Pnc Financial Services Group, Inc. (the) · NYSE:PNC
Pnc Financial Services Group, Inc. (the) — Q1 2024 Earnings Presentation
30 slides from Pnc Financial Services Group, Inc. (the)'s earnings presentation, Apr 16, 2024
Slide 1: First Quarter 2024 Earnings Conference Call
First Quarter 2024 Earnings Conference Call April 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 First Quarter 2024 Results
Delivered Solid First Quarter 2024 Results • Grew customers and deepened relationships $1.3 billion Net Income • Reduced core noninterest expense $3.10 Diluted Earnings per Share (EPS) • Credit quality stable; CRE adequately reserved $3.36 Adjusted Diluted EPS (non-GAAP) Excludes $130 million pre-ta
Slide 4: Increased Liquidity and Capital Position
Increased Liquidity and Capital Position 1Q24 vs. 4Q23 1Q24 vs. 1Q23 Average balances, $ billions 1Q24 $ Change % Change $ Change % Change Total loans $320.6 $(4.0) (1)% $(4.9) (2)% Investment securities $135.4 $(2.0) (1)% $(8.0) (6)% Federal Reserve Bank (FRB) balances $47.8 $5.6 13% $14.3 43% Depo
Slide 5: Loan Balances Impacted by Soft Demand
Loan Balances Impacted by Soft Demand Consolidated Loan Balances C&IB Utilization Remains Low Total Loans: $326 $325 $321 (1.5)% YoY 52.7% 51.7% $225 $223 $219 (1.2)% LQ 50.9% Commercial Loans: Average balances, $ billions 5.94% 6.01% (2.4)% YoY Average utilization 5.29% (1.5)% LQ $101 $102 $101 Con
Slide 6: High Quality, Short Duration Securities and Swaps
High Quality, Short Duration Securities and Swaps Average Securities Cumulative Projected Runoff Projected AOCI Accretion Duration of 4.0 Years 30% Through 2025 46% Through 2025 $143.4 $137.4 $135.4 $- Average balance, $ billions $7.9 2.49% 2.59% 2.62% (3)% $(10) 27% Burn (7)% Down $(20) $5.7 1Q23 4
Slide 7: Strong and Stable Deposit Base
Strong and Stable Deposit Base Consolidated Deposit Balances Cumulative Deposit Betas Peaking $436 Historical Forecast $424 $420 75% 76% 44% 45% 72% • First Fed rate cut expected in July 2024 35% • Rate paid anticipated to Average balances, $ billions decline with rate cuts 2.48% 2.60% 1.66% 3/31/24
Slide 8: Income Statement
Income Statement % Change vs. $ millions 1Q24 4Q23 1Q23 Net interest income $3,264 (4)% (9)% Noninterest income 1,881 (4)% (7)% Total revenue 5,145 (4)% (8)% Noninterest expense 3,334 (18)% - Core noninterest expense (non-GAAP) 3,204 (6)% (4)% Pretax, pre-provision earnings, as adjusted (non-GAAP) $
Slide 9: Revenue
Revenue Total Revenue Details of Revenue $5,603 $5,361 % Change vs. $2,018 $5,145 $ millions 1Q24 4Q23 1Q23 $1,958 $1,881 Net interest income $3,264 (4)% (9)% Asset management and brokerage 364 1% 2% $3,585 Capital markets and advisory 259 (16)% (1)% $3,403 $3,264 $ millions Card and cash management
Slide 10: Well Controlled Core Noninterest Expense
Well Controlled Core Noninterest Expense Noninterest Expense Details of Noninterest Expense $4,074 % Change vs. $ millions 1Q24 4Q23 1Q23 $3,334 Personnel $1,794 (10)% (2)% $3,321 $3,409 $3,204 Occupancy 244 - (3)% Equipment 341 (7)% (3)% $ millions Marketing 64 (14)% (14)% Other 891 (37)% 9% Total
Slide 11: Credit Quality
Credit Quality Nonperforming Loans (NPLs) Credit Quality Metrics 1Q23 2Q23 3Q23 4Q23 1Q24 NPLs, ex. CRE CRE NPLs NPLs / Total Loans (Period End) 0.62% 0.59% 0.67% 0.68% 0.74% Delinquencies / Total Loans (Period End) 0.41% 0.38% 0.40% 0.43% 0.40% $2,380 NCOs / Average Loans 0.24% 0.24% 0.15% 0.24% 0.
Slide 12: 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 3/31/24 Criticized NPL Reserved $8.9 $8.7 $8.6 $8.0 Multi-Tenant 45.1% 18.1% 14.4% $7.8 Single Tenant 3.1% 0.6% 3.3% $2.0
Slide 13: Second Quarter 2024 Compared to First Quarter 2024
Second Quarter 2024 Compared to First Quarter 2024 $ millions; except loans, $ billions 1Q24 2Q24 Guidance Average loans $320.6 Stable Net interest income $3,264 Down ~ 1% Fee income $1,746 Up 1% – 2% Other noninterest income $135 $150 – $200 Total revenue $5,145 Stable Core noninterest expense (non
Slide 14: Full Year 2024 Compared to Full Year 2023 – Unchanged
Full Year 2024 Compared to Full Year 2023 – Unchanged $ millions; except loans, $ billions 2023 2024 Guidance Average loans $323.5 Up ~ 1% Net interest income $13,916 Down 4% – 5% Noninterest income $7,574 Up 4% – 6% Total revenue $21,490 Stable to down 2% Core noninterest expense (non-GAAP) $13,347
Slide 15: 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 16: 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 and do not take into account potential legal and
Slide 17: 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 18: Appendix: Granular Deposit Base
Appendix: Granular Deposit Base Composition of Deposit Portfolio 57% of Total Deposits are Insured Consumer Commercial $223 billion $202 billion Deposits Deposits ~20 million 1.4 million Consumer accounts Commercial accounts Total Deposits 91% 78% Insured $426 Billion Uninsured as of 3/31/24 96% ~$1
Slide 19: Appendix: 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 3/31/24 $ billions 3/31/24 % of Total Loans Multifamily $16.1 5.0% Office 7.8 2.4% Industrial / Warehouse 4.1 1.3% Retail 2.3 0.7% Total Commercial Real Estate Seniors Housing 1.8 0.6
Slide 20: Appendix: Multifamily CRE Portfolio
Appendix: Multifamily CRE Portfolio CRE Multifamily Loans Geographic Diversification Key Multifamily Portfolio Metrics: as of 3/31/24 by Metropolitan Statistical Area Conservative Underwriting Methodology $ billions 3/31/24 $ millions 3/31/24 12/31/23 Miami, FL $1.1 Midrise Avg. Loan Commitment $30
Slide 21: Appendix: Office CRE Portfolio
Appendix: Office CRE Portfolio Tenant Classification Geographic Diversification Key Office Portfolio Metrics: Single- by Metropolitan Statistical Area Conservative Underwriting Methodology Tenant $ billions 3/31/24 $ millions 3/31/24 12/31/23 Medical 15% 15% Washington, DC $1.1 $7.8 Government Total
Slide 22: Appendix: 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 Mar. 31, 2024 (estimated); $ billions Tier 1 Capital Mar. 31, 2024 (estimated); $ bi
Slide 23: Appendix: 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 Mar. 31, 2024 Dec. 31, 2023 Mar. 31, 2023 Dec. 31, 2023 Total noninterest expense $3,334 $4,074 $3,321 $14,012 Workforce reduction charge (150) (150) FDIC special as
Slide 24: Appendix: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Adjusted Diluted Earnings per Share (non-GAAP) For the three months ended For the three months ended Mar. 31, Per Common Dec. 31, Per Common $ millions 2024 Share 2023 Share Net income attributable to common shareholders $1,247 $744 Dividend and undistribute
Slide 25: Appendix: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Pretax, Pre-Provision Earnings, as adjusted (non-GAAP) For the three months ended $ millions Mar. 31, 2024 Dec. 31, 2023 Mar. 31, 2023 Total Revenue $5,145 $5,361 $5,603 Total noninterest expense $3,334 $4,074 $3,321 Non-core noninterest expense (130) (665)
Slide 26: Appendix: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Taxable-Equivalent Net Interest Income (non-GAAP) For the three months ended $ millions Mar. 31, 2024 Dec. 31, 2023 Mar. 31, 2023 Net interest income $3,264 $3,403 $3,585 Taxable-equivalent adjustments 34 36 38 Net interest income - fully taxable-equivalent
Slide 27: Appendix: 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 Mar. 31, 2024 Dec. 31, 2023 Mar. 31, 2023 Book value per common share $113.30 $112.72 $104.76 Tangible book value per common share Common shareholder
Slide 28: Appendix: Non-GAAP to GAAP Reconciliation
Appendix: Non-GAAP to GAAP Reconciliation Tangible Common Equity Ratio (non-GAAP) For the three months ended $ millions Mar. 31, 2024 Dec. 31, 2023 Mar. 31, 2023 Tangible common shareholders’ equity Common shareholders’ equity $45,097 $44,864 $41,809 Goodwill and other intangible assets (11,225) (11
Slide 29: Appendix: 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 Mar. 31, 2024 Dec. 31, 2023 Mar. 31, 2023 Return on average common shareholders’ equity 11.39% 6.93% 16.11% Average common shareholders’ equity $44,421 $42,564 $40,462
Slide 30: Appendix: Expectations for Preferred Dividends
Appendix: Expectations for Preferred Dividends Preferred Dividends For the three months ended $ millions Jun. 30, 2024 Sept. 30, 2024 Dec. 31, 2024 Preferred dividends $95 $81 $94 The above represents our current estimate for preferred dividends over the course of the next 3 quarters for currently o
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