Pnc Financial Services Group, Inc. (the) · NYSE:PNC
Pnc Financial Services Group, Inc. (the) — Q3 2023 Earnings Presentation
28 slides from Pnc Financial Services Group, Inc. (the)'s earnings presentation, Oct 13, 2023
Slide 1: Third Quarter 2023 Earnings Conference Call
Third Quarter 2023 Earnings Conference Call October 13, 2023 The PNC Financial Services Group
Slide 2: Cautionary Statement Regarding Forward-Looking and non-GAAP Financial Information
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 Third Quarter 2023 Results
Delivered Solid Third Quarter 2023 Results Net Income Solid third quarter $1.6 billion – Continued to execute on our strategic priorities Diluted Earnings Per Share – Generated positive operating leverage $3.60 – Increased capital position Positive Operating Leverage – Continued strong expense con
Slide 4: Balance Sheet: Well-Positioned Balance Sheet
Balance Sheet: Well-Positioned Balance Sheet 3Q23 vs. 2Q23 3Q23 vs. 3Q22 Average balances, $ billions 3Q23 $ Change % Change $ Change % Change Total loans $319.5 ($5.0) (2)% $6.5 2% Investment securities $139.7 ($1.3) (1)% $2.7 2% Federal Reserve Bank (FRB) balances $37.9 $7.3 24% $6.4 20% Deposits
Slide 5: Balance Sheet: Large and Diversified Lending Franchise
Balance Sheet: Large and Diversified Lending Franchise Average Loan Balances +2.1% Year Over Year; -1.5% Linked Quarter $321.9 $325.5 $324.5 $319.5 $313.0 $221.6 $224.6 $223.2 $217.7 $214.1 5.75% Commercial Loans: 5.29% 5.57% 4.75% +1.7% YoY Average balances, $ billions 3.98% -2.5% LQ $98.9 $100
Slide 6: Balance Sheet: Strong Deposit Mix
Balance Sheet: Strong Deposit Mix PNC’s Deposit Mix Shift Driven by Commercial Deposits Forecasted Cumulative Deposit Beta Consumer Consolidated $223 $222 $218 $439 $426 $423 Historical Forecast 90% 90% 90% 68% 73% 74% 44% 44% 2.26% 42% 10% 1.96% Average balance, $ in billions 10% 10% 41% 3Q22 2Q23
Slide 7: Balance Sheet: High-Quality, Short-Duration Securities and Swaps
Balance Sheet: High-Quality, Short-Duration Securities and Swaps Average Securities Cumulative Projected Runoff Projected AOCI Accretion Duration of 4.2 Years 34% Through 2025 47% Through 2025 $137.0 $141.0 $139.7 $- Average balance, $ in billions $10.0 -2% 2.52% 2.57% $(10) -4% 2.10% 33% Burn -6% D
Slide 8: Income Statement: Solid Results
Income Statement: Solid Results Three Months Ended Nine Months Ended % Change vs. % Change vs. $ in millions 9/30/23 6/30/23 9/30/22 9/30/23 9/30/22 Net interest income $3,418 (3)% (2)% $10,513 13% Noninterest income 1,815 2% (12)% 5,616 (7)% Total revenue 5,233 (1)% (6)% 16,129 5% Noninterest expen
Slide 9: Income Statement: Broad Based Revenue Businesses
Income Statement: Broad Based Revenue Businesses Total Revenue Details of Revenue Three Months Ended Nine Months Ended % Chg. vs. % Chg. vs. $5,549 $5,293 $5,233 $ millions 9/30/23 6/30/23 9/30/22 9/30/23 9/30/22 $2,074 $1,783 $1,815 Net interest income $3,418 (3)% (2)% $10,513 13% Asset management
Slide 10: Income Statement: Well-Controlled Expenses
Income Statement: Well-Controlled Expenses Noninterest Expense Details of Noninterest Expenses Focused on Controlling Expenses Three Months Ended Nine Months Ended % Chg. vs. % Chg. vs. $3,280 $3,372 $3,245 $ millions 9/30/23 6/30/23 9/30/22 9/30/23 9/30/22 Personnel $1,773 (4)% (2)% $5,445 3% Occup
Slide 11: Credit: Strong Credit Quality Performance
Credit: Strong Credit Quality Performance Credit Quality Metrics 3Q22 4Q22 1Q23 2Q23 3Q23 NPLs / Total Loans (Period End) 0.66% 0.61% 0.62% 0.59% 0.67% Delinquencies / Total Loans (Period End) 0.52% 0.46% 0.41% 0.38% 0.40% Nonperforming Loans (NPLs) NCOs / Average Loans 0.15% 0.28% 0.24% 0.24% 0.15%
Slide 12: Well Positioned for Regulatory Proposals
Well Positioned for Regulatory Proposals Strong Capital Position Manageable Long Term Debt Requirements In Excess of Regulatory Minimum, Including Impact of Proposals 9.8% (1.9%) Binding constraint will be risk-weighted assets to long term debt at the holding company and bank level (0.5%) 7.4% Imp
Slide 13: Acquired Capital Commitment Revolving Facilities
Acquired Capital Commitment Revolving Facilities Transaction Summary Strategic Rationale Closing Date: October 2, 2023 – Grows PNC’s capital commitments business with minimal investment Loan Commitments: ~$16 billion – Origination strategy focused on large and established fund managers Funded Loan
Slide 14: Commitment to Expense Management
Commitment to Expense Management $725 million of Expense Actions Planned Benefiting 2024 Successful Continuous Improvement Programs (CIP) Workforce Reduction Provides Savings to Reinvest for Growth $325 million of Savings will Drop to the Bottom Line in 2024 $500 $500 PNC conducted an enterprise-w
Slide 15: Outlook: Fourth Quarter 2023 Compared to Third Quarter 2023
Outlook: Fourth Quarter 2023 Compared to Third Quarter 2023 ($ millions; except loans, $ billions) 3Q23 4Q23 Guidance Average loans $319.5 Up ~3% Net interest income $3,418 Down 1% - 2% Fee income $1,721 Up ~1% Other noninterest income $94 $150 - $200 Core noninterest expense $3,245 Up 3% - 4% Net c
Slide 16: Cautionary Statement Regarding Forward-Looking Information
Appendix: Cautionary Statement Regarding Forward-Looking Information We make statements in this news release and related conference call, 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
Slide 17: Cautionary Statement Regarding Forward-Looking Information
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 and do not take into account potential legal and
Slide 18: Cautionary Statement Regarding Forward-Looking Information
Appendix: Cautionary Statement Regarding Forward-Looking Information − Changes to laws and regulations, including changes affecting oversight of the financial services industry, changes in the enforcement and interpretation of such laws and regulations, and changes in accounting and reporting standa
Slide 19: Granular Deposit Base
Appendix: Granular Deposit Base Consumer Deposits Composition of Deposit Portfolio Commercial Deposits $219 billion at 9/30/23 54% of Total Deposits are Insured $205 billion at 9/30/23 As of 9/30/23 Large Customer Base ~20 million Operating & Relationship Accounts: Consumer Accounts Relationship Acc
Slide 20: Office Represents 2.7% of Total Loans
Appendix: Office Represents 2.7% of Total Loans Total Loans as of 9/30/23 PNC’s Commercial Real Estate (CRE) Portfolio $ billions 9/30/23 % of Total Loans Multifamily $15.3 4.8% Office 8.6 2.7% Industrial / Warehouse 4.0 1.3% Total Non-Office Retail 2.6 0.8% $318.4 CRE, 8.5% Billion Seniors Housing
Slide 21: Office CRE Portfolio
Appendix: Office CRE Portfolio Office Portfolio Geographic Diversification Key Office Portfolio Metrics Tenant Classification By Metropolitan Statistical Area Conservative Underwriting Methodology Single- $ billions 9/30/23 Tenant $ in millions 9/30/23 6/30/23 Medical Washington-Arlington-Alexandria
Slide 22: 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 Sept. 30, 2023 June 30, 2023 Sept. 30, 2022 Return on average common shareholders’ equity 13.65% 13.01% 14.97% Average common shareholders’ equity $42,069 $41,747 $41,2
Slide 23: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Pretax, Pre-Provision Earnings (non-GAAP) For the three months ended For the nine months ended $ millions Sept. 30, 2023 June 30, 2023 Sept. 30, 2022 Sept. 30, 2023 Sept. 30, 2022 Net interest income $3,418 $3,510 $3,475 $10,513 $9,330 Noninterest income 1,8
Slide 24: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Taxable-Equivalent Net Interest Income (non-GAAP) For the three months ended For the nine months ended $ millions Sept. 30, 2023 June 30, 2023 Sept. 30, 2022 Sept. 30, 2023 Sept. 30, 2022 Net interest income $3,418 $3,510 $3,475 $10,513 $9,330 Taxable-equiva
Slide 25: 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 Sept. 30, 2023 June 30, 2023 Sept. 30, 2022 Book value per common share $105.98 $105.67 $97.59 Tangible book value per common share Common shareholde
Slide 26: 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 Equity Sept. 30, 2023 (estimated), $ in billions Tier 1 Capital Sept. 30, 2023 (estimated), $ in billions
Slide 27: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Tangible Common Equity Ratio (non-GAAP) For the three months ended $ millions Sept. 30, 2023 Tangible common shareholders’ equity Common shareholders’ equity $42,215 Goodwill and other intangible assets (11,337) Deferred tax liabilities on goodwill and other
Slide 28: Expectations for Preferred Dividends
Appendix: Expectations for Preferred Dividends Preferred Dividends For the three months ended $ millions Dec. 31, 2023 Mar. 31, 2024 June 30, 2024 Sept. 30, 2024 Dec. 31, 2024 Preferred Dividends $118 $82 $95 $81 $94 The above represents our current estimate for preferred dividends over the course o
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