PNC Reports Full Year 2023 Net Income of $5.6 Billion, $12.79 Diluted EPS or $14.10 as Adjusted
- Net income of $0.9 billion, $1.85 diluted EPS or $3.16 as adjusted
- Revenue increased by 2% due to strong noninterest income growth
- Average loans increased by 2%, and average deposits grew modestly
- ACL to total loans of 1.7% was stable, and the CET1 capital ratio was 9.9%
- PNC returned $0.7 billion of capital to shareholders by dividends and common share repurchases
- Noninterest expense increased by 26%, reflecting higher business activity
- Net income decreased by 44% due to post-tax expenses related to the FDIC special assessment and workforce reduction charges
Insights
The reported net income of $0.9 billion and diluted EPS of $1.85 for the fourth quarter of 2023, compared to the previous quarter's $1.57 billion net income and $3.60 diluted EPS, indicates a significant decline. This sharp decrease is primarily attributed to the FDIC special assessment and workforce reduction charges. Despite this, the adjusted EPS of $3.16 suggests that the underlying business remains strong when excluding these one-time expenses.
From a financial perspective, the growth in average loans and deposits is a positive sign, reflecting the bank's ability to attract and retain customers. However, the provision for credit losses increasing to $232 million from $129 million in the previous quarter could be a sign of potential future credit risks. The net interest margin's slight decrease from 2.71% to 2.66% may also raise concerns about the bank's interest income sensitivity in a changing rate environment.
Investors should note the capital return to shareholders, including dividends and share repurchases, which suggests confidence in the bank's liquidity and capital position. The CET1 capital ratio's stability at 9.9% aligns with regulatory requirements, indicating a solid capital buffer.
The banking sector is facing headwinds from a challenging interest rate environment, as indicated by PNC's net interest margin compression. However, PNC's ability to grow revenue and manage core expenses showcases operational efficiency and resilience. An increase in capital markets and advisory fees by 84% from the previous quarter reflects a robust pipeline for mergers and acquisitions, which could be a positive indicator for the bank's investment banking segment.
On the balance sheet, the growth in average loans, particularly commercial loans, suggests that PNC is expanding its market share in the lending space. This could be beneficial if the economy remains stable, but it also exposes the bank to greater credit risk if economic conditions deteriorate. The stability in the allowance for credit losses to total loans ratio at 1.70% is reassuring, as it does not indicate a significant change in the bank's assessment of credit risk.
The banking industry is highly sensitive to macroeconomic conditions and PNC's financial results provide insights into broader economic trends. The reported increase in loan delinquencies and nonperforming loans, albeit modest, could be early indicators of economic stress among borrowers. This is particularly relevant in the context of the Federal Reserve's monetary tightening policy, which could lead to higher borrowing costs and increased default rates.
The FDIC special assessment, a consequence of the recent bank failures, reflects systemic risks within the banking sector and the regulatory response to maintain stability. PNC's ability to absorb such a significant charge and still report a stable capital ratio is a testament to its financial strength.
Furthermore, the Federal Reserve Bank balances and investment securities portfolio management will be crucial for PNC's interest income, especially as the Federal Reserve shifts its policy stance. The bank's liquidity coverage ratio (LCR) exceeding regulatory requirements is a positive sign of its ability to withstand potential liquidity shocks.
Fourth quarter 2023 net income was
Grew revenue; increased average loans and deposits
For the quarter | For the year | |||||||||||||
In millions, except per share data and as noted | 4Q23 | 3Q23 | 2023 | 2022 | Fourth Quarter Highlights | |||||||||
Financial Results | Comparisons reflect 4Q23 vs. 3Q23 | |||||||||||||
Revenue | $ 5,361 | $ 5,233 | $ 21,490 | Income Statement ▪ Revenue increased ▪ Core noninterest expense increased – Core noninterest expense excludes ▪ Provision for credit losses of Balance Sheet ▪ Average loans increased ▪ Average deposits grew modestly ▪ ACL to total loans of ▪ Net loan charge-offs were ▪ AOCI improved ▪ TBV increased to ▪ CET1 capital ratio of
| ||||||||||
Noninterest expense (NIE) | 4,074 | 3,245 | 14,012 | 13,170 | ||||||||||
Non-core NIE adjustments | 665 | — | 665 | — | ||||||||||
Core NIE (non-GAAP) | 3,409 | 3,245 | 13,347 | 13,170 | ||||||||||
Pretax, pre-provision earnings - as adjusted (non-GAAP) | 1,952 | 1,988 | 8,143 | 7,950 | ||||||||||
Provision for credit losses | 232 | 129 | 742 | 477 | ||||||||||
Net income | 883 | 1,570 | 5,647 | 6,113 | ||||||||||
Per Common Share | ||||||||||||||
Diluted earnings | $ 1.85 | $ 3.60 | $ 12.79 | $ 13.85 | ||||||||||
Impact from non-core NIE adjustments | 1.31 | — | 1.31 | — | ||||||||||
Diluted earnings - as adjusted (non-GAAP) | 3.16 | 3.60 | 14.10 | 13.85 | ||||||||||
Average diluted common shares outstanding | 401 | 400 | 401 | 412 | ||||||||||
Book value | 112.72 | 105.98 | 112.72 | 99.93 | ||||||||||
Tangible book value (TBV) (non-GAAP) | 85.08 | 78.16 | 85.08 | 72.12 | ||||||||||
Balance Sheet & Credit Quality | ||||||||||||||
Average loans In billions | $ 324.6 | $ 319.5 | $ 323.5 | $ 307.7 | ||||||||||
Average deposits In billions | 423.9 | 422.5 | 427.1 | 443.4 | ||||||||||
Accumulated other comprehensive income (loss) (AOCI) | (7.7) | (10.3) | (7.7) | (10.2) | ||||||||||
Net loan charge-offs | 200 | 121 | 710 | 563 | ||||||||||
Allowance for credit losses (ACL) to total loans | 1.70 % | 1.70 % | 1.70 % | 1.67 % | ||||||||||
Selected Ratios | ||||||||||||||
Return on average common shareholders' equity | 6.93 % | 13.65 % | 12.35 % | 13.52 % | ||||||||||
Return on average assets | 0.62 | 1.12 | 1.01 | 1.11 | ||||||||||
Net interest margin (NIM) (non-GAAP) | 2.66 | 2.71 | 2.76 | 2.65 | ||||||||||
Noninterest income to total revenue | 37 | 35 | 35 | 38 | ||||||||||
Efficiency | 76 | 62 | 65 | 62 | ||||||||||
Efficiency - as adjusted (non-GAAP) | 64 | 62 | 62 | 62 | ||||||||||
Common equity Tier 1 (CET1) capital ratio | 9.9 | 9.8 | 9.9 | 9.1 | ||||||||||
Core NIE is a non-GAAP measure calculated by excluding non-core NIE adjustments from noninterest expense. Non-core | ||||||||||||||
From Bill Demchak, PNC Chairman, President and Chief Executive Officer:
"During a challenging year for the banking industry, PNC demonstrated its strength and stability by growing customers, deepening relationships and managing the balance sheet for long-term success. We grew revenue, controlled core expenses, added to our loan portfolio and maintained strong credit metrics. We are well positioned for the year ahead to grow our businesses and deliver value for our stakeholders."
Income Statement Highlights
Fourth quarter 2023 compared with third quarter 2023
- Total revenue of
$5.4 billion $128 million 2% , due to higher noninterest income. - Net interest income of
$3.4 billion - Net interest margin of
2.66% decreased 5 basis points.
- Net interest margin of
- Noninterest income of
$2.0 billion $143 million 8% .- Fee income of
$1.8 billion $99 million 6% , primarily due to higher capital markets and advisory fees. - Other noninterest income of
$138 million $44 million 47% , and included favorable valuation adjustments and gains on sales. The fourth quarter also included negative Visa Class B derivative fair value adjustments of$100 million $51 million
- Fee income of
- Noninterest expense of
$4.1 billion $829 million 26% , and included$515 million $150 million $3.4 billion $164 million 5% , reflecting the impact of increased business activity, seasonality and asset impairments. - Provision for credit losses was
$232 million $129 million - Net income of
$0.9 billion $687 million 44% and included$525 million - The effective tax rate was
16.3% for the fourth quarter and15.5% for the third quarter.
Balance Sheet Highlights
Fourth quarter 2023 compared with third quarter 2023 or December 31, 2023 compared with September 30, 2023
- Average loans of
$324.6 billion $5.1 billion 2% .- Average commercial loans of
$222.6 billion $4.9 billion - Average consumer loans of
$102.0 billion
- Average commercial loans of
- Credit quality performance:
- Delinquencies of
$1.4 billion $97 million 8% , due to higher consumer and commercial loan delinquencies. - Total nonperforming loans of
$2.2 billion $57 million 3% , due to higher commercial nonperforming loans, partially offset by lower consumer nonperforming loans. - Net loan charge-offs of
$200 million $79 million - The allowance for credit losses of
$5.5 billion 1.70% at both December 31, 2023 and September 30, 2023.
- Delinquencies of
- Average deposits of
$423.9 billion $1.4 billion - Deposits at December 31, 2023 of
$421.4 billion $2.2 billion 1% , reflecting a decline in commercial deposits at year end.
- Deposits at December 31, 2023 of
- Average investment securities of
$137.4 billion $2.3 billion 2% . - Average Federal Reserve Bank balances of
$42.2 billion $4.3 billion - Federal Reserve Bank balances at December 31, 2023 were
$43.3 billion
- Federal Reserve Bank balances at December 31, 2023 were
- Average borrowed funds of
$72.9 billion $5.4 billion 8% , due to higher Federal Home Loan Bank borrowings and parent company senior debt issuances. - PNC maintained a strong capital and liquidity position.
- On January 4, 2024, the PNC board of directors declared a quarterly cash dividend on common stock of
$1.55 - PNC returned
$0.7 billion $0.6 billion $0.1 billion - The Basel III common equity Tier 1 capital ratio was an estimated
9.9% at December 31, 2023 and9.8% at September 30, 2023. - PNC's average LCR for the three months ended December 31, 2023 was
107% , exceeding the regulatory minimum requirement throughout the quarter. - PNC Bank average LCR for the three months ended December 31, 2023 was
127% .
- On January 4, 2024, the PNC board of directors declared a quarterly cash dividend on common stock of
Earnings Summary | ||||||
In millions, except per share data | 4Q23 | 3Q23 | 4Q22 | |||
Net income | $ 883 | $ 1,570 | $ 1,548 | |||
Net income attributable to diluted common shares - as reported | $ 740 | $ 1,440 | $ 1,400 | |||
Net income attributable to diluted common shares - as adjusted (non-GAAP) | $ 1,265 | $ 1,440 | $ 1,400 | |||
Diluted earnings per common share - as reported | $ 1.85 | $ 3.60 | $ 3.47 | |||
Diluted earnings per common share - as adjusted (non-GAAP) | $ 3.16 | $ 3.60 | $ 3.47 | |||
Average diluted common shares outstanding | 401 | 400 | 404 | |||
Cash dividends declared per common share | $ 1.55 | $ 1.55 | $ 1.50 | |||
See non-GAAP financial measures included in the Consolidated Financial Highlights accompanying this news release | ||||||
Fourth quarter 2023 net income of
The Consolidated Financial Highlights accompanying this news release include additional information regarding reconciliations of non-GAAP financial measures to reported (GAAP) amounts. This information supplements results as reported in accordance with GAAP and should not be viewed in isolation from, or as a substitute for, GAAP results. Information in this news release, including the financial tables, is unaudited.
CONSOLIDATED REVENUE REVIEW | |||||||
Revenue | Change | Change | |||||
4Q23 vs | 4Q23 vs | ||||||
In millions | 4Q23 | 3Q23 | 4Q22 | 3Q23 | 4Q22 | ||
Net interest income | $ 3,403 | $ 3,418 | $ 3,684 | — | (8) % | ||
Noninterest income | 1,958 | 1,815 | 2,079 | 8 % | (6) % | ||
Total revenue | $ 5,361 | $ 5,233 | $ 5,763 | 2 % | (7) % | ||
Total revenue for the fourth quarter of 2023 increased
Net interest income of
Compared to the fourth quarter of 2022, net interest income decreased
Noninterest Income | Change | Change | |||||
4Q23 vs | 4Q23 vs | ||||||
In millions | 4Q23 | 3Q23 | 4Q22 | 3Q23 | 4Q22 | ||
Asset management and brokerage | $ 360 | $ 348 | $ 345 | 3 % | 4 % | ||
Capital markets and advisory | 309 | 168 | 336 | 84 % | (8) % | ||
Card and cash management | 688 | 689 | 671 | — | 3 % | ||
Lending and deposit services | 314 | 315 | 296 | — | 6 % | ||
Residential and commercial mortgage | 149 | 201 | 184 | (26) % | (19) % | ||
Other | 138 | 94 | 247 | 47 % | (44) % | ||
Total noninterest income | $ 1,958 | $ 1,815 | $ 2,079 | 8 % | (6) % | ||
Noninterest income for the fourth quarter of 2023 increased
Noninterest income for the fourth quarter of 2023 decreased
CONSOLIDATED EXPENSE REVIEW | |||||||
Noninterest Expense | Change | Change | |||||
4Q23 vs | 4Q23 vs | ||||||
In millions | 4Q23 | 3Q23 | 4Q22 | 3Q23 | 4Q22 | ||
Personnel | $ 1,983 | $ 1,773 | $ 1,943 | 12 % | 2 % | ||
Occupancy | 243 | 244 | 247 | — | (2) % | ||
Equipment | 365 | 347 | 369 | 5 % | (1) % | ||
Marketing | 74 | 93 | 106 | (20) % | (30) % | ||
Other | 1,409 | 788 | 809 | 79 % | 74 % | ||
Total noninterest expense | $ 4,074 | $ 3,245 | $ 3,474 | 26 % | 17 % | ||
Non-core noninterest expense adjustments | 665 | — | — | ||||
Core noninterest expense (non-GAAP) | $ 3,409 | $ 3,245 | $ 3,474 | 5 % | (2) % | ||
See non-GAAP financial measures included in the Consolidated Financial Highlights accompanying this news release | |||||||
Noninterest expense for the fourth quarter of 2023 increased
Noninterest expense increased
The effective tax rate was
CONSOLIDATED BALANCE SHEET REVIEW
Average total assets were
Average Loans | Change | Change | |||||
4Q23 vs | 4Q23 vs | ||||||
In billions | 4Q23 | 3Q23 | 4Q22 | 3Q23 | 4Q22 | ||
Commercial | $ 222.6 | $ 217.7 | $ 221.6 | 2 % | — | ||
Consumer | 102.0 | 101.8 | 100.3 | — | 2 % | ||
Total | $ 324.6 | $ 319.5 | $ 321.9 | 2 % | 1 % | ||
Average loans for the fourth quarter of 2023 increased
Average Investment Securities | Change | Change | |||||
4Q23 vs | 4Q23 vs | ||||||
In billions | 4Q23 | 3Q23 | 4Q22 | 3Q23 | 4Q22 | ||
Available for sale | $ 46.1 | $ 46.5 | $ 49.7 | (1) % | (7) % | ||
Held to maturity | 91.3 | 93.2 | 93.2 | (2) % | (2) % | ||
Total | $ 137.4 | $ 139.7 | $ 142.9 | (2) % | (4) % | ||
Average investment securities for the fourth quarter of 2023 of
Net unrealized losses on available for sale securities were
Average Federal Reserve Bank balances for the fourth quarter of 2023 were
Federal Reserve Bank balances at December 31, 2023 were
Average Deposits | Change | Change | |||||
4Q23 vs | 4Q23 vs | ||||||
In billions | 4Q23 | 3Q23 | 4Q22 | 3Q23 | 4Q22 | ||
Commercial | $ 207.0 | $ 204.7 | $ 215.8 | 1 % | (4) % | ||
Consumer | 216.9 | 217.8 | 219.1 | — | (1) % | ||
Total | $ 423.9 | $ 422.5 | $ 434.9 | — | (3) % | ||
IB % of total avg. deposits | 75 % | 74 % | 69 % | ||||
NIB % of total avg. deposits | 25 % | 26 % | 31 % | ||||
IB - Interest-bearing NIB - Noninterest-bearing | |||||||
Average deposits for the fourth quarter of 2023 were
Deposits at December 31, 2023 of
Average Borrowed Funds | Change | Change | |||||
4Q23 vs | 4Q23 vs | ||||||
In billions | 4Q23 | 3Q23 | 4Q22 | 3Q23 | 4Q22 | ||
Total | $ 72.9 | $ 67.5 | $ 59.2 | 8 % | 23 % | ||
Average borrowed funds of
Capital | December 31, | September 30, | December 31, | ||||
Common shareholders' equity In billions | $ 44.9 | $ 42.2 | $ 40.0 | ||||
Accumulated other comprehensive income (loss) In billions | $ (7.7) | $ (10.3) | $ (10.2) | ||||
Basel III common equity Tier 1 capital ratio * | 9.9 % | 9.8 % | 9.1 % | ||||
Basel III common equity Tier 1 fully implemented capital ratio | 9.8 % | 9.7 % | 8.9 % | ||||
*December 31, 2023 ratio is estimated | |||||||
PNC maintained a strong capital position. Common shareholders' equity at December 31, 2023 increased
As a Category III institution, PNC has elected to exclude accumulated other comprehensive income related to both available for sale securities and pension and other post-retirement plans from CET1 capital. Accumulated other comprehensive income at December 31, 2023 improved
In the fourth quarter of 2023, PNC returned
In light of the Federal banking agencies proposed rules to adjust the Basel III capital framework, share repurchase activity is expected to remain modest during the first quarter of 2024. PNC continues to evaluate the potential impact of the proposed rules and may adjust share repurchase activity depending on market and economic conditions, as well as other factors.
PNC's SCB for the four-quarter period beginning October 1, 2023 is the regulatory minimum of
On January 4, 2024, the PNC board of directors declared a quarterly cash dividend on common stock of
At December 31, 2023, PNC was considered "well capitalized" based on applicable
CREDIT QUALITY REVIEW | |||||
Credit Quality | Change | Change | |||
December 31, | September 30, | December 31, | 12/31/23 vs | 12/31/23 vs | |
In millions | 09/30/23 | 12/31/22 | |||
Provision for credit losses | $ 232 | $ 129 | $ 408 | $ 103 | $ (176) |
Net loan charge-offs | $ 200 | $ 121 | $ 224 | 65 % | (11) % |
Allowance for credit losses (a) | $ 5,454 | $ 5,407 | $ 5,435 | 1 % | — |
Total delinquencies (b) | $ 1,384 | $ 1,287 | $ 1,490 | 8 % | (7) % |
Nonperforming loans | $ 2,180 | $ 2,123 | $ 1,985 | 3 % | 10 % |
Net charge-offs to average loans (annualized) | 0.24 % | 0.15 % | 0.28 % | ||
Allowance for credit losses to total loans | 1.70 % | 1.70 % | 1.67 % | ||
Nonperforming loans to total loans | 0.68 % | 0.67 % | 0.61 % | ||
(a) Excludes allowances for investment securities and other financial assets (b) Total delinquencies represent accruing loans more than 30 days past due | |||||
Provision for credit losses was
Net loan charge-offs of
The allowance for credit losses was
Delinquencies at December 31, 2023 were
Nonperforming loans at December 31, 2023 were
BUSINESS SEGMENT RESULTS | |||||
Business Segment Income (Loss) | |||||
In millions | 4Q23 | 3Q23 | 4Q22 | ||
Retail Banking | $ 1,073 | $ 1,094 | $ 752 | ||
Corporate & Institutional Banking | 1,213 | 960 | 982 | ||
Asset Management Group | 72 | 73 | 52 | ||
Other | (1,494) | (573) | (258) | ||
Net income excluding noncontrolling interests | $ 864 | $ 1,554 | $ 1,528 | ||
Retail Banking | Change | Change | |||||||
4Q23 vs | 4Q23 vs | ||||||||
In millions | 4Q23 | 3Q23 | 4Q22 | 3Q23 | 4Q22 | ||||
Net interest income | $ 2,669 | $ 2,576 | $ 2,330 | $ 93 | $ 339 | ||||
Noninterest income | $ 722 | $ 784 | $ 749 | $ (62) | $ (27) | ||||
Noninterest expense | $ 1,848 | $ 1,876 | $ 1,892 | $ (28) | $ (44) | ||||
Provision for credit losses | $ 130 | $ 42 | $ 193 | $ 88 | $ (63) | ||||
Earnings | $ 1,073 | $ 1,094 | $ 752 | $ (21) | $ 321 | ||||
In billions | |||||||||
Average loans | $ 97.4 | $ 97.4 | $ 96.6 | — | $ 0.8 | ||||
Average deposits | $ 251.3 | $ 253.7 | $ 259.8 | $ (2.4) | $ (8.5) | ||||
Net loan charge-offs In millions | $ 128 | $ 114 | $ 108 | $ 14 | $ 20 | ||||
Retail Banking Highlights
Fourth quarter 2023 compared with third quarter 2023
- Earnings decreased
2% , driven by a higher provision for credit losses and lower noninterest income, partially offset by higher net interest income and lower noninterest expense.- Noninterest income decreased
8% , due to negative Visa Class B derivative fair value adjustments of$100 million $51 million - Noninterest expense decreased
1% , primarily driven by a decline in marketing spend. - Provision for credit losses of
$130 million
- Noninterest income decreased
- Average loans were stable.
- Average deposits decreased
1% , as consumer spending levels have remained elevated.
Fourth quarter 2023 compared with fourth quarter 2022
- Earnings increased
43% , primarily due to higher net interest income.- Noninterest income decreased
4% , driven by negative Visa Class B derivative fair value adjustments, partially offset by higher lending and deposit related customer activity and increased brokerage fees. The fourth quarter of 2022 included negative Visa Class B derivative fair value adjustments of$41 million - Noninterest expense decreased
2% , driven by lower personnel expense and a continued focus on expense management.
- Noninterest income decreased
- Average loans increased
1% , as growth in commercial, home equity, and credit card loans was largely offset by declines in residential real estate, education and other consumer loans. - Average deposits decreased
3% , reflecting the impact of quantitative tightening by the Federal Reserve and increased customer spending.
Corporate & Institutional Banking | Change | Change | |||||||
4Q23 vs | 4Q23 vs | ||||||||
In millions | 4Q23 | 3Q23 | 4Q22 | 3Q23 | 4Q22 | ||||
Net interest income | $ 1,642 | $ 1,419 | $ 1,489 | $ 223 | $ 153 | ||||
Noninterest income | $ 995 | $ 835 | $ 962 | $ 160 | $ 33 | ||||
Noninterest expense | $ 975 | $ 895 | $ 990 | $ 80 | $ (15) | ||||
Provision for credit losses | $ 115 | $ 102 | $ 183 | $ 13 | $ (68) | ||||
Earnings | $ 1,213 | $ 960 | $ 982 | $ 253 | $ 231 | ||||
In billions | |||||||||
Average loans | $ 208.1 | $ 202.8 | $ 207.1 | $ 5.3 | $ 1.0 | ||||
Average deposits | $ 144.5 | $ 141.7 | $ 147.3 | $ 2.8 | $ (2.8) | ||||
Net loan charge-offs In millions | $ 76 | $ 12 | $ 100 | $ 64 | $ (24) | ||||
Corporate & Institutional Banking Highlights
Fourth quarter 2023 compared with third quarter 2023
- Earnings increased
26% , driven by higher net interest and noninterest income, partially offset by higher noninterest expense and an increase in provision for credit losses.- Noninterest income increased
19% , due to higher capital markets and advisory fees and gains on sales, partially offset by a decrease in commercial mortgage servicing rights valuation, net of economic hedge. - Noninterest expense increased
9% , reflecting higher variable compensation associated with increased business activity. - Provision for credit losses of
$115 million
- Noninterest income increased
- Average loans increased
3% , driven by the acquisition of capital commitment facilities from Signature Bridge Bank, N.A. on October 2, 2023, partially offset by lower utilization of loan commitments and paydowns outpacing new production. - Average deposits increased
2% , reflecting seasonality.
Fourth quarter 2023 compared with fourth quarter 2022
- Earnings increased
24% , due to higher net interest and noninterest income, a lower provision for credit losses and a decline in noninterest expense.- Noninterest income increased
3% , driven by higher capital markets and advisory fees and growth in treasury management product revenue, partially offset by lower commercial mortgage banking activities. - Noninterest expense decreased
2% , reflecting a continued focus on expense management.
- Noninterest income increased
- Average loans modestly increased, driven by the acquisition of capital commitment facilities from Signature Bridge Bank, N.A. on October 2, 2023, partially offset by lower utilization of loan commitments and paydowns outpacing new production.
- Average deposits decreased
2% , and included the impact of quantitative tightening by the Federal Reserve.
Asset Management Group | Change | Change | |||||||
4Q23 vs | 4Q23 vs | ||||||||
In millions | 4Q23 | 3Q23 | 4Q22 | 3Q23 | 4Q22 | ||||
Net interest income | $ 156 | $ 139 | $ 152 | $ 17 | $ 4 | ||||
Noninterest income | $ 224 | $ 223 | $ 223 | $ 1 | $ 1 | ||||
Noninterest expense | $ 284 | $ 271 | $ 291 | $ 13 | $ (7) | ||||
Provision for (recapture of) credit losses | $ 2 | $ (4) | $ 17 | $ 6 | $ (15) | ||||
Earnings | $ 72 | $ 73 | $ 52 | $ (1) | $ 20 | ||||
In billions | |||||||||
Discretionary client assets under management | $ 189 | $ 176 | $ 173 | $ 13 | $ 16 | ||||
Nondiscretionary client assets under administration | $ 179 | $ 170 | $ 152 | $ 9 | $ 27 | ||||
Client assets under administration at quarter end | $ 368 | $ 346 | $ 325 | $ 22 | $ 43 | ||||
In billions | |||||||||
Average loans | $ 16.1 | $ 15.7 | $ 14.5 | $ 0.4 | $ 1.6 | ||||
Average deposits | $ 28.2 | $ 27.2 | $ 27.8 | $ 1.0 | $ 0.4 | ||||
Net loan charge-offs (recoveries) In millions | $ (1) | — | $ 18 | $ (1) | $ (19) | ||||
Asset Management Group Highlights
Fourth quarter 2023 compared with third quarter 2023
- Earnings decreased
1% , primarily due to higher noninterest expense and a provision for credit losses, partially offset by higher net interest income.- Noninterest income was largely stable.
- Noninterest expense increased
5% , and included higher personnel costs and marketing spend.
- Discretionary client assets under management increased
7% , driven by higher spot equity markets. - Average loans increased
3% , due to growth in residential mortgage loans. - Average deposits increased
4% , reflecting growth in deposit sweep balances.
Fourth quarter 2023 compared with fourth quarter 2022
- Earnings increased
38% , primarily driven by a lower provision for credit losses, a decline in noninterest expense and higher net interest income.- Noninterest income was relatively stable.
- Noninterest expense decreased
2% , reflecting a continued focus on expense management.
- Discretionary client assets under management increased
9% , driven by higher spot equity markets. - Average loans increased
11% , driven by growth in residential mortgage loans. - Average deposits increased
1% , reflecting growth in deposit sweep and CD balances, partially offset by the impact of quantitative tightening by the Federal Reserve and the redeployment of funds to assets under management.
Other
The "Other" category, for the purposes of this release, includes residual activities that do not meet the criteria for disclosure as a separate reportable business, such as asset and liability management activities, including net securities gains or losses, ACL for investment securities, certain trading activities, certain runoff consumer loan portfolios, private equity investments, intercompany eliminations, certain corporate overhead, tax adjustments that are not allocated to business segments, exited businesses and differences between business segment performance reporting and financial statement reporting under generally accepted accounting principles.
CONFERENCE CALL AND SUPPLEMENTAL FINANCIAL INFORMATION
PNC Chairman, President and Chief Executive Officer William S. Demchak and Executive Vice President and Chief Financial Officer Robert Q.
The PNC Financial Services Group, Inc. is one of the largest diversified financial services institutions in
CONTACTS
MEDIA:
Timothy Miller
(412) 762-4550
media.relations@pnc.com
INVESTORS:
Bryan Gill
(412) 768-4143
investor.relations@pnc.com
[TABULAR MATERIAL FOLLOWS]
The PNC Financial Services Group, Inc. | Consolidated Financial Highlights (Unaudited) | |||||||||||
FINANCIAL RESULTS | Three months ended | Year ended | ||||||||||
Dollars in millions, except per share data | December 31 | September 30 | December 31 | December 31 | December 31 | |||||||
2023 | 2023 | 2022 | 2023 | 2022 | ||||||||
Revenue | ||||||||||||
Net interest income | $ 3,403 | $ 3,418 | $ 3,684 | $ 13,916 | $ 13,014 | |||||||
Noninterest income | 1,958 | 1,815 | 2,079 | 7,574 | 8,106 | |||||||
Total revenue | 5,361 | 5,233 | 5,763 | 21,490 | 21,120 | |||||||
Provision for credit losses | 232 | 129 | 408 | 742 | 477 | |||||||
Noninterest expense | 4,074 | 3,245 | 3,474 | 14,012 | 13,170 | |||||||
Income before income taxes and noncontrolling interests | $ 1,055 | $ 1,859 | $ 1,881 | $ 6,736 | $ 7,473 | |||||||
Income taxes | 172 | 289 | 333 | 1,089 | 1,360 | |||||||
Net income | $ 883 | $ 1,570 | $ 1,548 | $ 5,647 | $ 6,113 | |||||||
Less: | ||||||||||||
Net income attributable to noncontrolling interests | 19 | 16 | 20 | 69 | 72 | |||||||
Preferred stock dividends (a) | 118 | 104 | 120 | 417 | 301 | |||||||
Preferred stock discount accretion and redemptions | 2 | 2 | 1 | 8 | 5 | |||||||
Net income attributable to common shareholders | $ 744 | $ 1,448 | $ 1,407 | $ 5,153 | $ 5,735 | |||||||
Per Common Share | ||||||||||||
Basic | $ 1.85 | $ 3.60 | $ 3.47 | $ 12.80 | $ 13.86 | |||||||
Diluted | $ 1.85 | $ 3.60 | $ 3.47 | $ 12.79 | $ 13.85 | |||||||
Cash dividends declared per common share | $ 1.55 | $ 1.55 | $ 1.50 | $ 6.10 | $ 5.75 | |||||||
Effective tax rate (b) | 16.3 % | 15.5 % | 17.7 % | 16.2 % | 18.2 % | |||||||
PERFORMANCE RATIOS | ||||||||||||
Net interest margin (c) | 2.66 % | 2.71 % | 2.92 % | 2.76 % | 2.65 % | |||||||
Noninterest income to total revenue | 37 % | 35 % | 36 % | 35 % | 38 % | |||||||
Efficiency (d) | 76 % | 62 % | 60 % | 65 % | 62 % | |||||||
Return on: | ||||||||||||
Average common shareholders' equity | 6.93 % | 13.65 % | 14.19 % | 12.35 % | 13.52 % | |||||||
Average assets | 0.62 % | 1.12 % | 1.10 % | 1.01 % | 1.11 % | |||||||
(a) | Dividends are payable quarterly, other than Series S preferred stock, which is payable semiannually. |
(b) | The effective income tax rates are generally lower than the statutory rate due to the relationship of pretax income to tax credits and earnings that are not subject to tax. |
(c) | Net interest margin is the total yield on interest-earning assets minus the total rate on interest-bearing liabilities and includes the benefit from use of noninterest-bearing sources. To provide more meaningful comparisons of net interest margins, we use net interest income on a taxable-equivalent basis in calculating average yields used in the calculation of net interest margin by increasing the interest income earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments. This adjustment is not permitted under generally accepted accounting principles (GAAP) in the Consolidated Income Statement. The taxable-equivalent adjustments to net interest income for the three months ended December 31, 2023, September 30, 2023 and December 31, 2022 were |
(d) | Calculated as noninterest expense divided by total revenue. |
The PNC Financial Services Group, Inc. | Consolidated Financial Highlights (Unaudited) | ||||
December 31 | September 30 | December 31 | |||
2023 | 2023 | 2022 | |||
BALANCE SHEET DATA | |||||
Dollars in millions, except per share data and as noted | |||||
Assets | $ 561,580 | $ 557,334 | $ 557,263 | ||
Loans (a) | $ 321,508 | $ 318,416 | $ 326,025 | ||
Allowance for loan and lease losses | $ 4,791 | $ 4,767 | $ 4,741 | ||
Interest-earning deposits with banks | $ 43,804 | $ 41,484 | $ 27,320 | ||
Investment securities | $ 132,569 | $ 132,387 | $ 139,334 | ||
Total deposits | $ 421,418 | $ 423,609 | $ 436,282 | ||
Borrowed funds (a) | $ 72,737 | $ 66,167 | $ 58,713 | ||
Allowance for unfunded lending related commitments | $ 663 | $ 640 | $ 694 | ||
Total shareholders' equity | $ 51,105 | $ 49,454 | $ 45,774 | ||
Common shareholders' equity | $ 44,864 | $ 42,215 | $ 40,028 | ||
Accumulated other comprehensive income (loss) | $ (7,712) | $ (10,261) | $ (10,172) | ||
Book value per common share | $ 112.72 | $ 105.98 | $ 99.93 | ||
Tangible book value per common share (non-GAAP) (b) | $ 85.08 | $ 78.16 | $ 72.12 | ||
Period end common shares outstanding (In millions) | 398 | 398 | 401 | ||
Loans to deposits | 76 % | 75 % | 75 % | ||
Common shareholders' equity to total assets | 8.0 % | 7.6 % | 7.2 % | ||
CLIENT ASSETS (In billions) | |||||
Discretionary client assets under management | $ 189 | $ 176 | $ 173 | ||
Nondiscretionary client assets under administration | 179 | 170 | 152 | ||
Total client assets under administration | 368 | 346 | 325 | ||
Brokerage account client assets | 80 | 78 | 74 | ||
Total client assets | $ 448 | $ 424 | $ 399 | ||
CAPITAL RATIOS | |||||
Basel III (c) (d) | |||||
Common equity Tier 1 | 9.9 % | 9.8 % | 9.1 % | ||
Common equity Tier 1 fully implemented (e) | 9.8 % | 9.7 % | 8.9 % | ||
Tier 1 risk-based | 11.3 % | 11.5 % | 10.4 % | ||
Total capital risk-based | 13.2 % | 13.4 % | 12.3 % | ||
Leverage | 8.7 % | 8.9 % | 8.2 % | ||
Supplementary leverage | 7.2 % | 7.6 % | 6.9 % | ||
ASSET QUALITY | |||||
Nonperforming loans to total loans | 0.68 % | 0.67 % | 0.61 % | ||
Nonperforming assets to total loans, OREO and foreclosed assets | 0.69 % | 0.68 % | 0.62 % | ||
Nonperforming assets to total assets | 0.39 % | 0.39 % | 0.36 % | ||
Net charge-offs to average loans (for the three months ended) (annualized) | 0.24 % | 0.15 % | 0.28 % | ||
Allowance for loan and lease losses to total loans | 1.49 % | 1.50 % | 1.45 % | ||
Allowance for credit losses to total loans (f) | 1.70 % | 1.70 % | 1.67 % | ||
Allowance for loan and lease losses to nonperforming loans | 220 % | 225 % | 239 % | ||
Total delinquencies (In millions) (g) | $ 1,384 | $ 1,287 | $ 1,490 | ||
(a) | Amounts include assets and liabilities for which we have elected the fair value option. Our 2023 Form 10-Qs included, and our 2023 Form 10-K will include, additional information regarding these Consolidated Balance Sheet line items. |
(b) | See the Tangible Book Value per Common Share table on page 18 for additional information. |
(c) | All ratios are calculated using the regulatory capital methodology applicable to PNC during each period presented and calculated based on the standardized approach. See Capital Ratios on page 16 for additional information. The ratios as of December 31, 2023 are estimated. |
(d) | The ratios are calculated to reflect PNC's election to adopt the CECL optional five-year transition provision. |
(e) | The estimated fully implemented ratios are calculated to reflect the full impact of CECL and exclude the benefits of the five-year transition provision. |
(f) | Excludes allowances for investment securities and other financial assets. |
(g) | Total delinquencies represent accruing loans more than 30 days past due. |
The PNC Financial Services Group, Inc. | Consolidated Financial Highlights (Unaudited) |
CAPITAL RATIOS
PNC's regulatory risk-based capital ratios in 2023 are calculated using the standardized approach for determining risk-weighted assets. Under the standardized approach for determining credit risk-weighted assets, exposures are generally assigned a pre-defined risk weight. Exposures to high volatility commercial real estate, past due exposures and equity exposures are generally subject to higher risk weights than other types of exposures.
PNC elected a five-year transition provision effective March 31, 2020 to delay until December 31, 2021 the full impact of the CECL standard on regulatory capital, followed by a three-year transition period. Effective for the first quarter 2022, PNC is now in the three-year transition period, and the full impact of the CECL standard is being phased-in to regulatory capital through December 31, 2024. See the table below for the September 30, 2023, December 31, 2022 and estimated December 31, 2023 ratios. For the full impact of PNC's adoption of CECL, which excludes the benefits of the five-year transition provision, see the December 31, 2023 and September 30, 2023 (Fully Implemented) estimates presented in the table below.
Our Basel III capital ratios may be impacted by changes to the regulatory capital rules and additional regulatory guidance or analysis.
Basel III | |||||||
December 31 2023 (estimated) (b) | September 30 2023 (b) | December 31 2022 (b) | December 31, 2023 (estimated) (c) | September 30, 2023 (estimated) (c) | |||
Dollars in millions | |||||||
Common stock, related surplus and retained earnings, net of treasury stock | $ 53,059 | $ 52,958 | $ 50,924 | $ 52,576 | $ 52,476 | ||
Less regulatory capital adjustments: | |||||||
Goodwill and disallowed intangibles, net of deferred tax liabilities | (10,999) | (11,083) | (11,138) | (10,999) | (11,083) | ||
All other adjustments | (86) | (99) | (101) | (86) | (101) | ||
Basel III Common equity Tier 1 capital | $ 41,974 | $ 41,776 | $ 39,685 | $ 41,491 | $ 41,292 | ||
Basel III standardized approach risk-weighted assets (d) | $ 424,905 | $ 425,131 | $ 435,537 | $ 425,050 | $ 425,323 | ||
Basel III Common equity Tier 1 capital ratio | 9.9 % | 9.8 % | 9.1 % | 9.8 % | 9.7 % | ||
(a) | All ratios are calculated using the regulatory capital methodology applicable to PNC during each period presented. |
(b) | The ratios are calculated to reflect PNC's election to adopt the CECL optional five-year transition provisions. |
(c) | The December 31, 2023 and September 30, 2023 ratios are calculated to reflect the full impact of CECL and exclude the benefits of the five-year transition provisions. |
(d) | Basel III standardized approach risk-weighted assets are based on the Basel III standardized approach rules and include credit and market risk-weighted assets. |
The PNC Financial Services Group, Inc. | Consolidated Financial Highlights (Unaudited) |
NON-GAAP MEASURES
Core Noninterest Expense (non-GAAP) Efficiency Ratio - as adjusted (non-GAAP) | Three months ended | Year ended | |||||
December 31 | September 30 | December 31 | December 31 | ||||
Dollars in millions | 2023 | 2023 | 2023 | 2022 | |||
Noninterest expense | $ 4,074 | $ 3,245 | $ 14,012 | $ 13,170 | |||
Less non-core noninterest expense adjustments: | |||||||
FDIC special assessment costs | 515 | 515 | |||||
Workforce reduction charges | 150 | 150 | |||||
Total non-core noninterest expense adjustments | $ 665 | $ 665 | |||||
Core noninterest expense (non-GAAP) | $ 3,409 | $ 3,245 | $ 13,347 | $ 13,170 | |||
Total revenue | $ 5,361 | $ 5,233 | $ 21,490 | $ 21,120 | |||
Efficiency ratio (a) | 76 % | 62 % | 65 % | 62 % | |||
Efficiency ratio - as adjusted (non-GAAP) (b) | 64 % | 62 % | 62 % | 62 % | |||
(a) | Calculated as noninterest expense divided by total revenue. |
(b) | Calculated as core noninterest expense divided by total revenue. |
Core noninterest expense is a non-GAAP measure calculated based on noninterest expense less costs related to the FDIC special assessment related to the closures of Silicon Valley Bank (SVB) and Signature Bank as well as restructuring expenses incurred as part of the workforce reduction executed in the fourth quarter of 2023. We believe this non-GAAP measure to be a useful tool for comparison of operating expenses incurred during the normal course of business.
The efficiency ratio - as adjusted is a non-GAAP measure and excludes non-core noninterest expense adjustments comprised of costs related to the FDIC special assessment related to the closures of SVB and Signature Bank as well as restructuring expenses incurred as part of the workforce reduction executed in the fourth quarter of 2023. It is calculated based on adjusting the efficiency ratio calculation to use core noninterest expense which excludes the non-core noninterest expense adjustments. We believe that this non-GAAP measure is a useful tool for the purpose of evaluating PNC's results. The exclusion of FDIC special assessment costs and workforce reduction charges increases comparability across periods, demonstrates the impact of significant items and provides a useful measure for determining PNC's expenses that are core to our business operations and expected to recur over time.
The PNC Financial Services Group, Inc. | Consolidated Financial Highlights (Unaudited) |
Pretax Pre-Provision Earnings (non-GAAP) Pretax Pre-Provision Earnings - as adjusted (non-GAAP) | Three months ended | Year ended | |||||
December 31 | September 30 | December 31 | December 31 | ||||
Dollars in millions | 2023 | 2023 | 2023 | 2022 | |||
Income before income taxes and noncontrolling interests | $ 1,055 | $ 1,859 | $ 6,736 | $ 7,473 | |||
Provision for credit losses | 232 | 129 | 742 | 477 | |||
Pretax pre-provision earnings (non-GAAP) | $ 1,287 | $ 1,988 | $ 7,478 | $ 7,950 | |||
Total non-core noninterest expense adjustments | 665 | 665 | |||||
Pretax pre-provision earnings - as adjusted (non-GAAP) | $ 1,952 | $ 1,988 | $ 8,143 | $ 7,950 | |||
Pretax pre-provision earnings is a non-GAAP measure and is based on adjusting income before income taxes and noncontrolling interests to exclude provision for credit losses. We believe that pretax, pre-provision earnings is a useful tool to help evaluate the ability to provide for credit costs through operations and provides an additional basis to compare results between periods by isolating the impact of provision for credit losses, which can vary significantly between periods.
Pretax pre-provision earnings - as adjusted is a non-GAAP measure and is based on adjusting pretax pre-provision earnings to exclude non-core noninterest expense adjustments comprised of costs related to the FDIC special assessment related to the closures of SVB and Signature Bank as well as restructuring expenses incurred as part of the workforce reduction executed in the fourth quarter of 2023. We believe that this non-GAAP measure is a useful tool in understanding PNC's results by providing greater comparability between periods, as well as demonstrating the effect of significant items.
Diluted Earnings per Common Share - as adjusted (non-GAAP) | Three months ended | Year ended | ||||||
December 31 | Per Common | December 31 | Per Common | |||||
Dollars in millions, except per share data | 2023 | Share | 2023 | Share | ||||
Net income attributable to common shareholders | $ 744 | $ 5,153 | ||||||
Dividends and undistributed earnings allocated to nonvested restricted shares | (4) | (27) | ||||||
Net income attributable to diluted common shareholders | $ 740 | $ 1.85 | $ 5,126 | $ 12.79 | ||||
Total non-core noninterest expense adjustments after tax (a) | 525 | $ 1.31 | 525 | $ 1.31 | ||||
Net income attributable to diluted common shareholders - as adjusted (non- | $ 1,265 | $ 3.16 | $ 5,651 | $ 14.10 | ||||
Average diluted common shares outstanding (In millions) | 401 | 401 | ||||||
(a) | Statutory tax rate of |
The diluted earnings per common share - as adjusted is a non-GAAP measure and excludes non-core noninterest expense adjustments comprised of costs related to the FDIC special assessment related to the closures of SVB and Signature Bank as well as restructuring expenses incurred as part of the workforce reduction executed in the fourth quarter of 2023. It is calculated based on adjusting net income attributable to diluted common shareholders by removing post-tax non-core noninterest expense adjustments in the period. We believe this non-GAAP measure serves as a useful tool in understanding PNC's results by providing greater comparability between periods, as well as demonstrating the effect of significant items.
The PNC Financial Services Group, Inc. | Consolidated Financial Highlights (Unaudited) |
Tangible Book Value per Common Share (non-GAAP) | |||||
December 31 | September 30 | December 31 | |||
Dollars in millions, except per share data | 2023 | 2023 | 2022 | ||
Book value per common share | $ 112.72 | $ 105.98 | $ 99.93 | ||
Tangible book value per common share | |||||
Common shareholders' equity | $ 44,864 | $ 42,215 | $ 40,028 | ||
Goodwill and other intangible assets | (11,244) | (11,337) | (11,400) | ||
Deferred tax liabilities on goodwill and other intangible assets | 244 | 254 | 261 | ||
Tangible common shareholders' equity | $ 33,864 | $ 31,132 | $ 28,889 | ||
Period-end common shares outstanding (In millions) | 398 | 398 | 401 | ||
Tangible book value per common share (non-GAAP) | $ 85.08 | $ 78.16 | $ 72.12 |
Tangible book value per common share is a non-GAAP measure and is calculated based on tangible common shareholders' equity divided by period-end common shares outstanding. We believe this non-GAAP measure serves as a useful tool to help evaluate the strength and discipline of a company's capital management strategies and as an additional, conservative measure of total company value.
Taxable-Equivalent Net Interest Income (non-GAAP) | Three months ended | Year ended | |||||
December 31 | September 30 | December 31 | December 31 | ||||
Dollars in millions | 2023 | 2023 | 2023 | 2022 | |||
Net interest income | $ 3,403 | $ 3,418 | $ 13,916 | $ 13,014 | |||
Taxable-equivalent adjustments | 36 | 36 | 147 | 112 | |||
Net interest income (Fully Taxable-Equivalent - FTE) (non-GAAP) | $ 3,439 | $ 3,454 | $ 14,063 | $ 13,126 | |||
The interest income earned on certain earning assets is completely or partially exempt from federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments. To provide more meaningful comparisons of net interest income, we use interest income on a taxable-equivalent basis by increasing the interest income earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments. This adjustment is not permitted under GAAP. Taxable-equivalent net interest income is only used for calculating net interest margin. Net interest income shown elsewhere in this presentation is GAAP net interest income.
Cautionary Statement Regarding Forward-Looking Information
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 and liquidity levels and ratios, asset levels, asset quality, financial position, and other matters regarding or affecting us and our future business and operations, including our sustainability strategy, that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements are typically identified by words such as "believe," "plan," "expect," "anticipate," "see," "look," "intend," "outlook," "project," "forecast," "estimate," "goal," "will," "should" and other similar words and expressions.
Forward-looking statements are necessarily subject to numerous assumptions, risks and uncertainties, which change over time. Future events or circumstances may change our outlook and may also affect the nature of the assumptions, risks and uncertainties to which our forward-looking statements are subject. Forward-looking statements speak only as of the date made. We do not assume any duty and do not undertake any obligation to update forward-looking statements. Actual results or future events could differ, possibly materially, from those anticipated in forward-looking statements, as well as from historical performance. As a result, we caution against placing undue reliance on any forward-looking statements.
Our forward-looking statements are subject to the following principal risks and uncertainties.
- Our businesses, financial results and balance sheet values are affected by business and economic conditions, including:
- Changes in interest rates and valuations in debt, equity and other financial markets,
- Disruptions in the
U.S. and global financial markets, - Actions by the Federal Reserve Board,
U.S. Treasury and other government agencies, including those that impact money supply, market interest rates and inflation, - Changes in customer behavior due to changing business and economic conditions or legislative or regulatory initiatives,
- Changes in customers', suppliers' and other counterparties' performance and creditworthiness,
- Impacts of sanctions, tariffs and other trade policies of the
U.S. and its global trading partners, - Impacts of changes in federal, state and local governmental policy, including on the regulatory landscape, capital markets, taxes, infrastructure spending and social programs,
- Our ability to attract, recruit and retain skilled employees, and
- Commodity price volatility.
- 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 regulatory contingencies. These statements are based on our views that:
- Economic growth accelerated in the first three quarters of 2023, but Federal Reserve monetary policy tightening to slow inflation is weighing on interest-rate sensitive industries. Sectors where interest rates play an outsized role, such as business investment and consumer spending on durable goods, will contract in 2024.
- PNC's baseline outlook is for a mild recession starting in mid-2024, with a small contraction in real GDP of less than
1% , lasting into late 2024. The unemployment rate will increase throughout 2024, peaking at close to5% in early 2025. Inflation will slow with weaker demand, moving back to the Federal Reserve's2% objective by the second half of 2024. - PNC expects the federal funds rate to remain unchanged in the near term, between
5.25% and5.50% through mid-2024, with federal funds rate cuts starting in mid-2024 in response to the recession.
- PNC's ability to take certain capital actions, including returning capital to shareholders, is subject to PNC meeting or exceeding minimum capital levels, including a stress capital buffer established by the Federal Reserve Board in connection with the Federal Reserve Board's Comprehensive Capital Analysis and Review (CCAR) process.
- PNC's regulatory capital ratios in the future will depend on, among other things, the company's financial performance, the scope and terms of final capital regulations then in effect and management actions affecting the composition of PNC's balance sheet. In addition, PNC's ability to determine, evaluate and forecast regulatory capital ratios, and to take actions (such as capital distributions) based on actual or forecasted capital ratios, will be dependent at least in part on the development, validation and regulatory review of related models and the reliability of and risks resulting from extensive use of such models.
Cautionary Statement Regarding Forward-Looking Information (Continued)
- Legal and regulatory developments could have an impact on our ability to operate our businesses, financial condition, results of operations, competitive position, reputation, or pursuit of attractive acquisition opportunities. Reputational impacts could affect matters such as business generation and retention, liquidity, funding, and ability to attract and retain employees. These developments could include:
- 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 standards.
- Unfavorable resolution of legal proceedings or other claims and regulatory and other governmental investigations or other inquiries resulting in monetary losses, costs, or alterations in our business practices, and potentially causing reputational harm to PNC.
- Results of the regulatory examination and supervision process, including our failure to satisfy requirements of agreements with governmental agencies.
- Costs associated with obtaining rights in intellectual property claimed by others and of adequacy of our intellectual property protection in general.
- 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, derivatives, and capital management techniques, and to meet evolving regulatory capital and liquidity standards.
- Our reputation and business and operating results may be affected by our ability to appropriately meet or address environmental, social or governance targets, goals, commitments or concerns that may arise.
- We grow our business in part through acquisitions and new strategic initiatives. Risks and uncertainties include those presented by the nature of the business acquired and strategic initiative, including in some cases those associated with our entry into new businesses or new geographic or other markets and risks resulting from our inexperience in those new areas, as well as risks and uncertainties related to the acquisition transactions themselves, regulatory issues, the integration of the acquired businesses into PNC after closing or any failure to execute strategic or operational plans.
- Competition can have an impact on customer acquisition, growth and retention and on credit spreads and product pricing, which can affect market share, deposits and revenues. Our ability to anticipate and respond to technological changes can also impact our ability to respond to customer needs and meet competitive demands.
- Business and operating results can also be affected by widespread manmade, natural and other disasters (including severe weather events), health emergencies, dislocations, geopolitical instabilities or events, terrorist activities, system failures or disruptions, security breaches, cyberattacks, international hostilities, or other extraordinary events beyond PNC's control through impacts on the economy and financial markets generally or on us or our counterparties, customers or third-party vendors and service providers specifically.
We provide greater detail regarding these as well as other factors in our 2022 Form 10-K and subsequent Form 10-Qs, including in the Risk Factors and Risk Management sections and the Legal Proceedings and Commitments Notes of the Notes To Consolidated Financial Statements in those reports, and in our other subsequent SEC filings. Our forward-looking statements may also be subject to other risks and uncertainties, including those we may discuss elsewhere in this news release or in our SEC filings, accessible on the SEC's website at www.sec.gov and on our corporate website at www.pnc.com/secfilings. We have included these web addresses as inactive textual references only. Information on these websites is not part of this document.
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SOURCE The PNC Financial Services Group, Inc.
FAQ
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