10-QPeriod: Q2 FY2009

PNC FINANCIAL SERVICES GROUP, INC. Quarterly Report for Q2 Ended Jun 30, 2009

Filed August 10, 2009For Securities:PNC

Summary

PNC Financial Services Group, Inc. reported net income of $207 million ($0.14 per diluted share) for the second quarter of 2009, a significant decrease from $517 million ($1.45 per diluted share) in the same period of the prior year. This decline is largely attributed to increased provisions for credit losses, reflecting the ongoing economic downturn. Despite the challenging environment, total revenue grew to $4.0 billion, driven by the inclusion of National City's operations and strong noninterest income sources. The company continues to focus on integrating National City, reporting that cost savings are ahead of schedule and contributing to a strong pre-tax, pre-provision earnings of $1.3 billion. Capital levels strengthened during the quarter, with the Tier 1 risk-based capital ratio increasing to 10.5% and the Tier 1 common capital ratio to 5.3%. This improvement was supported by a $624 million common equity issuance in May. While the company has reduced its common stock dividend to $0.10 per share to conserve capital, its liquidity position remains strong with an 87% loan-to-deposit ratio.

Financial Highlights

31 data points
Beta

Revenue

$3.80B

Net Income

$207.00M

5.4% Net Margin

EPS (Diluted)

$0.14

Total Assets

$279.75B

Free Cash Flow

$480.00M

Financial Statements
Beta
Revenue$3.80B
Operating Income$715.00M
Interest Expense$807.00M
Net Income$207.00M
EPS (Basic)$0.14
EPS (Diluted)$0.14
Shares Outstanding (Basic)451.00M
Shares Outstanding (Diluted)453.00M

Key Highlights

  • 1Net income for Q2 2009 was $207 million, down from $517 million in Q2 2008, primarily due to higher provisions for credit losses.
  • 2Total revenue increased to $4.0 billion in Q2 2009 from $2.0 billion in Q2 2008, largely due to the acquisition of National City.
  • 3Pre-tax, pre-provision earnings were $1.3 billion, exceeding credit costs of $1.1 billion.
  • 4Tier 1 risk-based capital ratio improved to 10.5% at June 30, 2009, from 9.7% at December 31, 2008.
  • 5Tier 1 common capital ratio improved to 5.3% at June 30, 2009, from 4.8% at December 31, 2008.
  • 6The company raised $624 million in new common equity in May 2009.
  • 7The common stock dividend was reduced from $0.66 to $0.10 per share, effective April 2009.

Frequently Asked Questions

The acquisition of National City on December 31, 2008 significantly increased PNC's total assets and revenue. Total revenue for Q2 2009 was $4.0 billion, compared to $2.0 billion in Q2 2008, with the National City acquisition contributing substantially to this increase. The integration of National City is progressing well, with cost savings ahead of schedule, contributing to the company's pre-tax, pre-provision earnings.

Credit quality continued to deteriorate reflecting the weakened economy, though at a slower rate. Provisions for credit losses increased significantly to $1.1 billion in Q2 2009 from $186 million in Q2 2008. The allowance for loan and lease losses was strengthened to $4.6 billion, and net charge-offs increased to 1.89% of average loans.

PNC's capital levels strengthened during the quarter. The Tier 1 risk-based capital ratio increased to 10.5% and the Tier 1 common capital ratio rose to 5.3%. To further bolster capital, PNC raised $624 million in new common equity and reduced its quarterly common stock dividend from $0.66 to $0.10 per share.