PNC Financial 1Q17 Earnings Call Notes

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Bill Demchak – Chairman of the Board, President, Chief Executive Officer

Pleased and a little surprised by Fed hike

“We were pleased and frankly a little bit surprised to see another interest rate hike by the Fed in March. Of course, we welcome news of economic indicators that seem to suggest a confidence amongst consumers and business leaders. Now, as I said before, PNC is positioned to benefit should environmental factors turn more favorable. But still, we remain focused on execution against our strategic priorities.”

CRE growth replaced by C&I

“This time last year, growth was dominated by real estate. This quarter, real estate loans are actually down but have been replaced by growth in the rest of C&I which seems to run counter to recent industry data. The C&I growth was very broad based across equipment finance, ABL, large corporate, middle market and for the first time in seven years, straight commercial loans, which we categorize as loans declines in the $10 million to $50 million range in revenue.”

Rob Reilly

Credit quality stable

“Turning to slide nine. Overall credit quality remained stable in the first quarter. Total nonperforming loans were down $146 million or 7% linked quarter with improvements in both commercial and consumer loans. Total delinquencies decreased by $192 million or 12% reflecting improvements in all past due categories. Provision for credit losses of $88 million increased by $21 million linked quarter attributable to loan growth and normalizing trends in our commercial loan book. Net charge-offs increased $12 million to $118 million in the first quarter, largely driven by seasonal increases in home equity and credit card loans. The annualized net charge-off ratio was 23 basis points, up three basis points linked quarter. Our credit quality metrics remain near historical lows and these results fully reflect the outcome of the recently completed Shared National Credit examination.”