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PNC Reports First Quarter 2016 Net Income Of $943 Million, $1.68 Diluted EPS
"PNC had solid first quarter earnings that were impacted by weaker equity markets and related fees, and continued deterioration in energy related credits," said
Income Statement Highlights
- First quarter results reflected higher loans and securities, lower revenue, reduced noninterest expense, and higher provision for credit losses compared with the fourth quarter of 2015.
- Net interest income of
$2.1 billion for the first quarter increased$6 million compared with the fourth quarter driven by growth in core net interest income despite a lower day count. - Noninterest income of
$1.6 billion for the first quarter decreased$194 million , or 11 percent, compared with the fourth quarter primarily due to weaker equity markets, lower capital markets activity and seasonality. - Noninterest expense declined
$115 million , or 5 percent, to$2.3 billion reflecting seasonally lower business activity and PNC's continued focus on disciplined expense management. - Provision for credit losses of
$152 million for the first quarter increased$78 million compared with the fourth quarter primarily attributable to certain energy related loans.
Balance Sheet Highlights
- Loans grew
$.8 billion to $207.5 billion atMarch 31, 2016 compared withDecember 31, 2015 .- Total commercial lending grew
$1.6 billion , or 1 percent, primarily in PNC's corporate banking and real estate businesses. - Total consumer lending decreased
$.8 billion due to lower home equity and education loans as well as runoff in the non-strategic portfolio.
- Total commercial lending grew
- Overall credit quality in the first quarter remained relatively stable with the fourth quarter, except for certain energy related loans.
- Nonperforming assets of
$2.6 billion atMarch 31, 2016 increased$.1 billion , or 5 percent, compared withDecember 31, 2015 . - Net charge-offs increased to
$149 million for the first quarter compared with$120 million for the fourth quarter.
- Nonperforming assets of
- Deposits of
$250.4 billion atMarch 31, 2016 increased$1.4 billion , or 1 percent, overDecember 31, 2015 due to growth in consumer deposits partially offset by lower commercial deposits.- Average deposits decreased
$.8 billion from the fourth quarter reflecting seasonal declines in commercial deposits.
- Average deposits decreased
- Investment securities increased
$2.0 billion , or 3 percent, in the first quarter to$72.6 billion atMarch 31, 2016 compared withDecember 31, 2015 . - PNC maintained a strong liquidity position.
- The estimated Liquidity Coverage Ratio at
March 31, 2016 exceeded 100 percent for bothPNC and PNC Bank, N.A. , above the minimum phased-in requirement of 90 percent in 2016.
- The estimated Liquidity Coverage Ratio at
- PNC returned capital to shareholders in the first quarter through repurchases of 5.9 million common shares for
$.5 billion and dividends on common shares of$.3 billion . - PNC maintained a strong capital position.
- Transitional Basel III common equity Tier 1 capital ratio was an estimated 10.6 percent at
March 31, 2016 andDecember 31, 2015 , calculated using the regulatory capital methodologies applicable to PNC during 2016 and 2015, respectively. - Pro forma fully phased-in Basel III common equity Tier 1 capital ratio was an estimated 10.1 percent at
March 31, 2016 and 10.0 percent atDecember 31, 2015 based on the standardized approach rules.
- Transitional Basel III common equity Tier 1 capital ratio was an estimated 10.6 percent at
Earnings Summary |
|||||||||||||
In millions, except per share data |
1Q16 |
4Q15 |
1Q15 |
||||||||||
Net income |
$ |
943 |
$ |
1,022 |
$ |
1,004 |
|||||||
Net income attributable to diluted common shares |
$ |
850 |
$ |
957 |
$ |
926 |
|||||||
Diluted earnings per common share |
$ |
1.68 |
$ |
1.87 |
$ |
1.75 |
|||||||
Average diluted common shares outstanding |
507 |
513 |
529 |
||||||||||
Return on average assets |
1.07 |
% |
1.12 |
% |
1.17 |
% |
|||||||
Return on average common equity |
8.44 |
% |
9.30 |
% |
9.32 |
% |
|||||||
Book value per common share Period end |
$ |
83.47 |
$ |
81.84 |
$ |
78.99 |
|||||||
Tangible book value per common share (non-GAAP) Period end |
$ |
65.15 |
$ |
63.65 |
$ |
61.21 |
|||||||
Cash dividends declared per common share |
$ |
.51 |
$ |
.51 |
$ |
.48 |
|||||||
The Consolidated Financial Highlights accompanying this news release include additional information regarding reconciliations of non-GAAP financial measures to reported amounts, including reconciliations of tangible book value to book value per common share and business segment income to net income. Reference to core net interest income is to total net interest income less purchase accounting accretion, which consists of scheduled accretion and excess cash recoveries, as detailed in the Consolidated Financial Highlights. Fee income refers to noninterest income in the following categories: asset management, consumer services, corporate services, residential mortgage, and service charges on deposits. Information in this news release including the financial tables is unaudited. See the notes and other information in the Consolidated Financial Highlights.
CONSOLIDATED REVENUE REVIEW |
|||||||||||||||||||||
Revenue |
Change |
Change |
|||||||||||||||||||
1Q16 vs |
1Q16 vs |
||||||||||||||||||||
In millions |
1Q16 |
4Q15 |
1Q15 |
4Q15 |
1Q15 |
||||||||||||||||
Net interest income |
$ |
2,098 |
$ |
2,092 |
$ |
2,072 |
– |
1 |
% |
||||||||||||
Noninterest income |
1,567 |
1,761 |
1,659 |
(11) |
% |
(6) |
% |
||||||||||||||
Total revenue |
$ |
3,665 |
$ |
3,853 |
$ |
3,731 |
(5) |
% |
(2) |
% |
|||||||||||
Total revenue for the first quarter of 2016 decreased
Net interest income for the first quarter of 2016 increased
The net interest margin of 2.75 percent for the first quarter of 2016 increased over the fourth quarter margin of 2.70 percent primarily due to lower balances on deposit with the
Noninterest Income |
Change |
Change |
|||||||||||||||||||||
1Q16 vs |
1Q16 vs |
||||||||||||||||||||||
In millions |
1Q16 |
4Q15 |
1Q15 |
4Q15 |
1Q15 |
||||||||||||||||||
Asset management |
$ |
341 |
$ |
399 |
$ |
376 |
(15) |
% |
(9) |
% |
|||||||||||||
Consumer services |
337 |
349 |
311 |
(3) |
% |
8 |
% |
||||||||||||||||
Corporate services |
325 |
394 |
344 |
(18) |
% |
(6) |
% |
||||||||||||||||
Residential mortgage |
100 |
113 |
164 |
(12) |
% |
(39) |
% |
||||||||||||||||
Service charges on deposits |
158 |
170 |
153 |
(7) |
% |
3 |
% |
||||||||||||||||
Other, including net securities gains |
306 |
336 |
311 |
(9) |
% |
(2) |
% |
||||||||||||||||
$ |
1,567 |
$ |
1,761 |
$ |
1,659 |
(11) |
% |
(6) |
% |
||||||||||||||
Noninterest income for the first quarter of 2016 decreased
Noninterest income for the first quarter of 2016 decreased
CONSOLIDATED EXPENSE REVIEW |
||||||||||||||||||||||
Noninterest Expense |
Change |
Change |
||||||||||||||||||||
1Q16 vs |
1Q16 vs |
|||||||||||||||||||||
In millions |
1Q16 |
4Q15 |
1Q15 |
4Q15 |
1Q15 |
|||||||||||||||||
Personnel |
$ |
1,145 |
$ |
1,252 |
$ |
1,157 |
(9) |
% |
(1) |
% |
||||||||||||
Occupancy |
221 |
208 |
216 |
6 |
% |
2 |
% |
|||||||||||||||
Equipment |
234 |
245 |
222 |
(4) |
% |
5 |
% |
|||||||||||||||
Marketing |
54 |
56 |
62 |
(4) |
% |
(13) |
% |
|||||||||||||||
Other |
627 |
635 |
692 |
(1) |
% |
(9) |
% |
|||||||||||||||
$ |
2,281 |
$ |
2,396 |
$ |
2,349 |
(5) |
% |
(3) |
% |
|||||||||||||
Noninterest expense for the first quarter of 2016 decreased
Noninterest expense for the first quarter of 2016 decreased
The effective tax rate was 23.5 percent for the first quarter of 2016, 26.1 percent for the fourth quarter of 2015 and 24.4 percent for the first quarter of 2015.
CONSOLIDATED BALANCE SHEET REVIEW
Total assets were
Loans |
Change |
Change |
||||||||||||||||||||
3/31/16 |
vs |
3/31/16 |
vs |
|||||||||||||||||||
In billions |
3/31/2016 |
12/31/2015 |
3/31/2015 |
12/31/15 |
3/31/15 |
|||||||||||||||||
Commercial lending |
$ |
135.1 |
$ |
133.5 |
$ |
129.7 |
1 |
% |
4 |
% |
||||||||||||
Consumer lending |
72.4 |
73.2 |
75.0 |
(1) |
% |
(3) |
% |
|||||||||||||||
Total loans |
$ |
207.5 |
$ |
206.7 |
$ |
204.7 |
– |
1 |
% |
|||||||||||||
For the quarter ended: |
||||||||||||||||||||||
Average loans |
$ |
207.2 |
$ |
206.0 |
$ |
205.2 |
1 |
% |
1 |
% |
||||||||||||
Total loans grew
Average loans increased
First quarter 2016 period end and average loans increased
Investment Securities |
Change |
Change |
||||||||||||||||||||
3/31/16 |
vs |
3/31/16 |
vs |
|||||||||||||||||||
In billions |
3/31/2016 |
12/31/2015 |
3/31/2015 |
12/31/15 |
3/31/15 |
|||||||||||||||||
At quarter end |
$ |
72.6 |
$ |
70.6 |
$ |
60.8 |
3 |
% |
19 |
% |
||||||||||||
Average for the quarter ended |
$ |
70.3 |
$ |
67.9 |
$ |
57.2 |
4 |
% |
23 |
% |
||||||||||||
Investment securities balances at
Interest-earning deposits with banks, primarily with the
Deposits |
Change |
Change |
||||||||||||||||||||
3/31/16 |
vs |
3/31/16 |
vs |
|||||||||||||||||||
In billions |
3/31/2016 |
12/31/2015 |
3/31/2015 |
12/31/15 |
3/31/15 |
|||||||||||||||||
At quarter end |
$ |
250.4 |
$ |
249.0 |
$ |
236.5 |
1 |
% |
6 |
% |
||||||||||||
Average for the quarter ended |
$ |
246.1 |
$ |
246.9 |
$ |
233.1 |
– |
6 |
% |
|||||||||||||
Total deposits at
Borrowed Funds |
Change |
Change |
||||||||||||||||||||
3/31/16 |
vs |
3/31/16 |
vs |
|||||||||||||||||||
In billions |
3/31/2016 |
12/31/2015 |
3/31/2015 |
12/31/15 |
3/31/15 |
|||||||||||||||||
At quarter end |
$ |
54.2 |
$ |
54.6 |
$ |
56.9 |
(1) |
% |
(5) |
% |
||||||||||||
Average for the quarter ended |
$ |
53.6 |
$ |
55.0 |
$ |
56.3 |
(3) |
% |
(5) |
% |
||||||||||||
Borrowed funds at
Capital |
|||||||||||||
3/31/2016* |
12/31/2015 |
3/31/2015 |
|||||||||||
Common shareholders' equity In billions |
$ |
41.7 |
$ |
41.3 |
$ |
41.1 |
|||||||
Transitional Basel III common equity Tier 1 capital ratio |
10.6 |
% |
10.6 |
% |
10.5 |
% |
|||||||
Pro forma fully phased-in Basel III common equity |
|||||||||||||
Tier 1 capital ratio |
10.1 |
% |
10.0 |
% |
10.0 |
% |
|||||||
* Ratios estimated |
|||||||||||||
PNC maintained a strong capital position. Common shareholders' equity increased compared with
PNC returned capital to shareholders through share repurchases and dividends. During the first quarter of 2016, PNC repurchased 5.9 million common shares for
PNC paid dividends on common stock of
CREDIT QUALITY REVIEW |
|||||||||||||||||||
Credit Quality |
Change |
Change |
|||||||||||||||||
At or for the quarter ended |
3/31/16 |
vs |
3/31/16 |
vs |
|||||||||||||||
In millions |
3/31/2016 |
12/31/2015 |
3/31/2015 |
12/31/15 |
3/31/15 |
||||||||||||||
Nonperforming loans |
$ |
2,281 |
$ |
2,126 |
$ |
2,405 |
7 |
% |
(5) |
% |
|||||||||
Nonperforming assets |
$ |
2,552 |
$ |
2,425 |
$ |
2,754 |
5 |
% |
(7) |
% |
|||||||||
Accruing loans past due 90 days or more |
$ |
782 |
$ |
881 |
$ |
988 |
(11) |
% |
(21) |
% |
|||||||||
Net charge-offs |
$ |
149 |
$ |
120 |
$ |
103 |
24 |
% |
45 |
% |
|||||||||
Provision for credit losses |
$ |
152 |
$ |
74 |
$ |
54 |
105 |
% |
181 |
% |
|||||||||
Allowance for loan and lease losses |
$ |
2,711 |
$ |
2,727 |
$ |
3,306 |
(1) |
% |
(18) |
% |
|||||||||
Overall credit quality for the first quarter of 2016 remained relatively stable with the fourth quarter, except for certain energy related loans. Provision for credit losses for first quarter 2016 was
Nonperforming assets at
Overall delinquencies improved in the first quarter of 2016 with a decrease of
Net charge-offs for the first quarter of 2016 increased
The allowance for loan and lease losses at
BUSINESS SEGMENT RESULTS |
||||||||||||||
Business Segment Income (Loss) |
||||||||||||||
In millions |
1Q16 |
4Q15 |
1Q15 |
|||||||||||
Retail Banking |
$ |
268 |
$ |
213 |
$ |
202 |
||||||||
Corporate & Institutional Banking |
431 |
539 |
482 |
|||||||||||
Asset Management Group |
49 |
51 |
37 |
|||||||||||
Residential Mortgage Banking |
(13) |
(17) |
28 |
|||||||||||
Non-Strategic Assets Portfolio |
52 |
96 |
81 |
|||||||||||
Other, including BlackRock |
156 |
140 |
174 |
|||||||||||
Net income |
$ |
943 |
$ |
1,022 |
$ |
1,004 |
||||||||
See accompanying notes in Consolidated Financial Highlights |
||||||||||||||
Retail Banking |
Change |
Change |
||||||||||||||||||||
1Q16 vs |
1Q16 vs |
|||||||||||||||||||||
In millions |
1Q16 |
4Q15 |
1Q15 |
4Q15 |
1Q15 |
|||||||||||||||||
Net interest income |
$ |
1,113 |
$ |
1,074 |
$ |
1,038 |
$ |
39 |
$ |
75 |
||||||||||||
Noninterest income |
$ |
537 |
$ |
571 |
$ |
488 |
$ |
(34) |
$ |
49 |
||||||||||||
Provision for credit losses |
$ |
77 |
$ |
108 |
$ |
49 |
$ |
(31) |
$ |
28 |
||||||||||||
Noninterest expense |
$ |
1,150 |
$ |
1,203 |
$ |
1,158 |
$ |
(53) |
$ |
(8) |
||||||||||||
Earnings |
$ |
268 |
$ |
213 |
$ |
202 |
$ |
55 |
$ |
66 |
||||||||||||
In billions |
||||||||||||||||||||||
Average loans |
$ |
63.1 |
$ |
63.6 |
$ |
65.1 |
$ |
(.5) |
$ |
(2.0) |
||||||||||||
Average deposits |
$ |
151.6 |
$ |
149.9 |
$ |
141.6 |
$ |
1.7 |
$ |
10.0 |
||||||||||||
Retail Banking earnings for the first quarter of 2016 increased in both comparisons. Noninterest income included gains on sales of Visa Class B common shares of
- Retail Banking continued to focus on the strategic priority of transforming the customer experience through transaction migration, branch network transformation and multi-channel sales and service strategies.
- Approximately 56 percent of consumer customers used non-teller channels for the majority of their transactions during the first quarter of 2016 compared with 55 percent and 50 percent for the fourth and first quarters of 2015, respectively.
- Deposit transactions via ATM and mobile channels increased to 47 percent of total deposit transactions in the first quarter of 2016 compared with 46 percent for the fourth quarter and 40 percent for the first quarter of 2015.
- Integral to PNC's retail branch transformation strategy, approximately 14 percent of the branch network operates under the universal model designed to enhance sales opportunities for branch personnel, in part by driving higher ATM and mobile deposits. PNC had a network of 2,613 branches and 8,940 ATMs at
March 31, 2016 .
- Average deposits grew 1 percent over the fourth quarter and 7 percent over the first quarter of 2015 due to higher demand deposits as well as an increase in savings deposits partially offset by lower money market deposits reflecting a shift to new relationship-based savings products. Certificates of deposit declined in both comparisons from the net runoff of maturing accounts.
- Average loans decreased 3 percent compared with the first quarter of 2015 as growth in automobile and credit card loans was more than offset by lower home equity, education and commercial loans.
- Net charge-offs for the first quarter of 2016 were
$96 million compared with$93 million and$99 million in the fourth and first quarters of 2015, respectively.
Corporate & Institutional Banking |
Change |
Change |
|||||||||||||||||
1Q16 vs |
1Q16 vs |
||||||||||||||||||
In millions |
1Q16 |
4Q15 |
1Q15 |
4Q15 |
1Q15 |
||||||||||||||
Net interest income |
$ |
870 |
$ |
881 |
$ |
855 |
$ |
(11) |
$ |
15 |
|||||||||
Noninterest income |
$ |
434 |
$ |
538 |
$ |
429 |
$ |
(104) |
$ |
5 |
|||||||||
Provision for credit losses |
$ |
107 |
$ |
23 |
$ |
17 |
$ |
84 |
$ |
90 |
|||||||||
Noninterest expense |
$ |
521 |
$ |
554 |
$ |
514 |
$ |
(33) |
$ |
7 |
|||||||||
Earnings |
$ |
431 |
$ |
539 |
$ |
482 |
$ |
(108) |
$ |
(51) |
|||||||||
In billions |
|||||||||||||||||||
Average loans |
$ |
119.7 |
$ |
117.7 |
$ |
115.1 |
$ |
2.0 |
$ |
4.6 |
|||||||||
Average deposits |
$ |
79.5 |
$ |
82.0 |
$ |
78.6 |
$ |
(2.5) |
$ |
.9 |
|||||||||
Commercial loan servicing portfolio Quarter end |
$ |
453 |
$ |
447 |
$ |
390 |
$ |
6 |
$ |
63 |
|||||||||
Corporate & Institutional Banking earnings for the first quarter of 2016 decreased in both comparisons. Noninterest income declined from the fourth quarter primarily due to lower merger and acquisition advisory fees and lower loan syndication fees, down from traditionally strong fourth quarter levels, and lower revenue associated with multifamily loans originated for sale to agencies as well as lower gains on asset sales. Provision for credit losses increased in both comparisons principally attributable to energy related loans. Noninterest expense decreased compared with the fourth quarter primarily as a result of lower variable compensation and other costs associated with seasonally lower business activity.
- Average loans increased 2 percent over the fourth quarter and 4 percent over the first quarter of 2015 primarily due to growth in commercial lending in PNC's real estate business. The first quarter 2015 comparison also reflected increased lending to large corporate customers, partially offset by the impact of capital and liquidity management activities.
- Average deposits decreased 3 percent from the fourth quarter reflecting seasonal declines. Average deposits increased 1 percent over the first quarter of 2015 due to demand deposit growth, partially offset by a decrease in money market deposits.
- Net charge-offs in the first quarter of 2016 were
$41 million compared with net charge-offs of$24 million in the fourth quarter and a net recovery position of$1 million in the first quarter of 2015.
Asset Management Group |
Change |
Change |
||||||||||||||||||||
1Q16 vs |
1Q16 vs |
|||||||||||||||||||||
In millions |
1Q16 |
4Q15 |
1Q15 |
4Q15 |
1Q15 |
|||||||||||||||||
Net interest income |
$ |
77 |
$ |
77 |
$ |
73 |
– |
$ |
4 |
|||||||||||||
Noninterest income |
$ |
203 |
$ |
211 |
$ |
208 |
$ |
(8) |
$ |
(5) |
||||||||||||
Provision for credit losses (benefit) |
$ |
(3) |
$ |
(2) |
$ |
12 |
$ |
(1) |
$ |
(15) |
||||||||||||
Noninterest expense |
$ |
206 |
$ |
210 |
$ |
210 |
$ |
(4) |
$ |
(4) |
||||||||||||
Earnings |
$ |
49 |
$ |
51 |
$ |
37 |
$ |
(2) |
$ |
12 |
||||||||||||
In billions |
||||||||||||||||||||||
Client assets under administration Quarter end |
$ |
260 |
$ |
259 |
$ |
265 |
$ |
1 |
$ |
(5) |
||||||||||||
Average loans |
$ |
7.4 |
$ |
7.4 |
$ |
7.4 |
– |
– |
||||||||||||||
Average deposits |
$ |
12.3 |
$ |
12.2 |
$ |
10.7 |
$ |
.1 |
$ |
1.6 |
||||||||||||
Asset Management Group growth strategies include increasing sales sourced from other PNC lines of business, maximizing front line productivity and optimizing market presence in high opportunity markets. The business is primarily focused on growing client assets under management, building retirement capabilities and expanding product solutions for all customers.- Client assets under administration at
March 31, 2016 included discretionary client assets under management of$135 billion and nondiscretionary client assets under administration of$125 billion .- Discretionary client assets under management increased
$1 billion fromDecember 31, 2015 and decreased$1 billion fromMarch 31, 2015 .
- Discretionary client assets under management increased
Residential Mortgage Banking |
Change |
Change |
||||||||||||||||||
1Q16 vs |
1Q16 vs |
|||||||||||||||||||
In millions |
1Q16 |
4Q15 |
1Q15 |
4Q15 |
1Q15 |
|||||||||||||||
Net interest income |
$ |
25 |
$ |
30 |
$ |
30 |
$ |
(5) |
$ |
(5) |
||||||||||
Noninterest income |
$ |
105 |
$ |
125 |
$ |
177 |
$ |
(20) |
$ |
(72) |
||||||||||
Provision for credit losses (benefit) |
$ |
(1) |
$ |
- |
$ |
2 |
$ |
(1) |
$ |
(3) |
||||||||||
Noninterest expense |
$ |
152 |
$ |
181 |
$ |
161 |
$ |
(29) |
$ |
(9) |
||||||||||
Earnings (loss) |
$ |
(13) |
$ |
(17) |
$ |
28 |
$ |
4 |
$ |
(41) |
||||||||||
In billions |
||||||||||||||||||||
Residential mortgage servicing portfolio Quarter end |
$ |
125 |
$ |
123 |
$ |
113 |
$ |
2 |
$ |
12 |
||||||||||
Loan origination volume |
$ |
1.9 |
$ |
2.3 |
$ |
2.6 |
$ |
(.4) |
$ |
(.7) |
||||||||||
Residential Mortgage Banking reported losses for the first quarter of 2016 and fourth quarter of 2015 compared with earnings for the first quarter of 2015. Noninterest income decreased in both comparisons as a result of net hedging losses on residential mortgage servicing rights in first quarter 2016 compared with net hedging gains in both the first and fourth quarters of 2015, partially offset in both comparisons by higher servicing revenue. Lower loan sales revenue also contributed to the decline from first quarter 2015. Noninterest expense decreased from the fourth quarter primarily due to lower legal accruals and decreased from first quarter 2015 as a result of lower servicing costs and foreclosure-related expense.
- The strategic focus of Residential Mortgage Banking is the acquisition of new customers through a retail loan officer sales force with an emphasis on home purchase transactions, competing on the basis of superior service, and leveraging cross-sell opportunities, especially in the bank footprint markets.
- Loan origination volume in the first quarter of 2016 decreased 14 percent compared with the fourth quarter and 25 percent compared with the first quarter of 2015. Approximately 40 percent of first quarter 2016 origination volume was for home purchase transactions compared with 45 percent in the fourth quarter and 31 percent in the first quarter of 2015.
- Loan servicing acquisitions were
$5 billion in both the first quarter of 2016 and fourth quarter of 2015 and$8 billion in the first quarter of 2015.
Non-Strategic Assets Portfolio |
Change |
Change |
|||||||||||||||||
1Q16 vs |
1Q16 vs |
||||||||||||||||||
In millions |
1Q16 |
4Q15 |
1Q15 |
4Q15 |
1Q15 |
||||||||||||||
Net interest income |
$ |
75 |
$ |
90 |
$ |
112 |
$ |
(15) |
$ |
(37) |
|||||||||
Noninterest income |
$ |
22 |
$ |
19 |
$ |
9 |
$ |
3 |
$ |
13 |
|||||||||
Provision for credit losses (benefit) |
$ |
(7) |
$ |
(53) |
$ |
(31) |
$ |
46 |
$ |
24 |
|||||||||
Noninterest expense |
$ |
21 |
$ |
10 |
$ |
24 |
$ |
11 |
$ |
(3) |
|||||||||
Earnings |
$ |
52 |
$ |
96 |
$ |
81 |
$ |
(44) |
$ |
(29) |
|||||||||
In billions |
|||||||||||||||||||
Average loans |
$ |
6.1 |
$ |
6.8 |
$ |
8.0 |
$ |
(.7) |
$ |
(1.9) |
|||||||||
The Non-Strategic Assets Portfolio consists of assets primarily obtained through acquisitions of other companies and includes a consumer portfolio of mainly residential mortgage and brokered home equity loans and lines of credit, and a small commercial/commercial real estate loan and lease portfolio. The business activity of this segment is to manage the liquidation of the portfolios while maximizing the value and mitigating risk.
- Provision for credit losses was a lower benefit in the first quarter of 2016 compared with the linked quarter reflecting the impact of fourth quarter recognition of improved actual and projected cash flows on consumer impaired loans.
- Net charge-offs were
$8 million for the first quarter of 2016 compared with$4 million for the fourth quarter of 2015 and a small net recovery position for the first quarter of 2015.
Other, including
The "Other, including
CONFERENCE CALL AND SUPPLEMENTAL FINANCIAL INFORMATION
PNC Chairman, President and Chief Executive Officer
The
[TABULAR MATERIAL FOLLOWS]
The PNC Financial Services Group, Inc. |
Consolidated Financial Highlights (Unaudited) |
|||||||||||||
FINANCIAL RESULTS |
Three months ended |
|||||||||||||
Dollars in millions, except per share data |
March 31 |
December 31 |
March 31 |
|||||||||||
2016 |
2015 |
2015 |
||||||||||||
Revenue |
||||||||||||||
Net interest income |
$ |
2,098 |
$ |
2,092 |
$ |
2,072 |
||||||||
Noninterest income |
1,567 |
1,761 |
1,659 |
|||||||||||
Total revenue |
3,665 |
3,853 |
3,731 |
|||||||||||
Noninterest expense |
2,281 |
2,396 |
2,349 |
|||||||||||
Pretax, pre-provision earnings (a) |
1,384 |
1,457 |
1,382 |
|||||||||||
Provision for credit losses |
152 |
74 |
54 |
|||||||||||
Income before income taxes and noncontrolling interests |
$ |
1,232 |
$ |
1,383 |
$ |
1,328 |
||||||||
Net income (b) |
$ |
943 |
$ |
1,022 |
$ |
1,004 |
||||||||
Less: |
||||||||||||||
Net income (loss) attributable to noncontrolling interests |
19 |
14 |
1 |
|||||||||||
Preferred stock dividends and discount accretion and redemptions (c) |
65 |
43 |
70 |
|||||||||||
Net income attributable to common shareholders |
$ |
859 |
$ |
965 |
$ |
933 |
||||||||
Less: |
||||||||||||||
Dividends and undistributed earnings allocated to nonvested restricted shares |
6 |
4 |
2 |
|||||||||||
Impact of BlackRock earnings per share dilution |
3 |
4 |
5 |
|||||||||||
Net income attributable to diluted common shares |
$ |
850 |
$ |
957 |
$ |
926 |
||||||||
Diluted earnings per common share |
$ |
1.68 |
$ |
1.87 |
$ |
1.75 |
||||||||
Cash dividends declared per common share |
$ |
.51 |
$ |
.51 |
$ |
.48 |
||||||||
Effective tax rate (d) |
23.5 |
% |
26.1 |
% |
24.4 |
% |
(a) |
We believe that pretax, pre-provision earnings, a non-GAAP measure, is useful as a tool to help evaluate the ability to provide for credit costs through operations. |
|||||||||||||
(b) |
See page 16 for a reconciliation of business segment income to net income. |
|||||||||||||
(c) |
Dividends are payable quarterly other than Series O and Series R preferred stock, which are payable semiannually in different quarters. |
|||||||||||||
(d) |
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. |
TOTAL AND CORE NET INTEREST INCOME AND NET INTEREST MARGIN |
|||||||||||
Three months ended |
|||||||||||
March 31 |
December 31 |
March 31 |
|||||||||
Dollars in millions |
2016 |
2015 |
2015 |
||||||||
Net Interest Income |
|||||||||||
Core net interest income (a) |
$ |
2,012 |
$ |
2,002 |
$ |
1,944 |
|||||
Total purchase accounting accretion |
|||||||||||
Scheduled accretion net of contractual interest |
52 |
64 |
95 |
||||||||
Excess cash recoveries |
34 |
26 |
33 |
||||||||
Total purchase accounting accretion |
86 |
90 |
128 |
||||||||
Total net interest income |
$ |
2,098 |
$ |
2,092 |
$ |
2,072 |
|||||
Net Interest Margin |
|||||||||||
Core net interest margin (b) |
2.65 |
% |
2.60 |
% |
2.65 |
% |
|||||
Purchase accounting accretion impact on net interest margin |
.10 |
.10 |
.17 |
||||||||
Net interest margin |
2.75 |
% |
2.70 |
% |
2.82 |
% |
(a) |
We believe that core net interest income, a non-GAAP financial measure, is useful in evaluating the performance of our interest-based activities. |
||||||||||
(b) |
We believe that core net interest margin, a non-GAAP financial measure, is useful as a tool to help evaluate the impact of purchase accounting accretion on net interest margin. To calculate core net interest margin, net interest margin has been adjusted by annualized purchase accounting accretion divided by average interest-earning assets. |
The PNC Financial Services Group, Inc. |
Consolidated Financial Highlights (Unaudited) |
||||||||||||||
Three months ended |
|||||||||||||||
March 31 |
December 31 |
March 31 |
|||||||||||||
2016 |
2015 |
2015 |
|||||||||||||
PERFORMANCE RATIOS |
|||||||||||||||
Net interest margin (a) |
2.75 |
% |
2.70 |
% |
2.82 |
% |
|||||||||
Noninterest income to total revenue |
43 |
46 |
44 |
||||||||||||
Efficiency (b) |
62 |
62 |
63 |
||||||||||||
Return on: |
|||||||||||||||
Average common shareholders' equity |
8.44 |
9.30 |
9.32 |
||||||||||||
Average assets |
1.07 |
1.12 |
1.17 |
||||||||||||
BUSINESS SEGMENT NET INCOME (LOSS) (c) (d) |
|||||||||||||||
In millions |
|||||||||||||||
Retail Banking |
$ |
268 |
$ |
213 |
$ |
|