PNC Earns $559 Million in Third Quarter and $1.3 Billion Year-To-Date
Strong quarterly earnings and capital growth
Credit quality deterioration eases
PITTSBURGH, Oct. 22 /PRNewswire-FirstCall/ -- The PNC Financial Services Group, Inc. (NYSE: PNC) today reported net income of $559 million, or $1.00 per diluted common share, for the third quarter of 2009 compared with net income of $207 million, or $.14 per diluted common share, for the second quarter of 2009. For the first nine months of 2009, the company earned net income of $1.30 billion, or $2.17 per diluted common share. Net income was $1.16 billion, or $3.23 per diluted common share, for the first nine months of 2008.
"PNC continued to demonstrate its resiliency in the economic downturn with strong third quarter earnings growth," said James E. Rohr, chairman and chief executive officer. "Once again we delivered pretax pre-provision earnings significantly in excess of our credit costs resulting in growth in capital. We strengthened our balance sheet which we believe is well positioned as the economy begins to recover and the pace of credit quality deterioration eases. Sales across the franchise were strong and we see growing momentum as we added clients and deepened customer relationships in the quarter. We are building on the value of our combined company and are well prepared for the first wave of National City client conversions in early November. As our results demonstrate, we continue to execute against our plans to deliver significant shareholder value now and in the future."
HIGHLIGHTS
- Pretax pre-provision earnings of $1.7 billion exceeded the provision for credit losses by more than $750 million in the third quarter of 2009.
- Total revenue of $4.0 billion for the quarter reflected strong net interest income and noninterest income as PNC's diverse sources of revenue continued to deliver high quality results. The net interest margin increased 16 basis points linked quarter to 3.76 percent for the third quarter of 2009 primarily due to a substantial reduction in the overall cost of funds.
- Expenses remained well controlled and declined $279 million, or 10 percent, compared with the linked quarter.
- Capital ratios strengthened as PNC increased the estimated Tier 1 risk-based capital ratio by 30 basis points to 10.8 percent at September 30, 2009 and added 20 basis points to the estimated Tier 1 common equity ratio which was 5.5 percent at September 30, 2009. PNC plans to redeem the preferred shares issued under the TARP Capital Purchase Program when appropriate and in a shareholder-friendly manner, subject to approval by its banking regulators.
- PNC continued to maintain a strong liquidity position with an 87 percent loan to deposit ratio at September 30, 2009 combined with significant liquid assets and borrowing capacity. Transaction deposits increased $1 billion during the third quarter, reflecting growth of approximately $3 billion before the impact of the required branch divestitures that included $2 billion of transaction deposits. During the quarter the company continued to manage deposit pricing, reducing nonrelationship certificates of deposit.
- Loans declined 3 percent during the quarter to $161 billion reflecting paydowns and reduced demand as customers decreased debt, as well as net charge-offs. PNC remains committed to responsible lending, and loans and commitments of approximately $28 billion were originated and renewed during the third quarter as the company continued to make credit available.
- Credit quality deterioration occurred at a slower pace during the third quarter. PNC strengthened loan loss reserves. The provision for credit losses exceeded net charge-offs by $264 million and the ratio of allowance for loan and lease losses to total loans increased to 2.99 percent at September 30, 2009 from 2.77 percent at June 30, 2009. Net charge-offs to average loans were 1.59 percent on an annualized basis for the third quarter down from 1.89 percent for the second quarter of 2009. The allowance for loan and lease losses of $4.8 billion combined with the fair value marks of $6.6 billion on acquired impaired loans represented approximately 7 percent of loans outstanding at September 30, 2009.
- Overall the acquisition of National City Corporation continued to exceed expectations.
- The transaction was accretive to year-to-date earnings and is expected to be accretive for the full year.
- Cost savings of approximately $200 million were realized in the third quarter, an increase of $60 million from the second quarter. This brings cumulative savings to more than $460 million, ahead of plan and on track to exceed the $1.2 billion two-year goal.
- The required divestiture of 61 branches including $4.1 billion of deposits and $.8 billion of loans was completed by September 4, 2009.
- The first major conversion of National City customers to the PNC platform is scheduled for completion by November 9, 2009, with the remaining conversions to be completed by June 2010.
- Consolidation of bank charters is planned for early November 2009.
- The combined company is committed to delivering the PNC brand for client and business growth.
Read the Entire Press Release at PNC.com
