New tax law adds $1B to PNC's 4Q profit

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The new tax law added $1.1 billion in profits for PNC Financial Services Group in Pittsburgh in the fourth quarter.

Net income at the $381 billion-asset company more than doubled to $2 billion compared with a year earlier.

The tax-related boost came from an increase in the valuation of PNC's deferred tax liabilities. It was partly offset by several charges, including a donation to PNC’s charitable foundation, employee cash payments and costs to close data centers and sell real estate.

The company earned $4.18 per share. Without the impact of the tax law and other one-time items, PNC’s net income would have been $2.29, or 20 cents lower than the mean of estimates compiled by FactSet Research Systems.

“The year ended with a benefit from the new tax legislation, giving us increased flexibility as we continue to invest in our businesses, communities and our employees, which helps drive our Main Street banking model,” Chairman and CEO William Demchak said in a news release Friday.

Net interest income rose 10% to $2.3 billion on higher loan yields and an increase in loan balances.

Noninterest income increased 10% to $1.9 billion. The jump was driven by a "flow-through" benefit of the new tax law from PNC's $254 million equity stake in asset manager BlackRock. Corporate service fees also improved.

Gains to noninterest income were partly offset by fair-value adjustments that lowered by $248 million the value of Visa common stock derivatives held by PNC; the adjustments were prompted by revised estimates of how long it would take to resolve pending litigation.

Noninterest expense rose 25% to $1.4 billion due to PNC's $200 million charitable contribution to its foundation, $197 million in charges to dispose of real estate and $105 million to cover employee cash payments and pension account credits.

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