10-QPeriod: Q3 FY2011

PNC FINANCIAL SERVICES GROUP, INC. Quarterly Report for Q3 Ended Sep 30, 2011

Filed November 8, 2011For Securities:PNC

Summary

PNC Financial Services Group, Inc. reported solid performance for the third quarter and first nine months of 2011, demonstrating continued improvement in credit quality and disciplined expense management. Total revenue saw a slight decrease compared to the prior year periods, primarily due to lower purchase accounting accretion, but noninterest income remained stable year-over-year for the third quarter. The company highlighted significant improvements in asset quality, with nonperforming assets and net charge-offs declining. The provision for credit losses also decreased substantially, reflecting this improved credit profile. PNC continued to execute its growth strategies, focusing on client acquisition across its business segments and demonstrating strong capital and liquidity positions. The pending acquisition of RBC Bank (USA) is on track for a March 2012 closing, expected to further expand PNC's geographic footprint and market position.

Financial Highlights

31 data points
Beta

Revenue

$3.54B

Net Income

$834.00M

23.5% Net Margin

EPS (Diluted)

$1.55

Total Assets

$269.47B

Free Cash Flow

$880.00M

Financial Statements
Beta
Revenue$3.54B
Interest Expense$355.00M
Net Income$834.00M
EPS (Basic)$1.57
EPS (Diluted)$1.55
Shares Outstanding (Basic)524.00M
Shares Outstanding (Diluted)526.00M

Key Highlights

  • 1Net income attributable to common shareholders was $826 million for Q3 2011, down from $1,094 million in Q3 2010, largely due to a gain on sale in the prior year period.
  • 2Diluted earnings per common share from continuing operations were $1.55 in Q3 2011, an increase from $1.45 in Q3 2010.
  • 3Total revenue for Q3 2011 was $3.54 billion, a slight decrease from $3.60 billion in Q3 2010, primarily due to lower purchase accounting accretion.
  • 4Provision for credit losses decreased significantly to $261 million in Q3 2011 from $486 million in Q3 2010, reflecting improved asset quality.
  • 5Nonperforming assets decreased by 16% to $4.3 billion at September 30, 2011, compared to December 31, 2010.
  • 6PNC announced its agreement to acquire RBC Bank (USA) for $3.45 billion, expected to close in March 2012, and is also acquiring 27 branches from Flagstar Bank in Georgia.
  • 7Tier 1 common capital ratio was 10.5% at September 30, 2011, up from 9.8% at December 31, 2010, indicating strong capital adequacy.

Frequently Asked Questions

Net income attributable to common shareholders for the third quarter of 2011 was $826 million, a decrease from $1,094 million in the third quarter of 2010. This year-over-year decrease was primarily influenced by the $328 million after-tax gain on the sale of PNC Global Investment Servicing recognized in the third quarter of 2010. Diluted earnings per common share from continuing operations showed improvement, rising to $1.55 from $1.45 in the prior year.

PNC demonstrated improved credit quality. Nonperforming assets decreased by 16% to $4.3 billion at September 30, 2011, compared to December 31, 2010. Net charge-offs also saw a significant decline, falling to $365 million in the third quarter of 2011 from $614 million in the third quarter of 2010. The provision for credit losses decreased substantially, reflecting these positive trends in asset quality.

PNC is progressing with its significant strategic acquisition of RBC Bank (USA), with an expected closing in March 2012. This transaction is anticipated to add approximately $19 billion in deposits and $16 billion in loans. Additionally, PNC is acquiring 27 branches and associated deposits from Flagstar Bank in Georgia, expected to close in December 2011. These acquisitions are part of PNC's strategy to expand its geographic footprint and customer base.

PNC maintained a strong capital position. The Tier 1 common capital ratio improved to 10.5% at September 30, 2011, from 9.8% at December 31, 2010. Similarly, the Tier 1 risk-based capital ratio increased to 13.1% from 12.1%. These improvements were driven by retained earnings and strategic capital actions, including the issuance of preferred stock.