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PNC Reports First Quarter Net Income Of $1.0 Billion And $1.75 Diluted EPS
"PNC delivered solid results in the first quarter, continuing the consistent performance that has been characteristic of our strategic execution," said
Income Statement Highlights
- First quarter earnings reflected average loan and deposit growth, disciplined expense management, modestly improved credit quality and seasonal client trends.
- Net interest income of
$2.1 billion for the first quarter was relatively stable with the fourth quarter, declining slightly by$25 million , or 1 percent, primarily as a result of two fewer days in the first quarter. - Noninterest income of
$1.7 billion for the first quarter decreased$191 million , or 10 percent, compared with the fourth quarter due to higher fourth quarter gains on asset dispositions as well as seasonally lower client revenue.- Noninterest income increased 5 percent over first quarter 2014 driven by strong fee income growth from success in deepening client relationships and product penetration.
- Noninterest expense of
$2.3 billion for the first quarter declined substantially by$190 million , or
7 percent, compared with the fourth quarter reflecting elevated fourth quarter expenses and continued expense management. - Provision for credit losses was
$54 million for the first quarter compared with$52 million in the fourth quarter as overall credit quality improved modestly.
Balance Sheet Highlights
- Average loans grew
$2.3 billion , or 1 percent, compared with the fourth quarter. Total loans of$205 billion atMarch 31, 2015 decreased$.1 billion compared withDecember 31, 2014 as loan activity declined from higher fourth quarter levels.- Average commercial lending increased
$2.9 billion primarily in PNC's corporate banking and real estate businesses. - Average consumer lending decreased
$.6 billion .
- Average commercial lending increased
- Overall credit quality for the first quarter improved modestly compared with the fourth quarter.
- Nonperforming assets of
$2.8 billion atMarch 31, 2015 declined$126 million , or 4 percent, compared withDecember 31, 2014 . - Net charge-offs decreased to
$103 million for the first quarter from$118 million in the fourth quarter.
- Nonperforming assets of
- Investment securities increased by
$5.0 billion , or 9 percent, during the first quarter to$61 billion atMarch 31, 2015 , primarily funded by deposit growth. - Deposits grew
$4.3 billion , or 2 percent, to$237 billion atMarch 31, 2015 compared withDecember 31, 2014 reflecting higher retail deposits. - PNC's well-positioned balance sheet remained core funded with a loans to deposits ratio of
87 percent atMarch 31, 2015 . - PNC maintained a strong liquidity position.
- New regulatory short-term liquidity standards became effective for PNC as an advanced approaches bank beginning
January 1, 2015 , with a minimum phased-in Liquidity Coverage Ratio requirement of 80 percent in 2015, calculated as of month end. - The estimated Liquidity Coverage Ratio at
March 31, 2015 exceeded 100 percent for bothPNC and PNC Bank, N.A.
- New regulatory short-term liquidity standards became effective for PNC as an advanced approaches bank beginning
- PNC returned capital to shareholders through repurchases of 4.4 million common shares for
$.4 billion during the first quarter of 2015.- PNC completed its common stock repurchase program for the four quarter period that began in second quarter 2014 with total repurchases of 17.3 million common shares for
$1.5 billion . - In
March 2015 PNC announced new share repurchase programs of up to$2.875 billion for the five quarter period beginning in the second quarter of 2015.
- PNC completed its common stock repurchase program for the four quarter period that began in second quarter 2014 with total repurchases of 17.3 million common shares for
- In
April 2015 the board of directors raised the quarterly dividend on common stock to51 cents per share, an increase of3 cents per share, or 6 percent, effective with the May dividend. - PNC maintained a strong capital position.
- Transitional Basel III common equity Tier 1 capital ratio was an estimated 10.4 percent at
March 31, 2015 and 10.9 percent atDecember 31, 2014 , calculated using the regulatory capital methodologies applicable to PNC during 2015 and 2014, respectively. - Pro forma fully phased-in Basel III common equity Tier 1 capital ratio was an estimated 9.9 percent at
March 31, 2015 and 10.0 percent atDecember 31, 2014 based on the standardized approach rules.
- Transitional Basel III common equity Tier 1 capital ratio was an estimated 10.4 percent at
Earnings Summary |
|||||||||||||
In millions, except per share data |
1Q15 |
4Q14 |
1Q14 |
||||||||||
Net income |
$ |
1,004 |
$ |
1,057 |
$ |
1,060 |
|||||||
Net income attributable to diluted common shares |
$ |
926 |
$ |
981 |
$ |
983 |
|||||||
Diluted earnings per common share |
$ |
1.75 |
$ |
1.84 |
$ |
1.82 |
|||||||
Average diluted common shares outstanding |
529 |
532 |
539 |
||||||||||
Return on average assets |
1.17 |
% |
1.23 |
% |
1.35 |
% |
|||||||
Return on average common equity |
9.32 |
% |
9.67 |
% |
10.36 |
% |
|||||||
Book value per common share Period end |
$ |
78.99 |
$ |
77.61 |
$ |
73.73 |
|||||||
Tangible book value per common share (non-GAAP) Period end |
$ |
61.21 |
$ |
59.88 |
$ |
56.33 |
|||||||
Cash dividends declared per common share |
$ |
.48 |
$ |
.48 |
$ |
.44 |
|||||||
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. 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 |
|||||||||||||||||||
1Q15 vs |
1Q15 vs |
||||||||||||||||||||
In millions |
1Q15 |
4Q14 |
1Q14 |
4Q14 |
1Q14 |
||||||||||||||||
Net interest income |
$ |
2,072 |
$ |
2,097 |
$ |
2,195 |
(1) |
% |
(6) |
% |
|||||||||||
Noninterest income |
1,659 |
1,850 |
1,582 |
(10) |
% |
5 |
% |
||||||||||||||
Total revenue |
$ |
3,731 |
$ |
3,947 |
$ |
3,777 |
(5) |
% |
(1) |
% |
|||||||||||
Total revenue for the first quarter of 2015 decreased
Net interest income for the first quarter of 2015 declined
The net interest margin was 2.82 percent for the first quarter of 2015 compared with 2.89 percent for the fourth quarter and 3.26 percent for the first quarter of 2014. The decrease in the margin compared with the fourth quarter primarily resulted from lower yields on loans and securities. In the comparison with first quarter 2014, the decline in the margin was principally due to the impact of balance sheet management activities related to regulatory short-term liquidity standards, lower loan yields and lower benefit from purchase accounting accretion.
Noninterest Income |
Change |
Change |
|||||||||||||||||||||
1Q15 vs |
1Q15 vs |
||||||||||||||||||||||
In millions |
1Q15 |
4Q14 |
1Q14 |
4Q14 |
1Q14 |
||||||||||||||||||
Asset management |
$ |
376 |
$ |
376 |
$ |
364 |
– |
3 |
% |
||||||||||||||
Consumer services |
311 |
321 |
290 |
(3) |
% |
7 |
% |
||||||||||||||||
Corporate services |
344 |
397 |
301 |
(13) |
% |
14 |
% |
||||||||||||||||
Residential mortgage |
164 |
135 |
161 |
21 |
% |
2 |
% |
||||||||||||||||
Service charges on deposits |
153 |
180 |
147 |
(15) |
% |
4 |
% |
||||||||||||||||
Other, including net securities gains |
311 |
441 |
319 |
(29) |
% |
(3) |
% |
||||||||||||||||
$ |
1,659 |
$ |
1,850 |
$ |
1,582 |
(10) |
% |
5 |
% |
||||||||||||||
Noninterest income for the first quarter of 2015 decreased
Noninterest income for the first quarter of 2015 increased
CONSOLIDATED EXPENSE REVIEW |
||||||||||||||||||||||
Noninterest Expense |
Change |
Change |
||||||||||||||||||||
1Q15 vs |
1Q15 vs |
|||||||||||||||||||||
In millions |
1Q15 |
4Q14 |
1Q14 |
4Q14 |
1Q14 |
|||||||||||||||||
Personnel |
$ |
1,157 |
$ |
1,170 |
$ |
1,080 |
(1) |
% |
7 |
% |
||||||||||||
Occupancy |
216 |
216 |
218 |
– |
(1) |
% |
||||||||||||||||
Equipment |
222 |
234 |
201 |
(5) |
% |
10 |
% |
|||||||||||||||
Marketing |
62 |
67 |
52 |
(7) |
% |
19 |
% |
|||||||||||||||
Other |
692 |
852 |
713 |
(19) |
% |
(3) |
% |
|||||||||||||||
$ |
2,349 |
$ |
2,539 |
$ |
2,264 |
(7) |
% |
4 |
% |
|||||||||||||
Noninterest expense for the first quarter of 2015 decreased
Noninterest expense for the first quarter of 2015 increased
The effective tax rate was 24.4 percent for the first quarter of 2015, 22.1 percent for the fourth quarter of 2014 reflecting the tax favorability of the
CONSOLIDATED BALANCE SHEET REVIEW
Total assets were
Loans |
Change |
Change |
||||||||||||||||||||
3/31/15 |
vs |
3/31/15 |
vs |
|||||||||||||||||||
In billions |
3/31/2015 |
12/31/2014 |
3/31/2014 |
12/31/14 |
3/31/14 |
|||||||||||||||||
Commercial lending |
$ |
129.7 |
$ |
128.4 |
$ |
120.8 |
1 |
% |
7 |
% |
||||||||||||
Consumer lending |
75.0 |
76.4 |
77.4 |
(2) |
% |
(3) |
% |
|||||||||||||||
Total loans |
$ |
204.7 |
$ |
204.8 |
$ |
198.2 |
– |
3 |
% |
|||||||||||||
For the quarter ended: |
||||||||||||||||||||||
Average loans |
$ |
205.2 |
$ |
202.9 |
$ |
196.6 |
1 |
% |
4 |
% |
||||||||||||
Average loans grew
Investment Securities |
Change |
Change |
||||||||||||||||||||
3/31/15 |
vs |
3/31/15 |
vs |
|||||||||||||||||||
In billions |
3/31/2015 |
12/31/2014 |
3/31/2014 |
12/31/14 |
3/31/14 |
|||||||||||||||||
At quarter end |
$ |
60.8 |
$ |
55.8 |
$ |
58.6 |
9 |
% |
4 |
% |
||||||||||||
Average for the quarter ended |
$ |
57.2 |
$ |
54.2 |
$ |
58.4 |
6 |
% |
(2) |
% |
||||||||||||
Investment securities balances at
Interest-earning deposits with banks of
Other assets of
Deposits |
Change |
Change |
||||||||||||||||||||
3/31/15 |
vs |
3/31/15 |
vs |
|||||||||||||||||||
In billions |
3/31/2015 |
12/31/2014 |
3/31/2014 |
12/31/14 |
3/31/14 |
|||||||||||||||||
Transaction deposits |
$ |
202.3 |
$ |
198.3 |
$ |
188.1 |
2 |
% |
8 |
% |
||||||||||||
Other deposits |
34.2 |
33.9 |
34.3 |
1 |
% |
– |
||||||||||||||||
Total deposits |
$ |
236.5 |
$ |
232.2 |
$ |
222.4 |
2 |
% |
6 |
% |
||||||||||||
For the quarter ended: |
||||||||||||||||||||||
Average deposits |
$ |
233.1 |
$ |
229.4 |
$ |
218.4 |
2 |
% |
7 |
% |
||||||||||||
Total deposits at
Borrowed Funds |
Change |
Change |
||||||||||||||||||||
3/31/15 |
vs |
3/31/15 |
vs |
|||||||||||||||||||
In billions |
3/31/2015 |
12/31/2014 |
3/31/2014 |
12/31/14 |
3/31/14 |
|||||||||||||||||
At quarter end |
$ |
56.8 |
$ |
56.8 |
$ |
46.8 |
– |
21 |
% |
|||||||||||||
Average for the quarter ended |
$ |
56.4 |
$ |
52.4 |
$ |
46.4 |
8 |
% |
22 |
% |
||||||||||||
Borrowed funds at
Capital |
|||||||||||||
3/31/2015* |
12/31/2014 |
3/31/2014 |
|||||||||||
Common shareholders' equity In billions |
$ |
41.1 |
$ |
40.6 |
$ |
39.4 |
|||||||
Transitional Basel III common equity Tier 1 capital ratio |
10.4 |
% |
10.9 |
% |
10.8 |
||||||||
Pro forma fully phased-in Basel III common equity |
|||||||||||||
Tier 1 capital ratio |
9.9 |
% |
10.0 |
% |
9.7 |
% |
|||||||
* Ratios estimated |
|||||||||||||
PNC maintained a strong capital position. Common shareholders' equity increased compared with year end due to growth in retained earnings substantially offset by share repurchases. The transitional Basel III common equity Tier 1 capital ratios were calculated using the regulatory capital methodologies, including related phase-ins, applicable to PNC during 2015 and 2014. The Basel III standardized approach took effect on
PNC repurchased 4.4 million common shares for
On
CREDIT QUALITY REVIEW |
|||||||||||||||||||
Credit Quality |
Change |
Change |
|||||||||||||||||
At or for the quarter ended |
3/31/15 |
vs |
3/31/15 |
vs |
|||||||||||||||
In millions |
3/31/2015 |
12/31/2014 |
3/31/2014 |
12/31/14 |
3/31/14 |
||||||||||||||
Nonperforming loans |
$ |
2,405 |
$ |
2,510 |
$ |
2,947 |
(4) |
% |
(18) |
% |
|||||||||
Nonperforming assets |
$ |
2,754 |
$ |
2,880 |
$ |
3,304 |
(4) |
% |
(17) |
% |
|||||||||
Accruing loans past due 90 days or more |
$ |
988 |
$ |
1,105 |
$ |
1,310 |
(11) |
% |
(25) |
% |
|||||||||
Net charge-offs |
$ |
103 |
$ |
118 |
$ |
186 |
(13) |
% |
(45) |
% |
|||||||||
Provision for credit losses |
$ |
54 |
$ |
52 |
$ |
94 |
4 |
% |
(43) |
% |
|||||||||
Allowance for loan and lease losses |
$ |
3,306 |
$ |
3,331 |
$ |
3,530 |
(1) |
% |
(6) |
% |
|||||||||
Overall credit quality for the first quarter of 2015 improved modestly compared with the fourth quarter. Nonperforming assets at
Overall delinquencies decreased
Net charge-offs for the first quarter of 2015 declined
Provision for credit losses for first quarter 2015 was stable with the fourth quarter and declined
The allowance for loan and lease losses at
BUSINESS SEGMENT RESULTS |
||||||||||||||
Business Segment Income (Loss) |
||||||||||||||
In millions |
1Q15 |
4Q14 |
1Q14 |
|||||||||||
Retail Banking |
$ |
202 |
$ |
172 |
$ |
158 |
||||||||
Corporate & Institutional Banking |
482 |
564 |
523 |
|||||||||||
Asset Management Group |
37 |
45 |
37 |
|||||||||||
Residential Mortgage Banking |
28 |
(9) |
(4) |
|||||||||||
Non-Strategic Assets Portfolio |
81 |
76 |
110 |
|||||||||||
Other, including BlackRock |
174 |
209 |
236 |
|||||||||||
Net income |
$ |
1,004 |
$ |
1,057 |
$ |
1,060 |
||||||||
See accompanying notes in Consolidated Financial Highlights |
||||||||||||||
Net interest income in business segment results reflects PNC's internal funds transfer pricing methodology. Assets receive a funding charge and liabilities and capital receive a funding credit based on a transfer pricing methodology that incorporates product repricing characteristics, tenor and other factors. In the first quarter of 2015, enhancements were made to PNC's funds transfer pricing methodology primarily for costs related to new regulatory short-term liquidity standards. The enhancements incorporate an additional charge assigned to assets, including for unfunded loan commitments. Conversely, a higher transfer pricing credit has been assigned to those deposits that are accorded higher value under the regulatory rules for liquidity purposes. These adjustments apply to business segment results prospectively beginning with the first quarter of 2015. The enhancements to funds transfer pricing methodology primarily impacted two business segments with a benefit to Retail Banking earnings and a decrease in Corporate & Institutional Banking earnings for the first quarter of 2015.
Retail Banking |
Change |
Change |
||||||||||||||||||||
1Q15 vs |
1Q15 vs |
|||||||||||||||||||||
In millions |
1Q15 |
4Q14 |
1Q14 |
4Q14 |
1Q14 |
|||||||||||||||||
Net interest income |
$ |
1,038 |
$ |
986 |
$ |
980 |
$ |
52 |
$ |
58 |
||||||||||||
Noninterest income |
$ |
488 |
$ |
534 |
$ |
514 |
$ |
(46) |
$ |
(26) |
||||||||||||
Provision for credit losses |
$ |
49 |
$ |
54 |
$ |
145 |
$ |
(5) |
$ |
(96) |
||||||||||||
Noninterest expense |
$ |
1,158 |
$ |
1,195 |
$ |
1,100 |
$ |
(37) |
$ |
58 |
||||||||||||
Earnings |
$ |
202 |
$ |
172 |
$ |
158 |
$ |
30 |
$ |
44 |
||||||||||||
In billions |
||||||||||||||||||||||
Average loans |
$ |
65.1 |
$ |
65.4 |
$ |
67.1 |
$ |
(.3) |
$ |
(2.0) |
||||||||||||
Average deposits |
$ |
141.6 |
$ |
138.6 |
$ |
135.5 |
$ |
3.0 |
$ |
6.1 |
||||||||||||
Retail Banking earnings for the first quarter of 2015 increased in both comparisons. Net interest income increased in both comparisons as a result of the benefit from the enhancements to funds transfer pricing methodology in the first quarter of 2015. Noninterest income declined in both comparisons due to gains on sales of Visa Class B common shares of
- Retail Banking continued to focus on serving more customers through cost effective channels that meet their evolving preferences for convenience.
- Approximately 50 percent of consumer customers used non-teller channels for the majority of their transactions during the first quarter of 2015 compared with 49 percent for the fourth quarter and 43 percent for the first quarter of 2014.
- Deposit transactions via ATM and mobile channels increased to 40 percent of total deposit transactions in first quarter 2015 compared with 38 percent for the fourth quarter and 31 percent for the first quarter of 2014.
- As part of PNC's retail branch transformation strategy, 127 branches were converted to the new universal branch format and 40 branches were closed or consolidated in the first quarter of 2015. PNC had a network of 2,660 branches and 8,754 ATMs at
March 31, 2015 .
- Average transaction deposits grew
$3.0 billion , or 3 percent, over the fourth quarter and$7.0 billion , or 7 percent, over the first quarter of 2014 reflecting growth in personal demand and money market deposits. Average savings deposits increased$.6 billion over the fourth quarter and$1.6 billion over first quarter 2014, while average certificates of deposit decreased$.6 billion and$2.6 billion , respectively, due to net runoff of maturing accounts. - Average loans decreased 3 percent compared with the first quarter of 2014 as growth in automobile and credit card loans was more than offset by declines in home equity, education and commercial loans.
- Net charge-offs for the first quarter of 2015 were
$99 million compared with$104 million in the fourth quarter and$145 million in the first quarter of 2014. The decrease compared with first quarter 2014 resulted from improved credit quality in both consumer and commercial portfolios.
Corporate & Institutional Banking |
Change |
Change |
|||||||||||||||||
1Q15 vs |
1Q15 vs |
||||||||||||||||||
In millions |
1Q15 |
4Q14 |
1Q14 |
4Q14 |
1Q14 |
||||||||||||||
Net interest income |
$ |
855 |
$ |
956 |
$ |
934 |
$ |
(101) |
$ |
(79) |
|||||||||
Corporate service fees |
$ |
310 |
$ |
369 |
$ |
268 |
$ |
(59) |
$ |
42 |
|||||||||
Other noninterest income |
$ |
119 |
$ |
119 |
$ |
96 |
$ |
– |
$ |
23 |
|||||||||
Provision for credit losses (benefit) |
$ |
17 |
$ |
21 |
$ |
(13) |
$ |
(4) |
$ |
30 |
|||||||||
Noninterest expense |
$ |
514 |
$ |
544 |
$ |
488 |
$ |
(30) |
$ |
26 |
|||||||||
Earnings |
$ |
482 |
$ |
564 |
$ |
523 |
$ |
(82) |
$ |
(41) |
|||||||||
In billions |
|||||||||||||||||||
Average loans |
$ |
115.1 |
$ |
112.2 |
$ |
103.5 |
$ |
2.9 |
$ |
11.6 |
|||||||||
Average deposits |
$ |
78.6 |
$ |
78.4 |
$ |
71.0 |
$ |
.2 |
$ |
7.6 |
|||||||||
Commercial loan servicing portfolio Quarter end |
$ |
390 |
$ |
377 |
$ |
351 |
$ |
13 |
$ |
39 |
|||||||||
Corporate & Institutional Banking earnings for the first quarter of 2015 decreased compared with the fourth quarter and the first quarter of 2014. Net interest income declined in the comparisons reflecting the enhancements to funds transfer pricing methodology in the first quarter of 2015. Corporate service fees decreased compared with the fourth quarter primarily due to lower merger and acquisition advisory fees as well as lower syndication activity. In the comparison with first quarter 2014, the increase was mainly attributable to the change in classification from net interest income of certain commercial facility fees beginning second quarter 2014. Other noninterest income increased over first quarter 2014 primarily driven by increased securities underwriting activity and higher revenue associated with credit valuations for customer-related derivatives activities. Provision for credit losses in the first quarter of 2015 increased over the benefit recognized in first quarter 2014 due to portfolio growth and slower credit quality improvement. Noninterest expense decreased compared with the fourth quarter principally due to incentive compensation costs associated with business activity, and increased compared with the first quarter of 2014 as a result of investments in technology and infrastructure.
- Average loans increased 3 percent over the fourth quarter and 11 percent over first quarter 2014 primarily due to loan growth in PNC's corporate banking, real estate and business credit businesses.
- Average deposits increased 11 percent over the first quarter of 2014 driven by business growth and inflows into demand and money market deposits.
- Charge-offs were in a net recovery position of
$1 million in the first quarter of 2015 compared with a net recovery position of$2 million in the fourth quarter and net charge-offs of$2 million in the first quarter of 2014.
Asset Management Group |
Change |
Change |
||||||||||||||||||||
1Q15 vs |
1Q15 vs |
|||||||||||||||||||||
In millions |
1Q15 |
4Q14 |
1Q14 |
4Q14 |
1Q14 |
|||||||||||||||||
Net interest income |
$ |
73 |
$ |
74 |
$ |
71 |
$ |
(1) |
$ |
2 |
||||||||||||
Noninterest income |
$ |
208 |
$ |
207 |
$ |
199 |
$ |
1 |
$ |
9 |
||||||||||||
Provision for credit losses (benefit) |
$ |
12 |
$ |
(3) |
$ |
12 |
$ |
15 |
– |
|||||||||||||
Noninterest expense |
$ |
210 |
$ |
211 |
$ |
199 |
$ |
(1) |
$ |
11 |
||||||||||||
Earnings |
$ |
37 |
$ |
45 |
$ |
37 |
$ |
(8) |
– |
|||||||||||||
In billions |
||||||||||||||||||||||
Client assets under administration Quarter end |
$ |
265 |
$ |
263 |
$ |
255 |
$ |
2 |
$ |
10 |
||||||||||||
Average loans |
$ |
7.4 |
$ |
7.4 |
$ |
7.1 |
– |
$ |
.3 |
|||||||||||||
Average deposits |
$ |
10.7 |
$ |
10.1 |
$ |
9.6 |
$ |
.6 |
$ |
1.1 |
||||||||||||
- Client assets under administration at
March 31, 2015 included discretionary client assets under management of$136 billion and nondiscretionary client assets under administration of$129 billion .- Discretionary client assets under management increased
$1 billion compared withDecember 31, 2014 and$6 billion compared withMarch 31, 2014 driven by stronger equity markets.
- Discretionary client assets under management increased
Asset Management Group continued to focus on driving growth through sales sourced from other PNC lines of business, maximizing front line productivity and optimizing market presence including additions to staff in high opportunity markets. Its business strategies primarily focus on growing client assets under management, building retirement capabilities and expanding product solutions for all customers.
Residential Mortgage Banking |
Change |
Change |
||||||||||||||||||
1Q15 vs |
1Q15 vs |
|||||||||||||||||||
In millions |
1Q15 |
4Q14 |
1Q14 |
4Q14 |
1Q14 |
|||||||||||||||
Net interest income |
$ |
30 |
$ |
34 |
$ |
40 |
$ |
(4) |
$ |
(10) |
||||||||||
Noninterest income |
$ |
177 |
$ |
148 |
$ |
166 |
$ |
29 |
$ |
11 |
||||||||||
Provision for credit losses (benefit) |
$ |
2 |
$ |
(1) |
$ |
(1) |
$ |
3 |
$ |
3 |
||||||||||
Noninterest expense |
$ |
161 |
$ |
196 |
$ |
213 |
$ |
(35) |
$ |
(52) |
||||||||||
Earnings (loss) |
$ |
28 |
$ |
(9) |
$ |
(4) |
$ |
37 |
$ |
32 |
||||||||||
In billions |
||||||||||||||||||||
Residential mortgage servicing portfolio Quarter end |
$ |
113 |
$ |
108 |
$ |
114 |
$ |
5 |
$ |
(1) |
||||||||||
Loan origination volume |
$ |
2.6 |
$ |
2.4 |
$ |
1.9 |
$ |
.2 |
$ |
.7 |
||||||||||
Residential Mortgage Banking recorded earnings for the first quarter of 2015 compared with losses in the fourth quarter and first quarter of 2014. Noninterest income increased in both comparisons as higher net hedging gains on residential mortgage servicing rights and loans sales revenue were partially offset by lower servicing revenue driven by increased loan payoff activity. First quarter 2014 noninterest income included a benefit from release of reserves for residential mortgage repurchase obligations. Noninterest expense decreased compared with the fourth quarter due to lower servicing costs and residential mortgage foreclosure-related expenses. Noninterest expense declined compared with the first quarter of 2014 reflecting lower legal accruals.
- Loan origination volume in the first quarter of 2015 was
$2.6 billion , an increase of 5 percent compared with the fourth quarter and 32 percent compared with the first quarter of 2014. Approximately 31 percent of first quarter 2015 origination volume was for home purchase transactions compared with 42 percent in the fourth quarter and 37 percent in the first quarter of 2014. - 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.
Non-Strategic Assets Portfolio |
Change |
Change |
|||||||||||||||||
1Q15 vs |
1Q15 vs |
||||||||||||||||||
In millions |
1Q15 |
4Q14 |
1Q14 |
4Q14 |
1Q14 |
||||||||||||||
Net interest income |
$ |
112 |
$ |
122 |
$ |
142 |
$ |
(10) |
$ |
(30) |
|||||||||
Noninterest income |
$ |
9 |
$ |
18 |
$ |
6 |
$ |
(9) |
$ |
3 |
|||||||||
Provision for credit losses (benefit) |
$ |
(31) |
$ |
(20) |
$ |
(52) |
$ |
(11) |
$ |
21 |
|||||||||
Noninterest expense |
$ |
24 |
$ |
39 |
$ |
26 |
$ |
(15) |
$ |
(2) |
|||||||||
Earnings |
$ |
81 |
$ |
76 |
$ |
110 |
$ |
5 |
$ |
(29) |
|||||||||
In billions |
|||||||||||||||||||
Average loans |
$ |
8.0 |
$ |
8.3 |
$ |
9.6 |
$ |
(.3) |
$ |
(1.6) |
|||||||||
The Non-Strategic Assets Portfolio consists of non-strategic 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 wind-down of the portfolios while maximizing the value and mitigating risk.
- Provision for credit losses was a benefit in each of the three quarters reflecting improving credit metrics.
- Charge-offs were in a small net recovery position for the first quarter of 2015 compared with net charge-offs of
$12 million for the fourth quarter and net charge-offs of$31 million for the first quarter of 2014. The decrease in both comparisons reflected lower charge-offs across all Non-Strategic Asset portfolios in 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 |
|||||||||
2015 |
2014 |
2014 |
||||||||||
Revenue |
||||||||||||
Net interest income |
$ |
2,072 |
$ |
2,097 |
$ |
2,195 |
||||||
Noninterest income |
1,659 |
1,850 |
1,582 |
|||||||||
Total revenue |
3,731 |
3,947 |
3,777 |
|||||||||
Noninterest expense |
2,349 |
2,539 |
2,264 |
|||||||||
Pretax, pre-provision earnings (a) |
1,382 |
1,408 |
1,513 |
|||||||||
Provision for credit losses |
54 |
52 |
94 |
|||||||||
Income before income taxes and noncontrolling interests |
$ |
1,328 |
$ |
1,356 |
$ |
1,419 |
||||||
Net income (b) |
$ |
1,004 |
$ |
1,057 |
$ |
1,060 |
||||||
Less: |
||||||||||||
Net income (loss) attributable to noncontrolling interests |
1 |
21 |
(2) |
|||||||||
Preferred stock dividends and discount accretion |
||||||||||||
and redemptions (c) |
70 |
48 |
70 |
|||||||||
Net income attributable to common shareholders |
$ |
933 |
$ |
988 |
$ |
992 |
||||||
Less: |
||||||||||||
Dividends and undistributed earnings allocated to |
||||||||||||
nonvested restricted shares |
2 |
2 |
3 |
|||||||||
Impact of BlackRock earnings per share dilution |
5 |
5 |
6 |
|||||||||
Net income attributable to diluted common shares |
$ |
926 |
$ |
981 |
$ |
983 |
||||||
Diluted earnings per common share |
$ |
1.75 |
$ |
1.84 |
$ |
1.82 |
||||||
Cash dividends declared per common share |
$ |
.48 |
$ |
.48 |
$ |
.44 |
||||||
Certain prior period amounts included in these Consolidated Financial Highlights have been reclassified to conform with the current period presentation, which we believe is more meaningful to readers of our consolidated financial statements. |
||||||||||||
(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. |
TOTAL AND CORE NET INTEREST INCOME AND NET INTEREST MARGIN |
||||||||||
Three months ended |
||||||||||
March 31 |
December 31 |
March 31 |
||||||||
Dollars in millions |
2015 |
2014 |
2014 |
|||||||
Net Interest Income |
||||||||||
Core net interest income (a) |
$ |
1,944 |
$ |
1,971 |
$ |
2,032 |
||||
Total purchase accounting accretion |
||||||||||
Scheduled accretion net of contractual interest |
95 |
94 |
134 |
|||||||
Excess cash recoveries |
33 |
32 |
29 |
|||||||
Total purchase accounting accretion |
128 |
126 |
163 |
|||||||
Total net interest income |
$ |
2,072 |
$ |
2,097 |
$ |
2,195 |
||||
Net Interest Margin |
||||||||||
Core net interest margin (b) |
2.65 |
% |
2.72 |
% |
3.02 |
% |
||||
Purchase accounting accretion impact on net interest margin |
.17 |
.17 |
.24 |
|||||||
Net interest margin |
2.82 |
% |
2.89 |
% |
3.26 |
% |
||||
(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 |
|||||||||||||
2015 |
2014 |
2014 |
|||||||||||||
PERFORMANCE RATIOS |
|||||||||||||||
Net interest margin (a) |
2.82 |
% |
2.89 |
% |
3.26 |
% |
|||||||||
Noninterest income to total revenue |
44 |
47 |
42 |
||||||||||||
Efficiency (b) |
63 |
64 |
60 |
||||||||||||
Return on: |
|||||||||||||||
Average common shareholders' equity |