PNC Bank 2014 Annual Report Download - page 51

Proceedings and Note 22 Commitments and Guarantees in the
Notes To Consolidated Financial Statements in Item 8 of this
Report.
Key Factors Affecting Financial Performance
Our financial performance is substantially affected by a
number of external factors outside of our control, including
the following:
• General economic conditions, including the
continuity, speed and stamina of the current U.S.
economic expansion in general and on our customers
in particular,
• The monetary policy actions and statements of the
Federal Reserve and the Federal Open Market
Committee (FOMC),
• The level of, and direction, timing and magnitude of
movement in, interest rates and the shape of the
interest rate yield curve,
• The functioning and other performance of, and
availability of liquidity in, the capital and other
financial markets,
• Loan demand, utilization of credit commitments and
standby letters of credit, and asset quality,
• Customer demand for non-loan products and services,
• Changes in the competitive and regulatory landscape
and in counterparty creditworthiness and
performance as the financial services industry
restructures in the current environment,
• The impact of the extensive reforms enacted in the
Dodd-Frank legislation and other legislative,
regulatory and administrative initiatives and actions,
including those outlined elsewhere in this Report and
in our other SEC filings, and
• The impact of market credit spreads on asset
valuations.
In addition, our success will depend upon, among other things:
• Focused execution of strategic priorities for organic
customer growth opportunities,
• Further success in growing profitability through the
acquisition and retention of customers and deepening
relationships,
• Driving growth in acquired and underpenetrated
geographic markets, including our Southeast markets,
• Our ability to effectively manage PNC’s balance
sheet and generate net interest income,
• Revenue growth from fee income and our ability to
provide innovative and valued products to our
customers,
• Our ability to utilize technology to develop and
deliver products and services to our customers and
protect PNC’s systems and customer information,
• Our ability to bolster our critical infrastructure and
streamline our core processes,
• Our ability to manage and implement strategic
business objectives within the changing regulatory
environment,
• A sustained focus on expense management,
• Improving our overall asset quality,
• Managing the non-strategic assets portfolio and
impaired assets,
• Continuing to maintain and grow our deposit base as
a low-cost funding source,
• Prudent risk and capital management related to our
efforts to manage risk to acceptable levels and to
meet evolving CCAR compliance, regulatory capital
and liquidity standards,
• Actions we take within the capital and other financial
markets,
• The impact of legal and regulatory-related
contingencies, and
• The appropriateness of reserves needed for critical
accounting estimates and related contingencies.
For additional information, please see the Cautionary
Statement Regarding Forward-Looking Information section in
this Item 7 and Item 1A Risk Factors in this Report.
Table 1: Summary Financial Results
Year ended December 31 2014 2013
Net income (millions) $4,207 $4,212
Diluted earnings per common share from net
income $ 7.30 $ 7.36
Return from net income on:
Average common shareholders’ equity 9.91% 10.85%
Average assets 1.28% 1.38%
Income Statement Highlights
Our performance in 2014 included the following:
• Net income for 2014 of $4.2 billion was stable
compared with 2013, as a 4% decrease in revenue
was mostly offset by a reduction in provision for
credit losses and a 2% decline in noninterest expense.
Lower revenue in the comparison was driven by a
7% decline in net interest income, as noninterest
income was essentially unchanged. For additional
detail, please see the Consolidated Income Statement
Review section in this Item 7.
• Net interest income of $8.5 billion for 2014
decreased 7% compared with 2013, as lower yields
on loans and investment securities, a decline in
investment securities balances and a reduction in
purchase accounting accretion were partially offset
by commercial and commercial real estate loan
growth.
• Net interest margin decreased to 3.08 % for 2014
compared to 3.57 % for 2013. The decline reflected
the impact of lower loan and securities yields in the
ongoing low rate environment, lower purchase
accounting accretion and the impact of higher interest-
earning deposits with the Federal Reserve Bank.
The PNC Financial Services Group, Inc. – Form 10-K 33