"PNC’s diversified businesses delivered solid revenue despite weaker lending in the first quarter and ? combined with significantly reduced expenses ? drove improved returns for our shareholders," said James E. Rohr, chairman and chief executive officer. "We are making important progress on all of our strategic priorities as we continue to focus on growing deposits, loans and revenue. Our strong capital position should enable us to continue to invest to meet our clients’ needs even as we remain committed to disciplined expense management over the course of the year."
Income Statement Highlights:
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Strong first quarter earnings resulted from continued customer growth and a significant increase in pretax pre-provision earnings driven by solid revenue and a substantial reduction in expenses from fourth quarter.
Net interest income of $2.4 billion for the first quarter of 2013 declined $35 million compared with the fourth quarter of 2012 due to lower scheduled purchase accounting accretion. Core net interest income was stable.
Noninterest income was $1.6 billion for the first quarter of 2013 and reflected the diversification of PNC’s businesses. Noninterest income decreased $79 million compared with fourth quarter 2012 due in part to the impact of robust fourth quarter capital markets activity.
Provision for credit losses declined to $236 million for the first quarter of 2013 compared with $318 million for the fourth quarter of 2012 as a result of overall credit quality improvement.
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By GlobalDataNoninterest expense was significantly reduced by $434 million, or 15 percent, to $2.4 billion for the first quarter of 2013 compared with fourth quarter 2012.
First quarter included lower expense for residential mortgage foreclosure-related matters and no expense for trust preferred securities redemption discounts and merger integration costs.
The decline in first quarter expense also reflected continued commitment to disciplined expense management, lower marketing expense and reduced expense for lower capital markets activities.
Balance Sheet Highlights:
Loans increased $.7 billion to $187 billion at March 31, 2013 compared with year end 2012 as loan growth slowed during the first quarter.
Total commercial lending increased $1.4 billion, or 1 percent, over fourth quarter 2012 as a result of specialty lending businesses including public finance, asset-based lending and real estate.
Consumer lending decreased $.7 billion from pay downs of residential real estate, credit card and education loans.
Underlying credit quality continued to improve during the first quarter of 2013 compared with the fourth quarter of 2012.
As previously disclosed, credit quality metrics for the first quarter of 2013 were impacted by alignment with regulatory guidance which increased nonperforming assets by $426 million and net charge-offs by $134 million.
Total deposits decreased $1.5 billion to $212 billion at March 31, 2013 compared with December 31, 2012.
Runoff of year-end seasonally higher transaction deposits resulted in a decrease of $1.3 billion at March 31, 2013 compared with December 31, 2012.
Average transaction deposits grew $3.1 billion in the first quarter of 2013 compared with the fourth quarter.
PNC’s balance sheet remained core funded with a loans to deposits ratio of 88 percent at March 31, 2013.
PNC had a strong capital position at March 31, 2013.
The Tier 1 common capital ratio increased to an estimated 9.8 percent at March 31, 2013 compared with 9.6 percent at December 31, 2012.
The estimated proforma Basel III Tier 1 common capital ratio was 7.9 percent at March 31, 2013 without benefit of phase-ins.
In April 2013 the PNC board of directors raised the quarterly cash dividend on common stock to 44 cents per share, an increase of 4 cents per share, or 10 percent, effective with the May dividend.
