PNC Reports Full Year 2024 Net Income of $6.0 Billion, $13.74 Diluted EPS

PITTSBURGH, Jan. 16, 2025 /PRNewswire/ -- The PNC Financial Services Group, Inc. (NYSE: PNC) today reported:

Income Statement Highlights

Fourth quarter 2024 compared with third quarter 2024

• Total revenue of $5.6 billion increased $135 million due to higher net interest income and noninterest income.
  • Net interest income of $3.5 billion increased $113 million, or 3%, driven by lower funding costs and the continued repricing of fixed rate assets.
    • Net interest margin of 2.75% increased 11 basis points.
  • Fee income of $1.9 billion decreased $84 million, or 4%, due to elevated third quarter residential mortgage and capital markets activity.
  • Other noninterest income of $175 million increased $106 million reflecting lower negative Visa derivative adjustments.
• Noninterest expense of $3.5 billion increased $179 million, or 5%, and included $97 million of asset impairments primarily related to technology investments, and the benefit of an $18 million FDIC special assessment reduction. The combined impact of these items was $62 million after tax. The remaining increase was largely attributable to seasonality and higher marketing spend.
• Provision for credit losses was $156 million in the fourth quarter, reflecting improved macroeconomic factors and portfolio activity. The third quarter provision for credit losses was $243 million.
• The effective tax rate was 14.6% for the fourth quarter and 19.2% for the third quarter. The fourth quarter included the resolution of certain tax matters which resulted in $60 million of income tax benefits.
• Net income of $1.6 billion increased $122 million, or 8%.

Balance Sheet Highlights

Fourth quarter 2024 compared with third quarter 2024 or December 31, 2024 compared with September 30, 2024

• Average loans of $319.1 billion were stable, including average commercial loans of $218.6 billion and average consumer loans of $100.4 billion.
• Credit quality performance:
  • Delinquencies of $1.4 billion increased $107 million, or 8%, primarily due to higher commercial loan delinquencies.
  • Total nonperforming loans of $2.3 billion decreased $0.3 billion, or 10%, driven by lower commercial and industrial nonperforming loans.
  • Net loan charge-offs of $250 million decreased $36 million primarily due to lower commercial net loan charge-offs, including lower commercial real estate net loan charge-offs.
  • The allowance for credit losses of $5.2 billion decreased $0.1 billion. The allowance for credit losses to total loans was 1.64% at December 31, 2024 and 1.65% at September 30, 2024.
• Average investment securities of $143.9 billion were stable.
• Average Federal Reserve Bank balances of $37.5 billion decreased $7.4 billion, or 16%, reflecting lower borrowed funds outstanding.
• Average deposits of $425.3 billion increased $3.1 billion due to growth in interest-bearing commercial deposits, partially offset by a decline in consumer deposits, reflecting lower brokered time deposits. Noninterest-bearing deposits as a percentage of total average deposits remained stable at 23%.
• Average borrowed funds of $67.2 billion decreased $8.9 billion, or 12%, primarily due to lower Federal Home Loan Bank advances.
• PNC maintained a strong capital and liquidity position:
  • On January 3, 2025, the PNC board of directors declared a quarterly cash dividend on common stock of $1.60 per share to be paid on February 5, 2025 to shareholders of record at the close of business January 15, 2025.
  • PNC returned $0.9 billion of capital to shareholders, reflecting more than $0.6 billion of dividends on common shares and more than $0.2 billion of common share repurchases.
  • The Basel III common equity Tier 1 capital ratio was an estimated 10.5% at December 31, 2024 and was 10.3% at September 30, 2024.
  • PNC's average LCR for the three months ended December 31, 2024 was 107%, exceeding the regulatory minimum requirement throughout the quarter.

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

Total revenue for the fourth quarter of 2024 increased $135 million compared to the third quarter of 2024 and $206 million from the fourth quarter of 2023. In both comparisons, the increase was due to higher net interest income and noninterest income.

Net interest income of $3.5 billion increased $113 million from the third quarter of 2024 and $120 million from the fourth quarter of 2023, driven by lower funding costs and the continued repricing of fixed rate assets. Net interest margin was 2.75% in the fourth quarter of 2024, increasing 11 basis points from the third quarter of 2024, and 9 basis points from the fourth quarter of 2023.

Noninterest income for the fourth quarter of 2024 increased $22 million compared with the third quarter of 2024. Asset management and brokerage decreased $9 million, reflecting lower annuity sales, partially offset by the benefit from higher average equity markets. Capital markets and advisory revenue declined $23 million primarily due to elevated third quarter underwriting activity. Card and cash management fees decreased $3 million reflecting the impact of credit card origination incentives, partially offset by higher treasury management product revenue. Lending and deposit services increased $10 million and included increased customer activity. Residential and commercial mortgage revenue decreased $59 million driven by elevated third quarter residential mortgage revenue, partially offset by higher commercial mortgage revenue. Other noninterest income increased $106 million due to lower negative Visa derivative adjustments. Visa derivative adjustments were negative $23 million in the fourth quarter of 2024 compared to negative $128 million in the third quarter of 2024.

Noninterest income for the fourth quarter of 2024 increased $86 million from the fourth quarter of 2023. Fee income increased $49 million driven by business growth across the franchise, partially offset by lower residential mortgage revenue. Other noninterest income increased $37 million and included lower negative Visa derivative adjustments. Visa derivative adjustments were negative $100 million in the fourth quarter of 2023.

CONSOLIDATED EXPENSE REVIEW

Noninterest expense for the fourth quarter of 2024 increased $179 million compared to the third quarter of 2024 and included $97 million of asset impairments primarily related to technology investments, and the benefit of an $18 million FDIC special assessment reduction. The combined impact of these items was $62 million after tax. The remaining increase was largely attributable to seasonality and higher marketing spend.

Noninterest expense for the fourth quarter of 2024 decreased $568 million compared with the fourth quarter of 2023. The fourth quarter of 2023 included $515 million related to the FDIC special assessment as well as $150 million of workforce reduction charges.

The effective tax rate was 14.6% for the fourth quarter of 2024, 19.2% for the third quarter of 2024 and 16.3% for the fourth quarter of 2023. The fourth quarter of 2024 included the resolution of certain tax matters which resulted in $60 million of income tax benefits.

CONSOLIDATED BALANCE SHEET REVIEW 

Average total assets were $564.1 billion in the fourth quarter of 2024, stable in comparison to both the third quarter of 2024 and the fourth quarter of 2023.

Average commercial and consumer loans for the fourth quarter of 2024 were stable compared to the third quarter of 2024. In comparison to the fourth quarter of 2023, average loans decreased $5.5 billion. Average commercial loans decreased $4.0 billion reflecting lower utilization of loan commitments. Average consumer loans decreased $1.5 billion primarily due to lower residential mortgage, education and credit card loans.

Average investment securities of $143.9 billion in the fourth quarter of 2024 were stable compared to the third quarter of 2024 and increased $6.5 billion from the fourth quarter of 2023. In both comparisons, net purchase activity of available-for-sale securities more than offset paydowns and maturities of held-to-maturity securities. The duration of the investment securities portfolio was estimated at 3.4 years as of December 31, 2024, 3.3 years as of September 30, 2024 and 4.2 years as of December 31, 2023.

Net unrealized losses on available-for-sale securities were $3.6 billion at December 31, 2024, $2.3 billion at September 30, 2024 and $3.6 billion at December 31, 2023. The increase in net unrealized losses from September 30, 2024 reflected the impact of interest rate movements.  

Average Federal Reserve Bank balances for the fourth quarter of 2024 were $37.5 billion, decreasing $7.4 billion from the third quarter of 2024 and $4.7 billion from the fourth quarter of 2023 primarily due to lower borrowed funds outstanding.

Average deposits for the fourth quarter of 2024 of $425.3 billion increased $3.1 billion compared to the third quarter of 2024. Average commercial deposits grew $5.5 billion reflecting growth in interest-bearing deposit balances. Average consumer deposits declined $2.4 billion due to lower brokered time deposits. Compared to the fourth quarter of 2023, average deposits increased $1.3 billion.

Noninterest-bearing deposits as a percentage of total average deposits were 23% for the fourth quarter of 2024, stable from the third quarter of 2024 and down 2% from the fourth quarter of 2023.

Average borrowed funds of $67.2 billion in the fourth quarter of 2024 decreased $8.9 billion compared to the third quarter of 2024 and $5.7 billion compared to the fourth quarter of 2023. In both comparisons, the decrease was driven by lower Federal Home Loan Bank advances. Compared to the fourth quarter of 2023, the decrease was partially offset by higher parent company senior debt issuances.

PNC maintained a strong capital position. Common shareholders' equity at December 31, 2024 decreased $0.7 billion from September 30, 2024, due to a decline in accumulated other comprehensive income, dividends paid and share repurchases, partially offset by net income.

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 of negative $6.6 billion at December 31, 2024 declined from negative $5.1 billion at September 30, 2024 and improved from negative $7.7 billion at December 31, 2023. In both comparisons, the change reflected the impact of interest rate movements as well as paydowns and maturities of securities and swaps.

In the fourth quarter of 2024, PNC returned $0.9 billion of capital to shareholders, including more than $0.6 billion of dividends on common shares and more than $0.2 billion of common share repurchases. Consistent with the Stress Capital Buffer (SCB) framework, which allows for capital return 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 42% were still available for repurchase at December 31, 2024.

First quarter 2025 share repurchase activity is expected to approximate recent quarterly average share repurchase levels. PNC 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, 2024 is the regulatory minimum of 2.5%.

On January 3, 2025, the PNC board of directors declared a quarterly cash dividend on common stock of $1.60 per share to be paid on February 5, 2025 to shareholders of record at the close of business January 15, 2025.

At December 31, 2024, PNC was considered "well capitalized" based on applicable U.S. regulatory capital ratio requirements. For additional information regarding PNC's Basel III capital ratios, see Capital Ratios in the Consolidated Financial Highlights.

CREDIT QUALITY REVIEW

Provision for credit losses was $156 million in the fourth quarter of 2024, reflecting improved macroeconomic factors and portfolio activity. The third quarter of 2024 provision for credit losses was $243 million.

Net loan charge-offs were $250 million in the fourth quarter of 2024, decreasing $36 million compared to the third quarter of 2024 primarily due to lower commercial net loan charge-offs, including lower commercial real estate net loan charge-offs. Compared to the fourth quarter of 2023, net loan charge-offs increased $50 million primarily due to higher commercial real estate net loan charge-offs.

The allowance for credit losses was $5.2 billion at December 31, 2024, $5.3 billion at September 30, 2024 and $5.5 billion at December 31, 2023. The allowance for credit losses as a percentage of total loans was 1.64% at December 31, 2024, 1.65% at September 30, 2024 and 1.70% at December 31, 2023.

Delinquencies at December 31, 2024 were $1.4 billion, increasing $107 million from September 30, 2024, primarily due to higher commercial loan delinquencies. Compared to December 31, 2023, delinquencies were stable.

Nonperforming loans at December 31, 2024 were $2.3 billion, decreasing $0.3 billion from September 30, 2024, driven by lower commercial and industrial nonperforming loans. Compared to December 31, 2023, nonperforming loans increased $146 million primarily due to higher commercial real estate nonperforming loans.

BUSINESS SEGMENT RESULTS

Retail Banking Highlights

Fourth quarter 2024 compared with third quarter 2024

• Earnings decreased 8%, primarily driven by higher noninterest expense, partially offset by higher net interest and noninterest income.
  • Noninterest income increased 1%, primarily reflecting lower negative Visa derivative adjustments, partially offset by lower residential mortgage servicing rights valuation, net of economic hedge.
  • Noninterest expense increased 9%, and included the impact of asset impairments as well as seasonality and higher marketing spend.
  • Provision for credit losses of $106 million in the fourth quarter of 2024 reflected the impact of improved macroeconomic factors and portfolio activity.
• Average loans were stable.
• Average deposits decreased 1%, primarily due to lower brokered time deposits.

Fourth quarter 2024 compared with fourth quarter 2023

• Earnings were stable.
  • Noninterest income decreased 2%, primarily due to lower residential mortgage banking activity and the impact of credit card origination incentives, partially offset by lower negative Visa derivative adjustments.
  • Noninterest expense increased 9%, and included the impact of asset impairments as well as an increase in technology investments and marketing spend.
• Average loans were stable and included lower residential mortgage loans.
• Average deposits declined 2%, reflecting the impact of continued inflationary pressures and competitive pricing dynamics.

Corporate & Institutional Banking Highlights

Fourth quarter 2024 compared with third quarter 2024

• Earnings increased 14%, as a result of a lower provision for credit losses as well as higher net interest and noninterest income, partially offset by higher noninterest expense.
  • Noninterest income increased 4%, primarily due to higher commercial mortgage banking activities and growth in treasury management product revenue, partially offset by lower underwriting fees.
  • Noninterest expense increased 3%, and included higher variable compensation associated with increased business activity.
  • Provision for credit losses of $44 million in the fourth quarter of 2024 reflected the impact of improved macroeconomic factors and portfolio activity.
• Average loans were stable.
• Average deposits increased 4%, reflecting interest-bearing deposit growth.

Fourth quarter 2024 compared with fourth quarter 2023

• Earnings increased 13%, due to higher noninterest and net interest income as well as a lower provision for credit losses, partially offset by higher noninterest expense.
  • Noninterest income increased 7%, primarily due to higher commercial mortgage banking activities and treasury management product revenue.
  • Noninterest expense increased 1%.
• Average loans decreased 2%, driven by lower utilization of loan commitments.
• Average deposits increased 5%, due to growth in interest-bearing deposits.

Asset Management Group Highlights

Fourth quarter 2024 compared with third quarter 2024

• Earnings decreased 1%, reflecting higher noninterest expense and a provision for credit losses, partially offset by higher net interest income.
  • Noninterest income was stable.
  • Noninterest expense increased 3%, and included an increase in marketing spend.
• Discretionary client assets under management were stable.
• Average loans were stable.
• Average deposits increased 2%, driven by higher interest-bearing deposits.

Fourth quarter 2024 compared with fourth quarter 2023

• Earnings increased 43%, due to higher noninterest and net interest income as well as lower noninterest expense.
  • Noninterest income increased 8%, reflecting higher average equity markets.
  • Noninterest expense decreased 2%, reflecting a continued focus on expense management.
• Discretionary client assets under management increased 12%, and included the impact from higher spot equity markets.
• Average loans increased 2%, primarily driven by growth in residential mortgage loans.
• Average deposits decreased 2%, driven by lower interest-bearing deposits.

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, corporate overhead net of allocations, tax adjustments that are not allocated to business segments, exited businesses and the residual impact from funds transfer pricing operations.

CONFERENCE CALL AND SUPPLEMENTAL FINANCIAL INFORMATION

PNC Chairman and Chief Executive Officer William S. Demchak and Executive Vice President and Chief Financial Officer Robert Q. Reilly will hold a conference call for investors today at 10:00 a.m. Eastern Time regarding the topics addressed in this news release and the related earnings materials. Dial-in numbers for the conference call are (866) 604-1697 and (215) 268-9875 (international) and Internet access to the live audio listen-only webcast of the call is available at www.pnc.com/investorevents. PNC's fourth quarter 2024 earnings materials to accompany the conference call remarks will be available at www.pnc.com/investorevents prior to the beginning of the call. A telephone replay of the call will be available for 30 days at (877) 660-6853 and (201) 612-7415 (international), Access ID 13750472 and a replay of the audio webcast will be available on PNC's website for 30 days.

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.

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