PITTSBURGH, Jan. 15, 2020 /PRNewswire/ -- The PNC
Financial Services Group, Inc. (NYSE: PNC) today reported:
|
For the
year
|
|
For the
quarter
|
|
2019
|
2018
|
|
4Q19
|
3Q19
|
4Q18
|
Net
income $ millions
|
$5,418
|
|
$5,346
|
|
|
$1,381
|
|
$1,392
|
|
$1,351
|
|
Diluted earnings per
common share
|
$11.39
|
|
$10.71
|
|
|
$2.97
|
|
$2.94
|
|
$2.75
|
|
|
|
|
|
"PNC delivered
excellent results in 2019 against the backdrop of continued change
across our industry. Earnings per share increased and we generated
record revenue and positive operating leverage for the year.
Expenses were well controlled and our efficiency ratio improved. We
increased loans and deposits and leveraged our strong product set
to grow clients in existing and new markets. At the same time, we
made important investments in the development of our employees and
their careers and to support employees' health and wellness and
long-term financial wellbeing. With the announced increase to our
authorized share buybacks, we are well positioned with capital
flexibility for the opportunities and challenges ahead as we remain
focused on creating long-term shareholder value by doing what is
best for our customers."
Bill Demchak, PNC Chairman,
President and Chief Executive Officer
|
Increase to Authorized Share Repurchases
- PNC received approval in January
2020 from the Federal Reserve to repurchase up to an
additional $1.0 billion in common
shares through the end of the second quarter of 2020. This is in
addition to the share repurchase programs of up to $4.3 billion for the four-quarter period
beginning in the third quarter of 2019, which were announced in
June 2019.
Income Statement Highlights
Fourth quarter 2019 compared with third quarter 2019
- Net income was $1.4 billion, a
decrease of $11 million, or 1
percent.
- Total revenue of $4.6 billion
grew $116 million, or 3 percent.
- Net interest income of $2.5
billion decreased $16 million,
or 1 percent, due to lower loan and securities yields substantially
offset by lower rates on deposits and borrowings.
-
- Net interest margin decreased 6 basis points to 2.78
percent.
- Noninterest income of $2.1
billion increased $132
million, or 7 percent.
-
- Fee income of $1.7 billion
increased $18 million, or 1 percent,
driven by higher asset management revenue and corporate service
fees partially offset by lower residential mortgage revenue and
consumer service fees.
- Other noninterest income of $456
million increased $114 million
reflecting higher revenue from private equity investments and a
gain on the sale of proprietary mutual funds partially offset by
negative derivative fair value adjustments related to Visa Class B
common shares.
- Noninterest expense of $2.8
billion increased $139
million, or 5 percent, driven by equipment expense for
technology-related write-offs and benefits expense, including a
year-end employee award of an additional contribution to health
savings accounts.
- Provision for credit losses of $221
million increased $38 million,
or 21 percent, due to both the consumer lending portfolio and
reserves attributable to certain commercial credits.
- The effective tax rate was 15.1 percent for the fourth quarter
compared with 17.5 percent for the third quarter, and 16.4 percent
for the full year 2019.
Balance Sheet Highlights
- Average loans increased $1.2
billion to $238.9 billion in
the fourth quarter compared with the third quarter.
-
- Average consumer lending balances of $78.1 billion increased $1.9 billion, or 3 percent, due to growth in
residential mortgage, auto, credit card and unsecured installment
loans partially offset by lower education loans.
- Average commercial lending balances of $160.8 billion declined $.7 billion primarily in PNC's real estate
business, including a decrease in multifamily agency warehouse
lending balances, partially offset by growth in PNC's corporate
banking business.
- Overall credit quality remained historically strong.
-
- Nonperforming assets of $1.8
billion at December 31, 2019
decreased $95 million, or 5 percent,
compared with September 30,
2019.
- Net charge-offs were $209 million
for the fourth quarter compared with $155
million for the third quarter as both consumer and
commercial lending net charge-offs increased.
- The allowance for loan and lease losses to total loans remained
relatively stable at 1.14 percent at December 31, 2019 compared with 1.15 percent at
September 30, 2019.
- Average deposits increased $8.7
billion, or 3 percent, to $287.8
billion in the fourth quarter compared with the third
quarter due to higher commercial deposits reflecting seasonal
growth and the full quarter impact of a new sweep deposit product
offering for current asset management clients.
- Average investment securities decreased $1.7 billion, or 2 percent, to $83.5 billion in the fourth quarter compared with
the third quarter.
- Average balances held with the Federal Reserve of $23.0 billion increased $7.7 billion compared with the third
quarter.
- PNC returned $1.5 billion of
capital to shareholders in the fourth quarter through repurchases
of 6.5 million common shares for $1.0
billion and dividends on common shares of $.5 billion.
-
- For the full year 2019, PNC returned $5.4 billion of capital to shareholders through
repurchases of 25.9 million common shares for $3.5 billion and dividends on common shares of
$1.9 billion.
- PNC maintained a strong capital position.
-
- The Basel III common equity Tier 1 capital ratio was an
estimated 9.5 percent at December 31,
2019 and 9.6 percent at September 30,
2019.
Earnings
Summary
|
|
|
|
|
|
|
In millions,
except per share data
|
|
4Q19
|
|
|
3Q19
|
|
|
4Q18
|
|
Net income
|
|
$
|
1,381
|
|
|
$
|
1,392
|
|
|
$
|
1,351
|
|
Net income
attributable to diluted common shares
|
|
$
|
1,302
|
|
|
$
|
1,307
|
|
|
$
|
1,274
|
|
Diluted earnings per
common share
|
|
$
|
2.97
|
|
|
$
|
2.94
|
|
|
$
|
2.75
|
|
Average diluted
common shares outstanding
|
|
438
|
|
|
445
|
|
|
463
|
|
Return on average
assets
|
|
1.33
|
%
|
|
1.36
|
%
|
|
1.40
|
%
|
Return on average
common equity
|
|
11.54
|
%
|
|
11.56
|
%
|
|
11.83
|
%
|
Book value per common
share
|
Quarter
end
|
$
|
104.59
|
|
|
$
|
103.37
|
|
|
$
|
95.72
|
|
Tangible book value
per common share (non-GAAP)
|
Quarter
end
|
$
|
83.30
|
|
|
$
|
82.37
|
|
|
$
|
75.42
|
|
Cash dividends
declared per common share
|
|
$
|
1.15
|
|
|
$
|
1.15
|
|
|
$
|
.95
|
|
|
|
|
|
|
|
|
The Consolidated Financial Highlights accompanying this news
release include additional information regarding reconciliations of
non-GAAP financial measures to reported (GAAP) amounts. This
information supplements results as reported in accordance with GAAP
and should not be viewed in isolation from, or as a substitute for,
GAAP results. 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
|
|
|
|
|
|
|
4Q19 vs
|
4Q19 vs
|
In
millions
|
4Q19
|
|
|
3Q19
|
|
|
4Q18
|
|
3Q19
|
4Q18
|
Net interest
income
|
$
|
2,488
|
|
|
$
|
2,504
|
|
|
$
|
2,481
|
|
(1)
|
%
|
—
|
|
Noninterest
income
|
2,121
|
|
|
1,989
|
|
|
1,859
|
|
7
|
%
|
14
|
%
|
Total
revenue
|
$
|
4,609
|
|
|
$
|
4,493
|
|
|
$
|
4,340
|
|
3
|
%
|
6
|
%
|
|
|
|
|
|
|
|
|
Total revenue for the fourth quarter of 2019 increased
$116 million compared with the third
quarter and $269 million compared
with the fourth quarter of 2018 driven by higher noninterest
income.
Net interest income for the fourth quarter of 2019 decreased
$16 million compared with the third
quarter due to lower loan and securities yields substantially
offset by lower rates on deposits and borrowings. Net interest
income increased $7 million compared
with the fourth quarter of 2018 as higher loan and securities
balances and lower borrowing costs were substantially offset by
lower loan and securities yields and higher deposit and borrowing
balances. The net interest margin declined to 2.78 percent for the
fourth quarter of 2019 from 2.84 percent for the third quarter due
to lower earning asset yields and lower benefit from
noninterest-bearing sources of funds substantially offset by lower
rates on deposits and borrowings. The margin decreased from 2.96
percent in the fourth quarter of 2018 as a result of lower yields
on earning assets partially offset by lower borrowing costs.
Noninterest
Income
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
4Q19 vs
|
4Q19 vs
|
In
millions
|
4Q19
|
|
|
3Q19
|
|
|
4Q18
|
|
3Q19
|
4Q18
|
Asset
management
|
$
|
504
|
|
|
$
|
464
|
|
|
$
|
428
|
|
9
|
%
|
18
|
%
|
Consumer
services
|
390
|
|
|
402
|
|
|
387
|
|
(3)
|
%
|
1
|
%
|
Corporate
services
|
499
|
|
|
469
|
|
|
468
|
|
6
|
%
|
7
|
%
|
Residential
mortgage
|
87
|
|
|
134
|
|
|
59
|
|
(35)
|
%
|
47
|
%
|
Service charges on
deposits
|
185
|
|
|
178
|
|
|
192
|
|
4
|
%
|
(4)
|
%
|
Other
|
456
|
|
|
342
|
|
|
325
|
|
33
|
%
|
40
|
%
|
|
$
|
2,121
|
|
|
$
|
1,989
|
|
|
$
|
1,859
|
|
7
|
%
|
14
|
%
|
|
|
|
|
|
|
|
|
Noninterest income for the fourth quarter of 2019 increased
$132 million compared with the third
quarter driven by higher other noninterest income. Asset management
revenue increased $40 million
reflecting higher earnings from PNC's equity investment in
BlackRock. Consumer services decreased $12
million due to seasonally higher credit card activity that
was more than offset by a true up of credit card rewards costs.
Corporate services grew $30 million
reflecting broad-based increases including treasury management
product revenue. Residential mortgage revenue decreased
$47 million as a result of a lower
benefit from residential mortgage servicing rights valuation, net
of economic hedge, lower loan sales revenue and lower servicing
fees. Service charges on deposits increased $7 million reflecting seasonally higher consumer
spending. Other noninterest income increased $114 million due to higher revenue from private
equity investments and a gain on the sale of proprietary mutual
funds of $57 million partially offset
by negative derivative fair value adjustments related to Visa Class
B common shares of $45 million in the
fourth quarter compared with $8
million in the third quarter and lower net gains on
commercial mortgage loans held for sale.
Noninterest income for the fourth quarter of 2019 increased
$262 million compared with the fourth
quarter of 2018. Asset management revenue increased $76 million reflecting higher earnings from PNC's
equity investment in BlackRock. Consumer services increased
$3 million and included higher debit
card revenue. Corporate services grew $31
million across businesses led by higher treasury management
product revenue. Residential mortgage revenue increased
$28 million due to higher results
from residential mortgage servicing rights valuation, net of
economic hedge, and higher loan sales revenue partially offset by
lower servicing fees. Service charges on deposits decreased
$7 million reflecting a reduction of
customer fees charged partially offset by higher transaction
volumes. Other noninterest income increased $131 million as a result of higher revenue from
private equity investments, the gain on the sale of proprietary
mutual funds and higher capital markets-related revenue partially
offset by negative Visa derivative fair value adjustments in the
fourth quarter of 2019 compared with positive adjustments of
$42 million in the fourth quarter of
2018.
CONSOLIDATED
EXPENSE REVIEW
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest
Expense
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
4Q19 vs
|
4Q19 vs
|
In
millions
|
4Q19
|
|
|
3Q19
|
|
|
4Q18
|
|
3Q19
|
4Q18
|
Personnel
|
$
|
1,468
|
|
|
$
|
1,400
|
|
|
$
|
1,348
|
|
5
|
%
|
9
|
%
|
Occupancy
|
201
|
|
|
206
|
|
|
202
|
|
(2)
|
%
|
—
|
|
Equipment
|
348
|
|
|
291
|
|
|
285
|
|
20
|
%
|
22
|
%
|
Marketing
|
77
|
|
|
76
|
|
|
84
|
|
1
|
%
|
(8)
|
%
|
Other
|
668
|
|
|
650
|
|
|
658
|
|
3
|
%
|
2
|
%
|
|
$
|
2,762
|
|
|
$
|
2,623
|
|
|
$
|
2,577
|
|
5
|
%
|
7
|
%
|
|
|
|
|
|
|
|
|
Noninterest expense for the fourth quarter of 2019 increased
$139 million compared with the third
quarter. Personnel expense increased $68
million due to higher benefits, including a $25 million
year-end employee award of an additional contribution to health
savings accounts, and higher incentive compensation associated with
business activity. Equipment expense increased $57 largely million attributable to
technology-related write-offs of $50 million
primarily for decommissioned regulatory software.
Noninterest expense for the fourth quarter of 2019 increased
$185 million compared with the fourth
quarter of 2018. Personnel expense increased $120 million driven by business growth, and
equipment expense increased reflecting the fourth quarter 2019
write-offs.
The effective tax rate was 15.1 percent for the fourth quarter
of 2019, 17.5 percent for the third quarter of 2019 and 16.3
percent for the fourth quarter of 2018. The lower effective tax
rate in the fourth quarter of 2019 compared with the third quarter
was related to lower state income taxes and tax credit benefits.
For the full year 2019, the effective tax rate was 16.4
percent.
CONSOLIDATED BALANCE SHEET REVIEW
Average total assets of $411.4
billion in the fourth quarter of 2019 increased 1 percent
compared with $406.7 billion in the
third quarter of 2019 primarily due to higher balances held with
the Federal Reserve Bank. Average total assets increased 7 percent
compared with $383.1 billion in the
fourth quarter of 2018 reflecting loan growth and higher Federal
Reserve Bank balances. Total assets were $410.3 billion at December
31, 2019, $408.9 billion at
September 30, 2019 and $382.3 billion at December
31, 2018.
Loans
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
4Q19 vs
|
4Q19 vs
|
In
billions
|
4Q19
|
|
|
3Q19
|
|
|
4Q18
|
|
3Q19
|
4Q18
|
Average
|
|
|
|
|
|
|
|
Commercial
lending
|
$
|
160.8
|
|
|
$
|
161.5
|
|
|
$
|
152.2
|
|
—
|
|
6
|
%
|
Consumer
lending
|
78.1
|
|
|
76.2
|
|
|
73.7
|
|
3
|
%
|
6
|
%
|
Average
loans
|
$
|
238.9
|
|
|
$
|
237.7
|
|
|
$
|
225.9
|
|
—
|
|
6
|
%
|
|
|
|
|
|
|
|
|
Quarter
end
|
|
|
|
|
|
|
|
Commercial
lending
|
$
|
160.6
|
|
|
$
|
160.2
|
|
|
$
|
152.3
|
|
—
|
|
5
|
%
|
Consumer
lending
|
79.2
|
|
|
77.1
|
|
|
73.9
|
|
3
|
%
|
7
|
%
|
Total
loans
|
$
|
239.8
|
|
|
$
|
237.3
|
|
|
$
|
226.2
|
|
1
|
%
|
6
|
%
|
|
|
|
|
|
|
|
|
Average loans for the fourth quarter of 2019 grew $1.2 billion compared with the third quarter.
Average commercial lending balances declined $.7 billion primarily in PNC's real estate
business, including a decrease in multifamily agency warehouse
lending balances, partially offset by growth in PNC's corporate
banking business. Average consumer lending balances increased
$1.9 billion due to growth in
residential mortgage, auto, credit card and unsecured installment
loans partially offset by lower education loans. Total loans at
December 31, 2019 grew $2.5 billion compared with September 30, 2019. Consumer lending balances
increased $2.1 billion and commercial
lending balances increased $.4
billion.
Fourth quarter 2019 average and period end loans increased
$13.0 billion and $13.6 billion, respectively, compared with fourth
quarter 2018 driven by overall growth in both commercial and
consumer lending.
Investment
Securities
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
4Q19 vs
|
4Q19 vs
|
In
billions
|
4Q19
|
|
|
3Q19
|
|
|
4Q18
|
|
3Q19
|
4Q18
|
Average
|
$
|
83.5
|
|
|
$
|
85.2
|
|
|
$
|
82.1
|
|
(2)
|
%
|
2
|
%
|
Quarter
end
|
$
|
86.8
|
|
|
$
|
87.9
|
|
|
$
|
82.7
|
|
(1)
|
%
|
5
|
%
|
|
|
|
|
|
|
|
|
Average investment securities for the fourth quarter of 2019
decreased $1.7 billion and period end
balances decreased $1.1 billion
compared with the third quarter primarily due to net sales of U.S.
Treasury securities. Fourth quarter 2019 average and period-end
investment securities increased $1.4
billion and $4.1 billion,
respectively, compared with the fourth quarter of 2018 reflecting
net increases in agency residential mortgage-backed securities
partially offset by lower U.S. Treasury securities in the average
comparison. Net unrealized gains on available for sale securities
were $1.4 billion at both
December 31, 2019 and September 30, 2019 compared with net unrealized
losses of $.1 billion at December 31, 2018.
Average balances held with the Federal Reserve Bank increased to
$23.0 billion in the fourth quarter
of 2019 from $15.3 billion in the
third quarter and $16.4 billion in
the fourth quarter of 2018. Balances held with the Federal Reserve
were $23.2 billion at December 31, 2019, $18.8
billion at September 30, 2019
and $10.5 billion at December 31, 2018.
Deposits
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
4Q19 vs
|
4Q19 vs
|
In
billions
|
4Q19
|
|
|
3Q19
|
|
|
4Q18
|
|
3Q19
|
4Q18
|
Average
|
|
|
|
|
|
|
|
Noninterest-bearing
|
$
|
73.6
|
|
|
$
|
72.1
|
|
|
$
|
75.3
|
|
2
|
%
|
(2)
|
%
|
Interest-bearing
|
214.2
|
|
|
207.0
|
|
|
191.2
|
|
3
|
%
|
12
|
%
|
Average
deposits
|
$
|
287.8
|
|
|
$
|
279.1
|
|
|
$
|
266.5
|
|
3
|
%
|
8
|
%
|
|
|
|
|
|
|
|
|
Quarter
end
|
|
|
|
|
|
|
|
Noninterest-bearing
|
$
|
72.8
|
|
|
$
|
74.1
|
|
|
$
|
74.0
|
|
(2)
|
%
|
(2)
|
%
|
Interest-bearing
|
215.7
|
|
|
211.5
|
|
|
193.9
|
|
2
|
%
|
11
|
%
|
Total
deposits
|
$
|
288.5
|
|
|
$
|
285.6
|
|
|
$
|
267.9
|
|
1
|
%
|
8
|
%
|
|
|
|
|
|
|
|
|
Average deposits for the fourth quarter of 2019 increased
$8.7 billion compared with the third
quarter due to higher commercial deposits reflecting seasonal
growth and the full quarter impact of a new sweep deposit product
offering for current asset management clients. Deposits at
December 31, 2019 increased
$2.9 billion over September 30, 2019 as an increase in consumer
interest-bearing deposits at year end was partially offset by a
decline in commercial noninterest-bearing deposits. Fourth quarter
2019 average and period-end deposits increased $21.3 billion and $20.6
billion, respectively, compared with fourth quarter 2018
driven by overall deposit and customer growth.
Borrowed
Funds
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
4Q19 vs
|
4Q19 vs
|
In
billions
|
4Q19
|
|
|
3Q19
|
|
|
4Q18
|
|
3Q19
|
4Q18
|
Average
|
$
|
60.0
|
|
|
$
|
63.9
|
|
|
$
|
58.8
|
|
(6)
|
%
|
2
|
%
|
Quarter
end
|
$
|
60.3
|
|
|
$
|
61.4
|
|
|
$
|
57.4
|
|
(2)
|
%
|
5
|
%
|
|
|
|
|
|
|
|
|
Average borrowed funds for the fourth quarter of 2019 decreased
$3.9 billion and period end balances
decreased $1.1 billion compared with
the third quarter due to lower Federal Home Loan Bank borrowings
partially offset by higher federal funds purchased, and higher bank
notes and senior debt in the period end comparison. Average and
period-end borrowed funds for the fourth quarter of 2019 increased
$1.2 billion and $2.9 billion, respectively, compared with the
fourth quarter of 2018 due to higher federal funds purchased and
bank notes and senior debt partially offset by a decrease in
Federal Home Loan Bank borrowings.
Capital
|
|
|
|
|
|
|
|
12/31/2019
|
*
|
|
9/30/2019
|
|
12/31/2018
|
Common shareholders'
equity In billions
|
$
|
45.3
|
|
|
|
$
|
45.4
|
|
|
$
|
43.7
|
|
Basel III common
equity Tier 1 capital ratio
|
9.5
|
%
|
|
|
9.6
|
%
|
|
9.6
|
%
|
* Ratio
estimated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PNC maintained a strong capital position. Common shareholders'
equity at December 31, 2019 decreased
$.1 billion compared with
September 30, 2019 as fourth quarter
net income was more than offset by share repurchases and
dividends.
PNC received approval in January
2020 from the Federal Reserve to repurchase up to an
additional $1.0 billion in common
shares through the end of the second quarter of 2020. Share
repurchases will be made subject to market conditions. This is in
addition to the share repurchase programs of up to $4.3 billion for the four-quarter period
beginning in the third quarter of 2019, which were announced in
June 2019.
PNC returned $1.5 billion of
capital to shareholders in the fourth quarter of 2019 through
repurchases of 6.5 million common shares for $1.0 billion and dividends on common shares of
$.5 billion. For the full year 2019,
PNC returned $5.4 billion of capital
to shareholders through repurchases of 25.9 million common shares
for $3.5 billion and dividends on
common shares of $1.9 billion.
On January 2, 2020, the PNC board
of directors declared a quarterly cash dividend on common stock of
$1.15 per share effective with the
February 5, 2020 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
|
12/31/19
vs
|
12/31/19
vs
|
In
millions
|
12/31/2019
|
|
9/30/2019
|
|
12/31/2018
|
9/30/19
|
12/31/18
|
Nonperforming
loans
|
$
|
1,635
|
|
|
$
|
1,728
|
|
|
$
|
1,694
|
|
(5)
|
%
|
(3)
|
%
|
Nonperforming
assets
|
$
|
1,752
|
|
|
$
|
1,847
|
|
|
$
|
1,808
|
|
(5)
|
%
|
(3)
|
%
|
Accruing loans past
due 90 days or more
|
$
|
585
|
|
|
$
|
532
|
|
|
$
|
629
|
|
10
|
%
|
(7)
|
%
|
Net
charge-offs
|
$
|
209
|
|
|
$
|
155
|
|
|
$
|
107
|
|
35
|
%
|
95
|
%
|
Provision for credit
losses
|
$
|
221
|
|
|
$
|
183
|
|
|
$
|
148
|
|
21
|
%
|
49
|
%
|
Allowance for loan
and lease losses
|
$
|
2,742
|
|
|
$
|
2,738
|
|
|
$
|
2,629
|
|
—
|
|
4
|
%
|
|
|
|
|
|
|
|
|
Overall credit quality for the fourth quarter of 2019 remained
historically strong. Provision for credit losses for the fourth
quarter increased $38 million
compared with the third quarter. Provision for consumer lending
increased due to the credit card, auto and residential mortgage
loan portfolios partially offset by a lower provision for home
equity loans. Provision for commercial loans increased reflecting
reserves attributable to certain commercial credits.
Nonperforming assets at December 31,
2019 decreased $95 million
compared with September 30, 2019.
Lower nonperforming commercial, commercial real estate, home equity
and residential mortgage loans were partially offset by higher
nonperforming equipment lease financing, auto and credit card
loans. Nonperforming assets decreased $56
million compared with December 31,
2018 due to lower nonperforming home equity, residential
mortgage and commercial real estate loans partially offset by
higher nonperforming commercial, auto, equipment lease financing
and credit card loans. Nonperforming assets to total assets were
.43 percent at December 31, 2019, .45
percent at September 30, 2019 and .47
percent at December 31, 2018.
Overall delinquencies at December 31,
2019 increased $156 million,
or 12 percent, compared with September 30,
2019. Loans past due 30 to 59 days increased $114 million driven by higher equipment lease
financing, auto and commercial loan delinquencies. Loans past due
90 days or more increased $53 million
primarily due to higher commercial, government insured residential
mortgage, credit card and auto loan delinquencies. Overall
delinquencies at December 31, 2019
increased $19 million, or 1 percent,
compared with December 30, 2018
driven by higher past due auto, credit card and commercial loans
partially offset by lower government insured education and
residential mortgage loans.
Net charge-offs for the fourth quarter of 2019 increased
$54 million compared with the third
quarter. Consumer lending net charge-offs increased $30 million driven by credit card, auto and home
equity loans, and commercial lending net charge-offs increased
$24 million. Compared with fourth
quarter 2018, net charge-offs increased $102
million as commercial net charge-offs increased $52 million and consumer net charge-offs
increased $50 million. Net
charge-offs were .35 percent of average loans on an annualized
basis for the fourth quarter of 2019 compared with .26 percent for
the third quarter of 2019 and .19 percent for the fourth quarter of
2018.
The allowance for loan and lease losses to total loans remained
relatively stable at 1.14 percent at December 31, 2019 compared with 1.15 percent at
September 30, 2019 and 1.16 percent
at December 31, 2018. The allowance
to nonperforming loans was 168 percent at December 31, 2019 compared with 158 percent at
September 30, 2019 and 155 percent at
December 31, 2018.
BUSINESS SEGMENT
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
Business Segment
Income
|
|
|
|
|
|
In
millions
|
4Q19
|
|
|
3Q19
|
|
|
4Q18
|
|
Retail
Banking
|
$
|
277
|
|
|
$
|
347
|
|
|
$
|
313
|
|
Corporate &
Institutional Banking
|
649
|
|
|
645
|
|
|
651
|
|
Asset Management
Group
|
91
|
|
|
46
|
|
|
42
|
|
Other, including
BlackRock
|
364
|
|
|
354
|
|
|
345
|
|
Net income
|
$
|
1,381
|
|
|
$
|
1,392
|
|
|
$
|
1,351
|
|
See accompanying
notes in Consolidated Financial Highlights
|
|
|
|
|
|
|
|
|
|
|
|
Retail
Banking
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
4Q19 vs
|
|
4Q19 vs
|
In
millions
|
4Q19
|
|
|
3Q19
|
|
|
4Q18
|
|
|
3Q19
|
|
4Q18
|
Net interest
income
|
$
|
1,402
|
|
|
$
|
1,393
|
|
|
$
|
1,319
|
|
|
$
|
9
|
|
|
$
|
83
|
|
Noninterest
income
|
$
|
652
|
|
|
$
|
744
|
|
|
$
|
696
|
|
|
$
|
(92)
|
|
|
$
|
(44)
|
|
Provision for credit
losses
|
$
|
161
|
|
|
$
|
147
|
|
|
$
|
119
|
|
|
$
|
14
|
|
|
$
|
42
|
|
Noninterest
expense
|
$
|
1,530
|
|
|
$
|
1,536
|
|
|
$
|
1,487
|
|
|
$
|
(6)
|
|
|
$
|
43
|
|
Earnings
|
$
|
277
|
|
|
$
|
347
|
|
|
$
|
313
|
|
|
$
|
(70)
|
|
|
$
|
(36)
|
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
|
79.5
|
|
|
$
|
77.7
|
|
|
$
|
74.8
|
|
|
$
|
1.8
|
|
|
$
|
4.7
|
|
Average
deposits
|
$
|
170.8
|
|
|
$
|
168.8
|
|
|
$
|
161.8
|
|
|
$
|
2.0
|
|
|
$
|
9.0
|
|
|
|
|
|
|
|
|
|
|
|
Retail Banking earnings for the fourth quarter of 2019 decreased
in both comparisons. Noninterest income declined compared with the
third quarter due to negative derivative fair value adjustments
related to Visa Class B common shares and lower residential
mortgage revenue attributable to a lower benefit from residential
mortgage servicing rights valuation, net of economic hedge, and
decreased loan sales and servicing revenue. Noninterest income
decreased compared with the fourth quarter of 2018 due to negative
Visa derivative fair value adjustments in the fourth quarter of
2019 compared with positive adjustments in the fourth quarter of
2018 partially offset by higher results from residential mortgage
servicing rights valuation, net of economic hedge, increased loan
sales revenue, and growth in consumer service fees. Provision for
credit losses increased in both comparisons primarily due to higher
credit card and auto loan portfolio reserves attributable to loan
growth partially offset by a lower provision for home equity loans.
Noninterest expense increased compared with the fourth quarter of
2018 reflecting higher customer-related transaction costs,
noncredit losses and ATM expense resulting from enhanced checking
product benefits.
- Average loans increased 2 percent compared with the third
quarter and 6 percent compared with fourth quarter 2018 due to
growth in residential mortgage, auto, credit card and unsecured
installment loans partially offset by lower education loans.
- Average deposits increased 1 percent compared with the third
quarter and 6 percent compared with fourth quarter 2018 due to
increases in savings and demand deposits partially offset by lower
money market deposits reflecting a shift to relationship-based
savings products.
- Net charge-offs were $154 million
for the fourth quarter of 2019 compared with $128 million in the third quarter and
$112 million in the fourth quarter of
2018 with increases primarily in credit card and auto loan
portfolio net charge-offs.
- Residential mortgage loan origination volume was $3.5 billion for the fourth quarter of 2019
compared with $3.4 billion for the
third quarter and $1.6 billion for
the fourth quarter of 2018. Approximately 40 percent of fourth
quarter 2019 volume was for home purchase transactions compared
with 44 percent and 67 percent for the third quarter of 2019 and
fourth quarter of 2018, respectively.
- The third party residential mortgage servicing portfolio was
$120 billion at December 31, 2019 compared with $123 billion at September
30, 2019 and $125 billion at
December 31, 2018. Residential
mortgage loan servicing acquisitions were $3
billion for both the fourth and third quarters of 2019 and
$2 billion for the fourth quarter of
2018.
- Approximately 71 percent of consumer customers used non-teller
channels for the majority of their transactions during the fourth
quarter of 2019 compared with 70 percent in the third quarter and
67 percent in the fourth quarter of 2018.
- Deposit transactions via ATM and mobile channels were 58
percent of total deposit transactions in both the fourth and third
quarters of 2019 compared with 55 percent in the fourth quarter of
2018.
Corporate &
Institutional Banking
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
4Q19 vs
|
|
4Q19 vs
|
In
millions
|
4Q19
|
|
|
3Q19
|
|
|
4Q18
|
|
|
3Q19
|
|
4Q18
|
Net interest
income
|
$
|
969
|
|
|
$
|
930
|
|
|
$
|
930
|
|
|
$
|
39
|
|
|
$
|
39
|
|
Noninterest
income
|
$
|
646
|
|
|
$
|
654
|
|
|
$
|
632
|
|
|
$
|
(8)
|
|
|
$
|
14
|
|
Provision for credit
losses
|
$
|
65
|
|
|
$
|
48
|
|
|
$
|
42
|
|
|
$
|
17
|
|
|
$
|
23
|
|
Noninterest
expense
|
$
|
726
|
|
|
$
|
703
|
|
|
$
|
687
|
|
|
$
|
23
|
|
|
$
|
39
|
|
Earnings
|
$
|
649
|
|
|
$
|
645
|
|
|
$
|
651
|
|
|
$
|
4
|
|
|
$
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
|
147.9
|
|
|
$
|
148.6
|
|
|
$
|
139.5
|
|
|
$
|
(.7)
|
|
|
$
|
8.4
|
|
Average
deposits
|
$
|
98.5
|
|
|
$
|
95.8
|
|
|
$
|
91.8
|
|
|
$
|
2.7
|
|
|
$
|
6.7
|
|
|
|
|
|
|
|
|
|
|
|
Corporate & Institutional Banking earnings for the fourth
quarter of 2019 were relatively consistent in the comparisons.
Noninterest income decreased compared with the third quarter
primarily due to lower revenue from commercial mortgage banking
activities, partially offset by higher treasury management product
revenue. Noninterest income increased compared with the fourth
quarter of 2018 driven by higher treasury management product
revenue and higher capital markets-related revenue partially offset
by lower gains on asset sales. Provision for credit losses in the
fourth quarter of 2019 increased compared with the third quarter
due to reserves attributable to certain commercial credits.
Noninterest expense increased in both comparisons largely due to
investments in strategic initiatives and variable costs associated
with increased business activity.
- Average loans decreased $.7
billion, or less than 1 percent, compared with the third
quarter due to a decrease in multifamily agency warehouse lending
partially offset by loan growth in PNC's corporate banking
business. Average loans grew 6 percent compared with the fourth
quarter of 2018 driven by loan growth in PNC's corporate banking
and business credit businesses partially offset by a decrease in
multifamily agency warehouse lending.
- Average deposits increased 3 percent over the third quarter
reflecting seasonal growth and increased 7 percent compared with
the fourth quarter of 2018 due to growth in interest-bearing
deposits, including a shift from noninterest-bearing demand
deposits.
- Net charge-offs were $47 million
in the fourth quarter of 2019 compared with $30 million in the third quarter and $2 million in the fourth quarter of 2018.
Asset Management
Group
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
4Q19 vs
|
|
4Q19 vs
|
In
millions
|
4Q19
|
|
|
3Q19
|
|
|
4Q18
|
|
|
3Q19
|
|
4Q18
|
Net interest
income
|
$
|
80
|
|
|
$
|
70
|
|
|
$
|
70
|
|
|
$
|
10
|
|
|
$
|
10
|
|
Noninterest
income
|
$
|
272
|
|
|
$
|
216
|
|
|
$
|
216
|
|
|
$
|
56
|
|
|
$
|
56
|
|
Provision for credit
losses (benefit)
|
$
|
1
|
|
|
$
|
(1)
|
|
|
|
—
|
|
|
$
|
2
|
|
|
$
|
1
|
|
Noninterest
expense
|
$
|
232
|
|
|
$
|
228
|
|
|
$
|
232
|
|
|
$
|
4
|
|
|
|
—
|
|
Earnings
|
$
|
91
|
|
|
$
|
46
|
|
|
$
|
42
|
|
|
$
|
45
|
|
|
$
|
49
|
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Client assets under
administration at
quarter end
|
$
|
297
|
|
|
$
|
298
|
|
|
$
|
272
|
|
|
$
|
(1)
|
|
|
$
|
25
|
|
Average
loans
|
$
|
7.1
|
|
|
$
|
6.9
|
|
|
$
|
6.9
|
|
|
$
|
.2
|
|
|
$
|
.2
|
|
Average
deposits
|
$
|
17.9
|
|
|
$
|
13.6
|
|
|
$
|
12.5
|
|
|
$
|
4.3
|
|
|
$
|
5.4
|
|
|
|
|
|
|
|
|
|
|
|
Asset Management Group earnings for the fourth quarter of 2019
increased in both comparisons. Noninterest income increased as a
result of a gain of $57 million on
the sale of components of the PNC Capital Advisors investment
management business, including its PNC family of proprietary mutual
funds of approximately $14 billion.
Noninterest expense increased over the third quarter due to costs
associated with the sale transaction.
Client assets under administration at December 31, 2019 included discretionary client
assets under management of $154
billion and nondiscretionary client assets under
administration of $143 billion.
Discretionary client assets under management decreased $9 billion compared with September 30, 2019. The sale transaction resulted
in a decline of $11 billion in
discretionary assets under management, with the Asset Management
Group remaining the wealth manager of approximately $3 billion of funds sold. This decline was
partially offset by increases in equity markets. Discretionary
client assets under management increased $6
billion compared with December 31,
2018 as the impact of the sale transaction was more than
offset by increases in equity markets.
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 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 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 (800) 616-4018 and (303) 223-4381
(international) and Internet access to the live audio listen-only
webcast of the call is available at www.pnc.com/investorevents.
PNC's fourth quarter and full year 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
21934065 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
|
|
|
Year ended
|
Dollars in
millions, except per share data
|
|
December
31
|
|
September
30
|
|
December
31
|
|
|
December
31
|
|
December
31
|
|
|
2019
|
|
2019
|
|
2018
|
|
|
2019
|
|
2018
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
|
$
|
2,488
|
|
|
$
|
2,504
|
|
|
$
|
2,481
|
|
|
|
$
|
9,965
|
|
|
$
|
9,721
|
|
Noninterest
income
|
|
2,121
|
|
|
1,989
|
|
|
1,859
|
|
|
|
7,862
|
|
|
7,411
|
|
Total
revenue
|
|
4,609
|
|
|
4,493
|
|
|
4,340
|
|
|
|
17,827
|
|
|
17,132
|
|
Provision for credit
losses
|
|
221
|
|
|
183
|
|
|
148
|
|
|
|
773
|
|
|
408
|
|
Noninterest
expense
|
|
2,762
|
|
|
2,623
|
|
|
2,577
|
|
|
|
10,574
|
|
|
10,296
|
|
Income before income
taxes and noncontrolling interests
|
|
$
|
1,626
|
|
|
$
|
1,687
|
|
|
$
|
1,615
|
|
|
|
$
|
6,480
|
|
|
$
|
6,428
|
|
Net income
|
|
$
|
1,381
|
|
|
$
|
1,392
|
|
|
$
|
1,351
|
|
|
|
$
|
5,418
|
|
|
$
|
5,346
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests
|
|
14
|
|
|
13
|
|
|
14
|
|
|
|
49
|
|
|
45
|
|
Preferred stock
dividends (a)
|
|
55
|
|
|
63
|
|
|
55
|
|
|
|
236
|
|
|
236
|
|
Preferred stock
discount accretion and redemptions
|
|
1
|
|
|
1
|
|
|
1
|
|
|
|
4
|
|
|
4
|
|
Net income
attributable to common shareholders
|
|
$
|
1,311
|
|
|
$
|
1,315
|
|
|
$
|
1,281
|
|
|
|
$
|
5,129
|
|
|
$
|
5,061
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
Dividends and
undistributed earnings allocated to
nonvested restricted shares
|
|
6
|
|
|
6
|
|
|
5
|
|
|
|
21
|
|
|
21
|
|
Impact of BlackRock
earnings per share dilution
|
|
3
|
|
|
2
|
|
|
2
|
|
|
|
10
|
|
|
9
|
|
Net income
attributable to diluted common shares
|
|
$
|
1,302
|
|
|
$
|
1,307
|
|
|
$
|
1,274
|
|
|
|
$
|
5,098
|
|
|
$
|
5,031
|
|
Diluted earnings per
common share
|
|
$
|
2.97
|
|
|
$
|
2.94
|
|
|
$
|
2.75
|
|
|
|
$
|
11.39
|
|
|
$
|
10.71
|
|
Cash dividends
declared per common share
|
|
$
|
1.15
|
|
|
$
|
1.15
|
|
|
$
|
.95
|
|
|
|
$
|
4.20
|
|
|
$
|
3.40
|
|
Effective tax rate
(b)
|
|
15.1
|
%
|
|
17.5
|
%
|
|
16.3
|
%
|
|
|
16.4
|
%
|
|
16.8
|
%
|
|
|
(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
|
|
|
Year ended
|
|
|
December
31
|
|
September
30
|
|
December
31
|
|
|
December
31
|
|
December
31
|
|
|
2019
|
|
2019
|
|
2018
|
|
|
2019
|
|
2018
|
PERFORMANCE
RATIOS
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin
(a)
|
|
2.78
|
%
|
|
2.84
|
%
|
|
2.96
|
%
|
|
|
2.89
|
%
|
|
2.97
|
%
|
Noninterest income to
total revenue
|
|
46
|
%
|
|
44
|
%
|
|
43
|
%
|
|
|
44
|
%
|
|
43
|
%
|
Efficiency
(b)
|
|
60
|
%
|
|
58
|
%
|
|
59
|
%
|
|
|
59
|
%
|
|
60
|
%
|
Return on:
|
|
|
|
|
|
|
|
|
|
|
|
Average common
shareholders' equity
|
|
11.54
|
%
|
|
11.56
|
%
|
|
11.83
|
%
|
|
|
11.50
|
%
|
|
11.83
|
%
|
Average
assets
|
|
1.33
|
%
|
|
1.36
|
%
|
|
1.40
|
%
|
|
|
1.35
|
%
|
|
1.41
|
%
|
BUSINESS SEGMENT
NET INCOME (c)
|
|
|
|
|
|
|
|
|
|
|
|
In
millions
|
|
|
|
|
|
|
|
|
|
|
|
Retail
Banking
|
|
$
|
277
|
|
|
$
|
347
|
|
|
$
|
313
|
|
|
|
$
|
1,213
|
|
|
$
|
1,064
|
|
Corporate &
Institutional Banking
|
|
649
|
|
|
645
|
|
|
651
|
|
|
|
2,448
|
|
|
2,508
|
|
Asset Management
Group
|
|
91
|
|
|
46
|
|
|
42
|
|
|
|
262
|
|
|
202
|
|
Other, including
BlackRock (d)
|
|
364
|
|
|
354
|
|
|
345
|
|
|
|
1,495
|
|
|
1,572
|
|
Total net
income
|
|
$
|
1,381
|
|
|
$
|
1,392
|
|
|
$
|
1,351
|
|
|
|
$
|
5,418
|
|
|
$
|
5,346
|
|
|
|
(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 net interest income on
a taxable-equivalent basis in calculating average yields used in
the calculation of net interest margin by increasing the interest
income earned on tax-exempt assets to make it fully equivalent to
interest income earned on taxable investments. This adjustment is
not permitted under generally accepted accounting principles (GAAP)
in the Consolidated Income Statement. The taxable-equivalent
adjustments to net interest income for the three months ended
December 31, 2019, September 30, 2019 and
December 31, 2018 were $23 million, $25 million and $28
million, respectively. The taxable equivalent adjustments to net
interest income for the twelve months ended December 31, 2019
and December 31, 2018 were $103 million and $115 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 investment 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)
|
|
December
31
|
|
September
30
|
|
December
31
|
|
2019
|
|
2019
|
|
2018
|
BALANCE SHEET
DATA
|
|
|
|
|
|
Dollars in
millions, except per share data
|
|
|
|
|
|
Assets
|
$
|
410,295
|
|
|
$
|
408,916
|
|
|
$
|
382,315
|
|
Loans (a)
|
$
|
239,843
|
|
|
$
|
237,377
|
|
|
$
|
226,245
|
|
Allowance for loan
and lease losses
|
$
|
2,742
|
|
|
$
|
2,738
|
|
|
$
|
2,629
|
|
Interest-earning
deposits with banks
|
$
|
23,413
|
|
|
$
|
19,036
|
|
|
$
|
10,893
|
|
Investment
securities
|
$
|
86,824
|
|
|
$
|
87,883
|
|
|
$
|
82,701
|
|
Loans held for sale
(a)
|
$
|
1,083
|
|
|
$
|
1,872
|
|
|
$
|
994
|
|
Equity investments
(b)
|
$
|
13,734
|
|
|
$
|
13,325
|
|
|
$
|
12,894
|
|
Mortgage servicing
rights
|
$
|
1,644
|
|
|
$
|
1,483
|
|
|
$
|
1,983
|
|
Goodwill
|
$
|
9,233
|
|
|
$
|
9,233
|
|
|
$
|
9,218
|
|
Other assets
(a)
|
$
|
32,202
|
|
|
$
|
35,774
|
|
|
$
|
34,408
|
|
Noninterest-bearing
deposits
|
$
|
72,779
|
|
|
$
|
74,077
|
|
|
$
|
73,960
|
|
Interest-bearing
deposits
|
$
|
215,761
|
|
|
$
|
211,506
|
|
|
$
|
193,879
|
|
Total
deposits
|
$
|
288,540
|
|
|
$
|
285,583
|
|
|
$
|
267,839
|
|
Borrowed funds
(a)
|
$
|
60,263
|
|
|
$
|
61,354
|
|
|
$
|
57,419
|
|
Total shareholders'
equity
|
$
|
49,314
|
|
|
$
|
49,420
|
|
|
$
|
47,728
|
|
Common shareholders'
equity
|
$
|
45,321
|
|
|
$
|
45,428
|
|
|
$
|
43,742
|
|
Accumulated other
comprehensive income (loss)
|
$
|
799
|
|
|
$
|
837
|
|
|
$
|
(725)
|
|
Book value per common
share
|
$
|
104.59
|
|
|
$
|
103.37
|
|
|
$
|
95.72
|
|
Tangible book value
per common share (Non-GAAP) (c)
|
$
|
83.30
|
|
|
$
|
82.37
|
|
|
$
|
75.42
|
|
Period end common
shares outstanding (millions)
|
433
|
|
|
439
|
|
|
457
|
|
Loans to
deposits
|
83
|
%
|
|
83
|
%
|
|
84
|
%
|
Common shareholders'
equity to total assets
|
11.0
|
%
|
|
11.1
|
%
|
|
11.4
|
%
|
CLIENT ASSETS
(billions)
|
|
|
|
|
|
Discretionary client
assets under management
|
$
|
154
|
|
|
$
|
163
|
|
|
$
|
148
|
|
Nondiscretionary
client assets under administration
|
143
|
|
|
135
|
|
|
124
|
|
Total client assets
under administration
|
297
|
|
|
298
|
|
|
272
|
|
Brokerage account
client assets
|
54
|
|
|
52
|
|
|
47
|
|
Total client
assets
|
$
|
351
|
|
|
$
|
350
|
|
|
$
|
319
|
|
CAPITAL
RATIOS
|
|
|
|
|
|
Basel III
(d)
|
|
|
|
|
|
Common equity Tier
1
|
9.5
|
%
|
|
9.6
|
%
|
|
9.6
|
%
|
Tier 1
risk-based
|
10.7
|
%
|
|
10.7
|
%
|
|
10.8
|
%
|
Total capital
risk-based (e)
|
12.8
|
%
|
|
12.7
|
%
|
|
13.0
|
%
|
Leverage
|
9.1
|
%
|
|
9.3
|
%
|
|
9.4
|
%
|
Supplementary
leverage
|
7.6
|
%
|
|
7.8
|
%
|
|
7.8
|
%
|
ASSET
QUALITY
|
|
|
|
|
|
Nonperforming loans
to total loans
|
.68
|
%
|
|
.73
|
%
|
|
.75
|
%
|
Nonperforming assets
to total loans, OREO and foreclosed assets
|
.73
|
%
|
|
.78
|
%
|
|
.80
|
%
|
Nonperforming assets
to total assets
|
.43
|
%
|
|
.45
|
%
|
|
.47
|
%
|
Net charge-offs to
average loans (for the three months ended) (annualized)
|
.35
|
%
|
|
.26
|
%
|
|
.19
|
%
|
Allowance for loan
and lease losses to total loans
|
1.14
|
%
|
|
1.15
|
%
|
|
1.16
|
%
|
Allowance for loan
and lease losses to nonperforming loans
|
168
|
%
|
|
158
|
%
|
|
155
|
%
|
Accruing loans past
due 90 days or more (in millions)
|
$
|
585
|
|
|
$
|
532
|
|
|
$
|
629
|
|
|
|
(a)
|
Amounts include
assets and liabilities for which we have elected the fair value
option. Our third quarter 2019 Form 10-Q included, and our 2019
Form 10-K will include, additional information regarding these
Consolidated Balance Sheet line items.
|
(b)
|
Amounts include our
equity investment in BlackRock.
|
(c)
|
See the Tangible Book Value per
Common Share table on page 18 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 17 for additional
information. The ratios as of December 31, 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 was in
the parallel run qualification phase for the advanced approaches at
December 31, 2019, 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 during
2018 and 2019, 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 during
2018 and 2019 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)
|
|
|
|
|
|
|
December
31
|
|
September
30
|
|
December
31
|
Dollars in
millions
|
2019
(estimated)
|
|
2019
|
|
2018
|
Common stock, related
surplus and retained earnings, net of treasury stock
|
$
|
44,522
|
|
|
$
|
44,592
|
|
|
$
|
44,467
|
|
Less regulatory
capital adjustments:
|
|
|
|
|
|
Goodwill and
disallowed intangibles, net of deferred tax liabilities
|
(9,251)
|
|
|
(9,268)
|
|
|
(9,277)
|
|
Basel III total
threshold deductions
|
(3,279)
|
|
|
(2,952)
|
|
|
(3,464)
|
|
Accumulated other
comprehensive income (loss)
|
659
|
|
|
638
|
|
|
(610)
|
|
All other
adjustments
|
(175)
|
|
|
(209)
|
|
|
(211)
|
|
Basel III Common
equity Tier 1 capital
|
$
|
32,476
|
|
|
$
|
32,801
|
|
|
$
|
30,905
|
|
Basel III
standardized approach risk-weighted assets (b)
|
$
|
340,506
|
|
|
$
|
340,912
|
|
|
$
|
320,595
|
|
Basel III advanced
approaches risk-weighted assets (c)
|
$
|
317,778
|
|
|
$
|
319,960
|
|
|
$
|
282,902
|
|
Basel III Common
equity Tier 1 capital ratio
|
9.5
|
%
|
|
9.6
|
%
|
|
9.6
|
%
|
|
|
(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 and additional regulatory guidance or
analysis.
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)
|
|
|
|
|
|
|
December
31
|
|
September
30
|
|
December
31
|
Dollars in
millions, except per share data
|
2019
|
|
2019
|
|
2018
|
Book value per common
share
|
$
|
104.59
|
|
|
$
|
103.37
|
|
|
$
|
95.72
|
|
Tangible book value
per common share
|
|
|
|
|
|
Common shareholders'
equity
|
$
|
45,321
|
|
|
$
|
45,428
|
|
|
$
|
43,742
|
|
Goodwill and other
intangible assets
|
(9,441)
|
|
|
(9,459)
|
|
|
(9,467)
|
|
Deferred tax
liabilities on Goodwill and other intangible assets
|
187
|
|
|
191
|
|
|
190
|
|
Tangible common
shareholders' equity
|
$
|
36,067
|
|
|
$
|
36,160
|
|
|
$
|
34,465
|
|
Period-end common
shares outstanding (millions)
|
433
|
|
|
439
|
|
|
457
|
|
Tangible book value
per common share (Non-GAAP)
|
$
|
83.30
|
|
|
$
|
82.37
|
|
|
$
|
75.42
|
|
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 necessarily subject to numerous
assumptions, risks and uncertainties, which change over time.
Future events or circumstances may change our outlook and may also
affect the nature of the assumptions, risks and uncertainties to
which our forward-looking statements are subject.
Forward-looking statements speak only as of the date made. We
do not assume any duty and do not undertake 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 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 in 2020.
Slower global economic growth, trade tensions, reduced fiscal
stimulus, and aerospace production cuts are the primary drivers of
softer U.S. growth.
- Job growth will continue in 2020, but at a slower pace from
2019 due to both difficulty in finding workers and slower economic
growth. The unemployment rate is expected to increase slightly in
the near term, but the labor market will remain tight, pushing
wages higher and supporting continued gains in consumer
spending.
- Near-term risks are generally to the downside, including a
further softening in the global economy, a further escalation in
trade tensions, and geopolitical concerns. But there are some
upside risks as well, such as a quick U.S.-China trade deal and stronger labor force
growth.
- Inflation slowed in 2019, to below the Federal Open Market
Committee's (FOMC's) 2 percent objective, but is expected to
gradually increase over the next two years.
- We do not expect further federal funds rate cuts in 2020. The
federal funds rate is modestly positive for near-term economic
growth in its current range of 1.50 to 1.75 percent.
- 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.
- 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