PNC Financial Services Group Inc PNC
Q2 2013 Earnings Call Transcript

Transcript Call Date 07/17/2013

Operator: Good morning. My name is France, and I will be your operator for 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 a mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. As a reminder, this conference is being recorded.

I will now turn the call over to the Director of Investor Relations, Mr. Bill Callihan. You may go ahead, sir.

William H. Callihan - SVP, IR: Thank you and good morning. Welcome to today's conference call for the PNC Financial Services Group. Participating on this call is PNC's President and CEO, Bill Demchak and Rick Johnson, Executive Vice President and Chief Financial Officer.

Today's presentation contains forward-looking information. Actual results and future events could differ possibly materially from those anticipated in our statements and from our historical performance due to a variety of risks and other factors.

Our forward-looking statements regarding PNC's performance assume a continuation of the current economic environment and do not take into account the impact of potential legal and regulatory contingencies.

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, 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 the Investor Relations section. These statements speak only as of July 17, 2013, and PNC undertakes no obligation to update them.

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

William S. Demchak - President and CEO: Thanks, Bill and good morning everybody. Thanks for joining us today. I'm going to start by running through some of the highlights of our second quarter earnings and talking about the progress we're making on some of our strategic priorities. I will also share some views on the environment, now that it's likely to affect us through the remainder of the year, before I turn it over to Rick, to run you through the actual results. Then, we'll take your questions.

As you've all seen, we reported net income of $1.1 billion, or $1.99 per diluted common share, with the return on average assets of 1.49%. Obviously, these are big numbers and while we're pleased with the results, as we noted, we did have several select items in the quarter and let me run through a couple of these.

First, we sold some Visa Class B common stock and we realized a gain of $83 million. As you all know, we've been monetizing our position in Visa over time and at the end of the second quarter we still had approximately $750 million in unrealized gains.

Now, we also sold some securities early in the quarter when rates were low, which gave rise to some security gains and increased our asset sensitivity. As rates rose later in the quarter, we reinvested those proceeds. Now, the net effect was higher than normal security gains and lower than forecasted NII. All else equal, it should benefit NII in future quarters.

Read our Earnings Call Transcript disclaimer.
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