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PNC Reports Third Quarter Net Income of $1.0 Billion and $1.79 Diluted EPS
"In the third quarter, PNC continued to deliver solid performance in a challenging revenue environment by executing on our strategic priorities," said
Income Statement Highlights
- PNC continued to execute on its strategic priorities as reflected in the results for the third quarter which included strong fee income, well-controlled expenses and overall credit quality improvement.
- Net interest income of
$2.1 billion in the third quarter decreased$25 million , or 1 percent, compared with the second quarter due to lower earning asset yields, lower investment securities balances and the impact of increasing the company's liquidity position. - Noninterest income of
$1.7 billion increased$56 million , or 3 percent, compared with the second quarter.- Growth in fee income was attributable to higher asset management revenue, corporate service fees and service charges on deposits as the businesses remained focused on deepening client relationships and product penetration.
- Noninterest expense of
$2.4 billion for the third quarter increased$29 million , or 1 percent, compared with the second quarter in line with expectations as disciplined expense management continued.- PNC has completed actions as of
September 30, 2014 to achieve its full-year 2014 continuous improvement savings goal of$500 million .
- PNC has completed actions as of
- Provision for credit losses declined to
$55 million for the third quarter from$72 million in the second quarter as overall credit quality continued to improve.
Balance Sheet Highlights
- Average loans grew
$.6 billion compared with the second quarter. Total loans of$200.9 billion atSeptember 30, 2014 declined slightly by$.1 billion compared withJune 30, 2014 .- Average commercial lending increased
$.9 billion primarily in corporate banking and real estate. - Average consumer and residential real estate loans declined
$.3 billion .
- Average commercial lending increased
- Overall credit quality continued to improve in the third quarter compared with the second quarter.
- Nonperforming assets of
$3.0 billion atSeptember 30, 2014 declined$193 million , or 6 percent. - Net charge-offs decreased to
$82 million for the third quarter from$145 million in the second quarter.
- Nonperforming assets of
- Deposits grew
$3.7 billion , or 2 percent, to$226.3 billion atSeptember 30, 2014 compared withJune 30, 2014 . - PNC further increased its liquidity position as reflected in higher deposit balances maintained with the
Federal Reserve Bank and expects to exceed the phase-in requirement of the short-term liquidity coverage ratio when it becomes effective for PNC as an advanced approaches bank beginningJanuary 1, 2015 . - PNC's well-positioned balance sheet remained core funded with a loans to deposits ratio of
89 percent atSeptember 30, 2014 . - PNC improved its capital position.
- Transitional Basel III common equity Tier 1 capital ratio, calculated using the regulatory capital methodology applicable to PNC during 2014, increased to an estimated 11.1 percent at
September 30, 2014 from 11.0 percent atJune 30, 2014 . - Pro forma fully phased-in Basel III common equity Tier 1 capital ratio increased to an estimated 10.1 percent at
September 30, 2014 from 10.0 percent atJune 30, 2014 based on the standardized approach rules.
- Transitional Basel III common equity Tier 1 capital ratio, calculated using the regulatory capital methodology applicable to PNC during 2014, increased to an estimated 11.1 percent at
- PNC returned capital to shareholders through repurchases of 4.2 million common shares for
$.4 billion during the third quarter compared with 2.6 million common shares for$.2 billion during the second quarter under its existing common stock repurchase authorization.
Earnings Summary |
|||||||||||||
In millions, except per share data |
3Q14 |
2Q14 |
3Q13 |
||||||||||
Net income |
$ |
1,038 |
$ |
1,052 |
$ |
1,028 |
|||||||
Net income attributable to diluted common shares |
$ |
959 |
$ |
995 |
$ |
947 |
|||||||
Diluted earnings per common share |
$ |
1.79 |
$ |
1.85 |
$ |
1.77 |
|||||||
Average diluted common shares outstanding |
537 |
539 |
534 |
||||||||||
Return on average assets |
1.25 |
% |
1.31 |
% |
1.34 |
% |
|||||||
Return on average common equity |
9.52 |
% |
10.12 |
% |
10.40 |
% |
|||||||
Book value per common share Period end |
$ |
76.71 |
$ |
75.62 |
$ |
69.75 |
|||||||
Tangible book value per common share (non-GAAP) Period end |
$ |
59.24 |
$ |
58.22 |
$ |
52.17 |
|||||||
Cash dividends declared per common share |
$ |
.48 |
$ |
.48 |
$ |
.44 |
|||||||
The Consolidated Financial Highlights accompanying this news release include additional information regarding reconciliations to reported amounts of non-GAAP financial measures, including reconciliations of tangible book value to book value per common share and business segment income to net income, and regarding the first quarter 2014 adoption of Accounting Standards Update 2014-01 related to investments in low income housing tax credits. Reference to core net interest income is to total net interest income less purchase accounting accretion, which consists of scheduled accretion and excess cash recoveries, as detailed in the Consolidated Financial Highlights. Information in this news release including the financial tables is unaudited. See the notes and other information in the Consolidated Financial Highlights.
CONSOLIDATED REVENUE REVIEW |
|||||||||||||||||||||
Revenue |
Change |
Change |
|||||||||||||||||||
3Q14 vs |
3Q14 vs |
||||||||||||||||||||
In millions |
3Q14 |
2Q14 |
3Q13 |
2Q14 |
3Q13 |
||||||||||||||||
Net interest income |
$ |
2,104 |
$ |
2,129 |
$ |
2,234 |
(1) |
% |
(6) |
% |
|||||||||||
Noninterest income |
1,737 |
1,681 |
1,686 |
3 |
% |
3 |
% |
||||||||||||||
Total revenue |
$ |
3,841 |
$ |
3,810 |
$ |
3,920 |
1 |
% |
(2) |
% |
|||||||||||
Total revenue for the third quarter of 2014 increased
Net interest income for the third quarter of 2014 decreased
The net interest margin was 2.98 percent for the third quarter of 2014 compared with 3.12 percent for the second quarter and 3.47 percent for the third quarter of 2013. The decrease in the margin reflected lower earning asset yields and higher deposit balances maintained with the
Noninterest Income |
Change |
Change |
|||||||||||||||||||||
3Q14 vs |
3Q14 vs |
||||||||||||||||||||||
In millions |
3Q14 |
2Q14 |
3Q13 |
2Q14 |
3Q13 |
||||||||||||||||||
Asset management |
$ |
411 |
$ |
362 |
$ |
330 |
14 |
% |
25 |
% |
|||||||||||||
Consumer services |
320 |
323 |
316 |
(1) |
% |
1 |
% |
||||||||||||||||
Corporate services |
374 |
343 |
306 |
9 |
% |
22 |
% |
||||||||||||||||
Residential mortgage |
140 |
182 |
199 |
(23) |
% |
(30) |
% |
||||||||||||||||
Service charges on deposits |
179 |
156 |
156 |
15 |
% |
15 |
% |
||||||||||||||||
Other, including net securities gains (losses) |
313 |
315 |
379 |
(1) |
% |
(17) |
% |
||||||||||||||||
$ |
1,737 |
$ |
1,681 |
$ |
1,686 |
3 |
% |
3 |
% |
||||||||||||||
Noninterest income for the third quarter of 2014 increased
Noninterest income for the third quarter of 2014 increased
CONSOLIDATED EXPENSE REVIEW |
||||||||||||||||||||||
Noninterest Expense |
Change |
Change |
||||||||||||||||||||
3Q14 vs |
3Q14 vs |
|||||||||||||||||||||
In millions |
3Q14 |
2Q14 |
3Q13 |
2Q14 |
3Q13 |
|||||||||||||||||
Personnel |
$ |
1,189 |
$ |
1,172 |
$ |
1,181 |
1 |
% |
1 |
% |
||||||||||||
Occupancy |
200 |
199 |
205 |
1 |
% |
(2) |
% |
|||||||||||||||
Equipment |
220 |
204 |
194 |
8 |
% |
13 |
% |
|||||||||||||||
Marketing |
66 |
68 |
68 |
(3) |
% |
(3) |
% |
|||||||||||||||
Other |
682 |
685 |
746 |
– |
(9) |
% |
||||||||||||||||
$ |
2,357 |
$ |
2,328 |
$ |
2,394 |
1 |
% |
(2) |
% |
|||||||||||||
Noninterest expense for the third quarter of 2014 increased
Noninterest expense for third quarter 2014 decreased
The effective tax rate was 27.4 percent for the third quarter of 2014 compared with 25.4 percent for the second quarter of 2014 and 26.0 percent for the third quarter of 2013.
CONSOLIDATED BALANCE SHEET REVIEW
Total assets were
Loans |
Change |
Change |
||||||||||||||||||||
9/30/14 vs |
9/30/14 vs |
|||||||||||||||||||||
In billions |
9/30/2014 |
6/30/2014 |
9/30/2013 |
6/30/14 |
9/30/13 |
|||||||||||||||||
Commercial lending |
$ |
124.1 |
$ |
124.1 |
$ |
114.4 |
– |
8 |
% |
|||||||||||||
Consumer lending |
76.8 |
76.9 |
78.5 |
– |
(2) |
% |
||||||||||||||||
Total loans |
$ |
200.9 |
$ |
201.0 |
$ |
192.9 |
– |
4 |
% |
|||||||||||||
For the quarter ended: |
||||||||||||||||||||||
Average loans |
$ |
199.8 |
$ |
199.2 |
$ |
190.5 |
– |
5 |
% |
|||||||||||||
Average loans grew
Investment Securities |
Change |
Change |
||||||||||||||||||||
9/30/14 vs |
9/30/14 vs |
|||||||||||||||||||||
In billions |
9/30/2014 |
6/30/2014 |
9/30/2013 |
6/30/14 |
9/30/13 |
|||||||||||||||||
At quarter end |
$ |
55.0 |
$ |
56.6 |
$ |
57.3 |
(3) |
% |
(4) |
% |
||||||||||||
Average for the quarter ended |
$ |
54.4 |
$ |
56.3 |
$ |
56.6 |
(3) |
% |
(4) |
% |
||||||||||||
Investment securities balances at
Interest-earning deposits with banks were
Deposits |
Change |
Change |
||||||||||||||||||||
9/30/14 vs |
9/30/14 vs |
|||||||||||||||||||||
In billions |
9/30/2014 |
6/30/2014 |
9/30/2013 |
6/30/14 |
9/30/13 |
|||||||||||||||||
Transaction deposits |
$ |
192.2 |
$ |
188.4 |
$ |
181.8 |
2 |
% |
6 |
% |
||||||||||||
Other deposits |
34.1 |
34.2 |
34.3 |
– |
(1) |
% |
||||||||||||||||
Total deposits |
$ |
226.3 |
$ |
222.6 |
$ |
216.1 |
2 |
% |
5 |
% |
||||||||||||
For the quarter ended: |
||||||||||||||||||||||
Average deposits |
$ |
223.8 |
$ |
220.0 |
$ |
211.9 |
2 |
% |
6 |
% |
||||||||||||
Total deposits at
Borrowed Funds |
Change |
Change |
||||||||||||||||||||
9/30/14 vs |
9/30/14 vs |
|||||||||||||||||||||
In billions |
9/30/2014 |
6/30/2014 |
9/30/2013 |
6/30/14 |
9/30/13 |
|||||||||||||||||
At quarter end |
$ |
52.3 |
$ |
49.0 |
$ |
40.2 |
7 |
% |
30 |
% |
||||||||||||
Average for the quarter ended |
$ |
49.3 |
$ |
47.1 |
$ |
38.6 |
5 |
% |
28 |
% |
||||||||||||
Borrowed funds at
Capital |
|||||||||||||
9/30/2014* |
6/30/2014 |
9/30/2013 |
|||||||||||
Common shareholders' equity In billions |
$ |
40.5 |
$ |
40.3 |
$ |
37.1 |
|||||||
Transitional Basel III common equity Tier 1 capital ratio |
11.1 |
% |
11.0 |
% |
N/A |
||||||||
Pro forma fully phased-in Basel III common equity |
|||||||||||||
Tier 1 capital ratio |
10.1 |
% |
10.0 |
% |
8.7 |
% |
|||||||
* Ratios estimated |
|||||||||||||
PNC increased its capital levels and ratios. Common shareholders' equity and the Basel III capital ratios increased compared with the second quarter primarily due to growth in retained earnings partially offset by share repurchases. The transitional Basel III common equity Tier 1 capital ratio was calculated using the regulatory capital methodology that became effective for PNC as an advanced approaches bank on
PNC repurchased 4.2 million common shares for
On
CREDIT QUALITY REVIEW |
|||||||||||||||||||
Credit Quality |
Change |
Change |
|||||||||||||||||
At or for the quarter ended |
9/30/14 vs |
9/30/14 vs |
|||||||||||||||||
In millions |
9/30/2014 |
6/30/2014 |
9/30/2013 |
6/30/14 |
9/30/13 |
||||||||||||||
Nonperforming loans |
$ |
2,612 |
$ |
2,801 |
$ |
3,206 |
(7) |
% |
(19) |
% |
|||||||||
Nonperforming assets |
$ |
2,975 |
$ |
3,168 |
$ |
3,622 |
(6) |
% |
(18) |
% |
|||||||||
Accruing loans past due 90 days or more |
$ |
1,178 |
$ |
1,252 |
$ |
1,633 |
(6) |
% |
(28) |
% |
|||||||||
Net charge-offs |
$ |
82 |
$ |
145 |
$ |
224 |
(43) |
% |
(63) |
% |
|||||||||
Provision for credit losses |
$ |
55 |
$ |
72 |
$ |
137 |
(24) |
% |
(60) |
% |
|||||||||
Allowance for loan and lease losses |
$ |
3,406 |
$ |
3,453 |
$ |
3,691 |
(1) |
% |
(8) |
% |
|||||||||
Overall credit quality continued to improve during the third quarter of 2014. Nonperforming assets at
Overall delinquencies decreased
Net charge-offs for the third quarter of 2014 decreased
Provision for credit losses for third quarter 2014 decreased
The allowance for loan and lease losses at
BUSINESS SEGMENT RESULTS |
||||||||||||||
Business Segment Income |
||||||||||||||
In millions |
3Q14 |
2Q14 |
3Q13 |
|||||||||||
Retail Banking |
$ |
173 |
$ |
225 |
$ |
165 |
||||||||
Corporate & Institutional Banking |
549 |
470 |
542 |
|||||||||||
Asset Management Group |
46 |
53 |
47 |
|||||||||||
Residential Mortgage Banking |
12 |
36 |
28 |
|||||||||||
Non-Strategic Assets Portfolio |
82 |
99 |
121 |
|||||||||||
Other, including BlackRock |
176 |
169 |
125 |
|||||||||||
Net income |
$ |
1,038 |
$ |
1,052 |
$ |
1,028 |
||||||||
See accompanying notes in Consolidated Financial Highlights |
||||||||||||||
Retail Banking |
Change |
Change |
||||||||||||||||||||
3Q14 vs |
3Q14 vs |
|||||||||||||||||||||
In millions |
3Q14 |
2Q14 |
3Q13 |
2Q14 |
3Q13 |
|||||||||||||||||
Net interest income |
$ |
985 |
$ |
973 |
$ |
1,006 |
$ |
12 |
$ |
(21) |
||||||||||||
Noninterest income |
$ |
536 |
$ |
541 |
$ |
557 |
$ |
(5) |
$ |
(21) |
||||||||||||
Provision for credit losses |
$ |
74 |
$ |
4 |
$ |
152 |
$ |
70 |
$ |
(78) |
||||||||||||
Noninterest expense |
$ |
1,175 |
$ |
1,155 |
$ |
1,151 |
$ |
20 |
$ |
24 |
||||||||||||
Earnings |
$ |
173 |
$ |
225 |
$ |
165 |
$ |
(52) |
$ |
8 |
||||||||||||
In billions |
||||||||||||||||||||||
Average loans |
$ |
65.7 |
$ |
66.4 |
$ |
66.4 |
$ |
(.7) |
$ |
(.7) |
||||||||||||
Average deposits |
$ |
137.2 |
$ |
137.5 |
$ |
134.0 |
$ |
(.3) |
$ |
3.2 |
||||||||||||
Retail Banking earnings for the third quarter of 2014 decreased compared with the second quarter and increased compared with the third quarter of 2013. Noninterest income included strong customer-related fee income growth in both comparisons primarily resulting from changes in product offerings and increases in customer-initiated transactions. Noninterest income also reflected gains on sales of Visa Class B common shares of
- Retail Banking continued to focus on serving more customers through cost effective channels that meet their preferences for convenience.
- Approximately 47 percent of consumer customers used non-teller channels for the majority of their transactions during the third quarter of 2014 compared with 45 percent for the second quarter and 38 percent for the third quarter of 2013.
- Deposit transactions via ATM and mobile banking application increased to 36 percent of total deposit transactions in third quarter 2014 compared with 33 percent for the second quarter and 27 percent for the third quarter of 2013.
- As part of PNC's retail branch transformation strategy, 45 branches were converted to universal branches as of
September 30, 2014 in a pilot program, and 43 branches were closed or consolidated in the first nine months of 2014. PNC had a network of 2,691 branches and 8,178 ATMs atSeptember 30, 2014 .
- Average transaction deposits grew
$.2 billion over the second quarter due to higher non-personal demand and money market deposits. In comparison with third quarter 2013, average transaction deposits grew$4.5 billion , or 4 percent, resulting from growth in personal and non-personal demand deposits and personal money market deposits. Average certificates of deposit decreased$.6 billion from the second quarter and$2.3 billion from third quarter 2013 reflecting net runoff of maturing accounts. - Average loans decreased 1 percent compared with both the second quarter and the third quarter of 2013 as growth in automobile and credit card loans was more than offset by declines in home equity and education loans as well as lower floor plan loans in the comparison with second quarter.
- Net charge-offs declined to
$93 million for third quarter 2014 compared with$116 million in the second quarter and$143 million in the third quarter of 2013 driven by improved credit quality in both consumer and commercial portfolios.
Corporate & Institutional Banking |
Change |
Change |
|||||||||||||||||
3Q14 vs |
3Q14 vs |
||||||||||||||||||
In millions |
3Q14 |
2Q14 |
3Q13 |
2Q14 |
3Q13 |
||||||||||||||
Net interest income |
$ |
922 |
$ |
921 |
$ |
945 |
$ |
1 |
$ |
(23) |
|||||||||
Corporate service fees |
$ |
346 |
$ |
312 |
$ |
277 |
$ |
34 |
$ |
69 |
|||||||||
Other noninterest income |
$ |
118 |
$ |
115 |
$ |
134 |
$ |
3 |
$ |
(16) |
|||||||||
Provision for credit losses (benefit) |
$ |
(4) |
$ |
103 |
$ |
30 |
$ |
(107) |
$ |
(34) |
|||||||||
Noninterest expense |
$ |
528 |
$ |
504 |
$ |
495 |
$ |
24 |
$ |
33 |
|||||||||
Earnings |
$ |
549 |
$ |
470 |
$ |
542 |
$ |
79 |
$ |
7 |
|||||||||
In billions |
|||||||||||||||||||
Average loans |
$ |
108.7 |
$ |
107.2 |
$ |
98.0 |
$ |
1.5 |
$ |
10.7 |
|||||||||
Average deposits |
$ |
74.4 |
$ |
70.4 |
$ |
67.1 |
$ |
4.0 |
$ |
7.3 |
|||||||||
Commercial mortgage servicing portfolio Quarter end |
$ |
322 |
$ |
316 |
$ |
298 |
$ |
6 |
$ |
24 |
|||||||||
Corporate & Institutional Banking earnings for the third quarter of 2014 increased compared with both second quarter 2014 and third quarter 2013. Corporate service fees increased in both comparisons primarily due to higher merger and acquisition advisory fees. In the comparison with third quarter 2013, the increase also reflected the change in classification from net interest income of certain commercial facility fees. Provision for credit losses was a benefit in the third quarter of 2014 reflecting overall improvement in credit quality. Noninterest expense increased in both comparisons principally due to incentive compensation costs associated with business activity.
- Average loans increased 1 percent over the second quarter and 11 percent over third quarter 2013 primarily due to loan growth in Real Estate, Corporate Banking, Business Credit and Equipment Finance businesses.
- Average deposits increased 6 percent over the second quarter and 11 percent over the prior year third quarter as a result of business growth and inflows into money market and noninterest-bearing deposits.
- Charge-offs were in a net recovery position of
$7 million in the third quarter of 2014 compared with net charge-offs of$15 million in the second quarter of 2014 and$56 million in the third quarter of 2013.
Asset Management Group |
Change |
Change |
||||||||||||||||||||
3Q14 vs |
3Q14 vs |
|||||||||||||||||||||
In millions |
3Q14 |
2Q14 |
3Q13 |
2Q14 |
3Q13 |
|||||||||||||||||
Net interest income |
$ |
72 |
$ |
72 |
$ |
74 |
– |
$ |
(2) |
|||||||||||||
Noninterest income |
$ |
205 |
$ |
207 |
$ |
188 |
$ |
(2) |
$ |
17 |
||||||||||||
Provision for credit losses (benefit) |
$ |
(4) |
$ |
(6) |
$ |
(4) |
$ |
2 |
– |
|||||||||||||
Noninterest expense |
$ |
209 |
$ |
202 |
$ |
192 |
$ |
7 |
$ |
17 |
||||||||||||
Earnings |
$ |
46 |
$ |
53 |
$ |
47 |
$ |
(7) |
$ |
(1) |
||||||||||||
In billions |
||||||||||||||||||||||
Client assets under administration Quarter end |
$ |
259 |
$ |
257 |
$ |
237 |
$ |
2 |
$ |
22 |
||||||||||||
Average loans |
$ |
7.3 |
$ |
7.2 |
$ |
6.9 |
$ |
.1 |
$ |
.4 |
||||||||||||
Average deposits |
$ |
9.7 |
$ |
9.5 |
$ |
8.7 |
$ |
.2 |
$ |
1.0 |
||||||||||||
- Client assets under administration at
September 30, 2014 included discretionary client assets under management of$132 billion and nondiscretionary client assets under administration of$127 billion .- Discretionary client assets under management increased
$1 billion compared withJune 30, 2014 and$10 billion compared withSeptember 30, 2013 driven by stronger equity markets and positive net flows net of cyclical client activities.
- Discretionary client assets under management increased
Asset Management Group continued to focus on driving growth through sales sourced from other PNC lines of business, maximizing front line productivity and optimizing market presence including additions to staff in high opportunity markets. Its business strategies also focus on increasing share of clients' assets and growing retirement capabilities.
Residential Mortgage Banking |
Change |
Change |
||||||||||||||||||
3Q14 vs |
3Q14 vs |
|||||||||||||||||||
In millions |
3Q14 |
2Q14 |
3Q13 |
2Q14 |
3Q13 |
|||||||||||||||
Net interest income |
$ |
38 |
$ |
37 |
$ |
46 |
$ |
1 |
$ |
(8) |
||||||||||
Noninterest income |
||||||||||||||||||||
Benefit (provision) for residential mortgage |
||||||||||||||||||||
repurchase obligations |
$ |
(13) |
$ |
(2) |
$ |
6 |
$ |
(11) |
$ |
(19) |
||||||||||
Other noninterest income |
$ |
160 |
$ |
192 |
$ |
202 |
$ |
(32) |
$ |
(42) |
||||||||||
Provision for credit losses (benefit) |
$ |
(1) |
$ |
1 |
$ |
- |
$ |
(2) |
$ |
(1) |
||||||||||
Noninterest expense |
$ |
168 |
$ |
169 |
$ |
210 |
$ |
(1) |
$ |
(42) |
||||||||||
Earnings |
$ |
12 |
$ |
36 |
$ |
28 |
$ |
(24) |
$ |
(16) |
||||||||||
In billions |
||||||||||||||||||||
Residential mortgage servicing portfolio Quarter end |
$ |
111 |
$ |
111 |
$ |
115 |
– |
$ |
(4) |
|||||||||||
Loan origination volume |
$ |
2.6 |
$ |
2.6 |
$ |
3.7 |
– |
$ |
(1.1) |
|||||||||||
Residential Mortgage Banking earnings for the third quarter of 2014 decreased in both comparisons. Other noninterest income declined compared with the second quarter primarily due to lower loan sales revenue related to portfolio loans. Other noninterest income decreased from the third quarter of 2013 driven by lower net hedging gains on residential mortgage servicing rights and reduced loan sales revenue on lower origination volume partially offset by higher servicing fees. Noninterest expense was consistent with the second quarter and declined compared with the third quarter of 2013 as a result of reduced expenses on lower origination volume and lower residential mortgage foreclosure-related expenses.
- Loan origination volume in the third quarter increased 2 percent over the second quarter, and decreased 30 percent from the third quarter of 2013 reflecting a decline in refinancings. Approximately 50 percent of third and second quarter 2014 origination volume was for home purchase transactions, up from 38 percent in the third quarter of 2013.
- The strategic focus of Residential Mortgage Banking is the acquisition of new customers through a retail loan officer sales force with an emphasis on home purchase transactions and leveraging cross-sell opportunities in the bank footprint markets.
Non-Strategic Assets Portfolio |
Change |
Change |
|||||||||||||||||
3Q14 vs |
3Q14 vs |
||||||||||||||||||
In millions |
3Q14 |
2Q14 |
3Q13 |
2Q14 |
3Q13 |
||||||||||||||
Net interest income |
$ |
146 |
$ |
137 |
$ |
161 |
$ |
9 |
$ |
(15) |
|||||||||
Noninterest income |
$ |
6 |
$ |
10 |
$ |
20 |
$ |
(4) |
$ |
(14) |
|||||||||
Provision for credit losses (benefit) |
$ |
(8) |
$ |
(39) |
$ |
(43) |
$ |
31 |
$ |
35 |
|||||||||
Noninterest expense |
$ |
30 |
$ |
30 |
$ |
33 |
– |
$ |
(3) |
||||||||||
Earnings |
$ |
82 |
$ |
99 |
$ |
121 |
$ |
(17) |
$ |
(39) |
|||||||||
In billions |
|||||||||||||||||||
Average loans |
$ |
9.0 |
$ |
9.3 |
$ |
10.4 |
$ |
(.3) |
$ |
(1.4) |
|||||||||
The Non-Strategic Assets Portfolio consists of non-strategic assets primarily obtained through acquisitions of other companies and includes a consumer portfolio of mainly residential mortgage and brokered home equity loans and lines of credit, and a small commercial loan and lease portfolio. The business activity of this segment is to manage the wind-down of the portfolios while maximizing the value and mitigating risk.
- Charge-offs were in a net recovery position of
$6 million for the third quarter of 2014 compared with net charge-offs of$10 million for the second quarter and$23 million for the third quarter of 2013. The decline compared with the second quarter was driven by higher recovery activity. The decrease compared with third quarter 2013 was primarily attributable to credit quality improvement.
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 |
Nine months ended |
|||||||||||||
Dollars in millions, except per share data |
September 30 |
June 30 |
September 30 |
September 30 |
September 30 |
||||||||||
2014 |
2014 |
2013 |
2014 |
2013 |
|||||||||||
Revenue |
|||||||||||||||
Net interest income |
$ |
2,104 |
$ |
2,129 |
$ |
2,234 |
$ |
6,428 |
$ |
6,881 |
|||||
Noninterest income |
1,737 |
1,681 |
1,686 |
5,000 |
5,058 |
||||||||||
Total revenue |
3,841 |
3,810 |
3,920 |
11,428 |
11,939 |
||||||||||
Noninterest expense (a) |
2,357 |
2,328 |
2,394 |
6,949 |
7,167 |
||||||||||
Pretax, pre-provision earnings (b) |
1,484 |
1,482 |
1,526 |
4,479 |
4,772 |
||||||||||
Provision for credit losses |
55 |
72 |
137 |
221 |
530 |
||||||||||
Income before income taxes and noncontrolling interests |
$ |
1,429 |
$ |
1,410 |
$ |
1,389 |
$ |
4,258 |
$ |
4,242 |
|||||
Net income (a) (c) |
$ |
1,038 |
$ |
1,052 |
$ |
1,028 |
$ |
3,150 |
$ |
3,138 |
|||||
Less: |
|||||||||||||||
Net income (loss) attributable to noncontrolling interests (a) |
1 |
3 |
2 |
2 |
(2) |
||||||||||
Preferred stock dividends and discount accretion |
|||||||||||||||
and redemptions (d) |
71 |
48 |
71 |
189 |
199 |
||||||||||
Net income attributable to common shareholders |
$ |
966 |
$ |
1,001 |
$ |
955 |
$ |
2,959 |
$ |
2,941 |
|||||
Less: |
|||||||||||||||
Dividends and undistributed earnings allocated to |
|||||||||||||||
nonvested restricted shares |
3 |
3 |
4 |
9 |
13 |
||||||||||
Impact of BlackRock earnings per share dilution |
4 |
3 |
4 |
13 |
13 |
||||||||||
Net income attributable to diluted common shares |
$ |
959 |
$ |
995 |
$ |
947 |
$ |
2,937 |
$ |
2,915 |
|||||
Diluted earnings per common share |
$ |
1.79 |
$ |
1.85 |
$ |
1.77 |
$ |
5.45 |
$ |
5.49 |
|||||
Cash dividends declared per common share |
$ |
.48 |
$ |
.48 |
$ |
.44 |
$ |
1.40 |
$ |
1.28 |
|||||
Certain prior period amounts included in these Consolidated Financial Highlights have been reclassified to conform with the current period presentation, which we believe is more meaningful to readers of our consolidated financial statements. |
|||||||||||||||
(a) |
Amounts for 2013 periods have been updated to reflect the first quarter 2014 adoption of Accounting Standards Update (ASU) 2014-01 related to investments in low income housing tax credits. |
||||||||||||||
(b) |
We believe that pretax, pre-provision earnings, a non-GAAP measure, is useful as a tool to help evaluate the ability to provide for credit costs through operations. |
||||||||||||||
(c) |
See page 16 for a reconciliation of business segment income to net income. |
||||||||||||||
(d) |
Dividends are payable quarterly other than Series O and Series R preferred stock, which are payable semiannually in different quarters. |
TOTAL AND CORE NET INTEREST INCOME AND NET INTEREST MARGIN |
||||||||||||||||
Three months ended |
Nine months ended |
|||||||||||||||
September 30 |
June 30 |
September 30 |
September 30 |
September 30 |
||||||||||||
Dollars in millions |
2014 |
2014 |
2013 |
2014 |
2013 |
|||||||||||
Net Interest Income |
||||||||||||||||
Core net interest income (a) |
$ |
1,957 |
$ |
1,982 |
$ |
2,035 |
$ |
5,971 |
$ |
6,229 |
||||||
Total purchase accounting accretion (a) |
||||||||||||||||
Scheduled accretion net of contractual interest |
116 |
112 |
173 |
362 |
565 |
|||||||||||
Excess cash recoveries |
31 |
35 |
26 |
95 |
87 |
|||||||||||
Total purchase accounting accretion |
147 |
147 |
199 |
457 |
652 |
|||||||||||
Total net interest income |
$ |
2,104 |
$ |
2,129 |
$ |
2,234 |
$ |
6,428 |
$ |