Form: 8-K

Current report filing

January 15, 2021

Documents


Exhibit 99.1

pncbanklogoa181.jpg



THE PNC FINANCIAL SERVICES GROUP, INC.

FINANCIAL SUPPLEMENT
FOURTH QUARTER 2020
(Unaudited)



THE PNC FINANCIAL SERVICES GROUP, INC.
FINANCIAL SUPPLEMENT
FOURTH QUARTER 2020
(UNAUDITED)
Consolidated Results:
Page
7-8
9-10
11-12
Business Segment Results:
15-16
19-21

The information contained in this Financial Supplement is preliminary, unaudited and based on data available on January 15, 2021. We have reclassified certain prior period amounts to be consistent with the current period presentation, which we believe is more meaningful to readers of our consolidated financial statements. This information speaks only as of the particular date or dates included in the schedules. We do not undertake any obligation to, and disclaim any duty to, correct or update any of the information provided in this Financial Supplement. Our future financial performance is subject to risks and uncertainties as described in our United States Securities and Exchange Commission (SEC) filings.

BUSINESS
PNC is one of the largest diversified financial services companies in the United States (U.S) and is headquartered in Pittsburgh, Pennsylvania. PNC has businesses engaged in retail banking, including residential mortgage, corporate and institutional banking and asset management, providing many of its products and services nationally. PNC's retail branch network is located primarily in markets across the Mid-Atlantic, Midwest and Southeast. PNC also has strategic international offices in four countries outside the U.S.

DISCONTINUED OPERATIONS
On May 15, 2020, PNC completed the sale of its 31.6 million shares of BlackRock, Inc., common and preferred stock through a registered secondary offering. In addition, BlackRock repurchased 2.65 million shares from PNC. The total proceeds from the sale were $14.2 billion in cash, net of $.2 billion in expenses, and resulted in a gain on sale of $4.3 billion. Additionally, PNC contributed 500,000 BlackRock shares to the PNC Foundation on May 18, 2020. As a result, PNC has divested its entire holding in BlackRock. PNC and its affiliates only hold shares of BlackRock stock in a fiduciary capacity for clients of PNC and its affiliates. Activity for BlackRock for all periods presented on the Consolidated Income Statement have been reclassified to discontinued operations and prior period BlackRock investment balances have been reclassified to the Asset held for sale line on the Consolidated Balance Sheet in accordance with Accounting Standard Codification (ASC) 205-20, Presentation of Financial Statements - Discontinued Operations.

PENDING ACQUISITION OF BBVA USA BANCSHARES, INC.
On November 16, 2020, PNC announced the signing of a definitive agreement with BBVA, S.A. to acquire BBVA USA Bancshares, Inc., a U.S. financial holding company conducting its business operations primarily through its U.S. banking subsidiary, BBVA USA for a fixed purchase price of $11.6 billion in cash. BBVA USA has over 600 branches in Texas, Alabama, Arizona, California, Florida, Colorado and New Mexico. The transaction is expected to add approximately $102 billion in total assets, $86 billion of deposits and $66 billion of loans to PNC's Consolidated Balance Sheet and to close in mid-2021, subject to customary closing conditions, including receipt of regulatory approvals.


THE PNC FINANCIAL SERVICES GROUP, INC.
Cross Reference Index to Fourth Quarter 2020 Financial Supplement (Unaudited)
Financial Supplement Table Reference
Table Description Page
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9
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18
15-16
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THE PNC FINANCIAL SERVICES GROUP, INC.
Page 1

Table 1: Consolidated Income Statement (Unaudited)
Three months ended Year ended
December 31 September 30 June 30 March 31 December 31 December 31 December 31
In millions, except per share data 2020 2020 2020 2020 2019 2020 2019
Interest Income
Loans $ 2,074  $ 2,116  $ 2,257  $ 2,480  $ 2,573  $ 8,927  $ 10,525 
Investment securities 442  490  527  582  560  2,041  2,426 
Other 60  70  71  138  201  339  811 
Total interest income 2,576  2,676  2,855  3,200  3,334  11,307  13,762 
Interest Expense
Deposits 53  74  141  375  468  643  1,986 
Borrowed funds 99  118  187  314  378  718  1,811 
Total interest expense 152  192  328  689  846  1,361  3,797 
Net interest income 2,424  2,484  2,527  2,511  2,488  9,946  9,965 
Noninterest Income
Asset management 221  215  199  201  216  836  862 
Consumer services 387  390  330  377  390  1,484  1,555 
Corporate services 650  479  512  526  499  2,167  1,914 
Residential mortgage 99  137  158  210  87  604  368 
Service charges on deposits 134  119  79  168  185  500  702 
Other (a) 293  457  271  343  456  1,364  1,473 
Total noninterest income 1,784  1,797  1,549  1,825  1,833  6,955  6,874 
Total revenue 4,208  4,281  4,076  4,336  4,321  16,901  16,839 
Provision For (Recapture of) Credit Losses (254) 52  2,463  914  221  3,175  773 
Noninterest Expense
Personnel 1,521  1,410  1,373  1,369  1,468  5,673  5,647 
Occupancy 215  205  199  207  201  826  834 
Equipment 296  292  301  287  348  1,176  1,210 
Marketing 64  67  47  58  77  236  301 
Other 612  557  595  622  668  2,386  2,582 
Total noninterest expense 2,708  2,531  2,515  2,543  2,762  10,297  10,574 
Income (loss) from continuing operations before income taxes and noncontrolling interests 1,754  1,698  (902) 879  1,338  3,429  5,492 
Income taxes (benefit) from continuing operations 298  166  (158) 120  195  426  901 
Net income (loss) from continuing operations 1,456  1,532  (744) 759  1,143  3,003  4,591 
Income from discontinued operations before taxes 5,596  181  288  5,777  988 
Income taxes from discontinued operations 1,197  25  50  1,222  161 
Net income from discontinued operations 4,399  156  238  4,555  827 
Net income 1,456  1,532  3,655  915  1,381  7,558  5,418 
Less: Net income attributable to noncontrolling interests 14  13  7  7  14  41  49 
Preferred stock dividends (b) 48  63  55  63  55  229  236 
Preferred stock discount accretion and
redemptions		 1  1  1  1  1  4  4 
Net income attributable to common shareholders $ 1,393  $ 1,455  $ 3,592  $ 844  $ 1,311  $ 7,284  $ 5,129 
Earnings Per Common Share
Basic earnings (loss) from continuing operations $ 3.26  $ 3.40  $ (1.90) $ 1.59  $ 2.44  $ 6.37  $ 9.59 
Basic earnings from discontinued operations 10.28  0.37  0.54  10.62  1.84 
Total basic earnings $ 3.26  $ 3.40  $ 8.40  $ 1.96  $ 2.98  $ 16.99  $ 11.43 
Diluted earnings (loss) from continuing operations $ 3.26  $ 3.39  $ (1.90) $ 1.59  $ 2.43  $ 6.36  $ 9.57 
Diluted earnings from discontinued operations 10.28  0.36  0.54  10.60  1.82 
Total diluted earnings $ 3.26  $ 3.39  $ 8.40  $ 1.95  $ 2.97  $ 16.96  $ 11.39 
Average Common Shares Outstanding
Basic 425  426  426  429  437  427  447 
Diluted 426  426  426  430  438  427  448 
Efficiency 64  % 59  % 62  % 59  % 64  % 61  % 63  %
Noninterest income to total revenue 42  % 42  % 38  % 42  % 42  % 41  % 41  %
Effective tax rate from continuing operations (c) 17.0  % 9.8  % 17.5  % 13.7  % 14.6  % 12.4  % 16.4  %

(a)Includes net gains on sales of securities of $51 million, $32 million, $40 million, $182 million, and $12 million for the quarters ended December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020 and December 31, 2019, respectively. Amounts for the twelve months ended December 31, 2020 and December 31, 2019 were $305 million and $48 million, respectively.
(b)Dividends are payable quarterly other than Series O, Series R and Series S preferred stock, which are payable semiannually, with the Series O payable in different quarters than the Series R and Series S preferred stock.
(c)The effective income tax rates are generally lower than the statutory rate due to the relationship of pretax income to tax credits and earnings that are not subject to tax.

THE PNC FINANCIAL SERVICES GROUP, INC.
Page 2
Table 2: Consolidated Balance Sheet (Unaudited)
December 31 September 30 June 30 March 31 December 31
In millions, except par value 2020 2020 2020 2020 2019
Assets
Cash and due from banks $ 7,017  $ 6,629  $ 6,338  $ 7,493  $ 5,061 
Interest-earning deposits with banks (a) 85,173  70,959  50,233  19,986  23,413 
Loans held for sale (b) 1,597  1,787  1,443  1,693  1,083 
Asset held for sale (c) 8,511  8,558 
Investment securities – available for sale 87,358  89,747  97,052  89,077  69,163 
Investment securities – held to maturity 1,441  1,438  1,441  1,469  17,661 
Loans (b) 241,928  249,279  258,236  264,643  239,843 
Allowance for loan and lease losses (d) (5,361) (5,751) (5,928) (3,944) (2,742)
Net loans 236,567  243,528  252,308  260,699  237,101 
Equity investments 6,052  4,938  4,943  4,694  5,176 
Mortgage servicing rights 1,242  1,113  1,067  1,082  1,644 
Goodwill 9,233  9,233  9,233  9,233  9,233 
Other (b) 30,999  32,445  34,920  41,556  32,202 
Total assets $ 466,679  $ 461,817  $ 458,978  $ 445,493  $ 410,295 
Liabilities
Deposits
Noninterest-bearing $ 112,637  $ 107,281  $ 99,458  $ 81,614  $ 72,779 
Interest-bearing 252,708  247,798  246,539  223,590  215,761 
Total deposits 365,345  355,079  345,997  305,204  288,540 
Borrowed funds
Federal Home Loan Bank borrowings 3,500  5,500  8,500  23,491  16,341 
Bank notes and senior debt 24,271  26,839  27,704  31,438  29,010 
Subordinated debt 6,403  6,465  6,500  6,475  6,134 
Other (b) 3,021  3,306  4,322  11,995  8,778 
Total borrowed funds 37,195  42,110  47,026  73,399  60,263 
Allowance for unfunded lending related commitments (d) 584  689  662  450  318 
Accrued expenses and other liabilities 9,514  10,629  12,345  17,150  11,831 
Total liabilities 412,638  408,507  406,030  396,203  360,952 
Equity
Preferred stock (e)
Common stock - $5 par value
Authorized 800 shares, issued 543 shares 2,713  2,712  2,712  2,712  2,712 
Capital surplus 15,884  15,836  16,284  16,288  16,369 
Retained earnings 46,848  45,947  44,986  41,885  42,215 
Accumulated other comprehensive income 2,770  2,997  3,069  2,518  799 
Common stock held in treasury at cost:119, 118, 117, 118 and 109 shares (14,205) (14,216) (14,128) (14,140) (12,781)
Total shareholders’ equity 54,010  53,276  52,923  49,263  49,314 
Noncontrolling interests 31  34  25  27  29 
Total equity 54,041  53,310  52,948  49,290  49,343 
Total liabilities and equity $ 466,679  $ 461,817  $ 458,978  $ 445,493  $ 410,295 

(a)Amounts include balances held with the Federal Reserve Bank of Cleveland of $84.9 billion, $70.6 billion, $50.0 billion, $19.6 billion and $23.2 billion as of December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020 and December 31, 2019, respectively.
(b)Amounts include assets and liabilities for which PNC has elected the fair value option. Our third quarter 2020 Form 10-Q included, and our 2020 Form 10-K will include, additional information regarding these items.
(c)Represents our held for sale investment in BlackRock. In the second quarter of 2020, PNC divested its entire holding in BlackRock. Prior period BlackRock investment balances have been reclassified to the Asset held for sale line in accordance with Accounting Standards Codification 205-20, Presentation of Financial Statements - Discontinued Operations. Our second and third quarter 2020 Form 10-Qs included, and our 2020 Form 10-K will include additional information.
(d)Amounts as of December 31, 2020, September 30, 2020, June 30, 2020 and March 31, 2020 reflect the impact of adopting Accounting Standards Update 2016-13, Financial Instruments - Credit Losses, which is commonly referred to as the Current Expected Credit Losses (CECL) standard and our transition from an incurred loss methodology for these reserves to an expected credit loss methodology. Our 2019 Form 10-K and 2020 Form 10-Qs included, and our 2020 Form 10-K will include, additional information related to our adoption of this standard.
(e)Par value less than $0.5 million at each date.


THE PNC FINANCIAL SERVICES GROUP, INC.
Page 3
Table 3: Average Consolidated Balance Sheet (Unaudited) (a)
Three months ended Year ended
December 31 September 30 June 30 March 31 December 31 December 31 December 31
In millions 2020 2020 2020 2020 2019 2020 2019
Assets
Interest-earning assets:
Investment securities
Securities available for sale
Residential mortgage-backed
Agency $ 48,036  $ 52,215  $ 52,500  $ 49,636  $ 33,937  $ 50,594  $ 31,526 
Non-agency 1,337  1,437 1,529 1,617 1,582 1,480 1,746 
Commercial mortgage-backed 6,568 6,927 7,232 6,734 6,054 6,865 5,676 
Asset-backed 5,017 5,033 5,309 5,003 5,059 5,090 5,199 
U.S. Treasury and government agencies 18,783 18,724 15,457 15,938 15,966 17,234 17,642 
Other 4,561 4,723 4,952 4,024 2,849 4,564 3,200 
Total securities available for sale 84,302 89,059 86,979 82,952 65,447 85,827 64,989
Securities held to maturity
Residential mortgage-backed 14,943  15,421 
Commercial mortgage-backed 498 553 
Asset-backed 22 51 54 18 120 
U.S. Treasury and government agencies 793 788 783 779 774 786 767 
Other 650 655 646 640 1,794 648 1,816 
Total securities held to maturity 1,443 1,443 1,451 1,470 18,063 1,452 18,677
Total investment securities 85,745 90,502 88,430 84,422 83,510 87,279 83,666
Loans
Commercial and industrial 134,944 139,795 153,595 128,723 124,876 139,254 123,524 
Commercial real estate 28,991 29,081 28,707 28,275 28,670 28,765 28,526 
Equipment lease financing 6,380 6,771 7,035 7,066 7,199 6,812 7,255 
Consumer 52,872 54,692 56,485 57,680 56,765 55,423 55,671 
Residential real estate 22,638 22,753 22,292 21,828 21,341 22,379 20,040 
Total loans 245,825 253,092 268,114 243,572 238,851 252,633 235,016
Interest-earning deposits with banks (b) 76,374 60,327 34,600 17,569 23,316 47,333 16,878 
Other interest-earning assets 8,134 9,752 10,867 9,468 11,371 9,553 12,425 
Total interest-earning assets 416,078 413,673 402,011 355,031 357,048 396,798 347,985
Noninterest-earning assets 48,901 48,466 55,302 57,405 54,371 52,497 52,350 
Total assets $ 464,979  $ 462,139  $ 457,313  $ 412,436  $ 411,419  $ 449,295  $ 400,335 
Liabilities and Equity
Interest-bearing liabilities:
Interest-bearing deposits
Money market $ 62,621  $ 63,598  $ 61,346  $ 53,287  $ 56,209  $ 60,229  $ 55,505 
Demand 88,026 87,226 82,881 70,931 69,496 82,295 65,729 
Savings 79,430 77,479 75,345 69,977 66,827 75,574 62,938 
Time deposits 19,448 20,248 21,873 21,141 21,600 20,673 20,416 
Total interest-bearing deposits 249,525 248,551 241,445 215,336 214,132 238,771 204,588
Borrowed funds
Federal Home Loan Bank borrowings 4,761 7,196 12,559 13,440 18,944 9,470 22,253 
Bank notes and senior debt 24,022 25,858 28,298 29,988 27,403 27,030 26,781 
Subordinated debt 5,936 5,936 5,937 5,934 5,760 5,936 5,588 
Other 3,433 4,354 6,435 7,826 7,926 5,502 6,906 
Total borrowed funds 38,152 43,344 53,229 57,188 60,033 47,938 61,528
Total interest-bearing liabilities 287,677 291,895 294,674 272,524 274,165 286,709 266,116
Noninterest-bearing liabilities and equity:
Noninterest-bearing deposits 109,878 101,931 93,776 74,396 73,626 95,055 72,212 
Accrued expenses and other liabilities 14,348 15,341 16,989 16,437 14,541 15,774 13,371 
Equity 53,076 52,972 51,874 49,079 49,087 51,757 48,636 
Total liabilities and equity $ 464,979  $ 462,139  $ 457,313  $ 412,436  $ 411,419  $ 449,295  $ 400,335 

(a)Calculated using average daily balances.
(b)Amounts include average balances held with the Federal Reserve Bank of Cleveland of $76.1 billion, $60.0 billion, $34.2 billion, $17.3 billion and $23.0 billion for the three months ended December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020 and December 31, 2019, respectively. Amounts include $47.0 billion and $16.6 billion for the twelve months ended December 31, 2020 and December 31, 2019, respectively.

THE PNC FINANCIAL SERVICES GROUP, INC.
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Table 4: Details of Net Interest Margin (Unaudited)
Three months ended Year ended
December 31 September 30 June 30 March 31 December 31 December 31 December 31
2020 2020 2020 2020 2019 2020 2019
Average yields/rates (a)
Yield on interest-earning assets
Investment securities
Securities available for sale
Residential mortgage-backed
Agency 1.81  % 2.03  % 2.29  % 2.63  % 2.48  % 2.19  % 2.75  %
Non-agency 7.15  % 7.26  % 7.13  % 7.87  % 8.09  % 7.36  % 8.08  %
Commercial mortgage-backed 2.66  % 2.50  % 2.59  % 2.95  % 2.30  % 2.67  % 2.85  %
Asset-backed 2.04  % 2.44  % 2.60  % 3.05  % 3.26  % 2.53  % 3.31  %
U.S. Treasury and government agencies 1.77  % 1.64  % 1.77  % 2.29  % 2.31  % 1.88  % 2.47  %
Other 3.45  % 3.39  % 3.47  % 3.69  % 3.36  % 3.51  % 3.34  %
Total securities available for sale 2.05  % 2.16  % 2.39  % 2.77  % 2.65  % 2.35  % 2.90  %
Securities held to maturity
Residential mortgage-backed 2.63  % 2.84  %
Commercial mortgage-backed 4.44  % 3.80  %
Asset-backed 2.38  % 2.77  % 3.02  % 4.17  %
U.S. Treasury and government agencies 2.88  % 2.86  % 2.84  % 2.84  % 2.86  % 2.80  % 2.87  %
Other 4.20  % 4.20  % 4.27  % 4.48  % 4.47  % 4.32  % 4.41  %
Total securities held to maturity 3.47  % 3.47  % 3.47  % 3.56  % 2.87  % 3.44  % 3.03  %
Total investment securities 2.08  % 2.18  % 2.41  % 2.78  % 2.70  % 2.36  % 2.93  %
Loans
Commercial and industrial 2.87  % 2.82  % 2.83  % 3.62  % 3.88  % 3.07  % 4.17  %
Commercial real estate 2.63  % 2.65  % 2.84  % 3.64  % 3.89  % 2.98  % 4.33  %
Equipment lease financing 3.90  % 3.80  % 3.82  % 3.93  % 3.87  % 3.86  % 3.93  %
Consumer 4.74  % 4.69  % 4.86  % 5.38  % 5.45  % 4.93  % 5.54  %
Residential real estate 3.69  % 3.74  % 3.86  % 3.96  % 4.10  % 3.81  % 4.21  %
Total loans 3.35  % 3.32  % 3.37  % 4.08  % 4.27  % 3.55  % 4.51  %
Interest-earning deposits with banks 0.10  % 0.10  % 0.10  % 1.27  % 1.66  % 0.21  % 2.09  %
Other interest-earning assets 1.99  % 2.23  % 2.26  % 3.51  % 3.65  % 2.50  % 3.69  %
Total yield on interest-earning assets 2.46  % 2.57  % 2.85  % 3.62  % 3.71  % 2.87  % 3.98  %
Rate on interest-bearing liabilities
Interest-bearing deposits
Money market 0.05  % 0.07  % 0.15  % 0.72  % 0.93  % 0.23  % 1.10  %
Demand 0.04  % 0.05  % 0.08  % 0.41  % 0.51  % 0.13  % 0.54  %
Savings 0.08  % 0.11  % 0.31  % 0.79  % 0.97  % 0.31  % 1.11  %
Time deposits 0.41  % 0.58  % 0.80  % 1.34  % 1.52  % 0.79  % 1.60  %
Total interest-bearing deposits 0.08  % 0.12  % 0.23  % 0.70  % 0.87  % 0.27  % 0.97  %
Borrowed funds
Federal Home Loan Bank borrowings 0.40  % 0.47  % 1.00  % 1.69  % 2.11  % 1.09  % 2.56  %
Bank notes and senior debt 1.00  % 1.08  % 1.56  % 2.41  % 2.77  % 1.58  % 3.24  %
Subordinated debt 1.38  % 1.51  % 1.91  % 2.73  % 3.06  % 1.89  % 3.83  %
Other
1.39  % 1.31  % 0.92  % 1.69  % 1.89  % 1.36  % 2.30  %
Total borrowed funds 1.02  % 1.06  % 1.39  % 2.18  % 2.47  % 1.50  % 2.94  %
Total rate on interest-bearing liabilities 0.21  % 0.26  % 0.44  % 1.00  % 1.21  % 0.47  % 1.43  %
Interest rate spread 2.25  % 2.31  % 2.41  % 2.62  % 2.50  % 2.40  % 2.55  %
Benefit from use of noninterest bearing sources (b) 0.07  0.08  0.11  0.22  0.28  0.13  0.34 
Net interest margin 2.32  % 2.39  % 2.52  % 2.84  % 2.78  % 2.53  % 2.89  %

(a)Yields and rates are calculated using the applicable annualized interest income or interest expense divided by the applicable average earning assets or interest-bearing liabilities. Net interest margin is the total yield on interest-earning assets minus the total rate on interest-bearing liabilities and includes the benefit from use of noninterest-bearing sources. To provide more meaningful comparisons of net interest margins, we use net interest income on a taxable-equivalent basis in calculating average yields used in the calculation of net interest margin by increasing the interest income earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments. This adjustment is not permitted under generally accepted accounting principles (GAAP) in the Consolidated Income Statement. The taxable-equivalent adjustments to net interest income for the three months ended December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020 and December 31, 2019 were $17 million, $17 million, $19 million, $22 million and $23 million, respectively. The taxable-equivalent adjustments to net interest income for the years ended December 31, 2020 and December 31, 2019 were $75 million and $103 million, respectively.
(b)Represents the positive effects of investing noninterest-bearing sources in interest-earning assets.

THE PNC FINANCIAL SERVICES GROUP, INC.
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Table 5: Per Share Related Information (Unaudited)
Three months ended Year ended
December 31 September 30 June 30 March 31 December 31 December 31 December 31
In millions, except per share data 2020 2020 2020 2020 2019 2020 2019
Basic
Net income (loss) from continuing operations $ 1,456  $ 1,532  $ (744) $ 759  $ 1,143  $ 3,003  $ 4,591 
Less:
Net income attributable to noncontrolling
interests		 14  13  7  7  14  41  49 
Preferred stock dividends 48  63  55  63  55  229  236 
Preferred stock discount accretion and
redemptions		 1  1  1  1  1  4  4 
Net income (loss) from continuing operations
attributable to common shareholders		 1,393  1,455  (807) 688  1,073  2,729  4,302 
Less: Dividends and undistributed earnings
allocated to nonvested restricted shares		 6  8  1  3  5  13  18 
Net income (loss) from continuing operations
attributable to basic common shareholders		 $ 1,387  $ 1,447  $ (808) $ 685  $ 1,068  $ 2,716  $ 4,284 
Net income from discontinued operations
attributable to common shareholders		 $ 4,399  $ 156  $ 238  $ 4,555  $ 827 
Less: Undistributed earnings allocated to
nonvested restricted shares		   21  1  1  22  3 
Net income from discontinued operations
attributable to basic common shareholders		   $ 4,378  $ 155  $ 237  $ 4,533  $ 824 
Basic weighted-average common shares
outstanding		 425  426  426  429  437  427  447 
Basic earnings (loss) per common share from continuing
operations (a)		 $ 3.26  $ 3.40  $ (1.90) $ 1.59  $ 2.44  $ 6.37  $ 9.59 
Basic earnings per common share from
discontinued operations (a)		 $ 10.28  $ 0.37  $ 0.54  $ 10.62  $ 1.84 
Basic earnings per common share $ 3.26  $ 3.40  $ 8.40  $ 1.96  $ 2.98  $ 16.99  $ 11.43 
Diluted
Net income (loss) from continuing operations attributable
to diluted common shareholders		 $ 1,387  $ 1,447  $ (808) $ 685  $ 1,068  $ 2,716  $ 4,284 
Net income from discontinued operations
attributable to basic common shareholders		   $ 4,378  $ 155  $ 237  $ 4,533  $ 824 
Less: Impact of earnings per share dilution from
discontinued operations		   1  1  3  2  10 
Net income from discontinued operations
attributable to diluted common shareholders		   $ 4,377  $ 154  $ 234  $ 4,531  $ 814 
Basic weighted-average common shares
outstanding		 425  426  426  429  437  427  447 
Dilutive potential common shares 1 1  1    1 
Diluted weighted-average common shares
outstanding		 426  426  426  430  438  427  448 
Diluted earnings (loss) per common share from
continuing operations (a)		 $ 3.26  $ 3.39  $ (1.90) $ 1.59  $ 2.43  $ 6.36  $ 9.57 
Diluted earnings per common share from
discontinued operations (a)		 $ 10.28  $ 0.36  $ 0.54  $ 10.60  $ 1.82 
Diluted earnings per common share $ 3.26  $ 3.39  $ 8.40  $ 1.95  $ 2.97  $ 16.96  $ 11.39 

(a)Dividends are payable quarterly other than the Series O, Series R and Series S preferred stock, which are payable semiannually, with the Series O payable in different quarters than the Series R and Series S preferred stock.



THE PNC FINANCIAL SERVICES GROUP, INC.
Page 6
Table 6: Details of Loans (Unaudited)
December 31 September 30 June 30 March 31 December 31
In millions 2020 2020 2020 2020 2019
Commercial
Commercial and industrial
Manufacturing $ 20,712  $ 22,551  $ 25,590  $ 27,225  $ 21,540 
Retail/wholesale trade 20,218 20,287 21,747 24,408 21,565
Service providers 19,419 20,260 21,347 19,411 16,112
Real estate related (a) 13,369 14,040 14,634 14,843 12,346
Financial services 14,909 15,005 13,596 13,473 11,318
Health care 8,987 9,368 10,109 9,238 8,035
Transportation and warehousing 7,095 7,295 7,771 8,160 7,474
Other industries 27,364 28,381 29,541 32,373 26,947
Total commercial and industrial 132,073 137,187 144,335 149,131 125,337
Commercial real estate 28,716 29,028 28,763 28,544 28,110
Equipment lease financing 6,414 6,479 7,097 7,061 7,155
Total commercial 167,203 172,694 180,195 184,736 160,602
Consumer
Home equity 24,088 24,539 24,879 25,081 25,085
Residential real estate 22,560 22,886 22,469 22,250 21,821
Automobile 14,218 14,977 16,157 17,194 16,754
Credit card 6,215 6,303 6,575 7,132 7,308
Education 2,946 3,051 3,132 3,247 3,336
Other consumer 4,698 4,829 4,829 5,003 4,937
Total consumer 74,725 76,585 78,041 79,907 79,241
Total loans $ 241,928  $ 249,279  $ 258,236  $ 264,643  $ 239,843 

(a) Represents loans to customers in the real estate and construction industries.

THE PNC FINANCIAL SERVICES GROUP, INC.
Page 7
Allowance for Credit Losses (Unaudited)

Table 7: Change in Allowance for Loan and Lease Losses
Three months ended Year ended
December 31 September 30 June 30 March 31 December 31 December 31 December 31
Dollars in millions 2020 2020 2020 2020 2019 2020 2019
Allowance for loan and lease losses
Beginning balance $ 5,751  $ 5,928  $ 3,944  $ 2,742  $ 2,738  $ 2,742  $ 2,629 
Adoption of ASU 2016-03 (a) 463  463 
Gross charge-offs:
Commercial and industrial (133) (59) (112) (78) (67) (382) (183)
Commercial real estate (1) (1) (2) (2) (18)
Equipment lease financing (4) (4) (10) (5) (9) (23) (15)
Home equity (11) (12) (8) (11) (16) (42) (68)
Residential real estate (6) (2) (2) (4) (10) (9)
Automobile (55) (57) (69) (84) (78) (265) (261)
Credit card (72) (74) (76) (78) (70) (300) (263)
Education (3) (3) (4) (6) (6) (16) (26)
Other consumer (42) (35) (35) (40) (39) (152) (131)
Total gross charge-offs (327) (247) (314) (304) (291) (1,192) (974)
Recoveries:
Commercial and industrial 23  21  13  18  14  75  59 
Commercial real estate 3  2  4  3  9  11 
Equipment lease financing 3  3  2  2  2  10  8 
Home equity 17  15  15  14  18  61  74 
Residential real estate 4  4  4  4  3  16  14 
Automobile 33  31  29  35  29  128  114 
Credit card 9  9  9  8  6  35  27 
Education 2  2  2  2  2  8  8 
Other consumer 4  5  4  5  5  18  17 
Total recoveries 98  92  78  92  82  360  332 
Net (charge-offs) / recoveries:
Commercial and industrial (110) (38) (99) (60) (53) (307) (124)
Commercial real estate 2  1  4  1  7  (7)
Equipment lease financing (1) (1) (8) (3) (7) (13) (7)
Home equity 6  3  7  3  2  19  6 
Residential real estate (2) 2  4  2  (1) 6  5 
Automobile (22) (26) (40) (49) (49) (137) (147)
Credit card (63) (65) (67) (70) (64) (265) (236)
Education (1) (1) (2) (4) (4) (8) (18)
Other consumer (38) (30) (31) (35) (34) (134) (114)
Total net (charge-offs) (229) (155) (236) (212) (209) (832) (642)
Provision for (recapture of) credit losses (b) (164) (23) 2,220  952  221  2,985  773 
Net (increase) in allowance for unfunded
loan commitments and letters of credit		 (14) (33)
Other 3  1  (1) 6  3  15 
Ending balance $ 5,361  $ 5,751  $ 5,928  $ 3,944  $ 2,742  $ 5,361  $ 2,742 
Supplemental Information
Net charge-offs
Commercial net charge-offs $ (109) $ (38) $ (107) $ (59) $ (59) $ (313) $ (138)
Consumer net charge-offs (120) (117) (129) (153) (150) (519) (504)
Total net charge-offs $ (229) $ (155) $ (236) $ (212) $ (209) $ (832) $ (642)
Net charge-offs to average loans (c) 0.37  % 0.24  % 0.35  % 0.35  % 0.35  % 0.33  % 0.27  %
Commercial 0.25  % 0.09  % 0.23  % 0.14  % 0.15  % 0.18  % 0.09  %
Consumer 0.63  % 0.60  % 0.66  % 0.77  % 0.76  % 0.67  % 0.67  %
(a)    Represents the impact of adopting ASU 2016-13, Financial Instruments - Credit Losses on January 1, 2020, and our transition from an incurred loss methodology for our reserves to an expected credit loss methodology. Our 2019 Form 10-K and our 2020 Form 10-Qs included, and 2020 Form 10-K will include, additional information related to our adoption of the CECL standard.
(b)    See Table 8 for the components of the Provision for (recapture of) credit losses under CECL being reported on the Consolidated Income Statement.
(c)    Three month period percentages are annualized.

THE PNC FINANCIAL SERVICES GROUP, INC.
Page 8
Allowance for Credit Losses (Unaudited) (Continued)

Table 8: Components of the Provision for (Recapture of) Credit Losses Under CECL
Three months ended Year ended
December 31 September 30 June 30 March 31 December 31
In millions 2020 2020 2020 2020 2020
Provision for (recapture of) credit losses
Loans and leases $ (164) $ (23) $ 2,220  $ 952  $ 2,985 
Unfunded lending related commitments (105) 27  212  (47) 87 
Investment securities 11  39  30  80 
Other financial assets 4  9  1  9  23 
Total provision for (recapture of) credit losses $ (254) $ 52  $ 2,463  $ 914  $ 3,175 

Table 9: Allowance for Credit Losses by Loan Class (a)
December 31, 2020 September 30, 2020 December 31, 2019

Dollars in millions		 Allowance Amount Total Loans % of Total Loans Allowance Amount Total Loans % of Total Loans Allowance Amount Total Loans % of Total Loans
Allowance for loan and lease losses
Commercial
Commercial and industrial $ 2,300  $ 132,073  1.74  % $ 2,735  $ 137,187  1.99  % $ 1,489  $ 125,337  1.19  %
Commercial real estate 880  28,716  3.06  % 630  29,028  2.17  % 278  28,110  0.99  %
Equipment lease financing 157  6,414  2.45  % 163  6,479  2.52  % 45  7,155  0.63  %
Total commercial 3,337  167,203  2.00  % 3,528  172,694  2.04  % 1,812  160,602  1.13  %
Consumer
Home equity 313  24,088  1.30  % 349  24,539  1.42  % 87  25,085  0.35  %
Residential real estate 28  22,560  0.12  % 28  22,886  0.12  % 258  21,821  1.18  %
Automobile 379  14,218  2.67  % 404  14,977  2.70  % 160  16,754  0.95  %
Credit card 816  6,215  13.13  % 891  6,303  14.14  % 288  7,308  3.94  %
Education 129  2,946  4.38  % 136  3,051  4.46  % 17  3,336  0.51  %
Other consumer 359  4,698  7.64  % 415  4,829  8.59  % 120  4,937  2.43  %
Total consumer 2,024  74,725  2.71  % 2,223  76,585  2.90  % 930  79,241  1.17  %
Total
 5,361  $ 241,928  2.22  % 5,751  $ 249,279  2.31  % 2,742  $ 239,843  1.14  %
Allowance for unfunded lending related commitments
 584  689  318 
Allowance for credit losses
 $ 5,945  $ 6,440  $ 3,060 
Supplemental Information
Allowance for credit losses to total loans
 2.46  % 2.58  % 1.28  %
Commercial 2.29  % 2.38  % 1.33  %
Consumer 2.84  % 3.04  % 1.18  %

(a)    Excludes allowances for investment securities and other financial assets, which together totaled $109 million and $98 million at December 31, 2020 and September 30, 2020,
    respectively.

THE PNC FINANCIAL SERVICES GROUP, INC.
Page 9
Details of Nonperforming Assets (Unaudited)

Table 10: Nonperforming Assets by Type
December 31 September 30 June 30 March 31 December 31
Dollars in millions 2020 2020 2020 2020 2019
Nonperforming loans, including TDRs
Commercial
Commercial and industrial
Retail/wholesale trade $ 61  $ 90  $ 117  $ 121  $ 74 
Manufacturing 81  80  58  79  102 
Service providers 90  69  57  63  53 
Real estate related (a) 95  140  158  25  24 
Health care 20  20  19  14  17 
Transportation and warehousing 20  14  20  23  18 
Other industries 299  264  264  169  137 
Total commercial and industrial 666  677  693  494  425 
Commercial real estate 224  217  43  42  44 
Equipment lease financing 33  21  22  30  32 
Total commercial 923  915  758  566  501 
Consumer (b)
Home equity 645  639  636  617  669 
Residential real estate 528  339  305  292  315 
Automobile 175  171  156  154  135 
Credit card 8  13  15  10  11 
Other consumer 7  8  6  5  4 
Total consumer 1,363  1,170  1,118  1,078  1,134 
Total nonperforming loans (c) (d) 2,286  2,085  1,876  1,644  1,635 
OREO and foreclosed assets 51  67  79  111  117 
Total nonperforming assets $ 2,337  $ 2,152  $ 1,955  $ 1,755  $ 1,752 
Nonperforming loans to total loans 0.94  % 0.84  % 0.73  % 0.62  % 0.68  %
Nonperforming assets to total loans, OREO and foreclosed assets 0.97  % 0.86  % 0.76  % 0.66  % 0.73  %
Nonperforming assets to total assets 0.50  % 0.47  % 0.43  % 0.39  % 0.43  %
Allowance for loan and lease losses to nonperforming loans (e) 235  % 276  % 316  % 240  % 168  %
(a)Represents loans related to customers in the real estate and construction industries.
(b)Excludes most unsecured consumer loans and lines of credit, which are charged off after 120 to 180 days past due and are not placed on nonperforming status.
(c)Nonperforming loans exclude certain government insured or guaranteed loans, loans held for sale and loans accounted for under the fair value option. Amounts in 2019 also excluded purchased impaired loans.
(d)In connection with the adoption of the CECL standard, nonperforming loan amounts in 2020 include purchased credit deteriorated loans. Our 2019 Form 10-K and 2020 Form 10-Qs included, and our 2020 Form 10-K will include, additional information related to our adoption of this standard.
(e)Ratios in 2020 reflect the transition impact on our allowance for loan and lease losses from the adoption of the CECL standard along with the increases in reserves during 2020 due to the significant economic impact of COVID-19 and loan growth.





THE PNC FINANCIAL SERVICES GROUP, INC.
Page 10
Details of Nonperforming Assets (Unaudited) (Continued)

Table 11: Change in Nonperforming Assets
October 1, 2020 - July 1, 2020 - April 1, 2020 - January 1, 2020 - October 1, 2019 -
In millions December 31, 2020 September 30, 2020 June 30, 2020 March 31, 2020 December 31, 2019
Beginning balance $ 2,152  $ 1,955  $ 1,755  $ 1,752  $ 1,847 
New nonperforming assets 586  512  458  391  357 
Charge-offs and valuation adjustments (97) (75) (104) (145) (218)
Principal activity, including paydowns and payoffs (185) (175) (85) (158) (157)
Asset sales and transfers to loans held for sale (14) (20) (28) (20) (21)
Returned to performing status (105) (45) (41) (65) (56)
Ending balance $ 2,337  $ 2,152  $ 1,955  $ 1,755  $ 1,752 


Table 12: Largest Individual Nonperforming Assets (a)
December 31, 2020 - Dollars in millions
Ranking Outstandings Industry
1 $ 141  Real Estate and Rental and Leasing
2 46  Real Estate and Rental and Leasing
3 37  Real Estate and Rental and Leasing
4 33  Real Estate and Rental and Leasing
5 32  Mining, Quarrying, and Oil and Gas Extraction
6 31  Wholesale Trade
7 31  Real Estate and Rental and Leasing
8 30  Information
9 26  Manufacturing
10 26  Mining, Quarrying, and Oil and Gas Extraction
Total $ 433 
As a percent of total nonperforming assets 19%

(a)    Amounts shown are not net of related allowance for loan and lease losses, if applicable.

THE PNC FINANCIAL SERVICES GROUP, INC.
Page 11
Accruing Loans Past Due (Unaudited)         

Pursuant to the interagency guidance issued in April 2020 and in connection with the credit reporting rules from the U.S. Coronavirus Aid, Relief and Economic Security Act (CARES Act), the delinquency status of loans modified due to COVID-19 related hardships are reported as of December 31, 2020, September 30, 2020 and June 30, 2020 in alignment with the rules set forth for banks to report delinquency status to the credit agencies. These rules require that COVID-19 related loan modifications be reported as follows:
•if current at the time of modification, the loan remains current throughout the modification period,
•if delinquent at the time of modification and the borrower was not made current as part of the modification, the loan maintains its reported as delinquent status during the modification period, or
•if delinquent at the time of modification and the borrower was made current as part of the modification or became current during the modification period, the loan is reported as current.
As a result, certain loans modified due to COVID-19 related hardships are not being reported as past due as of December 31, 2020, September 30, 2020 and June 30, 2020 based on the contractual terms of the loan, even where borrowers may not be making payments on their loans during the modification period. Our second and third quarter 2020 Form 10-Qs included, and our 2020 Form 10-K will include, additional information on COVID-19 related loan modifications.

Table 13: Accruing Loans Past Due 30 to 59 Days (a) (b)
Amount Percent of Total Outstandings
Dec. 31 Sept. 30 Jun. 30 Mar. 31 Dec. 31 Dec. 31 Sept. 30 Jun. 30 Mar. 31 Dec. 31
Dollars in millions 2020 2020 2020 2020 2019 2020 2020 2020 2020 2019
Commercial and industrial $ 106  $ 56  $ 49  $ 97  $ 102  0.08  % 0.04  % 0.03  % 0.07  % 0.08  %
Commercial real estate 6  6  51  6  4  0.02  % 0.02  % 0.18  % 0.02  % 0.01  %
Equipment lease financing 31  7  8  42  49  0.48  % 0.11  % 0.11  % 0.59  % 0.68  %
Home equity 50  48  70  65  58  0.21  % 0.20  % 0.28  % 0.26  % 0.23  %
Residential real estate
Non government insured 89  99  135  121  90  0.39  % 0.43  % 0.60  % 0.54  % 0.41  %
Government insured 92  89  63  52  50  0.41  % 0.39  % 0.28  % 0.23  % 0.23  %
Automobile 134  116  105  177  178  0.94  % 0.77  % 0.65  % 1.03  % 1.06  %
Credit card 43  44  53  59  60  0.69  % 0.70  % 0.81  % 0.83  % 0.82  %
Education
Non government insured
 5  6  3  7  7  0.17  % 0.20  % 0.10  % 0.22  % 0.21  %
Government insured
 50  51  36  45  48  1.70  % 1.67  % 1.15  % 1.39  % 1.44  %
Other consumer 14  17  17  17  15  0.30  % 0.35  % 0.35  % 0.34  % 0.30  %
Total $ 620  $ 539  $ 590  $ 688  $ 661  0.26  % 0.22  % 0.23  % 0.26  % 0.28  %
Table 14: Accruing Loans Past Due 60 to 89 Days (a) (b)
Amount Percent of Total Outstandings
Dec. 31 Sept. 30 Jun. 30 Mar. 31 Dec. 31 Dec. 31 Sept. 30 Jun. 30 Mar. 31 Dec. 31
Dollars in millions 2020 2020 2020 2020 2019 2020 2020 2020 2020 2019
Commercial and industrial $ 26  $ 37  $ 28  $ 22  $ 30  0.02  % 0.03  % 0.02  % 0.01  % 0.02  %
Commercial real estate 1  6  4  1  1  0.00  % 0.02  % 0.01  % 0.00  % 0.00  %
Equipment lease financing 5  4  9  2  5  0.08  % 0.06  % 0.13  % 0.03  % 0.07  %
Home equity 21  22  27  28  24  0.09  % 0.09  % 0.11  % 0.11  % 0.10  %
Residential real estate
Non government insured 16  22  34  30  16  0.07  % 0.10  % 0.15  % 0.13  % 0.07  %
Government insured 62  58  59  52  53  0.27  % 0.25  % 0.26  % 0.23  % 0.24  %
Automobile 34  32  34  49  47  0.24  % 0.21  % 0.21  % 0.28  % 0.28  %
Credit card 30  33  38  37  37  0.48  % 0.52  % 0.58  % 0.52  % 0.51  %
Education
Non government insured
 2  2  2  4  3  0.07  % 0.07  % 0.06  % 0.12  % 0.09  %
Government insured
 27  24  21  26  31  0.92  % 0.79  % 0.67  % 0.80  % 0.93  %
Other consumer 10  11  8  10  11  0.21  % 0.23  % 0.17  % 0.20  % 0.22  %
Total $ 234  $ 251  $ 264  $ 261  $ 258  0.10  % 0.10  % 0.10  % 0.10  % 0.11  %


THE PNC FINANCIAL SERVICES GROUP, INC.
Page 12
Accruing Loans Past Due (Unaudited) (Continued)

Table 15: Accruing Loans Past Due 90 Days or More (a) (b)
Amount Percent of Total Outstandings
Dec. 31 Sept. 30 Jun. 30 Mar. 31 Dec. 31 Dec. 31 Sept. 30 Jun. 30 Mar. 31 Dec. 31
Dollars in millions 2020 2020 2020 2020 2019 2020 2020 2020 2020 2019
Commercial and industrial $ 30  $ 36  $ 34  $ 51  $ 85  0.02  % 0.03  % 0.02  % 0.03  % 0.07  %
Residential real estate
Non government insured 27  28  19  18  14  0.12  % 0.12  % 0.08  % 0.08  % 0.06  %
Government insured 292  241  245  282  301  1.29  % 1.05  % 1.09  % 1.27  % 1.38  %
Automobile 12  12  19  19  18  0.08  % 0.08  % 0.12  % 0.11  % 0.11  %
Credit card 60  60  61  70  67  0.97  % 0.95  % 0.93  % 0.98  % 0.92  %
Education
Non government insured
 2  1  1  2  2  0.07  % 0.03  % 0.03  % 0.06  % 0.06  %
Government insured
 75  62  65  82  89  2.55  % 2.03  % 2.08  % 2.53  % 2.67  %
Other consumer 11  8  12  10  9  0.23  % 0.17  % 0.25  % 0.20  % 0.18  %
Total $ 509  $ 448  $ 456  $ 534  $ 585  0.21  % 0.18  % 0.18  % 0.20  % 0.24  %

(a) Excludes loans held for sale, amounts in 2019 also excluded purchased impaired loans.
(b) In connection with the adoption of the CECL standard, accruing loans past due amounts in 2020 include purchased credit deteriorated loans. Our 2019 Form 10-K and 2020 Form 10-Qs included, and our 2020 Form 10-K will include, additional information related to our adoption of this standard.

THE PNC FINANCIAL SERVICES GROUP, INC.
Page 13
Business Segment Descriptions (Unaudited)

Retail Banking provides deposit, lending, brokerage, insurance services, investment management and cash management products and services to consumer and small business customers. Our customers are serviced through our branch network, ATMs, call centers, online banking and mobile channels. The branch network is located primarily in markets across the Mid-Atlantic, Midwest and Southeast. In 2018, Retail Banking launched its national expansion strategy designed to grow customers with digitally-led banking and a thin branch network in markets outside of our existing retail branch network. Deposit products include checking, savings and money market accounts and certificates of deposit. Lending products include residential mortgages, home equity loans and lines of credit, auto loans, credit cards, education loans and personal and small business loans and lines of credit. The residential mortgage loans are directly originated within our branch network and nationwide, and are typically underwritten to agency and/or third-party standards, and either sold, servicing retained, or held on our balance sheet. Brokerage, investment management and cash management products and services include managed, education, retirement and trust accounts.

Corporate & Institutional Banking provides lending, treasury management, and capital markets-related products and services to mid-sized and large corporations, and government and not-for-profit entities. Lending products include secured and unsecured loans, letters of credit and equipment leases. The Treasury Management business provides payables, receivables, deposit and account services, liquidity and investments, and online and mobile banking products and services to our clients. Capital markets-related products and services include foreign exchange, derivatives, securities underwriting, loan syndications, mergers and acquisitions advisory and equity capital markets advisory related services. We also provide commercial loan servicing and technology solutions for the commercial real estate finance industry. Products and services are provided nationally.

Asset Management Group provides personal wealth management for high net worth and ultra high net worth clients and institutional asset management. The Asset Management group is comprised of three distinct operating units:
•Wealth management provides products and services to individuals and their families including investment and retirement planning, customized investment management, private banking, and trust management and administration for individuals and their families.
•Our Hawthorn unit provides multi-generational family planning including estate, financial, tax planning, fiduciary, investment management and consulting, private banking, personal administrative services, asset custody and customized performance reporting to ultra high net worth clients.
•Institutional asset management provides outsourced chief investment officer, custody, private real estate, cash and fixed income client solutions, and fiduciary retirement advisory services to institutional clients including corporations, healthcare systems, insurance companies, unions, municipalities and non-profits.

Table 16: Period End Employees
December 31 September 30 June 30 March 31 December 31
2020 2020 2020 2020 2019
Full-time employees
Retail Banking 27,621  27,808  29,051  28,737  28,270 
Other full-time employees 21,928  21,997  21,752  21,776  21,747 
Total full-time employees 49,549  49,805  50,803  50,513  50,017 
Part-time employees
Retail Banking 1,611  1,593  1,854  1,780  1,759 
Other part-time employees 97  104  476  129  142 
Total part-time employees 1,708  1,697  2,330  1,909  1,901 
Total 51,257  51,502  53,133  52,422  51,918 


THE PNC FINANCIAL SERVICES GROUP, INC.
Page 14
Table 17: Summary of Business Segment Income and Revenue (Unaudited) (a)
Three months ended Year ended
December 31 September 30 June 30 March 31 December 31 December 31 December 31
In millions 2020 2020 2020 2020 2019 2020 2019
Income
Retail Banking $ 336  $ 530  $ (223) $ 201  $ 277  $ 844  $ 1,213 
Corporate & Institutional Banking 992  670  (358) 370  649  1,674  2,448 
Asset Management Group 82  91  28  54  91  255  262 
Other 46  241  (191) 134  126  230  668 
Net income (loss) from continuing
operations		 $ 1,456  $ 1,532  $ (744) $ 759  $ 1,143  $ 3,003  $ 4,591 
  
Revenue
Retail Banking $ 1,853  $ 2,056  $ 1,975  $ 2,244  $ 2,054  $ 8,128  $ 8,168 
Corporate & Institutional Banking 1,913  1,748  1,790  1,660  1,615  7,111  6,251 
Asset Management Group 316  310  293  292  352  1,211  1,279 
Other 126  167  18  140  300  451  1,141 
Total revenue $ 4,208  $ 4,281  $ 4,076  $ 4,336  $ 4,321  $ 16,901  $ 16,839 

(a)Our business information is presented based on our internal management reporting practices. Net interest income in business segment results reflects PNC’s internal funds transfer pricing methodology. Assets receive a funding charge and liabilities and capital receive a funding credit based on a transfer pricing methodology that incorporates product repricing characteristics, tenor and other factors.


THE PNC FINANCIAL SERVICES GROUP, INC.
Page 15
Table 18: Retail Banking (Unaudited) (a)
Three months ended Year ended
December 31 September 30 June 30 March 31 December 31 December 31 December 31
Dollars in millions 2020 2020 2020 2020 2019 2020 2019
Income Statement
Net interest income $ 1,380  $ 1,383  $ 1,390  $ 1,456  $ 1,402  $ 5,609  $ 5,520 
Noninterest income 473  673  585  788  652  2,519  2,648 
Total revenue 1,853  2,056  1,975  2,244  2,054  8,128  8,168 
Provision for (recapture of) credit losses (81) (157) 761  445  161  968  517 
Noninterest expense 1,482  1,512  1,497  1,528  1,516  6,019  6,011 
Pretax earnings (loss) 452  701  (283) 271  377  1,141  1,640 
Income taxes (benefit) 105  162  (63) 62  86  266  377 
Noncontrolling interest 11  9  3  8  14  31  50 
Earnings (loss) $ 336  $ 530  $ (223) $ 201  $ 277  $ 844  $ 1,213 
Average Balance Sheet
Loans held for sale $ 672  $ 700  $ 829  $ 779  $ 747  $ 745  $ 627 
Loans
Consumer
Home equity $ 22,366  $ 22,647  $ 22,790  $ 22,736  $ 22,590  $ 22,633  $ 22,657 
Residential real estate 18,042  18,435  18,244  17,964  17,352  18,171  16,196 
Automobile 14,536  15,573  16,688  17,096  16,427  15,968  15,510 
Credit card 6,218  6,408  6,690  7,207  6,985  6,629  6,550 
Education 3,027  3,119  3,218  3,343  3,428  3,176  3,611 
Other consumer 2,086  2,262  2,454  2,533  2,418  2,334  2,244 
Total consumer 66,275  68,444  70,084  70,879  69,200  68,911  66,768 
Commercial 13,391  13,356  13,612  10,524  10,323  12,573  10,410 
Total loans $ 79,666  $ 81,800  $ 83,696  $ 81,403  $ 79,523  $ 81,484  $ 77,178 
Total assets $ 94,303  $ 98,731  $ 102,103  $ 97,062  $ 94,967  $ 97,643  $ 92,959 
Deposits
Noninterest-bearing demand $ 43,818  $ 43,752  $ 39,134  $ 32,225  $ 32,674  $ 39,754  $ 31,675 
Interest-bearing demand 50,702  49,274  47,339  42,865  41,689  47,557  42,077 
Money market 24,112  23,816  22,942  22,866  23,927  23,436  25,317 
Savings 72,041  70,236  67,947  62,781  59,877  68,267  56,722 
Certificates of deposit 10,156  10,852  11,661  12,233  12,598  11,222  12,613 
Total deposits $ 200,829  $ 197,930  $ 189,023  $ 172,970  $ 170,765  $ 190,236  $ 168,404 
Performance Ratios
Return on average assets 1.41  % 2.13  % (0.88) % 0.84  % 1.16  % 0.86  % 1.30  %
Noninterest income to total revenue 26  % 33  % 30  % 35  % 32  % 31  % 32  %
Efficiency 80  % 74  % 76  % 68  % 74  % 74  % 74  %
(a)See note (a) on page 14.

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Retail Banking (Unaudited) (Continued)
Three months ended Year ended
December 31 September 30 June 30 March 31 December 31 December 31 December 31
Dollars in millions, except as noted 2020 2020 2020 2020 2019 2020 2019
Supplemental Noninterest Income
Information
Consumer services $ 369  $ 371  $ 315  $ 372  $ 382  $ 1,427  $ 1,530 
Residential mortgage $ 99  $ 137  $ 158  $ 210  $ 87  $ 604  $ 368 
Service charges on deposits $ 133  $ 118  $ 80  $ 166  $ 183  $ 497  $ 687 
Residential Mortgage Information
Residential mortgage servicing statistics (in billions, except as noted) (a)
Serviced portfolio balance (b) $ 121  $ 119  $ 122  $ 118  $ 120 
Serviced portfolio acquisitions $ 12  $ 8  $ 11  $ 2  $ 3  $ 33  $ 12 
MSR asset value (b) $ 0.7  $ 0.6  $ 0.6  $ 0.6  $ 1.0 
MSR capitalization value (in basis points) (b) 56  50  47  51  83 
Servicing income: (in millions)
Servicing fees, net (c) $ 13  $ 25  $ 36  $ 44  $ 39  $ 118  $ 178 
Mortgage servicing rights valuation, net of
economic hedge		 $ (1) $ 17  $ 20  $ 101  $ 9  $ 137  $ 47 
Residential mortgage loan statistics
Loan origination volume (in billions) $ 3.7  $ 4.0  $ 4.2  $ 3.2  $ 3.5  $ 15.1  $ 11.5 
Loan sale margin percentage 3.75  % 3.62  % 3.67  % 3.16  % 2.42  % 3.57  % 2.41  %
Percentage of originations represented by:
Purchase volume (d) 45  % 44  % 34  % 36  % 40  % 40  % 47  %
Refinance volume 55  % 56  % 66  % 64  % 60  % 60  % 53  %
Other Information (b)
Customer-related statistics (average)
Non-teller deposit transactions (e) 66  % 67  % 65  % 59  % 58  % 64  % 57  %
Digital consumer customers (f) 77  % 75  % 73  % 71  % 71  % 74  % 69  %
Credit-related statistics
Nonperforming assets $ 1,211  $ 1,077  $ 1,037  $ 1,011  $ 1,046 
Net charge-offs - loans and leases $ 136  $ 125  $ 142  $ 166  $ 154  $ 569  $ 534 
Other statistics
ATMs 8,900  9,058  9,058  9,048  9,091 
Branches (g) 2,162  2,207  2,256  2,277  2,296 
Brokerage account client assets (in billions) (h) $ 59  $ 55  $ 53  $ 49  $ 54 

(a)Represents mortgage loan servicing balances for third parties and the related income.
(b)Presented as of period end, except for average customer-related statistics and net charge-offs, which are both shown for the three months and year ended, respectively.
(c)Servicing fees net of impact of decrease in MSR value due to passage of time, including the impact from both regularly scheduled loan payments, prepayments, and loans that were paid down or paid off during the period.
(d)Mortgages with borrowers as part of residential real estate purchase transactions.
(e)Percentage of total consumer and business banking deposit transactions processed at an ATM or through our mobile banking application.
(f)Represents consumer checking relationships that process the majority of their transactions through non-teller channels.
(g)Excludes stand-alone mortgage offices and satellite offices (e.g., drive-ups, electronic branches and retirement centers) that provide limited products and/or services.
(h)Includes cash and money market balances.


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Table 19: Corporate & Institutional Banking (Unaudited) (a)
Three months ended Year ended
December 31 September 30 June 30 March 31 December 31 December 31 December 31
Dollars in millions 2020 2020 2020 2020 2019 2020 2019
Income Statement
Net interest income $ 994  $ 1,025  $ 1,064  $ 966  $ 969  $ 4,049  $ 3,714 
Noninterest income 919  723  726  694  646  3,062  2,537 
Total revenue 1,913  1,748  1,790  1,660  1,615  7,111  6,251 
Provision for (recapture of) credit losses (166) 211  1,585  458  65  2,088  284 
Noninterest expense 801  663  670  722  726  2,856  2,813 
Pretax earnings (loss) 1,278  874  (465) 480  824  2,167  3,154 
Income taxes (benefit) 282  201  (110) 110  175  483  706 
Noncontrolling interest 4  3  3  10 
Earnings (loss) $ 992  $ 670  $ (358) $ 370  $ 649  $ 1,674  $ 2,448 
Average Balance Sheet
Loans held for sale $ 1,039  $ 904  $ 704  $ 395  $ 616  $ 762  $ 505 
Loans
Commercial
Commercial and industrial $ 120,297  $ 125,187  $ 138,992  $ 117,288  $ 114,113  $ 125,426  $ 112,809 
Commercial real estate 27,509  27,511  27,106  26,589  26,586  27,180  26,340 
Equipment lease financing 6,381  6,772  7,036  7,066  7,200  6,813  7,255 
Total commercial 154,187  159,470  173,134  150,943  147,899  159,419  146,404 
Consumer 10  11  8  9  11  10  15 
Total loans $ 154,197  $ 159,481  $ 173,142  $ 150,952  $ 147,910  $ 159,429  $ 146,419 
Total assets $ 177,792  $ 183,266  $ 199,254  $ 172,502  $ 167,555  $ 183,189  $ 164,243 
Deposits
Noninterest-bearing demand $ 64,334  $ 56,433  $ 53,157  $ 40,651  $ 39,513  $ 53,681  $ 39,141 
Interest-bearing demand 28,793  29,730  27,674  21,101  20,851  26,838  19,487 
Money market 36,705  38,015  36,595  28,468  30,264  34,959  28,091 
Other 8,928  8,956  9,546  7,868  7,916  8,825  6,676 
Total deposits $ 138,760  $ 133,134  $ 126,972  $ 98,088  $ 98,544  $ 124,303  $ 93,395 
Performance Ratios
Return on average assets 2.21  % 1.45  % (0.72) % 0.87  % 1.54  % 0.91  % 1.49  %
Noninterest income to total revenue 48  % 41  % 41  % 42  % 40  % 43  % 41  %
Efficiency 42  % 38  % 37  % 43  % 45  % 40  % 45  %
Other Information
Consolidated revenue from:
Treasury Management (b) $ 472  $ 452  $ 469  $ 491  $ 494  $ 1,884  $ 1,866 
Capital Markets (b) $ 530  $ 345  $ 388  $ 344  $ 291  $ 1,607  $ 1,140 
Commercial mortgage banking activities
Commercial mortgage loans held for
sale (c)		 $ 45  $ 46  $ 42  $ 29  $ 24  $ 162  $ 97 
Commercial mortgage loan servicing
income (d)		 82  76  67  69  71  294  261 
Commercial mortgage servicing rights
    valuation, net of economic hedge (e)
 14  16  22  20  2  72  19 
Total $ 141  $ 138  $ 131  $ 118  $ 97  $ 528  $ 377 
MSR asset value (f) $ 569  $ 515  $ 490  $ 477  $ 649 
Average loans by C&IB business
Corporate Banking $ 76,664  $ 81,617  $ 91,634  $ 78,057  $ 75,665  $ 81,977  $ 74,016 
Real Estate 41,427  40,592  42,124  37,368  36,908  40,381  37,149 
Business Credit 21,337  21,845  23,943  23,251  22,900  22,589  22,586 
Commercial Banking 11,375  11,770  10,708  7,784  7,793  10,415  7,984 
Other 3,394  3,657  4,733  4,492  4,644  4,067  4,684 
Total average loans $ 154,197  $ 159,481  $ 173,142  $ 150,952  $ 147,910  $ 159,429  $ 146,419 
Credit-related statistics
Nonperforming assets (f) $ 827  $ 832  $ 674  $ 508  $ 444 
Net charge-offs - loans and leases $ 99  $ 32  $ 99  $ 50  $ 47  $ 280  $ 105 

(a)See note (a) on page 14.
(b)Amounts reported in net interest income and noninterest income.
(c)Represents other noninterest income for valuations on commercial mortgage loans held for sale and related commitments, derivative valuations, originations fees, gains on sale of loans held for sale and net interest income on loans held for sale.
(d)Represents net interest income and noninterest income (primarily in corporate service fees) from loan servicing net of reduction in commercial mortgage servicing rights due to amortization expense and payoffs. Commercial mortgage servicing rights valuation, net of economic hedge is shown separately.
(e)Amounts are reported in corporate service fees.
(f)Presented as of period end.

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Table 20: Asset Management Group (Unaudited) (a)
Three months ended Year ended
December 31 September 30 June 30 March 31 December 31 December 31 December 31
Dollars in millions, except as noted 2020 2020 2020 2020 2019 2020 2019
Income Statement
Net interest income $ 91  $ 89  $ 89  $ 88  $ 80  $ 357  $ 288 
Noninterest income 225  221  204  204  272  854  991 
Total revenue 316  310  293  292  352  1,211  1,279 
Provision for (recapture of) credit losses (2) (19) 39  3  1  21  (1)
Noninterest expense 211  211  217  219  232  858  939 
Pretax earnings 107  118  37  70  119  332  341 
Income taxes 25  27  9  16  28  77  79 
Earnings $ 82  $ 91  $ 28  $ 54  $ 91  $ 255  $ 262 
Average Balance Sheet
Loans
Consumer
Residential real estate $ 3,326  $ 2,976  $ 2,636  $ 2,385  $ 2,193  $ 2,832  $ 1,923 
Other consumer 4,077  4,065  3,975  4,052  4,145  4,042  4,232 
Total consumer 7,403  7,041  6,611  6,437  6,338  6,874  6,155 
Commercial 774  810  883  856  793  831  759 
Total loans $ 8,177  $ 7,851  $ 7,494  $ 7,293  $ 7,131  $ 7,705  $ 6,914 
Total assets $ 8,615  $ 8,361  $ 7,958  $ 7,801  $ 7,697  $ 8,186  $ 7,360 
Deposits
Noninterest-bearing demand $ 1,689  $ 1,692  $ 1,421  $ 1,468  $ 1,407  $ 1,568  $ 1,360 
Interest-bearing demand 8,404  8,101  7,742  6,850  6,846  7,777  4,060 
Money market 1,606  1,542  1,597  1,709  1,773  1,613  1,832 
Savings 7,388  7,243  7,398  7,197  6,950  7,307  6,216 
Other 482  554  722  847  898  650  822 
Total deposits $ 19,569  $ 19,132  $ 18,880  $ 18,071  $ 17,874  $ 18,915  $ 14,290 
Performance Ratios
Return on average assets 3.78  % 4.32  % 1.41  % 2.81  % 4.69  % 3.12  % 3.56  %
Noninterest income to total revenue 71  % 71  % 70  % 70  % 77  % 71  % 77  %
Efficiency 67  % 68  % 74  % 75  % 66  % 71  % 73  %
Other Information
Nonperforming assets (b) $ 66  $ 39  $ 38  $ 34  $ 39 
Net charge-offs (recoveries) - loans and leases $ 1  $ 1  $ (1) $ 4  $ 1  $ 5 
Client Assets Under Administration (in billions)
(b) (c)
Discretionary client assets under management $ 170  $ 158  $ 151  $ 136  $ 154 
Nondiscretionary client assets under administration 154  142  138  128  143 
Total $ 324  $ 300  $ 289  $ 264  $ 297 
Discretionary client assets under management
Personal $ 108  $ 99  $ 94  $ 84  $ 99 
Institutional 62  59  57  52  55 
Total $ 170  $ 158  $ 151  $ 136  $ 154 
(a)See note (a) on page 14.
(b)As of period end.
(c)Excludes brokerage account client assets.

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Glossary of Terms

Amortized cost basis - Amount at which a financial asset is originated or acquired, adjusted for applicable accretion or amortization of premiums, discounts and net deferred fees or costs, collection of cash, charge-offs, foreign exchange and fair value hedge accounting adjustments.

Adjusted average total assets - Primarily consisted of total average quarterly (or annual) assets plus/less unrealized losses (gains) on investment securities, less goodwill and certain other intangible assets (net of eligible deferred taxes).

Basel III common equity Tier 1 capital - Common stock plus related surplus, net of treasury stock, plus retained earnings, plus accumulated other comprehensive income for securities currently, and those transferred from, available for sale and pension and other postretirement benefit plans, subject to phase-in limits, less goodwill, net of associated deferred tax liabilities, less other disallowed intangibles, net of deferred tax liabilities and plus/less other adjustments. Significant common stock investments in unconsolidated financial institutions, as well as mortgage servicing rights and deferred tax assets, must then be deducted to the extent such items individually exceed 10%, or in the aggregate exceed 15%, of our adjusted Basel III common equity Tier 1 capital.

Basel III common equity Tier 1 capital (Tailoring Rules) - Common stock plus related surplus, net of treasury stock, plus retained earnings, less goodwill, net of associated deferred tax liabilities, less other disallowed intangibles, net of deferred tax liabilities and plus/less other adjustments. Investments in unconsolidated financial institutions, as well as mortgage servicing rights and deferred tax assets, must then be deducted to the extent such items individually exceed 25% of our adjusted Basel III common equity Tier 1 capital.

Basel III common equity Tier 1 capital ratio - Common equity Tier 1 capital divided by period-end risk-weighted assets (as applicable).

Basel III Tier 1 capital - Common equity Tier 1 capital, plus qualifying preferred stock, plus certain trust preferred capital securities, plus certain noncontrolling interests that are held by others and plus/less other adjustments.

Basel III Tier 1 capital ratio - Tier 1 capital divided by period-end risk-weighted assets (as applicable).

Basel III Total capital - Tier 1 capital plus qualifying subordinated debt, plus certain trust preferred securities, plus, under the Basel III transitional rules and the standardized approach, the allowance for loan and lease losses included in Tier 2 capital and other.

Basel III Total capital ratio - Basel III Total capital divided by period-end risk-weighted assets (as applicable).

Charge-off - Process of removing a loan or portion of a loan from our balance sheet because it is considered uncollectible. We also record a charge-off when a loan is transferred from portfolio holdings to held for sale by reducing the loan carrying amount to the fair value of the loan, if fair value is less than carrying amount.

Current Expected Credit Loss (CECL) - Methodology for estimating the allowance for credit losses on in-scope financial assets held at amortized cost and unfunded lending related commitments which uses a combination of expected losses over a reasonable and supportable forecast period, a reversion period and long run average credit losses for their estimated contractual term.

Combined loan-to-value ratio (CLTV) - This is the aggregate principal balance(s) of the mortgages on a property divided by its appraised value or purchase price.

Common shareholders’ equity - Total shareholders' equity less the liquidation value of preferred stock.

Credit valuation adjustment - Represents an adjustment to the fair value of our derivatives for our own and counterparties’ non-performance risk.

Criticized commercial loans - Loans with potential or identified weaknesses based upon internal risk ratings that comply with the regulatory classification definitions of “Special Mention,” “Substandard” or “Doubtful.”

Discretionary client assets under management - Assets over which we have sole or shared investment authority for our customers/clients. We do not include these assets on our Consolidated Balance Sheet.

Duration of equity - An estimate of the rate sensitivity of our economic value of equity. A negative duration of equity is associated with asset sensitivity (i.e., positioned for rising interest rates), while a positive value implies liability sensitivity (i.e., positioned for declining interest rates). For example, if the duration of equity is -1.5 years, the economic value of equity increases by 1.5% for each 100 basis point increase in interest rates.

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Earning assets - Assets that generate income, which include: interest-earning deposits with banks; loans held for sale; loans; investment securities; and certain other assets.

Effective duration - A measurement, expressed in years, that, when multiplied by a change in interest rates, would approximate the percentage change in value of on- and off- balance sheet positions.

Efficiency - Noninterest expense divided by total revenue.

Fair value - The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Fee income - Refers to the following categories within Noninterest income: Asset management; Consumer services; Corporate services; Residential mortgage; and Service charges on deposits.

FICO score - A credit bureau-based industry standard score created by Fair Isaac Co. which predicts the likelihood of borrower default. We use FICO scores both in underwriting and assessing credit risk in our consumer lending portfolio. Lower FICO scores indicate likely higher risk of default, while higher FICO scores indicate likely lower risk of default. FICO scores are updated on a periodic basis.

Futures and forward contracts - Contracts in which the buyer agrees to purchase and the seller agrees to deliver a specific financial instrument at a predetermined price or yield. May be settled either in cash or by delivery of the underlying financial instrument.

GAAP - Accounting principles generally accepted in the United States of America.

Impaired loans - Loans are determined to be impaired when, based on current information and events, it is probable that all contractually required payments will not be collected. Impaired loans include commercial nonperforming loans and consumer and commercial TDRs, regardless of nonperforming status. Excluded from impaired loans are nonperforming leases, loans held for sale, loans accounted for under the fair value option, smaller balance homogenous type loans and purchased impaired loans.

Leverage ratio - Basel III Tier 1 capital divided by average quarterly adjusted total assets.

LIBOR - Acronym for London InterBank Offered Rate. LIBOR is the average interest rate charged when banks in the London wholesale money market (or interbank market) borrow unsecured funds from each other. LIBOR rates are used as a benchmark for interest rates on a global basis. Our product set includes loans priced using LIBOR as a benchmark.

Loan-to-value ratio (LTV) - A calculation of a loan's collateral coverage that is used both in underwriting and assessing credit risk in our lending portfolio. LTV is the sum total of loan obligations secured by collateral divided by the market value of that same collateral. Market values of the collateral is based on an independent valuation of the collateral. For example, a LTV of less than 90% is better secured and has less credit risk than a LTV of greater than or equal to 90%.

Loss given default (LGD) - Assuming a credit obligor enters default status, an estimate of loss, based on collateral type, collateral value, loan exposure, and other factors. LGD is net of recovery, through any means, including but not limited to the liquidation of collateral or deficiency judgments rendered from foreclosure or bankruptcy proceedings.

Nonaccrual loans - Loans for which we do not accrue interest income. Nonaccrual loans include nonperforming loans, in addition to loans accounted for under fair value option and loans accounted for as held for sale for which full collection of contractual principal and/or interest is not probable.

Nondiscretionary client assets under administration - Assets we hold for our customers/clients in a nondiscretionary, custodial capacity. We do not include these assets on our Consolidated Balance Sheet.

Nonperforming assets - Nonperforming assets include nonperforming loans, OREO and foreclosed asserts. We do not accrue interest income on assets classified as nonperforming.

Nonperforming loans - Loans accounted for at amortized cost whose credit quality has deteriorated to the extent that full collection of contractual principal and interest is not probable, including TDRs which have not returned to performing status. Interest income is not recognized on nonperforming loans. Nonperforming loans exclude certain government insured or guaranteed loans for which we expect to collect substantially all principal and interest, loans held for sale and loans accounted for under the fair value option.


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Notional amount - A number of currency units, shares, or other units specified in a derivative contract.

Off-balance sheet credit exposures - Standby letters of credit, financial guarantees, commitments to extend credit and similar unfunded obligations that are not unilaterally, unconditionally, cancelable at PNC’s option.

Operating leverage - The period to period dollar or percentage change in total revenue less the dollar or percentage change in noninterest expense. A positive variance indicates that revenue growth exceeded expense growth (i.e., positive operating leverage) while a negative variance implies expense growth exceeded revenue growth (i.e., negative operating leverage).

Options - Contracts that grant the purchaser, for a premium payment, the right, but not the obligation, to either purchase or sell the associated financial instrument at a set price during a specified period or at a specified date in the future.

Other real estate owned (OREO) and foreclosed assets - Assets taken in settlement of troubled loans primarily through deed-in-lieu of foreclosure or foreclosure. Foreclosed assets include real and personal property. Certain assets that have a government-guarantee which are classified as other receivables are excluded.

Probability of default (PD) - An estimate of the likelihood that a credit obligor will enter into default status.

Purchased credit deteriorated assets - Acquired loans or debt securities that, at acquisition, are determined to have experienced a more-than-insignificant deterioration in credit quality since origination or issuance.

Recovery - Cash proceeds received on a loan that we had previously charged off. We credit the amount received to the allowance for loan and lease losses.

Reasonable and supportable forecast period (RSFP) - In context of CECL, the period for which forecasts and projections of macroeconomic variables have been determined to be reasonable and supportable, and are used as inputs for ACL measurement.

Risk-weighted assets - Computed by the assignment of specific risk-weights (as defined by the Board of Governors of the Federal Reserve System) to assets and off-balance sheet instruments.

Servicing rights - An intangible asset or liability created by an obligation to service assets for others. Typical servicing rights include the right to receive a fee for collecting and forwarding payments on loans and related taxes and insurance premiums held in escrow.

Supplementary leverage ratio - Basel III Tier 1 capital divided by Supplementary leverage exposure.

Taxable-equivalent interest income - The interest income earned on certain assets that is completely or partially exempt from federal income tax. These tax-exempt instruments typically yield lower returns than taxable investments. To provide more meaningful comparisons of yields and margins for all interest-earning assets, we use interest income on a taxable-equivalent basis in calculating average yields and net interest margins by increasing the interest income earned on tax-exempt assets to make it fully equivalent to interest income earned on other taxable investments. This adjustment is not permitted under GAAP on the Consolidated Income Statement.

Troubled debt restructuring (TDR) - A loan whose terms have been restructured in a manner that grants a concession to a borrower experiencing financial difficulties.

Yield curve - A graph showing the relationship between the yields on financial instruments or market indices of the same credit quality with different maturities. For example, a “normal” or “positive” yield curve exists when long-term bonds have higher yields than short-term bonds. A “flat” yield curve exists when yields are the same for short-term and long-term bonds. A “steep” yield curve exists when yields on long-term bonds are significantly higher than on short-term bonds. An “inverted” or “negative” yield curve exists when short-term bonds have higher yields than long-term bonds.