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The PNC Financial Services Group, Inc.’s (PNC - Free Report) first-quarter 2024 adjusted earnings per share of $3.36 surpassed the Zacks Consensus Estimate of $3.09. The adjusted figure excludes the impacts of expenses from the FDIC special assessment. In the prior-year quarter, the company reported earnings per share of $3.98.
Results were aided by a rise in deposit balances and an improvement in the company’s credit quality. However, an increase in non-interest expenses and lower net interest income (NII) were headwinds.
Net income was $1.3 billion, plunging 20.7% from the prior-year quarter.
Quarterly Revenues
Total quarterly revenues were $5.15 billion, down 8.2% year over year. The top line missed the Zacks Consensus Estimate of $5.18 billion.
Quarterly NII was $3.26 billion, which declined 9% from the year-ago quarter. Net interest margin (NIM) decreased 27 basis points to 2.57%. Our estimate for NII and NIM was $3.32 billion and 2.61%, respectively.
Non-interest income fell 6.8% year over year to $1.88 billion. The downtick was due to the decline in income from residential and commercial mortgage fees. Our estimate was $1.88 billion.
Non-interest expenses totaled $3.33 billion, increasing marginally from the year-ago figure. The metric included a $130 million FDIC special assessment. Excluding the impact of the FDIC special assessment, non-interest expenses were $3.2 billion, decreasing 4% year over year.
The efficiency ratio was 65% compared with 59% in the year-ago quarter. A rise in the efficiency ratio reflects lower profitability.
As of Mar 31, 2024, total loans were $319.78 billion, which decreased slightly on a sequential basis. Our estimate for total loans was $324.6 billion. However, total deposits increased nearly 1% from the end of the previous quarter to $425.62 billion. Our estimate for total deposits was $424.2 billion.
Credit Quality – Mixed Bag
The allowance for credit losses decreased nearly 1% to $5.36 billion. Non-performing loans increased 18.4% year over year to $2.38 billion.
Nonetheless, the company reported a provision for credit losses of $155 million in the first quarter, which decreased 34% from the year-earlier quarter. However, net loan charge-offs were $243 million, up 24.6% year over year.
Capital Position Improves & Profitability Ratios Weaken
As of Mar 31, 2024, the Basel III common equity tier 1 capital ratio was 10.1% compared with 9.2% as of Mar 31, 2023.
Return on average assets and average common shareholders’ equity were 0.97% and 11.39%, respectively, compared with 1.22% and 16.11% witnessed in the prior-year quarter.
Capital Distribution Activity
In the first quarter of 2024, PNC Financial returned $0.8 billion of capital to shareholders. This included more than $0.6 billion in common stock dividends and $0.1 billion in common share repurchases.
Our Viewpoint
PNC Financial is well-poised to grow on the back of its diverse business mix. Also, the company’s strategic acquisitions support its financials. However, the continued decline in fee income and higher expenses are near-term concerns.
The PNC Financial Services Group, Inc Price, Consensus and EPS Surprise
Citigroup Inc.’s (C - Free Report) first-quarter 2024 net income from continuing operations per share of $1.58 surpassed the Zacks Consensus Estimate of $1.13. However, the metric declined 28% from the year-ago quarter.
Citigroup witnessed declines in total loans and deposits in the quarter. Also, a decline in revenues and deteriorating credit quality are near-term woes.
Wells Fargo & Company’s (WFC - Free Report) first-quarter 2024 adjusted earnings per share of $1.26 surpassed the Zacks Consensus Estimate of $1.10. The adjusted figure excludes the impacts of expenses from the FDIC special assessment. In the prior-year quarter, the company reported earnings per share of $1.23.
WFC’s results benefited from higher non-interest income. An improvement in capital ratios and a decline in provisions were other positives. However, the decrease in net interest income and loan balances and an increase in expenses were the undermining factors.
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PNC Financial (PNC) Q1 Earnings Beat Estimates, Costs Rise
The PNC Financial Services Group, Inc.’s (PNC - Free Report) first-quarter 2024 adjusted earnings per share of $3.36 surpassed the Zacks Consensus Estimate of $3.09. The adjusted figure excludes the impacts of expenses from the FDIC special assessment. In the prior-year quarter, the company reported earnings per share of $3.98.
Results were aided by a rise in deposit balances and an improvement in the company’s credit quality. However, an increase in non-interest expenses and lower net interest income (NII) were headwinds.
Net income was $1.3 billion, plunging 20.7% from the prior-year quarter.
Quarterly Revenues
Total quarterly revenues were $5.15 billion, down 8.2% year over year. The top line missed the Zacks Consensus Estimate of $5.18 billion.
Quarterly NII was $3.26 billion, which declined 9% from the year-ago quarter. Net interest margin (NIM) decreased 27 basis points to 2.57%. Our estimate for NII and NIM was $3.32 billion and 2.61%, respectively.
Non-interest income fell 6.8% year over year to $1.88 billion. The downtick was due to the decline in income from residential and commercial mortgage fees. Our estimate was $1.88 billion.
Non-interest expenses totaled $3.33 billion, increasing marginally from the year-ago figure. The metric included a $130 million FDIC special assessment. Excluding the impact of the FDIC special assessment, non-interest expenses were $3.2 billion, decreasing 4% year over year.
The efficiency ratio was 65% compared with 59% in the year-ago quarter. A rise in the efficiency ratio reflects lower profitability.
As of Mar 31, 2024, total loans were $319.78 billion, which decreased slightly on a sequential basis. Our estimate for total loans was $324.6 billion. However, total deposits increased nearly 1% from the end of the previous quarter to $425.62 billion. Our estimate for total deposits was $424.2 billion.
Credit Quality – Mixed Bag
The allowance for credit losses decreased nearly 1% to $5.36 billion. Non-performing loans increased 18.4% year over year to $2.38 billion.
Nonetheless, the company reported a provision for credit losses of $155 million in the first quarter, which decreased 34% from the year-earlier quarter. However, net loan charge-offs were $243 million, up 24.6% year over year.
Capital Position Improves & Profitability Ratios Weaken
As of Mar 31, 2024, the Basel III common equity tier 1 capital ratio was 10.1% compared with 9.2% as of Mar 31, 2023.
Return on average assets and average common shareholders’ equity were 0.97% and 11.39%, respectively, compared with 1.22% and 16.11% witnessed in the prior-year quarter.
Capital Distribution Activity
In the first quarter of 2024, PNC Financial returned $0.8 billion of capital to shareholders. This included more than $0.6 billion in common stock dividends and $0.1 billion in common share repurchases.
Our Viewpoint
PNC Financial is well-poised to grow on the back of its diverse business mix. Also, the company’s strategic acquisitions support its financials. However, the continued decline in fee income and higher expenses are near-term concerns.
The PNC Financial Services Group, Inc Price, Consensus and EPS Surprise
The PNC Financial Services Group, Inc price-consensus-eps-surprise-chart | The PNC Financial Services Group, Inc Quote
Currently, PNC Financial carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Citigroup Inc.’s (C - Free Report) first-quarter 2024 net income from continuing operations per share of $1.58 surpassed the Zacks Consensus Estimate of $1.13. However, the metric declined 28% from the year-ago quarter.
Citigroup witnessed declines in total loans and deposits in the quarter. Also, a decline in revenues and deteriorating credit quality are near-term woes.
Wells Fargo & Company’s (WFC - Free Report) first-quarter 2024 adjusted earnings per share of $1.26 surpassed the Zacks Consensus Estimate of $1.10. The adjusted figure excludes the impacts of expenses from the FDIC special assessment. In the prior-year quarter, the company reported earnings per share of $1.23.
WFC’s results benefited from higher non-interest income. An improvement in capital ratios and a decline in provisions were other positives. However, the decrease in net interest income and loan balances and an increase in expenses were the undermining factors.