[PNC LOGO]
THE PNC FINANCIAL SERVICES GROUP, INC.
FINANCIAL SUPPLEMENT (UNAUDITED)
FIRST QUARTER 2003
THE PNC FINANCIAL SERVICES GROUP, INC.
FINANCIAL SUPPLEMENT (UNAUDITED)
FIRST QUARTER 2003
Page
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Consolidated Statement of Income 1
Consolidated Balance Sheet 2
Capital and Asset Quality Ratios 2
Results of Businesses
Summary 3
Banking Businesses
Regional Community Banking 4
Wholesale Banking
Corporate Banking 5
PNC Real Estate Finance 6
PNC Business Credit 7
PNC Advisors 8
Asset Management and Processing Businesses
BlackRock 9
PFPC 10
Details of Net Interest Income and Net Interest Margin 11
Details of Noninterest Income and Noninterest Expense 12
Consolidated Average Balance Sheet 13
Details of Loans and Loans Held for Sale 14
Allowances For Credit Losses And Unfunded Loan
Commitments And Letters of Credit 15
Details of Nonperforming Assets 16-17
Glossary of Terms 18
Business Definitions 20
The information contained in this Financial Supplement is preliminary and based
on data available at the time of the presentation. It speaks only as of the
particular date or dates included in the accompanying pages. The PNC Financial
Services Group, Inc. ("Corporation") does not undertake an obligation to, and
disclaims any duty to, correct or update any of the information provided. The
Corporation's future financial performance is subject to risks and uncertainties
as described in its SEC filings.
Certain prior period amounts included in this Financial Supplement have been
reclassified to conform to the current period presentation. In addition, amounts
included in this Financial Supplement are presented on a continuing operations
basis, unless otherwise noted.
THE PNC FINANCIAL SERVICES GROUP, INC. Page 1
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
March 31 December 31 September 30 June 30 March 31
For the three months ended - in millions, except per share data 2003 2002 2002 2002 2002
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INTEREST INCOME
Loans and fees on loans $507 $540 $567 $588 $599
Securities 143 150 140 149 177
Loans held for sale 12 18 24 41 52
Other 30 33 38 26 30
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Total interest income 692 741 769 804 858
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INTEREST EXPENSE
Deposits 132 149 162 172 176
Borrowed funds 57 68 79 77 92
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Total interest expense 189 217 241 249 268
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Net interest income 503 524 528 555 590
Provision for credit losses 36 65 73 89 82
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Net interest income less provision for credit losses 467 459 455 466 508
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NONINTEREST INCOME
Asset management 207 202 200 230 221
Fund servicing 193 194 193 217 212
Service charges on deposits 57 61 57 55 54
Brokerage 41 44 41 55 55
Consumer services 59 61 62 61 55
Corporate services 116 151 108 149 118
Equity management (4) (14) (22) (13) (2)
Net securities gains 56 1 68 16 4
Other 70 66 64 100 73
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Total noninterest income 795 766 771 870 790
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NONINTEREST EXPENSE
Staff expense 438 408 422 441 430
Net occupancy 90 62 64 59 58
Equipment 69 68 68 67 68
Marketing 15 11 14 13 13
Distributions on capital securities 14 14 15 14 15
Other 230 228 207 245 223
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Total noninterest expense 856 791 790 839 807
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Income from continuing operations before minority
interest and income taxes 406 434 436 497 491
Minority interest in income of consolidated entities 11 11 4 12 10
Income taxes 133 145 147 165 164
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Income from continuing operations 262 278 285 320 317
Income (loss) from discontinued operations (less
applicable income tax benefit of $9) (16)
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Net income $262 $262 $285 $320 $317
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EARNINGS PER COMMON SHARE
From continuing operations
Basic $.93 $.97 $1.00 $1.13 $1.12
Diluted $.92 $.97 $1.00 $1.12 $1.11
From net income
Basic $.93 $.92 $1.00 $1.13 $1.12
Diluted $.92 $.92 $1.00 $1.12 $1.11
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AVERAGE COMMON SHARES OUTSTANDING
Basic 283 284 284 283 283
Diluted 284 286 285 285 285
====================================================================================================================================
THE PNC FINANCIAL SERVICES GROUP, INC. Page 2
CONSOLIDATED BALANCE SHEET (Unaudited)
March 31 December 31 September 30 June 30 March 31
In millions, except par value 2003 2002 2002 2002 2002
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ASSETS
Cash and due from banks $3,626 $3,201 $3,403 $2,839 $2,786
Federal funds sold 1,913 1,847 3,031 1,100 710
Other short-term investments 2,012 1,811 1,730 1,795 1,395
Loans held for sale 1,702 1,607 1,989 2,441 3,648
Securities 14,973 13,763 12,536 12,313 11,092
Loans, net of unearned income of $1,018,
$1,075, $1,108, $1,104 and $1,136 35,245 35,450 35,917 37,684 38,539
Allowance for credit losses (680) (673) (648) (654) (613)
- ---------------------------------------------------------------------------------------------------------------------------------
Net loans 34,565 34,777 35,269 37,030 37,926
Goodwill 2,356 2,313 2,313 2,314 2,315
Other intangible assets 330 333 337 342 344
Other 7,142 6,725 7,051 6,739 6,447
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Total assets $68,619 $66,377 $67,659 $66,913 $66,663
=================================================================================================================================
LIABILITIES
Deposits
Noninterest-bearing $11,263 $9,538 $10,130 $9,227 $8,686
Interest-bearing 35,818 35,444 34,830 35,200 36,224
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Total deposits 47,081 44,982 44,960 44,427 44,910
Borrowed funds
Federal funds purchased 34 38 35 37 34
Repurchase agreements 1,082 814 988 971 827
Bank notes and senior debt 3,850 4,400 4,962 5,434 5,480
Federal Home Loan Bank borrowings 1,146 1,256 1,270 1,277 1,787
Subordinated debt 2,234 2,423 2,423 2,332 2,275
Other borrowed funds 188 185 269 429 585
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Total borrowed funds 8,534 9,116 9,947 10,480 10,988
Allowance for unfunded loan commitments
and letters of credit 77 84 79 73 99
Accrued expenses 2,023 2,046 2,077 1,865 1,575
Other 3,020 2,172 2,776 2,620 2,081
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Total liabilities 60,735 58,400 59,839 59,465 59,653
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Minority interest 244 270 255 210 183
Mandatorily redeemable capital securities of
subsidiary trusts 848 848 848 848 848
SHAREHOLDERS' EQUITY
Preferred stock 1
Common stock - $5 par value
Authorized 800 shares, issued 353 shares 1,764 1,764 1,764 1,764 1,764
Capital surplus 1,102 1,101 1,103 1,102 1,090
Retained earnings 7,311 7,187 7,062 6,913 6,730
Deferred benefit expense (28) (9) (11) (13) (15)
Accumulated other comprehensive income (loss) 293 321 325 170 (30)
Common stock held in treasury at cost: 71, 68,
69, 69 and 69 shares (3,650) (3,505) (3,526) (3,546) (3,561)
- ---------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 6,792 6,859 6,717 6,390 5,979
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Total liabilities, minority interest, capital
securities and shareholders' equity $68,619 $66,377 $67,659 $66,913 $66,663
=================================================================================================================================
CAPITAL RATIOS
Tier I risk-based (a) 8.6% 8.8% 8.8% 8.2% 7.7%
Total risk-based (a) 12.2 12.5 12.5 12.0 11.7
Leverage (a) 8.0 8.1 7.8 7.4 6.9
Shareholders' equity to total assets 9.90 10.33 9.93 9.55 8.97
Common shareholders' equity to total assets 9.89 10.32 9.91 9.53 8.95
ASSET QUALITY RATIOS
Nonperforming assets to total loans,
loans held for sale and foreclosed assets 1.10% 1.13% 1.08% 1.25% 1.04%
Nonperforming loans to total loans .95 .87 .75 .86 .65
Allowance for credit losses to total loans 1.93 1.90 1.80 1.74 1.59
Allowance for credit losses to nonperforming loans 203 218 239 201 244
Net charge-offs to average loans (For the three months ended) .42 .39 .79 .78 .43
=================================================================================================================================
(a) Estimated for March 31, 2003.
THE PNC FINANCIAL SERVICES GROUP, INC. Page 3
RESULTS OF BUSINESSES - SUMMARY (Unaudited) (a)
Three months ended - dollars in millions
March 31 December 31 September 30 June 30 March 31
EARNINGS (LOSS) 2003 2002 2002 2002 2002
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Banking Businesses
Regional Community Banking $152 $152 $192 $176 $177
Wholesale Banking
Corporate Banking 42 33 30 54 33
PNC Real Estate Finance 16 23 19 26 22
PNC Business Credit 14 28 8 2 2
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Total wholesale banking 72 84 57 82 57
PNC Advisors 16 13 20 31 33
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Total banking businesses 240 249 269 289 267
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Asset management and processing businesses
BlackRock 35 34 33 35 31
PFPC 12 8 19 21 17
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Total asset management and processing
businesses 47 42 52 56 48
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Total business earnings 287 291 321 345 315
Other (25) (13) (36) (25) 2
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Results from continuing operations 262 278 285 320 317
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Discontinued operations (16)
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Total consolidated $262 $262 $285 $320 $317
========================================================================================================================
March 31 December 31 September 30 June 30 March 31
REVENUE (b) 2003 2002 2002 2002 2002
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Banking Businesses
Regional Community Banking $518 $511 $577 $543 $551
Wholesale Banking
Corporate Banking 189 198 177 217 194
PNC Real Estate Finance 56 58 55 65 51
PNC Business Credit 44 49 43 45 45
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Total wholesale banking 289 305 275 327 290
PNC Advisors 147 150 150 171 183
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Total banking businesses 954 966 1,002 1,041 1,024
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Asset management and processing businesses
BlackRock 143 137 137 157 146
PFPC 193 195 192 217 213
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Total asset management and processing
businesses 336 332 329 374 359
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Total business revenue 1,290 1,298 1,331 1,415 1,383
Other 11 (5) (28) 13
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Total consolidated $1,301 $1,293 $1,303 $1,428 $1,383
================================================================================================================================
(a) See "Review of Businesses" within the Financial Review section of the
Corporation's 2002 Annual Report to Shareholders for additional information
regarding presentation of results for the Corporation's major businesses. The
Corporation's line of business information is based on management information
systems, assumptions and methodologies that are under review on an ongoing
basis.
(b) Business revenue is presented on a taxable-equivalent basis except for
BlackRock and PFPC, which are presented on a book (GAAP) basis. A reconciliation
of total consolidated revenue on a book basis to total consolidated revenue on a
taxable-equivalent basis is as follows (in millions):
March 31 December 31 September 30 June 30 March 31
2003 2002 2002 2002 2002
-------------------------------------------------------------------
Total consolidated revenue, book (GAAP) basis $1,298 $1,290 $1,299 $1,425 $1,380
Taxable-equivalent adjustment 3 3 4 3 3
-------------------------------------------------------------------
Total consolidated revenue,
taxable-equivalent basis $1,301 $1,293 $1,303 $1,428 $1,383
===================================================================
THE PNC FINANCIAL SERVICES GROUP, INC. Page 4
REGIONAL COMMUNITY BANKING (Unaudited)
Three months ended
Taxable-equivalent basis March 31 December 31 September 30 June 30 March 31
Dollars in millions 2003 2002 2002 2002 2002
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INCOME STATEMENT
Net interest income $317 $331 $337 $357 $384
Other noninterest income 163 180 174 171 164
Net securities gains 38 66 15 3
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Total revenue 518 511 577 543 551
Provision for credit losses 8 15 14 11 12
Noninterest expense 278 264 268 263 266
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Pretax earnings 232 232 295 269 273
Income taxes 80 80 103 93 96
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Earnings $152 $152 $192 $176 $177
=================================================================================================================================
AVERAGE BALANCE SHEET
Loans
Consumer
Home equity $7,675 $7,395 $7,236 $7,031 $6,733
Indirect 438 458 508 567 633
Other consumer 546 582 610 641 697
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Total consumer 8,659 8,435 8,354 8,239 8,063
Residential mortgage 3,276 3,146 3,801 4,422 5,096
Commercial 3,939 3,857 3,479 3,547 3,511
Vehicle leasing 1,336 1,464 1,606 1,752 1,895
Other 117 115 118 121 122
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Total loans 17,327 17,017 17,358 18,081 18,687
Securities 12,504 11,982 10,216 10,165 12,206
Education and other loans held for sale 1,197 1,215 1,181 1,397 1,488
Assigned assets and other assets 7,961 8,661 10,433 9,446 6,368
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Total assets $38,989 $38,875 $39,188 $39,089 $38,749
=================================================================================================================================
Deposits
Noninterest-bearing demand $5,264 $5,242 $5,063 $4,996 $4,879
Interest-bearing demand 6,112 6,191 5,990 5,993 6,053
Money market 12,361 12,184 12,293 12,348 12,292
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Total transaction deposits 23,737 23,617 23,346 23,337 23,224
Savings 1,976 1,950 1,978 1,996 1,924
Certificates 9,360 9,653 10,016 10,209 10,310
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Total deposits 35,073 35,220 35,340 35,542 35,458
Other liabilities 1,285 1,035 1,204 911 675
Assigned capital 2,631 2,620 2,644 2,636 2,616
- ---------------------------------------------------------------------------------------------------------------------------------
Total funds $38,989 $38,875 $39,188 $39,089 $38,749
=================================================================================================================================
PERFORMANCE RATIOS
Return on assigned capital 23% 23% 29% 27% 27%
Noninterest income to total revenue 39 35 42 34 30
Efficiency 54 52 46 48 48
=================================================================================================================================
OTHER INFORMATION (a)
Total nonperforming assets $86 $82 $65 $65 $59
Vehicle leasing outstandings, net
of unearned income $1,239 $1,386 $1,511 $1,661 $1,805
Net charge-offs $13 $15 $17 $12 $12
Net gains on loans held for sale $1 $10 $3 $9 $1
Average FTEs 9,404 9,610 9,721 9,598 9,699
ATMs 3,594 3,550 3,450 3,350 3,300
Branches 713 714 714 713 714
Financial consultants 674 645 626 650 580
Business banking centers 193 193 188 158 140
Checking relationships 1,555,000 1,542,000 1,538,000 1,494,000 1,465,000
Online banking users 647,287 606,752 563,471 508,608 466,213
Deposit households using online banking 38.6% 36.6% 34.7% 32.6% 30.8%
=================================================================================================================================
(a) Presented as of period-end, except for net charge-offs, net gains on loans
held for sale and average full-time equivalent employees (FTEs).
THE PNC FINANCIAL SERVICES GROUP, INC. Page 5
WHOLESALE BANKING - CORPORATE BANKING (Unaudited)
Three months ended
Taxable-equivalent basis March 31 December 31 September 30 June 30 March 31
Dollars in millions 2003 2002 2002 2002 2002
- --------------------------------------------------------------------------------------------------------------------
INCOME STATEMENT
Net interest income $76 $78 $88 $88 $95
Noninterest income 113 120 89 129 99
- --------------------------------------------------------------------------------------------------------------------
Total revenue 189 198 177 217 194
Provision for credit losses 15 64 44 49 46
Noninterest expense 109 87 89 86 97
- --------------------------------------------------------------------------------------------------------------------
Pretax earnings 65 47 44 82 51
Income taxes 23 14 14 28 18
- --------------------------------------------------------------------------------------------------------------------
Earnings $42 $33 $30 $54 $33
====================================================================================================================
AVERAGE BALANCE SHEET
Loans $8,604 $8,821 $9,468 $9,701 $9,930
Loans held for sale 291 464 804 1,717 2,519
Other assets 2,755 3,133 3,065 2,873 2,768
- --------------------------------------------------------------------------------------------------------------------
Total assets $11,650 $12,418 $13,337 $14,291 $15,217
====================================================================================================================
Deposits $5,097 $4,906 $4,746 $4,600 $4,475
Assigned funds and other liabilities 5,679 6,581 7,589 8,620 9,601
Assigned capital 874 931 1,002 1,071 1,141
- --------------------------------------------------------------------------------------------------------------------
Total funds $11,650 $12,418 $13,337 $14,291 $15,217
====================================================================================================================
PERFORMANCE RATIOS
Return on assigned capital 19% 14% 12% 20% 12%
Noninterest income to total revenue 60 61 50 59 51
Efficiency 58 44 50 40 50
====================================================================================================================
OTHER INFORMATION (a)
Total nonperforming assets $166 $187 $158 $261 $191
Net charge-offs $18 $15 $51 $55 $16
Average FTEs 1,971 2,109 2,086 2,092 2,206
INSTITUTIONAL LENDING REPOSITIONING
Loans held for sale
Credit exposure $315 $564 $964 $1,822 $3,519
Outstandings $155 $245 $415 $920 $1,714
Exit portfolio
Credit exposure $349 $413 $611 $1,178 $1,945
Outstandings $4 $12 $12 $113
Net gains on loans held for sale $17 $55 $21 $50 $29
====================================================================================================================
(a) Presented as of period-end, except for net charge-offs, net gains on loans
held for sale and average full-time equivalent employees (FTEs).
THE PNC FINANCIAL SERVICES GROUP, INC. Page 6
WHOLESALE BANKING - PNC REAL ESTATE FINANCE (Unaudited)
Three months ended
Taxable-equivalent basis March 31 December 31 September 30 June 30 March 31
Dollars in millions except as noted 2003 2002 2002 2002 2002
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INCOME STATEMENT
Net interest income $28 $30 $27 $30 $30
Noninterest income
Commercial mortgage banking 19 19 14 14 18
Other 9 9 14 21 3
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Total noninterest income 28 28 28 35 21
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Total revenue 56 58 55 65 51
Provision for credit losses 8 (3) (2) (5)
Noninterest expense 38 41 45 38 36
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Pretax earnings 10 20 12 27 20
Minority interest benefit (2)
Income tax (benefit) expense (6) (3) (5) 1 (2)
- -------------------------------------------------------------------------------------------------------------------------------
Earnings $16 $23 $19 $26 $22
===============================================================================================================================
AVERAGE BALANCE SHEET
Loans
Commercial real estate $2,052 $2,167 $2,279 $2,245 $2,228
Commercial - real estate related 1,397 1,463 1,407 1,462 1,555
- -------------------------------------------------------------------------------------------------------------------------------
Total loans 3,449 3,630 3,686 3,707 3,783
Commercial mortgages held for sale 315 327 193 246 318
Other loans held for sale 53 94 106 155 211
Other assets 950 970 907 881 862
- -------------------------------------------------------------------------------------------------------------------------------
Total assets $4,767 $5,021 $4,892 $4,989 $5,174
===============================================================================================================================
Deposits $950 $892 $789 $699 $617
Assigned funds and other liabilities 3,454 3,746 3,714 3,893 4,158
Assigned capital 363 383 389 397 399
- -------------------------------------------------------------------------------------------------------------------------------
Total funds $4,767 $5,021 $4,892 $4,989 $5,174
===============================================================================================================================
PERFORMANCE RATIOS
Return on assigned capital 18% 24% 19% 26% 22%
Noninterest income to total revenue 50 48 51 54 41
Efficiency 68 71 82 58 71
===============================================================================================================================
OTHER INFORMATION (a)
Total nonperforming assets $12 $2 $3 $6 $12
Net (recoveries) charge-offs $(1) $(5)
Average FTEs 770 780 788 795 792
Commercial mortgage servicing portfolio (b) $75 $74 $74 $71 $69
Gains on sales of commercial mortgages (c) $9 $11 $5 $5 $8
INSTITUTIONAL LENDING REPOSITIONING
Loans held for sale
Credit exposure $19 $49 $68 $124 $320
Outstandings $19 $44 $55 $105 $234
Exit portfolio
Credit exposure $25 $25 $25 $25 $25
Outstandings $5 $4 $13 $6
Net gains (losses) on loans held for sale $1 $(3) $12 $(6)
===============================================================================================================================
(a) Presented as of period-end, except for net (recoveries) charge-offs, net
gains (losses) on loans held for sale and average full-time equivalent employees
(FTEs).
(b) In billions.
(c) Included in "commercial mortgage banking" in the income statement above.
THE PNC FINANCIAL SERVICES GROUP, INC. Page 7
WHOLESALE BANKING - PNC BUSINESS CREDIT (Unaudited)
Three months ended
Taxable-equivalent basis March 31 December 31 September 30 June 30 March 31
Dollars in millions 2003 2002 2002 2002 2002
- -------------------------------------------------------------------------------------------------------------------------------
INCOME STATEMENT
Net interest income $32 $33 $35 $33 $33
Noninterest income 12 16 8 12 12
- -------------------------------------------------------------------------------------------------------------------------------
Total revenue 44 49 43 45 45
Provision for credit losses 7 (8) 15 29 28
Noninterest expense 14 12 14 13 14
- -------------------------------------------------------------------------------------------------------------------------------
Pretax earnings 23 45 14 3 3
Income tax expense 9 17 6 1 1
- -------------------------------------------------------------------------------------------------------------------------------
Earnings $14 $28 $8 $2 $2
===============================================================================================================================
AVERAGE BALANCE SHEET
Loans $3,381 $3,490 $3,524 $3,641 $3,484
Loans held for sale 18 23 71 86 92
Other assets 229 225 219 251 241
- -------------------------------------------------------------------------------------------------------------------------------
Total assets $3,628 $3,738 $3,814 $3,978 $3,817
===============================================================================================================================
Deposits $82 $102 $88 $78 $68
Assigned funds and other liabilities 3,309 3,392 3,476 3,643 3,500
Assigned capital 237 244 250 257 249
- -------------------------------------------------------------------------------------------------------------------------------
Total funds $3,628 $3,738 $3,814 $3,978 $3,817
===============================================================================================================================
PERFORMANCE RATIOS
Return on assigned capital 24% 46% 13% 3% 3%
Noninterest income to total revenue 27 33 19 27 27
Efficiency 32 24 33 29 31
===============================================================================================================================
OTHER INFORMATION (a)
Total nonperforming assets $139 $142 $179 $164 $172
Net charge-offs $5 $6 $4 $5 $17
NBOC put option liability $49 $57 $78 $86 $107
NBOC put option valuation income (b) $6 $9 $4 $10 $5
Marketing locations 24 23 23 24 23
Average FTEs 250 249 249 248 217
INSTITUTIONAL LENDING REPOSITIONING
Loans held for sale
Credit exposure $10 $13 $46 $73 $35
Outstandings $7 $9 $25 $41 $27
Net gains (losses) on loans held for sale $(3) $(4) $(7)
===============================================================================================================================
(a) Presented as of period-end, except for net charge-offs, net gains (losses)
on loans held for sale and average full-time equivalent employees (FTEs).
(b) Included in noninterest income.
THE PNC FINANCIAL SERVICES GROUP, INC. Page 8
PNC ADVISORS (Unaudited)
Three months ended
Taxable-equivalent basis March 31 December 31 September 30 June 30 March 31
Dollars in millions except as noted 2003 2002 2002 2002 2002
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME STATEMENT
Net interest income $21 $24 $24 $26 $26
Noninterest income
Investment management and trust 76 76 76 90 92
Brokerage 26 29 29 34 39
Other 24 21 21 21 26
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Total noninterest income 126 126 126 145 157
- -----------------------------------------------------------------------------------------------------------------------------------
Total revenue 147 150 150 171 183
Provision for credit losses 1 2 1
Noninterest expense 122 129 116 122 130
- -----------------------------------------------------------------------------------------------------------------------------------
Pretax earnings 25 20 32 48 53
Income taxes 9 7 12 17 20
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings $16 $13 $20 $31 $33
===================================================================================================================================
AVERAGE BALANCE SHEET
Loans
Consumer $1,280 $1,264 $1,251 $1,226 $1,170
Residential mortgage 327 394 464 535 613
Commercial 439 439 433 495 475
Other 284 276 314 341 349
- -----------------------------------------------------------------------------------------------------------------------------------
Total loans 2,330 2,373 2,462 2,597 2,607
Other assets 540 417 410 419 435
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $2,870 $2,790 $2,872 $3,016 $3,042
===================================================================================================================================
Deposits $2,085 $2,016 $1,955 $2,000 $2,058
Assigned funds and other liabilities 263 243 406 495 455
Assigned capital 522 531 511 521 529
- -----------------------------------------------------------------------------------------------------------------------------------
Total funds $2,870 $2,790 $2,872 $3,016 $3,042
===================================================================================================================================
PERFORMANCE RATIOS
Return on assigned capital 12% 10% 16% 24% 25%
Noninterest income to total revenue 86 84 84 85 86
Efficiency 83 86 77 71 71
===================================================================================================================================
ASSETS UNDER MANAGEMENT (a)
Personal investment management and trust $40 $41 $40 $45 $48
Institutional trust 9 9 10 11 12
- -----------------------------------------------------------------------------------------------------------------------------------
Total $49 $50 $50 $56 $60
- -----------------------------------------------------------------------------------------------------------------------------------
Asset Type
Equity $25 $26 $26 $31 $36
Fixed income 16 17 17 18 17
Liquidity 8 7 7 7 7
- -----------------------------------------------------------------------------------------------------------------------------------
Total $49 $50 $50 $56 $60
===================================================================================================================================
OTHER INFORMATION (b)
Total nonperforming assets $5 $5 $4 $4 $4
Net charge-offs $1 $2 $1
Brokerage assets administered (In billions) $31 $32 $31 $33 $29
Full service brokerage offices 102 106 108 109 113
Financial consultants 585 615 621 644 669
Margin loans $247 $260 $257 $297 $301
Average FTEs 3,290 3,317 3,319 3,347 3,421
===================================================================================================================================
(a) In billions; excludes brokerage assets administered.
(b) Presented as of period-end, except for net charge-offs and average full-time
equivalent employees (FTEs).
THE PNC FINANCIAL SERVICES GROUP, INC. Page 9
BLACKROCK (Unaudited)
Three months ended March 31 December 31 September 30 June 30 March 31
Dollars in millions except as noted 2003 2002 2002 2002 2002
- -----------------------------------------------------------------------------------------------------------
INCOME STATEMENT
Investment advisory and
administrative fees $127 $122 $122 $144 $132
Other income 16 15 15 13 14
- -----------------------------------------------------------------------------------------------------------
Total revenue 143 137 137 157 146
Operating expense 81 74 74 90 83
Fund administration
and servicing costs 8 8 8 12 13
- -----------------------------------------------------------------------------------------------------------
Total expense 89 82 82 102 96
- -----------------------------------------------------------------------------------------------------------
Operating income 54 55 55 55 50
Nonoperating income 3 2 1 4 3
- -----------------------------------------------------------------------------------------------------------
Pretax earnings 57 57 56 59 53
Income taxes 22 23 23 24 22
- -----------------------------------------------------------------------------------------------------------
Earnings $35 $34 $33 $35 $31
===========================================================================================================
PERIOD-END BALANCE SHEET
Goodwill and other intangible assets $183 $183 $181 $181 $181
Other assets 653 681 609 553 486
- -----------------------------------------------------------------------------------------------------------
Total assets $836 $864 $790 $734 $667
===========================================================================================================
Liabilities $168 $229 $194 $173 $144
Stockholders' equity 668 635 596 561 523
- -----------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $836 $864 $790 $734 $667
===========================================================================================================
PERFORMANCE DATA
Return on equity 22% 22% 23% 25% 25%
Operating margin (a) 40 43 43 38 38
Diluted earnings per share $.54 $.52 $.51 $.53 $.48
===========================================================================================================
ASSETS UNDER MANAGEMENT (in billions)
Separate accounts
Fixed income $168 $157 $146 $141 $124
Liquidity 6 6 5 6 5
Liquidity - securities lending 6 6 6 6 10
Equity 9 10 8 10 9
Alternative investment products 6 5 6 5 6
- -----------------------------------------------------------------------------------------------------------
Total separate accounts 195 184 171 168 154
Mutual funds (b)
Fixed income 20 19 19 17 16
Liquidity 56 66 52 59 60
Equity 3 4 4 6 8
- -----------------------------------------------------------------------------------------------------------
Total mutual funds 79 89 75 82 84
- -----------------------------------------------------------------------------------------------------------
Total assets under management $274 $273 $246 $250 $238
===========================================================================================================
OTHER INFORMATION
Average FTEs 872 867 848 800 774
===========================================================================================================
(a) Calculated as operating income divided by total revenue less fund
administration and servicing costs. A reconciliation of this presentation to
operating margin calculated on a GAAP basis (operating income divided by
total revenue) follows in millions:
Operating income $54 $55 $55 $55 $50
--------------------------------------------------------
Total revenue $143 $137 $137 $157 $146
Less fund administration and servicing costs 8 8 8 12 13
--------------------------------------------------------
Revenue used for operating margin calculation,
as reported $135 $129 $129 $145 $133
Operating margin, as reported 40% 43% 43% 38% 38%
Operating margin, GAAP basis 38% 40% 40% 35% 34%
- -----------------------------------------------------------------------------------------------------------
PNC believes that operating margin, as reported, is an effective indicator of
management's ability to effectively employ BlackRock's resources. Fund
administration and servicing costs have been excluded from the operating margin
calculation because these costs are a fixed, asset-based expense which can
fluctuate based on the discretion of a third party.
(b) Includes BlackRock Funds, BlackRock Provident Institutional Funds, BlackRock
Closed End Funds, Short Term Investment Funds and BlackRock Global Funds.
THE PNC FINANCIAL SERVICES GROUP, INC. Page 10
PFPC (Unaudited)
Three months ended March 31 December 31 September 30 June 30 March 31
Dollars in millions except as noted 2003 2002 2002 2002 2002
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME STATEMENT
Fund servicing revenue $193 $195 $192 $217 $213
Operating expense 162 168 164 167 170
(Accretion)/amortization of
other intangibles, net (4) (5) (4) (5) (5)
- ---------------------------------------------------------------------------------------------------------------------------------
Operating income 35 32 32 55 48
Nonoperating income (a) 2 2 2 2 4
Debt financing 17 21 22 22 23
Adjustment to facilities consolidation charge (19)
- ---------------------------------------------------------------------------------------------------------------------------------
Pretax earnings 20 13 31 35 29
Income taxes 8 5 12 14 12
- ---------------------------------------------------------------------------------------------------------------------------------
Earnings $12 $8 $19 $21 $17
=================================================================================================================================
AVERAGE BALANCE SHEET
Goodwill and other intangible assets $1,025 $1,022 $1,025 $1,030 $1,036
Other assets 840 857 868 902 812
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets $1,865 $1,879 $1,893 $1,932 $1,848
=================================================================================================================================
Assigned funds and other liabilities $1,657 $1,671 $1,685 $1,724 $1,640
Assigned capital 208 208 208 208 208
- ---------------------------------------------------------------------------------------------------------------------------------
Total funds $1,865 $1,879 $1,893 $1,932 $1,848
=================================================================================================================================
PERFORMANCE RATIOS
Return on assigned capital 23% 15% 36% 40% 33%
Operating margin (b) 18 16 27 25 23
=================================================================================================================================
SERVICING STATISTICS
Accounting/administration net assets (c)
Domestic $542 $481 $464 $485 $520
Foreign (d) 31 29 25 28 23
- ---------------------------------------------------------------------------------------------------------------------------------
Total $573 $510 $489 $513 $543
=================================================================================================================================
Custody assets (c) $347 $336 $311 $323 $339
Shareholder accounts (in millions) 48 51 52 51 49
=================================================================================================================================
OTHER INFORMATION
Average FTEs 5,437 5,538 5,772 5,979 6,046
=================================================================================================================================
(a) Net of nonoperating expense.
(b) Operating income divided by total (fund servicing) revenue. For the quarter
ended September 30, 2002, operating margin is computed as the sum of operating
income and adjustment to facilities consolidation charge divided by total
revenue.
(c) In billions.
(d) Represents net assets serviced offshore.
THE PNC FINANCIAL SERVICES GROUP, INC. Page 11
DETAILS OF NET INTEREST INCOME AND NET INTEREST MARGIN (Unaudited)
Taxable-equivalent basis
Quarter ended
----------------------------------------------------------------
NET INTEREST INCOME March 31 December 31 September 30 June 30 March 31
In millions 2003 2002 2002 2002 2002
- -------------------------------------------------------------------------------------------------------------
Interest income
Loans and fees on loans $509 $542 $570 $591 $601
Securities 144 150 141 149 178
Loans held for sale 12 18 24 41 52
Other 30 34 38 26 30
- -------------------------------------------------------------------------------------------------------------
Total interest income 695 744 773 807 861
- -------------------------------------------------------------------------------------------------------------
Interest expense
Deposits 132 149 162 172 176
Borrowed funds 57 68 79 77 92
- -------------------------------------------------------------------------------------------------------------
Total interest expense 189 217 241 249 268
- -------------------------------------------------------------------------------------------------------------
Net interest income (a) $506 $527 $532 $558 $593
=============================================================================================================
Lending revenue to total revenue (b) 22% 27% 22% 24% 22%
Quarter ended
--------------------------------------------------------------------
NET INTEREST MARGIN March 31 December 31 September 30 June 30 March 31
2003 2002 2002 2002 2002
- ----------------------------------------------------------------------------------------------------------------
Average yields/rates
Yield on earning assets
Loans and fees on loans 5.82% 6.03% 6.13% 6.20% 6.28%
Securities 4.41 4.67 5.10 5.39 5.47
Loans held for sale 2.65 3.48 4.43 5.07 4.85
Other 3.05 3.68 3.47 3.07 6.38
Total yield on earning assets 5.17 5.45 5.64 5.78 5.99
Rate on interest-bearing liabilities
Deposits 1.51 1.68 1.84 1.92 1.97
Borrowed funds 2.63 2.93 3.16 2.83 2.80
Total rate on interest-bearing
liabilities 1.73 1.94 2.13 2.13 2.19
- ----------------------------------------------------------------------------------------------------------------
Interest rate spread 3.44 3.51 3.51 3.65 3.80
Impact of noninterest-bearing sources .32 .36 .37 .34 .32
- ----------------------------------------------------------------------------------------------------------------
Net interest margin 3.76% 3.87% 3.88% 3.99% 4.12%
================================================================================================================
(a) A reconciliation of net interest income as reported in the Consolidated
Statement of Income to net interest income on a taxable-equivalent basis
follows:
Quarter ended
-----------------------------------------------------------------
In millions March 31 December 31 September 30 June 30 March 31
2003 2002 2002 2002 2002
-----------------------------------------------------------------
Net interest income, GAAP basis $503 $524 $528 $555 $590
Taxable-equivalent adjustment 3 3 4 3 3
-----------------------------------------------------------------
Net interest income, taxable-equivalent basis $506 $527 $532 $558 $593
(b) The lending revenue to total revenue ratio is the sum of net interest income
and noninterest income from loans, loans held for sale and related
noninterest-earning assets and noninterest-bearing liabilities attributable
to the lending function divided by the sum of consolidated net interest
income and noninterest income. For the quarters ended March 31, 2002, June
30, 2002, September 30, 2002 and December 31, 2002, this ratio had
previously been reported by using taxable-equivalent net interest income.
The ratios for those quarters have been restated to conform to the current
period presentation.
THE PNC FINANCIAL SERVICES GROUP, INC. Page 12
DETAILS OF NONINTEREST INCOME AND NONINTEREST EXPENSE (Unaudited)
In millions
Quarter ended
------------------------------------------------------------------------------
NONINTEREST INCOME March 31 December 31 September 30 June 30 March 31
2003 2002 2002 2002 2002
- ---------------------------------------------------------------------------------------------------------------------------------
Asset management $207 $202 $200 $230 $221
Fund servicing 193 194 193 217 212
Service charges on deposits 57 61 57 55 54
Brokerage 41 44 41 55 55
Consumer services 59 61 62 61 55
Corporate services 116 151 108 149 118
Equity management (4) (14) (22) (13) (2)
Net securities gains 56 1 68 16 4
Other 70 66 64 100 73
- ---------------------------------------------------------------------------------------------------------------------------------
Total noninterest income $795 $766 $771 $870 $790
=================================================================================================================================
Net gains on institutional loans held for
sale (included in "Corporate services"
above) $15 $52 $17 $55 $23
Noninterest income to total revenue (a) 61% 59% 59% 61% 57%
Quarter ended
----------------------------------------------------------------------
NONINTEREST EXPENSE March 31 December 31 September 30 June 30 March 31
2003 2002 2002 2002 2002
- ------------------------------------------------------------------------------------------------------------------------
Staff expense $438 $408 $422 $441 $430
Net occupancy 90 62 64 59 58
Equipment 69 68 68 67 68
Marketing 15 11 14 13 13
Distributions on capital securities 14 14 15 14 15
Other 230 228 207 245 223
- ------------------------------------------------------------------------------------------------------------------------
Total noninterest expense $856 $791 $790 $839 $807
========================================================================================================================
Legal and consulting fees related to
regulatory compliance and legal
proceedings (included in "Other" above) $2 $10 $8 $2 $10
Efficiency (b) 66% 61% 61% 59% 58%
========================================================================================================================
(a) Calculated as total noninterest income divided by the sum of net interest
income and noninterest income. For the quarters ended March 31, 2002, June 30,
2002, September 30, 2002 and December 31, 2002, the ratio had previously been
reported by using taxable-equivalent net interest income. The ratios for those
quarters have been restated to conform to the current period presentation.
(b) The efficiency ratio for all periods presented is computed as noninterest
expense divided by the sum of net interest income and noninterest income. For
the quarters ended March 31, 2002, June 30, 2002, September 30, 2002 and
December 31, 2002, the efficiency ratio had previously been reported by
excluding amortization expense and distributions on capital securities from the
calculation and had used taxable-equivalent net interest income. The efficiency
ratios for those quarters have been restated to conform to the current period
presentation.
THE PNC FINANCIAL SERVICES GROUP, INC. Page 13
CONSOLIDATED AVERAGE BALANCE SHEET (Unaudited)
March 31 December 31 September 30 June 30 March 31
Three months ended - in millions 2003 2002 2002 2002 2002
- ---------------------------------------------------------------------------------------------------------------------------------
ASSETS
Interest-earning assets
Loans held for sale $1,782 $1,985 $2,125 $3,235 $4,276
Securities 13,078 12,852 11,108 11,035 13,011
Loans, net of unearned income
Commercial 15,050 15,426 15,698 16,311 16,264
Commercial real estate 2,265 2,382 2,501 2,470 2,452
Consumer 9,974 9,739 9,649 9,509 9,278
Residential mortgage 3,619 3,554 4,296 4,979 5,756
Lease financing 3,909 4,000 4,124 4,244 4,327
Other 363 356 419 402 394
- ---------------------------------------------------------------------------------------------------------------------------------
Total loans, net of unearned income 35,180 35,457 36,687 37,915 38,471
Other 3,958 3,631 4,322 3,457 1,867
- ---------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 53,998 53,925 54,242 55,642 57,625
Allowance for credit losses (682) (655) (665) (625) (567)
Other noninterest-earning assets 12,639 12,572 12,281 11,443 11,171
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets $65,955 $65,842 $65,858 $66,460 $68,229
=================================================================================================================================
LIABILITIES, MINORITY INTEREST, CAPITAL SECURITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
Interest-bearing deposits
Demand and money market $22,826 $22,395 $21,994 $22,147 $21,802
Savings 2,058 2,020 2,050 2,067 1,994
Retail certificates of deposit 9,638 9,977 10,347 10,518 10,608
Other time 350 312 307 948 827
Deposits in foreign offices 497 370 299 243 867
- ---------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 35,369 35,074 34,997 35,923 36,098
Borrowed funds 8,702 9,045 9,826 10,862 13,172
- ---------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 44,071 44,119 44,823 46,785 49,270
Demand and other noninterest-bearing deposits 9,017 9,030 8,665 8,406 8,288
Allowance for unfunded loan commitments
and letters of credit 84 79 73 98 70
Accrued expenses and other liabilities 4,928 4,829 4,754 4,027 3,675
- ---------------------------------------------------------------------------------------------------------------------------------
Total liabilities 58,100 58,057 58,315 59,316 61,303
Minority interest 251 261 218 192 177
Mandatorily redeemable capital securities
of subsidiary trusts 848 848 848 848 848
Shareholders' equity 6,756 6,676 6,477 6,104 5,901
- ---------------------------------------------------------------------------------------------------------------------------------
Total liabilities, minority interest, capital
securities and shareholders' equity $65,955 $65,842 $65,858 $66,460 $68,229
=================================================================================================================================
Supplemental average balance sheet information
- ----------------------------------------------
Federal funds sold $1,813 $1,426 $2,212 $1,532 $80
- ---------------------------------------------------------------------------------------------------------------------------------
Interest-bearing deposits $35,369 $35,074 $34,997 $35,923 $36,098
Demand and other noninterest-bearing deposits 9,017 9,030 8,665 8,406 8,288
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL DEPOSITS $44,386 $44,104 $43,662 $44,329 $44,386
- ---------------------------------------------------------------------------------------------------------------------------------
Interest-bearing demand and money market deposits $22,826 $22,395 $21,994 $22,147 $21,802
Demand and other noninterest-bearing deposits 9,017 9,030 8,665 8,406 8,288
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL TRANSACTION DEPOSITS $31,843 $31,425 $30,659 $30,553 $30,090
- ---------------------------------------------------------------------------------------------------------------------------------
Common Shareholders' Equity $6,746 $6,666 $6,467 $6,094 $5,891
- ---------------------------------------------------------------------------------------------------------------------------------
THE PNC FINANCIAL SERVICES GROUP, INC. Page 14
DETAILS OF LOANS AND LOANS HELD FOR SALE (Unaudited)
LOANS
March 31 December 31 September 30 June 30 March 31
Period ended-in millions 2003 2002 2002 2002 2002
- ----------------------------------------------------------------------------------------------------------------------------------
Commercial
Manufacturing $3,685 $3,454 $3,726 $3,838 $4,066
Retail/wholesale 4,147 4,161 4,247 4,333 4,368
Service providers 1,978 1,906 1,986 2,016 2,131
Real estate related 1,441 1,481 1,554 1,583 1,664
Financial services 1,255 1,218 1,252 1,326 1,289
Communications 110 124 115 110 111
Health care 422 458 450 471 487
Other 2,035 2,185 2,042 2,548 2,362
- ----------------------------------------------------------------------------------------------------------------------------------
Total commercial 15,073 14,987 15,372 16,225 16,478
- ----------------------------------------------------------------------------------------------------------------------------------
Commercial real estate
Mortgage 492 517 516 546 561
Real estate project 1,749 1,750 1,958 1,963 1,891
- ----------------------------------------------------------------------------------------------------------------------------------
Total commercial real estate 2,241 2,267 2,474 2,509 2,452
- ----------------------------------------------------------------------------------------------------------------------------------
Consumer
Home equity 8,435 8,108 7,905 7,654 7,358
Automobile 476 484 540 607 683
Other 1,209 1,262 1,283 1,325 1,346
- ----------------------------------------------------------------------------------------------------------------------------------
Total consumer 10,120 9,854 9,728 9,586 9,387
- ----------------------------------------------------------------------------------------------------------------------------------
Residential mortgage 3,627 3,921 3,829 4,750 5,420
Lease financing
Vehicles 1,346 1,521 1,676 1,859 2,039
Equipment 3,500 3,560 3,537 3,422 3,432
- ----------------------------------------------------------------------------------------------------------------------------------
Total lease financing 4,846 5,081 5,213 5,281 5,471
- ----------------------------------------------------------------------------------------------------------------------------------
Other 356 415 409 437 467
Unearned income (1,018) (1,075) (1,108) (1,104) (1,136)
- ----------------------------------------------------------------------------------------------------------------------------------
Total, net of unearned income $35,245 $35,450 $35,917 $37,684 $38,539
==================================================================================================================================
WHOLESALE LENDING STATISTICS
Portfolio composition-total exposure
Investment grade equivalent or better 52% 53%
Non-investment grade-secured lending 24 24
Non-investment grade 24 23
- ----------------------------------------------------------------------------------
Total 100% 100%
- ----------------------------------------------------------------------------------
Client relationships >$50 million-total exposure $13,618 $13,758
Client relationships >$50 million-customers 149 143
==================================================================================================================================
CONSUMER LOAN STATISTICS(a)
Net charge-offs to loans .24% .24% .31% .22% .19%
==================================================================================================================================
LOANS HELD FOR SALE
March 31 December 31 September 30 June 30 March 31
Period ended - in millions 2003 2002 2002 2002 2002
- --------------------------------------------------------------------------------------------------------------------
Institutional lending repositioning $181 $298 $495 $1,066 $1,975
Education loans 1,243 1,035 1,225 1,123 1,532
Other 278 274 269 252 141
- --------------------------------------------------------------------------------------------------------------------
Total $1,702 $1,607 $1,989 $2,441 $3,648
====================================================================================================================
INSTITUTIONAL LENDING REPOSITIONING
March 31 December 31 September 30 June 30 March 31
Period ended - in millions 2003 2002 2002 2002 2002
- -----------------------------------------------------------------------------------------------------------
Loans held for sale
Credit exposure $344 $626 $1,078 $2,019 $3,874
Outstandings 181 298 495 1,066 1,975
Exit portfolio
Credit exposure 374 438 636 1,203 1,970
Outstandings 9 4 25 18 113
===========================================================================================================
(a) Includes consumer, residential mortgage and vehicle leasing.
THE PNC FINANCIAL SERVICES GROUP, INC. Page 15
ALLOWANCES FOR CREDIT LOSSES AND UNFUNDED LOAN COMMITMENTS AND LETTERS OF CREDIT
(Unaudited)
CHANGE IN ALLOWANCE FOR CREDIT LOSSES
March 31 December 31 September 30 June 30 March 31
Three months ended - in millions 2003 2002 2002 2002 2002
- ------------------------------------------------------------------------------------------------------------------------------
Beginning balance $673 $648 $654 $613 $560
Charge-offs
Commercial (32) (27) (62) (66) (39)
Commercial real estate (1) (2)
Consumer (10) (10) (10) (10) (10)
Residential mortgage (3) (1) (1)
Lease financing (8) (5) (10) (5) (5)
- ------------------------------------------------------------------------------------------------------------------------------
Total charge-offs (50) (43) (85) (82) (57)
Recoveries
Commercial 10 3 9 4 10
Commercial real estate 1
Consumer 3 3 3 4 4
Residential mortgage 1
Lease financing 1 1 1
- ------------------------------------------------------------------------------------------------------------------------------
Total recoveries 14 8 12 8 16
Net charge-offs
Commercial (22) (24) (53) (62) (29)
Commercial real estate (2)
Consumer (7) (7) (7) (6) (6)
Residential mortgage (3) (1)
Lease financing (7) (4) (10) (5) (4)
- ------------------------------------------------------------------------------------------------------------------------------
Total net charge-offs (36) (35) (73) (74) (41)
Provision for credit losses 36 65 73 89 82
Acquired allowance (NBOC acquisition) 41
Net change in allowance for unfunded loan
commitments and letters of credit 7 (5) (6) 26 (29)
- ------------------------------------------------------------------------------------------------------------------------------
Ending balance $680 $673 $648 $654 $613
==============================================================================================================================
CHANGE IN ALLOWANCE FOR UNFUNDED LOAN COMMITMENTS AND LETTERS OF CREDIT
March 31 December 31 September 30 June 30 March 31
Three months ended - in millions 2003 2002 2002 2002 2002
- -----------------------------------------------------------------------------------------------------------------------
Beginning Balance $84 $79 $73 $99 $70
Net change in allowance for unfunded
loan commitments and letters of credit (7) 5 6 (26) 29
- -----------------------------------------------------------------------------------------------------------------------
Ending Balance $77 $84 $79 $73 $99
=======================================================================================================================
THE PNC FINANCIAL SERVICES GROUP, INC. Page 16
DETAILS OF NONPERFORMING ASSETS (Unaudited)
NONPERFORMING ASSETS BY TYPE
March 31 December 31 September 30 June 30 March 31
Period ended - in millions 2003 2002 2002 2002 2002
- ----------------------------------------------------------------------------------------------------------------------------------
Nonaccrual loans
Commercial $250 $226 $232 $285 $225
Commercial real estate 13 7 5 3 5
Consumer 11 11 12 11 2
Residential mortgage 7 7 5 6 6
Lease financing 51 57 15 18 13
- ----------------------------------------------------------------------------------------------------------------------------------
Total nonaccrual loans 332 308 269 323 251
Troubled debt restructured loan 3 1 2 2
- ----------------------------------------------------------------------------------------------------------------------------------
Total nonperforming loans 335 309 271 325 251
Nonperforming loans held for sale (a) 61 97 125 162 175
Foreclosed and other assets
Commercial real estate 1
Residential mortgage 6 6 6 5 3
Other 6 6 7 8 8
- ----------------------------------------------------------------------------------------------------------------------------------
Total foreclosed and other assets 12 12 13 13 12
- ----------------------------------------------------------------------------------------------------------------------------------
Total nonperforming assets (b) $408 $418 $409 $500 $438
- ----------------------------------------------------------------------------------------------------------------------------------
Nonperforming loans to total loans .95% .87% .75% .86% .65%
Nonperforming assets to total loans, loans held
for sale and foreclosed assets 1.10 1.13 1.08 1.25 1.04
Nonperforming assets to total assets .59 .63 .60 .75 .66
==================================================================================================================================
(a) Includes troubled debt restructured loans held
for sale $12 $17 $11
(b) Excludes equity management assets carried at
estimated fair value (March 31, 2003, December 31,
2002 and September 30, 2002 amounts include
troubled debt restructured assets of $3 million, $12
million and $13 million, respectively) $30 $40 $42 $29 $18
CHANGE IN NONPERFORMING ASSETS
Three months
March 31, 2003 - in millions ended
- -------------------------------------------------------------
Beginning of period $418
Transferred from accrual 111
Returned to performing (1)
Principal reductions and payoffs (55)
Asset sales (18)
Charge-offs and valuation adjustments (47)
- -------------------------------------------------------------
March 31 $408
=============================================================
THE PNC FINANCIAL SERVICES GROUP, INC. Page 17
DETAILS OF NONPERFORMING ASSETS (Unaudited)
NONPERFORMING ASSETS BY BUSINESS
March 31 December 31 September 30 June 30 March 31
Period ended - in millions 2003 2002 2002 2002 2002
- ----------------------------------------------------------------------------------------------------------------
REGIONAL COMMUNITY BANKING
- --------------------------
Nonperforming loans $76 $72 $56 $56 $52
Foreclosed and other assets 10 10 9 9 7
------------------------------------------------------------------
Total $86 $82 $65 $65 $59
------------------------------------------------------------------
WHOLESALE BANKING-CORPORATE BANKING
- -----------------------------------
Nonperforming loans $114 $104 $57 $126 $62
Nonperforming loans held for sale 52 83 99 133 127
Foreclosed and other assets 2 2 2
------------------------------------------------------------------
Total $166 $187 $158 $261 $191
------------------------------------------------------------------
WHOLESALE BANKING-PNC REAL ESTATE FINANCE
- -----------------------------------------
Nonperforming loans $10 $2 $3 $3 $5
Nonperforming loans held for sale 2 3 6
Foreclosed and other assets 1
------------------------------------------------------------------
Total $12 $2 $3 $6 $12
------------------------------------------------------------------
WHOLESALE BANKING-PNC BUSINESS CREDIT
- -------------------------------------
Nonperforming loans $130 $126 $151 $136 $128
Nonperforming loans held for sale 7 14 26 26 42
Foreclosed and other assets 2 2 2 2 2
------------------------------------------------------------------
Total $139 $142 $179 $164 $172
------------------------------------------------------------------
PNC ADVISORS
- ------------
Nonperforming loans $5 $5 $4 $4 $4
------------------------------------------------------------------
Total $5 $5 $4 $4 $4
------------------------------------------------------------------
CONSOLIDATED TOTALS
- -------------------
Nonperforming loans $335 $309 $271 $325 $251
Nonperforming loans held for sale 61 97 125 162 175
Foreclosed and other assets 12 12 13 13 12
------------------------------------------------------------------
Total $408 $418 $409 $500 $438
==================================================================
LARGEST NONPERFORMING ASSETS AT MARCH 31, 2003 - IN MILLIONS
PNC Corporate Banking PNC Business Credit
- ------------------------------------------------------------------------------------------------------------------------------------
Ranking Outstandings Industry Outstandings Industry Outstandings Industry
- ------------------------------------------------------------------------------------------------------------------------------------
1 $68 Retail/Wholesale $44 Service Provider $68 Retail Wholesale
2 44 Service Provider 20 Manufacturing 16 Manufacturing
3 20 Manufacturing 12 Manufacturing 8 Manufacturing
4 16 Manufacturing 11 Finance 7 Manufacturing
5 12 Manufacturing 9 Communications 7 Manufacturing
6 11 Finance 8 Manufacturing 4 Manufacturing
7 9 Communications 7 Manufacturing 4 Retail/Wholesale
8 8 Manufacturing 4 Manufacturing 4 Service Provider
9 8 Construction 4 Communications 3 Manufacturing
10 8 Manufacturing 4 Service Provider 3 Manufacturing
- ------------------------------------------------------------------------------------------------------------------------------------
Total $204 $123 $124
- ------------------------------------------------------------------------------------------------------------------------------------
As a percent of nonperforming
assets 50% 74% 89%
====================================================================================================================================
Page 18
GLOSSARY OF TERMS
Accounting/administration net assets - Domestic and foreign assets for which PNC
provides accounting and administrative services.
Annualized - Adjusted to reflect a full year of activity.
Assets under management - Assets held by PNC in a fiduciary capacity for
customers/clients. These assets are not included on PNC's balance sheet.
Assigned capital - Economic capital assignments based on management's assessment
of inherent risks and equity levels at independent companies providing similar
products and services in order to present the financial results of each business
as if each business operated on a stand-alone basis.
Charge-off - Process of removing a loan or portion of a loan from a bank's
balance sheet because the loan is considered uncollectible. A charge-off also is
recorded when a loan is transferred to held for sale and the loan's market value
is less than its carrying amount. This difference is a charge-off.
Common shareholders' equity to total assets - Common shareholders' equity
divided by total assets. Common shareholders' equity equals total shareholders'
equity less preferred stock and the portion of capital surplus and retained
interest related to the preferred stock.
Custody assets - Assets held on behalf of a customer under a safekeeping
arrangement and that are not reported on PNC's balance sheet. Assets held in
custody accounts at other institutions on behalf of PNC are included in the
appropriate asset categories as if held in the physical custody of PNC.
Discontinued operations - A discontinued operation is a component of an
enterprise that, pursuant to a single plan, is disposed of substantially in its
entirety. The component represents a separate major line of business and can be
distinguished operationally and for financial reporting purposes. During 2000,
PNC entered an agreement to sell its residential mortgage banking business and
the sale closed in the first quarter of 2001. Final settlement of all issues in
dispute with the buyer in connection with the sale occurred in January 2003 and
was reflected in fourth quarter 2002 results.
Efficiency ratio - Noninterest expense divided by the sum of net interest income
and noninterest income.
Institutional lending repositioning - A strategic action to build a more diverse
and valuable business mix designed to create shareholder value over time by
reducing lending leverage and improving the risk/return characteristics of the
banking business.
Leverage ratio - Tier I risk-based capital divided by adjusted average total
assets.
Net interest margin - Annualized taxable-equivalent net interest income divided
by average earning assets.
Noninterest income to total revenue - Total noninterest income divided by total
revenue. Total noninterest income includes asset management, fund servicing,
service charges on deposits, brokerage, consumer services, corporate services,
equity management, net securities gains (losses) and other noninterest income.
Total revenue includes total noninterest income plus net interest income.
Nonperforming assets - Nonperforming assets include nonaccrual loans, troubled
debt restructurings, nonaccrual loans held for sale and foreclosed assets.
Nonperforming loans - Nonperforming loans include loans to commercial, lease
financing, consumer, commercial real estate and residential mortgage customers
as well as troubled debt restructured loans. Nonperforming loans do not include
nonaccrual loans held for sale or foreclosed assets.
Operating margin - Operating income divided by total revenue.
Return on assigned capital - Annualized net income divided by assigned capital.
Page 19
Return on average assets - Annualized earnings divided by average assets.
Earnings can be from net income or continuing operations, as indicated in PNC's
disclosures.
Return on average equity - Annualized earnings divided by average shareholders'
equity. Earnings can be from net income or continuing operations, as indicated
in PNC's disclosures.
Securitization - The process by which financial assets are transformed into
securities.
Shareholders' equity to total assets - Total shareholders' equity divided by
total assets.
Taxable-equivalent interest - The interest income earned on certain assets is
completely or partially exempt from federal income tax. As such, these
tax-exempt instruments typically yield lower returns than a taxable investment.
In order to provide accurate comparisons of yields and margins for all earning
assets, the interest income earned on tax-exempt assets is increased to make
them fully equivalent to other taxable interest income investments.
Tier I risk-based capital - Tier I capital equals: total shareholders' equity,
plus trust preferred capital securities, plus certain minority interest that are
held by others; less goodwill and certain intangible assets, less equity
investments in nonfinancial companies and less net unrealized holding losses on
available-for-sale equity securities. Net unrealized holding gains on
available-for-sale equity securities, net unrealized holding gains (losses) on
available-for-sale debt securities and net unrealized holding gains (losses) on
cash flow hedge derivatives are excluded from total shareholders' equity for
Tier I capital purposes.
Total risk-based capital - Tier I risk-based capital plus qualifying senior and
subordinated debt, other minority interest not qualified as Tier 1, and the
allowance for credit losses, subject to certain limitations.
Total deposits - The sum of total transaction deposits, savings accounts,
certificates of deposit, other time deposits and deposits in foreign offices.
Total transaction deposits - The sum of noninterest-bearing demand deposits,
interest-bearing demand deposits and money market accounts.
Page 20
Business Definitions
- - Regional Community Banking provides deposit, lending, cash management and
investment services to two million consumer and small business customers
within PNC's geographic footprint.
- - Wholesale Banking includes the results for Corporate Banking, PNC Real
Estate Finance and PNC Business Credit.
- Corporate Banking provides credit, equipment leasing, treasury
management and capital markets products and services to mid-sized
corporations, government entities and selectively to large corporations
primarily within PNC's geographic region. Treasury management
activities, which include cash and investment management, receivables
management, disbursement services and global trade services; capital
markets products, which include foreign exchange, derivatives trading
and loan syndications; and equipment leasing products are offered
through Corporate Banking and sold by several businesses across the
Corporation.
- PNC Real Estate Finance specializes in financial solutions for the
acquisition, development, permanent financing and operation of
commercial real estate nationally. PNC Real Estate Finance offers
treasury and investment management, access to the capital markets,
commercial mortgage loan servicing and other products and services to
clients that develop, own, manage, or invest in commercial real estate.
PNC's commercial real estate financial services platform provides
processing services through Midland Loan Services, Inc., a leading
third-party provider of loan servicing and technology to the commercial
real estate finance industry. Columbia Housing Partners, LP is a
national syndicator of affordable housing equity.
- PNC Business Credit provides asset-based lending, treasury management
and capital markets products and services to middle market customers
nationally. PNC Business Credit's lending services include loans secured
by accounts receivable, inventory, machinery and equipment, and other
collateral, and its customers include manufacturing, wholesale,
distribution, retailing and service industry companies.
- - PNC Advisors provides a full range of tailored investment, trust and banking
products and services to affluent individuals and families, including
full-service brokerage through J.J.B. Hilliard, W.L.Lyons, Inc. and
investment consulting and trust services to the ultra-affluent through
Hawthorn. PNC Advisors also serves as investment manager and trustee for
employee benefit plans and charitable and endowment assets and provides
defined contribution plan services and investment options through its Vested
Interest(R) product.
- - BlackRock is one of the largest publicly traded investment management firms
in the United States. BlackRock manages assets on behalf of institutions and
individuals worldwide through a variety of fixed income, liquidity and
equity mutual funds, separate accounts and alternative investment products.
Mutual funds include the flagship fund families, BlackRock Funds and
BlackRock Provident Institutional Funds. In addition, BlackRock provides
risk management and investment system services to institutional investors
under the BlackRock Solutions(R) brand name.
- - PFPC is the largest full-service mutual fund transfer agent and second
largest provider of mutual fund accounting and administration services in
the United States, offering a wide range of fund services to the investment
management industry. PFPC also provides processing solutions to the
international marketplace through its Ireland and Luxembourg operations.