The PNC Financial Services Group, Inc. (NYSE:PNC) Q1 2019 Earnings Conference Call Transcript

Apr 12, 2019 • 09:30 am ET


The PNC Financial Services Group, Inc. (NYSE:PNC) Q1 2019 Earnings Conference Call 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 speakers' remarks, there will be a question-and-answer session. (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. Bryan Gill. Sir, please go ahead.

Bryan K. Gill

Well, thank you, and good morning, everyone. Welcome to today's conference call for the PNC Financial Services Group. Participating on this call are PNC's Chairman, President and CEO, Bill Demchak; and Rob Reilly, Executive Vice President and CFO.

Today's presentation contains forward-looking information, cautionary statements about this information as well as reconciliations of non-GAAP measures are included in today's earnings release materials as well as our SEC filings and other investor materials.

These materials are all available on our corporate website under Investor Relations. These statements speak only as of April 12th, 2019 and PNC undertakes no obligation to update them.

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

William S. Demchak

Thanks, Brian, and good morning, everybody. As you've seen this morning, PNC reported net income of $1.3 billion or $2.61 per diluted common share for the first quarter. Rob is going to run you through all the numbers in a second, but I thought I would highlight a few brief items here.

As you know, the first quarter of the year is typically negatively impacted by some seasonality as well as two fewer days compared to the fourth quarter. And with this as context, I really think PNC delivered good results.

Linked quarter, we saw very strong growth in average commercial balances and small growth in consumer loans as well. Within C&IB, the growth was actually greater than the headline numbers as we had a decrease in our commercial real estate balances of approximately $1.8 billion, driven principally by our multi-family warehouse lines. If you exclude the real estate book, C&IB growth came in at just over 4% quarter-over-quarter.

We could -- we saw continued growth in our secured lending areas, but we also saw growth in our more traditional cash flow lending businesses for the first time in several quarters. Reflecting normal first quarter seasonality total fee -- fee income came in about where we expected. Importantly, expenses were flat and our overall credit quality remained strong. Our loan loss provision came in higher than we anticipated, but as Rob is going to discuss, it was largely driven by our strong loan growth and some reserves for certain commercial credits, nothing that we saw on a broad based basis.

As we look forward from here, we still feel very good about the economy, notwithstanding some mixed signals from economic indicators, we have seen very little from our clients that would indicate that there is inherent weakness in the US economy. Having