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PNC Reports Second Quarter 2017 Net Income of $1.1 Billion, $2.10 Diluted EPS
For the quarter |
|||||||||||
2Q17 |
1Q17 |
2Q16 |
|||||||||
Net income $ millions |
$1,097 |
$1,074 |
$989 |
||||||||
Diluted earnings per common share |
$2.10 |
$1.96 |
$1.82 |
"In the second quarter, PNC grew loans and revenue, and we controlled expenses well," said
Income Statement Highlights
Second quarter 2017 compared with first quarter 2017
- Total revenue grew
$176 million , or 5 percent, to$4.1 billion , and PNC continued to generate positive operating leverage. - Net interest income increased
$98 million , or 5 percent, to$2.3 billion due to higher loan yields and balances and an additional day in the second quarter partially offset by increased funding costs. The net interest margin increased 7 basis points to 2.84 percent. - Noninterest income increased
$78 million , or 5 percent, to$1.8 billion driven by fee income growth related to higher business activity and seasonality. - Noninterest expense increased
$77 million , or 3 percent, to$2.5 billion reflecting the impact of seasonal activity. - Provision for credit losses increased
$10 million to $98 million and included an initial provision for a loan and lease portfolio obtained through a business acquisition offset by a benefit from the performance of certain residential real estate loans and home equity lines of credit reaching draw period end dates.
Balance Sheet Highlights
- Loans grew
$5.2 billion , or 2 percent, to$218.0 billion atJune 30, 2017 compared withMarch 31 , 2017. - Commercial lending balances increased
$5.1 billion in PNC's corporate banking, real estate and business credit businesses as well as the equipment finance business, which included the acquisition onApril 3, 2017 of a commercial and vendor finance business with$1.0 billion of loans and leases. - Consumer lending balances increased
$.1 billion as growth in residential mortgage, auto and credit card loans was substantially offset by lower home equity and education loans. - Overall credit quality remained stable.
- Nonperforming assets of
$2.2 billion atJune 30, 2017 decreased$59 million , or 3 percent, compared withMarch 31, 2017 . - Net charge-offs decreased to
$110 million for the second quarter compared with$118 million for the first quarter. - Deposits were
$259.2 billion atJune 30, 2017 , a decrease of$1.5 billion , or 1 percent, compared withMarch 31, 2017 reflecting a seasonal decline in consumer deposits. - Average deposits increased
$1.5 billion , or 1 percent, in the second quarter compared with the first quarter. - Investment securities were
$76.4 billion at bothJune 30, 2017 andMarch 31, 2017 . - PNC completed common stock repurchase programs for the four quarter period ending in the second quarter of 2017 and returned a total of
$3.4 billion of capital to shareholders over this period through repurchases of 21.5 million common shares for$2.3 billion and dividends on common shares of$1.1 billion . - Capital returned to shareholders in the second quarter of 2017 totaled
$1.0 billion , or 93 percent of second quarter net income attributable to diluted common shares, through repurchases of 5.7 million common shares for$.7 billion and dividends on common shares of$.3 billion . - PNC's board of directors raised the quarterly cash dividend on common stock to
75 cents per share, an increase of20 cents per share, or 36 percent, effective with the August dividend. - In
June 2017 PNC announced share repurchase programs of up to$2.7 billion for the four-quarter period beginning in the third quarter of 2017, including repurchases of up to$.3 billion related to employee benefit plans. - PNC maintained strong capital and liquidity positions.
- Transitional Basel III common equity Tier 1 capital ratio was an estimated 10.3 percent at
June 30, 2017 and 10.5 percent atMarch 31, 2017 , calculated using the regulatory capital methodologies applicable to PNC during 2017. - Pro forma fully phased-in Basel III common equity Tier 1 capital ratio, a non-GAAP financial measure, was an estimated 9.8 percent at
June 30, 2017 and 10.0 percent at March 31, 2017, based on the standardized approach rules. - The Liquidity Coverage Ratio at
June 30, 2017 for bothPNC and PNC Bank, N.A. continued to exceed the fully phased-in requirement of 100 percent.
Earnings Summary |
||||||||||||||
In millions, except per share data |
2Q17 |
1Q17 |
2Q16 |
|||||||||||
Net income |
$ |
1,097 |
$ |
1,074 |
$ |
989 |
||||||||
Net income attributable to diluted common shares |
$ |
1,025 |
$ |
963 |
$ |
914 |
||||||||
Diluted earnings per common share |
$ |
2.10 |
$ |
1.96 |
$ |
1.82 |
||||||||
Average diluted common shares outstanding |
488 |
492 |
503 |
|||||||||||
Return on average assets |
1.19 |
% |
1.19 |
% |
1.11 |
% |
||||||||
Return on average common equity |
9.88 |
% |
9.50 |
% |
8.87 |
% |
||||||||
Book value per common share |
Quarter end |
$ |
87.78 |
$ |
86.14 |
$ |
85.33 |
|||||||
Tangible book value per common share (non-GAAP) |
Quarter end |
$ |
68.55 |
$ |
67.47 |
$ |
66.89 |
|||||||
Cash dividends declared per common share |
$ |
.55 |
$ |
.55 |
$ |
.51 |
||||||||
The Consolidated Financial Highlights accompanying this news release include additional information regarding reconciliations of non-GAAP financial measures to reported amounts. 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 |
|||||||||||||||||||
2Q17 vs |
2Q17 vs |
||||||||||||||||||||
In millions |
2Q17 |
1Q17 |
2Q16 |
1Q17 |
2Q16 |
||||||||||||||||
Net interest income |
$ |
2,258 |
$ |
2,160 |
$ |
2,068 |
5 |
% |
9 |
% |
|||||||||||
Noninterest income |
1,802 |
1,724 |
1,726 |
5 |
% |
4 |
% |
||||||||||||||
Total revenue |
$ |
4,060 |
$ |
3,884 |
$ |
3,794 |
5 |
% |
7 |
% |
|||||||||||
Total revenue for the second quarter of 2017 grew
Net interest income for the second quarter of 2017 increased
The net interest margin increased to 2.84 percent for the second quarter of 2017 compared with 2.77 percent for the first quarter and 2.70 percent for the second quarter of 2016. The second quarter 2017 margin reflected the benefit from higher interest rates in the quarter.
Noninterest Income |
Change |
Change |
|||||||||||||||||||||
2Q17 vs |
2Q17 vs |
||||||||||||||||||||||
In millions |
2Q17 |
1Q17 |
2Q16 |
1Q17 |
2Q16 |
||||||||||||||||||
Asset management |
$ |
398 |
$ |
403 |
$ |
377 |
(1) |
% |
6 |
% |
|||||||||||||
Consumer services |
360 |
332 |
354 |
8 |
% |
2 |
% |
||||||||||||||||
Corporate services |
434 |
393 |
403 |
10 |
% |
8 |
% |
||||||||||||||||
Residential mortgage |
104 |
113 |
165 |
(8) |
% |
(37) |
% |
||||||||||||||||
Service charges on deposits |
170 |
161 |
163 |
6 |
% |
4 |
% |
||||||||||||||||
Other |
336 |
322 |
264 |
4 |
% |
27 |
% |
||||||||||||||||
$ |
1,802 |
$ |
1,724 |
$ |
1,726 |
5 |
% |
4 |
% |
||||||||||||||
Noninterest income for the second quarter of 2017 increased
Noninterest income for the second quarter of 2017 increased
CONSOLIDATED EXPENSE REVIEW |
||||||||||||||||||||||
Noninterest Expense |
Change |
Change |
||||||||||||||||||||
2Q17 vs |
2Q17 vs |
|||||||||||||||||||||
In millions |
2Q17 |
1Q17 |
2Q16 |
1Q17 |
2Q16 |
|||||||||||||||||
Personnel |
$ |
1,263 |
$ |
1,249 |
$ |
1,226 |
1 |
% |
3 |
% |
||||||||||||
Occupancy |
202 |
222 |
215 |
(9) |
% |
(6) |
% |
|||||||||||||||
Equipment |
281 |
251 |
240 |
12 |
% |
17 |
% |
|||||||||||||||
Marketing |
67 |
55 |
61 |
22 |
% |
10 |
% |
|||||||||||||||
Other |
666 |
625 |
618 |
7 |
% |
8 |
% |
|||||||||||||||
$ |
2,479 |
$ |
2,402 |
$ |
2,360 |
3 |
% |
5 |
% |
|||||||||||||
Noninterest expense for the second quarter of 2017 increased
The effective tax rate was 26.0 percent for the second quarter of 2017, 23.0 percent for the first quarter of 2017 and 24.3 percent for the second quarter of 2016. The increase in the effective tax rate over the first quarter resulted from the impact of first quarter tax deductions related to stock-based compensation and higher pretax earnings.
CONSOLIDATED BALANCE SHEET REVIEW
Total assets were
Loans |
Change |
Change |
||||||||||||||||||||
6/30/17 vs |
6/30/17 vs |
|||||||||||||||||||||
In billions |
6/30/2017 |
3/31/2017 |
6/30/2016 |
3/31/17 |
6/30/16 |
|||||||||||||||||
Commercial lending |
$ |
145.8 |
$ |
140.7 |
$ |
137.0 |
4 |
% |
6 |
% |
||||||||||||
Consumer lending |
72.2 |
72.1 |
72.0 |
– |
– |
|||||||||||||||||
Total loans |
$ |
218.0 |
$ |
212.8 |
$ |
209.0 |
2 |
% |
4 |
% |
||||||||||||
For the quarter ended: |
||||||||||||||||||||||
Average loans |
$ |
216.4 |
$ |
212.3 |
$ |
208.3 |
2 |
% |
4 |
% |
||||||||||||
Total loans grew
Second quarter 2017 period end and average loans increased
Investment Securities |
Change |
Change |
||||||||||||||||||||
6/30/17 vs |
6/30/17 vs |
|||||||||||||||||||||
In billions |
6/30/2017 |
3/31/2017 |
6/30/2016 |
3/31/17 |
6/30/16 |
|||||||||||||||||
At quarter end |
$ |
76.4 |
$ |
76.4 |
$ |
71.8 |
– |
6 |
% |
|||||||||||||
Average for the quarter ended |
$ |
75.4 |
$ |
76.3 |
$ |
70.2 |
(1) |
% |
7 |
% |
||||||||||||
Investment securities balances at
Balances held with the
Deposits |
Change |
Change |
||||||||||||||||||||
6/30/17 vs |
6/30/17 vs |
|||||||||||||||||||||
In billions |
6/30/2017 |
3/31/2017 |
6/30/2016 |
3/31/17 |
6/30/16 |
|||||||||||||||||
At quarter end |
$ |
259.2 |
$ |
260.7 |
$ |
249.8 |
(1) |
% |
4 |
% |
||||||||||||
Average for the quarter ended |
$ |
256.4 |
$ |
254.9 |
$ |
247.6 |
1 |
% |
4 |
% |
||||||||||||
Total deposits at
Borrowed Funds |
Change |
Change |
||||||||||||||||||||
6/30/17 vs |
6/30/17 vs |
|||||||||||||||||||||
In billions |
6/30/2017 |
3/31/2017 |
6/30/2016 |
3/31/17 |
6/30/16 |
|||||||||||||||||
At quarter end |
$ |
56.4 |
$ |
55.1 |
$ |
54.6 |
2 |
% |
3 |
% |
||||||||||||
Average for the quarter ended |
$ |
57.5 |
$ |
54.9 |
$ |
53.6 |
5 |
% |
7 |
% |
||||||||||||
Borrowed funds at
Capital |
|||||||||||||
6/30/2017* |
3/31/2017 |
6/30/2016 |
|||||||||||
Common shareholders' equity In billions |
$ |
42.1 |
$ |
41.8 |
$ |
42.1 |
|||||||
Transitional Basel III common equity Tier 1 capital ratio |
10.3 |
% |
10.5 |
% |
10.6 |
% |
|||||||
Pro forma fully phased-in Basel III common equity |
|||||||||||||
Tier 1 capital ratio (non-GAAP) |
9.8 |
% |
10.0 |
% |
10.2 |
% |
|||||||
* Ratios estimated |
|||||||||||||
PNC maintained a strong capital position. Common shareholders' equity at
PNC completed common stock repurchase programs for the four quarter period ended in the second quarter of 2017 and returned a total of
In
On
CREDIT QUALITY REVIEW |
|||||||||||||||||||
Credit Quality |
Change |
Change |
|||||||||||||||||
At or for the quarter ended |
6/30/17 vs |
6/30/17 vs |
|||||||||||||||||
In millions |
6/30/2017 |
3/31/2017 |
6/30/2016 |
3/31/17 |
6/30/16 |
||||||||||||||
Nonperforming loans |
$ |
1,957 |
$ |
1,998 |
$ |
2,264 |
(2) |
% |
(14) |
% |
|||||||||
Nonperforming assets |
$ |
2,153 |
$ |
2,212 |
$ |
2,515 |
(3) |
% |
(14) |
% |
|||||||||
Accruing loans past due 90 days or more |
$ |
674 |
$ |
699 |
$ |
754 |
(4) |
% |
(11) |
% |
|||||||||
Net charge-offs |
$ |
110 |
$ |
118 |
$ |
134 |
(7) |
% |
(18) |
% |
|||||||||
Provision for credit losses |
$ |
98 |
$ |
88 |
$ |
127 |
11 |
% |
(23) |
% |
|||||||||
Allowance for loan and lease losses |
$ |
2,561 |
$ |
2,561 |
$ |
2,685 |
– |
(5) |
% |
||||||||||
Overall credit quality for the second quarter of 2017 remained stable with the first quarter. Provision for credit losses for second quarter 2017 increased
Nonperforming assets at
Overall delinquencies as of
Net charge-offs for the second quarter of 2017 decreased
The allowance for loan and lease losses at
BUSINESS SEGMENT RESULTS |
||||||||||||||
Business Segment Income |
||||||||||||||
In millions |
2Q17 |
1Q17 |
2Q16 |
|||||||||||
Retail Banking |
$ |
230 |
$ |
213 |
$ |
328 |
||||||||
Corporate & Institutional Banking |
518 |
484 |
457 |
|||||||||||
Asset Management Group |
52 |
47 |
48 |
|||||||||||
Other, including BlackRock |
297 |
330 |
156 |
|||||||||||
Net income |
$ |
1,097 |
$ |
1,074 |
$ |
989 |
||||||||
See accompanying notes in Consolidated Financial Highlights |
||||||||||||||
Effective for the first quarter of 2017, as a result of changes to how PNC manages its businesses, it realigned its segments and, accordingly, has changed the basis of presentation of its segments, resulting in four reportable business segments: Retail Banking, Corporate & Institutional Banking,
Retail Banking |
Change |
Change |
||||||||||||||||||||
2Q17 vs |
2Q17 vs |
|||||||||||||||||||||
In millions |
2Q17 |
1Q17 |
2Q16 |
1Q17 |
2Q16 |
|||||||||||||||||
Net interest income |
$ |
1,139 |
$ |
1,121 |
$ |
1,133 |
$ |
18 |
$ |
6 |
||||||||||||
Noninterest income |
$ |
645 |
$ |
603 |
$ |
725 |
$ |
42 |
$ |
(80) |
||||||||||||
Provision for credit losses |
$ |
50 |
$ |
71 |
$ |
36 |
$ |
(21) |
$ |
14 |
||||||||||||
Noninterest expense |
$ |
1,370 |
$ |
1,315 |
$ |
1,305 |
$ |
55 |
$ |
65 |
||||||||||||
Earnings |
$ |
230 |
$ |
213 |
$ |
328 |
$ |
17 |
$ |
(98) |
||||||||||||
In billions |
||||||||||||||||||||||
Average loans |
$ |
72.3 |
$ |
72.4 |
$ |
71.6 |
$ |
(.1) |
$ |
.7 |
||||||||||||
Average deposits |
$ |
160.2 |
$ |
158.0 |
$ |
154.1 |
$ |
2.2 |
$ |
6.1 |
||||||||||||
Residential mortgage servicing portfolio Quarter end |
$ |
131 |
$ |
130 |
$ |
126 |
$ |
1 |
$ |
5 |
||||||||||||
Loan origination volume |
$ |
2.2 |
$ |
1.9 |
$ |
2.6 |
$ |
.3 |
$ |
(.4) |
||||||||||||
Retail Banking earnings for the second quarter of 2017 increased compared with the first quarter and decreased compared with the second quarter of 2016. Noninterest income grew over the first quarter primarily as a result of seasonally higher customer-initiated transactions, including debit card, credit card and merchant services. Noninterest income decreased compared with the second quarter of 2016 due to the impact of second quarter 2016 net gains on the sale of Visa Class B common shares, lower residential mortgage loan sales revenue and lower net hedging gains on residential mortgage servicing rights. Provision for credit losses decreased compared with the first quarter reflecting performance of certain consumer loan portfolios. Noninterest expense increased in both comparisons as a result of higher personnel expense, marketing activity and continued investments in technology.
- Average loans increased 1 percent compared with the second quarter of 2016 as growth in residential mortgage, auto and credit card loans was partially offset by lower home equity and education loans.
- Average deposits grew 1 percent over the first quarter and 4 percent over the second quarter of 2016 due to higher demand deposits as well as an increase in savings deposits which was partially offset by lower money market deposits reflecting a shift to relationship-based savings products.
- Approximately 61 percent of second quarter 2017 residential mortgage loan origination volume was for home purchase transactions compared with 43 percent for the first quarter and 48 percent in second quarter of 2016.
- Residential mortgage loan servicing acquisitions were
$8 billion for both the second and first quarters of 2017 and$6 billion in the second quarter of 2016. - Net charge-offs were
$87 million for the second quarter of 2017 compared with$100 million in the first quarter and$74 million for the second quarter of 2016. - Retail Banking continued to focus on the strategic priority of transforming the customer experience through transaction migration, branch network and home lending transformations and multi-channel engagement and service strategies.
- Approximately 62 percent of consumer customers used non-teller channels for the majority of their transactions during the second quarter of 2017 compared with 61 percent in the first quarter and 57 percent for the second quarter of 2016.
- Deposit transactions via ATM and mobile channels were 52 percent of total deposit transactions in both the second and first quarters of 2017 compared to 48 percent in the second quarter of 2016.
- PNC had a network of 2,481 branches and 8,972 ATMs at
June 30, 2017 . Approximately 21 percent of the branch network operates under the universal model.
Corporate & Institutional Banking |
Change |
Change |
|||||||||||||||||
2Q17 vs |
2Q17 vs |
||||||||||||||||||
In millions |
2Q17 |
1Q17 |
2Q16 |
1Q17 |
2Q16 |
||||||||||||||
Net interest income |
$ |
890 |
$ |
839 |
$ |
805 |
$ |
51 |
$ |
85 |
|||||||||
Noninterest income |
$ |
588 |
$ |
524 |
$ |
539 |
$ |
64 |
$ |
49 |
|||||||||
Provision for credit losses |
$ |
87 |
$ |
25 |
$ |
70 |
$ |
62 |
$ |
17 |
|||||||||
Noninterest expense |
$ |
602 |
$ |
584 |
$ |
557 |
$ |
18 |
$ |
45 |
|||||||||
Earnings |
$ |
518 |
$ |
484 |
$ |
457 |
$ |
34 |
$ |
61 |
|||||||||
In billions |
|||||||||||||||||||
Average loans |
$ |
131.5 |
$ |
127.0 |
$ |
123.1 |
$ |
4.5 |
$ |
8.4 |
|||||||||
Average deposits |
$ |
83.7 |
$ |
83.9 |
$ |
81.3 |
$ |
(.2) |
$ |
2.4 |
|||||||||
Commercial loan servicing portfolio Quarter end |
$ |
502 |
$ |
490 |
$ |
459 |
$ |
12 |
$ |
43 |
|||||||||
Corporate & Institutional Banking earnings for the second quarter of 2017 increased compared with the first quarter of 2017 and the second quarter of 2016. Noninterest income increased in both comparisons primarily due to higher revenue from commercial mortgage loans held for sale activities, higher capital markets revenue including loan syndication fees, higher operating lease income related to the acquired business and increased treasury management fees. Provision for credit losses in the second quarter of 2017 increased in both comparisons as a result of an initial provision for the loan and lease portfolio obtained through the business acquisition and continued loan growth, as well as an increase in specific reserves compared with the first quarter. Noninterest expense increased in both comparisons due to operating expense related to the acquired business, variable costs associated with increased business activity and investments in technology and infrastructure.
- Average loans increased 4 percent over the first quarter of 2017 and 7 percent over the second quarter of 2016 driven by growth in PNC's real estate, corporate banking and business credit businesses as well as the equipment finance business, which included the acquired business with
$1.0 billion of loans and leases. - Average deposits declined slightly compared with the first quarter of 2017, and increased 3 percent compared with the second quarter of 2016 primarily driven by an increase in interest-bearing demand deposits partially offset by a decrease in money market deposits.
- Net charge-offs were
$21 million in the second quarter of 2017,$21 million in the first quarter and$60 million in the second quarter of 2016, which reflected energy-related loans. - PNC has formalized plans to expand its middle market business into the
Denver ,Houston andNashville markets in 2018, following expansion toDallas ,Kansas City andMinneapolis in 2017.
Asset Management Group |
Change |
Change |
||||||||||||||||||||
2Q17 vs |
2Q17 vs |
|||||||||||||||||||||
In millions |
2Q17 |
1Q17 |
2Q16 |
1Q17 |
2Q16 |
|||||||||||||||||
Net interest income |
$ |
73 |
$ |
71 |
$ |
76 |
$ |
2 |
$ |
(3) |
||||||||||||
Noninterest income |
$ |
217 |
$ |
218 |
$ |
213 |
$ |
(1) |
$ |
4 |
||||||||||||
Provision for credit losses (benefit) |
$ |
(7) |
$ |
(2) |
$ |
6 |
$ |
(5) |
$ |
(13) |
||||||||||||
Noninterest expense |
$ |
215 |
$ |
217 |
$ |
206 |
$ |
(2) |
$ |
9 |
||||||||||||
Earnings |
$ |
52 |
$ |
47 |
$ |
48 |
$ |
5 |
$ |
4 |
||||||||||||
In billions |
||||||||||||||||||||||
Client assets under administration Quarter end |
$ |
266 |
$ |
264 |
$ |
252 |
$ |
2 |
$ |
14 |
||||||||||||
Average loans |
$ |
7.0 |
$ |
7.0 |
$ |
7.3 |
– |
$ |
(.3) |
|||||||||||||
Average deposits |
$ |
12.4 |
$ |
12.8 |
$ |
12.0 |
$ |
(.4) |
$ |
.4 |
||||||||||||
Asset Management Group's strategy is focused on growing investable assets by continually evolving the client experience and products and services. The business offers an open architecture platform with a full array of investment products and banking solutions.- Client assets under administration at
June 30, 2017 included discretionary client assets under management of$141 billion and nondiscretionary client assets under administration of$125 billion . - Discretionary client assets under management were stable with
March 31, 2017 and increased$6 billion compared withJune 30, 2016 primarily attributable to equity market increases.
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 |
Six months ended |
||||||||||||||
Dollars in millions, except per share data |
June 30 |
March 31 |
June 30 |
June 30 |
June 30 |
|||||||||||
2017 |
2017 |
2016 |
2017 |
2016 |
||||||||||||
Revenue |
||||||||||||||||
Net interest income |
$ |
2,258 |
$ |
2,160 |
$ |
2,068 |
$ |
4,418 |
$ |
4,166 |
||||||
Noninterest income |
1,802 |
1,724 |
1,726 |
3,526 |
3,293 |
|||||||||||
Total revenue |
4,060 |
3,884 |
3,794 |
7,944 |
7,459 |
|||||||||||
Provision for credit losses |
98 |
88 |
127 |
186 |
279 |
|||||||||||
Noninterest expense |
2,479 |
2,402 |
2,360 |
4,881 |
4,641 |
|||||||||||
Income before income taxes and noncontrolling interests |
$ |
1,483 |
$ |
1,394 |
$ |
1,307 |
$ |
2,877 |
$ |
2,539 |
||||||
Net income |
$ |
1,097 |
$ |
1,074 |
$ |
989 |
$ |
2,171 |
$ |
1,932 |
||||||
Less: |
||||||||||||||||
Net income attributable to noncontrolling interests |
10 |
17 |
23 |
27 |
42 |
|||||||||||
Preferred stock dividends (a) |
55 |
63 |
42 |
118 |
105 |
|||||||||||
Preferred stock discount accretion and redemptions |
2 |
21 |
1 |
23 |
3 |
|||||||||||
Net income attributable to common shareholders |
$ |
1,030 |
$ |
973 |
$ |
923 |
$ |
2,003 |
$ |
1,782 |
||||||
Less: |
||||||||||||||||
Dividends and undistributed earnings allocated to nonvested restricted shares |
4 |
6 |
6 |
10 |
12 |
|||||||||||
Impact of BlackRock earnings per share dilution |
1 |
4 |
3 |
5 |
6 |
|||||||||||
Net income attributable to diluted common shares |
$ |
1,025 |
$ |
963 |
$ |
914 |
$ |
1,988 |
$ |
1,764 |
||||||
Diluted earnings per common share |
$ |
2.10 |
$ |
1.96 |
$ |
1.82 |
$ |
4.05 |
$ |
3.49 |
||||||
Cash dividends declared per common share |
$ |
.55 |
$ |
.55 |
$ |
.51 |
$ |
1.10 |
$ |
1.02 |
||||||
Effective tax rate (b) |
26.0 |
% |
23.0 |
% |
24.3 |
% |
24.5 |
% |
23.9 |
% |
||||||
(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 |
Six months ended |
||||||||||||||||||||
June 30 |
March 31 |
June 30 |
June 30 |
June 30 |
|||||||||||||||||
2017 |
2017 |
2016 |
2017 |
2016 |
|||||||||||||||||
PERFORMANCE RATIOS |
|||||||||||||||||||||
Net interest margin (a) |
2.84 |
% |
2.77 |
% |
2.70 |
% |
2.81 |
% |
2.73 |
% |
|||||||||||
Noninterest income to total revenue |
44 |
% |
44 |
% |
45 |
% |
44 |
% |
44 |
% |
|||||||||||
Efficiency (b) |
61 |
% |
62 |
% |
62 |
% |
61 |
% |
62 |
% |
|||||||||||
Return on: |
|||||||||||||||||||||
Average common shareholders' equity |
9.88 |
% |
9.50 |
% |
8.87 |
% |
9.69 |
% |
8.66 |
% |
|||||||||||
Average assets |
1.19 |
% |
1.19 |
% |
1.11 |
% |
1.19 |
% |
1.09 |
% |
|||||||||||
BUSINESS SEGMENT NET INCOME (LOSS) (c) (d) |
|||||||||||||||||||||
In millions |
|||||||||||||||||||||
Retail Banking |
$ |
230 |
$ |
213 |
$ |
328 |
$ |
443 |
$ |
571 |
|||||||||||
Corporate & Institutional Banking |
518 |
484 |
457 |
1,002 |
855 |
||||||||||||||||
Asset Management Group |
52 |
47 |
48 |
99 |
97 |
||||||||||||||||
Other, including BlackRock (e) |
297 |
330 |
156 |
627 |
409 |
||||||||||||||||
Total net income |
$ |
1,097 |
$ |
1,074 |
$ |
989 |
$ |
2,171 |
$ |
1,932 |
(a) |
Calculated as annualized taxable-equivalent net interest income divided by average earning assets. To provide more meaningful comparisons of net interest margins, we use net interest income on a taxable-equivalent basis in calculating 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 June 30, 2017, March 31, 2017 and June 30, 2016 were $54 million, $52 million and $48 million, respectively. The taxable equivalent adjustments to net interest income for the first six months of 2017 and 2016 were $106 million and $96 million, respectively. |
||||||||||||||||||||
(b) |
Calculated as noninterest expense divided by total revenue. |
||||||||||||||||||||
(c) |
Effective for the first quarter of 2017, as a result of changes to how we manage our businesses, we realigned our segments and, accordingly, changed the basis of presentation of our segments, resulting in four reportable business segments: Retail Banking, Corporate & Institutional Banking, Asset Management Group and BlackRock. For purposes of this presentation, we have combined BlackRock with Other. All 2016 prior periods presented were revised to conform to the new segment alignment. |
||||||||||||||||||||
(d) |
Our business information is presented based on our internal management reporting practices. 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. We periodically refine our internal methodologies as management reporting practices are enhanced. In the first quarter of 2017, we made certain adjustments to our internal funds transfer pricing methodology primarily relating to weighted average lives of certain non-maturity deposits. These changes in methodology affected business segment results, primarily adversely impacting net interest income for Corporate & Institutional Banking and Retail Banking, offset by increased net interest income in Other. All 2016 prior periods presented were revised to reflect our change in internal funds transfer pricing methodology. |
||||||||||||||||||||
(e) |
Includes earnings and gains or losses related to PNC's equity interest 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) |
|||||||||||||
June 30 |
March 31 |
June 30 |
||||||||||||
2017 |
2017 |
2016 |
||||||||||||
BALANCE SHEET DATA |
||||||||||||||
Dollars in millions, except per share data |
||||||||||||||
Assets |
$ |
372,190 |
$ |
370,944 |
$ |
361,335 |
||||||||
Loans (a) |
$ |
218,034 |
$ |
212,826 |
$ |
209,056 |
||||||||
Allowance for loan and lease losses |
$ |
2,561 |
$ |
2,561 |
$ |
2,685 |
||||||||
Interest-earning deposits with banks |
$ |
22,482 |
$ |
27,877 |
$ |
26,750 |
||||||||
Investment securities |
$ |
76,431 |
$ |
76,432 |
$ |
71,801 |
||||||||
Loans held for sale (a) |
$ |
2,030 |
$ |
1,414 |
$ |
2,296 |
||||||||
Equity investments (b) |
$ |
10,819 |
$ |
10,900 |
$ |
10,469 |
||||||||
Mortgage servicing rights |
$ |
1,867 |
$ |
1,867 |
$ |
1,222 |
||||||||
Goodwill |
$ |
9,163 |
$ |
9,103 |
$ |
9,103 |
||||||||
Other assets (a) |
$ |
28,886 |
$ |
28,083 |
$ |
29,127 |
||||||||
Noninterest-bearing deposits |
$ |
79,550 |
$ |
79,246 |
$ |
77,866 |
||||||||
Interest-bearing deposits |
$ |
179,626 |
$ |
181,464 |
$ |
171,912 |
||||||||
Total deposits |
$ |
259,176 |
$ |
260,710 |
$ |
249,778 |
||||||||
Borrowed funds (a) |
$ |
56,406 |
$ |
55,062 |
$ |
54,571 |
||||||||
Shareholders' equity |
$ |
46,084 |
$ |
45,754 |
$ |
45,558 |
||||||||
Common shareholders' equity |
$ |
42,103 |
$ |
41,774 |
$ |
42,103 |
||||||||
Accumulated other comprehensive income |
$ |
(98) |
$ |
(279) |
$ |
736 |
||||||||
Book value per common share |
$ |
87.78 |
$ |
86.14 |
$ |
85.33 |
||||||||
Tangible book value per common share (Non-GAAP) (c) |
$ |
68.55 |
$ |
67.47 |
$ |
66.89 |
||||||||
Period end common shares outstanding (millions) |
480 |
485 |
493 |
|||||||||||
Loans to deposits |
84 |
% |
82 |
% |
84 |
% |
||||||||
CLIENT ASSETS (billions) |
||||||||||||||
Discretionary client assets under management |
$ |
141 |
$ |
141 |
$ |
135 |
||||||||
Nondiscretionary client assets under administration |
125 |
123 |
117 |
|||||||||||
Total client assets under administration |
266 |
264 |
252 |
|||||||||||
Brokerage account client assets |
46 |
46 |
44 |
|||||||||||
Total client assets |
$ |
312 |
$ |
310 |
$ |
296 |
||||||||
CAPITAL RATIOS |
||||||||||||||
Transitional Basel III (d) (e) |
||||||||||||||
Common equity Tier 1 |
10.3 |
% |
10.5 |
% |
10.6 |
% |
||||||||
Tier 1 risk-based |
11.6 |
% |
11.8 |
% |
11.9 |
% |
||||||||
Total capital risk-based |
13.7 |
% |
14.1 |
% |
14.3 |
% |
||||||||
Leverage |
9.9 |
% |
9.9 |
% |
10.2 |
% |
||||||||
Pro forma Fully Phased-In Basel III (Non-GAAP) (d) |
||||||||||||||
Common equity Tier 1 |
9.8 |
% |
10.0 |
% |
10.2 |
% |
||||||||
Common shareholders' equity to assets |
11.3 |
% |
11.3 |
% |
11.7 |
% |
||||||||