Generated positive operating leverage;
increased pretax, pre-provision earnings
Grew capital and
tangible book value
PITTSBURGH, Oct. 13,
2023 /PRNewswire/ -- The PNC Financial Services
Group, Inc. (NYSE: PNC) today reported:
|
|
|
For the
quarter
|
|
|
|
|
|
In millions, except per
share data and as noted
|
3Q23
|
2Q23
|
3Q22
|
Third Quarter
Highlights
|
Financial
Results
|
|
|
|
Comparisons reflect
3Q23 vs. 2Q23
|
Revenue
|
$
5,233
|
$
5,293
|
$
5,549
|
Income Statement
▪
Generated positive operating
leverage of 3%
▪
Revenue declined 1%
▪
Expenses were well controlled,
decreasing 4%
▪
PPNR increased 3%
▪
Provision for credit losses of
$129 million
Balance
Sheet
▪ Average
loans decreased 2%
▪ Average
deposits declined 1%
▪
Federal Reserve Bank balances
averaged $37.9 billion, an
increase of $7.3 billion
▪
ACL to total loans was stable
▪
Net loan charge-offs were $121
million, or 0.15% annualized to
average loans
▪
AOCI was a negative $10.3
billion, reflecting the
unfavorable impact of interest rate
movements
▪
TBV increased to $78.16
▪
CET1 capital ratio increased 30
basis points to 9.8%
|
Noninterest
expense
|
3,245
|
3,372
|
3,280
|
Pretax, pre-provision
earnings (PPNR) (non-GAAP)
|
1,988
|
1,921
|
2,269
|
Provision for credit
losses
|
129
|
146
|
241
|
Net income
|
1,570
|
1,500
|
1,640
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Common
Share
|
|
|
|
Diluted
earnings
|
$
3.60
|
$
3.36
|
$
3.78
|
Average diluted common
shares outstanding
|
400
|
401
|
410
|
Book value
|
105.98
|
105.67
|
97.59
|
Tangible book value
(TBV) (non-GAAP)
|
78.16
|
77.80
|
69.98
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet &
Credit Quality
|
|
|
Average loans
In billions
|
$
319.5
|
$
324.5
|
$
313.0
|
Average
deposits In billions
|
422.5
|
425.7
|
439.2
|
Accumulated other
comprehensive income (loss) (AOCI) In
billions
|
(10.3)
|
(9.5)
|
(10.5)
|
Net loan
charge-offs
|
121
|
194
|
119
|
Allowance for credit
losses (ACL) to total loans
|
1.70 %
|
1.68 %
|
1.67 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected
Ratios
|
|
|
|
Return on average
common shareholders' equity
|
13.65 %
|
13.01 %
|
14.97 %
|
Return on average
assets
|
1.12
|
1.08
|
1.19
|
Net interest margin
(NIM) (non-GAAP)
|
2.71
|
2.79
|
2.82
|
Noninterest income to
total revenue
|
35
|
34
|
37
|
Efficiency
|
62
|
64
|
59
|
Common equity Tier 1
(CET1) capital ratio
|
9.8
|
9.5
|
9.3
|
See non-GAAP financial measures in the Consolidated Financial
Highlights accompanying this release.
|
From Bill Demchak, PNC
Chairman, President and Chief Executive Officer:
"PNC delivered strong results in the third quarter. We
generated positive operating leverage, controlled expenses well,
maintained strong credit quality and further increased our capital
levels. The strength of our balance sheet positions us well for the
current economic environment, inclusive of proposed regulatory
changes."
Income Statement Highlights
Third quarter 2023 compared with second quarter
2023
- Net income of $1.6 billion
increased $70 million, or 5%.
- Total revenue of $5.2 billion
decreased $60 million, or 1%, as
higher noninterest income was more than offset by lower net
interest income.
- Net interest income of $3.4
billion decreased $92 million,
or 3%, as higher yields on interest-earning assets were more than
offset by increased funding costs.
- Net interest margin of 2.71% decreased 8 basis points.
- Noninterest income of $1.8
billion increased $32 million,
or 2%.
- Fee income of $1.7 billion
increased $67 million, or 4%,
primarily due to higher residential and commercial mortgage
revenue, partially offset by lower capital markets and advisory
fees.
- Other noninterest income of $94
million decreased $35 million,
or 27%, reflecting lower private equity revenue. The third quarter
also included negative Visa Class B derivative fair value
adjustments of $51 million primarily
related to the extension of anticipated litigation resolution
timing. Visa Class B derivative fair value adjustments were
negative $83 million in the second
quarter.
- Noninterest expense of $3.2
billion decreased $127
million, or 4%, driven by lower or stable expenses across
all categories, reflecting a continued focus on expense
management.
- Provision for credit losses was $129
million in the third quarter. The second quarter of 2023
included a provision for credit losses of $146 million.
- The effective tax rate was 15.5% for both the third quarter and
second quarter.
Balance Sheet Highlights
Third quarter 2023 compared with second quarter
2023 or September 30, 2023 compared with June 30,
2023
- Average loans of $319.5 billion
decreased $5.0 billion, or 2%.
- Average commercial loans of $217.7
billion decreased $5.5
billion, driven by lower corporate banking balances,
reflecting lower utilization and paydowns outpacing new
production.
- Average consumer loans of $101.8
billion increased $0.5 billion
and included higher residential mortgage and credit card
loans.
- Credit quality performance:
- Delinquencies of $1.3 billion
increased $75 million, or 6%,
primarily due to higher consumer loan delinquencies.
- Total nonperforming loans of $2.1
billion increased $210
million, or 11%, primarily due to an increase in commercial
real estate nonperforming loans, partially offset by lower consumer
nonperforming loans.
- Net loan charge-offs of $121
million decreased $73 million,
primarily reflecting lower commercial real estate net loan
charge-offs.
- The allowance for credit losses of $5.4
billion was stable. The allowance for credit losses to total
loans was 1.70% at September 30, 2023
compared with 1.68% at June 30,
2023.
- Average deposits of $422.5
billion decreased $3.2
billion, or 1%, as growth in commercial deposits was more
than offset by lower consumer deposits.
- Average investment securities of $139.7
billion decreased $1.3
billion, or 1%.
- Average Federal Reserve Bank balances of $37.9 billion increased $7.3 billion.
- Federal Reserve Bank balances at September 30, 2023 were $41.1 billion.
- Average borrowed funds of $67.5
billion increased $1.8
billion, or 3%, primarily due to parent company senior debt
issuances near the end of the second quarter.
- PNC maintained a strong capital and liquidity position.
- On October 2, 2023, the PNC board
of directors declared a quarterly cash dividend on common stock of
$1.55 per share. The dividend, with a
payment date of November 5, 2023,
will be payable the next business day.
- PNC returned $0.6 billion of
capital to shareholders through dividends on common shares.
- The Basel III common equity Tier 1 capital ratio was an
estimated 9.8% at September 30, 2023
and 9.5% at June 30, 2023.
- PNC's average LCR for the three months ended September 30, 2023 was 107%, exceeding the
regulatory minimum requirement throughout the quarter.
- PNC Bank average LCR for the three months ended September 30, 2023 was 132%.
Earnings
Summary
|
|
|
|
|
|
|
In millions, except
per share data
|
|
3Q23
|
|
2Q23
|
|
3Q22
|
Net income
|
|
$
1,570
|
|
$
1,500
|
|
$
1,640
|
Net income attributable
to diluted common shares
|
|
$
1,440
|
|
$
1,347
|
|
$
1,550
|
Diluted earnings per
common share
|
|
$
3.60
|
|
$
3.36
|
|
$
3.78
|
Average diluted common
shares outstanding
|
|
400
|
|
401
|
|
410
|
Cash dividends declared
per common share
|
|
$
1.55
|
|
$
1.50
|
|
$
1.50
|
|
|
|
|
|
|
|
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. Information in this news release, including the
financial tables, is unaudited.
CONSOLIDATED REVENUE
REVIEW
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
3Q23 vs
|
3Q23 vs
|
In
millions
|
3Q23
|
|
2Q23
|
|
3Q22
|
2Q23
|
3Q22
|
Net interest
income
|
$ 3,418
|
|
$ 3,510
|
|
$ 3,475
|
(3) %
|
(2) %
|
Noninterest
income
|
1,815
|
|
1,783
|
|
2,074
|
2 %
|
(12) %
|
Total
revenue
|
$ 5,233
|
|
$ 5,293
|
|
$ 5,549
|
(1) %
|
(6) %
|
|
|
|
|
|
|
|
|
Total revenue for the third quarter of 2023 decreased
$60 million from the second quarter
of 2023, as higher noninterest income was more than offset by lower
net interest income. Compared with the third quarter of 2022, total
revenue declined $316 million due to
lower noninterest income and net interest income.
Net interest income of $3.4
billion for the third quarter of 2023 decreased $92 million and $57
million from the second quarter of 2023 and third quarter of
2022, respectively. Net interest margin was 2.71% in the third
quarter of 2023, decreasing 8 basis points in comparison with the
second quarter of 2023 and 11 basis points compared to the third
quarter of 2022. In all comparisons, higher yields on
interest-earning assets were more than offset by increased funding
costs.
Noninterest
Income
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
3Q23 vs
|
3Q23 vs
|
In
millions
|
3Q23
|
|
2Q23
|
|
3Q22
|
2Q23
|
3Q22
|
Asset management and
brokerage
|
$ 348
|
|
$ 348
|
|
$ 357
|
—
|
(3) %
|
Capital markets and
advisory
|
168
|
|
213
|
|
299
|
(21) %
|
(44) %
|
Card and cash
management
|
689
|
|
697
|
|
671
|
(1) %
|
3 %
|
Lending and deposit
services
|
315
|
|
298
|
|
287
|
6 %
|
10 %
|
Residential and
commercial mortgage
|
201
|
|
98
|
|
143
|
105 %
|
41 %
|
Other
|
94
|
|
129
|
|
317
|
(27) %
|
(70) %
|
Total noninterest
income
|
$
1,815
|
|
$
1,783
|
|
$
2,074
|
2 %
|
(12) %
|
|
Noninterest income for the third quarter of 2023 increased
$32 million compared with the second
quarter of 2023. Capital markets and advisory revenue decreased
$45 million, driven by lower trading
revenue. Card and cash management fees decreased $8 million as increased treasury management
product revenue was more than offset by lower consumer transaction
volumes. Lending and deposit services increased $17 million, reflecting increased customer
activity. Residential and commercial mortgage revenue increased
$103 million primarily due to a
$97 million increase in mortgage
servicing rights valuation, net of economic hedge. Other
noninterest income decreased $35
million, reflecting lower private equity revenue. The third
quarter also included negative Visa Class B derivative fair value
adjustments of $51 million primarily
related to the extension of anticipated litigation resolution
timing. Visa Class B derivative fair value adjustments were
negative $83 million in the second
quarter.
Noninterest income for the third quarter of 2023 decreased
$259 million from the third quarter
of 2022. Asset management and brokerage revenue decreased
$9 million as a result of client
activity, partially offset by higher average equity markets.
Capital markets and advisory revenue decreased $131 million driven by lower trading, loan
syndication and merger and acquisition advisory revenue. Card and
cash management fees increased $18
million due to growth in treasury management product
revenue. Lending and deposit services increased $28 million, reflecting increased customer
activity. Residential and commercial mortgage revenue increased
$58 million due to increased
residential mortgage activity. Other noninterest income decreased
$223 million, primarily driven by
lower private equity revenue. The third quarter of 2022 included
positive Visa Class B derivative fair value adjustments of
$13 million.
CONSOLIDATED EXPENSE
REVIEW
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest
Expense
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
3Q23 vs
|
3Q23 vs
|
In
millions
|
3Q23
|
|
2Q23
|
|
3Q22
|
2Q23
|
3Q22
|
Personnel
|
$
1,773
|
|
$
1,846
|
|
$
1,805
|
(4) %
|
(2) %
|
Occupancy
|
244
|
|
244
|
|
241
|
—
|
1 %
|
Equipment
|
347
|
|
349
|
|
344
|
(1) %
|
1 %
|
Marketing
|
93
|
|
109
|
|
93
|
(15) %
|
—
|
Other
|
788
|
|
824
|
|
797
|
(4) %
|
(1) %
|
Total noninterest
expense
|
$
3,245
|
|
$
3,372
|
|
$
3,280
|
(4) %
|
(1) %
|
|
Noninterest expense for the third quarter of 2023 decreased
$127 million in comparison to the
second quarter of 2023, driven by lower or stable expenses across
all categories, reflecting a continued focus on expense
management.
Noninterest expense decreased $35
million from the third quarter of 2022, primarily due to
lower personnel costs, reflecting reduced variable compensation
expenses.
The effective tax rate was 15.5% for both the third quarter and
second quarter of 2023 and 19.1% for the third quarter of 2022. The
third quarter of 2023 included the favorable impact of certain tax
matters.
CONSOLIDATED BALANCE SHEET REVIEW
Average total assets were $555.0
billion in the third quarter of 2023 compared with
$555.5 billion in the second quarter
of 2023 and $547.1 billion in the
third quarter of 2022. In comparison to the third quarter of 2022,
the increase was attributable to higher interest-earning
assets.
Average
Loans
|
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
3Q23 vs
|
3Q23 vs
|
In
billions
|
3Q23
|
|
2Q23
|
|
3Q22
|
2Q23
|
3Q22
|
Commercial
|
$
217.7
|
|
$
223.2
|
|
$
214.1
|
(2) %
|
2 %
|
Consumer
|
101.8
|
|
101.3
|
|
98.9
|
—
|
3 %
|
Total
|
$
319.5
|
|
$
324.5
|
|
$
313.0
|
(2) %
|
2 %
|
|
|
|
|
|
|
|
|
Average loans for the third quarter of 2023 decreased
$5.0 billion compared to the second
quarter of 2023. Average commercial loans decreased $5.5 billion, driven by lower corporate banking
balances, reflecting lower utilization and paydowns outpacing new
production. Average consumer loans grew $0.5
billion and included higher residential mortgage and credit
card loans.
Average loans for the third quarter of 2023 increased
$6.5 billion in comparison to the
third quarter of 2022. Average commercial loans increased
$3.6 billion as a result of growth in
PNC's corporate banking, real estate and business credit
businesses. Average consumer loans increased $2.9 billion due to growth in residential
mortgage, home equity and credit card loans.
Average Investment
Securities
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
3Q23 vs
|
3Q23 vs
|
In
billions
|
3Q23
|
|
2Q23
|
|
3Q22
|
2Q23
|
3Q22
|
Available for
sale
|
$
46.5
|
|
$
46.6
|
|
$
52.1
|
—
|
(11) %
|
Held to
maturity
|
93.2
|
|
94.4
|
|
84.9
|
(1) %
|
10 %
|
Total
|
$
139.7
|
|
$
141.0
|
|
$
137.0
|
(1) %
|
2 %
|
|
|
|
|
|
|
|
|
Average investment securities for the third quarter of 2023 of
$139.7 billion declined $1.3 billion from the second quarter of 2023 as
limited purchase activity during the quarter was more than offset
by portfolio paydowns and maturities. Average investment securities
increased $2.7 billion from the third
quarter of 2022, reflecting net purchase activity. The duration of
the investment securities portfolio was 4.2 years at
September 30, 2023, 4.3 years at June 30, 2023 and 4.5
years at September 30, 2022.
Net unrealized losses on available for sale securities were
$5.4 billion at September 30, 2023 increasing from $4.2 billion at June 30,
2023 and $4.8 billion at
September 30, 2022. In both
comparisons, the increase reflected the unfavorable impact of
interest rate movements.
Average Federal Reserve Bank balances for the third quarter of
2023 were $37.9 billion, increasing
$7.3 billion from the second quarter
of 2023, primarily due to lower loan balances. Average Federal
Reserve Bank balances increased $6.4
billion from the third quarter of 2022, primarily due to
higher borrowed funds, largely offset by lower deposits and higher
loans outstanding.
Federal Reserve Bank balances at September 30, 2023 were $41.1 billion, increasing $3.3 billion from June 30,
2023.
Average
Deposits
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
3Q23 vs
|
3Q23 vs
|
In
billions
|
3Q23
|
|
2Q23
|
|
3Q22
|
2Q23
|
3Q22
|
Commercial
|
$
204.7
|
|
$
204.1
|
|
$
215.8
|
—
|
(5) %
|
Consumer
|
217.8
|
|
221.6
|
|
223.4
|
(2) %
|
(3) %
|
Total
|
$
422.5
|
|
$
425.7
|
|
$
439.2
|
(1) %
|
(4) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IB % of total avg.
deposits
|
74 %
|
|
73 %
|
|
68 %
|
|
|
NIB % of total avg.
deposits
|
26 %
|
|
27 %
|
|
32 %
|
|
|
|
IB -
Interest-bearing
NIB -
Noninterest-bearing
|
|
|
|
|
|
|
|
|
Average deposits for the third quarter of 2023 were $422.5 billion, decreasing $3.2 billion from the second quarter of 2023 as
growth in commercial deposits was more than offset by lower
consumer deposits. Compared to the third quarter of 2022, average
deposits decreased $16.7 billion due
to lower commercial and consumer deposits, which included the
impact of quantitative tightening by the Federal Reserve and
increased customer spending. Noninterest-bearing balances as a
percentage of total deposits decreased in both comparisons due to
the continued shift into interest-bearing deposit products as
interest rates have risen.
Average Borrowed
Funds
|
|
|
|
|
Change
|
Change
|
|
|
|
|
|
|
3Q23 vs
|
3Q23 vs
|
In
billions
|
3Q23
|
|
2Q23
|
|
3Q22
|
2Q23
|
3Q22
|
Total
|
$
67.5
|
|
$
65.7
|
|
$
44.3
|
3 %
|
52 %
|
|
|
|
|
|
|
|
|
Average borrowed funds of $67.5
billion in the third quarter of 2023 increased $1.8 billion primarily due to parent company
senior debt issuances near the end of the second quarter. Compared
to the third quarter of 2022, average borrowed funds increased
$23.2 billion due to higher Federal
Home Loan Bank borrowings and parent company senior debt
issuances.
Capital
|
September 30,
2023
|
|
June 30,
2023
|
|
September 30,
2022
|
|
|
|
Common shareholders'
equity In billions
|
$
42.2
|
|
$
42.1
|
|
$
39.4
|
Accumulated other
comprehensive income (loss)
In
billions
|
$
(10.3)
|
|
$
(9.5)
|
|
$
(10.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
Basel III common equity
Tier 1 capital ratio *
|
9.8 %
|
|
9.5 %
|
|
9.3 %
|
Basel III common equity
Tier 1 fully implemented
capital ratio (estimated)
|
9.7 %
|
|
9.4 %
|
|
9.1 %
|
*September 30,
2023 ratio is estimated
|
|
|
|
|
|
|
PNC maintained a strong capital position. Common shareholders'
equity at September 30, 2023 increased $0.1 billion from June 30, 2023, driven by
the benefit of net income, partially offset by a decline in
accumulated other comprehensive income as well as dividends
paid.
As a Category III institution, PNC has elected to exclude
accumulated other comprehensive income related to both available
for sale securities and pension and other post-retirement plans
from CET1 capital. Accumulated other comprehensive income at
September 30, 2023 declined $0.8
billion from June 30, 2023 due to securities and swaps
valuation changes as the benefit of paydowns and maturities was
more than offset by the unfavorable impact of interest rate
movements. Compared to September 30, 2022, accumulated other
comprehensive income improved $0.2
billion, reflecting the benefit of paydowns and
maturities.
In the third quarter of 2023, PNC returned $0.6 billion of capital to shareholders through
dividends on common shares. Consistent with the Stress Capital
Buffer (SCB) framework, which allows for capital return in amounts
in excess of the SCB minimum levels, our board of directors has
authorized a repurchase framework under the previously approved
repurchase program of up to 100 million common shares, of which
approximately 46% were still available for repurchase at
September 30, 2023.
In light of the Federal banking agencies proposed rules to
adjust the Basel III capital framework, share repurchase activity
is expected to remain paused during the fourth quarter of 2023. PNC
continues to evaluate the potential impact of the proposed rules
and may resume share repurchase activity depending on market and
economic conditions, as well as other factors.
PNC's SCB for the four-quarter period beginning October 1, 2023 is the regulatory minimum of
2.5%.
On October 2, 2023, the PNC board
of directors declared a quarterly cash dividend on common stock of
$1.55 per share. The dividend, with a
payment date of November 5, 2023,
will be payable the next business day.
At September 30, 2023, PNC was considered "well
capitalized" based on applicable U.S. regulatory capital ratio
requirements. For additional information regarding PNC's Basel III
capital ratios, see Capital Ratios in the Consolidated Financial
Highlights. PNC elected a five-year transition provision effective
March 31, 2020 to delay until
December 31, 2021 the full impact of
the Current Expected Credit Losses (CECL) standard on regulatory
capital, followed by a three-year transition period. Effective for
the first quarter of 2022, PNC is now in the three-year transition
period, and the full impact of the CECL standard is being phased-in
to regulatory capital through December 31,
2024. The fully implemented ratios reflect the full impact
of CECL and exclude the benefits of this transition provision.
CREDIT QUALITY
REVIEW
|
|
|
|
|
|
|
|
|
|
|
|
Credit
Quality
|
|
|
|
Change
|
Change
|
|
September
30, 2023
|
June 30,
2023
|
September
30, 2022
|
09/30/23 vs
|
09/30/23 vs
|
In
millions
|
06/30/23
|
09/30/22
|
Provision for credit
losses
|
$ 129
|
$ 146
|
$ 241
|
$
(17)
|
$ (112)
|
Net loan
charge-offs
|
$ 121
|
$ 194
|
$ 119
|
(38) %
|
2 %
|
Allowance for credit
losses (a)
|
$
5,407
|
$
5,400
|
$
5,263
|
—
|
3 %
|
Total
delinquencies (b)
|
$
1,287
|
$
1,212
|
$
1,626
|
6 %
|
(21) %
|
Nonperforming
loans
|
$
2,123
|
$
1,913
|
$
2,068
|
11 %
|
3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs to
average loans
(annualized)
|
0.15 %
|
0.24 %
|
0.15 %
|
|
|
Allowance for credit
losses to total
loans
|
1.70 %
|
1.68 %
|
1.67 %
|
|
|
Nonperforming loans to
total loans
|
0.67 %
|
0.59 %
|
0.66 %
|
|
|
(a) Excludes
allowances for investment securities and other financial
assets
(b) Total
delinquencies represent accruing loans more than 30 days past
due
|
Provision for credit losses was $129
million in the third quarter of 2023. The second quarter of
2023 included a provision for credit losses of $146 million.
Net loan charge-offs of $121
million in the third quarter of 2023 decreased $73 million compared to the second quarter of
2023, primarily reflecting lower commercial real estate net loan
charge-offs. Compared to the third quarter of 2022, net loan
charge-offs were relatively stable.
The allowance for credit losses was $5.4
billion at both September 30, 2023 and June 30,
2023 and $5.3 billion at
September 30, 2022. The allowance for credit losses as a
percentage of total loans was 1.70% at September 30, 2023,
1.68% at June 30, 2023 and 1.67% at September 30,
2022.
Nonperforming loans at September 30, 2023 were $2.1 billion, increasing $210 million from June 30, 2023 and
$55 million from September 30,
2022. In both comparisons, the increase was primarily due to higher
commercial real estate nonperforming loans, partially offset by
lower consumer nonperforming loans.
Delinquencies at September 30, 2023 were $1.3 billion, increasing $75 million from June 30, 2023 primarily due
to higher consumer loan delinquencies. Compared to
September 30, 2022 delinquencies decreased $339 million due to lower commercial and consumer
loan delinquencies.
BUSINESS SEGMENT
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
Business Segment
Income (Loss)
|
|
|
|
|
|
In
millions
|
3Q23
|
|
2Q23
|
|
3Q22
|
Retail
Banking
|
$
1,094
|
|
$ 954
|
|
$ 560
|
Corporate &
Institutional Banking
|
960
|
|
817
|
|
929
|
Asset Management
Group
|
73
|
|
63
|
|
90
|
Other
|
(573)
|
|
(351)
|
|
45
|
Net income excluding
noncontrolling interests
|
$
1,554
|
|
$
1,483
|
|
$
1,624
|
|
|
|
|
|
|
Retail
Banking
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
3Q23 vs
|
|
3Q23 vs
|
In
millions
|
3Q23
|
|
2Q23
|
|
3Q22
|
|
2Q23
|
|
3Q22
|
Net interest
income
|
$
2,576
|
|
$
2,448
|
|
$
2,017
|
|
$ 128
|
|
$ 559
|
Noninterest
income
|
$ 784
|
|
$ 702
|
|
$ 725
|
|
$
82
|
|
$
59
|
Noninterest
expense
|
$
1,876
|
|
$
1,904
|
|
$
1,901
|
|
$
(28)
|
|
$
(25)
|
Provision for
(recapture of) credit losses
|
$ 42
|
|
$ (14)
|
|
$ 92
|
|
$
56
|
|
$
(50)
|
Earnings
|
$
1,094
|
|
$ 954
|
|
$ 560
|
|
$ 140
|
|
$ 534
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
97.4
|
|
$
97.6
|
|
$
94.9
|
|
$ (0.2)
|
|
$
2.5
|
Average
deposits
|
$
253.7
|
|
$
257.3
|
|
$
264.4
|
|
$ (3.6)
|
|
$
(10.7)
|
|
|
|
|
|
|
|
|
|
|
Net loan charge-offs
In millions
|
$ 114
|
|
$ 109
|
|
$ 98
|
|
$
5
|
|
$
16
|
|
|
|
|
|
|
|
|
|
|
Retail Banking Highlights
Third quarter 2023 compared with second quarter
2023
- Earnings increased 15%, driven by higher net interest income,
an increase in noninterest income and lower noninterest expense,
partially offset by a provision for credit losses.
- Noninterest income increased 12%, reflecting increased
residential mortgage servicing rights valuation, net of economic
hedge, and lower negative Visa Class B derivative fair value
adjustments of $51 million. The
second quarter included negative Visa Class B derivative fair value
adjustments of $83 million.
- Noninterest expense decreased modestly, driven by a decline in
personnel and marketing expenses, reflecting a continued focus on
expense management.
- Average loans were relatively stable.
- Average deposits decreased 1%, as consumer spending levels have
remained elevated.
Third quarter 2023 compared with third quarter
2022
- Earnings increased 95%, primarily due to higher net interest
income.
- Noninterest income increased 8%, driven by higher residential
mortgage banking activity and increased lending and deposit related
customer activity, partially offset by negative Visa Class B
derivative fair value adjustments. The third quarter of 2022
included positive Visa Class B derivative fair value adjustments of
$13 million.
- Noninterest expense decreased modestly.
- Average loans increased 3%, driven by growth in home equity,
commercial, residential mortgage and credit card loans.
- Average deposits decreased 4%, reflecting the impact of
increased spending and quantitative tightening by the Federal
Reserve.
Corporate &
Institutional Banking
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
3Q23 vs
|
|
3Q23 vs
|
In
millions
|
3Q23
|
|
2Q23
|
|
3Q22
|
|
2Q23
|
|
3Q22
|
Net interest
income
|
$
1,419
|
|
$
1,381
|
|
$
1,368
|
|
$
38
|
|
$
51
|
Noninterest
income
|
$ 835
|
|
$ 821
|
|
$ 887
|
|
$
14
|
|
$
(52)
|
Noninterest
expense
|
$ 895
|
|
$ 921
|
|
$ 890
|
|
$
(26)
|
|
$
5
|
Provision for credit
losses
|
$ 102
|
|
$ 209
|
|
$ 150
|
|
$
(107)
|
|
$
(48)
|
Earnings
|
$ 960
|
|
$ 817
|
|
$ 929
|
|
$ 143
|
|
$
31
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
202.8
|
|
$
208.1
|
|
$
199.9
|
|
$
(5.3)
|
|
$
2.9
|
Average
deposits
|
$
141.7
|
|
$
141.0
|
|
$
145.4
|
|
$
0.7
|
|
$
(3.7)
|
|
|
|
|
|
|
|
|
|
|
Net loan charge-offs
In millions
|
$ 12
|
|
$ 93
|
|
$ 33
|
|
$
(81)
|
|
$
(21)
|
|
|
|
|
|
|
|
|
|
|
Corporate & Institutional Banking Highlights
Third quarter 2023 compared with second quarter
2023
- Earnings increased 18%, driven by a decrease in the provision
for credit losses, higher net interest and noninterest income and
lower noninterest expense.
- Noninterest income increased 2%, due to a $51 million increase in commercial mortgage
servicing rights valuation, net of economic hedge, and higher
treasury management product revenue, partially offset by lower
capital markets and advisory fees.
- Noninterest expense decreased 3%, reflecting a continued focus
on expense management and lower business activity.
- Average loans decreased 3%, driven by lower corporate banking
balances, reflecting lower utilization of loan commitments and
paydowns outpacing new production.
- Average deposits increased modestly.
Third quarter 2023 compared with third quarter
2022
- Earnings increased 3%, primarily driven by higher net interest
income and a lower provision for credit losses, partially offset by
a decline in noninterest income.
- Noninterest income decreased 6%, driven by lower loan
syndication fees, lower commercial mortgage banking activities and
a decline in merger and acquisition advisory fees, partially offset
by higher treasury management product revenue.
- Noninterest expense increased modestly.
- Average loans increased 1%, as growth in PNC's corporate
banking, real estate and business credit businesses was partially
offset by a decline in commercial banking.
- Average deposits decreased 3%, and included the impact of
quantitative tightening by the Federal Reserve.
Asset Management
Group
|
|
|
|
|
|
|
Change
|
|
Change
|
|
|
|
|
|
|
|
3Q23 vs
|
|
3Q23 vs
|
In
millions
|
3Q23
|
|
2Q23
|
|
3Q22
|
|
2Q23
|
|
3Q22
|
Net interest
income
|
$
139
|
|
$
125
|
|
$
165
|
|
$
14
|
|
$ (26)
|
Noninterest
income
|
$
223
|
|
$
228
|
|
$
231
|
|
$
(5)
|
|
$
(8)
|
Noninterest
expense
|
$
271
|
|
$
280
|
|
$
274
|
|
$
(9)
|
|
$
(3)
|
Provision for
(recapture of) credit losses
|
$ (4)
|
|
$
(10)
|
|
$
4
|
|
$
6
|
|
$
(8)
|
Earnings
|
$ 73
|
|
$ 63
|
|
$ 90
|
|
$
10
|
|
$ (17)
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Discretionary client
assets under management
|
$
176
|
|
$
176
|
|
$
166
|
|
—
|
|
$
10
|
Nondiscretionary
client assets under administration
|
$
170
|
|
$
168
|
|
$
148
|
|
$
2
|
|
$
22
|
Client assets under
administration at quarter end
|
$
346
|
|
$
344
|
|
$
314
|
|
$
2
|
|
$
32
|
Brokerage client
account assets
|
$
5
|
|
$
5
|
|
$
4
|
|
—
|
|
$
1
|
|
|
|
|
|
|
|
|
|
|
In
billions
|
|
|
|
|
|
|
|
|
|
Average
loans
|
$
15.7
|
|
$
15.1
|
|
$
14.4
|
|
$ 0.6
|
|
$ 1.3
|
Average
deposits
|
$
27.2
|
|
$
27.3
|
|
$
29.3
|
|
$
(0.1)
|
|
$
(2.1)
|
|
|
|
|
|
|
|
|
|
|
Net loan charge-offs
(recoveries) In millions
|
—
|
|
$ (2)
|
|
$ (2)
|
|
$
2
|
|
$
2
|
|
|
|
|
|
|
|
|
|
|
Asset Management Group Highlights
Third quarter 2023 compared with second quarter
2023
- Earnings increased 16%, due to higher net interest income and
lower noninterest expense, partially offset by a lower provision
recapture and a decline in noninterest income.
- Noninterest income decreased 2%, reflecting the impact of
client activity, partially offset by higher average equity
markets.
- Noninterest expense decreased 3% and included the impact of a
continued focus on expense management.
- Discretionary client assets under management were stable.
- Average loans increased 4%, driven by growth in residential
mortgage loans.
- Average deposits were stable.
Third quarter 2023 compared with third quarter
2022
- Earnings decreased 19%, driven by a decline in net interest and
noninterest income, partially offset by a provision recapture and
lower noninterest expense.
- Noninterest income decreased 3%, reflecting the impact of
client activity, partially offset by higher average equity
markets.
- Noninterest expense decreased 1%.
- Discretionary client assets under management increased 6%,
driven by higher spot equity markets.
- Average loans increased 9%, driven by growth in residential
mortgage loans.
- Average deposits decreased 7%, and included the impact of
quantitative tightening by the Federal Reserve as well as the
redeployment of funds to assets under management.
Other
The "Other" category, for the purposes of this release, includes
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,
ACL for 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 Executive Vice President
and Chief Financial Officer Robert Q.
Reilly will hold a conference call for investors today at
11:00 a.m. Eastern Time regarding the
topics addressed in this news release and the related earnings
materials. Dial-in numbers for the conference call are (877)
272-3498 and (303) 223-4380 (international) and Internet access to
the live audio listen-only webcast of the call is available at
www.pnc.com/investorevents. PNC's third quarter 2023 earnings
materials 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 22027858 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.
CONTACTS
MEDIA:
Timothy Miller
(412) 762-4550
media.relations@pnc.com
INVESTORS:
Bryan
Gill
(412) 768-4143
investor.relations@pnc.com
[TABULAR MATERIAL FOLLOWS]
The PNC Financial
Services Group, Inc.
|
Consolidated
Financial Highlights (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL
RESULTS
|
|
Three months
ended
|
|
|
|
Nine months
ended
|
Dollars in millions,
except per share data
|
|
September 30
|
|
June 30
|
|
September 30
|
|
|
|
September 30
|
|
September 30
|
|
|
2023
|
|
2023
|
|
2022
|
|
|
|
2023
|
|
2022
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
|
$ 3,418
|
|
$ 3,510
|
|
$ 3,475
|
|
|
|
$
10,513
|
|
$ 9,330
|
Noninterest
income
|
|
1,815
|
|
1,783
|
|
2,074
|
|
|
|
5,616
|
|
6,027
|
Total
revenue
|
|
5,233
|
|
5,293
|
|
5,549
|
|
|
|
16,129
|
|
15,357
|
Provision for credit
losses
|
|
129
|
|
146
|
|
241
|
|
|
|
510
|
|
69
|
Noninterest
expense
|
|
3,245
|
|
3,372
|
|
3,280
|
|
|
|
9,938
|
|
9,696
|
Income before income
taxes and noncontrolling
interests
|
|
$ 1,859
|
|
$ 1,775
|
|
$ 2,028
|
|
|
|
$ 5,681
|
|
$ 5,592
|
Income taxes
|
|
289
|
|
275
|
|
388
|
|
|
|
917
|
|
1,027
|
Net income
|
|
$ 1,570
|
|
$ 1,500
|
|
$ 1,640
|
|
|
|
$ 4,764
|
|
$ 4,565
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests
|
|
16
|
|
17
|
|
16
|
|
|
|
50
|
|
52
|
Preferred stock
dividends (a)
|
|
104
|
|
127
|
|
65
|
|
|
|
299
|
|
181
|
Preferred stock
discount accretion and redemptions
|
|
2
|
|
2
|
|
1
|
|
|
|
6
|
|
4
|
Net income attributable
to common shareholders
|
|
$ 1,448
|
|
$ 1,354
|
|
$ 1,558
|
|
|
|
$ 4,409
|
|
$ 4,328
|
Per Common
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ 3.60
|
|
$ 3.36
|
|
$ 3.78
|
|
|
|
$ 10.95
|
|
$ 10.39
|
Diluted
|
|
$ 3.60
|
|
$ 3.36
|
|
$ 3.78
|
|
|
|
$ 10.94
|
|
$ 10.39
|
Cash dividends declared
per common share
|
|
$ 1.55
|
|
$ 1.50
|
|
$ 1.50
|
|
|
|
$ 4.55
|
|
$ 4.25
|
Effective tax rate
(b)
|
|
15.5 %
|
|
15.5 %
|
|
19.1 %
|
|
|
|
16.1 %
|
|
18.4 %
|
PERFORMANCE
RATIOS
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin
(c)
|
|
2.71 %
|
|
2.79 %
|
|
2.82 %
|
|
|
|
2.78 %
|
|
2.54 %
|
Noninterest income to
total revenue
|
|
35 %
|
|
34 %
|
|
37 %
|
|
|
|
35 %
|
|
39 %
|
Efficiency
(d)
|
|
62 %
|
|
64 %
|
|
59 %
|
|
|
|
62 %
|
|
63 %
|
Return on:
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common
shareholders' equity
|
|
13.65 %
|
|
13.01 %
|
|
14.97 %
|
|
|
|
14.23 %
|
|
13.31 %
|
Average
assets
|
|
1.12 %
|
|
1.08 %
|
|
1.19 %
|
|
|
|
1.14 %
|
|
1.11 %
|
|
|
(a)
|
Dividends are payable
quarterly other than Series R and Series S preferred stock, which
are payable semiannually.
|
(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.
|
(c)
|
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
September 30, 2023, June 30, 2023 and September 30, 2022 were $36
million, $37 million and $29 million, respectively. The
taxable-equivalent adjustments to net interest income for the nine
months ended September 30, 2023 and September 30, 2022 were $111
million and $76 million, respectively.
|
(d)
|
Calculated as
noninterest expense divided by total revenue.
|
The PNC Financial
Services Group, Inc.
|
Consolidated
Financial Highlights (Unaudited)
|
|
|
|
|
|
|
|
September 30
|
|
June 30
|
|
September 30
|
|
2023
|
|
2023
|
|
2022
|
BALANCE SHEET
DATA
|
|
|
|
|
|
Dollars in millions,
except per share data and as noted
|
|
|
|
|
|
Assets
|
$
557,334
|
|
$
558,207
|
|
$
559,477
|
Loans (a)
|
$
318,416
|
|
$
321,761
|
|
$
315,400
|
Allowance for loan and
lease losses
|
$
4,767
|
|
$
4,737
|
|
$
4,581
|
Interest-earning
deposits with banks
|
$
41,484
|
|
$
38,259
|
|
$
40,278
|
Investment
securities
|
$
132,387
|
|
$
135,661
|
|
$
136,451
|
Total
deposits
|
$
423,609
|
|
$
427,489
|
|
$
438,194
|
Borrowed funds
(a)
|
$
66,167
|
|
$
65,384
|
|
$
54,633
|
Allowance for unfunded
lending related commitments
|
$
640
|
|
$
663
|
|
$
682
|
Total shareholders'
equity
|
$
49,454
|
|
$
49,320
|
|
$
46,688
|
Common shareholders'
equity
|
$
42,215
|
|
$
42,083
|
|
$
39,444
|
Accumulated other
comprehensive income (loss)
|
$
(10,261)
|
|
$
(9,525)
|
|
$
(10,486)
|
Book value per common
share
|
$
105.98
|
|
$
105.67
|
|
$
97.59
|
Tangible book value per
common share (non-GAAP) (b)
|
$
78.16
|
|
$
77.80
|
|
$
69.98
|
Period end common
shares outstanding (In millions)
|
398
|
|
398
|
|
404
|
Loans to
deposits
|
75 %
|
|
75 %
|
|
72 %
|
Common shareholders'
equity to total assets
|
7.6 %
|
|
7.5 %
|
|
7.1 %
|
CLIENT ASSETS (In
billions)
|
|
|
|
|
|
Discretionary client
assets under management
|
$
176
|
|
$
176
|
|
$
166
|
Nondiscretionary client
assets under administration
|
170
|
|
168
|
|
148
|
Total client assets
under administration
|
346
|
|
344
|
|
314
|
Brokerage account
client assets
|
78
|
|
80
|
|
71
|
Total client
assets
|
$
424
|
|
$
424
|
|
$
385
|
CAPITAL
RATIOS
|
|
|
|
|
|
Basel III (c)
(d)
|
|
|
|
|
|
Common equity Tier
1
|
9.8 %
|
|
9.5 %
|
|
9.3 %
|
Common equity Tier 1
fully implemented (e)
|
9.7 %
|
|
9.4 %
|
|
9.1 %
|
Tier 1
risk-based
|
11.5 %
|
|
11.2 %
|
|
11.0 %
|
Total capital
risk-based
|
13.3 %
|
|
13.1 %
|
|
12.9 %
|
Leverage
|
8.9 %
|
|
8.8 %
|
|
8.6 %
|
Supplementary
leverage
|
7.6 %
|
|
7.4 %
|
|
7.3 %
|
ASSET
QUALITY
|
|
|
|
|
|
Nonperforming loans to
total loans
|
0.67 %
|
|
0.59 %
|
|
0.66 %
|
Nonperforming assets to
total loans, OREO and foreclosed assets
|
0.68 %
|
|
0.61 %
|
|
0.67 %
|
Nonperforming assets to
total assets
|
0.39 %
|
|
0.35 %
|
|
0.38 %
|
Net charge-offs to
average loans (for the three months ended) (annualized)
|
0.15 %
|
|
0.24 %
|
|
0.15 %
|
Allowance for loan and
lease losses to total loans
|
1.50 %
|
|
1.47 %
|
|
1.45 %
|
Allowance for credit
losses to total loans (f)
|
1.70 %
|
|
1.68 %
|
|
1.67 %
|
Allowance for loan and
lease losses to nonperforming loans
|
225 %
|
|
248 %
|
|
222 %
|
Total delinquencies
(In millions) (g)
|
$
1,287
|
|
$
1,212
|
|
$
1,626
|
|
|
(a)
|
Amounts include assets
and liabilities for which we have elected the fair value option.
Our second quarter 2023 Form 10-Q included, and our third quarter
2023 Form 10-Q will include, additional information regarding these
Consolidated Balance Sheet line items.
|
(b)
|
See the Tangible Book
Value per Common Share table on page 17 for additional
information.
|
(c)
|
All ratios are
calculated using the regulatory capital methodology applicable to
PNC during each period presented and calculated based on the
standardized approach. See Capital Ratios on page 16 for additional
information. The ratios as of September 30, 2023 are
estimated.
|
(d)
|
The ratios are
calculated to reflect PNC's election to adopt the CECL optional
five-year transition provision.
|
(e)
|
The estimated fully
implemented ratios are calculated to reflect the full impact of
CECL and exclude the benefits of the five-year transition
provision.
|
(f)
|
Excludes allowances for
investment securities and other financial assets.
|
(g)
|
Total delinquencies
represent accruing loans more than 30 days past due.
|
The PNC Financial
Services Group, Inc.
|
|
|
|
|
Consolidated
Financial Highlights (Unaudited)
|
CAPITAL RATIOS
PNC's regulatory risk-based capital ratios in 2023 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.
PNC elected a five-year transition provision effective
March 31, 2020 to delay until
December 31, 2021 the full impact of
the CECL standard on regulatory capital, followed by a three-year
transition period. Effective for the first quarter 2022, PNC is now
in the three-year transition period, and the full impact of the
CECL standard is being phased-in to regulatory capital through
December 31, 2024. See the table
below for the June 30, 2023, September 30, 2022 and
estimated September 30, 2023 ratios. For the full impact of
PNC's adoption of CECL, which excludes the benefits of the
five-year transition provision, see the September 30,
2023 and June 30, 2023 (Fully Implemented) estimates presented
in the table below.
Our Basel III capital ratios may be impacted by changes to the
regulatory capital rules and additional regulatory guidance or
analysis.
Basel lll Common
Equity Tier 1 Capital Ratios
|
|
|
|
|
|
|
|
Basel III
(a)
|
|
|
|
|
September 30
2023
(estimated)
(b)
|
June 30
2023 (b)
|
|
September 30
2022
(b)
|
|
September 30, 2023
(Fully
Implemented)
(estimated)
(c)
|
June 30, 2023
(Fully
Implemented)
(estimated)
(c)
|
|
|
|
Dollars in
millions
|
|
Common stock, related
surplus and retained earnings,
net of treasury stock
|
$
52,958
|
$
52,091
|
|
$
50,654
|
|
$
52,476
|
$
51,608
|
Less regulatory capital
adjustments:
|
|
|
|
|
|
|
|
Goodwill and
disallowed intangibles, net of deferred
tax liabilities
|
(11,083)
|
(11,101)
|
|
(11,159)
|
|
(11,083)
|
(11,101)
|
All other
adjustments
|
(99)
|
(89)
|
|
(123)
|
|
(101)
|
(90)
|
Basel III Common equity
Tier 1 capital
|
$
41,776
|
$
40,901
|
|
$
39,372
|
|
$
41,292
|
$
40,417
|
Basel III standardized
approach risk-weighted assets (d)
|
$
425,924
|
$
429,634
|
|
$
423,446
|
|
$
426,117
|
$
429,826
|
Basel III Common equity
Tier 1 capital ratio
|
9.8 %
|
9.5 %
|
|
9.3 %
|
|
9.7 %
|
9.4 %
|
|
|
(a)
|
All ratios are
calculated using the regulatory capital methodology applicable to
PNC during each period presented.
|
(b)
|
The ratios are
calculated to reflect PNC's election to adopt the CECL optional
five-year transition provisions.
|
(c)
|
The September 30, 2023
and June 30, 2023 ratios are calculated to reflect the full impact
of CECL and exclude the benefits of the five-year transition
provisions.
|
(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.
|
The PNC Financial
Services Group, Inc.
|
|
|
|
|
Consolidated
Financial Highlights (Unaudited)
|
NON-GAAP MEASURES
Pretax
Pre-Provision Earnings (non-GAAP)
|
Three months
ended
|
|
September 30
|
|
June 30
|
|
September 30
|
Dollars in
millions
|
2023
|
|
2023
|
|
2022
|
Income before income
taxes and noncontrolling interests
|
$
1,859
|
|
$
1,775
|
|
$
2,028
|
Provision for credit
losses
|
129
|
|
146
|
|
241
|
Pretax pre-provision
earnings (non-GAAP)
|
$
1,988
|
|
$
1,921
|
|
$
2,269
|
Pretax pre-provision earnings is a non-GAAP measure and is based
on adjusting income before income taxes and noncontrolling
interests to exclude provision for credit losses. We believe that
pretax, pre-provision earnings is a useful tool to help evaluate
the ability to provide for credit costs through operations and
provides an additional basis to compare results between periods by
isolating the impact of provision for credit losses, which can vary
significantly between periods.
Tangible Book
Value per Common Share (non-GAAP)
|
|
|
|
|
|
|
September 30
|
|
June 30
|
|
September 30
|
Dollars in millions,
except per share data
|
2023
|
|
2023
|
|
2022
|
Book value per common
share
|
$
105.98
|
|
$
105.67
|
|
$
97.59
|
Tangible book value per
common share
|
|
|
|
|
|
Common shareholders'
equity
|
$
42,215
|
|
$
42,083
|
|
$
39,444
|
Goodwill and other
intangible assets
|
(11,337)
|
|
(11,357)
|
|
(11,423)
|
Deferred tax
liabilities on goodwill and other intangible assets
|
254
|
|
256
|
|
263
|
Tangible common
shareholders' equity
|
$
31,132
|
|
$
30,982
|
|
$
28,284
|
Period-end common
shares outstanding (In millions)
|
398
|
|
398
|
|
404
|
Tangible book value per
common share (non-GAAP)
|
$
78.16
|
|
$
77.80
|
|
$
69.98
|
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.
Taxable-Equivalent Net Interest Income
(non-GAAP)
|
Three months
ended
|
|
September 30
|
|
June 30
|
|
September 30
|
Dollars in
millions
|
2023
|
|
2023
|
|
2022
|
Net interest
income
|
$
3,418
|
|
$
3,510
|
|
$
3,475
|
Taxable-equivalent
adjustments
|
36
|
|
37
|
|
29
|
Net interest income
(Fully Taxable-Equivalent - FTE)
|
$
3,454
|
|
$
3,547
|
|
$
3,504
|
The interest income earned on certain earning assets is
completely or partially exempt from federal income tax. As such,
these tax-exempt instruments typically yield lower returns than
taxable investments. To provide more meaningful comparisons of net
interest income, we use interest income on a taxable-equivalent
basis 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 GAAP.
Taxable-equivalent net interest income is only used for calculating
net interest margin and net interest income shown elsewhere in this
presentation is GAAP net interest income.
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 financial performance, such as earnings, revenues,
expenses, tax rates, capital and liquidity levels and ratios, asset
levels, asset quality, financial position, and other matters
regarding or affecting us and our future business and operations,
including our sustainability strategy, 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 any obligation 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:
- 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,
market interest rates and inflation,
- 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 sanctions, tariffs and other trade policies of the
U.S. and its global trading partners,
- Impacts of changes in federal, state and local governmental
policy, including on the regulatory landscape, capital markets,
taxes, infrastructure spending and social programs,
- Our ability to attract, recruit and retain skilled employees,
and
- 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:
- Economic growth accelerated in the first half of 2023, but
ongoing Federal Reserve monetary policy tightening to slow
inflation is weighing on interest-rate sensitive industries.
Sectors where interest rates play an outsized role, such as
business investment and consumer spending on durable goods, will
contract into 2024.
- PNC's baseline outlook is for a mild recession starting in the
first half of 2024, with a small contraction in real GDP of less
than 1%, lasting into the second half of 2024. The unemployment
rate will increase through the rest of 2023 and throughout 2024,
peaking at close to 5% in early 2025. Inflation will slow with
weaker demand, moving back to the Federal Reserve's 2% objective by
mid-2024.
- PNC expects the federal funds rate to remain unchanged in the
near term, between 5.25% and 5.50% through mid-2024, when PNC
expects federal funds rate cuts in response to the recession.
- PNC's ability to take certain capital actions, including
returning capital to shareholders, is subject to PNC meeting or
exceeding a stress capital buffer established by the Federal
Reserve Board in connection with the Federal Reserve Board's
Comprehensive Capital Analysis and Review (CCAR) process.
- 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 and the
reliability of and risks resulting from extensive use of such
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 employees.
These developments could include:
- Changes to laws and regulations, including changes affecting
oversight of the financial services industry, changes in the
enforcement and interpretation of such laws and regulations, and
changes in accounting and reporting standards.
- Unfavorable resolution of legal proceedings or other claims and
regulatory and other governmental investigations or other inquiries
resulting in monetary losses, costs, or alterations in our business
practices, and potentially causing reputational harm to PNC.
- Results of the regulatory examination and supervision process,
including our failure to satisfy requirements of agreements with
governmental agencies.
- 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.
- Our reputation and business and operating results may be
affected by our ability to appropriately meet or address
environmental, social or governance targets, goals, commitments or
concerns that may arise.
- 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, the integration of the acquired
businesses into PNC after closing or any failure to execute
strategic or operational plans.
- 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 manmade, natural and other disasters (including severe
weather events), health emergencies, dislocations, geopolitical
instabilities or events, terrorist activities, system failures or
disruptions, security breaches, cyberattacks, international
hostilities, or other extraordinary events beyond PNC's control
through impacts on the economy and financial markets generally or
on us or our counterparties, customers or third-party vendors and
service providers specifically.
We provide greater detail regarding these as well as other
factors in our 2022 Form 10-K and subsequent 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.
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SOURCE The PNC Financial Services Group, Inc.