28 slides from Pnc Financial Services Group, Inc. (the)'s earnings presentation, Oct 13, 2023
Slide 1: Third Quarter 2023 Earnings Conference Call
The PNC Financial Services Group Third Quarter 2023 Earnings Conference Call October 13, 2023 Exhibit 99.1
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 2 Solid third quarter – Continued to execute on our strategic priorities – Generated positive operating leverage – Increased capital position – Continued strong expense control – Maintained strong credit quality Fourth quarter events – On October 2, com
Slide 4: Balance Sheet: Well-Positioned Balance Sheet
Balance Sheet: Well-Positioned Balance Sheet 3 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% Deposit
Slide 5: Balance Sheet: Large and Diversified Lending Franchise
Balance Sheet: Large and Diversified Lending Franchise 4 Av er ag e ba la nc es , $ b ill io ns $98.9 $100.3 $100.9 $101.3 $101.8 $214.1 $221.6 $224.6 $223.2 $217.7 $313.0 $321.9 $325.5 $324.5 $319.5 3.98% 4.75% 5.29% 5.57% 5.75% 3Q22 4Q22 1Q23 2Q23 3Q23 Consumer Commercial Total Loan Yield − YoY re
Slide 6: Balance Sheet: Strong Deposit Mix
32% 27% 26% 68% 73% 74% 0.45% 1.96% 2.26% 3Q22 2Q23 3Q23 Balance Sheet: Strong Deposit Mix 5 − IB Deposits represent interest-bearing deposits, and NIB Deposits represent noninterest-bearing deposits. − Cumulative deposit beta is calculated as the increase in the rate paid on interest-bearing deposi
Slide 7: Balance Sheet: High-Quality, Short-Duration Securities and Swaps
Balance Sheet: High-Quality, Short-Duration Securities and Swaps 6 Average Securities Duration of 4.2 Years $137.0 $141.0 $139.7 2.10% 2.52% 2.57% 3Q22 2Q23 3Q23 Notional Receive-Fixed Swaps Duration of 2.4 Years -2% -4% -6% -10% -16% -20% -24% -29% -34% $(70) $(60) $(50) $(40) $(30) $(20) $(10) $-
Slide 8: Income Statement: Solid Results
Income Statement: Solid Results 7− Pretax, pre-provision earnings (non-GAAP) – See Reconciliation in Appendix. − Net interest margin is calculated using taxable-equivalent net interest income, a non-GAAP measure, a reconciliation of which is provided in the Appendix. Three Months Ended Nine Months E
Slide 9: Income Statement: Broad Based Revenue Businesses
Income Statement: Broad Based Revenue Businesses 8 $ m ill io ns Total Revenue $3,475 $3,510 $3,418 $2,074 $1,783 $1,815 $5,549 $5,293 $5,233 2.82% 2.79% 2.71% 3Q22 2Q23 3Q23 Details of Revenue Net Interest Income NIMNoninterest Income Three Months Ended Nine Months Ended % Chg. vs. % Chg. vs. $ mil
Slide 10: Income Statement: Well-Controlled Expenses
Income Statement: Well-Controlled Expenses 9 Noninterest Expense Focused on Controlling Expenses $3,280 $3,372 $3,245 59% 64% 62% 3Q22 2Q23 3Q23 Details of Noninterest Expenses $ m ill io ns Three Months Ended Nine Months Ended % Chg. vs. % Chg. vs. $ millions 9/30/23 6/30/23 9/30/22 9/30/23 9/30/22
Slide 11: Credit: Strong Credit Quality Performance
$121$119 $224 $195 $194 3Q22 4Q22 1Q23 2Q23 3Q23 Credit: Strong Credit Quality Performance 10 − NPLs, ex. CRE represent nonperforming loans excluding commercial real estate nonperforming loans. CRE NPLs represent commercial real estate nonperforming loans. − NCOs / Average Loans represent annualized
Slide 12: Well Positioned for Regulatory Proposals
Well Positioned for Regulatory Proposals 11 7.0% 7.0% Strong Capital Position In Excess of Regulatory Minimum, Including Impact of Proposals Manageable Long Term Debt Requirements − CET1 Ratio Requirement represents the minimum CET1 capital requirement of 4.5% plus PNC’s 2.5% stress capital buffer r
Slide 13: Acquired Capital Commitment Revolving Facilities
Acquired Capital Commitment Revolving Facilities 12 Transaction Summary Closing Date: October 2, 2023 Loan Commitments: ~$16 billion Funded Loans: $9.0 billion Price (of par value): 99.0% Estimated 4Q23 EPS accretion: $0.10 Utilization: 54% Criticized Loans: 0.0% Average Advance Rate: 67% Strategi
Slide 14: Commitment to Expense Management
Commitment to Expense Management $725 million of Expense Actions Planned Benefiting 2024 13 Successful Continuous Improvement Programs (CIP) Provides Savings to Reinvest for Growth Workforce Reduction $325 million of Savings will Drop to the Bottom Line in 2024 $500 $500 $400 $350 $250 $300 $300 $30
Slide 15: Outlook: Fourth Quarter 2023 Compared to Third Quarter 2023
Outlook: Fourth Quarter 2023 Compared to Third Quarter 2023 14 − Refer to Cautionary Statement in the Appendix, including economic and other assumptions. Does not take into account impact of potential legal and regulatory contingencies. − Average loans, net interest income, fee income, and nonintere
Slide 16: Cautionary Statement Regarding Forward-Looking Information
Appendix: Cautionary Statement Regarding Forward-Looking Information 15 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 a
Slide 17: Cautionary Statement Regarding Forward-Looking Information
Appendix: Cautionary Statement Regarding Forward-Looking Information 16 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
Slide 18: Cautionary Statement Regarding Forward-Looking Information
Appendix: Cautionary Statement Regarding Forward-Looking Information 17 − 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 sta
Slide 19: Granular Deposit Base
Appendix: Granular Deposit Base 18 Composition of Deposit Portfolio 54% of Total Deposits are Insured Total Deposits $424 Billion as of 9/30/23 Commercial Deposits $205 billion at 9/30/23 89% Insured 19% Insured 81% Uninsured Consumer Deposits $219 billion at 9/30/23 Granular Deposit Base ~$10,900 A
Slide 20: Office Represents 2.7% of Total Loans
Appendix: Office Represents 2.7% of Total Loans 19 Non-Office CRE, 8.5% Office CRE, 2.7% Total $318.4 Billion PNC’s Commercial Real Estate (CRE) Portfolio Total Loans as of 9/30/23 $ billions 9/30/23 % of Total Loans Multifamily $15.3 4.8% Office 8.6 2.7% Industrial / Warehouse 4.0 1.3% Retail 2.6 0
Slide 21: Office CRE Portfolio
Appendix: Office CRE Portfolio 20 Office Portfolio Multi-Tenant 59% Single- Tenant 15% Medical 15% Government 10% Other 1% $8.6 billion Geographic Diversification By Metropolitan Statistical Area Key Office Portfolio Metrics Conservative Underwriting Methodology Suburban 44% Central Business Distric
Slide 22: Non-GAAP to GAAP Reconciliation: Return on Average Tangible Common Equity
Appendix: Non-GAAP to GAAP Reconciliation 21 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 $4
Slide 23: Non-GAAP to GAAP Reconciliation: Pretax, Pre-Provision Earnings
Appendix: Non-GAAP to GAAP Reconciliation 22 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
Slide 24: Non-GAAP to GAAP Reconciliation: Taxable-Equivalent Net Interest Income
Appendix: Non-GAAP to GAAP Reconciliation 23 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-equ
Slide 25: Non-GAAP to GAAP Reconciliation: Tangible Book Value per Common Share
Appendix: Non-GAAP to GAAP Reconciliation 24 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 shareho
Slide 26: Non-GAAP to GAAP Reconciliation: Consolidated CET1 Ratio
Appendix: Non-GAAP to GAAP Reconciliation 25 Consolidated CET1 Ratio, including AOCI & Other Fully Phased-In Expanded Risk-Based Approach (ERBA) Impacts, Basel III Endgame Impacts (non-GAAP) Sept. 30, 2023 (estimated), $ in billions Common Equity Tier 1 Capital Sept. 30, 2023 (estimated), $ in billi
Slide 27: Non-GAAP to GAAP Reconciliation: Tangible Common Equity Ratio
Appendix: Non-GAAP to GAAP Reconciliation 26 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 ot
Slide 28: Expectations for Preferred Dividends
Appendix: Expectations for Preferred Dividends 27 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 cours