PNC Announces Stress Capital Buffer (SCB) and Planned Capital Actions

Rhea-AI Summary

The PNC Financial Services Group has announced its Stress Capital Buffer (SCB) and planned capital actions following the 2024 Federal Reserve's Comprehensive Capital Analysis and Review (CCAR). Despite a calculated SCB of 2.2%, PNC's effective SCB remains at 2.5%, consistent with current levels. PNC's Common Equity Tier 1 (CET1) ratio is 10.1%, significantly above the regulatory minimum of 7.0%. Under adverse conditions, projected CET1 ratios remain above 8.3%, well above the 4.5% regulatory minimum.

PNC plans to recommend a 3% increase in its quarterly cash dividend to $1.60 per share. Additionally, its board has authorized a share repurchase program for up to 100 million shares, with 44% still available for repurchase as of March 31, 2024. Share repurchase activities are expected to align with recent levels, subject to market and economic conditions.

Positive

• PNC's CET1 ratio of 10.1% exceeds the regulatory minimum of 7.0%.
• Projected CET1 ratios remain above 8.3% under adverse conditions, significantly above the regulatory minimum of 4.5%.
• Planned 3% increase in quarterly cash dividend to $1.60 per share.
• Authorization for share repurchase program up to 100 million shares, with 44% still available for repurchase.

Negative

• Calculated SCB of 2.2% is below the regulatory minimum, resulting in an effective SCB of 2.5%.

Insights

Financial Analyst

PNC's announcement of its Stress Capital Buffer (SCB) at 2.5% and a Common Equity Tier 1 (CET1) ratio of 10.1% for March 31, 2024, substantially above the regulatory minimum of 7%, projects a solid financial position. These metrics are vital because they indicate PNC's robustness against economic downturns, which is promising for retail investors. The increase in quarterly dividends by 5 cents per share to $1.60 and the ongoing share repurchase program demonstrate confidence in financial health and a commitment to shareholder value. Though the increase is modest, it signals stability and sustained growth. However, investors should also be aware that market and economic changes could influence future repurchase activities.

In the short term, these actions suggest a heathy outlook for shareholders, safeguarding investments against potential market volatility. In the long term, sustaining such strong capital ratios will be important for maintaining investor confidence.

Market Research Analyst

The approval of PNC's share repurchase program and the planned dividend increase highlight the institution's strategic focus on returning value to shareholders, which can be particularly attractive to retail investors seeking stable returns. Share repurchases often signal that a company views its stock as undervalued, a positive indicator for potential buyers. Moreover, the consistency in repurchase activity suggests a controlled and well-planned approach, mitigating risks of sudden market impacts. This strategic allocation of capital reflects PNC’s confidence in its financial performance and market position.

For investors, understanding that share repurchases can also reduce the number of outstanding shares, potentially increasing earnings per share (EPS) over time, is crucial. Nevertheless, one must consider broader economic conditions that could affect PNC's ability to sustain these activities.

PITTSBURGH, June 28, 2024 /PRNewswire/ -- The PNC Financial Services Group, Inc. (NYSE: PNC) this week received the results of the Federal Reserve's 2024 Comprehensive Capital Analysis and Review (CCAR). The Federal Reserve's CCAR disclosure included its estimate of PNC's minimum capital ratios for the period from the first quarter of 2024 through the first quarter of 2026 under the hypothetical Supervisory Severely Adverse scenario. Based on PNC's strong results, PNC's calculated Stress Capital Buffer (SCB) for the four-quarter period beginning Oct. 1, 2024 is 2.2%, which is below the regulatory minimum SCB amount, resulting in an SCB of 2.5%. This is consistent with PNC's SCB in effect through Sept. 30, 2024. PNC's Common Equity Tier 1 (CET1) ratio of 10.1% as reported for March 31, 2024 significantly exceeds the regulatory minimum plus our SCB (7.0%), reflecting our strong capital levels. Furthermore, under the Federal Reserve's projections in the 2024 Supervisory Severely Adverse scenario, PNC's post-stress capital ratios are projected to remain well above regulatory minimums, with our minimum and ending CET1 ratios both projected to be 8.3%, compared to the regulatory minimum of 4.5%.

PNC plans to recommend to its board of directors an increase in the quarterly cash dividend on common stock of 5 cents per share, or 3%, to $1.60 per share in the third quarter of 2024, consistent with the current capital plan approved by its board. PNC's board of directors is expected to consider this recommendation at its next scheduled meeting on July 2, 2024.

Consistent with the SCB framework, which allows for capital returns in amounts in excess of the SCB minimum levels, our board of directors has authorized a repurchase framework under the previously approved repurchase program of up to 100 million common shares, of which approximately 44% were still available for repurchase at March 31, 2024. Share repurchase activity in the third quarter 2024 is expected to be consistent with recent quarterly share repurchase levels.  PNC continues to evaluate and may adjust share repurchase activity, as actual amounts and timing are dependent on market and economic conditions as well as other factors. PNC's common share repurchases may be executed in privately negotiated transactions or through the open market, including under Rule 10b5-1 plans.

The PNC Financial Services Group, Inc. is one of the largest diversified financial services institutions in the United States, organized around its customers and communities for strong relationships and local delivery of retail and business banking including a full range of lending products; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management and asset management. For information about PNC, visit www.pnc.com.

CONTACTS

MEDIA:
Timothy Miller
(412) 762-4550
media.relations@pnc.com        

INVESTORS:
Bryan Gill
(412) 768-4143
investor.relations@pnc.com

 

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SOURCE The PNC Financial Services Group, Inc.

FAQ

What is PNC's Common Equity Tier 1 (CET1) ratio as of March 31, 2024?

PNC's CET1 ratio is 10.1% as of March 31, 2024.

What is the projected CET1 ratio for PNC under the Federal Reserve's adverse scenario?

PNC's projected CET1 ratios under the adverse scenario are both 8.3%.

What is PNC's Stress Capital Buffer (SCB) for the period beginning Oct. 1, 2024?

PNC's SCB for the period beginning Oct. 1, 2024, is calculated at 2.2%, resulting in an SCB of 2.5%.

Will PNC increase its quarterly cash dividend in 2024?

Yes, PNC plans to recommend a 3% increase in the quarterly cash dividend to $1.60 per share.

What is the size of PNC's share repurchase program?

PNC has authorized a share repurchase program for up to 100 million shares, with 44% still available for repurchase as of March 31, 2024.

When will PNC's board consider the dividend increase?

PNC's board will consider the dividend increase at its next scheduled meeting on July 2, 2024.