
|
|
|
$
|
2,721
|
|
|
$
|
2,584
|
|
Interest-earning
deposits with banks
|
$
|
19,036
|
|
|
$
|
18,362
|
|
|
$
|
19,800
|
|
Investment
securities
|
$
|
87,883
|
|
|
$
|
88,303
|
|
|
$
|
80,804
|
|
Loans held for sale
(a)
|
$
|
1,872
|
|
|
$
|
1,144
|
|
|
$
|
1,108
|
|
Equity investments
(b)
|
$
|
13,325
|
|
|
$
|
13,001
|
|
|
$
|
12,446
|
|
Mortgage servicing
rights
|
$
|
1,483
|
|
|
$
|
1,627
|
|
|
$
|
2,136
|
|
Goodwill
|
$
|
9,233
|
|
|
$
|
9,221
|
|
|
$
|
9,218
|
|
Other assets
(a)
|
$
|
35,774
|
|
|
$
|
34,193
|
|
|
$
|
28,851
|
|
Noninterest-bearing
deposits
|
$
|
74,077
|
|
|
$
|
69,867
|
|
|
$
|
74,736
|
|
Interest-bearing
deposits
|
$
|
211,506
|
|
|
$
|
203,393
|
|
|
$
|
190,148
|
|
Total
deposits
|
$
|
285,583
|
|
|
$
|
273,260
|
|
|
$
|
264,884
|
|
Borrowed funds
(a)
|
$
|
61,354
|
|
|
$
|
69,025
|
|
|
$
|
57,955
|
|
Total shareholders'
equity
|
$
|
49,420
|
|
|
$
|
49,340
|
|
|
$
|
47,058
|
|
Common shareholders'
equity
|
$
|
45,428
|
|
|
$
|
45,349
|
|
|
$
|
43,076
|
|
Accumulated other
comprehensive income (loss)
|
$
|
837
|
|
|
$
|
631
|
|
|
$
|
(1,260)
|
|
Book value per common
share
|
$
|
103.37
|
|
|
$
|
101.53
|
|
|
$
|
93.22
|
|
Tangible book value
per common share (Non-GAAP) (c)
|
$
|
82.37
|
|
|
$
|
80.76
|
|
|
$
|
73.11
|
|
Period end common
shares outstanding (millions)
|
439
|
|
|
447
|
|
|
462
|
|
Loans to
deposits
|
83
|
%
|
|
87
|
%
|
|
84
|
%
|
Common shareholders'
equity to total assets
|
11.1
|
%
|
|
11.2
|
%
|
|
11.3
|
%
|
CLIENT ASSETS
(billions)
|
|
|
|
|
|
Discretionary client
assets under management
|
$
|
163
|
|
|
$
|
162
|
|
|
$
|
159
|
|
Nondiscretionary
client assets under administration
|
135
|
|
|
132
|
|
|
134
|
|
Total client assets
under administration
|
298
|
|
|
294
|
|
|
293
|
|
Brokerage account
client assets
|
52
|
|
|
52
|
|
|
51
|
|
Total client
assets
|
$
|
350
|
|
|
$
|
346
|
|
|
$
|
344
|
|
CAPITAL
RATIOS
|
|
|
|
|
|
Basel III
(d)
|
|
|
|
|
|
Common equity Tier
1
|
9.6
|
%
|
|
9.7
|
%
|
|
9.3
|
%
|
Tier 1
risk-based
|
10.7
|
%
|
|
10.9
|
%
|
|
10.5
|
%
|
Total capital
risk-based (e)
|
12.7
|
%
|
|
12.8
|
%
|
|
12.7
|
%
|
Leverage
|
9.3
|
%
|
|
9.6
|
%
|
|
9.2
|
%
|
Supplementary
leverage
|
7.8
|
%
|
|
8.0
|
%
|
|
7.7
|
%
|
ASSET
QUALITY
|
|
|
|
|
|
Nonperforming loans
to total loans
|
.73
|
%
|
|
.73
|
%
|
|
.76
|
%
|
Nonperforming assets
to total loans, OREO and foreclosed assets
|
.78
|
%
|
|
.78
|
%
|
|
.82
|
%
|
Nonperforming assets
to total assets
|
.45
|
%
|
|
.46
|
%
|
|
.48
|
%
|
Net charge-offs to
average loans (for the three months ended) (annualized)
|
.26
|
%
|
|
.24
|
%
|
|
.16
|
%
|
Allowance for loan
and lease losses to total loans
|
1.15
|
%
|
|
1.15
|
%
|
|
1.16
|
%
|
Allowance for loan
and lease losses to nonperforming loans
|
158
|
%
|
|
158
|
%
|
|
153
|
%
|
Accruing loans past
due 90 days or more (in millions)
|
$
|
532
|
|
|
$
|
524
|
|
|
$
|
619
|
|
(a)
|
Amounts include
assets and liabilities for which we have elected the fair value
option. Our second quarter 2019 Form 10-Q included, and our third
quarter 2019 Form 10-Q will include, additional information
regarding these Consolidated Balance Sheet line items.
|
(b)
|
Amounts include our
equity interest in BlackRock.
|
(c)
|
See the Tangible Book
Value per Common Share table on page 17 for additional
information.
|
(d)
|
All ratios are
calculated using the regulatory capital methodology applicable to
PNC during each period presented and calculated based on the
standardized approach. See Capital Ratios on page 16 for additional
information. The ratios as of September 30, 2019 are
estimated.
|
(e)
|
The 2019 and 2018
Basel III Total risk-based capital ratios include nonqualifying
trust preferred capital securities of $60 million and $80 million,
respectively, that are subject to a phase-out period that runs
through 2021.
|
The PNC Financial Services Group,
Inc.
|
|
Consolidated
Financial Highlights (Unaudited)
|
|
|
|
|
|
|
CAPITAL RATIOS
|
|
Because PNC remains
in the parallel run qualification phase for the advanced
approaches, PNC's regulatory risk-based capital ratios in 2019 and
2018 are calculated using the standardized approach for determining
risk-weighted assets. Under the standardized approach for
determining credit risk-weighted assets, exposures are generally
assigned a pre-defined risk weight. Exposures to high volatility
commercial real estate, past due exposures and equity exposures are
generally subject to higher risk weights than other types of
exposures.
|
|
We provide
information below regarding PNC's Basel III Common equity Tier 1
capital ratios. Under the Basel III rules applicable to PNC,
significant common stock investments in unconsolidated financial
institutions (for PNC, primarily BlackRock), mortgage servicing
rights and deferred tax assets must be deducted from capital (net
of associated deferred tax liabilities) to the extent they
individually exceed 10%, or in the aggregate exceed 15%, of the
institution's adjusted common equity Tier 1 capital. Also, PNC's
Basel III regulatory capital includes accumulated other
comprehensive income (loss) related to securities currently, and
those transferred from, available for sale, as well as pension and
other postretirement plans.
|
|
|
|
|
|
|
Basel lll
Common Equity Tier 1 Capital Ratios (a)
|
|
|
|
|
|
|
September
30
|
|
June 30
|
|
September
30
|
Dollars in
millions
|
2019
(estimated)
|
|
2019
|
|
2018
|
Common stock, related
surplus and retained earnings, net of treasury stock
|
$
|
44,592
|
|
|
$
|
44,718
|
|
|
$
|
44,336
|
|
Less regulatory
capital adjustments:
|
|
|
|
|
|
Goodwill and
disallowed intangibles, net of deferred tax liabilities
|
(9,268)
|
|
|
(9,252)
|
|
|
(9,297)
|
|
Basel III total
threshold deductions
|
(2,952)
|
|
|
(2,909)
|
|
|
(3,932)
|
|
Accumulated other
comprehensive income (loss)
|
637
|
|
|
471
|
|
|
(1,007)
|
|
All other
adjustments
|
(209)
|
|
|
(185)
|
|
|
(322)
|
|
Basel III Common
equity Tier 1 capital
|
$
|
32,800
|
|
|
$
|
32,843
|
|
|
$
|
29,778
|
|
Basel III
standardized approach risk-weighted assets (b)
|
$
|
341,117
|
|
|
$
|
337,612
|
|
|
$
|
318,889
|
|
Basel III advanced
approaches risk-weighted assets (c)
|
$
|
319,963
|
|
|
$
|
309,646
|
|
|
$
|
274,742
|
|
Basel III Common
equity Tier 1 capital ratio
|
9.6
|
%
|
|
9.7
|
%
|
|
9.3
|
%
|
(a)
|
All ratios are
calculated using the regulatory capital methodology applicable to
PNC during each period presented.
|
(b)
|
Basel III
standardized approach risk-weighted assets are based on the Basel
III standardized approach rules and include credit and market
risk-weighted assets.
|
(c)
|
Basel III advanced
approaches risk-weighted assets are based on the Basel III advanced
approaches rules, and include credit, market and operational
risk-weighted assets. During the parallel run qualification phase,
PNC has refined the data, models and internal processes used as
part of the advanced approaches for determining risk-weighted
assets.
|
Our Basel III capital ratios may be impacted by changes to
the regulatory capital rules, additional regulatory guidance or
analysis, and, in the case of those ratios calculated using the
advanced approaches, may be subject to variability based on the
ongoing evolution, validation and regulatory approval of PNC's
models that are integral to the calculation of advanced approaches
risk-weighted assets as PNC moves through the parallel run approval
process.
The PNC Financial Services Group,
Inc.
|
|
Consolidated
Financial Highlights (Unaudited)
|
|
Tangible book value
per common share is a non-GAAP measure and is calculated based on
tangible common shareholders' equity divided by period-end common
shares outstanding. We believe this non-GAAP measure serves as a
useful tool to help evaluate the strength and discipline of a
company's capital management strategies and as an additional,
conservative measure of total company value.
|
|
Tangible Book
Value per Common Share (Non-GAAP)
|
|
|
|
|
|
|
September
30
|
|
June 30
|
|
September
30
|
Dollars in
millions, except per share data
|
2019
|
|
2019
|
|
2018
|
Book value per common
share
|
$
|
103.37
|
|
|
$
|
101.53
|
|
|
$
|
93.22
|
|
Tangible book value
per common share
|
|
|
|
|
|
Common shareholders'
equity
|
$
|
45,428
|
|
|
$
|
45,349
|
|
|
$
|
43,076
|
|
Goodwill and other
intangible assets
|
(9,459)
|
|
|
(9,442)
|
|
|
(9,489)
|
|
Deferred tax
liabilities on Goodwill and other intangible assets
|
191
|
|
|
191
|
|
|
192
|
|
Tangible common
shareholders' equity
|
$
|
36,160
|
|
|
$
|
36,098
|
|
|
$
|
33,779
|
|
Period-end common
shares outstanding (millions)
|
439
|
|
|
447
|
|
|
462
|
|
Tangible book value
per common share (Non-GAAP)
|
$
|
82.37
|
|
|
$
|
80.76
|
|
|
$
|
73.11
|
|
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.
Future events or circumstances may change our outlook and may also
affect the nature of the assumptions, risks and uncertainties to
which our forward-looking statements are subject. Forward-looking
statements speak only as of the date made. We do not assume any
duty and do not undertake to update forward-looking statements.
Actual results or future events could differ, possibly materially,
from those anticipated in forward-looking statements, as well as
from historical performance. As a result, we caution against
placing undue reliance on any forward-looking
statements.
Our forward-looking statements are subject to the
following principal risks and uncertainties.
- Our businesses, financial results and balance sheet
values are affected by business and economic conditions, including
the following:
-
- Changes in interest rates and valuations in debt, equity
and other financial markets.
- Disruptions in the U.S. and global financial
markets.
- Actions by the Federal Reserve Board, U.S. Treasury and
other government agencies, including those that impact money supply
and market interest rates.
- Changes in customer behavior due to recently enacted tax
legislation, changing business and economic conditions or
legislative or regulatory initiatives.
- Changes in customers', suppliers' and other
counterparties' performance and creditworthiness.
- Impacts of tariffs and other trade policies of the U.S.
and its global trading partners.
- Slowing or reversal of the current U.S. economic
expansion.
- Commodity price volatility
- Our forward-looking financial statements are subject to
the risk that economic and financial market conditions will be
substantially different than those we are currently expecting and
do not take into account potential legal and regulatory
contingencies. These statements are based on our views
that:
-
- U.S. economic growth, after accelerating a few years ago,
has slowed since mid-2018 and is expected to slow further through
the rest of this year and into 2020.
- We expect that further gradual improvement in the labor
market this year and into 2020, including job gains and rising
wages, will be a positive for consumer spending.
- Slower global economic growth, trade restrictions and
geopolitical concerns are downside risks to the forecast, which
have increased in 2019, and risks are weighted to the
downside.
- Inflation has slowed in 2019, to below the FOMC's 2
percent objective, but is expected to gradually increase over the
next two years.
- Our baseline forecast is for one more 0.25 percentage
point cut to the federal funds rate in October 2019, taking the rate to a range of 1.50
to 1.75 percent by the end of 2019.
- PNC's ability to take certain capital actions, including
returning capital to shareholders, is subject to review by the
Federal Reserve Board as part of PNC's comprehensive capital plan
for the applicable period in connection with the Federal Reserve
Board's Comprehensive Capital Analysis and Review (CCAR) process
and to the acceptance of such capital plan and non-objection to
such capital actions by the Federal Reserve Board.
- PNC's regulatory capital ratios in the future will depend
on, among other things, the company's financial performance, the
scope and terms of final capital regulations then in effect and
management actions affecting the composition of PNC's balance
sheet. In addition, PNC's ability to determine, evaluate and
forecast regulatory capital ratios, and to take actions (such as
capital distributions) based on actual or forecasted capital
ratios, will be dependent at least in part on the development,
validation and regulatory review of related models.
Cautionary Statement Regarding Forward-Looking
Information (Continued)
- Legal and regulatory developments could have an impact on
our ability to operate our businesses, financial condition, results
of operations, competitive position, reputation, or pursuit of
attractive acquisition opportunities. Reputational impacts could
affect matters such as business generation and retention,
liquidity, funding, and ability to attract and retain management.
These developments could include:
-
- Changes to laws and regulations, including changes
affecting oversight of the financial services industry, consumer
protection, bank capital and liquidity standards, pension,
bankruptcy and other industry aspects, and changes in accounting
policies and principles.
- Unfavorable resolution of legal proceedings or other
claims and regulatory and other governmental investigations or
other inquiries. These matters may result in monetary judgments or
settlements or other remedies, including fines, penalties,
restitution or alterations in our business practices, and in
additional expenses and collateral costs, and may cause
reputational harm to PNC.
- Results of the regulatory examination and supervision
process, including our failure to satisfy requirements of
agreements with governmental agencies.
- Impact on business and operating results of any costs
associated with obtaining rights in intellectual property claimed
by others and of adequacy of our intellectual property protection
in general.
- Business and operating results are affected by our
ability to identify and effectively manage risks inherent in our
businesses, including, where appropriate, through effective use of
systems and controls, third-party insurance, derivatives, and
capital management techniques, and to meet evolving regulatory
capital and liquidity standards.
- Business and operating results also include impacts
relating to our equity interest in BlackRock, Inc. and rely to a
significant extent on information provided to us by BlackRock.
Risks and uncertainties that could affect BlackRock are discussed
in more detail by BlackRock in its SEC filings.
- We grow our business in part through acquisitions and new
strategic initiatives. Risks and uncertainties include those
presented by the nature of the business acquired and strategic
initiative, including in some cases those associated with our entry
into new businesses or new geographic or other markets and risks
resulting from our inexperience in those new areas, as well as
risks and uncertainties related to the acquisition transactions
themselves, regulatory issues, and the integration of the acquired
businesses into PNC after closing.
- Competition can have an impact on customer acquisition,
growth and retention and on credit spreads and product pricing,
which can affect market share, deposits and revenues. Our ability
to anticipate and respond to technological changes can also impact
our ability to respond to customer needs and meet competitive
demands.
- Business and operating results can also be affected by
widespread natural and other disasters, pandemics, dislocations,
terrorist activities, system failures, security breaches,
cyberattacks or international hostilities through impacts on the
economy and financial markets generally or on us or our
counterparties specifically.
We provide greater detail regarding these as well as other
factors in our 2018 Form 10-K and subsequent 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 other subsequent
SEC filings. Our forward-looking statements may also be subject to
other risks and uncertainties, including those we may discuss
elsewhere in this news release or in our SEC filings, accessible on
the SEC's website at www.sec.gov and on our corporate website at
www.pnc.com/secfilings. We have included these web addresses as
inactive textual references only. Information on these websites is
not part of this document.
MEDIA:
Marcey
Zwiebel
(412) 762-4550
media.relations@pnc.com
INVESTORS:
Bryan
Gill
(412) 768-4143
investor.relations@pnc.com
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SOURCE PNC Financial Services Group, Inc.