PNC Financial Services Group Inc. reported earnings of $5.3 billion in 2018, and earnings per share of $10.71. In the fourth quarter, the bank earned net income of $1.4 billion and $2.75 earnings per share.
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Bill Demchak[/caption]
"2018 was a successful year for PNC. Earnings per share increased, and our returns on average assets and common equity were strong,” said Bill Demchak, chairman, president and chief executive officer at PNC. “Record revenue was driven by higher net interest income and noninterest income, and we generated positive operating leverage for the year. We grew loans … [as well as the] successful launch of our national retail digital strategy.” Driven by its digital strategy, the bank increased its marketing budget by $13 million, compared with the third quarter of 2018.
Residential mortgage origination volume was $1.6 billion for the fourth quarter of 2018, compared with $2.1 billion for the third quarter, and $2.4 billion for the fourth quarter of 2017. Around 67 percent of fourth quarter of 2018 residential volume was for purchase transactions, compared with 72 percent in the third quarter, and 50 percent the fourth quarter of 2017.
The third-party residential mortgage servicing portfolio was $125 billion in the fourth quarter, compared with $127 billion in both the third quarter and in the fourth quarter of 2017. Residential mortgage loan-servicing acquisitions were $2 billion in the fourth quarter of 2018, compared with $6 billion for the third quarter and $1 billion for the fourth quarter of 2017.
Residential mortgage revenue decreased $17 million, reflecting a $19 million negative adjustment for residential mortgage servicing rights valuation, which was driven by a decline in long-term interest rates in the fourth quarter.
Nonperforming assets in the fourth quarter decreased $17 million, compared with the third quarter of 2018, because of lower real-estate owned and foreclosed assets. Nonperforming loans were stable reflecting a reduced number of nonperforming home equity and residential mortgage loans, which were offset by higher nonperforming commercial loans.
Average loan balances increased 1 percent, compared with the third quarter and 2 percent compared with the fourth quarter of 2017 due to growth in residential mortgage, auto, credit card and unsecured installment loans partially offset by lower home equity and education loans.
Average commercial lending balances increased $2.3 billion, reflecting seasonal and loan growth in PNC's multifamily agency warehouse lending. Average consumer lending balances increased $0.3 billion, to 73.7 billion, due to growth in residential mortgage, credit card, auto and unsecured installment loans partially offset by lower home equity and education loans.
