UPDATE: PNC Financial Services (PNC) Reports Q2 EPS of $8.40, Reflecting Gain On BlackRock Sale; Q2 Revenues Miss

(Updated - July 15, 2020 6:56 AM EDT)

PNC Financial Services (NYSE: PNC) reported Q2 EPS of $8.40, versus $0.51 reported last year. Revenue for the quarter came in at $4.08 billion versus the consensus estimate of $4.11 billion.

Income Statement Highlights - Continuing Operations

Second quarter 2020 compared with first quarter 2020

• Results from continuing operations reflected a loss of $744 million, a decrease of $1.5 billion due to a higher provision for credit losses.
• Provision for credit losses increased to $2.5 billion for the second quarter compared with $914 million for the first quarter due to the significant estimated economic impact of the pandemic. Provision was calculated under the Current Expected Credit Loss (CECL) accounting standard adopted January 1, 2020.
  • Provision was $1.7 billion for the commercial portfolio and $720 million for the consumer portfolio.
• Total revenue of $4.1 billion declined $260 million, or 6%.
• Net interest income of $2.5 billion increased $16 million, or 1%, as lower rates on deposits and borrowings and higher average loans, balances held with the Federal Reserve Bank and securities were partially offset by lower yields on earning assets.
• Net interest margin decreased 32 basis points to 2.52% reflecting the full quarter impact of the 1.5 percentage point reduction in the federal funds rate by the Federal Reserve in March 2020.
• Noninterest income of $1.6 billion decreased $276 million, or 15%.
• Fee income of $1.3 billion declined $204 million, or 14%. Service charges on deposits and consumer service fees decreased $136 million reflecting lower consumer spending and fees waived to assist customers in the pandemic, and residential mortgage revenue decreased $52 million due to a lower benefit from residential mortgage servicing rights valuation, net of economic hedge.
• Other noninterest income of $271 million declined $72 million primarily due to lower net securities gains partially offset by higher capital markets-related revenue.
• Noninterest expense of $2.5 billion decreased $28 million, or 1%, reflecting lower business activity related to the economic impact of the pandemic and well-controlled expenses.

"During this remarkable period in the midst of the pandemic and economic downturn, PNC has remained steadfast in our commitment to our customers, communities, employees and shareholders. While our pre-provision results for the second quarter were good in the context of a lower rate environment and business headwinds, the uncertainty in the economy related to the pandemic resulted in a substantial loan loss reserve build. The monetization of our BlackRock investment and recent CCAR results underscore the strength of our balance sheet. Our book value per share increased significantly, and PNC is very well positioned with substantial capital and liquidity flexibility to continue to support our constituents and capitalize on opportunities that may arise during these challenging times."

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

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