PNC Reports Second Quarter 2024 Net Income of $1.5 Billion, $3.39 Diluted EPS
Generated positive operating leverage; grew NII and NIM; maintained 2.5% SCB requirement
Increased quarterly common stock dividend
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For the quarter |
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In millions, except per share data and as noted |
2Q24 |
1Q24 |
2Q23 |
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Second Quarter Highlights |
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Financial Results |
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Comparisons reflect 2Q24 vs. 1Q24 |
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Net interest income (NII) |
$ 3,302 |
$ 3,264 |
$ 3,510 |
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Income Statement |
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Noninterest income |
2,109 |
1,881 |
1,783 |
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▪ Generated positive operating |
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Revenue |
5,411 |
5,145 |
5,293 |
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Noninterest expense |
3,357 |
3,334 |
3,372 |
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▪ Revenue increased 5% |
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Pretax, pre-provision earnings (PPNR) (non-GAAP) |
2,054 |
1,811 |
1,921 |
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– NII and NIM increased |
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Provision for credit losses |
235 |
155 |
146 |
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▪ Noninterest expense increased 1% |
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Net income |
1,477 |
1,344 |
1,500 |
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▪ Gain on |
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Per Common Share |
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Diluted earnings per share (EPS) |
$ 3.39 |
$ 3.10 |
$ 3.36 |
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Balance Sheet |
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Average diluted common shares outstanding |
400 |
400 |
401 |
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▪ Average loans and deposits were |
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Book value |
116.70 |
113.30 |
105.67 |
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Tangible book value (TBV) (non-GAAP) |
89.12 |
85.70 |
77.80 |
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▪ Average securities increased 4% |
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▪ Net loan charge-offs were |
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Balance Sheet & Credit Quality |
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Average loans In billions |
$ 319.9 |
$ 320.6 |
$ 324.5 |
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▪ ACL to total loans stable at 1.7% |
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Average securities In billions |
141.3 |
135.4 |
141.0 |
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▪ AOCI improved |
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Average deposits In billions |
417.2 |
420.2 |
425.7 |
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Accumulated other comprehensive income (loss) (AOCI) In billions |
(7.4) |
(8.0) |
(9.5) |
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▪ TBV per share increased 4% |
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Net loan charge-offs |
262 |
243 |
194 |
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▪ Maintained strong capital position |
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Allowance for credit losses (ACL) to total loans |
1.67 % |
1.68 % |
1.68 % |
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– CET1 capital ratio of 10.2% |
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– Maintained regulatory minimum |
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Selected Ratios |
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Return on average common shareholders' equity |
12.16 % |
11.39 % |
13.01 % |
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– Increased quarterly common stock |
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Return on average assets |
1.05 |
0.97 |
1.08 |
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Net interest margin (NIM) (non-GAAP) |
2.60 |
2.57 |
2.79 |
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Noninterest income to total revenue |
39 |
37 |
34 |
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Efficiency |
62 |
65 |
64 |
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Common equity Tier 1 (CET1) capital ratio |
10.2 |
10.1 |
9.5 |
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See non-GAAP financial measures in the Consolidated Financial Highlights accompanying this release. |
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From |
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"PNC delivered strong results in the second quarter; generating positive operating leverage through revenue growth and well controlled expenses while adding customers, and strengthening our capital levels. Importantly, net interest income and net interest margin increased, marking the beginning of our growth trajectory towards expected record NII in 2025. In June, the |
Significant Items
In the second quarter of 2024, PNC participated in the
Income Statement Impact of Significant Items |
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In millions |
2Q24 |
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Noninterest Income |
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Significant items impacting Other Noninterest Income |
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Gain on exchange of Visa Class B-1 shares |
$ 754 |
Visa Class B-2 derivative fair value adjustments |
(116) |
Loss on sale of securities |
(497) |
Noninterest income increase from significant items |
$ 141 |
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Noninterest Expense |
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Significant items impacting Other Noninterest Expense |
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Contribution to |
$ 120 |
Noninterest expense increase from significant items |
$ 120 |
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Net Income and EPS |
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Pretax, pre-provision impact of significant items |
$ 21 |
Tax impact of significant items |
14 |
Net Income increase from significant items |
$ 35 |
EPS impact of significant items |
$ 0.09 |
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Tax impact of significant items includes the benefit of shares donated to the |
Income Statement Highlights
Second quarter 2024 compared with first quarter 2024
- Total revenue of
$5.4 billion increased$266 million , or 5%, due to higher noninterest and net interest income. - Net interest income of
$3.3 billion increased$38 million , or 1%, reflecting higher yields on interest-earning assets.- Net interest margin of 2.60% increased 3 basis points.
- Noninterest income of
$2.1 billion increased$228 million , or 12%.- Fee income of
$1.8 billion increased$31 million , or 2%, primarily due to seasonally higher card and cash management fees and increased capital markets and advisory activity, partially offset by lower residential mortgage revenue. - Other noninterest income of
$332 million increased$197 million reflecting the impact of$141 million of significant items in the second quarter of 2024.
- Fee income of
- Noninterest expense of
$3.4 billion increased$23 million , or 1%, and included a$120 million PNC Foundation contribution expense in the second quarter of 2024, while the first quarter included a$130 million FDIC special assessment expense. - Provision for credit losses was
$235 million in the second quarter, primarily reflecting the impact of portfolio activity. The first quarter of 2024 included a provision for credit losses of$155 million . - The effective tax rate was 18.8% for both the second and first quarter.
Balance Sheet Highlights
Second quarter 2024
compared with first quarter 2024 or
- Average loans of
$319.9 billion were stable, reflecting average commercial loans of$219.1 billion and average consumer loans of$100.8 billion . - Credit quality performance:
- Delinquencies of
$1.3 billion were stable. - Total nonperforming loans of
$2.5 billion increased$123 million , or 5%, primarily due to higher commercial nonperforming loans. - Net loan charge-offs of
$262 million increased$19 million , primarily due to higher commercial real estate net loan charge-offs. - The allowance for credit losses of
$5.4 billion was relatively stable. The allowance for credit losses to total loans was 1.67% atJune 30, 2024 and 1.68% atMarch 31, 2024 .
- Delinquencies of
- Average investment securities of
$141.3 billion increased$5.9 billion , or 4%, reflecting net purchase activity, primarily ofU.S. Treasury securities. - Average
Federal Reserve Bank balances of$40.7 billion decreased$7.1 billion , primarily reflecting net securities purchases. - Average deposits of
$417.2 billion were relatively stable and included seasonal declines in corporate deposits. - Average borrowed funds of
$77.5 billion increased$1.9 billion , or 2%, reflecting parent company senior debt issuances. - PNC maintained a strong capital and liquidity position.
- Based on the results of the
Federal Reserve's 2024 annual stress test, PNC's SCB for the four-quarter period beginningOctober 1, 2024 will remain at the regulatory minimum of 2.5%. - On
July 2, 2024 , the PNC board of directors raised the quarterly cash dividend on common stock to$1.60 per share, an increase of5 cents per share. The dividend is payable onAugust 5, 2024 to shareholders of record at the close of businessJuly 15, 2024 . - PNC returned
$0.7 billion of capital to shareholders, reflecting$0.6 billion of dividends on common shares and$0.1 billion of common share repurchases, representing 0.7 million shares. - The Basel III common equity Tier 1 capital ratio was an estimated 10.2% at
June 30, 2024 and was 10.1% atMarch 31, 2024 . - PNC's average LCR for the three months ended
June 30, 2024 was 108%, exceeding the regulatory minimum requirement throughout the quarter.
- Based on the results of the
Earnings Summary |
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In millions, except per share data |
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2Q24 |
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1Q24 |
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2Q23 |
Net income |
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$ 1,477 |
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$ 1,344 |
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$ 1,500 |
Net income attributable to diluted common shares |
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$ 1,355 |
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$ 1,240 |
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$ 1,347 |
Diluted earnings per common share |
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$ 3.39 |
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$ 3.10 |
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$ 3.36 |
Average diluted common shares outstanding |
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400 |
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400 |
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401 |
Cash dividends declared per common share |
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$ 1.55 |
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$ 1.55 |
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$ 1.50 |
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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 and brokerage, capital markets and advisory, card and cash management, lending and deposit services, and residential and commercial mortgage. Information in this news release, including the financial tables, is unaudited.
CONSOLIDATED REVENUE REVIEW |
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Revenue |
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Change |
Change |
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2Q24 vs |
2Q24 vs |
In millions |
2Q24 |
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1Q24 |
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2Q23 |
1Q24 |
2Q23 |
Net interest income |
$ 3,302 |
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$ 3,264 |
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$ 3,510 |
1 % |
(6) % |
Noninterest income |
2,109 |
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1,881 |
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1,783 |
12 % |
18 % |
Total revenue |
$ 5,411 |
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$ 5,145 |
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$ 5,293 |
5 % |
2 % |
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Total revenue for the second quarter of 2024 increased
Net interest income of
Compared to the second quarter of 2023, net interest income decreased
Noninterest Income |
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Change |
Change |
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2Q24 vs |
2Q24 vs |
In millions |
2Q24 |
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1Q24 |
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2Q23 |
1Q24 |
2Q23 |
Asset management and brokerage |
$ 364 |
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$ 364 |
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$ 348 |
— |
5 % |
Capital markets and advisory |
272 |
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259 |
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213 |
5 % |
28 % |
Card and cash management |
706 |
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671 |
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697 |
5 % |
1 % |
Lending and deposit services |
304 |
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305 |
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298 |
— |
2 % |
Residential and commercial mortgage |
131 |
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147 |
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98 |
(11) % |
34 % |
Fee income |
1,777 |
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1,746 |
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1,654 |
2 % |
7 % |
Other |
332 |
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135 |
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129 |
146 % |
157 % |
Total noninterest income |
$ 2,109 |
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$ 1,881 |
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$ 1,783 |
12 % |
18 % |
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Noninterest income for the second quarter of 2024 increased
Noninterest income for the second quarter of 2024, increased
CONSOLIDATED EXPENSE REVIEW |
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Noninterest Expense |
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Change |
Change |
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2Q24 vs |
2Q24 vs |
In millions |
2Q24 |
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1Q24 |
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2Q23 |
1Q24 |
2Q23 |
Personnel |
$ 1,782 |
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$ 1,794 |
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$ 1,846 |
(1) % |
(3) % |
Occupancy |
236 |
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244 |
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244 |
(3) % |
(3) % |
Equipment |
356 |
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341 |
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349 |
4 % |
2 % |
Marketing |
93 |
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64 |
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109 |
45 % |
(15) % |
Other |
890 |
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891 |
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824 |
— |
8 % |
Total noninterest expense |
$ 3,357 |
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$ 3,334 |
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$ 3,372 |
1 % |
— |
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Noninterest expense for the second quarter of 2024 increased
Noninterest expense of
The effective tax rate was 18.8% for both the second and first quarter of 2024 and 15.5% for the second quarter of 2023.
CONSOLIDATED BALANCE SHEET REVIEW
Average total assets of
Average Loans |
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Change |
Change |
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2Q24 vs |
2Q24 vs |
In billions |
2Q24 |
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1Q24 |
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2Q23 |
1Q24 |
2Q23 |
Commercial |
$ 219.1 |
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$ 219.2 |
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$ 223.2 |
— |
(2) % |
Consumer |
100.8 |
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101.4 |
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101.3 |
(1) % |
(1) % |
Total |
$ 319.9 |
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$ 320.6 |
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$ 324.5 |
— |
(1) % |
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Average loans for the second quarter of 2024 were stable compared to the first quarter of 2024 and included a modest decline in consumer balances reflecting lower residential real estate and home equity loans.
Average loans for the second quarter of 2024 decreased
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Change |
Change |
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2Q24 vs |
2Q24 vs |
In billions |
2Q24 |
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1Q24 |
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2Q23 |
1Q24 |
2Q23 |
Available for sale |
$ 53.4 |
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$ 46.0 |
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$ 46.6 |
16 % |
15 % |
Held to maturity |
87.9 |
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89.4 |
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94.4 |
(2) % |
(7) % |
Total |
$ 141.3 |
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$ 135.4 |
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$ 141.0 |
4 % |
— |
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Average investment securities of
Net unrealized losses on available-for-sale securities were
Average
Average Deposits |
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Change |
Change |
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2Q24 vs |
2Q24 vs |
In billions |
2Q24 |
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1Q24 |
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2Q23 |
1Q24 |
2Q23 |
Commercial |
$ 199.7 |
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$ 202.5 |
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$ 204.1 |
(1) % |
(2) % |
Consumer |
217.5 |
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217.6 |
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221.6 |
— |
(2) % |
Total |
$ 417.2 |
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$ 420.2 |
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$ 425.7 |
(1) % |
(2) % |
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IB % of total avg. deposits |
77 % |
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76 % |
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73 % |
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NIB % of total avg. deposits |
23 % |
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24 % |
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27 % |
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IB - Interest-bearing NIB - Noninterest-bearing |
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Totals may not sum due to rounding |
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Average deposits for the second quarter of 2024 of
Average Borrowed Funds |
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Change |
Change |
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2Q24 vs |
2Q24 vs |
In billions |
2Q24 |
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1Q24 |
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2Q23 |
1Q24 |
2Q23 |
Total |
$ 77.5 |
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$ 75.6 |
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$ 65.7 |
2 % |
18 % |
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Avg. borrowed funds to avg. liabilities |
15 % |
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15 % |
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13 % |
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Average borrowed funds of
Capital |
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Common shareholders' equity In billions |
$ 46.4 |
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$ 45.1 |
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$ 42.1 |
Accumulated other comprehensive income (loss) In billions |
$ (7.4) |
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$ (8.0) |
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$ (9.5) |
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Basel III common equity Tier 1 capital ratio * |
10.2 % |
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10.1 % |
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9.5 % |
Basel III common equity Tier 1 fully implemented capital ratio (estimated) |
10.1 % |
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10.0 % |
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9.4 % |
* |
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PNC maintained a strong capital position. Common shareholders' equity at
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
In the second quarter of 2024, PNC returned
In light of the Federal banking agencies' proposed rules to adjust the Basel III capital framework, third quarter 2024 share repurchase activity is expected to approximate recent quarterly average share repurchase levels. PNC continues to evaluate the potential impact of the proposed rules and may adjust share repurchase activity depending on market and economic conditions, as well as other factors.
Based on the results of the
On
At
CREDIT QUALITY REVIEW |
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Credit Quality |
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Change |
Change |
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In millions |
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Provision for credit losses (a) |
$ 235 |
$ 155 |
$ 146 |
$ 80 |
$ 89 |
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Net loan charge-offs (a) |
$ 262 |
$ 243 |
$ 194 |
8 % |
35 % |
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Allowance for credit losses (b) |
$ 5,353 |
$ 5,365 |
$ 5,400 |
— |
(1) % |
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Total delinquencies (c) |
$ 1,272 |
$ 1,275 |
$ 1,212 |
— |
5 % |
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Nonperforming loans |
$ 2,503 |
$ 2,380 |
$ 1,913 |
5 % |
31 % |
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Net charge-offs to average loans (annualized) |
0.33 % |
0.30 % |
0.24 % |
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Allowance for credit losses to total loans |
1.67 % |
1.68 % |
1.68 % |
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Nonperforming loans to total loans |
0.78 % |
0.74 % |
0.59 % |
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(a) Represents amounts for the three months ended for each respective period |
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(b) Excludes allowances for investment securities and other financial assets |
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(c) Total delinquencies represent accruing loans more than 30 days past due |
Provision for credit losses was
Net loan charge-offs were
The allowance for credit losses was
Delinquencies at
Nonperforming loans at
BUSINESS SEGMENT RESULTS |
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Business Segment Income (Loss) |
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In millions |
2Q24 |
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1Q24 |
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2Q23 |
Retail Banking |
$ 1,715 |
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$ 1,085 |
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$ 954 |
Corporate & Institutional Banking |
1,046 |
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1,121 |
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817 |
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103 |
|
97 |
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63 |
Other |
(1,405) |
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(973) |
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(351) |
Net income excluding noncontrolling interests |
$ 1,459 |
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$ 1,330 |
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$ 1,483 |
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Retail Banking |
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Change |
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Change |
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2Q24 vs |
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2Q24 vs |
In millions |
2Q24 |
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1Q24 |
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2Q23 |
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1Q24 |
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2Q23 |
Net interest income |
$ 2,709 |
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$ 2,617 |
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$ 2,448 |
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$ 92 |
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$ 261 |
Noninterest income |
$ 1,409 |
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$ 764 |
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$ 702 |
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$ 645 |
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$ 707 |
Noninterest expense |
$ 1,841 |
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$ 1,837 |
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$ 1,904 |
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$ 4 |
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$ (63) |
Provision for (recapture of) credit losses |
$ 27 |
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$ 118 |
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$ (14) |
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$ (91) |
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$ 41 |
Earnings |
$ 1,715 |
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$ 1,085 |
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$ 954 |
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$ 630 |
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$ 761 |
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In billions |
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Average loans |
$ 96.5 |
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$ 97.2 |
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$ 97.6 |
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$ (0.7) |
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$ (1.1) |
Average deposits |
$ 249.7 |
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$ 249.0 |
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$ 257.3 |
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$ 0.7 |
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$ (7.6) |
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Net loan charge-offs In millions |
$ 138 |
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$ 139 |
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$ 109 |
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$ (1) |
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$ 29 |
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Retail Banking Highlights
Second quarter 2024 compared with first quarter 2024
- Earnings increased 58%, primarily driven by higher noninterest and net interest income as well as a lower provision for credit losses.
- Noninterest income increased 84%, and included a gain of
$754 million related to one half of PNC's total exchangedVisa shares. The second quarter of 2024 also includedVisa derivative fair value adjustments of negative$116 million primarily related to the extension of anticipated litigation resolution timing.Visa derivative fair value adjustments were negative$7 million in the first quarter of 2024. - Noninterest expense was stable.
- Provision for credit losses of
$27 million in the second quarter of 2024 reflected the impact of portfolio activity.
- Noninterest income increased 84%, and included a gain of
- Average loans decreased 1% reflecting lower residential real estate and home equity loans.
- Average deposits were stable.
- Second quarter 2024 compared with second quarter 2023
- Earnings increased 80%, primarily due to higher noninterest and net interest income as well as lower noninterest expense.
- Noninterest income increased 101%, and included the aforementioned second quarter of 2024
Visa exchange impacts and derivative fair value adjustments. The second quarter of 2023 includedVisa derivative fair value adjustments of negative$83 million . - Noninterest expense decreased 3%, reflecting a continued focus on expense management, partially offset by higher technology investment.
- Noninterest income increased 101%, and included the aforementioned second quarter of 2024
- Average loans decreased 1%, and included lower residential mortgage and home equity loans.
- Average deposits decreased 3%, and included the impact of increased customer spending.
Corporate & Institutional Banking |
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Change |
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Change |
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2Q24 vs |
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2Q24 vs |
In millions |
2Q24 |
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1Q24 |
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2Q23 |
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1Q24 |
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2Q23 |
Net interest income |
$ 1,560 |
|
$ 1,549 |
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$ 1,381 |
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$ 11 |
|
$ 179 |
Noninterest income |
$ 942 |
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$ 888 |
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$ 821 |
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$ 54 |
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$ 121 |
Noninterest expense |
$ 911 |
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$ 922 |
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$ 921 |
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$ (11) |
|
$ (10) |
Provision for credit losses |
$ 228 |
|
$ 47 |
|
$ 209 |
|
$ 181 |
|
$ 19 |
Earnings |
$ 1,046 |
|
$ 1,121 |
|
$ 817 |
|
$ (75) |
|
$ 229 |
|
|
|
|
|
|
|
|
|
|
In billions |
|
|
|
|
|
|
|
|
|
Average loans |
$ 204.0 |
|
$ 204.2 |
|
$ 208.1 |
|
$ (0.2) |
|
$ (4.1) |
Average deposits |
$ 139.9 |
|
$ 142.7 |
|
$ 141.0 |
|
$ (2.8) |
|
$ (1.1) |
|
|
|
|
|
|
|
|
|
|
Net loan charge-offs In millions |
$ 129 |
|
$ 108 |
|
$ 93 |
|
$ 21 |
|
$ 36 |
|
|
|
|
|
|
|
|
|
|
Corporate & Institutional Banking Highlights
Second quarter 2024 compared with first quarter 2024
- Earnings decreased 7%, driven by a higher provision for credit losses, partially offset by higher noninterest and net interest income as well as lower noninterest expense.
- Noninterest income increased 6%, reflecting higher merger and acquisition advisory activity and higher treasury management product revenue.
- Noninterest expense decreased 1%, reflecting a continued focus on expense management.
- Provision for credit losses of
$228 million in the second quarter of 2024 reflected the impact of portfolio activity.
- Average loans were stable.
- Average deposits decreased 2%, reflecting seasonal declines in corporate deposits.
Second quarter 2024 compared with second quarter 2023
- Earnings increased 28% driven by higher net interest and noninterest income as well as lower noninterest expense.
- Noninterest income increased 15%, reflecting business growth across the franchise.
- Noninterest expense decreased 1%, reflecting a continued focus on expense management.
- Average loans decreased 2%, driven by lower utilization of loan commitments.
- Average deposits decreased less than 1%.
|
|
|
|
|
|
|
Change |
|
Change |
|
|
|
|
|
|
|
2Q24 vs |
|
2Q24 vs |
In millions |
2Q24 |
|
1Q24 |
|
2Q23 |
|
1Q24 |
|
2Q23 |
Net interest income |
$ 163 |
|
$ 157 |
|
$ 125 |
|
$ 6 |
|
$ 38 |
Noninterest income |
$ 235 |
|
$ 230 |
|
$ 228 |
|
$ 5 |
|
$ 7 |
Noninterest expense |
$ 261 |
|
$ 265 |
|
$ 280 |
|
$ (4) |
|
$ (19) |
Provision for (recapture of) credit losses |
$ 2 |
|
$ (5) |
|
$ (10) |
|
$ 7 |
|
$ 12 |
Earnings |
$ 103 |
|
$ 97 |
|
$ 63 |
|
$ 6 |
|
$ 40 |
|
|
|
|
|
|
|
|
|
|
In billions |
|
|
|
|
|
|
|
|
|
Discretionary client assets under management |
$ 196 |
|
$ 195 |
|
$ 176 |
|
$ 1 |
|
$ 20 |
Nondiscretionary client assets under administration |
$ 208 |
|
$ 199 |
|
$ 168 |
|
$ 9 |
|
$ 40 |
Client assets under administration at quarter end |
$ 404 |
|
$ 394 |
|
$ 344 |
|
$ 10 |
|
$ 60 |
|
|
|
|
|
|
|
|
|
|
In billions |
|
|
|
|
|
|
|
|
|
Average loans |
$ 16.6 |
|
$ 16.3 |
|
$ 15.1 |
|
$ 0.3 |
|
$ 1.5 |
Average deposits |
$ 27.9 |
|
$ 28.7 |
|
$ 27.3 |
|
$ (0.8) |
|
$ 0.6 |
|
|
|
|
|
|
|
|
|
|
Net loan charge-offs (recoveries) In millions |
— |
|
— |
|
$ (2) |
|
— |
|
$ 2 |
|
|
|
|
|
|
|
|
|
|
Asset Management Group Highlights
Second quarter 2024 compared with first quarter 2024
- Earnings increased 6%, reflecting higher net interest and noninterest income and lower noninterest expense, partially offset by a provision for credit losses.
- Noninterest income increased 2%, and included the impact of higher average equity markets.
- Noninterest expense decreased 2%, driven by lower personnel expense and a continued focus on expense management.
- Discretionary client assets under management increased 1%, reflecting higher spot equity markets.
- Average loans increased 2%, primarily due to growth in residential mortgage loans.
- Average deposits decreased 3%, driven by the timing of client annual income tax payments.
Second quarter 2024 compared with second quarter 2023
- Earnings increased 63%, due to higher net interest income, lower noninterest expense and higher noninterest income, partially offset by a provision for credit losses.
- Noninterest income increased 3%, reflecting higher average equity markets.
- Noninterest expense decreased 7%, reflecting a continued focus on expense management.
- Discretionary client assets under management increased 11%, reflecting higher spot equity markets.
- Average loans increased 10%, primarily driven by growth in residential mortgage loans.
- Average deposits increased 2%, reflecting growth in CD and deposit sweep balances.
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, corporate overhead net of allocations, tax adjustments that are not allocated to business segments, exited businesses and the residual impact from funds transfer pricing operations.
CONFERENCE CALL AND SUPPLEMENTAL FINANCIAL INFORMATION
PNC Chairman and Chief Executive Officer
CONTACTS |
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MEDIA: |
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INVESTORS: |
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(412) 762-4550 |
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(412) 768-4143 |
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[TABULAR MATERIAL FOLLOWS]
|
Consolidated Financial Highlights (Unaudited) |
|||||||||||
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|
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|
|
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|
|
|
|
|
FINANCIAL RESULTS |
|
Three months ended |
|
|
|
Six months ended |
||||||
Dollars in millions, except per share data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
|
2024 |
|
2023 |
|
|
|
2024 |
|
2023 |
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
$ 3,302 |
|
$ 3,264 |
|
$ 3,510 |
|
|
|
$ 6,566 |
|
$ 7,095 |
Noninterest income |
|
2,109 |
|
1,881 |
|
1,783 |
|
|
|
3,990 |
|
3,801 |
Total revenue |
|
5,411 |
|
5,145 |
|
5,293 |
|
|
|
10,556 |
|
10,896 |
Provision for credit losses |
|
235 |
|
155 |
|
146 |
|
|
|
390 |
|
381 |
Noninterest expense |
|
3,357 |
|
3,334 |
|
3,372 |
|
|
|
6,691 |
|
6,693 |
Income before income taxes and noncontrolling interests |
|
$ 1,819 |
|
$ 1,656 |
|
$ 1,775 |
|
|
|
$ 3,475 |
|
$ 3,822 |
Income taxes |
|
342 |
|
312 |
|
275 |
|
|
|
654 |
|
628 |
Net income |
|
$ 1,477 |
|
$ 1,344 |
|
$ 1,500 |
|
|
|
$ 2,821 |
|
$ 3,194 |
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to noncontrolling interests |
|
18 |
|
14 |
|
17 |
|
|
|
32 |
|
34 |
Preferred stock dividends (a) |
|
95 |
|
81 |
|
127 |
|
|
|
176 |
|
195 |
Preferred stock discount accretion and redemptions |
|
2 |
|
2 |
|
2 |
|
|
|
4 |
|
4 |
Net income attributable to common shareholders |
|
$ 1,362 |
|
$ 1,247 |
|
$ 1,354 |
|
|
|
$ 2,609 |
|
$ 2,961 |
Per Common Share |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ 3.39 |
|
$ 3.10 |
|
$ 3.36 |
|
|
|
$ 6.49 |
|
$ 7.35 |
Diluted |
|
$ 3.39 |
|
$ 3.10 |
|
$ 3.36 |
|
|
|
$ 6.48 |
|
$ 7.34 |
Cash dividends declared per common share |
|
$ 1.55 |
|
$ 1.55 |
|
$ 1.50 |
|
|
|
$ 3.10 |
|
$ 3.00 |
Effective tax rate (b) |
|
18.8 % |
|
18.8 % |
|
15.5 % |
|
|
|
18.8 % |
|
16.4 % |
PERFORMANCE RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin (c) |
|
2.60 % |
|
2.57 % |
|
2.79 % |
|
|
|
2.58 % |
|
2.81 % |
Noninterest income to total revenue |
|
39 % |
|
37 % |
|
34 % |
|
|
|
38 % |
|
35 % |
Efficiency (d) |
|
62 % |
|
65 % |
|
64 % |
|
|
|
63 % |
|
61 % |
Return on: |
|
|
|
|
|
|
|
|
|
|
|
|
Average common shareholders' equity |
|
12.16 % |
|
11.39 % |
|
13.01 % |
|
|
|
11.78 % |
|
14.53 % |
Average assets |
|
1.05 % |
|
0.97 % |
|
1.08 % |
|
|
|
1.01 % |
|
1.15 % |
|
|
(a) |
Dividends are payable quarterly, other than Series S preferred stock, which is 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 |
(d) |
Calculated as noninterest expense divided by total revenue. |
|
Consolidated Financial Highlights (Unaudited) |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
|
2024 |
|
2023 |
BALANCE SHEET DATA |
|
|
|
|
|
Dollars in millions, except per share data and as noted |
|
|
|
|
|
Assets |
$ 556,519 |
|
$ 566,162 |
|
$ 558,207 |
Loans (a) |
$ 321,429 |
|
$ 319,781 |
|
$ 321,761 |
Allowance for loan and lease losses |
$ 4,636 |
|
$ 4,693 |
|
$ 4,737 |
Interest-earning deposits with banks |
$ 33,039 |
|
$ 53,612 |
|
$ 38,259 |
Investment securities |
$ 138,645 |
|
$ 130,460 |
|
$ 135,661 |
Total deposits |
$ 416,391 |
|
$ 425,624 |
|
$ 427,489 |
Borrowed funds (a) |
$ 71,391 |
|
$ 72,707 |
|
$ 65,384 |
Allowance for unfunded lending related commitments |
$ 717 |
|
$ 672 |
|
$ 663 |
Total shareholders' equity |
$ 52,642 |
|
$ 51,340 |
|
$ 49,320 |
Common shareholders' equity |
$ 46,397 |
|
$ 45,097 |
|
$ 42,083 |
Accumulated other comprehensive income (loss) |
$ (7,446) |
|
$ (8,042) |
|
$ (9,525) |
Book value per common share |
$ 116.70 |
|
$ 113.30 |
|
$ 105.67 |
Tangible book value per common share (non-GAAP) (b) |
$ 89.12 |
|
$ 85.70 |
|
$ 77.80 |
Period end common shares outstanding (In millions) |
398 |
|
398 |
|
398 |
Loans to deposits |
77 % |
|
75 % |
|
75 % |
Common shareholders' equity to total assets |
8.3 % |
|
8.0 % |
|
7.5 % |
CLIENT ASSETS (In billions) |
|
|
|
|
|
Discretionary client assets under management |
$ 196 |
|
$ 195 |
|
$ 176 |
Nondiscretionary client assets under administration |
208 |
|
199 |
|
168 |
Total client assets under administration |
404 |
|
394 |
|
344 |
Brokerage account client assets |
83 |
|
83 |
|
80 |
Total client assets |
$ 487 |
|
$ 477 |
|
$ 424 |
CAPITAL RATIOS |
|
|
|
|
|
Basel III (c) (d) |
|
|
|
|
|
Common equity Tier 1 |
10.2 % |
|
10.1 % |
|
9.5 % |
Common equity Tier 1 fully implemented (e) |
10.1 % |
|
10.0 % |
|
9.4 % |
Tier 1 risk-based |
11.6 % |
|
11.6 % |
|
11.2 % |
Total capital risk-based |
13.5 % |
|
13.4 % |
|
13.1 % |
Leverage |
8.9 % |
|
8.7 % |
|
8.8 % |
Supplementary leverage |
7.4 % |
|
7.3 % |
|
7.4 % |
ASSET QUALITY |
|
|
|
|
|
Nonperforming loans to total loans |
0.78 % |
|
0.74 % |
|
0.59 % |
Nonperforming assets to total loans, OREO and foreclosed assets |
0.79 % |
|
0.76 % |
|
0.61 % |
Nonperforming assets to total assets |
0.46 % |
|
0.43 % |
|
0.35 % |
Net charge-offs to average loans (for the three months ended) (annualized) |
0.33 % |
|
0.30 % |
|
0.24 % |
Allowance for loan and lease losses to total loans |
1.44 % |
|
1.47 % |
|
1.47 % |
Allowance for credit losses to total loans (f) |
1.67 % |
|
1.68 % |
|
1.68 % |
Allowance for loan and lease losses to nonperforming loans |
185 % |
|
197 % |
|
248 % |
Total delinquencies (In millions) (g) |
$ 1,272 |
|
$ 1,275 |
|
$ 1,212 |
|
|
(a) |
Amounts include assets and liabilities for which we have elected the fair value option. Our first quarter 2024 Form 10-Q included, and our second quarter 2024 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 16 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 15 for additional information. The ratios as of |
(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. |
|
Consolidated Financial Highlights (Unaudited) |
CAPITAL RATIOS
PNC's regulatory risk-based capital ratios in 2024 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
Our Basel III capital ratios may be impacted by changes to the regulatory capital rules and additional regulatory guidance or analysis.
|
|
|
|
|
|
|
|
|
Basel III |
|
|
|
|||
|
2024 (estimated) (b) |
2024 (b) |
|
2023 (b) |
|
(estimated) (c) |
(estimated) (c) |
|
|
|
|||||
Dollars in millions |
|
||||||
Common stock, related surplus and retained earnings, |
$ 54,084 |
$ 53,380 |
|
$ 52,091 |
|
$ 53,843 |
$ 53,139 |
Less regulatory capital adjustments: |
|
|
|
|
|
|
|
|
(10,965) |
(10,982) |
|
(11,101) |
|
(10,965) |
(10,982) |
All other adjustments |
(102) |
(88) |
|
(89) |
|
(104) |
(90) |
Basel III Common equity Tier 1 capital |
$ 43,017 |
$ 42,310 |
|
$ 40,901 |
|
$ 42,774 |
$ 42,067 |
Basel III standardized approach risk-weighted assets (d) |
$ 423,339 |
$ 420,342 |
|
$ 429,634 |
|
$ 423,430 |
$ 420,397 |
Basel III Common equity Tier 1 capital ratio |
10.2 % |
10.1 % |
|
9.5 % |
|
10.1 % |
10.0 % |
|
|
(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 |
(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 |
||||
|
|
|
|
|
|
Dollars in millions |
2024 |
|
2024 |
|
2023 |
Income before income taxes and noncontrolling interests |
$ 1,819 |
|
$ 1,656 |
|
$ 1,775 |
Provision for credit losses |
235 |
|
155 |
|
146 |
Pretax pre-provision earnings (non-GAAP) |
$ 2,054 |
|
$ 1,811 |
|
$ 1,921 |
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) |
|
|
|
|
|
|
|
|
|
|
|
Dollars in millions, except per share data |
2024 |
|
2024 |
|
2023 |
Book value per common share |
$ 116.70 |
|
$ 113.30 |
|
$ 105.67 |
Tangible book value per common share |
|
|
|
|
|
Common shareholders' equity |
$ 46,397 |
|
$ 45,097 |
|
$ 42,083 |
|
(11,206) |
|
(11,225) |
|
(11,357) |
Deferred tax liabilities on goodwill and other intangible assets |
241 |
|
242 |
|
256 |
Tangible common shareholders' equity |
$ 35,432 |
|
$ 34,114 |
|
$ 30,982 |
Period-end common shares outstanding (In millions) |
398 |
|
398 |
|
398 |
Tangible book value per common share (non-GAAP) |
$ 89.12 |
|
$ 85.70 |
|
$ 77.80 |
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 |
||||
|
|
|
|
|
|
Dollars in millions |
2024 |
|
2024 |
|
2023 |
Net interest income |
$ 3,302 |
|
$ 3,264 |
|
$ 3,510 |
Taxable-equivalent adjustments |
34 |
|
34 |
|
37 |
Net interest income (Fully Taxable-Equivalent - FTE) (non-GAAP) |
$ 3,336 |
|
$ 3,298 |
|
$ 3,547 |
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. 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:
- Job and income gains will continue to support consumer spending growth this year, but PNC's baseline forecast is for slower economic growth in 2024 as higher interest rates remain a drag on the economy.
- Real GDP growth this year will be close to trend at around 2%, and the unemployment rate will increase modestly to somewhat above 4% by the end of 2024. Inflation will continue to slow as wage pressures abate, gradually moving back to the
Federal Reserve's 2% long-term objective. - With slowing inflation PNC expects two federal funds rate cuts of 25 basis points each at the
Federal Open Market Committee's September and December meetings, with the rate ending this year in a range between 4.75% and 5.00%. PNC expects multiple federal funds rate cuts in 2025 as inflation continues to ease.
- PNC's ability to take certain capital actions, including returning capital to shareholders, is subject to PNC meeting or exceeding minimum capital levels, including a stress capital buffer established by the
Federal Reserve Board in connection with theFederal Reserve Board's Comprehensive Capital Analysis and Review (CCAR) process. - PNC's regulatory capital ratios in the future will depend on, among other things, PNC'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 2023 Form 10-K and in our first quarter 2023 Form 10-Q, including in the Risk Factors and Risk Management sections and the Legal Proceedings and Commitments Notes of the Notes To Consolidated Financial Statements in those reports, and in our subsequent
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