Robert Q. Reilly
Chief Financial Officer at The PNC Financial Services Group
Thanks, Bill, and good morning, everyone. Our balance sheet is on Slide four and is presented on an average linked quarter basis. Loans are $321 billion decreased $4 billion or 1%. Investment securities declined $2 billion or 1%. And our cash balances at the Federal Reserve were $48 billion, an increase of $6 billion [Technical Issues] However, on a spot basis, deposits were up $4 billion, reflecting growth in both commercial and consumer deposits.
Borrowed funds increased $3 billion to $76 billion, primarily driven by parent company debt issuances early in the quarter. At quarter end, AOCI was a negative $8 billion compared to a negative $7.7 billion at December 31, reflecting the impact of higher interest rates. Our tangible book value increased to $85.70 per common share, an 11% increase compared to the same period a year ago. We remain well capitalized with an estimated CET1 ratio of 10.1% as of March 31st. While we recognize the likelihood of potentially substantial changes to the Basel III endgame NPR under the currently proposed capital rules, our estimated fully phased in expanded risk-based CET1 ratio would be approximately 8.3% as of March 31, 2024. We continue to be well positioned with capital flexibility. Share repurchases approximated $135 million or roughly 1 million shares. And when combined with $624 million of common dividends, we returned $759 million of capital to shareholders during the quarter.
Slide five shows our loans in more detail. Compared to the fourth quarter, average loan balances decreased 1%, primarily driven by lower commercial loan balances. Commercial loans were $219 billion, a decrease of $3.4 billion, driven by lower utilization as well as soft loan demand.
Within the corporate and institutional bank, utilization rates have remained below 2023 yearend levels and have not increased in the first quarter as is historically typical. We expect utilization to increase throughout the year. Notably, each percent of utilization within CNIB equates to $4 billion of loan growth. Consumer loans declined approximately $600 million, driven by lower credit card and home equity balances, and total loan yields increased 7 basis points to 6.1% in the first quarter.
Slide six details our investment, security and swap portfolios. Average investment securities of $135 billion decreased 1% as curtailed purchase activity was more than offset by portfolio paydowns and maturities. The securities portfolio yield increased 3 basis points to 2.62%, reflecting the runoff of lower yielding securities. As of March 31, the securities portfolio duration was four years.
Our receive-fixed swaps pointed to the commercial loan book totaled $37 billion on March 31st. The weighted average receive fixed rate of our swap portfolio increased 20 basis points to 2.3% and the duration of the portfolio was two years.
Through the end of 2024, 13% of our securities and swap portfolio is scheduled to mature which will allow us to reinvest into higher yielding assets, providing a meaningful benefit to net interest income in the second half of the year. Accumulated other comprehensive income was negative $8 billion at March 31st, which will accrete back as our securities and swaps mature, resulting in continued tangible book value growth.
Slide seven covers our deposits in more detail. Average deposits decreased $4 billion to $420 billion during the quarter, as growth in consumer deposits was more than offset by a seasonal decline in commercial deposits. Regarding mix, consolidated, noninterest-bearing deposits were 24% in the first quarter, down slightly from 25% in the fourth quarter.
Notably, on a spot basis in the first quarter, noninterest-bearing deposits had the smallest dollar decline since the Fed began raising rates in 2022, which gives us confidence that the noninterest-bearing portion of our deposits has largely stabilized. Our rate paid on interest-bearing deposits increased to 2.6% during the first quarter, up from 2.48% in the prior quarter. And as of March 31st, our cumulative deposit beta was 45% and consistent with our expectations. We believe our deposit betas have approached their peak levels, although we do expect some potential drift higher through the period leading up to a Fed rate cut, which we currently expect to occur in July.
In regard to the timing and amount of potential rate cuts, we recognize there's a lot of fluidity and uncertainty. However, our 2024 NII will largely be unaffected by any short-term interest rate movement or lack thereof. This is because our floating rate assets are aligned with our floating rate liabilities, including our high beta commercial interest-bearing deposits and our long-term debt, which is almost entirely swapped to floating rates. Importantly, going forward, we've remained well positioned for the NII benefit of repricing low yielding fixed rate securities and loans maturing during the latter half of 2024 and into 2025.
Turning to the income statement on Slide eight. First quarter net income was $1.3 billion or $3.10 per share, which included a pretax, noncore, noninterest expense of $130 million or $103 million after tax related to the increased FDIC special assess assessment. Excluding noncore expenses, adjusted EPS was $3.36 per share.
Total revenue of $5.1 billion decreased $216 million or 4% compared to the fourth quarter of 2023. Net interest income declined by $139 million or 4%, and our net interest margin was 2.57%, a decline of 9 basis points, resulting primarily from higher funding costs. Noninterest income decreased $77 million or 4%. Noninterest expense of $3.3 billion declined $740 million or 18%, and included $130 million FDIC special assessment. Importantly, core noninterest expense was $3.2 billion and decreased $205 million or 6%. Provision was $155 million in the first quarter, reflecting portfolio activity and improved macroeconomic factors, and our effective tax rate was 18.8%.
Turning to Slide nine, we highlight our revenue trends. First quarter revenue was down $216 million or 4%, driven by lower net interest income and in part a seasonal decline in fee income. Net interest income of $3.3 billion declined $139 million or 4%, reflecting increased funding costs, lower loan balances, and one less day in the quarter. Fee income was $1.7 billion and decreased $74 million or 4% linked quarter.
Looking at the detail. Asset management and brokerage revenue was up $4 million or 1%, reflecting higher average equity markets. Capital markets and advisory fees declined $50 million or 16%, driven by lower M&A advisory activity, off elevated fourth quarter levels, partially offset by higher underwriting fees. Card and cash management decreased $17 million or 2%, driven by seasonally lower consumer transaction volumes, partially offset by higher treasury management fees. Lending and deposit-related fees declined $9 million or 3%, reflecting the reduction of customer fees on certain checking products. Residential and commercial mortgage revenue declined $2 million or 1%, and included lower residential mortgage activity. Other noninterest income of $135 million decreased $3 million or 2%, reflecting lower gains on sales. The first quarter also included a negative $7 million Visa fair value adjustment compared to a negative $100 million adjustment in the fourth quarter.
Turning to Slide 10. Our core noninterest expense at $3.2 billion decreased $205 million or 6% linked quarter, reflecting strong expense management. Importantly, compared to the first quarter of 2023, core noninterest expense declined $117 million or 4%, with a decline in every expense category. This broad-based result reflects the impact of expense actions taken in 2023.
As we've previously stated, we implemented expense management actions that will drive $750 million of cost savings in 2024. These actions include the $325 million workforce reduction effort last year, which was realized in our first quarter expense run rate, and our $425 million 2024 continuous improvement program goal, which we're well on track to achieve. We remain diligent in our expense management efforts, and these actions give us confidence that will keep our year-over-year expenses stable.
Our credit metrics are presented on Slide 11. While overall credit quality remains resilient, the pressure we anticipated within the commercial real estate office sector has continued. Nonperforming loans increased $200 million or 9% linked quarter, almost entirely driven by commercial real estate, which increased $188 million. And inside of that, approximately $150 million was related to the CRE office portfolio.
Total delinquencies of $1.3 billion decreased $109 million or 8% linked quarter, driven by lower consumer and commercial delinquencies. Net loan charge-offs were $243 million in the first quarter, and our annualized net charge-offs to average loans ratio was 30 basis points. Our allowance for credit losses totaled $5.4 billion or 1.7% of total loans on March 31st, stable with December 31st.
Slide 12 provides more detail on our CRE office credit metrics. While NPLs have increased over the past few quarters, our criticized balances have remained relatively consistent. The migration of criticized loans to nonperforming status is an expected outcome as we work to resolve the occupancy and rate challenges inherent to this portfolio.
In the first quarter, net loan charge-offs within the CRE office portfolio were $50 million, essentially in line with the previous quarter level. Ultimately, we expect continued charge-offs on this portfolio, and accordingly we believe we are adequately reserved. As of March 31st, our reserves on the office portfolio were 9.7% of total office loans. And inside of that, 14.4% on the multitenant portfolio. Importantly, we continue to manage our exposure down and as a result, our balances declined 3%, or approximately $200 million linked quarter.
In summary, PNC reported a solid first quarter 2024, and we're well positioned for the remainder of the year. Regarding our view of the overall economy, we're expecting economic expansion in the second half of the year, resulting in real GDP growth of approximately 2% in 2024, and unemployment to increase modestly to 4% by year end. We expect the Fed to cut rates two times in 2024, with a 25 basis point decrease in July and another in November.
Looking at the second quarter of 2024 compared to the first quarter of 2024, we expect average loans to be stable, net interest income to be down approximately 1%. And as I mentioned previously, we expect NII and net interest margin to trough in the second quarter. Fee income to be up 1% to 2%. Other noninterest income to be in the range of $150 million and $200 million, excluding Visa activity.
Taking the component pieces of revenue together, we expect total revenue to be stable. We expect total core noninterest expense to be up 2% to 4%. We expect second quarter net charge-offs to be between $225 million and $275 million. As a reminder, PNC owns 3.5 million Visa class B shares with an unrecognized gain of approximately $1.6 billion. Under the terms of Visa's current exchange program scheduled to close on or about May 3rd, class B shareholders will have the opportunity to monetize 50% of their holdings. We've not included the impact of monetizing the Visa gain in our forecast.
Turning to Slide 14. Our full year 2024 guidance is unchanged from our January earnings call. And as a reminder, for the full year 2024 compared to the full year 2023, we expect average loan growth of approximately 1%. Total revenue to be stable to down 2%. Inside of that, our expectation is for net interest income to be down in the range of 4% to 5%, and noninterest income to be up 4% to 6%. Core noninterest expense, which excludes the FDIC assessment, is expected to be stable. And we expect our affected tax rate to be approximately 18.5%.
And with that, Bill and I are ready to take your questions.
