Pnc Financial Services Group, Inc. (the) · NYSE:PNC

Pnc Financial Services Group, Inc. (the) — Q1 2023 Earnings Presentation

33 slides from Pnc Financial Services Group, Inc. (the)'s earnings presentation, Apr 14, 2023

  1. Slide 1: First Quarter 2023 Earnings Conference Call

    First Quarter 2023 Earnings Conference Call April 14, 2023 The PNC Financial Services Group

  2. 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

  3. Slide 3: Delivered Strong First Quarter 2023 Results

    Delivered Strong First Quarter 2023 Results  Grew deposits Net Income $1.7 billion  Increased capital and liquidity positions Diluted Earnings Per Share  Remained focused on disciplined loan growth $3.98  Well-controlled expenses Positive Operating Leverage  Generated positive operating leverag

  4. Slide 4: Financial Performance Overview

    Financial Performance Overview The PNC Financial Services Group

  5. Slide 5: Balance Sheet: Well-Positioned Balance Sheet

    Balance Sheet: Well-Positioned Balance Sheet 1Q23 vs. 4Q22 1Q23 vs. 1Q22 Average balances, $ billions 1Q23 $ Change % Change $ Change % Change Total loans $325.5 $3.6 1% $34.8 12% Investment securities $143.4 $0.5 -- $9.5 7% Federal Reserve Bank (FRB) balances $33.5 $3.5 12% ($28.8) (46)% Deposits $

  6. Slide 6: Balance Sheet: Loans Core Funded with Deposits

    Balance Sheet: Loans Core Funded with Deposits Grew Average Loans Grew Average Deposits Linked Quarter Disciplined Loan Growth Strong Core Deposit Base $453.3 $434.9 $436.2 $321.9 $325.5 $153.7 $133.5 $121.2 $290.7 $221.6 $224.6 $195.6 Average balances, $ billions Average balances, $ billions 5.29%

  7. Slide 7: Income Statement: Solid Performance

    Income Statement: Solid Performance % Change 1Q23 vs. $ millions 1Q23 4Q22 1Q22 4Q22 1Q22 Net interest income $3,585 $3,684 $2,804 (3)% 28% Noninterest income 2,018 2,079 1,888 (3)% 7% Total revenue 5,603 5,763 4,692 (3)% 19% Noninterest expense 3,321 3,474 3,172 (4)% 5% Pretax, pre-provision earnin

  8. Slide 8: Income Statement: Generated Positive Operating Leverage

    Income Statement: Generated Positive Operating Leverage Revenue Noninterest Expense Highlights Diversified Business Mix Expenses Remain Well-Controlled Linked Quarter $5,763 $5,603 $2,079 $3,474  Efficiency improved to 59% $2,018 $3,321 $4,692 $3,172  Generated 2% positive operating leverage $1,88

  9. Slide 9: Credit: Strong Credit Quality Performance

    Credit: Strong Credit Quality Performance Credit Quality Metrics 1Q22 2Q22 3Q22 4Q22 1Q23 NPLs / Total Loans (Period End) 0.78% 0.66% 0.66% 0.61% 0.62% Delinquencies / Total Loans (Period End) 0.58% 0.49% 0.52% 0.46% 0.41% Nonperforming Loans (NPLs) NCOs / Average Loans 0.19% 0.11% 0.15% 0.28% 0.24%

  10. Slide 10: Key Areas of Focus

    Key Areas of Focus The PNC Financial Services Group

  11. Slide 11: Deposits: Granular Deposit Base

    Deposits: Granular Deposit Base Consumer Deposits Composition of Deposit Portfolio Commercial Deposits $230 billion at 3/31/23 55% of Total Deposits are Insured $207 billion at 3/31/23 As of 3/31/23 Large Customer Base ~20 million Operating & Relationship Accounts: Consumer Accounts Relationship Acc

  12. Slide 12: Deposits: Noninterest-Bearing and Interest-Bearing Mix

    Deposits: Noninterest-Bearing and Interest-Bearing Mix PNC’s Deposit Mix Shift in Current Rate Cycle Noninterest-Bearing Levels Through Time PNC has Historically Outperformed the Industry Consumer Consolidated $233 $230 40% $450 $437 90% 90% PNC Industry 67% 73% 35% 30% 10% 10% 3/31/22 3/31/23 25% $

  13. Slide 13: Deposits: Beta Outlook

    Deposits: Beta Outlook Historical Rate Paid and Beta Forecasted Cumulative Deposit Beta Betas Lagged Early in the Cycle Column1 Historical Forecast Cumulative Deposit Beta Expected Rate Paid on IB Deposits (3 months ended) 41% 42% Terminal 38% Beta: 35% 34% 35% 42% 31% 22% 16% 1.66% 1.07% 0.45% 0.12

  14. Slide 14: Securities & Swaps: High Quality and Short Duration

    Securities & Swaps: High Quality and Short Duration Securities Balances Securities and Swap Portfolio Highlights $142.9 $143.4 Securities $133.9  Balances stable linked quarter  1Q23 securities yield 2.49% 2.49% 2.36% – 1Q23 purchase yields averaging > 4.75% Average balances, $ billions  Duration

  15. Slide 15: Securities & Swaps: Significant AOCI Accretion Expected

    Securities & Swaps: Significant AOCI Accretion Expected Cumulative Securities and Swap Projected Runoff Projected AOCI Accretion Over the Next 7 Quarters Over the Next 7 Quarters $- $8.8 ~40% -2% Burn Down $(10) -5% $(20) -9% $5.4 -12% $(30) -16% $(40) $ billions $ billions -20% $(50) -26% $(60) 2Q2

  16. Slide 16: Liquidity: Maintaining a Strong Liquidity Position

    Liquidity: Maintaining a Strong Liquidity Position PNC Average Liquidity Coverage Ratio Positioned for Enhanced Regulatory Requirements Bank Consolidated  Opportunistically increased borrowings to bolster 126% 130% liquidity position over the past year 107% 108% – 12% borrowed funds to total liabil

  17. Slide 17: Capital: Well Capitalized

    Capital: Well Capitalized Capital Ratios as of 3/31/23 Market Value of Equity  Market value of equity is not reflected on balance sheet due to U.S. CET 1 Capital Ratio generally accepted accounting principles (GAAP) 9.2%  Improvement in the market value of PNC’s deposit base significantly 7.4% Req

  18. Slide 18: CRE Portfolio: Office Represents 2.7% of Total Loans

    CRE Portfolio: Office Represents 2.7% of Total Loans Total Loans as of 3/31/23 PNC’s Commercial Real Estate (CRE) Portfolio $ billions 3/31/23 % of Total Loans Multifamily $14.3 4.4% Office 8.9 2.7% Industrial / Warehouse 3.9 1.2% Total Non-Office Retail 2.8 0.9% $326 CRE, 8.3% Billion Seniors Housi

  19. Slide 19: Office CRE Portfolio: Diversified Tenants and Markets

    Office CRE Portfolio: Diversified Tenants and Markets Office Portfolio Geographic Diversification Key Office Portfolio Metrics Tenant Classification By Metropolitan Statistical Area Conservative Underwriting Methodology Single- $ billions 3/31/23 3/31/23 Tenant Medical 16% Washington-Arlington-Alexa

  20. Slide 20: Summary: Results Reflect the Strength of our Balance Sheet

    Summary: Results Reflect the Strength of our Balance Sheet 3/31/23 12/31/22 Improved Deposits $436.8 billion $436.3 billion  Fed Cash Balances $32.5 billion $26.9 billion  CET 1 Capital Ratio 9.2% 9.1%  AOCI ($9.1) billion ($10.2) billion  Tangible Book Value / Share (non-GAAP) $76.90 $72.12  N

  21. Slide 21: Guidance

    Guidance The PNC Financial Services Group

  22. Slide 22: Outlook: Full Year 2023 Compared to Full Year 2022

    Outlook: Full Year 2023 Compared to Full Year 2022 ($ millions; except loans, $ billions) 2022 2023 Guidance Period-end loans (as of 12/31/22) $326.0 Up 1% – 3% Average loans $307.7 Up 5% – 7% Revenue $21,120 Up 4% – 5% Noninterest expense $13,170 Up 2% – 3% Effective tax rate 18.2% ~18% − Refer to

  23. Slide 23: Outlook: Second Quarter 2023 Compared to First Quarter 2023

    Outlook: Second Quarter 2023 Compared to First Quarter 2023 ($ millions; except loans, $ billions) 1Q23 2Q23 Guidance Average loans $325.5 Stable Net interest income $3,585 Down 2% – 4% Fee income $1,760 Stable to Down 1% Other noninterest income $258 $200 – $250 Revenue $5,603 Down ~3% Noninterest

  24. Slide 24: Appendix: Cautionary Statement Regarding Forward-Looking Information

    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,

  25. Slide 25: Appendix: 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

  26. Slide 26: Appendix: 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

  27. Slide 27: 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, 2023 Dec. 31, 2022 Mar. 31, 2022 Return on average common shareholders’ equity 16.11% 14.19% 11.64% Average common shareholders’ equity $40,462 $39,321 $47,415

  28. Slide 28: Appendix: Non-GAAP to GAAP Reconciliation

    Appendix: Non-GAAP to GAAP Reconciliation Pretax, Pre-Provision Earnings (non-GAAP) For the three months ended $ millions Mar. 31, 2023 Dec. 31, 2022 Mar. 31, 2022 Net interest income $3,585 $3,684 $2,804 Noninterest income 2,018 2,079 1,888 Total Revenue $5,603 $5,763 $4,692 Noninterest expense 3,3

  29. Slide 29: 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, 2023 Dec. 31, 2022 Sept. 30, 2022 June 30, 2022 Mar. 31, 2022 Net interest income $3,585 $3,684 $3,475 $3,051 $2,804 Taxable-equivalent adjustments 38 36 29 25 2

  30. Slide 30: 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, 2023 Dec. 31, 2022 Mar. 31, 2022 Book value per common share $104.76 $99.93 $106.47 Tangible book value per common share Common shareholders

  31. Slide 31: Appendix: Non-GAAP to GAAP Reconciliation

    Appendix: Non-GAAP to GAAP Reconciliation Common Equity Tier 1 Ratio, including AOCI (non-GAAP) Common Equity March 31, 2023 (estimated), $ in millions March 31, 2023 (estimated), $ in millions Risk-weighted assets Tier 1 Capital Common stock, related surplus and retained $51,400 Risk-weighted asset

  32. Slide 32: 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, 2023 Tangible common shareholders’ equity Common shareholders’ equity $41,809 Goodwill and other intangible assets (11,378) Deferred tax liabilities on goodwill and other

  33. Slide 33: Appendix: Expectations for Preferred Dividends

    Appendix: Expectations for Preferred Dividends Preferred Dividends For the three months ended For the year ended $ millions Mar. 31, 2023 June 30, 2023 Sept. 30, 2023 Dec. 31, 2023 Dec. 31, 2023 Preferred Dividends $68 $127 $103 $115 $412 The above represents our current estimate for preferred divid

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