The PNC Financial Services Group, Inc. (NYSE:PNC) Q4 2014 Earnings Conference Call - Final Transcript

Jan 16, 2015 • 10:00 am ET


The PNC Financial Services Group, Inc. (NYSE:PNC) Q4 2014 Earnings Conference Call - Final Transcript


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Good morning. My name is Amanda and I will be your conference operator today. At this time I would like to welcome everyone to The PNC Financial Services Group earnings conference call. (Operator Instructions)

As a reminder, this call is being recorded. I would now like to turn the call over to the Director of Investor Relations, Mr. Bill Callihan. Sir, please go ahead.

Bill Callihan

Thank you and good morning. Welcome to today's conference call for The PNC Financial Services Group. Participating on this call our PNC's Chairman, President, and Chief Executive Officer, Bill Demchak, and Rob Reilly, Executive Vice President and Chief Financial Officer.

(Forward-looking Cautionary Statements)

Now I'd like to turn the call over to Bill Demchak.

Bill Demchak

Thanks, Bill, and good morning, everybody. As you've seen today, we reported net income of $4.2 billion or

Unidentified Speaker

$7.30 per diluted common share for the full year, now, that compares with 2013 net income of $4.2 billion or $7.36 per diluted common share. Our return on average assets for the full year was 1.28%. 2014 was a successful year for PNC, despite what proved to be a pretty challenging revenue environment with low rates and elevated competition. We grew loans 4% and deposits 6%. Fee income was up 4% and represented a higher percentage of our total revenue mix in 2014 than in 2013.

We strengthened our capital position even as we continued to return capital to shareholders through repurchases and higher dividends. We controlled expenses well and like the rest of the industry, benefited from continued outstanding credit quality. And importantly, we've made significant progress against our strategic priorities in 2014. We're almost three years now into the RBC acquisition, and we continue to grow in the southeast faster than in our legacy markets. Brand awareness there is up to about 65% from 50% a year ago.

We're thrilled with the team we have on the ground. And importantly, there are no material incremental investment costs to come in the southeast, really just incremental revenue as we continue to develop relationships, win business, and gain share. We know it's going to take time for us to build a leading banking franchise in the southeast, but we are exceeding our expectations. We're extremely excited about the potential in the region.

Inside of our Asset Management Group, we continued to grow assets in 2014 or assets under administration, driven by increases in the equity markets, new sales production, and cross sell referrals from other lines of business. Our transformation of the retail banking experience continues to gain momentum. We are well on our way to completing about 300 branch conversions by the end of the first quarter, which is increasingly important as the number of customers who prefer non-branch channels for their routine banking transactions approaches 50%.

These new, more efficient branches offer more technology and more opportunities for a meaningful sales and service conversation with those customers who do walk through the door, resulting in our best chance to truly understand our customers'