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PNC Reports Third Quarter 2020 Net Income Of $1.5 Billion, $3.39 Diluted EPS
For the quarter |
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In millions, except per share data |
3Q20 |
2Q20 |
3Q19 |
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Net income (loss) from continuing operations |
|
( |
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Net income from discontinued operations |
— |
|
|
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Net income |
|
|
|
|||
Diluted earnings (loss) per common share from continuing operations |
|
( |
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|||
Diluted earnings per common share from discontinued operations |
— |
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Diluted earnings per common share |
|
|
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"PNC delivered solid third quarter results against the backdrop of a continuing uncertain economy. Noninterest income increased, expenses were well managed and we continued to generate positive operating leverage. Deposits grew while loans declined as a result of lower commercial loan utilization rates, despite growth in loan commitments. Our provision for credit losses was significantly less than last quarter, reflecting stable reserve levels. We continue to execute on our strategic priorities, including ongoing investments in our national expansion and digital offerings. We have substantial capital and liquidity flexibility, and remain well positioned to take advantage of potential investment opportunities to enhance shareholder value." Bill Demchak, PNC Chairman, President and Chief Executive Officer |
Second Quarter Sale of
- In the second quarter of 2020, PNC divested its entire 22.4% equity investment in BlackRock. Net proceeds from the sale were
$14.2 billion . The after-tax gain on the sale of$4.3 billion , and donation expense and BlackRock's historical results for all periods presented, are reported as discontinued operations.
Income Statement Highlights - Continuing Operations
Third quarter 2020 compared with second quarter 2020
- Net income from continuing operations was
$1.5 billion , an increase of$2.3 billion driven by a lower provision for credit losses and higher noninterest income. - Total revenue of
$4.3 billion increased$205 million , or 5%. - Net interest income of
$2.5 billion decreased$43 million , or 2%, as lower yields on loans and securities and a decline in loan balances more than offset the benefit of lower rates on deposits and borrowings. - Net interest margin decreased 13 basis points to 2.39% reflecting the impact of higher balances held with the
Federal Reserve Bank and lower yields on loans and securities partially offset by lower rates on deposits and borrowings. - Noninterest income of
$1.8 billion increased$248 million , or 16%. - Fee income of
$1.3 billion increased$62 million , or 5%, as a result of increases in consumer service fees, service charges on deposits and asset management revenue partially offset by lower corporate service fees and residential mortgage revenue. - Other noninterest income of
$457 million increased$186 million and included positive valuation adjustments of private equity investments partially offset by lower capital markets-related revenue. - Noninterest expense of
$2.5 billion increased$16 million , or 1%. - Provision for credit losses was
$52 million , a decrease of$2.4 billion . - Provision for commercial loans was
$219 million largely related to borrowers in industries adversely impacted by the pandemic, primarily within the commercial real estate portfolio. - The consumer loan portfolio had a provision recapture of
$215 million primarily due to improvement in macroeconomic factors. - The effective tax rate declined to 9.8% for the third quarter compared with 17.5% for the second quarter primarily due to tax credit benefits and the favorable resolution of certain tax matters.
Balance Sheet Highlights
Third quarter 2020 compared with second quarter 2020, or
- Average loans decreased
$15.0 billion , or 6%, to$253.1 billion . - Average commercial loans of
$175.6 billion decreased$13.7 billion , or 7%, reflecting lower utilization of loan commitments. - Average consumer loans of
$77.5 billion decreased$1.3 billion , or 2%, due to lower auto, credit card, home equity and student loans partially offset by higher residential mortgage loans. - Loans at
September 30, 2020 declined$9.0 billion , or 3%, to$249.3 billion . Commercial loans decreased$7.5 billion , or 4%, and consumer loans decreased$1.5 billion , or 2%. - Credit quality performance:
- Overall delinquencies of
$1.2 billion atSeptember 30, 2020 decreased$72 million , or 5%. - Nonperforming assets of
$2.2 billion atSeptember 30, 2020 increased$197 million , or 10%. - Net loan charge-offs were
$155 million for the third quarter compared with$236 million for the second quarter. - The allowance for credit losses to total loans was 2.58% at
September 30, 2020 compared with 2.55% atJune 30, 2020 . - Average deposits increased
$15.3 billion , or 5%, to$350.5 billion due to growth in both commercial and consumer deposits. Commercial deposits grew as a result of customer liquidity accumulation. Consumer deposits increased driven by government stimulus and lower consumer spending. - Deposits at
September 30, 2020 increased$9.1 billion , or 3%, to$355.1 billion . - Average investment securities increased
$2.1 billion , or 2%, to$90.5 billion . - Investment securities at
September 30, 2020 decreased$7.3 billion , or 7%, to$91.2 billion as portfolio prepayments and maturities exceeded reinvestments. - Average balances held with the
Federal Reserve Bank of$60.0 billion increased$25.8 billion reflecting higher deposits and proceeds from the sale of the equity investment in BlackRock. Federal Reserve Bank balances atSeptember 30, 2020 increased$20.6 billion to$70.6 billion due to liquidity from deposit growth.- PNC maintained strong capital and liquidity positions.
- On
October 1, 2020 , the PNC board of directors declared a quarterly cash dividend on common stock of$1.15 per share payable onNovember 5, 2020 . - The Basel III common equity Tier 1 capital ratio was an estimated 11.7% at
September 30, 2020 and 11.3% atJune 30, 2020 . - The Liquidity Coverage Ratio at
September 30, 2020 for bothPNC and PNC Bank, N.A. exceeded the regulatory minimum requirement.
Earnings Summary |
||||||||||||
In millions, except per share data |
3Q20 |
2Q20 |
3Q19 |
|||||||||
Net income |
$ |
1,532 |
$ |
3,655 |
$ |
1,392 |
||||||
Net income attributable to diluted common shares |
$ |
1,447 |
$ |
3,569 |
$ |
1,307 |
||||||
Diluted earnings per common share |
$ |
3.39 |
$ |
8.40 |
$ |
2.94 |
||||||
Average diluted common shares outstanding |
426 |
426 |
445 |
|||||||||
Return on average assets |
1.32 |
% |
3.21 |
% |
1.36 |
% |
||||||
Return on average common equity |
11.76 |
% |
30.11 |
% |
11.56 |
% |
||||||
Book value per common share |
Quarter end |
$ |
117.44 |
$ |
115.26 |
$ |
103.37 |
|||||
Tangible book value per common share (non-GAAP) |
Quarter end |
$ |
95.71 |
$ |
93.54 |
$ |
82.37 |
|||||
Cash dividends declared per common share |
$ |
1.15 |
$ |
1.15 |
$ |
1.15 |
||||||
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 |
|||||||||||||
3Q20 vs |
3Q20 vs |
||||||||||||||
In millions |
3Q20 |
2Q20 |
3Q19 |
2Q20 |
3Q19 |
||||||||||
Net interest income |
$ |
2,484 |
$ |
2,527 |
$ |
2,504 |
(2) |
% |
(1) |
% |
|||||
Noninterest income |
1,797 |
1,549 |
1,738 |
16 |
% |
3 |
% |
||||||||
Total revenue |
$ |
4,281 |
$ |
4,076 |
$ |
4,242 |
5 |
% |
1 |
% |
|||||
Total revenue for the third quarter of 2020 increased
Net interest income of
Noninterest Income |
Change |
Change |
|||||||||||||
3Q20 vs |
3Q20 vs |
||||||||||||||
In millions |
3Q20 |
2Q20 |
3Q19 |
2Q20 |
3Q19 |
||||||||||
Asset management |
$ |
215 |
$ |
199 |
$ |
213 |
8 |
% |
1 |
% |
|||||
Consumer services |
390 |
330 |
402 |
18 |
% |
(3) |
% |
||||||||
Corporate services |
479 |
512 |
469 |
(6) |
% |
2 |
% |
||||||||
Residential mortgage |
137 |
158 |
134 |
(13) |
% |
2 |
% |
||||||||
Service charges on deposits |
119 |
79 |
178 |
51 |
% |
(33) |
% |
||||||||
Other |
457 |
271 |
342 |
69 |
% |
34 |
% |
||||||||
$ |
1,797 |
$ |
1,549 |
$ |
1,738 |
16 |
% |
3 |
% |
||||||
Noninterest income for the third quarter of 2020 increased
Noninterest income for the third quarter of 2020 increased
CONSOLIDATED EXPENSE REVIEW |
|||||||||||||||
Noninterest Expense |
Change |
Change |
|||||||||||||
3Q20 vs |
3Q20 vs |
||||||||||||||
In millions |
3Q20 |
2Q20 |
3Q19 |
2Q20 |
3Q19 |
||||||||||
Personnel |
$ |
1,410 |
$ |
1,373 |
$ |
1,400 |
3 |
% |
1 |
% |
|||||
Occupancy |
205 |
199 |
206 |
3 |
% |
— |
|||||||||
Equipment |
292 |
301 |
291 |
(3) |
% |
— |
|||||||||
Marketing |
67 |
47 |
76 |
43 |
% |
(12) |
% |
||||||||
Other |
557 |
595 |
650 |
(6) |
% |
(14) |
% |
||||||||
$ |
2,531 |
$ |
2,515 |
$ |
2,623 |
1 |
% |
(4) |
% |
||||||
Noninterest expense for the third quarter of 2020 increased
Noninterest expense for the third quarter of 2020 decreased
The effective tax rate from continuing operations was 9.8% for the third quarter of 2020, 17.5% for the second quarter of 2020 and 17.8% for the third quarter of 2019. The decrease in both comparisons was primarily due to tax credit benefits and the favorable resolution of certain tax matters in the third quarter of 2020.
CONSOLIDATED BALANCE SHEET REVIEW
Average total assets were
Loans |
Change |
Change |
|||||||||||||
3Q20 vs |
3Q20 vs |
||||||||||||||
In billions |
3Q20 |
2Q20 |
3Q19 |
2Q20 |
3Q19 |
||||||||||
Average |
|||||||||||||||
Commercial |
$ |
175.6 |
$ |
189.3 |
$ |
161.5 |
(7) |
% |
9 |
% |
|||||
Consumer |
77.5 |
78.8 |
76.2 |
(2) |
% |
2 |
% |
||||||||
Average loans |
$ |
253.1 |
$ |
268.1 |
$ |
237.7 |
(6) |
% |
6 |
% |
|||||
Quarter end |
|||||||||||||||
Commercial |
$ |
172.7 |
$ |
180.2 |
$ |
160.2 |
(4) |
% |
8 |
% |
|||||
Consumer |
76.6 |
78.1 |
77.2 |
(2) |
% |
(1) |
% |
||||||||
Total loans |
$ |
249.3 |
$ |
258.3 |
$ |
237.4 |
(3) |
% |
5 |
% |
|||||
Average loans for the third quarter 2020 decreased
Total loans at
Average and period-end loans for the third quarter of 2020 increased
|
Change |
Change |
|||||||||||||
3Q20 vs |
3Q20 vs |
||||||||||||||
In billions |
3Q20 |
2Q20 |
3Q19 |
2Q20 |
3Q19 |
||||||||||
Average |
$ |
90.5 |
$ |
88.4 |
$ |
85.2 |
2 |
% |
6 |
% |
|||||
Quarter end |
$ |
91.2 |
$ |
98.5 |
$ |
87.9 |
(7) |
% |
4 |
% |
|||||
Average investment securities for the third quarter of 2020 increased
Average balances held with the
Deposits |
Change |
Change |
|||||||||||||
3Q20 vs |
3Q20 vs |
||||||||||||||
In billions |
3Q20 |
2Q20 |
3Q19 |
2Q20 |
3Q19 |
||||||||||
Average |
|||||||||||||||
Noninterest-bearing |
$ |
101.9 |
$ |
93.7 |
$ |
72.1 |
9 |
% |
41 |
% |
|||||
Interest-bearing |
248.6 |
241.5 |
207.0 |
3 |
% |
20 |
% |
||||||||
Average deposits |
$ |
350.5 |
$ |
335.2 |
$ |
279.1 |
5 |
% |
26 |
% |
|||||
Quarter end |
|||||||||||||||
Noninterest-bearing |
$ |
107.3 |
$ |
99.5 |
$ |
74.1 |
8 |
% |
45 |
% |
|||||
Interest-bearing |
247.8 |
246.5 |
211.5 |
1 |
% |
17 |
% |
||||||||
Total deposits |
$ |
355.1 |
$ |
346.0 |
$ |
285.6 |
3 |
% |
24 |
% |
|||||
Average deposits for the third quarter of 2020 increased
Borrowed Funds |
Change |
Change |
|||||||||||||
3Q20 vs |
3Q20 vs |
||||||||||||||
In billions |
3Q20 |
2Q20 |
3Q19 |
2Q20 |
3Q19 |
||||||||||
Average |
$ |
43.3 |
$ |
53.2 |
$ |
63.9 |
(19) |
% |
(32) |
% |
|||||
Quarter end |
$ |
42.1 |
$ |
47.0 |
$ |
61.3 |
(10) |
% |
(31) |
% |
|||||
Average borrowed funds for the third quarter of 2020 decreased
Capital |
||||||||||||
|
* |
|
|
|||||||||
Common shareholders' equity In billions |
$ |
49.8 |
$ |
48.9 |
$ |
45.4 |
||||||
Basel III common equity Tier 1 capital ratio |
11.7 |
% |
11.3 |
% |
9.6 |
% |
||||||
Basel III common equity Tier 1 fully implemented capital |
11.3 |
% |
10.9 |
% |
N/A |
|||||||
* Ratios estimated |
||||||||||||
PNC maintained a strong capital position. Common shareholders' equity at
The PNC board of directors declared a quarterly cash dividend on common stock payable on
PNC announced on
For information regarding PNC's Basel III capital ratios, see Capital Ratios in the Consolidated Financial Highlights. The 2019 Tailoring Rules became effective for PNC as of
CREDIT QUALITY REVIEW |
|||||||||||||||||
Credit Quality |
Change |
Change |
|||||||||||||||
At or for the quarter ended |
3Q20 vs |
3Q20 vs |
|||||||||||||||
In millions |
|
|
|
2Q20 |
3Q19 |
||||||||||||
Provision for credit losses |
$ |
52 |
$ |
2,463 |
$ |
183 |
$ |
(2,411) |
$ |
(131) |
|||||||
Net loan charge-offs |
$ |
155 |
$ |
236 |
$ |
155 |
(34) |
% |
— |
||||||||
Nonperforming loans |
$ |
2,085 |
$ |
1,876 |
$ |
1,728 |
11 |
% |
21 |
% |
|||||||
Nonperforming assets |
$ |
2,152 |
$ |
1,955 |
$ |
1,847 |
10 |
% |
17 |
% |
|||||||
Accruing loans past due 90 days or more |
$ |
448 |
$ |
456 |
$ |
532 |
(2) |
% |
(16) |
% |
|||||||
Allowance for loan and lease losses |
$ |
5,751 |
$ |
5,928 |
$ |
2,738 |
$ |
(177) |
$ |
3,013 |
|||||||
Allowance for unfunded lending related commitments |
$ |
689 |
$ |
662 |
$ |
304 |
$ |
27 |
$ |
385 |
|||||||
Allowance for credit losses to total loans |
2.58 |
% |
2.55 |
% |
1.28 |
% |
|||||||||||
Provision for credit losses was
Net loan charge-offs for the third quarter of 2020 decreased
Nonperforming assets at
Overall delinquencies at
The allowance for credit losses was
BUSINESS SEGMENT RESULTS |
|||||||||||
Business Segment Income (Loss) |
|||||||||||
In millions |
3Q20 |
2Q20 |
3Q19 |
||||||||
Retail Banking |
$ |
530 |
$ |
(223) |
$ |
347 |
|||||
Corporate & Institutional Banking |
670 |
(358) |
645 |
||||||||
|
91 |
28 |
46 |
||||||||
Other |
241 |
(191) |
143 |
||||||||
Net income (loss) from continuing operations |
$ |
1,532 |
$ |
(744) |
$ |
1,181 |
|||||
See accompanying notes in Consolidated Financial Highlights |
|||||||||||
Retail Banking |
Change |
Change |
|||||||||||||||||
3Q20 vs |
3Q20 vs |
||||||||||||||||||
In millions |
3Q20 |
2Q20 |
3Q19 |
2Q20 |
3Q19 |
||||||||||||||
Net interest income |
$ |
1,383 |
$ |
1,390 |
$ |
1,393 |
$ |
(7) |
$ |
(10) |
|||||||||
Noninterest income |
$ |
673 |
$ |
585 |
$ |
744 |
$ |
88 |
$ |
(71) |
|||||||||
Provision for (recapture of) credit losses |
$ |
(157) |
$ |
761 |
$ |
147 |
$ |
(918) |
$ |
(304) |
|||||||||
Noninterest expense |
$ |
1,521 |
$ |
1,500 |
$ |
1,536 |
$ |
21 |
$ |
(15) |
|||||||||
Earnings (loss) |
$ |
530 |
$ |
(223) |
$ |
347 |
$ |
753 |
$ |
183 |
|||||||||
In billions |
|||||||||||||||||||
Average loans |
$ |
81.8 |
$ |
83.7 |
$ |
77.7 |
$ |
(1.9) |
$ |
4.1 |
|||||||||
Average deposits |
$ |
197.9 |
$ |
189.0 |
$ |
168.8 |
$ |
8.9 |
$ |
29.1 |
|||||||||
Retail Banking earnings for the third quarter of 2020 increased compared with the second quarter of 2020 and the third quarter of 2019. Noninterest income increased over the second quarter driven by higher consumer services fees, including merchant services, debit card and credit card fees primarily attributable to higher transaction volumes, as well as increased service charges on deposits due to a decrease in total fees waived for customers experiencing pandemic-related hardships. These increases were partially offset by lower residential mortgage revenue as a result of lower servicing fees and loan sales revenue. In comparison with the third quarter of 2019, noninterest income decreased due to lower service charges on deposits and consumer services fees, including merchant services and credit card, driven by lower transaction volumes. Service charges on deposits declined largely due to fees waived for customers experiencing pandemic-related hardships and lower revenue related to the elimination of certain checking product fees. Noninterest income in both comparisons benefited from the impact of negative derivative fair value adjustments related to Visa Class B common shares in the second quarter of 2020 and third quarter of 2019. Provision for credit losses decreased in the third quarter of 2020 compared with the second quarter due to improvement in macroeconomic factors. Noninterest expense increased compared with the second quarter reflecting higher marketing, including the launch of a new digital checking product, and ATM expense as a result of higher transaction volumes. Noninterest expense decreased compared with the third quarter of 2019 primarily as a result of lower marketing, ATM expense and costs associated with business travel partially offset by higher branch-related expense due to the impact of the pandemic.
- Average loans decreased 2% compared with the second quarter of 2020 and increased 5% compared with the third quarter of 2019. The decrease from the second quarter was driven by declines in auto, credit card and unsecured installment loans reflecting consumer behavior. The increase compared with third quarter 2019 primarily resulted from growth in commercial loans driven by PPP lending and residential mortgage loans reflecting higher originations in the low interest rate environment.
- Average deposits increased 5% compared with the second quarter and 17% compared with third quarter 2019 due to increases in demand deposits and savings as a result of government stimulus and lower consumer spending, partially offset by lower certificates of deposit. Compared to the third quarter of 2019, the increase was also partially offset by lower money market deposits reflecting a shift to relationship-based savings products.
- Net loan charge-offs were
$125 million for the third quarter of 2020 compared with$142 million in the second quarter of 2020 and$128 million in the third quarter of 2019. - Residential mortgage loan origination volume was
$4.0 billion in the third quarter of 2020 compared with$4.2 billion for the second quarter and$3.4 billion for the third quarter of 2019. Approximately 44% of third quarter 2020 volume was for home purchase transactions compared with 34% and 44% for the second quarter of 2020 and third quarter of 2019, respectively. - The third party residential mortgage servicing portfolio was
$119 billion atSeptember 30, 2020 compared with$122 billion atJune 30, 2020 and$123 billion atSeptember 30, 2019 . Residential mortgage loan servicing acquisitions were$8 billion for the third quarter of 2020 compared with$11 billion for the second quarter of 2020 and$3 billion for the third quarter of 2019. - Approximately 75% of consumer customers used non-teller channels for the majority of their transactions during the third quarter of 2020 compared with 73% in the second quarter of 2020 and 70% in the third quarter of 2019.
- Deposit transactions via ATM and mobile channels were 67% of total deposit transactions in the third quarter of 2020 compared with 65% in the second quarter of 2020 and 58% in the third quarter of 2019.
Corporate & Institutional Banking |
Change |
Change |
|||||||||||||||||
3Q20 vs |
3Q20 vs |
||||||||||||||||||
In millions |
3Q20 |
2Q20 |
3Q19 |
2Q20 |
3Q19 |
||||||||||||||
Net interest income |
$ |
1,025 |
$ |
1,064 |
$ |
930 |
$ |
(39) |
$ |
95 |
|||||||||
Noninterest income |
$ |
723 |
$ |
726 |
$ |
654 |
$ |
(3) |
$ |
69 |
|||||||||
Provision for credit losses |
$ |
211 |
$ |
1,585 |
$ |
48 |
$ |
(1,374) |
$ |
163 |
|||||||||
Noninterest expense |
$ |
666 |
$ |
673 |
$ |
703 |
$ |
(7) |
$ |
(37) |
|||||||||
Earnings (loss) |
$ |
670 |
$ |
(358) |
$ |
645 |
$ |
1,028 |
$ |
25 |
|||||||||
In billions |
|||||||||||||||||||
Average loans |
$ |
159.5 |
$ |
173.1 |
$ |
148.6 |
$ |
(13.6) |
$ |
10.9 |
|||||||||
Average deposits |
$ |
133.1 |
$ |
127.0 |
$ |
95.8 |
$ |
6.1 |
$ |
37.3 |
|||||||||
Corporate & Institutional Banking earnings for the third quarter of 2020 increased compared with both the second quarter of 2020 and third quarter of 2019. Noninterest income decreased slightly compared to the second quarter primarily due to lower capital markets-related revenue partially offset by higher treasury management product revenue, gains on asset sales and loan commitment fees. Noninterest income increased compared with the third quarter of 2019 driven by broad-based growth in revenue from commercial mortgage banking activities, capital markets-related revenue and treasury management product revenue. Provision for credit losses decreased in the third quarter of 2020 compared with the second quarter due to improvement in macroeconomic factors partially offset by higher expected losses for certain borrowers in industries adversely impacted by the pandemic, primarily within the commercial real estate loan portfolio. Noninterest expense decreased in both comparisons largely due to lower variable costs, including lower expense associated with business travel.
- Average loans decreased 8% compared with the second quarter due to declines across PNC's corporate banking, business credit and real estate businesses, including lower average utilization of loan commitments. Average loans increased 7% over the third quarter of 2019 due to broad growth across PNC's corporate banking, commercial banking and real estate businesses, including PPP loan originations.
- Average deposits increased 5% from the second quarter and 39% from the third quarter of 2019 reflecting liquidity maintained by customers due to the economic impact of the pandemic.
- Net charge-offs were
$32 million in the third quarter of 2020 compared with$99 million in the second quarter and$30 million in the third quarter of 2019.
|
Change |
Change |
|||||||||||||||||
3Q20 vs |
3Q20 vs |
||||||||||||||||||
In millions |
3Q20 |
2Q20 |
3Q19 |
2Q20 |
3Q19 |
||||||||||||||
Net interest income |
$ |
89 |
$ |
89 |
$ |
70 |
— |
$ |
19 |
||||||||||
Noninterest income |
$ |
221 |
$ |
204 |
$ |
216 |
$ |
17 |
$ |
5 |
|||||||||
Provision for (recapture of) credit losses |
$ |
(19) |
$ |
39 |
$ |
(1) |
$ |
(58) |
$ |
(18) |
|||||||||
Noninterest expense |
$ |
211 |
$ |
217 |
$ |
228 |
$ |
(6) |
$ |
(17) |
|||||||||
Earnings |
$ |
91 |
$ |
28 |
$ |
46 |
$ |
63 |
$ |
45 |
|||||||||
In billions |
|||||||||||||||||||
Client assets under administration at |
$ |
300 |
$ |
289 |
$ |
298 |
$ |
11 |
$ |
2 |
|||||||||
Average loans |
$ |
7.9 |
$ |
7.5 |
$ |
6.9 |
$ |
.4 |
$ |
1.0 |
|||||||||
Average deposits |
$ |
19.1 |
$ |
18.9 |
$ |
13.6 |
$ |
.2 |
$ |
5.5 |
|||||||||
Client assets under administration at
Other
The "Other" category, for the purposes of this release, includes residual activities that do not meet the criteria for disclosure as a separate reportable business, such as asset and liability management activities including net securities gains or losses, other-than-temporary impairment of investment securities, certain trading activities, certain runoff consumer loan portfolios, private equity investments, intercompany eliminations, certain corporate overhead, tax adjustments that are not allocated to business segments, exited businesses, and differences between business segment performance reporting and financial statement reporting under generally accepted accounting principles.
CONFERENCE CALL AND SUPPLEMENTAL FINANCIAL INFORMATION
PNC Chairman, President and Chief Executive Officer
[TABULAR MATERIAL FOLLOWS]
|
Consolidated Financial Highlights (Unaudited) |
|||||||||||||||||||||
FINANCIAL RESULTS |
Three months ended |
Nine months ended |
||||||||||||||||||||
Dollars in millions, except per share data |
|
|
|
|
|
|||||||||||||||||
2020 |
2020 |
2019 |
2020 |
2019 |
||||||||||||||||||
Revenue |
||||||||||||||||||||||
Net interest income |
$ |
2,484 |
$ |
2,527 |
$ |
2,504 |
$ |
7,522 |
$ |
7,477 |
||||||||||||
Noninterest income |
1,797 |
1,549 |
1,738 |
5,171 |
5,041 |
|||||||||||||||||
Total revenue |
4,281 |
4,076 |
4,242 |
12,693 |
12,518 |
|||||||||||||||||
Provision for credit losses |
52 |
2,463 |
183 |
3,429 |
552 |
|||||||||||||||||
Noninterest expense |
2,531 |
2,515 |
2,623 |
7,589 |
7,812 |
|||||||||||||||||
Income (loss) from continuing operations before income taxes and noncontrolling interests |
$ |
1,698 |
$ |
(902) |
$ |
1,436 |
$ |
1,675 |
$ |
4,154 |
||||||||||||
Income taxes (benefit) from continuing operations |
166 |
(158) |
255 |
128 |
706 |
|||||||||||||||||
Net income (loss) from continuing operations |
$ |
1,532 |
$ |
(744) |
$ |
1,181 |
$ |
1,547 |
$ |
3,448 |
||||||||||||
Income from discontinued operations before taxes |
$ |
5,596 |
$ |
251 |
$ |
5,777 |
$ |
700 |
||||||||||||||
Income taxes from discontinued operations |
1,197 |
40 |
1,222 |
111 |
||||||||||||||||||
Net income from discontinued operations |
$ |
4,399 |
$ |
211 |
$ |
4,555 |
$ |
589 |
||||||||||||||
Net income |
$ |
1,532 |
$ |
3,655 |
$ |
1,392 |
$ |
6,102 |
$ |
4,037 |
||||||||||||
Less: |
||||||||||||||||||||||
Net income attributable to noncontrolling interests |
13 |
7 |
13 |
27 |
35 |
|||||||||||||||||
Preferred stock dividends (a) |
63 |
55 |
63 |
181 |
181 |
|||||||||||||||||
Preferred stock discount accretion and redemptions |
1 |
1 |
1 |
3 |
3 |
|||||||||||||||||
Net income attributable to common shareholders |
$ |
1,455 |
$ |
3,592 |
$ |
1,315 |
$ |
5,891 |
$ |
3,818 |
||||||||||||
Per Common Share |
||||||||||||||||||||||
Basic earnings (loss) from continuing operations |
$ |
3.40 |
$ |
(1.90) |
$ |
2.47 |
$ |
3.11 |
$ |
7.15 |
||||||||||||
Basic earnings from discontinued operations |
10.28 |
.48 |
10.61 |
1.30 |
||||||||||||||||||
Total basic earnings |
$ |
3.40 |
$ |
8.40 |
$ |
2.95 |
$ |
13.73 |
$ |
8.45 |
||||||||||||
Diluted earnings (loss) from continuing operations |
$ |
3.39 |
$ |
(1.90) |
$ |
2.47 |
$ |
3.11 |
$ |
7.13 |
||||||||||||
Diluted earnings from discontinued operations |
10.28 |
.47 |
10.59 |
1.29 |
||||||||||||||||||
Total diluted earnings |
$ |
3.39 |
$ |
8.40 |
$ |
2.94 |
$ |
13.70 |
$ |
8.42 |
||||||||||||
Cash dividends declared per common share |
$ |
1.15 |
$ |
1.15 |
$ |
1.15 |
$ |
3.45 |
$ |
3.05 |
||||||||||||
Effective tax rate from continuing operations (b) |
9.8 |
% |
17.5 |
% |
17.8 |
% |
7.6 |
% |
17.0 |
% |
(a) |
Dividends are payable quarterly other than 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. |
|
Consolidated Financial Highlights (Unaudited) |
|||||||||||||||||||||
Three months ended |
Nine months ended |
|||||||||||||||||||||
|
|
|
|
|
||||||||||||||||||
2020 |
2020 |
2019 |
2020 |
2019 |
||||||||||||||||||
PERFORMANCE RATIOS |
||||||||||||||||||||||
Net interest margin (a) |
2.39 |
% |
2.52 |
% |
2.84 |
% |
2.57 |
% |
2.91 |
% |
||||||||||||
Noninterest income to total revenue |
42 |
% |
38 |
% |
41 |
% |
41 |
% |
40 |
% |
||||||||||||
Efficiency (b) |
59 |
% |
62 |
% |
62 |
% |
60 |
% |
62 |
% |
||||||||||||
Return on: |
||||||||||||||||||||||
Average common shareholders' equity |
11.76 |
% |
30.11 |
% |
11.56 |
% |
16.57 |
% |
11.48 |
% |
||||||||||||
Average assets |
1.32 |
% |
3.21 |
% |
1.36 |
% |
1.83 |
% |
1.36 |
% |
||||||||||||
BUSINESS SEGMENT NET INCOME (c) |
||||||||||||||||||||||
In millions |
||||||||||||||||||||||
Retail Banking |
$ |
530 |
$ |
(223) |
$ |
347 |
$ |
508 |
$ |
936 |
||||||||||||
Corporate & Institutional Banking |
670 |
(358) |
645 |
682 |
1,799 |
|||||||||||||||||
|
91 |
28 |
46 |
173 |
171 |
|||||||||||||||||
Other (d) |
241 |
(191) |
143 |
184 |
542 |
|||||||||||||||||
Net income (loss) from continuing operations |
$ |
1,532 |
$ |
(744) |
$ |
1,181 |
$ |
1,547 |
$ |
3,448 |
(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 |
(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 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 |
|
Consolidated Financial Highlights (Unaudited) |
||||||||||
|
|
|
|||||||||
2020 |
2020 |
2019 |
|||||||||
BALANCE SHEET DATA |
|||||||||||
Dollars in millions, except per share data |
|||||||||||
Assets |
$ |
461,817 |
$ |
458,978 |
$ |
408,916 |
|||||
Loans (a) |
$ |
249,279 |
$ |
258,236 |
$ |
237,377 |
|||||
Allowance for loan and lease losses (b) |
$ |
5,751 |
$ |
5,928 |
$ |
2,738 |
|||||
Interest-earning deposits with banks |
$ |
70,959 |
$ |
50,233 |
$ |
19,036 |
|||||
Investment securities |
$ |
91,185 |
$ |
98,493 |
$ |
87,883 |
|||||
Loans held for sale (a) |
$ |
1,787 |
$ |
1,443 |
$ |
1,872 |
|||||
Equity investments |
$ |
4,938 |
$ |
4,943 |
$ |
5,004 |
|||||
Asset held for sale (c) |
$ |
8,321 |
|||||||||
Mortgage servicing rights |
$ |
1,113 |
$ |
1,067 |
$ |
1,483 |
|||||
|
$ |
9,233 |
$ |
9,233 |
$ |
9,233 |
|||||
Other assets (a) |
$ |
32,445 |
$ |
34,920 |
$ |
35,774 |
|||||
Noninterest-bearing deposits |
$ |
107,281 |
$ |
99,458 |
$ |
74,077 |
|||||
Interest-bearing deposits |
$ |
247,798 |
$ |
246,539 |
$ |
211,506 |
|||||
Total deposits |
$ |
355,079 |
$ |
345,997 |
$ |
285,583 |
|||||
Borrowed funds (a) |
$ |
42,110 |
$ |
47,026 |
$ |
61,354 |
|||||
Allowance for unfunded lending related commitments (b) |
$ |
689 |
$ |
662 |
$ |
304 |
|||||
Total shareholders' equity |
$ |
53,276 |
$ |
52,923 |
$ |
49,420 |
|||||
Common shareholders' equity |
$ |
49,760 |
$ |
48,928 |
$ |
45,428 |
|||||
Accumulated other comprehensive income (loss) |
$ |
2,997 |
$ |
3,069 |
$ |
837 |
|||||
Book value per common share |
$ |
117.44 |
$ |
115.26 |
$ |
103.37 |
|||||
Tangible book value per common share (Non-GAAP) (d) |
$ |
95.71 |
$ |
93.54 |
$ |
82.37 |
|||||
Period end common shares outstanding (millions) |
424 |
425 |
439 |
||||||||
Loans to deposits |
70 |
% |
75 |
% |
83 |
% |
|||||
Common shareholders' equity to total assets |
10.8 |
% |
10.7 |
% |
11.1 |
% |
|||||
CLIENT ASSETS (billions) |
|||||||||||
Discretionary client assets under management |
$ |
158 |
$ |
151 |
$ |
163 |
|||||
Nondiscretionary client assets under administration |
142 |
138 |
135 |
||||||||
Total client assets under administration |
300 |
289 |
298 |
||||||||
Brokerage account client assets |
55 |
53 |
52 |
||||||||
Total client assets |
$ |
355 |
$ |
342 |
$ |
350 |
|||||
CAPITAL RATIOS |
|||||||||||
Basel III (e) (f) |
|||||||||||
Common equity Tier 1 |
11.7 |
% |
11.3 |
% |
9.6 |
% |
|||||
Common equity Tier 1 fully implemented (g) |
11.3 |
% |
10.9 |
% |
N/A |
||||||
Tier 1 risk-based |
12.7 |
% |
12.4 |
% |
10.7 |
% |
|||||
Total capital risk-based (h) |
15.2 |
% |
14.9 |
% |
12.7 |
% |
|||||
Leverage |
9.4 |
% |
9.4 |
% |
9.3 |
% |
|||||
Supplementary leverage |
9.5 |
% |
9.3 |