PNC Financial Services (PNC) Tops Q1 EPS Views; Offers Qtr. Highlights

PNC Financial Services (NYSE: PNC) reported Q1 EPS of $1.82, $0.16 better than the analyst estimate of $1.66.

Income Statement Highlights

• First quarter results were driven by loan and deposit growth, well-controlled expenses and credit quality improvement as well as seasonal trends.
• Net interest income of $2.2 billion for the first quarter declined $71 million, or 3 percent, compared with the fourth quarter reflecting fewer days in the quarter and lower purchase accounting accretion.
• Noninterest income of $1.6 billion decreased $225 million, or 12 percent, compared with the fourth quarter.
  • Lower benefit from release of reserves for residential mortgage repurchase obligations and first quarter seasonal declines impacted fee income.
• Noninterest expense of $2.3 billion decreased $250 million, or 10 percent, from fourth quarter reflecting disciplined expense management and seasonality.
• Provision for credit losses declined to $94 million for the first quarter compared with $113 million for the fourth quarter as overall credit quality continued to improve.

Balance Sheet Highlights

• Loans grew $2.6 billion, or 1 percent, to $198 billion at March 31, 2014 compared with December 31, 2013.
  • Total commercial lending grew $3.6 billion, or 3 percent, primarily in real estate, corporate banking and business credit.
  • Total consumer lending decreased $1.0 billion due to lower home equity, residential mortgage and education loans as well as seasonal declines in credit card loans partially offset by growth in automobile loans.
• Overall credit quality continued to improve during the first quarter of 2014 compared with the fourth quarter.
  • Nonperforming assets of $3.3 billion at March 31, 2014 declined $153 million, or 4 percent.
  • Net charge-offs were stable at $186 million for the first quarter and $189 million for fourth quarter 2013.
• Deposits grew $1.5 billion, or 1 percent, to $222 billion at March 31, 2014 compared with December 31, 2013.
• PNC continued to enhance its liquidity position in preparation for implementation of new short-term liquidity regulatory standards as reflected in higher deposit balances maintained with the Federal Reserve Bank and investment securities and borrowed funds activity.
• PNC's well-positioned balance sheet remained core funded with a loans to deposits ratio of 89 percent at March 31, 2014.
• PNC took actions reflecting its strong capital position.
  • In April 2014 the board of directors raised the quarterly cash dividend on common stock to 48 cents per share, an increase of 4 cents per share, or 9 percent, effective with the May dividend.
  • PNC announced share repurchase programs of up to $1.5 billion for the four quarter period beginning in the second quarter of 2014 under its existing common stock repurchase program authorization.
• Transitional Basel III common equity Tier 1 capital ratio, calculated using the regulatory capital methodology applicable to PNC during 2014, was an estimated 10.8 percent at March 31, 2014.
• Pro forma fully phased-in Basel III common equity Tier 1 capital ratio increased to an estimated 9.7 percent at March 31, 2014 from 9.4 percent at December 31, 2013 based on the standardized approach rules.

For earnings history and earnings-related data on PNC Financial Services (PNC) click here.

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