PITTSBURGH, April 13, 2018 /PRNewswire/ -- The PNC
Financial Services Group, Inc. (NYSE: PNC) today reported:
|
For the
quarter
|
|
1Q18
|
4Q17
|
1Q17
|
Net
income $ millions
|
$1,239
|
|
$2,091
|
|
$1,074
|
|
Diluted earnings per
common share
|
$2.43
|
|
$4.18
|
|
$1.96
|
|
"PNC delivered another quarter
of strong earnings. Our expanded net interest margin, well-managed
expenses and stable credit quality contributed to our results as we
maintained strong capital returns. We see loan demand strengthening
and look forward to launching our national retail digital strategy
as the year goes on, and we continue to invest in our strategic
priorities to expand PNC's franchise, deepen customer relationships
and leverage technology to create long-term shareholder
value."
Bill
Demchak, PNC Chairman, President and Chief Executive
Officer
Income Statement Highlights
First quarter 2018 compared with fourth quarter 2017
- Net income was $1.2 billion for
the first quarter compared with $2.1
billion for the fourth quarter, which included a net benefit
of $.9 billion from federal tax
legislation and significant items.
- Total revenue for the first quarter was $4.1 billion, a decrease of $149 million, or 3 percent.
-
- Net interest income increased $16
million, or 1 percent, to $2.4
billion primarily due to higher loan yields offset by higher
deposit and borrowing costs and the impact of two fewer days in the
first quarter.
- Net interest margin increased 3 basis points to 2.91
percent.
- Noninterest income decreased $165
million, or 9 percent, to $1.8
billion reflecting seasonally lower income and the impact of
a fourth quarter benefit from significant items.
- Noninterest expense decreased $534
million, or 17 percent, to $2.5
billion. Fourth quarter 2017 included a total of
$502 million for a PNC Foundation
contribution, charges for real estate dispositions and exits, and
employee cash payments and pension account credits. Excluding the
impact of these items, noninterest expense decreased $32 million, or 1 percent.
- Provision for credit losses was $92
million, a decrease of $33
million, reflecting stable credit quality.
Balance Sheet Highlights
- Loans increased $1.2 billion to
$221.6 billion at March 31, 2018 compared with December 31, 2017 driven by growth in commercial
lending. Average loans in the first quarter were stable with the
fourth quarter.
-
- Average commercial lending balances decreased $.3 billion as growth in PNC's corporate banking,
equipment finance and business credit businesses was more than
offset by a decline in multifamily agency warehouse lending within
the real estate business.
- Average consumer lending balances increased $.3 billion reflecting growth in residential
mortgage, auto and credit card loans partially offset by lower home
equity and education loans.
- Overall credit quality remained stable.
-
- Nonperforming assets of $2.0
billion at March 31, 2018
decreased $31 million, or 2 percent,
compared with December 31, 2017.
- Net charge-offs declined to $113
million for the first quarter compared with $123 million for the fourth quarter.
- Average deposits decreased $.8
billion to $260.7 billion in
the first quarter compared with the fourth quarter due to seasonal
declines in commercial deposits partially offset by growth in
consumer deposits.
- Average investment securities increased $.4 billion to $74.6
billion in the first quarter compared with the fourth
quarter.
- PNC returned $1.1 billion of
capital to shareholders in the first quarter through repurchases of
4.8 million common shares for $.7
billion and dividends on common shares of $.4 billion.
- PNC maintained strong capital and liquidity positions.
-
- The Basel III common equity Tier 1 capital ratio, which became
effective for PNC as of January 1,
2018, was an estimated 9.6 percent at March 31, 2018 compared with 9.8 percent at
December 31, 2017, calculated on the
same basis.
- The Liquidity Coverage Ratio at March
31, 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
|
|
1Q18
|
|
4Q17
|
|
1Q17
|
Net income
|
|
$
|
1,239
|
|
|
$
|
2,091
|
|
|
$
|
1,074
|
|
Net income
attributable to diluted common shares
|
|
$
|
1,158
|
|
|
$
|
2,007
|
|
|
$
|
963
|
|
Diluted earnings per
common share
|
|
$
|
2.43
|
|
|
$
|
4.18
|
|
|
$
|
1.96
|
|
Average diluted
common shares outstanding
|
|
476
|
|
|
480
|
|
|
492
|
|
Return on average
assets
|
|
1.34
|
%
|
|
2.20
|
%
|
|
1.19
|
%
|
Return on average
common equity
|
|
11.04
|
%
|
|
18.90
|
%
|
|
9.50
|
%
|
Book value per common
share
|
Quarter
end
|
$
|
91.39
|
|
|
$
|
91.94
|
|
|
$
|
86.14
|
|
Tangible book value
per common share (non-GAAP)
|
Quarter
end
|
$
|
71.58
|
|
|
$
|
72.28
|
|
|
$
|
67.47
|
|
Cash dividends
declared per common share
|
|
$
|
.75
|
|
|
$
|
.75
|
|
|
$
|
.55
|
|
|
|
|
|
|
|
|
The Consolidated Financial Highlights accompanying this news
release include additional information regarding reconciliations of
non-GAAP financial measures to reported amounts. Fee income, a
non-GAAP financial measure, refers to noninterest income in the
following categories: asset management, consumer services,
corporate services, residential mortgage and service charges on
deposits. Information in this news release including the financial
tables is unaudited.
CONSOLIDATED
REVENUE REVIEW
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
1Q18 vs
|
1Q18 vs
|
In
millions
|
1Q18
|
|
4Q17
|
|
1Q17
|
4Q17
|
1Q17
|
Net interest
income
|
$
|
2,361
|
|
|
$
|
2,345
|
|
|
$
|
2,160
|
|
1
|
%
|
9
|
%
|
Noninterest
income
|
1,750
|
|
|
1,915
|
|
|
1,724
|
|
(9)
|
%
|
2
|
%
|
Total
revenue
|
$
|
4,111
|
|
|
$
|
4,260
|
|
|
$
|
3,884
|
|
(3)
|
%
|
6
|
%
|
|
|
|
|
|
|
|
|
Total revenue for the first quarter of 2018 decreased
$149 million compared with the fourth
quarter as a result of lower noninterest income partially offset by
higher net interest income. Total revenue increased $227 million compared with the first quarter of
2017 due to higher net interest income and noninterest income.
Net interest income for the first quarter of 2018 increased
$16 million compared with the fourth
quarter and $201 million compared
with the first quarter of 2017 primarily due to higher loan yields
partially offset by higher deposit and borrowing costs. First
quarter 2018 was negatively impacted by two fewer days compared
with the fourth quarter. Fourth quarter net interest income was
reduced by $26 million from the
impact of tax legislation on leveraged leases. In the comparison
with first quarter 2017, higher loan balances and higher securities
yields also contributed to the increase in net interest income.
The net interest margin increased to 2.91 percent for the first
quarter of 2018 compared with 2.88 percent for the fourth quarter
and 2.77 percent for the first quarter of 2017. Higher loan yields
in the first quarter of 2018 were partially offset by higher
borrowing and deposit costs in both comparisons. Higher average
rates on borrowed funds included the impact of an increase in
3-month Libor during the first quarter of 2018. The impact of the
new lower statutory federal income tax rate on first quarter
taxable-equivalent net interest income was a reduction of 3 basis
points to the net interest margin. In the fourth quarter, the
impact of tax legislation related to leveraged leases reduced the
net interest margin by 3 basis points.
Noninterest
Income
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
1Q18 vs
|
1Q18 vs
|
In
millions
|
1Q18
|
|
4Q17
|
|
1Q17
|
4Q17
|
1Q17
|
Asset
management
|
$
|
455
|
|
|
$
|
720
|
|
|
$
|
403
|
|
(37)
|
%
|
13
|
%
|
Consumer
services
|
357
|
|
|
366
|
|
|
332
|
|
(2)
|
%
|
8
|
%
|
Corporate
services
|
429
|
|
|
458
|
|
|
414
|
|
(6)
|
%
|
4
|
%
|
Residential
mortgage
|
97
|
|
|
29
|
|
|
113
|
|
234
|
%
|
(14)
|
%
|
Service charges on
deposits
|
167
|
|
|
183
|
|
|
161
|
|
(9)
|
%
|
4
|
%
|
Other
|
245
|
|
|
159
|
|
|
301
|
|
54
|
%
|
(19)
|
%
|
|
$
|
1,750
|
|
|
$
|
1,915
|
|
|
$
|
1,724
|
|
(9)
|
%
|
2
|
%
|
|
|
|
|
|
|
|
|
Noninterest income for the first quarter of 2018 decreased
$165 million compared with the fourth
quarter reflecting seasonally lower income and the impact of a
fourth quarter net benefit from significant items of $54 million. Asset management revenue declined
$265 million primarily due to a
fourth quarter flow through impact of tax legislation from PNC's
equity investment in BlackRock of $254
million. Decreases in consumer service fees, corporate
service fees and service charges on deposits were driven by
seasonally lower transaction volumes and activity. Residential
mortgage revenue increased $68
million reflecting the impact of a fourth quarter
$71 million negative adjustment for
residential mortgage servicing rights fair value assumption
updates.
Other noninterest income increased $86
million compared with fourth quarter 2017. The fourth
quarter included $248 million of
negative derivative fair value adjustments related to Visa Class B
common shares partially offset by a benefit of $119 million for appreciation in value of
BlackRock stock contributed to the PNC Foundation. Additionally,
net gains on commercial mortgage loans held for sale were lower in
the first quarter of 2018. Effective with the first quarter of
2018, operating lease income is reported in corporate service fees
rather than other income, and prior periods have been reclassified.
Operating lease income was $34
million in the first quarter of 2018 and $35 million in the fourth quarter of 2017.
Noninterest income for the first quarter of 2018 increased
$26 million compared with the first
quarter of 2017. Asset management revenue increased $52 million reflecting higher equity markets.
Consumer service fees grew $25
million as a result of higher customer activity, including
credit card, brokerage and debit card fees. Corporate service fees
increased $15 million primarily
attributable to growth in treasury management product revenue and
higher operating lease income partially offset by a lower benefit
from commercial mortgage servicing rights valuation, net of
economic hedge. Residential mortgage revenue decreased $16 million due to lower loan sales revenue.
Other noninterest income declined $56
million reflecting lower revenue from equity investments,
including the impact of a first quarter 2017 benefit from valuation
adjustments related to the Volcker Rule provisions of the
Dodd-Frank Act.
CONSOLIDATED
EXPENSE REVIEW
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest
Expense
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
1Q18 vs
|
1Q18 vs
|
In
millions
|
1Q18
|
|
4Q17
|
|
1Q17
|
4Q17
|
1Q17
|
Personnel
|
$
|
1,354
|
|
|
$
|
1,449
|
|
|
$
|
1,257
|
|
(7)
|
%
|
8
|
%
|
Occupancy
|
218
|
|
|
240
|
|
|
222
|
|
(9)
|
%
|
(2)
|
%
|
Equipment
|
273
|
|
|
274
|
|
|
251
|
|
—
|
9
|
%
|
Marketing
|
55
|
|
|
60
|
|
|
55
|
|
(8)
|
%
|
—
|
Other
|
627
|
|
|
1,038
|
|
|
617
|
|
(40)
|
%
|
2
|
%
|
|
$
|
2,527
|
|
|
$
|
3,061
|
|
|
$
|
2,402
|
|
(17)
|
%
|
5
|
%
|
|
|
|
|
|
|
|
|
Noninterest expense for the first quarter of 2018 decreased
$534 million compared with the fourth
quarter. Significant items included in the fourth quarter totaled
$502 million, consisting of a
$200 million contribution to the PNC
Foundation, $197 million of charges
for real estate dispositions and exits, and $105 million of personnel expense for employee
cash payments and pension account credits. Excluding the impact of
these items, noninterest expense decreased $32 million, or 1 percent, and reflected
seasonally lower costs and PNC's focus on expense management.
Noninterest expense for the first quarter of 2018 increased
$125 million compared with the first
quarter of 2017 due to ongoing business and technology
investments and operating expense related to the second quarter
2017 acquisition of a commercial and vendor finance business.
The effective tax rate was 17.0 percent for the first quarter of
2018 reflecting the new federal statutory tax rate of 21.0 percent.
Fourth quarter 2017 included an income tax benefit recognized as a
result of the federal tax legislation and was primarily
attributable to revaluation of net deferred tax liabilities at the
lower statutory tax rate. The effective tax rate was 23.0 percent
for the first quarter of 2017.
CONSOLIDATED BALANCE SHEET REVIEW
Total assets were $379.2 billion
at March 31, 2018 compared with
$380.8 billion at December 31, 2017 and $370.9 billion at March
31, 2017. Assets declined $1.6
billion compared with December 31,
2017 primarily due to lower loans held for sale and
investment securities partially offset by higher loans. Assets grew
2 percent over March 31, 2017
reflecting loan growth.
Loans
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
1Q18 vs
|
1Q18 vs
|
In
billions
|
1Q18
|
|
4Q17
|
|
1Q17
|
4Q17
|
1Q17
|
Average
|
|
|
|
|
|
|
|
Commercial
lending
|
$
|
148.2
|
|
|
$
|
148.5
|
|
|
$
|
139.8
|
|
—
|
|
6
|
%
|
Consumer
lending
|
72.9
|
|
|
72.6
|
|
|
72.5
|
|
—
|
|
1
|
%
|
Average
loans
|
$
|
221.1
|
|
|
$
|
221.1
|
|
|
$
|
212.3
|
|
—
|
|
4
|
%
|
|
|
|
|
|
|
|
|
Quarter
end
|
|
|
|
|
|
|
|
Commercial
lending
|
$
|
148.9
|
|
|
$
|
147.4
|
|
|
$
|
140.6
|
|
1
|
%
|
6
|
%
|
Consumer
lending
|
72.7
|
|
|
73.0
|
|
|
72.2
|
|
—
|
|
1
|
%
|
Total
loans
|
$
|
221.6
|
|
|
$
|
220.4
|
|
|
$
|
212.8
|
|
1
|
%
|
4
|
%
|
|
|
|
|
|
|
|
|
Average loans for the first quarter of 2018 were stable with the
fourth quarter. Average commercial lending balances decreased
$.3 billion as growth in PNC's
corporate banking, equipment finance and business credit businesses
was more than offset by a decline in multifamily agency warehouse
lending within the real estate business. Average consumer lending
balances increased $.3 billion
reflecting growth in residential mortgage, auto and credit card
loans partially offset by lower home equity and education
loans.
Total loans at March 31, 2018
increased $1.2 billion compared with
December 31, 2017 driven by growth of
$1.5 billion in commercial lending
balances in PNC's corporate banking, real estate and business
credit businesses. Consumer lending balances at March 31, 2018 decreased $.3 billion compared with December 31, 2017 due to lower home equity and
education loans partially offset by growth in auto and
residential mortgage loans.
First quarter 2018 average and period end loans both increased
$8.8 billion compared with first
quarter 2017 driven by broad-based commercial loan growth as well
as an increase in consumer lending.
Investment
Securities
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
1Q18 vs
|
1Q18 vs
|
In
billions
|
1Q18
|
|
4Q17
|
|
1Q17
|
4Q17
|
1Q17
|
Average
|
$
|
74.6
|
|
|
$
|
74.2
|
|
|
$
|
76.2
|
|
1
|
%
|
(2)
|
%
|
Quarter
end
|
$
|
74.6
|
|
|
$
|
76.2
|
|
|
$
|
76.5
|
|
(2)
|
%
|
(2)
|
%
|
|
|
|
|
|
|
|
|
Investment securities average balances for the first quarter of
2018 increased $.4 billion compared
with the fourth quarter, while period end balances decreased
$1.6 billion reflecting timing of
reinvestments as well as reclassification of $.6 billion of securities to equity investments
in accordance with an accounting standard adoption. First quarter
2018 average and period end investment securities decreased
$1.6 billion and $1.9 billion, respectively, compared with the
first quarter of 2017 due to portfolio runoff and lower
reinvestments. Net unrealized losses on available for sale
securities were $.2 billion at
March 31, 2018 compared with net
unrealized gains of $.4 billion at
December 31, 2017 and $.3 billion at March 31,
2017.
Balances held with the Federal Reserve Bank increased to
$28.6 billion at March 31, 2018 compared with $28.3 billion at December
31, 2017 and $27.5 billion at
March 31, 2017.
Deposits
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
1Q18 vs
|
1Q18 vs
|
In
billions
|
1Q18
|
|
4Q17
|
|
1Q17
|
4Q17
|
1Q17
|
Average
|
|
|
|
|
|
|
|
Noninterest-bearing
|
$
|
77.2
|
|
|
$
|
80.2
|
|
|
$
|
78.1
|
|
(4)
|
%
|
(1)
|
%
|
Interest-bearing
|
183.5
|
|
|
181.3
|
|
|
176.9
|
|
1
|
%
|
4
|
%
|
Average
deposits
|
$
|
260.7
|
|
|
$
|
261.5
|
|
|
$
|
255.0
|
|
—
|
|
2
|
%
|
|
|
|
|
|
|
|
|
Quarter
end
|
|
|
|
|
|
|
|
Noninterest-bearing
|
$
|
78.3
|
|
|
$
|
79.8
|
|
|
$
|
79.2
|
|
(2)
|
%
|
(1)
|
%
|
Interest-bearing
|
186.4
|
|
|
185.2
|
|
|
181.5
|
|
1
|
%
|
3
|
%
|
Total
deposits
|
$
|
264.7
|
|
|
$
|
265.0
|
|
|
$
|
260.7
|
|
—
|
|
2
|
%
|
|
|
|
|
|
|
|
|
Average deposits for the first quarter of 2018 decreased
$.8 billion compared with the fourth
quarter due to seasonal declines in commercial deposits partially
offset by growth in consumer deposits. Higher interest rates
contributed to a shift from noninterest-bearing deposits to
interest-bearing. First quarter 2018 average and period end
deposits increased $5.7 billion and
$4.0 billion, respectively, compared
with first quarter 2017 driven by overall deposit and customer
growth.
Borrowed
Funds
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
1Q18 vs
|
1Q18 vs
|
In
billions
|
1Q18
|
|
4Q17
|
|
1Q17
|
4Q17
|
1Q17
|
Average
|
$
|
59.6
|
|
|
$
|
58.0
|
|
|
$
|
54.9
|
|
3
|
%
|
9
|
%
|
Quarter
end
|
$
|
58.0
|
|
|
$
|
59.0
|
|
|
$
|
55.0
|
|
(2)
|
%
|
5
|
%
|
|
|
|
|
|
|
|
|
Average borrowed funds for the first quarter of 2018 increased
$1.6 billion compared with the fourth
quarter reflecting issuances of $2.0
billion of senior bank notes in January 2018. Borrowed funds at March 31, 2018 decreased $1.0 billion compared with December 31, 2017 primarily due to lower Federal
Home Loan Bank borrowings reflecting the timing of maturities.
First quarter 2018 average and period end borrowed funds increased
$4.7 billion and $3.0 billion, respectively, compared with first
quarter 2017 due to increases in bank notes and senior debt
partially offset by lower subordinated debt.
Capital
|
|
|
|
|
|
|
3/31/2018*
|
|
12/31/2017
|
|
3/31/2017
|
Common shareholders'
equity In billions
|
$
|
43.0
|
|
|
$
|
43.5
|
|
|
$
|
41.8
|
|
Basel III common
equity Tier 1 capital ratio
|
9.6
|
%
|
|
N/A
|
|
N/A
|
Fully phased-in Basel
III common equity Tier 1 capital
|
|
|
|
|
|
ratio (Non-GAAP)
|
N/A
|
|
9.8
|
%
|
|
10.0
|
%
|
Transitional Basel
III common equity Tier 1 capital ratio
|
N/A
|
|
10.4
|
%
|
|
10.5
|
%
|
* Ratios
estimated; N/A - Not applicable
|
|
|
|
|
|
|
|
|
|
|
|
PNC maintained a strong capital position. Common shareholders'
equity at March 31, 2018 decreased
$.5 billion compared with
December 31, 2017 reflecting first
quarter net income offset by dividends and share repurchases and
lower accumulated other comprehensive income related to net
unrealized securities losses. 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 fully phased-in Basel III
common equity Tier 1 capital ratio for 2017 periods is presented on
a pro forma basis and is a non-GAAP financial measure. The
transitional Basel III common equity Tier 1 capital ratio was
applicable to PNC during 2017. These ratios were calculated based
on the standardized approach. See Capital Ratios in the
Consolidated Financial Highlights.
PNC returned $1.1 billion of
capital to shareholders in the first quarter of 2018 through
repurchases of 4.8 million common shares for $.7 billion and dividends on common shares of
$.4 billion. PNC has repurchased a
total of 12.7 million shares for $1.8
billion under current share repurchase programs of up to
$2.7 billion for the four-quarter
period ending in the second quarter of 2018. These programs include
repurchases of up to $.3 billion
related to stock issuances under employee benefit plans.
On April 4, 2018, the PNC board of
directors declared a quarterly cash dividend on common stock of
75 cents per share effective with the
May 5, 2018 dividend payment
date.
CREDIT QUALITY
REVIEW
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit
Quality
|
|
|
|
|
|
Change
|
Change
|
|
At or for the quarter
ended
|
3/31/18 vs
|
3/31/18 vs
|
In
millions
|
3/31/2018
|
|
12/31/2017
|
|
3/31/2017
|
12/31/17
|
3/31/17
|
Nonperforming
loans
|
$
|
1,842
|
|
|
$
|
1,865
|
|
|
$
|
1,998
|
|
(1)
|
%
|
(8)
|
%
|
Nonperforming
assets
|
$
|
2,004
|
|
|
$
|
2,035
|
|
|
$
|
2,212
|
|
(2)
|
%
|
(9)
|
%
|
Accruing loans past
due 90 days or
more
|
$
|
628
|
|
|
$
|
737
|
|
|
$
|
699
|
|
(15)
|
%
|
(10)
|
%
|
Net
charge-offs
|
$
|
113
|
|
|
$
|
123
|
|
|
$
|
118
|
|
(8)
|
%
|
(4)
|
%
|
Provision for credit
losses
|
$
|
92
|
|
|
$
|
125
|
|
|
$
|
88
|
|
(26)
|
%
|
5
|
%
|
Allowance for loan
and lease losses
|
$
|
2,604
|
|
|
$
|
2,611
|
|
|
$
|
2,561
|
|
—
|
2
|
%
|
|
|
|
|
|
|
|
|
Overall credit quality for the first quarter of 2018 remained
stable with the fourth quarter. Provision for credit losses for the
first quarter decreased $33 million
compared with the fourth quarter reflecting a lower provision for
consumer loans partially offset by a higher provision for
commercial loans. The lower consumer loan provision was driven by
favorable historical performance experience for home equity loans,
and the impact of fourth quarter reserve builds for auto and credit
card loans. The increase in the provision for the commercial
lending portfolio reflected first quarter specific reserves for
certain nonperforming credits compared with fourth quarter specific
reserve releases.
Nonperforming assets at March 31,
2018 decreased $31 million
compared with December 31, 2017 due
to declines in nonperforming commercial real estate and residential
real estate loans and other real estate owned and foreclosed
and other assets. In the comparison with March 31, 2017, nonperforming assets decreased
$208 million driven by
lower residential real estate, home equity and commercial
real estate nonperforming loans as well as lower other real
estate owned and foreclosed and other assets partially offset by an
increase in nonperforming commercial loans. Nonperforming assets to
total assets were .53 percent at both March
31, 2018 and December 31, 2017
compared with .60 percent at March 31,
2017.
Overall delinquencies at March 31,
2018 decreased $131 million,
or 9 percent, compared with December
31, 2017 balances, which were elevated reflecting
seasonality and the residual impact of hurricanes. Accruing loans
past due 90 days or more declined $109
million primarily due to a decrease in government insured
residential mortgage loans.
Net charge-offs for the first quarter of 2018 decreased
$10 million compared with the fourth
quarter and $5 million compared with
the first quarter of 2017 primarily due to lower commercial loan
net charge-offs. Net charge-offs for the first quarter of 2018 were
.21 percent of average loans on an annualized basis compared with
.22 percent for the fourth quarter and .23 percent for the first
quarter of 2017.
The allowance for loan and lease losses to total loans was 1.18
percent at both March 31, 2018 and
December 31, 2017 and 1.20 percent at
March 31, 2017. The allowance to
nonperforming loans was 141 percent at March
31, 2018, 140 percent at December 31,
2017 and 128 percent at March 31,
2017.
BUSINESS SEGMENT
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
Business Segment
Income
|
|
|
|
|
|
In
millions
|
1Q18
|
|
4Q17
|
|
1Q17
|
Retail
Banking
|
$
|
296
|
|
|
$
|
(145)
|
|
|
$
|
213
|
|
Corporate &
Institutional Banking
|
584
|
|
|
937
|
|
|
484
|
|
Asset Management
Group
|
68
|
|
|
56
|
|
|
47
|
|
Other, including
BlackRock
|
291
|
|
|
1,243
|
|
|
330
|
|
Net income
|
$
|
1,239
|
|
|
$
|
2,091
|
|
|
$
|
1,074
|
|
See accompanying
notes in Consolidated Financial Highlights
|
|
|
|
|
|
|
|
|
|
|
|
Retail
Banking
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
1Q18 vs
|
|
1Q18 vs
|
In
millions
|
1Q18
|
|
4Q17
|
|
1Q17
|
|
4Q17
|
|
1Q17
|
Net interest
income
|
$
|
1,218
|
|
|
$
|
1,190
|
|
|
$
|
1,121
|
|
|
$
|
28
|
|
|
$
|
97
|
|
Noninterest
income
|
$
|
635
|
|
|
$
|
345
|
|
|
$
|
603
|
|
|
$
|
290
|
|
|
$
|
32
|
|
Provision for credit
losses
|
$
|
69
|
|
|
$
|
149
|
|
|
$
|
71
|
|
|
$
|
(80)
|
|
|
$
|
(2)
|
|
Noninterest
expense
|
$
|
1,395
|
|
|
$
|
1,391
|
|
|
$
|
1,315
|
|
|
$
|
4
|
|
|
$
|
80
|
|
Earnings
(loss)
|
$
|
296
|
|
|
$
|
(145)
|
|
|
$
|
213
|
|
|
$
|
441
|
|
|
$
|
83
|
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
|
73.5
|
|
|
$
|
73.0
|
|
|
$
|
72.5
|
|
|
$
|
.5
|
|
|
$
|
1.0
|
|
Average
deposits
|
$
|
160.0
|
|
|
$
|
159.3
|
|
|
$
|
158.0
|
|
|
$
|
.7
|
|
|
$
|
2.0
|
|
|
|
|
|
|
|
|
|
|
|
Retail Banking earnings for the first quarter of 2018 increased
in both comparisons. The loss in the fourth quarter of 2017
included income tax expense of $139
million as a result of tax legislation. Noninterest income
increased over the fourth quarter, which included $248 million of negative derivative fair value
adjustments related to Visa Class B common shares and a
$71 million negative adjustment for
residential mortgage servicing rights fair value assumption
updates. First quarter 2018 noninterest income reflected seasonally
lower consumer service fees and service charges on deposits
compared with the fourth quarter. In the comparison with first
quarter 2017, noninterest income increased as a result of strong
growth in consumer service fees, including credit card, brokerage
and debit card fees, and higher service charges on deposits
partially offset by lower residential mortgage loan sales revenue.
Provision for credit losses decreased compared with the fourth
quarter due to favorable historical performance experience for home
equity loans and the impact of fourth quarter reserve builds for
auto and credit card loans. Noninterest expense increased compared
with the first quarter of 2017 as a result of higher personnel
expenses, investments in technology and higher compliance
expense.
- Average loans increased 1 percent in both comparisons due to
growth in residential mortgage, auto and credit card loans
partially offset by lower home equity and education loans.
- Average deposits grew in the first quarter of 2018 compared
with the fourth quarter reflecting higher interest-bearing deposits
of $1.2 billion partially offset by a
decline in noninterest-bearing demand deposits of $.5 billion. Both interest-bearing and
noninterest-bearing deposits grew in first quarter 2018 compared
with first quarter 2017.
- Net charge-offs were $100 million
for the first quarters of 2018 and 2017 and $99 million in the fourth quarter of 2017.
- Residential mortgage loan origination volume was $1.7 billion for the first quarter of 2018
compared with $2.4 billion for the
fourth quarter and $1.9 billion for
the first quarter of 2017. Approximately 56 percent of first
quarter 2018 volume was for home purchase transactions compared
with 50 percent for the fourth quarter and 43 percent for the first
quarter of 2017.
- The residential mortgage servicing portfolio was $125 billion at March 31,
2018 compared with $127
billion at December 31, 2017
and $130 billion at March 31, 2017. Residential mortgage loan
servicing acquisitions were $1
billion for both the first quarter of 2018 and fourth
quarter of 2017 and $8 billion for
the first quarter of 2017.
- Approximately 64 percent of consumer customers used non-teller
channels for the majority of their transactions during the first
quarter of 2018 compared with 63 percent in the fourth quarter and
61 percent in the first quarter of 2017.
- Deposit transactions via ATM and mobile channels were 54
percent of total deposit transactions in both the first quarter of
2018 and fourth quarter of 2017 compared with 52 percent
in the first quarter of 2017.
Corporate &
Institutional Banking
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
1Q18 vs
|
|
1Q18 vs
|
In
millions
|
1Q18
|
|
4Q17
|
|
1Q17
|
|
4Q17
|
|
1Q17
|
Net interest
income
|
$
|
882
|
|
|
$
|
898
|
|
|
$
|
839
|
|
|
$
|
(16)
|
|
|
$
|
43
|
|
Noninterest
income
|
$
|
547
|
|
|
$
|
604
|
|
|
$
|
524
|
|
|
$
|
(57)
|
|
|
$
|
23
|
|
Provision for credit
losses (benefit)
|
$
|
41
|
|
|
$
|
(14)
|
|
|
$
|
25
|
|
|
$
|
55
|
|
|
$
|
16
|
|
Noninterest
expense
|
$
|
626
|
|
|
$
|
643
|
|
|
$
|
584
|
|
|
$
|
(17)
|
|
|
$
|
42
|
|
Earnings
|
$
|
584
|
|
|
$
|
937
|
|
|
$
|
484
|
|
|
$
|
(353)
|
|
|
$
|
100
|
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
|
135.5
|
|
|
$
|
135.8
|
|
|
$
|
127.0
|
|
|
$
|
(.3)
|
|
|
$
|
8.5
|
|
Average
deposits
|
$
|
87.9
|
|
|
$
|
89.4
|
|
|
$
|
83.9
|
|
|
$
|
(1.5)
|
|
|
$
|
4.0
|
|
|
|
|
|
|
|
|
|
|
|
Corporate & Institutional Banking earnings for the first
quarter of 2018 decreased compared with the fourth quarter and
increased compared with the first quarter of 2017. Fourth quarter
2017 earnings included an income tax benefit of $373 million and net interest income included a
reduction of $26 million related to
leveraged leases, both a result of tax legislation. Noninterest
income declined from the fourth quarter due to lower net gains on
commercial mortgage loans held for sale and lower capital
markets-related revenue, including merger and acquisition advisory
and loan syndication fees. Noninterest income increased compared
with the first quarter of 2017 reflecting growth in treasury
management product revenue and higher operating lease income from
the commercial and vendor finance business acquired in the second
quarter of 2017, partially offset by a lower benefit from
commercial mortgage servicing rights valuation, net of economic
hedge. Provision for credit losses increased in the first quarter
of 2018 reflecting first quarter specific reserves for certain
nonperforming credits compared with fourth quarter specific reserve
releases. Noninterest expense decreased compared with the fourth
quarter primarily due to lower variable compensation, and increased
compared with first quarter 2017 largely due to operating expense
associated with the acquired business as well as investments in
technology and risk management activities.
- Average loans decreased slightly compared with the fourth
quarter as growth in PNC's corporate banking, equipment finance and
business credit businesses was more than offset by a decline in
multifamily agency warehouse lending within the real estate
business. Average loans increased 7 percent over the first quarter
of 2017 reflecting broad-based loan growth.
- Average deposits decreased 2 percent from the fourth quarter as
a result of seasonal declines, and increased 5 percent compared
with first quarter 2017 due to growth in interest-bearing deposits
partially offset by decreases in noninterest-bearing demand
deposits.
- Net charge-offs were $9 million
in the first quarter of 2018 compared with $29 million in the fourth quarter and
$21 million in the first quarter of
2017.
Asset Management
Group
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
1Q18 vs
|
|
1Q18 vs
|
In
millions
|
1Q18
|
|
4Q17
|
|
1Q17
|
|
4Q17
|
|
1Q17
|
Net interest
income
|
$
|
74
|
|
|
$
|
71
|
|
|
$
|
71
|
|
|
$
|
3
|
|
|
$
|
3
|
|
Noninterest
income
|
$
|
226
|
|
|
$
|
226
|
|
|
$
|
218
|
|
|
—
|
|
|
$
|
8
|
|
Provision for credit
losses (benefit)
|
$
|
(7)
|
|
|
$
|
7
|
|
|
$
|
(2)
|
|
|
$
|
(14)
|
|
|
$
|
(5)
|
|
Noninterest
expense
|
$
|
218
|
|
|
$
|
217
|
|
|
$
|
217
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Earnings
|
$
|
68
|
|
|
$
|
56
|
|
|
$
|
47
|
|
|
$
|
12
|
|
|
$
|
21
|
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Client assets under
administration at
quarter end
|
$
|
277
|
|
|
$
|
282
|
|
|
$
|
264
|
|
|
$
|
(5)
|
|
|
$
|
13
|
|
Average
loans
|
$
|
7.0
|
|
|
$
|
7.1
|
|
|
$
|
7.0
|
|
|
$
|
(.1)
|
|
|
—
|
|
Average
deposits
|
$
|
12.5
|
|
|
$
|
12.6
|
|
|
$
|
12.8
|
|
|
$
|
(.1)
|
|
|
$
|
(.3)
|
|
|
|
|
|
|
|
|
|
|
|
Asset Management Group earnings for the first quarter of 2018
increased in both comparisons. Fourth quarter 2017 earnings
included an income tax benefit of $9
million as a result of tax legislation. Noninterest income
was stable with the fourth quarter and increased compared with the
first quarter of 2017 due to higher average equity markets.
Provision for credit losses was a benefit in the first quarter of
2018 and reflected lower reserves on home equity loans compared
with the fourth quarter.
- Client assets under administration at March 31, 2018 included discretionary client
assets under management of $148
billion and nondiscretionary client assets under
administration of $129 billion.
-
- Discretionary client assets under management decreased
$3 billion compared with December 31, 2017 due to equity market declines
and net business activities, and increased $7 billion compared with March 31, 2017 primarily attributable to equity
market increases.
Other, including BlackRock
The "Other, including BlackRock" category, for the purposes of
this release, includes earnings and gains or losses related to
PNC's equity interest in BlackRock, and residual activities that do
not meet the criteria for disclosure as a separate reportable
business, such as asset and liability management activities
including net securities gains or losses, other-than-temporary
impairment of investment securities and certain trading activities,
discontinued consumer loan portfolios, private equity investments,
intercompany eliminations, most corporate overhead, tax adjustments
that are not allocated to business segments, exited businesses,
integration costs, and differences between business segment
performance reporting and financial statement reporting under
generally accepted accounting principles.
CONFERENCE CALL AND SUPPLEMENTAL FINANCIAL
INFORMATION
PNC Chairman, President and Chief Executive Officer William S. Demchak and Chief Financial Officer
Robert Q. Reilly will hold a
conference call for investors today at 9:30
a.m. Eastern Time regarding the topics addressed in this
news release and the related financial supplement. Dial-in numbers
for the conference call are (877) 402-9102 and (312) 281-1202
(international) and Internet access to the live audio listen-only
webcast of the call is available at www.pnc.com/investorevents.
PNC's first quarter 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 21885331 and a replay of the audio
webcast will be available on PNC's website for 30 days.
The PNC Financial Services Group, Inc. is one of the largest
diversified financial services institutions in the United States, organized around its
customers and communities for strong relationships and local
delivery of retail and business banking including a full range of
lending products; specialized services for corporations and
government entities, including corporate banking, real estate
finance and asset-based lending; wealth management and asset
management. For information about PNC, visit www.pnc.com.
[TABULAR MATERIAL FOLLOWS]
The PNC Financial
Services Group, Inc.
|
Consolidated
Financial Highlights (Unaudited)
|
FINANCIAL
RESULTS
|
Three months
ended
|
Dollars in
millions, except per share data
|
|
March 31
|
|
December
31
|
|
March 31
|
|
|
2018
|
|
2017
|
|
2017
|
Revenue
|
|
|
|
|
|
|
Net interest
income
|
|
$
|
2,361
|
|
|
$
|
2,345
|
|
|
$
|
2,160
|
|
Noninterest
income
|
|
1,750
|
|
|
1,915
|
|
|
1,724
|
|
Total
revenue
|
|
4,111
|
|
|
4,260
|
|
|
3,884
|
|
Provision for credit
losses
|
|
92
|
|
|
125
|
|
|
88
|
|
Noninterest
expense
|
|
2,527
|
|
|
3,061
|
|
|
2,402
|
|
Income before income
taxes (benefit) and noncontrolling interests
|
|
$
|
1,492
|
|
|
$
|
1,074
|
|
|
$
|
1,394
|
|
Net income
|
|
$
|
1,239
|
|
|
$
|
2,091
|
|
|
$
|
1,074
|
|
Less:
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests
|
|
10
|
|
|
11
|
|
|
17
|
|
Preferred stock
dividends (a)
|
|
63
|
|
|
55
|
|
|
63
|
|
Preferred stock
discount accretion and redemptions
|
|
1
|
|
|
2
|
|
|
21
|
|
Net income
attributable to common shareholders
|
|
$
|
1,165
|
|
|
$
|
2,023
|
|
|
$
|
973
|
|
Less:
|
|
|
|
|
|
|
Dividends and
undistributed earnings allocated to nonvested restricted
shares
|
5
|
|
|
8
|
|
|
6
|
|
Impact of BlackRock
earnings per share dilution
|
|
2
|
|
|
8
|
|
|
4
|
|
Net income
attributable to diluted common shares
|
|
$
|
1,158
|
|
|
$
|
2,007
|
|
|
$
|
963
|
|
Diluted earnings per
common share
|
|
$
|
2.43
|
|
|
$
|
4.18
|
|
|
$
|
1.96
|
|
Cash dividends
declared per common share
|
|
$
|
.75
|
|
|
$
|
.75
|
|
|
$
|
.55
|
|
Effective tax rate
(b)
|
|
17.0
|
%
|
|
(94.7)
|
%
|
|
23.0
|
%
|
(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 first quarter 2018 results reflected the
change in the statutory federal income tax rate from 35% to 21%,
effective as of January 1, 2018, as a result of the new federal tax
legislation. The fourth quarter 2017 results benefited from an
income tax benefit from the new federal tax legislation primarily
attributable to revaluation of deferred tax liabilities at the
lower statutory tax rate. Where certain income tax effects could be
reasonably estimated, these were included as provisional amounts as
of December 31, 2017. As a result, these provisional amounts could
be adjusted during the measurement period, which will end in
December 2018. No changes were made to these provisional amounts
during the first quarter of 2018.
|
The PNC Financial
Services Group, Inc.
|
Consolidated
Financial Highlights (Unaudited)
|
|
|
Three months
ended
|
|
|
March 31
|
|
December
31
|
|
March 31
|
|
|
2018
|
|
2017
|
|
2017
|
PERFORMANCE
RATIOS
|
|
|
|
|
|
|
Net interest margin
(a)
|
|
2.91
|
%
|
|
2.88
|
%
|
|
2.77
|
%
|
Noninterest income to
total revenue
|
|
43
|
%
|
|
45
|
%
|
|
44
|
%
|
Efficiency
(b)
|
|
61
|
%
|
|
72
|
%
|
|
62
|
%
|
Return on:
|
|
|
|
|
|
|
Average common
shareholders' equity (c)
|
|
11.04
|
%
|
|
18.90
|
%
|
|
9.50
|
%
|
Average assets
(c)
|
|
1.34
|
%
|
|
2.20
|
%
|
|
1.19
|
%
|
BUSINESS SEGMENT
NET INCOME (LOSS) (c) (d)
|
|
|
|
|
|
|
In
millions
|
|
|
|
|
|
|
Retail
Banking
|
|
$
|
296
|
|
|
$
|
(145)
|
|
|
$
|
213
|
|
Corporate &
Institutional Banking
|
|
584
|
|
|
937
|
|
|
484
|
|
Asset Management
Group
|
|
68
|
|
|
56
|
|
|
47
|
|
Other, including
BlackRock (e)
|
|
291
|
|
|
1,243
|
|
|
330
|
|
Total net
income
|
|
$
|
1,239
|
|
|
$
|
2,091
|
|
|
$
|
1,074
|
|
(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 March 31, 2018,
December 31, 2017 and March 31, 2017 were $29 million,
$54 million and $52 million, respectively. Taxable equivalent
amounts for the 2018 period were calculated using a statutory
federal income tax rate of 21%, reflecting the enactment of the new
federal tax legislation effective January 1, 2018. Amounts for the
2017 periods were calculated using the previously applicable
statutory federal income tax rate of 35%.
|
(b)
|
Calculated as
noninterest expense divided by total revenue.
|
(c)
|
The first quarter
2018 results reflected the change in the statutory federal income
tax rate from 35% to 21%, effective as of January 1, 2018, as a
result of the new federal tax legislation. The fourth quarter 2017
results benefited from an income tax benefit from the new federal
tax legislation primarily attributable to revaluation of deferred
tax liabilities at the lower statutory tax rate. Our business
segment results for the fourth quarter of 2017 reflect the
allocation of the impact of the new tax legislation to our business
segments, primarily the revaluation of the net deferred tax
positions allocated to the segments. Where certain income tax
effects could be reasonably estimated, these were included as
provisional amounts as of December 31, 2017. As a result, these
provisional amounts could be adjusted during the measurement
period, which will end in December 2018. No changes were made to
these provisional amounts during the first quarter of
2018.
|
(d)
|
Our business
information is presented based on our internal management reporting
practices. Net interest income in business segment results reflects
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)
|
|
March 31
|
|
December
31
|
|
March 31
|
|
2018
|
|
2017
|
|
2017
|
BALANCE SHEET
DATA
|
|
|
|
|
|
Dollars in
millions, except per share data
|
|
|
|
|
|
Assets
|
$
|
379,161
|
|
|
$
|
380,768
|
|
|
$
|
370,944
|
|
Loans (a)
|
$
|
221,614
|
|
|
$
|
220,458
|
|
|
$
|
212,826
|
|
Allowance for loan
and lease losses
|
$
|
2,604
|
|
|
$
|
2,611
|
|
|
$
|
2,561
|
|
Interest-earning
deposits with banks
|
$
|
28,821
|
|
|
$
|
28,595
|
|
|
$
|
27,877
|
|
Investment
securities
|
$
|
74,562
|
|
|
$
|
76,131
|
|
|
$
|
76,432
|
|
Loans held for sale
(a)
|
$
|
965
|
|
|
$
|
2,655
|
|
|
$
|
1,414
|
|
Equity investments
(b)
|
$
|
12,008
|
|
|
$
|
11,392
|
|
|
$
|
10,900
|
|
Mortgage servicing
rights
|
$
|
1,979
|
|
|
$
|
1,832
|
|
|
$
|
1,867
|
|
Goodwill
|
$
|
9,218
|
|
|
$
|
9,173
|
|
|
$
|
9,103
|
|
Other assets
(a)
|
$
|
27,949
|
|
|
$
|
27,894
|
|
|
$
|
28,083
|
|
Noninterest-bearing
deposits
|
$
|
78,303
|
|
|
$
|
79,864
|
|
|
$
|
79,246
|
|
Interest-bearing
deposits
|
$
|
186,401
|
|
|
$
|
185,189
|
|
|
$
|
181,464
|
|
Total
deposits
|
$
|
264,704
|
|
|
$
|
265,053
|
|
|
$
|
260,710
|
|
Borrowed funds
(a)
|
$
|
58,039
|
|
|
$
|
59,088
|
|
|
$
|
55,062
|
|
Shareholders'
equity
|
$
|
46,969
|
|
|
$
|
47,513
|
|
|
$
|
45,754
|
|
Common shareholders'
equity
|
$
|
42,983
|
|
|
$
|
43,530
|
|
|
$
|
41,774
|
|
Accumulated other
comprehensive income (loss)
|
$
|
(699)
|
|
|
$
|
(148)
|
|
|
$
|
(279)
|
|
Book value per common
share
|
$
|
91.39
|
|
|
$
|
91.94
|
|
|
$
|
86.14
|
|
Tangible book value
per common share (Non-GAAP) (c)
|
$
|
71.58
|
|
|
$
|
72.28
|
|
|
$
|
67.47
|
|
Period end common
shares outstanding (millions)
|
470
|
|
|
473
|
|
|
485
|
|
Loans to
deposits
|
84
|
%
|
|
83
|
%
|
|
82
|
%
|
CLIENT ASSETS
(billions)
|
|
|
|
|
|
Discretionary client
assets under management
|
$
|
148
|
|
|
$
|
151
|
|
|
$
|
141
|
|
Nondiscretionary
client assets under administration
|
129
|
|
|
131
|
|
|
123
|
|
Total client assets
under administration
|
277
|
|
|
282
|
|
|
264
|
|
Brokerage account
client assets
|
49
|
|
|
49
|
|
|
46
|
|
Total client
assets
|
$
|
326
|
|
|
$
|
331
|
|
|
$
|
310
|
|
CAPITAL
RATIOS
|
|
|
|
|
|
Basel III (d) (e)
(f)
|
|
|
|
|
|
Common equity Tier 1
|
9.6
|
%
|
|
N/A
|
|
N/A
|
Tier 1 risk-based
|
10.8
|
%
|
|
N/A
|
|
N/A
|
Total
capital risk-based
|
12.8
|
%
|
|
N/A
|
|
N/A
|
Leverage
|
9.4
|
%
|
|
N/A
|
|
N/A
|
Supplementary leverage
|
7.9
|
%
|
|
N/A
|
|
N/A
|
Fully Phased-In
Basel III (Non-GAAP)
|
|
|
|
|
|
Common
equity Tier 1
|
N/A
|
|
9.8
|
%
|
|
10.0
|
%
|
2017 Transitional
Basel III (e)
|
|
|
|
|
|
Common
equity Tier 1
|
N/A
|
|
10.4
|
%
|
|
10.5
|
%
|
Tier 1
risk-based
|
N/A
|
|
11.6
|
%
|
|
11.8
|
%
|
Total
capital risk-based
|
N/A
|
|
13.7
|
%
|
|
14.1
|
%
|
Leverage
|
N/A
|
|
9.9
|
%
|
|
9.9
|
%
|
Common shareholders'
equity to total assets
|
11.3
|
%
|
|
11.4
|
%
|
|
11.3
|
%
|
ASSET
QUALITY
|
|
|
|
|
|
Nonperforming loans
to total loans
|
.83
|
%
|
|
.85
|
%
|
|
.94
|
%
|
Nonperforming assets
to total loans, OREO, foreclosed and other assets
|
.90
|
%
|
|
.92
|
%
|
|
1.04
|
%
|
Nonperforming assets
to total assets
|
.53
|
%
|
|
.53
|
%
|
|
.60
|
%
|
Net charge-offs to
average loans (for the three months ended) (annualized)
|
.21
|
%
|
|
.22
|
%
|
|
.23
|
%
|
Allowance for loan
and lease losses to total loans
|
1.18
|
%
|
|
1.18
|
%
|
|
1.20
|
%
|
Allowance for loan
and lease losses to nonperforming loans
|
141
|
%
|
|
140
|
%
|
|
128
|
%
|
Accruing loans past
due 90 days or more (in millions)
|
$
|
628
|
|
|
$
|
737
|
|
|
$
|
699
|
|
(a)
|
Amounts include
assets and liabilities for which we have elected the fair value
option. Our 2017 Form 10-K included, and our first quarter 2018
Form 10-Q will include, additional information regarding these
Consolidated Balance Sheet line items.
|
(b)
|
Amounts include our
equity interest in BlackRock. The amount at March 31, 2018 includes
$603 million of trading and available for sale securities that were
reclassified to Equity investments on January 1, 2018 in accordance
with the adoption of Accounting Standard 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 18 for additional
information.
|
(d)
|
The ratios as of
March 31, 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 17 for additional
information.
|
(f)
|
The 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
Basel III total risk-based capital ratio includes $80 million of
nonqualifying trust preferred capital securities that are subject
to a phase-out period that runs through 2022.
|
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. 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. All current period capital
ratios are calculated using the regulatory capital methodology
applicable to us during 2018.
|
|
We provide
information below regarding PNC's estimated Basel III
March 31, 2018 and pro forma Fully Phased-In Basel III
December 31, 2017 and March 31, 2017 common equity Tier 1
ratios and PNC's actual December 31, 2017 and March 31, 2017
Transitional Basel III common equity Tier 1 ratios. Under the Basel
III rules applicable to PNC, significant common stock investments
in unconsolidated financial institutions (primarily BlackRock),
mortgage servicing rights and deferred tax assets must be deducted
from capital (subject to a phase-in schedule that ended December
31, 2017 and net of associated deferred tax liabilities) to the
extent they individually exceed 10%, or in the aggregate exceed
15%, of the institution's adjusted common equity Tier 1 capital.
Also, Basel III regulatory capital includes (subject to a phase-in
schedule that ended December 31, 2017) accumulated other
comprehensive income related to securities currently and previously
held as 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
|
|
|
|
|
|
|
|
March 31
|
|
|
December
31
|
|
March 31
|
|
|
|
December
31
|
|
March 31
|
Dollars in
millions
|
2018
(estimated)
|
|
|
2017
|
|
2017
|
|
|
|
2017
|
|
2017
|
Common stock, related
surplus and retained earnings,
net of treasury stock
|
$
|
43,683
|
|
|
|
$
|
43,676
|
|
|
$
|
42,053
|
|
|
|
|
$
|
43,676
|
|
|
$
|
42,053
|
|
Less regulatory
capital adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill and
disallowed intangibles, net of deferred
tax liabilities
|
(9,343)
|
|
|
|
(9,307)
|
|
|
(9,052)
|
|
|
|
|
(9,243)
|
|
|
(9,007)
|
|
Basel III total
threshold deductions
|
(3,284)
|
|
|
|
(2,928)
|
|
|
(1,585)
|
|
|
|
|
(1,983)
|
|
|
(1,064)
|
|
Accumulated other
comprehensive income (c)
|
(645)
|
|
|
|
(207)
|
|
|
(369)
|
|
|
|
|
(166)
|
|
|
(295)
|
|
All other
adjustments
|
(120)
|
|
|
|
(141)
|
|
|
(180)
|
|
|
|
|
(138)
|
|
|
(183)
|
|
Basel III Common
equity Tier 1 capital
|
$
|
30,291
|
|
|
|
$
|
31,093
|
|
|
$
|
30,867
|
|
|
|
|
$
|
32,146
|
|
|
$
|
31,504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basel III
standardized approach risk-weighted assets (d)
|
$
|
315,711
|
|
|
|
$
|
316,120
|
|
|
$
|
308,392
|
|
|
|
|
$
|
309,460
|
|
|
$
|
300,233
|
|
Basel III advanced
approaches risk-weighted assets (e)
|
281,322
|
|
|
|
$
|
285,226
|
|
|
$
|
278,938
|
|
|
|
|
N/A
|
|
N/A
|
Basel III Common
equity Tier 1 capital ratio
|
9.6
|
%
|
|
|
9.8
|
%
|
|
10.0
|
%
|
|
|
|
10.4
|
%
|
|
10.5
|
%
|
Risk weight and
associated rules utilized
|
Standardized
|
|
|
Standardized
|
|
|
|
Standardized (with
2017
transition adjustments)
|
(a)
|
All current period
results are calculated using the regulatory capital methodology
applicable to us during 2018. Basel III common equity Tier I
capital ratio as of March 31, 2018 reflects 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)
|
Represents net
adjustments related to accumulated other comprehensive income for
securities currently and previously held as available for sale, as
well as pension and other postretirement plans.
|
(d)
|
Basel III
standardized approach risk-weighted assets are based on the Basel
III standardized approach rules and include credit and market
risk-weighted assets.
|
(e)
|
Basel III advanced
approaches risk-weighted assets are based on the Basel III advanced
approaches rules, and include credit, market and operational
risk-weighted assets. During the parallel run qualification phase,
PNC has refined the data, models and internal processes used as
part of the advanced approaches for determining risk-weighted
assets. We anticipate additional refinements through the parallel
run qualification phase.
|
Our Basel III capital ratios may be impacted by additional
regulatory guidance or analysis, and, in the case of those ratios
calculated using the advanced approaches, may be subject to
variability based on the ongoing evolution, validation and
regulatory approval of PNC's models that are integral to the
calculation of advanced approaches risk-weighted assets as PNC
moves through the parallel run approval process.
The PNC Financial
Services Group, Inc.
|
Consolidated
Financial Highlights (Unaudited)
|
|
|
Tangible book value
per common share is a non-GAAP measure and is calculated based on
tangible common shareholders' equity divided by period-end common
shares outstanding. We believe this non-GAAP measure serves as a
useful tool to help evaluate the strength and discipline of a
company's capital management strategies and as an additional,
conservative measure of total company value.
|
|
|
Tangible Book
Value per Common Share (Non-GAAP)
|
|
|
|
|
|
|
March 31
|
|
December
31
|
|
March 31
|
Dollars in
millions, except per share data
|
2018
|
|
2017
|
|
2017
|
Book value per common
share
|
$
|
91.39
|
|
|
$
|
91.94
|
|
|
$
|
86.14
|
|
Tangible book value
per common share
|
|
|
|
|
|
Common shareholders'
equity
|
$
|
42,983
|
|
|
$
|
43,530
|
|
|
$
|
41,774
|
|
Goodwill and Other
Intangible Assets
|
(9,533)
|
|
|
(9,498)
|
|
|
(9,356)
|
|
Deferred tax
liabilities on Goodwill and Other Intangible Assets
|
192
|
|
|
191
|
|
|
303
|
|
Tangible
common shareholders' equity
|
$
|
33,642
|
|
|
$
|
34,223
|
|
|
$
|
32,721
|
|
Period-end common
shares outstanding (in millions)
|
470
|
|
|
473
|
|
|
485
|
|
Tangible book value
per common share (Non-GAAP)
|
$
|
71.58
|
|
|
$
|
72.28
|
|
|
$
|
67.47
|
|
Cautionary Statement Regarding Forward-Looking
Information
We make statements in this news release and related conference
call, and we may from time to time make other statements, regarding
our outlook for earnings, revenues, expenses, tax rates, capital
and liquidity levels and ratios, asset levels, asset quality,
financial position, and other matters regarding or affecting PNC
and its future business and operations that are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act. Forward-looking statements are typically
identified by words such as "believe," "plan," "expect,"
"anticipate," "see," "look," "intend," "outlook," "project,"
"forecast," "estimate," "goal," "will," "should" and other similar
words and expressions.
Forward-looking statements are subject to numerous assumptions,
risks and uncertainties, which change over time.
Forward-looking statements speak only as of the date made. We
do not assume any duty and do not undertake to update
forward-looking statements. Actual results or future events
could differ, possibly materially, from those anticipated in
forward-looking statements, as well as from historical
performance.
Our forward-looking statements are subject to the following
principal risks and uncertainties.
- Our businesses, financial results and balance sheet values are
affected by business and economic conditions, including the
following:
-
- Changes in interest rates and valuations in debt, equity and
other financial markets.
- Disruptions in the U.S. and global financial markets.
- Actions by the Federal Reserve Board, U.S. Treasury and other
government agencies, including those that impact money supply and
market interest rates.
- Changes in customer behavior due to newly enacted tax
legislation, changing business and economic conditions or
legislative or regulatory initiatives.
- Changes in customers', suppliers' and other counterparties'
performance and creditworthiness.
- Slowing or reversal of the current U.S. economic
expansion.
- Commodity price volatility.
- Our forward-looking financial statements are subject to the
risk that economic and financial market conditions will be
substantially different than those we are currently expecting and
do not take into account potential legal and regulatory
contingencies. These statements are based on our current view that
U.S. economic growth will accelerate somewhat in 2018, in light of
stimulus from corporate and personal income tax cuts passed in late
2017 that are expected to support business investment and consumer
spending, respectively. We expect an increase in federal government
spending will also support economic growth in 2018. Further gradual
improvement in the labor market this year, including job gains and
rising wages, is another positive for consumer spending. Other
sources of growth for the U.S. economy in 2018 will be the global
economic expansion and the housing market, although trade
restrictions are a downside risk to the forecast. Although
inflation slowed in 2017, it should pick up as the labor market
continues to tighten. Short-term interest rates and bond yields are
expected to rise throughout 2018; after the Federal Open Market
Committee raised the federal funds rate in March, our baseline
forecast is for two additional rate hikes in 2018, pushing the fed
funds rate to a range of 2.00 to 2.25 percent by the end of the
year. Longer-term rates are also expected to increase as the
Federal Reserve slowly reduces the size of its balance sheet and
the federal government borrows more. Long-term rates will rise more
slowly than short-term rates, so we anticipate that the yield curve
will flatten but not invert.
- PNC's ability to take certain capital actions, including
returning capital to shareholders, is subject to review by the
Federal Reserve Board as part of PNC's comprehensive capital plan
for the applicable period in connection with the Federal Reserve
Board's Comprehensive Capital Analysis and Review (CCAR) process
and to the acceptance of such capital plan and non-objection to
such capital actions by the Federal Reserve Board.
- PNC's regulatory capital ratios in the future will depend on,
among other things, the company's financial performance, the scope
and terms of final capital regulations then in effect (particularly
those implementing the international regulatory capital framework
developed by the Basel Committee on Banking Supervision (Basel
Committee), and management actions affecting the composition of
PNC's balance sheet. In addition, PNC's ability to determine,
evaluate and forecast regulatory capital ratios, and to take
actions (such as capital distributions) based on actual or
forecasted capital ratios, will be dependent at least in part on
the development, validation and regulatory approval of related
models.
Cautionary Statement Regarding Forward-Looking
Information (Continued)
- Legal and regulatory developments could have an impact on our
ability to operate our businesses, financial condition, results of
operations, competitive position, reputation, or pursuit of
attractive acquisition opportunities. Reputational impacts could
affect matters such as business generation and retention,
liquidity, funding, and ability to attract and retain management.
These developments could include:
-
- Changes resulting from legislative and regulatory reforms,
including changes affecting oversight of the financial services
industry, consumer protection, pension, bankruptcy and other
industry aspects, and changes in accounting policies and
principles.
- Changes to regulations governing bank capital and liquidity
standards, including due to the Dodd-Frank Act and initiatives of
the Basel Committee.
- Unfavorable resolution of legal proceedings or other claims and
regulatory and other governmental investigations or other
inquiries. These matters may result in monetary judgments or
settlements or other remedies, including fines, penalties,
restitution or alterations in our business practices, and in
additional expenses and collateral costs, and may cause
reputational harm to PNC.
- Results of the regulatory examination and supervision process,
including our failure to satisfy requirements of agreements with
governmental agencies.
- Impact on business and operating results of any costs
associated with obtaining rights in intellectual property claimed
by others and of adequacy of our intellectual property protection
in general.
- Business and operating results are affected by our ability to
identify and effectively manage risks inherent in our businesses,
including, where appropriate, through effective use of systems and
controls, third-party insurance, derivatives, and capital
management techniques, and to meet evolving regulatory capital and
liquidity standards.
- Business and operating results also include impacts relating to
our equity interest in BlackRock, Inc. and rely to a significant
extent on information provided to us by BlackRock. Risks and
uncertainties that could affect BlackRock are discussed in more
detail by BlackRock in its SEC filings.
- We grow our business in part through acquisitions. Acquisition
risks and uncertainties include those presented by the nature of
the business acquired, including in some cases those associated
with our entry into new businesses or new geographic or other
markets and risks resulting from our inexperience in those new
areas, as well as risks and uncertainties related to the
acquisition transactions themselves, regulatory issues, and the
integration of the acquired businesses into PNC after closing.
- Competition can have an impact on customer acquisition, growth
and retention and on credit spreads and product pricing, which can
affect market share, deposits and revenues. Our ability to
anticipate and respond to technological changes can also impact our
ability to respond to customer needs and meet competitive
demands.
- Business and operating results can also be affected by
widespread natural and other disasters, pandemics, dislocations,
terrorist activities, system failures, security breaches,
cyberattacks or international hostilities through impacts on the
economy and financial markets generally or on us or our
counterparties specifically.
We provide greater detail regarding these as well as other
factors in our 2017 Form 10-K, including in the Risk Factors and
Risk Management sections and the Legal Proceedings and Commitments
Notes of the Notes To Consolidated Financial Statements in that
report, and in our 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:
|
|
|
INVESTORS:
|
|
Diane
Zappas
|
|
|
Bryan Gill
|
|
(412)
762-4550
|
|
|
(412)
768-4143
|
|
media.relations@pnc.com
|
|
|
investor.relations@pnc.com
|
|
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SOURCE PNC Financial Services Group, Inc.