Pnc Financial Services Group, Inc. (the) · NYSE:PNC
Pnc Financial Services Group, Inc. (the) — Q2 2023 Earnings Presentation
26 slides from Pnc Financial Services Group, Inc. (the)'s earnings presentation, Jul 18, 2023
Slide 1: Second Quarter 2023 Earnings Conference Call
Second Quarter 2023 Earnings Conference Call July 18, 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 Second Quarter 2023 Results
Delivered Solid Second Quarter 2023 Results Net Income Continued to execute on our strategic priorities $1.5 billion Grew consumer households and commercial relationships Diluted Earnings Per Share $3.36 Increased capital position Net Charge-Off Ratio Well-controlled expenses 0.24% Maintai
Slide 4: Balance Sheet: Well-Positioned Balance Sheet
Balance Sheet: Well-Positioned Balance Sheet 2Q23 vs. 1Q23 2Q23 vs. 2Q22 Average balances, $ billions 2Q23 $ Change % Change $ Change % Change Total loans $324.5 ($1.0) -- $19.7 6% Investment securities $141.0 ($2.4) (2)% $6.3 5% Federal Reserve Bank (FRB) balances $30.6 ($2.9) (9)% ($8.7) (22)% Dep
Slide 5: Balance Sheet: Large and Diversified Lending Franchise
Balance Sheet: Large and Diversified Lending Franchise Average Loan Balances +6.5% Year Over Year; Stable Linked Quarter $321.9 $325.5 $324.5 $304.8 $313.0 $221.6 $224.6 $223.2 $207.6 $214.1 Commercial Loans: 5.29% 5.57% 4.75% +7.5% YoY Average balances, $ billions 3.98% -0.6% LQ 3.29% $97.2 $98
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 $230 $226 $222 $447 $436 $426 Historical Forecast 44% 90% 90% 90% 67% 72% 73% 41% 42% 42% 38% 39% 10% 1.96% Average balance, $ in billions 10% 10% 1.66% 2Q
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 38% Through 2025 46% Through 2025 $134.7 $143.4 $141.0 $- Average balance, $ in billions -3% $9.2 2.49% 2.52% $(10) 1.89% -5% -8% 31% Burn $(
Slide 8: Income Statement: Solid Results
Income Statement: Solid Results Three Months Ended Six Months Ended % Chg. 2Q23 vs. % Chg. $ in millions 2Q23 1Q23 2Q22 1H23 1H23 vs. 1H22 Net interest income $3,510 (2)% 15% $7,095 21% Noninterest income 1,783 (12)% (14)% 3,801 (4)% Total revenue 5,293 (6)% 3% 10,896 11% Noninterest expense 3,372 2
Slide 9: Income Statement: Broad Based Revenue Businesses
Income Statement: Broad Based Revenue Businesses Total Revenue Details of Revenue 3% YoY Growth; 6% LQ Decline 2Q23 2Q23 $ millions 2Q23 vs. 1Q23 vs. 2Q22 $5,603 $5,293 Net interest income $3,510 ($75) $459 $5,116 $2,018 $1,783 Asset management and brokerage 348 (8) (17) $2,065 Capital markets and A
Slide 10: Income Statement: Well-Controlled Expenses
Income Statement: Well-Controlled Expenses Noninterest Expense Details of Expenses Focused on Controlling Expenses 2Q23 vs. 1Q23 2Q23 vs. 2Q22 $3,372 $ millions 2Q23 $ % $ % $3,244 $3,321 Personnel $1,846 $20 1% $67 4% Occupancy 244 (7) (3)% (2) (1)% $ millions Equipment 349 (1) -- (2) (1)% Marketin
Slide 11: Credit: Strong Credit Quality Performance
Credit: Strong Credit Quality Performance Credit Quality Metrics 2Q22 3Q22 4Q22 1Q23 2Q23 NPLs / Total Loans (Period End) 0.66% 0.66% 0.61% 0.62% 0.59% Delinquencies / Total Loans (Period End) 0.49% 0.52% 0.46% 0.41% 0.38% Nonperforming Loans (NPLs) NCOs / Average Loans 0.11% 0.15% 0.28% 0.24% 0.24%
Slide 12: Outlook: Third Quarter 2023 Compared to Second Quarter 2023
Outlook: Third Quarter 2023 Compared to Second Quarter 2023 ($ millions; except loans, $ billions) 2Q23 3Q23 Guidance Average loans $324.5 Down ~1% Net interest income $3,510 Down 3% - 4% Noninterest income $1,783 Up 10% - 11% Revenue $5,293 Up ~1% Noninterest expense $3,372 Stable Net charge-offs $
Slide 13: Outlook: Full Year 2023 Compared to Full Year 2022
Outlook: Full Year 2023 Compared to Full Year 2022 2023 Guidance ($ millions; except loans, $ billions) 2022 Previous Current Period-end loans (as of 12/31/22) $326.0 Up 1% - 3% Stable Average loans $307.7 Up 5% - 7% Up 5% - 6% Expectations for slightly higher deposit Net interest income $13,014 Up
Slide 14: 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,
Slide 15: 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 16: 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 17: Appendix: Granular Deposit Base
Appendix: Granular Deposit Base Consumer Deposits Composition of Deposit Portfolio Commercial Deposits $221 billion at 6/30/23 54% of Total Deposits are Insured $206 billion at 6/30/23 As of 6/30/23 Large Customer Base ~20 million Operating & Relationship Accounts: Consumer Accounts Relationship Acc
Slide 18: Office Represents 2.7% of Total Loans
Appendix: Office Represents 2.7% of Total Loans Total Loans as of 6/30/23 PNC’s Commercial Real Estate (CRE) Portfolio $ billions 6/30/23 % of Total Loans Multifamily $14.8 4.6% Office 8.7 2.7% Industrial / Warehouse 3.9 1.2% Total Retail 2.8 0.9% $321.8 Non-Office CRE, 8.5% Billion Seniors Housing
Slide 19: 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 6/30/23 Tenant $ in millions 6/30/23 3/31/23 Medical 16% Washington-Arlington-Alexan
Slide 20: Non-GAAP to GAAP Reconciliation: Return on Average Tangible Common Equity
Appendix: Non-GAAP to GAAP Reconciliation Return On Average Tangible Common Equity (non-GAAP) For the three months ended $ millions June 30, 2023 Mar. 31, 2023 June 30, 2022 Return on average common shareholders’ equity 13.01% 16.11% 13.52% Average common shareholders’ equity $41,747 $40,462 $41,809
Slide 21: Non-GAAP to GAAP Reconciliation: Pretax, Pre-Provision Earnings
Appendix: Non-GAAP to GAAP Reconciliation Pretax, Pre-Provision Earnings (non-GAAP) For the three months ended For the six months ended $ millions June 30, 2023 Mar. 31, 2023 June 30, 2022 June 30, 2023 Net interest income $3,510 $3,585 $3,051 $7,095 Noninterest income 1,783 2,018 2,065 3,801 Total
Slide 22: Non-GAAP to GAAP Reconciliation: Taxable-Equivalent Net Interest Income
Appendix: Non-GAAP to GAAP Reconciliation Taxable-Equivalent Net Interest Income (non-GAAP) For the three months ended For the six months ended $ millions June 30, 2023 Mar. 31, 2023 June 30, 2022 June 30, 2023 Net interest income $3,510 $3,585 $3,051 $7,095 Taxable-equivalent adjustments 37 38 25 7
Slide 23: Non-GAAP to GAAP Reconciliation: Tangible Book Value per Common Share
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, 2023 Mar. 31, 2023 June 30, 2022 Book value per common share $105.67 $104.76 $101.39 Tangible book value per common share Common shareholder
Slide 24: Non-GAAP to GAAP Reconciliation: Common Equity Tier 1 Ratio, including AOCI
Appendix: Non-GAAP to GAAP Reconciliation Common Equity Tier 1 Ratio, including AOCI (non-GAAP) Common Equity June 30, 2023 (estimated), $ in millions June 30, 2023 (estimated), $ in millions Risk-weighted assets Tier 1 Capital Common stock, related surplus and retained $52,091 Risk-weighted assets,
Slide 25: Non-GAAP to GAAP Reconciliation: Tangible Common Equity Ratio
Appendix: Non-GAAP to GAAP Reconciliation Tangible Common Equity Ratio (non-GAAP) For the three months ended $ millions June 30, 2023 Tangible common shareholders’ equity Common shareholders’ equity $42,083 Goodwill and other intangible assets (11,357) Deferred tax liabilities on goodwill and other
Slide 26: 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 $104 $117 $416 The above represents our current estimate for preferred divid
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