PNC Financial Services reported second-quarter net income of $2.1 billion and diluted earnings per share of $4.81, or $4.85 on an adjusted basis, on record revenue of $6.88 billion, the Pittsburgh-based lender said in its quarterly release on Wednesday.
Revenue rose 21% year on year, with both record net interest income and record fee income contributing, according to the press release published on the group's investor relations site. Reported EPS was reduced by a net $0.04 per share by FirstBank integration costs and other second-quarter significant items, and the board raised the quarterly common stock dividend by 30 cents, or 18%, to $2.00 per share.
FIRSTBANK BOOSTS THE REVENUE BASE
Revenue included the full-quarter benefit of FirstBank, whose acquisition closed on 5 January, and a $448 million gain on the exchange of Visa Class B-2 shares. Net interest income rose 16% and fee income 20% year on year, both to record levels for a three-month period.
PNC incurred $127 million of FirstBank integration costs in the quarter. The Visa gain was substantially offset by a $140 million PNC Foundation contribution expense, a $139 million securities loss on repositioning about $4 billion of available-for-sale securities and negative $85 million of Visa Class B-3 derivative fair value adjustments; together with the integration costs, these items reduced net income by $15 million, or 4 cents per share.
On 22 June PNC completed the conversion of about 780,000 FirstBank customers, more than 1,620 employees and 95 branches across Colorado and Arizona to PNC Bank.
DIVIDEND LIFT AND CAPITAL DISCIPLINE
PNC's board raised the quarterly common stock dividend by 18% to $2.00 per share on 6 July. PNC returned $1.3 billion to shareholders in the quarter, including $0.6 billion of share repurchases, and its CET1 ratio was 9.9%, down from 10.1% at the end of March.
Fee income rose 10% from the first quarter, driven by strong capital markets activity, and net interest income rose 4%, with the net interest margin at 2.96%.
Chairman and chief executive Bill Demchak said: "Our successful FirstBank conversion, strong capital position and announced dividend increase provide further evidence of the strength and resilience of our franchise."