The PNC Financial Services Group, Inc. (NYSE:PNC) Q2 2016 Earnings Conference Call - Final Transcript

Jul 15, 2016 • 11:00 am ET


The PNC Financial Services Group, Inc. (NYSE:PNC) Q2 2016 Earnings Conference Call - Final Transcript


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Good morning, my name is Silvana 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. All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question-and-answer session. (Operator Instructions) As a reminder this call is being recorded.

I will now turn the call over to Director of Investor Relations Mr. Bryan Gill. Sir, please go ahead.

Bryan Gill

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

(Forward-Looking Cautionary Statements)

Information about such factors, as well as GAAP reconciliations and other information on non-GAAP financial measures we discuss, is included in today's conference call, earnings release and related presentation materials and in our 10-K, 10-Q and various other SEC filings and investor materials. These are all available on our corporate website,, under investor relations. These statements speak only as of July 15, 2016 and PNC undertakes no obligation to update them.

Now I would like to turn the call over to Bill Demchak.

Bill Demchak

Thanks, Bryan, and good morning, everybody. You have seen this morning that we reported net income of $989 million or $1.82 per diluted common share in the second quarter. We continued to execute on our strategic priorities with overall performance you have seen consistent with our prior guidance.

Now Rob is going to take you through the numbers in a couple of minutes but I will call your attention to just a few highlights. Specifically in the second quarter we saw revenue growth on the back of strong fee income, expenses that were again well managed, stable credit quality and growth in average loans and deposits. We maintained our strong capital position and you have likely seen the announcement that the regulators did not object to our capital plan submitted as part of the 2016 CCAR process. And as such we are pleased to be able to announce that the dividend will increase to $0.55 per share beginning in the third quarter. We also announced plans to repurchase up to $2 billion of common shares over the next four quarters.

So all in all it was a pretty good second quarter for PNC. As we look forward in regards to interest rates, the Fed appears to be back in a holding pattern on further target fed fund rate increases, at least according to the market. And post the Brexit vote we have seen long-term rates rally as global investors reach for basically any positive yield. And the combination of a strong dollar and positive yields in the U.S. makes the U.S. rate market preferable to virtually all others, and we have seen the impact of that.

Now the impact of these two issues, which are part economic and