Pnc Financial Services Group, Inc. (the) · NYSE:PNC
Pnc Financial Services Group, Inc. (the) — Q2 2024 Earnings Presentation
31 slides from Pnc Financial Services Group, Inc. (the)'s earnings presentation, Jul 16, 2024
Slide 1: Second Quarter 2024 Earnings Conference Call
Second Quarter 2024 Earnings Conference Call July 16, 2024
Slide 2: Cautionary Statement
Cautionary Statement Regarding Forward-Looking and non-GAAP Financial Information Our earnings conference call presentation is not intended as a full business or financial review and should be viewed in the context of all of the information made available by PNC in its SEC filings and on our corpora
Slide 3: Delivered Solid Second Quarter 2024 Results
Delivered Solid Second Quarter 2024 Results • Grew net interest income and net interest margin $1.5 billion Net Income • Strong expense control; Generated positive operating leverage • Recorded Visa gain, largely offset by other significant items in 2Q24 $3.39 Diluted Earnings per Share (EPS) • Main
Slide 4: Avg. Loans Stable; Increased Securities and Grew Capital
Avg. Loans Stable; Increased Securities and Grew Capital 2Q24 vs. 1Q24 2Q24 vs. 2Q23 Average balances, $ billions 2Q24 $ Change % Change $ Change % Change Total loans $319.9 $(0.7) – $(4.6) (1)% Investment securities $141.3 $5.9 4% $0.3 – Federal Reserve Bank (FRB) balances $40.7 $(7.1) (15)% $10.1
Slide 5: Loans Impacted by Low Utilization
Loans Impacted by Low Utilization Consolidated Loan Balances C&IB Utilization Remains Low Total Loans: ~55% $325 $321 $320 (1.4)% YoY 52.5% $223 $219 $219 (0.2)% LQ 50.9% 50.9% Commercial Loans: 6.05% Average balances, $ billions 6.01% (1.8)% YoY Average utilization 5.57% (0.0)% LQ $101 $101 $101 Co
Slide 6: High-Quality, Short Duration Security and Swap Portfolios
High-Quality, Short Duration Security and Swap Portfolios Grew Average Securities Balances Active Swap Balances Swap Portfolio Duration of 3.5 years Receive fixed rate of 2.50% as of 6/30/24 • In 2Q24, PNC entered into $35 $35 $34 forward starting swaps that $141 $141 closely match active swap $135
Slide 7: Repositioned $3.8 billion of Low Yielding Securities
Repositioned $3.8 billion of Low Yielding Securities Repositioned a Portion of the Available for Sale Portfolio Impact to Net Interest Income • $3.8 billion of market value $10 million Securities 2Q 2024 • Weighted average yield of ~1.5% Sold • Resulted in $497 million loss ~$70 million 2H 2024 • $3
Slide 8: Short Duration Driving Meaningful AOCI Accretion
Short Duration Driving Meaningful AOCI Accretion Cumulative Projected Runoff Projected AOCI Accretion 39% of securities and swap portfolio maturing through 2026 50% of AOCI to accrete back through 2026 $- $(10) (4)% $(20) (9)% $(30) (13)% (16)% $(3.7) $(40) $ billions $ billions (20)% $(4.5) 50% Bur
Slide 9: Strong Deposit Base with Stabilizing Trends
Strong Deposit Base with Stabilizing Trends Consolidated Deposit Balances Slowing Pace of Decline in NIB Balances LQ change in average NIB deposit balances $426 $420 $417 $(3.4) $(2.6) 73% 76% 77% $(4.3) $(5.2) $(5.7) $(7.7) $ billions $(8.3) $(8.0) $(12.3) Average balances, $ billions 2.60% 2.61% 2
Slide 10: Visa Gain Largely Offset by Other Significant Items in 2Q24
Visa Gain Largely Offset by Other Significant Items in 2Q24 Impact of 2Q24 Visa Gain and Other Significant Items 2Q24 Visa Securities Visa Foundation Net Impact of $ millions Reported Gain Sale Derivative Contribution Sig. Items Net interest income $3,302 Fee income 1,777 Other noninterest income 33
Slide 11: Income Statement
Income Statement 2Q24 vs. 1Q24 2Q24 vs. 2Q23 $ millions 2Q24 $ % $ % Net interest income $3,302 $38 1% $(208) (6)% Noninterest income Includes $141 million of significant items 2,109 228 12% 326 18% Total revenue $5,411 $266 5% $118 2% Noninterest expense Includes $120 million foundation contributio
Slide 12: Revenue Increased; NII and NIM Inflected
Revenue Increased; NII and NIM Inflected Total Revenue +5% vs. 1Q24 Details of Noninterest Income Includes $141 million of significant items 2Q24 vs. 1Q24 2Q24 vs. 2Q23 $5,293 $5,411 $ millions 2Q24 $ % $ % $5,145 $1,783 $2,109 $1,881 Asset management and brokerage $364 – – $16 5% Capital markets an
Slide 13: Well Controlled Noninterest Expense
Well Controlled Noninterest Expense Noninterest Expense Details of Noninterest Expense Includes $130 million Includes $120 million FDIC special PNC Foundation 2Q24 vs. 1Q24 2Q24 vs. 2Q23 assessment contribution expense $ millions 2Q24 $ % $ % $3,372 $3,334 $3,357 Personnel $1,782 $(12) (1)% $(64) (3
Slide 14: Credit Quality
Credit Quality Nonperforming Loans (NPLs) Credit Quality Metrics 2Q23 3Q23 4Q23 1Q24 2Q24 NPLs, ex. CRE CRE NPLs NPLs / Total Loans (Period end) 0.59% 0.67% 0.68% 0.74% 0.78% Delinquencies / Total Loans (Period end) 0.38% 0.40% 0.43% 0.40% 0.40% $2,503 $2,380 NCOs / Average Loans 0.24% 0.15% 0.24% 0
Slide 15: Credit Quality – Office Commercial Real Estate (CRE)
Credit Quality – Office Commercial Real Estate (CRE) Office CRE Loan Balances Office CRE Portfolio Non-Criticized Criticized, Accrual Criticized, NPL Reserves / Loans % % % As of 6/30/24 Criticized NPL Reserved $8.7 $8.6 $8.0 Multi-Tenant 51.9% 19.7% 15.5% $7.8 $7.5 Single Tenant 2.9% 0.5% 3.6% Medi
Slide 16: Third Quarter 2024 Compared to Second Quarter 2024
Third Quarter 2024 Compared to Second Quarter 2024 $ millions; except loans, $ billions 2Q24 3Q24 Guidance Average loans $319.9 Stable Net interest income $3,302 Up 1% – 2% Fee income $1,777 Up 1% – 2% Other noninterest income $332 $150 – $200 Core noninterest expense (non-GAAP) $3,237 Up 3% – 4% Ne
Slide 17: Full Year 2024 Compared to Full Year 2023
Full Year 2024 Compared to Full Year 2023 $ millions; except loans, $ billions 2023 Current Average loans $323.5 Down less than 1% Net interest income $13,916 Down ~4% Excludes $141 million of 2Q24 Significant Items: • $754 million Visa gain Noninterest income $7,574 Up 3% – 5% • $(497) million of s
Slide 18: Appendix: Cautionary Statement
Appendix: Cautionary Statement Regarding Forward-Looking Information We make statements in this presentation, and we may from time to time make other statements, regarding our outlook for financial performance, such as earnings, revenues, expenses, tax rates, capital and liquidity levels and ratios,
Slide 19: Appendix: Cautionary Statement
Appendix: Cautionary Statement Regarding Forward-Looking Information • Our forward-looking financial statements are subject to the risk that economic and financial market conditions will be substantially different than those we are currently expecting. These statements are based on our views that: −
Slide 20: Appendix: Cautionary Statement
Appendix: Cautionary Statement Regarding Forward-Looking Information • Business and operating results are affected by our ability to identify and effectively manage risks inherent in our businesses, including, where appropriate, through effective use of systems and controls, third-party insurance, d
Slide 21: CRE Portfolio Represents 11% of Total Loans
Appendix: CRE Portfolio Represents 11% of Total Loans Total Loans PNC’s Commercial Real Estate (CRE) Portfolio as of 6/30/24 $ billions 6/30/24 % of Total Loans Multifamily $16.5 5.1% Office 7.5 2.3% Industrial / Warehouse 4.1 1.3% Retail 2.2 0.7% Total Commercial Real Estate Seniors Housing 1.9 0.6
Slide 22: Multifamily CRE Portfolio
Appendix: Multifamily CRE Portfolio CRE Multifamily Loans Geographic Diversification Key Multifamily Portfolio Metrics: as of 6/30/24 by Metropolitan Statistical Area Conservative Underwriting Methodology $ billions 6/30/24 $ millions 6/30/24 3/31/24 Miami, FL $1.2 Midrise Total Loans ($ billions) $
Slide 23: Office CRE Portfolio
Appendix: Office CRE Portfolio Tenant Classification Geographic Diversification Key Office Portfolio Metrics: Single- by Metropolitan Statistical Area Conservative Underwriting Methodology Tenant Medical $ billions 6/30/24 $ millions 6/30/24 3/31/24 17% 16% Government Washington, DC $1.0 $7.5 Total
Slide 24: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Consolidated CET1 Ratio, including AOCI & Other Fully Phased-In Expanded Risk-Based Approach (ERBA) Impacts, Basel III Endgame Impacts (non-GAAP) Common Risk Equity Weighted June 30, 2024 (estimated); $ billions Tier 1 Capital June 30, 2024 (estimated); $ bi
Slide 25: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Core Noninterest Expense (non-GAAP) For the three months ended For the year ended $ millions June 30, 2024 Mar. 31, 2024 Dec. 31, 2023 Total noninterest expense $3,357 $3,334 $14,012 2Q24 PNC Foundation contribution expense (120) Workforce reduction charge (
Slide 26: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Pretax, Pre-Provision Earnings (non-GAAP) For the three months ended $ millions June 30, 2024 Mar. 31, 2024 June 30, 2023 Total revenue $5,411 $5,145 $5,293 Total noninterest expense 3,357 3,334 3,372 Pretax, pre-provision earnings (non-GAAP) $2,054 $1,811 $
Slide 27: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Taxable-Equivalent Net Interest Income (non-GAAP) For the three months ended $ millions June 30, 2024 Mar. 31, 2024 June 30, 2023 Net interest income $3,302 $3,264 $3,510 Taxable-equivalent adjustments 34 34 37 Net interest income - fully taxable-equivalent
Slide 28: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Tangible Book Value per Common Share (non-GAAP) For the three months ended $ millions, except per share data June 30, 2024 Mar. 31, 2024 June 30, 2023 Book value per common share $116.70 $113.30 $105.67 Tangible book value per common share Common shareholder
Slide 29: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Tangible Common Equity Ratio (non-GAAP) For the three months ended $ millions June 30, 2024 Mar. 31, 2024 June 30, 2023 Tangible common shareholders’ equity Common shareholders’ equity $46,397 $45,097 $42,083 Goodwill and other intangible assets (11,206) (11
Slide 30: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Return On Average Tangible Common Equity (non-GAAP) For the three months ended $ millions June 30, 2024 Mar. 31, 2024 June 30, 2023 Return on average common shareholders’ equity 12.16% 11.39% 13.01% Average common shareholders’ equity $44,916 $44,421 $41,747
Slide 31: Appendix: Expectations for Preferred Dividends
Appendix: Expectations for Preferred Dividends Preferred Dividends For the three months ended For the year ended $ millions Mar. 31, 2024 June 30, 2024 Sept. 30, 2024 Dec. 31, 2024 Dec. 31, 2024 Preferred dividends $82 $95 $82 $94 $352 The above represents our current estimate for preferred dividend
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