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PNC Reports Full Year 2019 Net Income Of $5.4 Billion, $11.39 Diluted EPS
For the year |
For the quarter |
||||||||||
2019 |
2018 |
4Q19 |
3Q19 |
4Q18 |
|||||||
Net income $ millions |
$5,418 |
$5,346 |
$1,381 |
$1,392 |
$1,351 |
||||||
Diluted earnings per common share |
$11.39 |
$10.71 |
$2.97 |
$2.94 |
$2.75 |
"PNC delivered excellent results in 2019 against the backdrop of continued change across our industry. Earnings per share increased and we generated record revenue and positive operating leverage for the year. Expenses were well controlled and our efficiency ratio improved. We increased loans and deposits and leveraged our strong product set to grow clients in existing and new markets. At the same time, we made important investments in the development of our employees and their careers and to support employees' health and wellness and long-term financial wellbeing. With the announced increase to our authorized share buybacks, we are well positioned with capital flexibility for the opportunities and challenges ahead as we remain focused on creating long-term shareholder value by doing what is best for our customers." Bill Demchak, PNC Chairman, President and Chief Executive Officer |
Increase to Authorized Share Repurchases
- PNC received approval in
January 2020 from the Federal Reserve to repurchase up to an additional$1.0 billion in common shares through the end of the second quarter of 2020. This is in addition to the share repurchase programs of up to$4.3 billion for the four-quarter period beginning in the third quarter of 2019, which were announced inJune 2019 .
Income Statement Highlights
Fourth quarter 2019 compared with third quarter 2019
- Net income was
$1.4 billion , a decrease of$11 million , or 1 percent. - Total revenue of
$4.6 billion grew$116 million , or 3 percent. - Net interest income of
$2.5 billion decreased$16 million , or 1 percent, due to lower loan and securities yields substantially offset by lower rates on deposits and borrowings. - Net interest margin decreased 6 basis points to 2.78 percent.
- Noninterest income of
$2.1 billion increased$132 million , or 7 percent. - Fee income of
$1.7 billion increased$18 million , or 1 percent, driven by higher asset management revenue and corporate service fees partially offset by lower residential mortgage revenue and consumer service fees. - Other noninterest income of
$456 million increased$114 million reflecting higher revenue from private equity investments and a gain on the sale of proprietary mutual funds partially offset by negative derivative fair value adjustments related to Visa Class B common shares. - Noninterest expense of
$2.8 billion increased$139 million , or 5 percent, driven by equipment expense for technology-related write-offs and benefits expense, including a year-end employee award of an additional contribution to health savings accounts. - Provision for credit losses of
$221 million increased$38 million , or 21 percent, due to both the consumer lending portfolio and reserves attributable to certain commercial credits. - The effective tax rate was 15.1 percent for the fourth quarter compared with 17.5 percent for the third quarter, and 16.4 percent for the full year 2019.
Balance Sheet Highlights
- Average loans increased
$1.2 billion to $238.9 billion in the fourth quarter compared with the third quarter. - Average consumer lending balances of
$78.1 billion increased$1.9 billion , or 3 percent, due to growth in residential mortgage, auto, credit card and unsecured installment loans partially offset by lower education loans. - Average commercial lending balances of
$160.8 billion declined$.7 billion primarily in PNC's real estate business, including a decrease in multifamily agency warehouse lending balances, partially offset by growth in PNC's corporate banking business. - Overall credit quality remained historically strong.
- Nonperforming assets of
$1.8 billion atDecember 31, 2019 decreased$95 million , or 5 percent, compared withSeptember 30, 2019 . - Net charge-offs were
$209 million for the fourth quarter compared with$155 million for the third quarter as both consumer and commercial lending net charge-offs increased. - The allowance for loan and lease losses to total loans remained relatively stable at 1.14 percent at
December 31, 2019 compared with 1.15 percent atSeptember 30, 2019 . - Average deposits increased
$8.7 billion , or 3 percent, to$287.8 billion in the fourth quarter compared with the third quarter due to higher commercial deposits reflecting seasonal growth and the full quarter impact of a new sweep deposit product offering for current asset management clients. - Average investment securities decreased
$1.7 billion , or 2 percent, to$83.5 billion in the fourth quarter compared with the third quarter. - Average balances held with the Federal Reserve of
$23.0 billion increased$7.7 billion compared with the third quarter. - PNC returned
$1.5 billion of capital to shareholders in the fourth quarter through repurchases of 6.5 million common shares for$1.0 billion and dividends on common shares of$.5 billion . - For the full year 2019, PNC returned
$5.4 billion of capital to shareholders through repurchases of 25.9 million common shares for$3.5 billion and dividends on common shares of$1.9 billion . - PNC maintained a strong capital position.
- The Basel III common equity Tier 1 capital ratio was an estimated 9.5 percent at
December 31, 2019 and 9.6 percent atSeptember 30, 2019 .
Earnings Summary |
||||||||||||
In millions, except per share data |
4Q19 |
3Q19 |
4Q18 |
|||||||||
Net income |
$ |
1,381 |
$ |
1,392 |
$ |
1,351 |
||||||
Net income attributable to diluted common shares |
$ |
1,302 |
$ |
1,307 |
$ |
1,274 |
||||||
Diluted earnings per common share |
$ |
2.97 |
$ |
2.94 |
$ |
2.75 |
||||||
Average diluted common shares outstanding |
438 |
445 |
463 |
|||||||||
Return on average assets |
1.33 |
% |
1.36 |
% |
1.40 |
% |
||||||
Return on average common equity |
11.54 |
% |
11.56 |
% |
11.83 |
% |
||||||
Book value per common share |
Quarter end |
$ |
104.59 |
$ |
103.37 |
$ |
95.72 |
|||||
Tangible book value per common share (non-GAAP) |
Quarter end |
$ |
83.30 |
$ |
82.37 |
$ |
75.42 |
|||||
Cash dividends declared per common share |
$ |
1.15 |
$ |
1.15 |
$ |
.95 |
||||||
The Consolidated Financial Highlights accompanying this news release include additional information regarding reconciliations of non-GAAP financial measures to reported (GAAP) amounts. This information supplements results as reported in accordance with GAAP and should not be viewed in isolation from, or as a substitute for, GAAP results. Fee income, a non-GAAP financial measure, refers to noninterest income in the following categories: asset management, consumer services, corporate services, residential mortgage and service charges on deposits. Information in this news release, including the financial tables, is unaudited.
CONSOLIDATED REVENUE REVIEW |
|||||||||||||||
Revenue |
Change |
Change |
|||||||||||||
4Q19 vs |
4Q19 vs |
||||||||||||||
In millions |
4Q19 |
3Q19 |
4Q18 |
3Q19 |
4Q18 |
||||||||||
Net interest income |
$ |
2,488 |
$ |
2,504 |
$ |
2,481 |
(1) |
% |
— |
||||||
Noninterest income |
2,121 |
1,989 |
1,859 |
7 |
% |
14 |
% |
||||||||
Total revenue |
$ |
4,609 |
$ |
4,493 |
$ |
4,340 |
3 |
% |
6 |
% |
|||||
Total revenue for the fourth quarter of 2019 increased
Net interest income for the fourth quarter of 2019 decreased
Noninterest Income |
Change |
Change |
|||||||||||||
4Q19 vs |
4Q19 vs |
||||||||||||||
In millions |
4Q19 |
3Q19 |
4Q18 |
3Q19 |
4Q18 |
||||||||||
Asset management |
$ |
504 |
$ |
464 |
$ |
428 |
9 |
% |
18 |
% |
|||||
Consumer services |
390 |
402 |
387 |
(3) |
% |
1 |
% |
||||||||
Corporate services |
499 |
469 |
468 |
6 |
% |
7 |
% |
||||||||
Residential mortgage |
87 |
134 |
59 |
(35) |
% |
47 |
% |
||||||||
Service charges on deposits |
185 |
178 |
192 |
4 |
% |
(4) |
% |
||||||||
Other |
456 |
342 |
325 |
33 |
% |
40 |
% |
||||||||
$ |
2,121 |
$ |
1,989 |
$ |
1,859 |
7 |
% |
14 |
% |
||||||
Noninterest income for the fourth quarter of 2019 increased
Noninterest income for the fourth quarter of 2019 increased
CONSOLIDATED EXPENSE REVIEW |
|||||||||||||||
Noninterest Expense |
Change |
Change |
|||||||||||||
4Q19 vs |
4Q19 vs |
||||||||||||||
In millions |
4Q19 |
3Q19 |
4Q18 |
3Q19 |
4Q18 |
||||||||||
Personnel |
$ |
1,468 |
$ |
1,400 |
$ |
1,348 |
5 |
% |
9 |
% |
|||||
Occupancy |
201 |
206 |
202 |
(2) |
% |
— |
|||||||||
Equipment |
348 |
291 |
285 |
20 |
% |
22 |
% |
||||||||
Marketing |
77 |
76 |
84 |
1 |
% |
(8) |
% |
||||||||
Other |
668 |
650 |
658 |
3 |
% |
2 |
% |
||||||||
$ |
2,762 |
$ |
2,623 |
$ |
2,577 |
5 |
% |
7 |
% |
||||||
Noninterest expense for the fourth quarter of 2019 increased
Noninterest expense for the fourth quarter of 2019 increased
The effective tax rate was 15.1 percent for the fourth quarter of 2019, 17.5 percent for the third quarter of 2019 and 16.3 percent for the fourth quarter of 2018. The lower effective tax rate in the fourth quarter of 2019 compared with the third quarter was related to lower state income taxes and tax credit benefits. For the full year 2019, the effective tax rate was 16.4 percent.
CONSOLIDATED BALANCE SHEET REVIEW
Average total assets of
Loans |
Change |
Change |
|||||||||||||
4Q19 vs |
4Q19 vs |
||||||||||||||
In billions |
4Q19 |
3Q19 |
4Q18 |
3Q19 |
4Q18 |
||||||||||
Average |
|||||||||||||||
Commercial lending |
$ |
160.8 |
$ |
161.5 |
$ |
152.2 |
— |
6 |
% |
||||||
Consumer lending |
78.1 |
76.2 |
73.7 |
3 |
% |
6 |
% |
||||||||
Average loans |
$ |
238.9 |
$ |
237.7 |
$ |
225.9 |
— |
6 |
% |
||||||
Quarter end |
|||||||||||||||
Commercial lending |
$ |
160.6 |
$ |
160.2 |
$ |
152.3 |
— |
5 |
% |
||||||
Consumer lending |
79.2 |
77.1 |
73.9 |
3 |
% |
7 |
% |
||||||||
Total loans |
$ |
239.8 |
$ |
237.3 |
$ |
226.2 |
1 |
% |
6 |
% |
|||||
Average loans for the fourth quarter of 2019 grew
Fourth quarter 2019 average and period end loans increased
Investment Securities |
Change |
Change |
|||||||||||||
4Q19 vs |
4Q19 vs |
||||||||||||||
In billions |
4Q19 |
3Q19 |
4Q18 |
3Q19 |
4Q18 |
||||||||||
Average |
$ |
83.5 |
$ |
85.2 |
$ |
82.1 |
(2) |
% |
2 |
% |
|||||
Quarter end |
$ |
86.8 |
$ |
87.9 |
$ |
82.7 |
(1) |
% |
5 |
% |
|||||
Average investment securities for the fourth quarter of 2019 decreased
Average balances held with the
Deposits |
Change |
Change |
|||||||||||||
4Q19 vs |
4Q19 vs |
||||||||||||||
In billions |
4Q19 |
3Q19 |
4Q18 |
3Q19 |
4Q18 |
||||||||||
Average |
|||||||||||||||
Noninterest-bearing |
$ |
73.6 |
$ |
72.1 |
$ |
75.3 |
2 |
% |
(2) |
% |
|||||
Interest-bearing |
214.2 |
207.0 |
191.2 |
3 |
% |
12 |
% |
||||||||
Average deposits |
$ |
287.8 |
$ |
279.1 |
$ |
266.5 |
3 |
% |
8 |
% |
|||||
Quarter end |
|||||||||||||||
Noninterest-bearing |
$ |
72.8 |
$ |
74.1 |
$ |
74.0 |
(2) |
% |
(2) |
% |
|||||
Interest-bearing |
215.7 |
211.5 |
193.9 |
2 |
% |
11 |
% |
||||||||
Total deposits |
$ |
288.5 |
$ |
285.6 |
$ |
267.9 |
1 |
% |
8 |
% |
|||||
Average deposits for the fourth quarter of 2019 increased
Borrowed Funds |
Change |
Change |
|||||||||||||
4Q19 vs |
4Q19 vs |
||||||||||||||
In billions |
4Q19 |
3Q19 |
4Q18 |
3Q19 |
4Q18 |
||||||||||
Average |
$ |
60.0 |
$ |
63.9 |
$ |
58.8 |
(6) |
% |
2 |
% |
|||||
Quarter end |
$ |
60.3 |
$ |
61.4 |
$ |
57.4 |
(2) |
% |
5 |
% |
|||||
Average borrowed funds for the fourth quarter of 2019 decreased
Capital |
||||||||||||
12/31/2019 |
* |
9/30/2019 |
12/31/2018 |
|||||||||
Common shareholders' equity In billions |
$ |
45.3 |
$ |
45.4 |
$ |
43.7 |
||||||
Basel III common equity Tier 1 capital ratio |
9.5 |
% |
9.6 |
% |
9.6 |
% |
||||||
* Ratio estimated |
||||||||||||
PNC maintained a strong capital position. Common shareholders' equity at
PNC received approval in
PNC returned
On
The Basel III common equity Tier 1 capital ratio was calculated based on the standardized approach for the risk-weighting of assets. See Capital Ratios in the Consolidated Financial Highlights.
CREDIT QUALITY REVIEW |
|||||||||||||||
Credit Quality |
Change |
Change |
|||||||||||||
At or for the quarter ended |
12/31/19 vs |
12/31/19 vs |
|||||||||||||
In millions |
12/31/2019 |
9/30/2019 |
12/31/2018 |
9/30/19 |
12/31/18 |
||||||||||
Nonperforming loans |
$ |
1,635 |
$ |
1,728 |
$ |
1,694 |
(5) |
% |
(3) |
% |
|||||
Nonperforming assets |
$ |
1,752 |
$ |
1,847 |
$ |
1,808 |
(5) |
% |
(3) |
% |
|||||
Accruing loans past due 90 days or more |
$ |
585 |
$ |
532 |
$ |
629 |
10 |
% |
(7) |
% |
|||||
Net charge-offs |
$ |
209 |
$ |
155 |
$ |
107 |
35 |
% |
95 |
% |
|||||
Provision for credit losses |
$ |
221 |
$ |
183 |
$ |
148 |
21 |
% |
49 |
% |
|||||
Allowance for loan and lease losses |
$ |
2,742 |
$ |
2,738 |
$ |
2,629 |
— |
4 |
% |
||||||
Overall credit quality for the fourth quarter of 2019 remained historically strong. Provision for credit losses for the fourth quarter increased
Nonperforming assets at
Overall delinquencies at
Net charge-offs for the fourth quarter of 2019 increased
The allowance for loan and lease losses to total loans remained relatively stable at 1.14 percent at
BUSINESS SEGMENT RESULTS |
|||||||||||
Business Segment Income |
|||||||||||
In millions |
4Q19 |
3Q19 |
4Q18 |
||||||||
Retail Banking |
$ |
277 |
$ |
347 |
$ |
313 |
|||||
Corporate & Institutional Banking |
649 |
645 |
651 |
||||||||
Asset Management Group |
91 |
46 |
42 |
||||||||
Other, including BlackRock |
364 |
354 |
345 |
||||||||
Net income |
$ |
1,381 |
$ |
1,392 |
$ |
1,351 |
|||||
See accompanying notes in Consolidated Financial Highlights |
|||||||||||
Retail Banking |
Change |
Change |
|||||||||||||||||
4Q19 vs |
4Q19 vs |
||||||||||||||||||
In millions |
4Q19 |
3Q19 |
4Q18 |
3Q19 |
4Q18 |
||||||||||||||
Net interest income |
$ |
1,402 |
$ |
1,393 |
$ |
1,319 |
$ |
9 |
$ |
83 |
|||||||||
Noninterest income |
$ |
652 |
$ |
744 |
$ |
696 |
$ |
(92) |
$ |
(44) |
|||||||||
Provision for credit losses |
$ |
161 |
$ |
147 |
$ |
119 |
$ |
14 |
$ |
42 |
|||||||||
Noninterest expense |
$ |
1,530 |
$ |
1,536 |
$ |
1,487 |
$ |
(6) |
$ |
43 |
|||||||||
Earnings |
$ |
277 |
$ |
347 |
$ |
313 |
$ |
(70) |
$ |
(36) |
|||||||||
In billions |
|||||||||||||||||||
Average loans |
$ |
79.5 |
$ |
77.7 |
$ |
74.8 |
$ |
1.8 |
$ |
4.7 |
|||||||||
Average deposits |
$ |
170.8 |
$ |
168.8 |
$ |
161.8 |
$ |
2.0 |
$ |
9.0 |
|||||||||
Retail Banking earnings for the fourth quarter of 2019 decreased in both comparisons. Noninterest income declined compared with the third quarter due to negative derivative fair value adjustments related to Visa Class B common shares and lower residential mortgage revenue attributable to a lower benefit from residential mortgage servicing rights valuation, net of economic hedge, and decreased loan sales and servicing revenue. Noninterest income decreased compared with the fourth quarter of 2018 due to negative Visa derivative fair value adjustments in the fourth quarter of 2019 compared with positive adjustments in the fourth quarter of 2018 partially offset by higher results from residential mortgage servicing rights valuation, net of economic hedge, increased loan sales revenue, and growth in consumer service fees. Provision for credit losses increased in both comparisons primarily due to higher credit card and auto loan portfolio reserves attributable to loan growth partially offset by a lower provision for home equity loans. Noninterest expense increased compared with the fourth quarter of 2018 reflecting higher customer-related transaction costs, noncredit losses and ATM expense resulting from enhanced checking product benefits.
- Average loans increased 2 percent compared with the third quarter and 6 percent compared with fourth quarter 2018 due to growth in residential mortgage, auto, credit card and unsecured installment loans partially offset by lower education loans.
- Average deposits increased 1 percent compared with the third quarter and 6 percent compared with fourth quarter 2018 due to increases in savings and demand deposits partially offset by lower money market deposits reflecting a shift to relationship-based savings products.
- Net charge-offs were
$154 million for the fourth quarter of 2019 compared with$128 million in the third quarter and$112 million in the fourth quarter of 2018 with increases primarily in credit card and auto loan portfolio net charge-offs. - Residential mortgage loan origination volume was
$3.5 billion for the fourth quarter of 2019 compared with$3.4 billion for the third quarter and$1.6 billion for the fourth quarter of 2018. Approximately 40 percent of fourth quarter 2019 volume was for home purchase transactions compared with 44 percent and 67 percent for the third quarter of 2019 and fourth quarter of 2018, respectively. - The third party residential mortgage servicing portfolio was
$120 billion atDecember 31, 2019 compared with$123 billion atSeptember 30, 2019 and$125 billion atDecember 31, 2018 . Residential mortgage loan servicing acquisitions were$3 billion for both the fourth and third quarters of 2019 and$2 billion for the fourth quarter of 2018. - Approximately 71 percent of consumer customers used non-teller channels for the majority of their transactions during the fourth quarter of 2019 compared with 70 percent in the third quarter and 67 percent in the fourth quarter of 2018.
- Deposit transactions via ATM and mobile channels were 58 percent of total deposit transactions in both the fourth and third quarters of 2019 compared with 55 percent in the fourth quarter of 2018.
Corporate & Institutional Banking |
Change |
Change |
|||||||||||||||||
4Q19 vs |
4Q19 vs |
||||||||||||||||||
In millions |
4Q19 |
3Q19 |
4Q18 |
3Q19 |
4Q18 |
||||||||||||||
Net interest income |
$ |
969 |
$ |
930 |
$ |
930 |
$ |
39 |
$ |
39 |
|||||||||
Noninterest income |
$ |
646 |
$ |
654 |
$ |
632 |
$ |
(8) |
$ |
14 |
|||||||||
Provision for credit losses |
$ |
65 |
$ |
48 |
$ |
42 |
$ |
17 |
$ |
23 |
|||||||||
Noninterest expense |
$ |
726 |
$ |
703 |
$ |
687 |
$ |
23 |
$ |
39 |
|||||||||
Earnings |
$ |
649 |
$ |
645 |
$ |
651 |
$ |
4 |
$ |
(2) |
|||||||||
In billions |
|||||||||||||||||||
Average loans |
$ |
147.9 |
$ |
148.6 |
$ |
139.5 |
$ |
(.7) |
$ |
8.4 |
|||||||||
Average deposits |
$ |
98.5 |
$ |
95.8 |
$ |
91.8 |
$ |
2.7 |
$ |
6.7 |
|||||||||
Corporate & Institutional Banking earnings for the fourth quarter of 2019 were relatively consistent in the comparisons. Noninterest income decreased compared with the third quarter primarily due to lower revenue from commercial mortgage banking activities, partially offset by higher treasury management product revenue. Noninterest income increased compared with the fourth quarter of 2018 driven by higher treasury management product revenue and higher capital markets-related revenue partially offset by lower gains on asset sales. Provision for credit losses in the fourth quarter of 2019 increased compared with the third quarter due to reserves attributable to certain commercial credits. Noninterest expense increased in both comparisons largely due to investments in strategic initiatives and variable costs associated with increased business activity.
- Average loans decreased
$.7 billion , or less than 1 percent, compared with the third quarter due to a decrease in multifamily agency warehouse lending partially offset by loan growth in PNC's corporate banking business. Average loans grew 6 percent compared with the fourth quarter of 2018 driven by loan growth in PNC's corporate banking and business credit businesses partially offset by a decrease in multifamily agency warehouse lending. - Average deposits increased 3 percent over the third quarter reflecting seasonal growth and increased 7 percent compared with the fourth quarter of 2018 due to growth in interest-bearing deposits, including a shift from noninterest-bearing demand deposits.
- Net charge-offs were
$47 million in the fourth quarter of 2019 compared with$30 million in the third quarter and$2 million in the fourth quarter of 2018.
Asset Management Group |
Change |
Change |
|||||||||||||||||
4Q19 vs |
4Q19 vs |
||||||||||||||||||
In millions |
4Q19 |
3Q19 |
4Q18 |
3Q19 |
4Q18 |
||||||||||||||
Net interest income |
$ |
80 |
$ |
70 |
$ |
70 |
$ |
10 |
$ |
10 |
|||||||||
Noninterest income |
$ |
272 |
$ |
216 |
$ |
216 |
$ |
56 |
$ |
56 |
|||||||||
Provision for credit losses (benefit) |
$ |
1 |
$ |
(1) |
— |
$ |
2 |
$ |
1 |
||||||||||
Noninterest expense |
$ |
232 |
$ |
228 |
$ |
232 |
$ |
4 |
— |
||||||||||
Earnings |
$ |
91 |
$ |
46 |
$ |
42 |
$ |
45 |
$ |
49 |
|||||||||
In billions |
|||||||||||||||||||
Client assets under administration at |
$ |
297 |
$ |
298 |
$ |
272 |
$ |
(1) |
$ |
25 |
|||||||||
Average loans |
$ |
7.1 |
$ |
6.9 |
$ |
6.9 |
$ |
.2 |
$ |
.2 |
|||||||||
Average deposits |
$ |
17.9 |
$ |
13.6 |
$ |
12.5 |
$ |
4.3 |
$ |
5.4 |
|||||||||
Client assets under administration at
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 |
Year ended |
|||||||||||||||||||
Dollars in millions, except per share data |
December 31 |
September 30 |
December 31 |
December 31 |
December 31 |
||||||||||||||||
2019 |
2019 |
2018 |
2019 |
2018 |
|||||||||||||||||
Revenue |
|||||||||||||||||||||
Net interest income |
$ |
2,488 |
$ |
2,504 |
$ |
2,481 |
$ |
9,965 |
$ |
9,721 |
|||||||||||
Noninterest income |
2,121 |
1,989 |
1,859 |
7,862 |
7,411 |
||||||||||||||||
Total revenue |
4,609 |
4,493 |
4,340 |
17,827 |
17,132 |
||||||||||||||||
Provision for credit losses |
221 |
183 |
148 |
773 |
408 |
||||||||||||||||
Noninterest expense |
2,762 |
2,623 |
2,577 |
10,574 |
10,296 |
||||||||||||||||
Income before income taxes and noncontrolling interests |
$ |
1,626 |
$ |
1,687 |
$ |
1,615 |
$ |
6,480 |
$ |
6,428 |
|||||||||||
Net income |
$ |
1,381 |
$ |
1,392 |
$ |
1,351 |
$ |
5,418 |
$ |
5,346 |
|||||||||||
Less: |
|||||||||||||||||||||
Net income attributable to noncontrolling interests |
14 |
13 |
14 |
49 |
45 |
||||||||||||||||
Preferred stock dividends (a) |
55 |
63 |
55 |
236 |
236 |
||||||||||||||||
Preferred stock discount accretion and redemptions |
1 |
1 |
1 |
4 |
4 |
||||||||||||||||
Net income attributable to common shareholders |
$ |
1,311 |
$ |
1,315 |
$ |
1,281 |
$ |
5,129 |
$ |
5,061 |
|||||||||||
Less: |
|||||||||||||||||||||
Dividends and undistributed earnings allocated to |
6 |
6 |
5 |
21 |
21 |
||||||||||||||||
Impact of BlackRock earnings per share dilution |
3 |
2 |
2 |
10 |
9 |
||||||||||||||||
Net income attributable to diluted common shares |
$ |
1,302 |
$ |
1,307 |
$ |
1,274 |
$ |
5,098 |
$ |
5,031 |
|||||||||||
Diluted earnings per common share |
$ |
2.97 |
$ |
2.94 |
$ |
2.75 |
$ |
11.39 |
$ |
10.71 |
|||||||||||
Cash dividends declared per common share |
$ |
1.15 |
$ |
1.15 |
$ |
.95 |
$ |
4.20 |
$ |
3.40 |
|||||||||||
Effective tax rate (b) |
15.1 |
% |
17.5 |
% |
16.3 |
% |
16.4 |
% |
16.8 |
% |
(a) |
Dividends are payable quarterly other than the Series O, Series R and Series S preferred stock, which are payable semiannually, with the Series O payable in different quarters than the Series R and Series S preferred stock. |
(b) |
The effective income tax rates are generally lower than the statutory rate due to the relationship of pretax income to tax credits and earnings that are not subject to tax. |
The PNC Financial Services Group, Inc. |
Consolidated Financial Highlights (Unaudited) |
||||||||||||||||||||
Three months ended |
Year ended |
||||||||||||||||||||
December 31 |
September 30 |
December 31 |
December 31 |
December 31 |
|||||||||||||||||
2019 |
2019 |
2018 |
2019 |
2018 |
|||||||||||||||||
PERFORMANCE RATIOS |
|||||||||||||||||||||
Net interest margin (a) |
2.78 |
% |
2.84 |
% |
2.96 |
% |
2.89 |
% |
2.97 |
% |
|||||||||||
Noninterest income to total revenue |
46 |
% |
44 |
% |
43 |
% |
44 |
% |
43 |
% |
|||||||||||
Efficiency (b) |
60 |
% |
58 |
% |
59 |
% |
59 |
% |
60 |
% |
|||||||||||
Return on: |
|||||||||||||||||||||
Average common shareholders' equity |
11.54 |
% |
11.56 |
% |
11.83 |
% |
11.50 |
% |
11.83 |
% |
|||||||||||
Average assets |
1.33 |
% |
1.36 |
% |
1.40 |
% |
1.35 |
% |
1.41 |
% |
|||||||||||
BUSINESS SEGMENT NET INCOME (c) |
|||||||||||||||||||||
In millions |
|||||||||||||||||||||
Retail Banking |
$ |
277 |
$ |
347 |
$ |
313 |
$ |
1,213 |
$ |
1,064 |
|||||||||||
Corporate & Institutional Banking |
649 |
645 |
651 |
2,448 |
2,508 |
||||||||||||||||
Asset Management Group |
91 |
46 |
42 |
262 |
202 |
||||||||||||||||
Other, including BlackRock (d) |
364 |
354 |
345 |
1,495 |
1,572 |
||||||||||||||||
Total net income |
$ |
1,381 |
$ |
1,392 |
$ |
1,351 |
$ |
5,418 |
$ |
5,346 |
(a) |
Net interest margin is the total yield on interest-earning assets minus the total rate on interest-bearing liabilities and includes the benefit from use of noninterest-bearing sources. To provide more meaningful comparisons of net interest margins, we use net interest income on a taxable-equivalent basis in calculating average yields used in the calculation of net interest margin by increasing the interest income earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments. This adjustment is not permitted under generally accepted accounting principles (GAAP) in the Consolidated Income Statement. The taxable-equivalent adjustments to net interest income for the three months ended December 31, 2019, September 30, 2019 and December 31, 2018 were $23 million, $25 million and $28 million, respectively. The taxable equivalent adjustments to net interest income for the twelve months ended December 31, 2019 and December 31, 2018 were $103 million and $115 million, respectively. |
(b) |
Calculated as noninterest expense divided by total revenue. |
(c) |
Our business information is presented based on our internal management reporting practices. Net interest income in business segment results reflect PNC's internal funds transfer pricing methodology. Assets receive a funding charge and liabilities and capital receive a funding credit based on a transfer pricing methodology that incorporates product repricing characteristics, tenor and other factors. |
(d) |
Includes earnings and gains or losses related to PNC's equity investment in BlackRock and residual activities that do not meet the criteria for disclosure as a separate reportable business. We provide additional information on these activities in our Form 10-K and Form 10-Q filings with the SEC. |
The PNC Financial Services Group, Inc. |
Consolidated Financial Highlights (Unaudited) |
||||||||||
December 31 |
September 30 |
December 31 |
|||||||||
2019 |
2019 |
2018 |
|||||||||
BALANCE SHEET DATA |
|||||||||||
Dollars in millions, except per share data |
|||||||||||
Assets |
$ |
410,295 |
$ |
408,916 |
$ |
382,315 |
|||||
Loans (a) |
$ |
239,843 |
$ |
237,377 |
$ |
226,245 |
|||||
Allowance for loan and lease losses |
$ |
2,742 |
$ |
2,738 |
$ |
2,629 |
|||||
Interest-earning deposits with banks |
$ |
23,413 |
$ |
19,036 |
$ |
10,893 |
|||||
Investment securities |
$ |
86,824 |
$ |
87,883 |
$ |
82,701 |
|||||
Loans held for sale (a) |
$ |
1,083 |
$ |
1,872 |
$ |
994 |
|||||
Equity investments (b) |
$ |
13,734 |
$ |
13,325 |
$ |
12,894 |
|||||
Mortgage servicing rights |
$ |
1,644 |
$ |
1,483 |
$ |
1,983 |
|||||
Goodwill |
$ |
9,233 |
$ |
9,233 |
$ |
9,218 |
|||||
Other assets (a) |
$ |
32,202 |
$ |
35,774 |
$ |
34,408 |
|||||
Noninterest-bearing deposits |
$ |
72,779 |
$ |
74,077 |
$ |
73,960 |
|||||
Interest-bearing deposits |
$ |
215,761 |
$ |
211,506 |
$ |
193,879 |
|||||
Total deposits |
$ |
288,540 |
$ |
285,583 |
$ |
267,839 |
|||||
Borrowed funds (a) |
$ |
60,263 |
$ |
61,354 |
$ |
57,419 |
|||||
Total shareholders' equity |
$ |
49,314 |
$ |
49,420 |
$ |
47,728 |
|||||
Common shareholders' equity |
$ |
45,321 |
$ |
45,428 |
$ |
43,742 |
|||||
Accumulated other comprehensive income (loss) |
$ |
799 |
$ |
837 |
$ |
(725) |
|||||
Book value per common share |
$ |
104.59 |
$ |
103.37 |
$ |
95.72 |
|||||
Tangible book value per common share (Non-GAAP) (c) |
$ |
83.30 |
$ |
82.37 |
$ |
75.42 |
|||||
Period end common shares outstanding (millions) |
433 |
439 |
457 |
||||||||
Loans to deposits |
83 |
% |
83 |
% |
84 |
% |
|||||
Common shareholders' equity to total assets |
11.0 |
% |
11.1 |
% |
11.4 |
% |
|||||
CLIENT ASSETS (billions) |
|||||||||||
Discretionary client assets under management |
$ |
154 |
$ |
163 |
$ |
148 |
|||||
Nondiscretionary client assets under administration |
143 |
135 |
124 |
||||||||
Total client assets under administration |
297 |
298 |
272 |
||||||||
Brokerage account client assets |
54 |
52 |
47 |
||||||||
Total client assets |
$ |
351 |
$ |
350 |
$ |
319 |
|||||
CAPITAL RATIOS |
|||||||||||
Basel III (d) |
|||||||||||
Common equity Tier 1 |
9.5 |
% |
9.6 |
% |
9.6 |
% |
|||||
Tier 1 risk-based |
10.7 |
% |
10.7 |
% |
10.8 |
% |
|||||
Total capital risk-based (e) |
12.8 |
% |
12.7 |
% |
13.0 |
% |
|||||
Leverage |
9.1 |
% |
9.3 |
% |
9.4 |
% |
|||||
Supplementary leverage |
7.6 |
% |
7.8 |
% |
7.8 |
% |
|||||
ASSET QUALITY |
|||||||||||
Nonperforming loans to total loans |
.68 |
% |
.73 |
% |
.75 |
% |
|||||
Nonperforming assets to total loans, OREO and foreclosed assets |
.73 |
% |
.78 |
% |
.80 |
% |
|||||
Nonperforming assets to total assets |
.43 |
% |
.45 |
% |
.47 |
% |
|||||
Net charge-offs to average loans (for the three months ended) (annualized) |
.35 |
% |
.26 |
% |
.19 |
% |
|||||
Allowance for loan and lease losses to total loans |
1.14 |
% |
1.15 |
% |
1.16 |
% |
|||||
Allowance for loan and lease losses to nonperforming loans |
168 |
% |
158 |
% |
155 |
% |
|||||
Accruing loans past due 90 days or more (in millions) |
$ |
585 |
$ |
532 |
$ |
629 |
(a) |
Amounts include assets and liabilities for which we have elected the fair value option. Our third quarter 2019 Form 10-Q included, and our 2019 Form 10-K will include, additional information regarding these Consolidated Balance Sheet line items. |
(b) |
Amounts include our equity investment in BlackRock. |
(c) |
See the Tangible Book Value per Common Share table on page 18 for additional information. |
(d) |
All ratios are calculated using the regulatory capital methodology applicable to PNC during each period presented and calculated based on the standardized approach. See Capital Ratios on page 17 for additional information. The ratios as of December 31, 2019 are estimated. |
(e) |
The 2019 and 2018 Basel III Total risk-based capital ratios include nonqualifying trust preferred capital securities of $60 million and $80 million, respectively, that are subject to a phase-out period that runs through 2021. |
The PNC Financial Services Group, Inc. |
Consolidated Financial Highlights (Unaudited) |
|
CAPITAL RATIOS |
||
Because PNC was in the parallel run qualification phase for the advanced approaches at December 31, 2019, PNC's regulatory risk-based capital ratios in 2019 and 2018 are calculated using the standardized approach for determining risk-weighted assets. Under the standardized approach for determining credit risk-weighted assets, exposures are generally assigned a pre-defined risk weight. Exposures to high volatility commercial real estate, past due exposures and equity exposures are generally subject to higher risk weights than other types of exposures. |
||
We provide information below regarding PNC's Basel III Common equity Tier 1 capital ratios. Under the Basel III rules applicable to PNC during 2018 and 2019, significant common stock investments in unconsolidated financial institutions (for PNC, primarily BlackRock), mortgage servicing rights and deferred tax assets must be deducted from capital (net of associated deferred tax liabilities) to the extent they individually exceed 10%, or in the aggregate exceed 15%, of the institution's adjusted common equity Tier 1 capital. Also, PNC's Basel III regulatory capital during 2018 and 2019 includes accumulated other comprehensive income (loss) related to securities currently, and those transferred from, available for sale, as well as pension and other postretirement plans. |
Basel lll Common Equity Tier 1 Capital Ratios (a) |
|||||||||||
December 31 |
September 30 |
December 31 |
|||||||||
Dollars in millions |
2019 |
2019 |
2018 |
||||||||
Common stock, related surplus and retained earnings, net of treasury stock |
$ |
44,522 |
$ |
44,592 |
$ |
44,467 |
|||||
Less regulatory capital adjustments: |
|||||||||||
Goodwill and disallowed intangibles, net of deferred tax liabilities |
(9,251) |
(9,268) |
(9,277) |
||||||||
Basel III total threshold deductions |
(3,279) |
(2,952) |
(3,464) |
||||||||
Accumulated other comprehensive income (loss) |
659 |
638 |
(610) |
||||||||
All other adjustments |
(175) |
(209) |
(211) |
||||||||
Basel III Common equity Tier 1 capital |
$ |
32,476 |
$ |
32,801 |
$ |
30,905 |
|||||
Basel III standardized approach risk-weighted assets (b) |
$ |
340,506 |
$ |
340,912 |
$ |
320,595 |
|||||
Basel III advanced approaches risk-weighted assets (c) |
$ |
317,778 |
$ |
319,960 |
$ |
282,902 |
|||||
Basel III Common equity Tier 1 capital ratio |
9.5 |
% |
9.6 |
% |
9.6 |
% |
(a) |
All ratios are calculated using the regulatory capital methodology applicable to PNC during each period presented. |
(b) |
Basel III standardized approach risk-weighted assets are based on the Basel III standardized approach rules and include credit and market risk-weighted assets. |
|