PNC Reports First Quarter 2017 Net Income of $1.1 Billion, $1.96 Diluted EPS - 13.04.17 - News

PITTSBURGH, April 13, 2017

For the quarter

1Q17

4Q16

1Q16

Net income $ millions

$1,074

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PNC Financial Services Group

147,00 €

+0,68%

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$1,047

$943

Diluted earnings per common share

$1.96

$1.97

$1.68

"PNC had a good start to the year," said William S. Demchak, chairman, president and chief executive officer. "We grew loans and revenue, and we managed expenses well while continuing to invest in our businesses and to enhance innovation. As we progress through 2017, we are well positioned to benefit should environmental factors, including interest rates, turn more favorable."

Income Statement Highlights

First quarter 2017 compared with fourth quarter 2016

Total revenue grew $10 million to $3.9 billion.

Net interest income increased $30 million, or 1 percent, to $2.2 billion primarily due to higher loan and securities yields that benefited from higher interest rates in the quarter partially offset by two fewer days in the first quarter.
Noninterest income decreased $20 million, or 1 percent, to $1.7 billion reflecting seasonally lower fee income partially offset by positive valuation adjustments of $47 million associated with a five-year extension to conform certain equity investments subject to the Volcker Rule.

Noninterest expense decreased $39 million, or 2 percent, to $2.4 billion and expenses continued to be well managed.
Provision for credit losses was $88 million, an increase of $21 million. Overall credit quality remained stable.
Diluted earnings per common share were negatively impacted by $.04 due to recognition of deferred issuance costs of $19 million upon the redemption of all REIT preferred securities on March 15, 2017.

Balance Sheet Highlights

Loans grew $2.0 billion, or 1 percent, to $212.8 billion at March 31, 2017 compared with December 31, 2016.

Commercial lending balances increased $2.7 billion, or 2 percent, primarily in PNC's real estate, business credit and corporate banking businesses.
Consumer lending balances decreased $.7 billion reflecting lower home equity, education and credit card loans partially offset by higher residential mortgage loans.

Overall credit quality remained stable.

Nonperforming assets of $2.2 billion at March 31, 2017 decreased $.2 billion, or 7 percent, compared with December 31, 2016.
Net charge-offs increased to $118 million for the first quarter compared with $106 million for the fourth quarter.

Deposits increased $3.5 billion, or 1 percent, to $260.7 billion at March 31, 2017 compared with December 31, 2016 reflecting growth in consumer deposits partially offset by seasonal declines in commercial deposits.
Investment securities increased $.5 billion, or 1 percent, to $76.4 billion at March 31, 2017 compared with December 31, 2016.
PNC maintained a strong liquidity position.

The Liquidity Coverage Ratio at March 31, 2017 for both PNC and PNC Bank, N.A. continued to exceed the fully phased-in requirement of 100 percent, which became effective on January 1, 2017.

PNC returned $.9 billion of capital to shareholders, or 92 percent of first quarter net income attributable to diluted common shares, through repurchases of 5.0 million common shares for $.6 billion and dividends on common shares of $.3 billion.

On January 30, 2017, PNC announced a $300 million increase to its common stock share repurchase programs, which now provide for repurchases of up to $2.3 billion for the four-quarter period ending June 30, 2017.

PNC maintained a strong capital position.

Transitional Basel III common equity Tier 1 capital ratio was an estimated 10.5 percent at March 31, 2017 and 10.6 percent at December 31, 2016, calculated using the regulatory capital methodologies applicable to PNC during 2017 and 2016, respectively.
Pro forma fully phased-in Basel III common equity Tier 1 capital ratio, a non-GAAP financial measure, was an estimated 10.0 percent at both March 31, 2017 and December 31, 2016, based on the standardized approach rules.

Earnings Summary
	In millions, except per share data			1Q17			4Q16			1Q16
	Net income		$	1,074		$	1,047		$	943
	Net income attributable to diluted common shares		$	963		$	973		$	850
	Diluted earnings per common share		$	1.96		$	1.97		$	1.68
	Average diluted common shares outstanding			492			494			507
	Return on average assets			1.19	%		1.13	%		1.07	%
	Return on average common equity			9.50	%		9.31	%		8.44	%
	Book value per common share	Quarter end	$	86.14		$	85.94		$	83.47
	Tangible book value per common share (non-GAAP)	Quarter end	$	67.47		$	67.26		$	65.15
	Cash dividends declared per common share		$	.55		$	.55		$	.51

The Consolidated Financial Highlights accompanying this news release include additional information regarding reconciliations of non-GAAP financial measures to reported amounts. Fee income, a non-GAAP financial measure, refers to noninterest income in the following categories: asset management, consumer services, corporate services, residential mortgage and service charges on deposits. Information in this news release including the financial tables is unaudited.

CONSOLIDATED REVENUE REVIEW

Revenue

Change

1Q17 vs

In millions

1Q17

4Q16

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