EXHIBIT 99.1 [PNC LOGO] THE PNC FINANCIAL SERVICES GROUP, INC. FINANCIAL SUPPLEMENT (UNAUDITED) FOURTH QUARTER AND FULL YEAR 2003 THE PNC FINANCIAL SERVICES GROUP, INC. FINANCIAL SUPPLEMENT (UNAUDITED) FOURTH QUARTER AND FULL YEAR 2003
Page ------- Consolidated Statement of Income 1 - 2 Consolidated Balance Sheet 3 Capital and Asset Quality Ratios 3 Results of Businesses Summary 4 - 5 Banking Businesses Regional Community Banking 6 - 7 Wholesale Banking Corporate Banking 8 - 9 PNC Real Estate Finance 10 - 11 PNC Business Credit 12 - 13 PNC Advisors 14 - 15 Asset Management and Processing Businesses BlackRock 16 - 17 PFPC 18 - 19 Details of Net Interest Income and Net Interest Margin 20 Details of Noninterest Income and Noninterest Expense 21 Consolidated Average Balance Sheet 22 - 23 Details of Loans and Loans Held for Sale 24 Allowances For Credit Losses And Unfunded Loan Commitments And Letters of Credit 25 Details of Nonperforming Assets 26 - 27 Glossary of Terms 28 Business Definitions 30
The information contained in this Financial Supplement is preliminary, unaudited and based on data available at January 21, 2004. It speaks only as of the particular date or dates included in the accompanying pages. PNC 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. Consolidated financial results for the three months ended September 30, 2003 have been adjusted to reflect the de-consolidation of certain variable interest entities in accordance with the Financial Accounting Standards Board's Financial Interpretation No. 46 (Revised 2003) ("FIN 46R"). These entities were previously consolidated under the Corporation's early adoption of FIN 46 in PNC's consolidated financial statements as of and for the three months ended September 30, 2003. In addition, based on guidance included in FIN 46R, the Corporation deconsolidated the assets and liabilities of PNC Institutional Capital Trust A, B, C and D effective December 31, 2003. Average full-time equivalent employee (FTE) statistics as disclosed in this Financial Supplement by business reflect staff directly employed by the respective business and exclude corporate and shared services employees. THE PNC FINANCIAL SERVICES GROUP, INC. Page 1 CONSOLIDATED STATEMENT OF INCOME (Unaudited)
December 31 December 31 December 31 For the year ended - in millions, except per share data 2003 2002 2001 - --------------------------------------------------------------------------------------------------------------- INTEREST INCOME Loans and fees on loans $ 1,940 $ 2,294 $ 3,279 Securities 579 616 625 Loans held for sale 48 135 119 Purchased customer receivables 22 Other 123 127 114 - ------------------------------------------------------------------------------------------------------------- Total interest income 2,712 3,172 4,137 - ------------------------------------------------------------------------------------------------------------- INTEREST EXPENSE Deposits 457 659 1,229 Borrowed funds 210 316 646 Capital securities 29 Commercial paper 14 Liabilities of certain variable interest entities 6 - ------------------------------------------------------------------------------------------------------------- Total interest expense 716 975 1,875 - ------------------------------------------------------------------------------------------------------------- Net interest income 1,996 2,197 2,262 Provision for credit losses 177 309 903 - ------------------------------------------------------------------------------------------------------------- Net interest income less provision for credit losses 1,819 1,888 1,359 - ------------------------------------------------------------------------------------------------------------- NONINTEREST INCOME Asset management 861 853 848 Fund servicing 762 816 833 Service charges on deposits 239 227 218 Brokerage 184 195 206 Consumer services 251 239 229 Corporate services 485 526 60 Equity management (25) (51) (179) Net securities gains 116 89 131 Investments held by certain variable interest entities 19 Other 365 303 306 - ------------------------------------------------------------------------------------------------------------- Total noninterest income 3,257 3,197 2,652 - ------------------------------------------------------------------------------------------------------------- NONINTEREST EXPENSE Staff 1,804 1,701 1,667 Net occupancy 282 243 220 Equipment 276 271 255 Marketing 64 51 57 Distributions on capital securities 28 58 63 Other 1,022 903 1,152 - ------------------------------------------------------------------------------------------------------------- Total noninterest expense 3,476 3,227 3,414 - ------------------------------------------------------------------------------------------------------------- Income from continuing operations before minority and noncontrolling interests and income taxes 1,600 1,858 597 Minority and noncontrolling interests in income of consolidated entities 32 37 33 Income taxes 539 621 187 - ------------------------------------------------------------------------------------------------------------- Income from continuing operations 1,029 1,200 377 Income (loss) from discontinued operations (less applicable income tax benefit of $9 in 2002 and income taxes of zero in 2001) (16) 5 - ------------------------------------------------------------------------------------------------------------- Income before cumulative effect of accounting change 1,029 1,184 382 Cumulative effect of accounting change (less applicable income tax benefits of $14 in 2003 and $2 in 2001) (28) (5) - ------------------------------------------------------------------------------------------------------------- Net income $ 1,001 $ 1,184 $ 377 - ------------------------------------------------------------------------------------------------------------- EARNINGS PER COMMON SHARE From continuing operations Basic $ 3.68 $ 4.23 $ 1.27 Diluted $ 3.65 $ 4.20 $ 1.26 - ------------------------------------------------------------------------------------------------------------- From net income Basic $ 3.58 $ 4.18 $ 1.27 Diluted $ 3.55 $ 4.15 $ 1.26 - ------------------------------------------------------------------------------------------------------------- AVERAGE COMMON SHARES OUTSTANDING Basic 280 283 287 Diluted 281 285 290 =============================================================================================================
THE PNC FINANCIAL SERVICES GROUP, INC. Page 2 CONSOLIDATED STATEMENT OF INCOME (Unaudited)
December 31 September 30 June 30 March 31 December 31 For the three months ended - in millions, except per share data 2003 2003 2003 2003 2002 - -------------------------------------------------------------------------------------------------------------------------- INTEREST INCOME Loans and fees on loans $ 461 $ 477 $ 495 $ 507 $ 540 Securities 140 141 155 143 150 Loans held for sale 13 8 15 12 18 Purchased customer receivables 11 11 Other 35 31 27 30 33 - ----------------------------------------------------------------------------------------------------------------------- Total interest income 660 668 692 692 741 - ----------------------------------------------------------------------------------------------------------------------- INTEREST EXPENSE Deposits 102 106 117 132 149 Borrowed funds 48 51 54 57 68 Capital securities 15 14 Commercial paper 7 7 Liabilities of certain variable interest entities 3 3 - ----------------------------------------------------------------------------------------------------------------------- Total interest expense 175 181 171 189 217 - ----------------------------------------------------------------------------------------------------------------------- Net interest income 485 487 521 503 524 Provision for credit losses 34 50 57 36 65 - ----------------------------------------------------------------------------------------------------------------------- Net interest income less provision for credit losses 451 437 464 467 459 - ----------------------------------------------------------------------------------------------------------------------- NONINTEREST INCOME Asset management 229 216 209 207 202 Fund servicing 193 188 188 193 194 Service charges on deposits 62 60 60 57 61 Brokerage 51 46 46 41 44 Consumer services 63 65 64 59 61 Corporate services 123 132 114 116 151 Equity management (4) (17) (4) (14) Net securities gains 15 19 26 56 1 Investments held by certain variable interest entities 10 9 Other 115 94 86 70 66 - ----------------------------------------------------------------------------------------------------------------------- Total noninterest income 861 825 776 795 766 - ----------------------------------------------------------------------------------------------------------------------- NONINTEREST EXPENSE Staff 472 448 446 438 408 Net occupancy 65 63 64 90 62 Equipment 71 67 69 69 68 Marketing 15 16 18 15 11 Distributions on capital securities 14 14 14 Other 235 233 324 230 228 - ----------------------------------------------------------------------------------------------------------------------- Total noninterest expense 858 827 935 856 791 - ----------------------------------------------------------------------------------------------------------------------- Income from continuing operations before minority and noncontrolling interests and income taxes 454 435 305 406 434 Minority and noncontrolling interests in income of consolidated entities 6 2 13 11 11 Income taxes 146 152 108 133 145 - ----------------------------------------------------------------------------------------------------------------------- Income from continuing operations 302 281 184 262 278 Income (loss) from discontinued operations (less applicable income tax benefit of $9) (16) - ----------------------------------------------------------------------------------------------------------------------- Income before cumulative effect of accounting change 302 281 184 262 262 Cumulative effect of accounting change (less applicable income tax benefit of $14) (28) - ----------------------------------------------------------------------------------------------------------------------- Net income $ 274 $ 281 $ 184 $ 262 $ 262 - ----------------------------------------------------------------------------------------------------------------------- EARNINGS PER COMMON SHARE From continuing operations Basic $1.09 $1.01 $ .65 $ .93 $ .97 Diluted $1.08 $1.00 $ .65 $ .92 $ .97 From net income Basic $ .99 $1.01 $ .65 $ .93 $ .92 Diluted $ .98 $1.00 $ .65 $ .92 $ .92 - ----------------------------------------------------------------------------------------------------------------------- AVERAGE COMMON SHARES OUTSTANDING Basic 276 278 281 283 284 Diluted (a) 278 280 282 284 286 =======================================================================================================================
THE PNC FINANCIAL SERVICES GROUP, INC. Page 3 CONSOLIDATED BALANCE SHEET (Unaudited)
December 31 September 30 June 30 March 31 December 31 In millions, except par value 2003 2003 2003 2003 2002 - ----------------------------------------------------------------------------------------------------------------------------------- ASSETS Cash and due from banks $ 2,968 $ 3,150 $ 3,797 $ 3,626 $ 3,201 Federal funds sold 50 850 1,913 1,847 Other short-term investments 2,546 2,533 1,554 2,012 1,811 Loans held for sale 1,400 1,531 1,475 1,702 1,607 Securities 15,690 14,907 16,017 14,973 13,763 Loans, net of unearned income of $1,009, $1,037, $1,018, $1,018 and $1,075 34,080 34,514 34,534 35,245 35,450 Allowance for credit losses (632) (648) (673) (680) (673) - --------------------------------------------------------------------------------------------------------------------------------- Net loans 33,448 33,866 33,861 34,565 34,777 Goodwill 2,390 2,385 2,356 2,356 2,313 Other intangible assets 317 311 316 330 333 Purchased customer receivables 2,223 2,481 Other 7,136 7,539 7,036 7,142 6,725 - --------------------------------------------------------------------------------------------------------------------------------- Total assets $ 68,168 $ 68,703 $ 67,262 $ 68,619 $ 66,377 ================================================================================================================================= LIABILITIES Deposits Noninterest-bearing $ 11,505 $ 12,118 $ 13,368 $ 12,460 $ 10,563 Interest-bearing 33,736 33,405 33,326 34,621 34,419 - --------------------------------------------------------------------------------------------------------------------------------- Total deposits 45,241 45,523 46,694 47,081 44,982 Borrowed funds Federal funds purchased 169 881 36 34 38 Repurchase agreements 1,081 1,048 1,015 1,082 814 Bank notes and senior debt 2,823 2,839 3,306 3,850 4,400 Federal Home Loan Bank borrowings 1,115 1,127 1,134 1,146 1,256 Subordinated debt 3,729 1,980 2,260 2,234 2,423 Mandatorily redeemable capital securities of subsidiary trusts 848 Commercial paper 2,226 2,483 Liabilities of certain variable interest entities 144 160 Other borrowed funds 166 188 152 188 185 - --------------------------------------------------------------------------------------------------------------------------------- Total borrowed funds 11,453 11,554 7,903 8,534 9,116 Allowance for unfunded loan commitments and letters of credit 90 89 78 77 84 Accrued expenses 2,275 2,226 2,269 2,023 2,046 Other 2,002 2,193 2,435 3,020 2,172 - --------------------------------------------------------------------------------------------------------------------------------- Total liabilities 61,061 61,585 59,379 60,735 58,400 - --------------------------------------------------------------------------------------------------------------------------------- Minority and noncontrolling interests in consolidated entities 462 480 261 244 270 Mandatorily redeemable capital securities of subsidiary trusts 848 848 848 SHAREHOLDERS' EQUITY Preferred stock Common stock - $5 par value Authorized 800 shares, issued 353 shares 1,764 1,764 1,764 1,764 1,764 Capital surplus 1,108 1,110 1,100 1,102 1,101 Retained earnings 7,642 7,507 7,360 7,311 7,187 Deferred benefit expense (29) (24) (27) (28) (9) Accumulated other comprehensive income 60 148 304 293 321 Common stock held in treasury at cost: 76, 76, 73, 71, and 68 shares (3,900) (3,867) (3,727) (3,650) (3,505) - --------------------------------------------------------------------------------------------------------------------------------- Total shareholders' equity 6,645 6,638 6,774 6,792 6,859 - --------------------------------------------------------------------------------------------------------------------------------- Total liabilities, minority and noncontrolling interests, capital securities and shareholders' equity $ 68,168 $ 68,703 $ 67,262 $ 68,619 $ 66,377 ================================================================================================================================= CAPITAL RATIOS Tier I risk-based (a) 9.5 % 8.7 % 8.9 % 8.7 % 8.8 % Total risk-based (a) 13.7 12.0 12.3 12.3 12.5 Leverage (a) 8.2 7.6 8.1 8.0 8.1 Shareholders' equity to total assets 9.75 9.66 10.07 9.90 10.33 Common shareholders' equity to total assets 9.73 9.65 10.06 9.89 10.32 ASSET QUALITY RATIOS Nonperforming assets to total loans, loans held for sale and foreclosed assets .92 % 1.10 % 1.12 % 1.10 % 1.13 % Nonperforming loans to total loans .78 .94 .95 .95 .87 Allowance for credit losses to total loans 1.85 1.88 1.95 1.93 1.90 Allowance for credit losses to nonperforming loans 238 200 206 203 218 Net charge-offs to average loans (For the three months ended) .57 .73 .73 .42 .39 =================================================================================================================================
(a) Estimated for December 31, 2003. THE PNC FINANCIAL SERVICES GROUP, INC. Page 4 RESULTS OF BUSINESSES - SUMMARY (Unaudited) (a) Year ended - dollars in millions
December 31 December 31 EARNINGS (LOSS) 2003 2002 - ----------------------------------------------------------------------------------------------------------------- Banking Businesses Regional Community Banking $ 608 $ 697 Wholesale Banking Corporate Banking 173 150 PNC Real Estate Finance 102 90 PNC Business Credit 31 40 - ----------------------------------------------------------------------------------------------------------------- Total wholesale banking 306 280 PNC Advisors 72 97 - ----------------------------------------------------------------------------------------------------------------- Total banking businesses 986 1,074 - ----------------------------------------------------------------------------------------------------------------- Asset management and processing businesses BlackRock 155 133 PFPC 61 65 - ----------------------------------------------------------------------------------------------------------------- Total asset management and processing businesses 216 198 - ----------------------------------------------------------------------------------------------------------------- Total business earnings 1,202 1,272 Intercompany eliminations (6) (9) Other (167) (63) - ----------------------------------------------------------------------------------------------------------------- Results from continuing operations 1,029 1,200 Discontinued operations (16) - ----------------------------------------------------------------------------------------------------------------- Results before cumulative effect of accounting change 1,029 1,184 Cumulative effect of accounting change (28) - ----------------------------------------------------------------------------------------------------------------- Total consolidated $ 1,001 $ 1,184 =================================================================================================================
December 31 December 31 REVENUE (b) 2003 2002 - ----------------------------------------------------------------------------------------------------------------- Banking Businesses Regional Community Banking $ 2,064 $ 2,182 Wholesale Banking Corporate Banking 685 786 PNC Real Estate Finance 267 229 PNC Business Credit 192 182 - ----------------------------------------------------------------------------------------------------------------- Total wholesale banking 1,144 1,197 PNC Advisors 615 654 - ----------------------------------------------------------------------------------------------------------------- Total banking businesses 3,823 4,033 - ----------------------------------------------------------------------------------------------------------------- Asset Management and Processing Businesses BlackRock 598 577 PFPC 762 817 - ----------------------------------------------------------------------------------------------------------------- Total asset management and processing businesses 1,360 1,394 - ----------------------------------------------------------------------------------------------------------------- Total business revenue 5,183 5,427 Intercompany eliminations (89) (101) Other 169 81 - ----------------------------------------------------------------------------------------------------------------- Total consolidated $ 5,263 $ 5,407 =================================================================================================================
(a) See "Review of Businesses" within the Financial Review section of the Corporation's 2002 Annual Report to Shareholders included as Exhibit 13 in the Corporation's 2002 Annual Report on Form 10-K 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. 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 has been increased to make them fully equivalent to other taxable interest income investments. A reconciliation of total consolidated revenue on a book basis to total consolidated revenue on a taxable-equivalent basis is as follows (in millions):
December 31 December 31 2003 2002 ------------------------------ Total consolidated revenue, book (GAAP) basis $ 5,253 $ 5,394 Taxable-equivalent adjustment 10 13 ------------------------------ Total consolidated revenue, taxable-equivalent basis $ 5,263 $ 5,407 ==============================
THE PNC FINANCIAL SERVICES GROUP, INC. Page 5 RESULTS OF BUSINESSES - SUMMARY (Unaudited) (a) Three months ended - dollars in millions
December 31 September 30 June 30 March 31 December 31 EARNINGS (LOSS) 2003 2003 2003 2003 2002 - ------------------------------------------------------------------------------------------------------------------------ Banking Businesses Regional Community Banking $ 159 $ 138 $ 159 $ 152 $ 152 Wholesale Banking Corporate Banking 61 37 33 42 33 PNC Real Estate Finance 28 34 24 16 23 PNC Business Credit 5 6 6 14 28 - ------------------------------------------------------------------------------------------------------------------------ Total wholesale banking 94 77 63 72 84 PNC Advisors 16 20 20 16 13 - ------------------------------------------------------------------------------------------------------------------------ Total banking businesses 269 235 242 240 249 - ------------------------------------------------------------------------------------------------------------------------ Asset Management and Processing Businesses BlackRock 41 40 39 35 34 PFPC 18 16 15 12 8 - ------------------------------------------------------------------------------------------------------------------------ Total asset management and processing businesses 59 56 54 47 42 - ------------------------------------------------------------------------------------------------------------------------ Total business earnings 328 291 296 287 291 Intercompany eliminations (1) (2) (1) (2) (2) Other (25) (8) (111) (23) (11) - ------------------------------------------------------------------------------------------------------------------------ Results from continuing operations 302 281 184 262 278 Discontinued operations (16) - ------------------------------------------------------------------------------------------------------------------------ Results before cumulative effect of accounting change 302 281 184 262 262 Cumulative effect of accounting change (28) - ------------------------------------------------------------------------------------------------------------------------ Total consolidated $ 274 $ 281 $ 184 $ 262 $ 262 ========================================================================================================================
December 31 September 30 June 30 March 31 December 31 REVENUE (b) 2003 2003 2003 2003 2002 - ------------------------------------------------------------------------------------------------------------------------ Banking Businesses Regional Community Banking $ 506 $ 503 $ 537 $ 518 $ 511 Wholesale Banking Corporate Banking 172 165 159 189 198 PNC Real Estate Finance 69 80 62 56 58 PNC Business Credit 55 47 46 44 49 - ------------------------------------------------------------------------------------------------------------------------ Total wholesale banking 296 292 267 289 305 PNC Advisors 159 155 154 147 150 - ------------------------------------------------------------------------------------------------------------------------ Total banking businesses 961 950 958 954 966 - ------------------------------------------------------------------------------------------------------------------------ Asset management and processing businesses BlackRock 161 150 144 143 137 PFPC 194 188 187 193 195 - ------------------------------------------------------------------------------------------------------------------------ Total asset management and processing businesses 355 338 331 336 332 - ------------------------------------------------------------------------------------------------------------------------ Total business revenue 1,316 1,288 1,289 1,290 1,298 Intercompany eliminations (21) (21) (25) (22) (22) Other 54 47 35 33 17 - ------------------------------------------------------------------------------------------------------------------------ Total consolidated $ 1,349 $ 1,314 $ 1,299 $ 1,301 $ 1,293 ========================================================================================================================
(a) See "Review of Businesses" within the Financial Review section of the Corporation's 2002 Annual Report to Shareholders included as Exhibit 13 in the Corporation's 2002 Annual Report on Form 10-K 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):
December 31 September 30 June 30 March 31 December 31 2003 2003 2003 2003 2002 ----------------------------------------------------------------------- Total consolidated revenue, book (GAAP) basis $ 1,346 $ 1,312 $ 1,297 $ 1,298 $ 1,290 Taxable-equivalent adjustment 3 2 2 3 3 ----------------------------------------------------------------------- Total consolidated revenue, taxable-equivalent basis $ 1,349 $ 1,314 $ 1,299 $ 1,301 $ 1,293 =======================================================================
THE PNC FINANCIAL SERVICES GROUP, INC. Page 6 REGIONAL COMMUNITY BANKING (Unaudited)
Year ended Taxable-equivalent basis December 31 December 31 Dollars in millions 2003 2002 - ----------------------------------------------------------------------------------------------------------------- INCOME STATEMENT Net interest income $ 1,267 $ 1,409 Other noninterest income 704 689 Net securities gains 93 84 - ----------------------------------------------------------------------------------------------------------------- Total revenue 2,064 2,182 Provision for credit losses 46 52 Noninterest expense 1,094 1,061 - ----------------------------------------------------------------------------------------------------------------- Pretax earnings 924 1,069 Income taxes 316 372 - ----------------------------------------------------------------------------------------------------------------- Earnings $ 608 $ 697 ================================================================================================================= AVERAGE BALANCE SHEET Loans Consumer Home equity $ 8,285 $ 7,101 Indirect 477 541 Other consumer 510 632 - ----------------------------------------------------------------------------------------------------------------- Total consumer 9,272 8,274 Residential mortgage 2,893 4,110 Commercial 3,946 3,599 Vehicle leasing 1,069 1,678 Other 117 119 - ----------------------------------------------------------------------------------------------------------------- Total loans 17,297 17,780 Securities 14,169 11,139 Education and other loans held for sale 1,164 1,319 Assigned assets and other assets 5,820 8,738 - ----------------------------------------------------------------------------------------------------------------- Total assets $ 38,450 $ 38,976 ================================================================================================================= Deposits Noninterest-bearing demand $ 5,570 $ 5,046 Interest-bearing demand 6,313 6,057 Money market 12,303 12,279 Savings 2,023 1,962 Certificates 8,572 10,045 - ----------------------------------------------------------------------------------------------------------------- Total deposits 34,781 35,389 Other liabilities 1,072 958 Assigned capital 2,597 2,629 - ----------------------------------------------------------------------------------------------------------------- Total funds $ 38,450 $ 38,976 ================================================================================================================= PERFORMANCE RATIOS Return on assigned capital 23% 27% Noninterest income to total revenue 39 35 Efficiency 53 49 ================================================================================================================= OTHER INFORMATION (a) Total nonperforming assets (b) $ 90 $ 82 Vehicle leasing outstandings, net of unearned income $ 698 $ 1,386 Net charge-offs $ 53 $ 56 Home equity portfolio credit statistics: Percentage of first lien positions 51% 40% Weighted average loan-to-value ratios 70% 70% Weighted average FICO scores 713 709 Gains on sales of education loans (c) $ 20 $ 23 Average FTE staff 9,447 9,657 ATMs 3,600 3,550 Branches 719 714 Financial consultants 693 645 Business banking centers 208 193 Checking relationships 1,611,000 1,542,000 Online banking users 762,000 607,000 Deposit households using online banking 43.2% 36.6% =================================================================================================================
(a) Presented as of period-end, except for net charge-offs, gains on sales of education loans and average FTEs. (b) See Note (a) on page 26 of this financial supplement. The impact of this change was reflected in the amount at December 31, 2003. (c) Included in other noninterest income above. THE PNC FINANCIAL SERVICES GROUP, INC. Page 7 REGIONAL COMMUNITY BANKING (Unaudited)
Three months ended Taxable-equivalent basis December 31 September 30 June 30 March 31 December 31 Dollars in millions 2003 2003 2003 2003 2002 - ------------------------------------------------------------------------------------------------------------------------ INCOME STATEMENT Net interest income $ 307 $ 309 $ 334 $ 317 $ 331 Other noninterest income 183 177 181 163 180 Net securities gains 16 17 22 38 - ------------------------------------------------------------------------------------------------------------------------ Total revenue 506 503 537 518 511 Provision for credit losses 14 11 13 8 15 Noninterest expense 252 282 282 278 264 - ------------------------------------------------------------------------------------------------------------------------ Pretax earnings 240 210 242 232 232 Income taxes 81 72 83 80 80 - ------------------------------------------------------------------------------------------------------------------------ Earnings $ 159 $ 138 $ 159 $ 152 $ 152 ======================================================================================================================== AVERAGE BALANCE SHEET Loans Consumer Home equity $ 8,926 $ 8,476 $ 8,047 $ 7,675 $ 7,395 Indirect 510 492 468 438 458 Other consumer 474 504 516 546 582 - ------------------------------------------------------------------------------------------------------------------------ Total consumer 9,910 9,472 9,031 8,659 8,435 Residential mortgage 2,751 2,585 2,970 3,276 3,146 Commercial 3,934 3,911 4,001 3,939 3,857 Vehicle leasing 790 980 1,177 1,336 1,464 Other 120 114 117 117 115 - ------------------------------------------------------------------------------------------------------------------------ Total loans 17,505 17,062 17,296 17,327 17,017 Securities 15,133 14,792 14,211 12,504 11,982 Education and other loans held for sale 1,158 1,105 1,197 1,197 1,215 Assigned assets and other assets 4,185 5,448 5,731 7,961 8,661 - ------------------------------------------------------------------------------------------------------------------------ Total assets $ 37,981 $ 38,407 $ 38,435 $ 38,989 $ 38,875 ======================================================================================================================== Deposits Noninterest-bearing demand $ 5,799 $ 5,739 $ 5,471 $ 5,264 $ 5,242 Interest-bearing demand 6,601 6,397 6,136 6,112 6,191 Money market 12,140 12,307 12,407 12,361 12,184 Savings 2,020 2,050 2,046 1,976 1,950 Certificates 8,047 8,234 8,666 9,360 9,653 - ------------------------------------------------------------------------------------------------------------------------ Total deposits 34,607 34,727 34,726 35,073 35,220 Other liabilities 801 1,093 1,112 1,285 1,035 Assigned capital 2,573 2,587 2,597 2,631 2,620 - ------------------------------------------------------------------------------------------------------------------------ Total funds $ 37,981 $ 38,407 $ 38,435 $ 38,989 $ 38,875 ======================================================================================================================== PERFORMANCE RATIOS Return on assigned capital 25% 21% 25% 23% 23% Noninterest income to total revenue 39 39 38 39 35 Efficiency 50 56 53 54 52 ======================================================================================================================== OTHER INFORMATION (a) Total nonperforming assets (b) $ 90 $ 74 $ 75 $ 86 $ 82 Vehicle leasing outstandings, net of unearned income $ 698 $ 872 $ 1,048 $ 1,239 $ 1,386 Net charge-offs $ 15 $ 12 $ 13 $ 13 $ 15 Home equity portfolio credit statistics: Percentage of first lien positions 51% 50% 46% 43% 40% Weighted average loan-to-value ratios 70% 70% 72% 70% 70% Weighted average FICO scores 713 712 712 709 709 Gains on sales of education loans (c) $ 8 $ 4 $ 7 $ 1 $ 10 Average FTE staff 9,474 9,524 9,447 9,404 9,610 ATMs 3,600 3,664 3,660 3,594 3,550 Branches 719 715 713 713 714 Financial consultants 693 702 693 674 645 Business banking centers 208 208 193 193 193 Checking relationships 1,611,000 1,606,000 1,575,000 1,555,000 1,542,000 Online banking users 762,000 728,000 684,000 647,000 607,000 Deposit households using online banking 43.2% 41.7% 40.2% 38.6% 36.6% ========================================================================================================================
(a) Presented as of period-end, except for net charge-offs, gains on sales of education loans and average FTEs. (b) See Note (a) on page 26 of this financial supplement. The impact of this change was reflected in the amount at December 31, 2003. (c) Included in other noninterest income above. THE PNC FINANCIAL SERVICES GROUP, INC. Page 8 WHOLESALE BANKING - CORPORATE BANKING (Unaudited)
Year ended Taxable-equivalent basis December 31 December 31 Dollars in millions 2003 2002 - ----------------------------------------------------------------------------------------------------------------- INCOME STATEMENT Net interest income $ 301 $ 349 Noninterest income 384 437 - ----------------------------------------------------------------------------------------------------------------- Total revenue 685 786 Provision for credit losses 48 203 Noninterest expense 370 359 - ----------------------------------------------------------------------------------------------------------------- Pretax earnings 267 224 Income taxes 94 74 - ----------------------------------------------------------------------------------------------------------------- Earnings $ 173 $ 150 ================================================================================================================= AVERAGE BALANCE SHEET Loans $ 8,180 $ 9,477 Purchased customer receivables 1,230 Loans held for sale 202 1,369 Other assets 2,855 2,961 - ----------------------------------------------------------------------------------------------------------------- Total assets $ 12,467 $ 13,807 ================================================================================================================= Deposits $ 5,135 $ 4,683 Commercial paper 1,232 Assigned funds and other liabilities 5,254 8,088 Assigned capital 846 1,036 - ----------------------------------------------------------------------------------------------------------------- Total funds $ 12,467 $ 13,807 ================================================================================================================= PERFORMANCE RATIOS Return on assigned capital 20% 14% Noninterest income to total revenue 56 56 Efficiency 54 46 ================================================================================================================= OTHER INFORMATION (a) Consolidated revenue from treasury management (b) $ 347 $ 343 Total nonperforming assets $ 116 $ 187 Net charge-offs $ 90 $ 137 Average FTE staff 1,890 2,123 INSTITUTIONAL LENDING REPOSITIONING Loans held for sale Credit exposure $ 85 $ 564 Outstandings $ 51 $ 245 Exit portfolio Credit exposure $ 51 $ 413 Outstandings Net gains on loans held for sale (c) $ 62 $ 155 =================================================================================================================
(a) Presented as of period-end, except for consolidated revenue from treasury management, net charge-offs, net gains on loans held for sale and average FTEs. (b) Treasury management products offered through Corporate Banking are sold by several businesses across PNC and related revenue net of expense is included in the results of those businesses. (c) Included in noninterest income above. THE PNC FINANCIAL SERVICES GROUP, INC. Page 9 WHOLESALE BANKING - CORPORATE BANKING (Unaudited)
Three months ended Taxable-equivalent basis December 31 September 30 June 30 March 31 December 31 Dollars in millions 2003 2003 2003 2003 2002 - ----------------------------------------------------------------------------------------------------------- INCOME STATEMENT Net interest income $ 77 $ 77 $ 71 $ 76 $ 78 Noninterest income 95 88 88 113 120 - --------------------------------------------------------------------------------------------------------- Total revenue 172 165 159 189 198 Provision for credit losses (15) 23 25 15 64 Noninterest expense 92 85 84 109 87 - --------------------------------------------------------------------------------------------------------- Pretax earnings 95 57 50 65 47 Income taxes 34 20 17 23 14 - --------------------------------------------------------------------------------------------------------- Earnings $ 61 $ 37 $ 33 $ 42 $ 33 ========================================================================================================= AVERAGE BALANCE SHEET Loans $ 7,848 $ 8,017 $ 8,262 $ 8,604 $ 8,821 Purchased customer receivables 2,384 2,496 Loans held for sale 169 154 196 291 464 Other assets 2,876 2,891 2,896 2,755 3,133 - --------------------------------------------------------------------------------------------------------- Total assets $ 13,277 $ 13,558 $ 11,354 $ 11,650 $ 12,418 ========================================================================================================= Deposits $ 5,221 $ 5,230 $ 4,990 $ 5,097 $ 4,906 Commercial paper 2,386 2,502 Assigned funds and other liabilities 4,848 4,990 5,512 5,679 6,581 Assigned capital 822 836 852 874 931 - --------------------------------------------------------------------------------------------------------- Total funds $ 13,277 $ 13,558 $ 11,354 $ 11,650 $ 12,418 ========================================================================================================= PERFORMANCE RATIOS Return on assigned capital 29 % 18 % 16 % 19 % 14 % Noninterest income to total revenue 55 53 55 60 61 Efficiency 53 52 53 58 44 ========================================================================================================= OTHER INFORMATION (a) Consolidated revenue from treasury management (b) $ 85 $ 87 $ 86 $ 89 $ 86 Total nonperforming assets $ 116 $ 168 $ 176 $ 166 $ 187 Net charge-offs $ 12 $ 18 $ 42 $ 18 $ 15 Average FTE staff 1,882 1,879 1,888 1,971 2,109 INSTITUTIONAL LENDING REPOSITIONING Loans held for sale Credit exposure $ 85 $ 126 $ 173 $ 315 $ 564 Outstandings $ 51 $ 75 $ 101 $ 155 $ 245 Exit portfolio Credit exposure $ 51 $ 61 $ 251 $ 349 $ 413 Outstandings $ 10 $ 11 $ 4 Net gains on loans held for sale (c) $ 15 $ 17 $ 13 $ 17 $ 55 =========================================================================================================
(a) Presented as of period-end, except for consolidated revenue from treasury management, net charge-offs, net gains on loans held for sale and average FTEs. (b) Treasury management products offered through Corporate Banking are sold by several businesses across PNC and related revenue net of expense is included in the results of those businesses. (c) Included in noninterest income above. THE PNC FINANCIAL SERVICES GROUP, INC. Page 10 WHOLESALE BANKING - PNC REAL ESTATE FINANCE (Unaudited)
Year ended Taxable-equivalent basis December 31 December 31 Dollars in millions 2003 2002 - -------------------------------------------------------------------------------------------- INCOME STATEMENT Net interest income $ 103 $ 117 Noninterest income Net commercial mortgage banking Net gains on loan sales 52 31 Servicing and other fees, net of amortization 39 40 Other 73 41 - ------------------------------------------------------------------------------------------ Total noninterest income 164 112 - ------------------------------------------------------------------------------------------ Total revenue 267 229 Provision for credit losses (7) (10) Noninterest expense 199 160 - ------------------------------------------------------------------------------------------ Pretax earnings 75 79 Noncontrolling interests in income of consolidated entities (21) (2) Income tax (benefit) expense (6) (9) - ------------------------------------------------------------------------------------------ Earnings $ 102 $ 90 ========================================================================================== AVERAGE BALANCE SHEET Loans Commercial real estate $ 1,872 $ 2,230 Commercial - real estate related 1,404 1,471 - ------------------------------------------------------------------------------------------ Total loans 3,276 3,701 Commercial mortgages held for sale 324 271 Other loans held for sale 25 141 Other assets 1,133 905 - ------------------------------------------------------------------------------------------ Total assets $ 4,758 $ 5,018 ========================================================================================== Deposits $ 1,133 $ 750 Liabilities of certain variable interest entities 64 Noncontrolling interests in consolidated entities 67 Assigned funds and other liabilities 3,142 3,876 Assigned capital 352 392 - ------------------------------------------------------------------------------------------ Total funds $ 4,758 $ 5,018 ========================================================================================== PERFORMANCE RATIOS Return on assigned capital 29 % 23 % Noninterest income to total revenue 61 49 Efficiency 75 70 ========================================================================================== OTHER INFORMATION (a) Total nonperforming assets $ 3 $ 2 Net charge-offs (recoveries) $ 1 $ (6) Average FTE staff 743 789 Commercial mortgage servicing portfolio (b) $ 83 $ 74 Net carrying amount of commercial mortgage servicing rights $ 209 $ 201 INSTITUTIONAL LENDING REPOSITIONING Loans held for sale Credit exposure $ 16 $ 49 Outstandings $ 16 $ 44 Exit portfolio Credit exposure $ 25 Outstandings $ 4 Net gains on loans held for sale (c) $ 8 $ 3 ==========================================================================================
(a) Presented as of period-end, except for net charge-offs (recoveries), net gains on loans held for sale and average FTEs. (b) In billions. (c) Included in noninterest income - other above. THE PNC FINANCIAL SERVICES GROUP, INC. Page 11 WHOLESALE BANKING - PNC REAL ESTATE FINANCE (Unaudited)
Three months ended Taxable-equivalent basis December 31 September 30 June 30 March 31 December 31 Dollars in millions 2003 2003 2003 2003 2002 - ----------------------------------------------------------------------------------------------------------------------- INCOME STATEMENT Net interest income $ 22 $ 25 $ 28 $ 28 $ 30 Noninterest income Net commercial mortgage banking Net gains on loan sales 14 15 13 10 12 Servicing and other fees, net of amortization 9 11 8 11 10 Other 24 29 13 7 6 - ------------------------------------------------------------------------------------------------------------------- Total noninterest income 47 55 34 28 28 - ------------------------------------------------------------------------------------------------------------------- Total revenue 69 80 62 56 58 Provision for credit losses (6) (8) (1) 8 (3) Noninterest expense 59 58 44 38 41 - ------------------------------------------------------------------------------------------------------------------- Pretax earnings 16 30 19 10 20 Noncontrolling interests in income of consolidated entities (8) (11) (2) Income tax (benefit) expense (4) 7 (3) (6) (3) - ------------------------------------------------------------------------------------------------------------------- Earnings $ 28 $ 34 $ 24 $ 16 $ 23 =================================================================================================================== AVERAGE BALANCE SHEET Loans Commercial real estate $ 1,350 $ 1,841 $ 1,953 $ 2,052 $ 2,167 Commercial - real estate related 1,647 1,431 1,438 1,397 1,463 - ------------------------------------------------------------------------------------------------------------------- Total loans 2,997 3,272 3,391 3,449 3,630 Commercial mortgages held for sale 348 228 373 315 327 Other loans held for sale 18 24 37 53 94 Other assets 1,454 1,159 964 950 970 - ------------------------------------------------------------------------------------------------------------------- Total assets $ 4,817 $ 4,683 $ 4,765 $ 4,767 $ 5,021 =================================================================================================================== Deposits $ 1,308 $ 1,226 $ 1,044 $ 950 $ 892 Liabilities of certain variable interest entities 156 98 Noncontrolling interests in consolidated entities 227 39 Assigned funds and other liabilities 2,787 2,975 3,368 3,454 3,746 Assigned capital 339 345 353 363 383 - ------------------------------------------------------------------------------------------------------------------- Total funds $ 4,817 $ 4,683 $ 4,765 $ 4,767 $ 5,021 =================================================================================================================== PERFORMANCE RATIOS Return on assigned capital 33 % 39 % 27 % 18 % 24 % Noninterest income to total revenue 68 69 55 50 48 Efficiency 86 73 71 68 71 =================================================================================================================== OTHER INFORMATION (a) Total nonperforming assets $ 3 $ 3 $ 3 $ 12 $ 2 Net (recoveries) charge-offs $ (1) $ 2 Average FTE staff 738 742 747 770 780 Commercial mortgage servicing portfolio (b) $ 83 $ 80 $ 79 $ 75 $ 74 Net carrying amount of commercial mortgage servicing rights $ 209 $ 200 $ 199 $ 201 $ 201 INSTITUTIONAL LENDING REPOSITIONING Loans held for sale Credit exposure $ 16 $ 16 $ 16 $ 19 $ 49 Outstandings $ 16 $ 16 $ 16 $ 19 $ 44 Exit portfolio Credit exposure $ 25 $ 25 Outstandings $ 5 $ 4 Net gains (losses) on loans held for sale (c) $ 1 $ 6 $ 1 $ (3) ===================================================================================================================
(a) Presented as of period-end, except for net (recoveries) charge-offs, net gains (losses) on loans held for sale and average FTEs. (b) In billions. (c) Included in noninterest income - other above. THE PNC FINANCIAL SERVICES GROUP, INC. Page 12 WHOLESALE BANKING - PNC BUSINESS CREDIT (Unaudited)
Year ended Taxable-equivalent basis December 31 December 31 Dollars in millions 2003 2002 - ------------------------------------------------------------------------- INCOME STATEMENT Net interest income $ 136 $ 134 Noninterest income 56 48 - ----------------------------------------------------------------------- Total revenue 192 182 Provision for credit losses 81 64 Noninterest expense 61 53 - ----------------------------------------------------------------------- Pretax earnings 50 65 Income taxes 19 25 - ----------------------------------------------------------------------- Earnings $ 31 $ 40 ======================================================================= AVERAGE BALANCE SHEET Loans $ 3,551 $ 3,535 Loans held for sale 21 68 Other assets 245 234 - ----------------------------------------------------------------------- Total assets $ 3,817 $ 3,837 ======================================================================= Deposits $ 105 $ 84 Assigned funds and other liabilities 3,464 3,503 Assigned capital 248 250 - ----------------------------------------------------------------------- Total funds $ 3,817 $ 3,837 ======================================================================= PERFORMANCE RATIOS Return on assigned capital 13 % 16 % Noninterest income to total revenue 29 26 Efficiency 32 29 ======================================================================= OTHER INFORMATION (a) Total nonperforming assets $ 108 $ 142 Net charge-offs $ 67 $ 32 NBOC put option liability $ 57 NBOC put option valuation income (b) $ 8 $ 28 Marketing locations 24 23 Average FTE staff 252 241 INSTITUTIONAL LENDING REPOSITIONING Loans held for sale Credit exposure $ 3 $ 13 Outstandings $ 3 $ 9 Net losses on loans held for sale (b) $ (1) $ (11) =======================================================================
(a) Presented as of period-end, except for net charge-offs, NBOC put option valuation income, net losses on loans held for sale and average FTEs. (b) Included in noninterest income above. THE PNC FINANCIAL SERVICES GROUP, INC. Page 13 WHOLESALE BANKING - PNC BUSINESS CREDIT (Unaudited)
Three months ended Taxable-equivalent basis December 31 September 30 June 30 March 31 December 31 Dollars in millions 2003 2003 2003 2003 2002 - ------------------------------------------------------------------------------------------------------------------------------- INCOME STATEMENT Net interest income $ 35 $ 35 $ 34 $ 32 $ 33 Noninterest income 20 12 12 12 16 - ----------------------------------------------------------------------------------------------------------------------------- Total revenue 55 47 46 44 49 Provision for credit losses 30 23 21 7 (8) Noninterest expense 17 15 15 14 12 - ----------------------------------------------------------------------------------------------------------------------------- Pretax earnings 8 9 10 23 45 Income taxes 3 3 4 9 17 - ----------------------------------------------------------------------------------------------------------------------------- Earnings $ 5 $ 6 $ 6 $ 14 $ 28 ============================================================================================================================= AVERAGE BALANCE SHEET Loans $ 3,658 $ 3,633 $ 3,528 $ 3,381 $ 3,490 Loans held for sale 12 30 24 18 23 Other assets 263 263 225 229 225 - ----------------------------------------------------------------------------------------------------------------------------- Total assets $ 3,933 $ 3,926 $ 3,777 $ 3,628 $ 3,738 ============================================================================================================================= Deposits $ 126 $ 106 $ 106 $ 82 $ 102 Assigned funds and other liabilities 3,547 3,568 3,428 3,309 3,392 Assigned capital 260 252 243 237 244 - ----------------------------------------------------------------------------------------------------------------------------- Total funds $ 3,933 $ 3,926 $ 3,777 $ 3,628 $ 3,738 ============================================================================================================================= PERFORMANCE RATIOS Return on assigned capital 8 % 9 % 10 % 24 % 46 % Noninterest income to total revenue 36 26 26 27 33 Efficiency 31 32 33 32 24 ============================================================================================================================= OTHER INFORMATION (a) Total nonperforming assets $ 108 $ 140 $ 145 $ 139 $ 142 Net charge-offs $ 22 $ 34 $ 6 $ 5 $ 6 NBOC put option liability $ 43 $ 49 $ 57 NBOC put option valuation income (b) $ 1 $ 1 $ 6 $ 9 Marketing locations 24 24 24 24 23 Average FTE staff 253 255 249 250 249 INSTITUTIONAL LENDING REPOSITIONING Loans held for sale Credit exposure $ 3 $ 8 $ 10 $ 10 $ 13 Outstandings $ 3 $ 7 $ 9 $ 7 $ 9 Net gains (losses) on loans held for sale (b) $ 2 $ (3) =============================================================================================================================
(a) Presented as of period-end, except for net charge-offs, NBOC put option valuation income, net gains (losses) on loans held for sale and average FTEs. (b) Included in noninterest income above. THE PNC FINANCIAL SERVICES GROUP, INC. Page 14 PNC ADVISORS (Unaudited)
Year ended; Taxable-equivalent basis December 31 December 31 Dollars in millions except as noted 2003 2002 - ---------------------------------------------------------------------------------------------------------------------- INCOME STATEMENT Net interest income $ 82 $ 100 Noninterest income Investment management and trust 313 334 Brokerage 123 131 Other 97 89 - ---------------------------------------------------------------------------------------------------------------------- Total noninterest income 533 554 - ---------------------------------------------------------------------------------------------------------------------- Total revenue 615 654 Provision for credit losses 3 4 Noninterest expense 500 497 - ---------------------------------------------------------------------------------------------------------------------- Pretax earnings 112 153 Income taxes 40 56 - ---------------------------------------------------------------------------------------------------------------------- Earnings $ 72 $ 97 ====================================================================================================================== AVERAGE BALANCE SHEET Loans Consumer $ 1,317 $ 1,228 Residential mortgage 244 501 Commercial 438 460 Other 287 320 - ---------------------------------------------------------------------------------------------------------------------- Total loans 2,286 2,509 Other assets 626 420 - ---------------------------------------------------------------------------------------------------------------------- Total assets $ 2,912 $ 2,929 ====================================================================================================================== Deposits $ 2,122 $ 2,007 Assigned funds and other liabilities 262 399 Assigned capital 528 523 - ---------------------------------------------------------------------------------------------------------------------- Total funds $ 2,912 $ 2,929 ====================================================================================================================== PERFORMANCE RATIOS Return on assigned capital 14 % 19 % Noninterest income to total revenue 87 85 Efficiency 81 76 ====================================================================================================================== ASSETS UNDER ADMINISTRATION (in billions) (a) (b) Assets under management Personal $ 44 $ 41 Institutional 9 9 - ---------------------------------------------------------------------------------------------------------------------- Total $ 53 $ 50 - ---------------------------------------------------------------------------------------------------------------------- Asset type Equity $ 31 $ 26 Fixed income 16 17 Liquidity/other 6 7 - ---------------------------------------------------------------------------------------------------------------------- Total $ 53 $ 50 - ---------------------------------------------------------------------------------------------------------------------- Nondiscretionary assets under administration Personal $ 22 $ 20 Institutional 65 62 - ---------------------------------------------------------------------------------------------------------------------- Total $ 87 $ 82 - ---------------------------------------------------------------------------------------------------------------------- Asset Type Equity $ 30 $ 27 Fixed income 30 29 Liquidity/other 27 26 - ---------------------------------------------------------------------------------------------------------------------- Total $ 87 $ 82 ====================================================================================================================== OTHER INFORMATION (b) Total nonperforming assets $ 11 $ 5 Brokerage assets administered (in billions) $ 37 $ 32 Full service brokerage offices 98 106 Financial consultants 549 615 Margin loans $ 256 $ 260 Average FTE staff 3,093 3,351 ======================================================================================================================
(a) Excludes brokerage assets administered. (b) Presented as of period-end, except for average FTEs. THE PNC FINANCIAL SERVICES GROUP, INC. Page 15 PNC ADVISORS (Unaudited)
Three months ended; Taxable-equivalent basis December 31 September 30 June 30 March 31 December 31 Dollars in millions except as noted 2003 2003 2003 2003 2002 - ------------------------------------------------------------------------------------------------------------------------------ INCOME STATEMENT Net interest income $ 20 $ 20 $ 21 $ 21 $ 24 Noninterest income Investment management and trust 81 78 78 76 76 Brokerage 36 30 31 26 29 Other 22 27 24 24 21 - ---------------------------------------------------------------------------------------------------------------------------- Total noninterest income 139 135 133 126 126 - ---------------------------------------------------------------------------------------------------------------------------- Total revenue 159 155 154 147 150 Provision for credit losses 1 1 1 1 Noninterest expense 134 123 121 122 129 - ---------------------------------------------------------------------------------------------------------------------------- Pretax earnings 24 31 32 25 20 Income taxes 8 11 12 9 7 - ---------------------------------------------------------------------------------------------------------------------------- Earnings $ 16 $ 20 $ 20 $ 16 $ 13 ============================================================================================================================ AVERAGE BALANCE SHEET Loans Consumer $1,370 $1,332 $1,284 $1,280 $1,264 Residential mortgage 173 215 263 327 394 Commercial 414 464 435 439 439 Other 293 285 286 284 276 - ---------------------------------------------------------------------------------------------------------------------------- Total loans 2,250 2,296 2,268 2,330 2,373 Other assets 719 656 588 540 417 - ---------------------------------------------------------------------------------------------------------------------------- Total assets $2,969 $2,952 $2,856 $2,870 $2,790 ============================================================================================================================ Deposits $2,161 $2,164 $2,077 $2,085 $2,016 Assigned funds and other liabilities 268 262 255 263 243 Assigned capital 540 526 524 522 531 - ---------------------------------------------------------------------------------------------------------------------------- Total funds $2,969 $2,952 $2,856 $2,870 $2,790 ============================================================================================================================ PERFORMANCE RATIOS Return on assigned capital 12 % 15 % 15 % 12 % 10 % Noninterest income to total revenue 87 87 86 86 84 Efficiency 84 79 79 83 86 ============================================================================================================================ ASSETS UNDER ADMINISTRATION (in billions) (a) (b) Assets under management Personal $ 44 $ 42 $ 42 $ 40 $ 41 Institutional 9 9 9 9 9 - ---------------------------------------------------------------------------------------------------------------------------- Total $ 53 $ 51 $ 51 $ 49 $ 50 - ---------------------------------------------------------------------------------------------------------------------------- Asset Type Equity $ 31 $ 28 $ 28 $ 25 $ 26 Fixed income 16 16 16 16 17 Liquidity/other 6 7 7 8 7 - ---------------------------------------------------------------------------------------------------------------------------- Total $ 53 $ 51 $ 51 $ 49 $ 50 - ---------------------------------------------------------------------------------------------------------------------------- Nondiscretionary assets under administration Personal $ 22 $ 23 $ 20 $ 20 $ 20 Institutional 65 63 65 61 62 - ---------------------------------------------------------------------------------------------------------------------------- Total $ 87 $ 86 $ 85 $ 81 $ 82 - ---------------------------------------------------------------------------------------------------------------------------- Asset Type Equity $ 30 $ 30 $ 29 $ 27 $ 27 Fixed income 30 29 29 28 29 Liquidity/other 27 27 27 26 26 - ---------------------------------------------------------------------------------------------------------------------------- Total $ 87 $ 86 $ 85 $ 81 $ 82 ============================================================================================================================ OTHER INFORMATION (b) Total nonperforming assets $ 11 $ 11 $ 5 $ 5 $ 5 Brokerage assets administered (in billions) $ 37 $ 35 $ 34 $ 31 $ 32 Full service brokerage offices 98 99 99 102 106 Financial consultants 549 561 577 585 615 Margin loans $ 256 $ 257 $ 253 $ 247 $ 260 Average FTE staff 2,984 3,081 3,118 3,226 3,326 ============================================================================================================================
(a) Excludes brokerage assets administered. (b) Presented as of period-end, except for average FTEs. THE PNC FINANCIAL SERVICES GROUP, INC. Page 16 BLACKROCK (Unaudited)
Year ended December 31 December 31 Dollars in millions except as noted 2003 2002 - ----------------------------------------------------------------------------------- INCOME STATEMENT Investment advisory and administrative fees $ 529 $ 519 Other income 69 58 - -------------------------------------------------------------------------------- Total revenue 598 577 Operating expense 337 320 Fund administration and servicing costs 33 42 - -------------------------------------------------------------------------------- Total expense 370 362 - -------------------------------------------------------------------------------- Operating income 228 215 Nonoperating income 23 9 - -------------------------------------------------------------------------------- Pretax earnings 251 224 Income taxes 96 91 - -------------------------------------------------------------------------------- Earnings $ 155 $ 133 ================================================================================ PERIOD-END BALANCE SHEET Goodwill and other intangible assets $ 192 $ 183 Other assets 775 681 - -------------------------------------------------------------------------------- Total assets $ 967 $ 864 ================================================================================ Other liabilities $ 254 $ 229 Stockholders' equity 713 635 - -------------------------------------------------------------------------------- Total liabilities and stockholders' equity $ 967 $ 864 ================================================================================ PERFORMANCE DATA Return on equity 23% 24% Operating margin (a) 40 40 Diluted earnings per share $2.36 $2.04 ================================================================================ ASSETS UNDER MANAGEMENT (in billions) Separate accounts Fixed income $ 190 $ 157 Liquidity 6 6 Liquidity - securities lending 10 6 Equity 9 10 Alternative investment products 7 5 - -------------------------------------------------------------------------------- Total separate accounts 222 184 Mutual funds (b) Fixed income 24 19 Liquidity 59 66 Equity 4 4 - -------------------------------------------------------------------------------- Total mutual funds 87 89 - -------------------------------------------------------------------------------- Total assets under management $ 309 $ 273 ================================================================================ OTHER INFORMATION Average FTE staff 962 894 ================================================================================
(a) Calculated as operating income divided by total revenue less 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 $228 $215 ============ Total revenue $598 $577 Less fund administration and servicing costs 33 42 ------------ Revenue used for operating margin calculation, as reported 565 535 ============ Operating margin, as reported 40% 40% Operating margin, GAAP basis 38% 37%
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 Fund and BlackRock Global Series. THE PNC FINANCIAL SERVICES GROUP, INC. Page 17 BLACKROCK (Unaudited)
Three months ended December 31 September 30 June 30 March 31 December 31 Dollars in millions except as noted 2003 2003 2003 2003 2002 - --------------------------------------------------------------------------------------------------------- INCOME STATEMENT Investment advisory and administration fees $141 $133 $128 $127 $122 Other income 20 17 16 16 15 - ----------------------------------------------------------------------------------------------------- Total revenue 161 150 144 143 137 Operating expense 90 84 81 81 74 Fund administration and servicing costs 9 8 8 8 8 - ----------------------------------------------------------------------------------------------------- Total expense 99 92 89 89 82 - ----------------------------------------------------------------------------------------------------- Operating income 62 58 55 54 55 Nonoperating income 5 6 8 3 2 - ----------------------------------------------------------------------------------------------------- Pretax earnings 67 64 63 57 57 Income taxes 26 24 24 22 23 - ----------------------------------------------------------------------------------------------------- Earnings $ 41 $ 40 $ 39 $ 35 $ 34 ===================================================================================================== PERIOD-END BALANCE SHEET Goodwill and other intangible assets $192 $192 $192 $183 $183 Other assets 775 728 709 653 681 - ----------------------------------------------------------------------------------------------------- Total assets $967 $920 $901 $836 $864 ===================================================================================================== Other liabilities $254 $223 $192 $168 $229 Stockholders' equity 713 697 709 668 635 - ----------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $967 $920 $901 $836 $864 ===================================================================================================== PERFORMANCE DATA Return on equity 23% 23% 23% 22% 22% Operating margin (a) 41 41 40 40 43 Diluted earnings per share $.63 $.61 $.58 $.54 $.52 ===================================================================================================== ASSETS UNDER MANAGEMENT (in billions) Separate accounts Fixed income $190 $178 $175 $168 $157 Liquidity 6 6 5 6 6 Liquidity - securities lending 10 10 8 6 6 Equity 9 9 9 9 10 Alternative investment products 7 7 6 6 5 - ----------------------------------------------------------------------------------------------------- Total separate accounts 222 210 203 195 184 Mutual funds (b) Fixed income 24 23 22 20 19 Liquidity 59 58 58 56 66 Equity 4 3 3 3 4 - ----------------------------------------------------------------------------------------------------- Total mutual funds 87 84 83 79 89 - ----------------------------------------------------------------------------------------------------- Total assets under management $309 $294 $286 $274 $273 ===================================================================================================== OTHER INFORMATION Average FTE staff 991 976 943 944 938 =====================================================================================================
(a) Calculated as operating income divided by total revenue less 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 $ 62 $ 58 $ 55 $ 54 $ 55 ======================================================== Total revenue $161 $150 $144 $143 $137 Less fund administration and servicing costs 9 8 8 8 8 -------------------------------------------------------- Revenue used for operating margin calculation, as reported $152 $142 $136 $135 $129 ======================================================== Operating margin, as reported 41% 41% 40% 40% 43% Operating margin, GAAP basis 38% 38% 38% 38% 40%
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 Fund and BlackRock Global Series. THE PNC FINANCIAL SERVICES GROUP, INC. Page 18 PFPC (Unaudited)
Year ended December 31 December 31 Dollars in millions except as noted 2003 2002 - ----------------------------------------------------------------------------- INCOME STATEMENT Fund servicing revenue $ 762 $ 817 Operating expense 618 650 (Accretion)/amortization of other intangibles, net (18) (19) - --------------------------------------------------------------------------- Net operating income 162 186 Nonoperating income (a) 8 10 Debt financing 69 88 - --------------------------------------------------------------------------- Pretax earnings 101 108 Income taxes 40 43 - --------------------------------------------------------------------------- Earnings $ 61 $ 65 =========================================================================== AVERAGE BALANCE SHEET Goodwill and other intangible assets $ 1,037 $ 1,028 Other assets 872 860 - --------------------------------------------------------------------------- Total assets $ 1,909 $ 1,888 =========================================================================== Debt financing $ 1,279 $ 1,290 Assigned funds and other liabilities 422 390 Assigned capital 208 208 - --------------------------------------------------------------------------- Total funds $ 1,909 $ 1,888 =========================================================================== PERFORMANCE RATIOS Return on assigned capital 29% 31% Operating margin 21 23 =========================================================================== SERVICING STATISTICS Accounting/administration net assets (b) Domestic $ 622 $ 481 Foreign (c) 45 29 - --------------------------------------------------------------------------- Total $ 667 $ 510 - --------------------------------------------------------------------------- Asset type Money Market $ 341 $ 297 Equity 193 118 Fixed income 92 72 Other 41 23 - --------------------------------------------------------------------------- Total $ 667 $ 510 - --------------------------------------------------------------------------- Custody assets (b) $ 401 $ 336 - --------------------------------------------------------------------------- Shareholder accounts (in millions) Transfer agency 21 26 Subaccounting 32 25 - --------------------------------------------------------------------------- Total 53 51 =========================================================================== OTHER INFORMATION Average FTE staff 5,081 5,834 ===========================================================================
(a) Net of nonoperating expense. (b) At December 31. Dollars in billions. (c) Represents net assets serviced offshore. THE PNC FINANCIAL SERVICES GROUP, INC. Page 19 PFPC (Unaudited)
Three months ended December 31 September 30 June 30 March 31 December 31 Dollars in millions except as noted 2003 2003 2003 2003 2002 - -------------------------------------------------------------------------------------------------------------------------------- INCOME STATEMENT Fund servicing revenue $ 194 $ 188 $ 187 $ 193 $ 195 Operating expense 155 150 151 162 168 (Accretion)/amortization of other intangibles, net (4) (6) (4) (4) (5) - ------------------------------------------------------------------------------------------------------------------------------ Net operating income 43 44 40 35 32 Nonoperating income (a) 2 2 2 2 2 Debt financing 16 18 18 17 21 - ------------------------------------------------------------------------------------------------------------------------------ Pretax earnings 29 28 24 20 13 Income taxes 11 12 9 8 5 - ------------------------------------------------------------------------------------------------------------------------------ Earnings $ 18 $ 16 $ 15 $ 12 $ 8 ============================================================================================================================== AVERAGE BALANCE SHEET Goodwill and other intangible assets $ 1,034 $ 1,034 $ 1,055 $ 1,025 $ 1,022 Other assets 949 862 836 840 857 - ------------------------------------------------------------------------------------------------------------------------------ Total assets $ 1,983 $ 1,896 $ 1,891 $ 1,865 $ 1,879 ============================================================================================================================== Debt financing $ 1,248 $ 1,290 $ 1,290 $ 1,290 $ 1,290 Assigned funds and other liabilities 527 398 393 367 381 Assigned capital 208 208 208 208 208 - ------------------------------------------------------------------------------------------------------------------------------ Total funds $ 1,983 $ 1,896 $ 1,891 $ 1,865 $ 1,879 ============================================================================================================================== PERFORMANCE RATIOS Return on assigned capital 34% 31% 29% 23% 15% Operating margin 22 23 21 18 16 ============================================================================================================================== SERVICING STATISTICS Accounting/administration net assets (b) Domestic $ 622 $ 593 $ 583 $ 542 $ 481 Foreign (c) 45 41 35 31 29 - ------------------------------------------------------------------------------------------------------------------------------ Total $ 667 $ 634 $ 618 $ 573 $ 510 - ------------------------------------------------------------------------------------------------------------------------------ Asset Type Money Market $ 341 $ 343 $ 349 $ 345 $ 297 Equity 193 166 148 121 118 Fixed income 92 89 88 79 72 Other 41 36 33 28 23 - ------------------------------------------------------------------------------------------------------------------------------ Total $ 667 $ 634 $ 618 $ 573 $ 510 - ------------------------------------------------------------------------------------------------------------------------------ Custody assets (b) $ 401 $ 384 $ 371 $ 347 $ 336 - ------------------------------------------------------------------------------------------------------------------------------ Shareholder accounts (in millions) Transfer agency 21 21 20 21 26 Subaccounting 32 29 28 27 25 - ------------------------------------------------------------------------------------------------------------------------------ Total 53 50 48 48 51 ============================================================================================================================== OTHER INFORMATION Average FTE staff 4,801 4,760 5,328 5,437 5,538 ==============================================================================================================================
(a) Net of nonoperating expense. (b) In billions. (c) Represents net assets serviced offshore. THE PNC FINANCIAL SERVICES GROUP, INC. Page 20 DETAILS OF NET INTEREST INCOME AND NET INTEREST MARGIN (Unaudited) Taxable-equivalent basis
Quarter ended Year ended ------------------------------------------------------------ ------------------------ NET INTEREST INCOME December 31 September 30 June 30 March 31 December 31 December 31 December 31 In millions 2003 2003 2003 2003 2002 2003 2002 - ----------------------------------------------------------------------------------------------------------------------------- Interest income Loans and fees on loans $ 463 $ 479 $ 497 $ 509 $ 542 $1,948 $2,304 Securities 141 141 155 144 150 581 618 Loans held for sale 13 8 15 12 18 48 135 Other 46 42 27 30 34 145 128 - -------------------------------------------------------------------------------------------------------------------------- Total interest income 663 670 694 695 744 2,722 3,185 - -------------------------------------------------------------------------------------------------------------------------- Interest expense Deposits 102 106 117 132 149 457 659 Borrowed funds 73 75 54 57 68 259 316 - -------------------------------------------------------------------------------------------------------------------------- Total interest expense 175 181 171 189 217 716 975 - -------------------------------------------------------------------------------------------------------------------------- Net interest income $ 488 $ 489 $ 523 $ 506 $ 527 $2,006 $2,210 ========================================================================================================================== Lending revenue to total revenue (a) 25 % 24 % 23 % 22 % 27 % 23 % 24 %
Quarter ended Year ended ------------------------------------------------------------ ------------------------ December 31 September 30 June 30 March 31 December 31 December 31 December 31 NET INTEREST MARGIN 2003 2003 2003 2003 2002 2003 2002 - --------------------------------------------------------------------------------------------------------------------------------- Average yields/rates Yield on earning assets Loans and fees on loans 5.31 % 5.50 % 5.67 % 5.82 % 6.03 % 5.62 % 6.21 % Securities 3.63 3.69 4.21 4.41 4.67 3.96 5.15 Loans held for sale 3.02 2.11 3.45 2.65 3.48 2.88 4.66 Other 3.34 3.18 5.55 3.05 3.68 3.50 3.85 Total yield on earning assets 4.60 4.71 5.19 5.17 5.45 4.93 5.75 Rate on interest-bearing liabilities Deposits 1.20 1.25 1.40 1.56 1.73 1.35 1.89 Borrowed funds 2.31 2.45 2.46 2.63 2.93 2.47 2.95 Total rate on interest-bearing liabilities 1.50 1.57 1.61 1.77 1.98 1.61 2.14 - ----------------------------------------------------------------------------------------------------------------------------- Interest rate spread 3.10 3.14 3.58 3.40 3.47 3.32 3.61 Impact of noninterest-bearing sources .28 .30 .33 .36 .40 .32 .38 - ----------------------------------------------------------------------------------------------------------------------------- Net interest margin 3.38 % 3.44 % 3.91 % 3.76 % 3.87 % 3.64 % 3.99 % =============================================================================================================================
(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 Year ended --------------------------------------------------------- ------------------------ December 31 September 30 June 30 March 31 December 31 December 31 December 31 In millions 2003 2003 2003 2003 2002 2003 2002 - ----------------------------------------- --------------------------------------------------------- ------------------------ Net interest income, GAAP basis $485 $487 $521 $503 $524 $1,996 $2,197 Taxable-equivalent adjustment 3 2 2 3 3 10 13 --------------------------------------------------------- ------------------------ Net interest income, taxable-equivalent basis $488 $489 $523 $506 $527 $2,006 $2,210 ========================================================= ========================
(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. THE PNC FINANCIAL SERVICES GROUP, INC. Page 21 DETAILS OF NONINTEREST INCOME AND NONINTEREST EXPENSE (Unaudited) In millions
Quarter ended Year ended ---------------------------------------------------------- ------------------------ December 31 September 30 June 30 March 31 December 31 December 31 December 31 NONINTEREST INCOME 2003 2003 2003 2003 2002 2003 2002 - ------------------------------------------------------------------------------------------------------------------------------------ Asset management $ 229 $ 216 $ 209 $ 207 $ 202 $ 861 $ 853 Fund servicing 193 188 188 193 194 762 816 Service charges on deposits 62 60 60 57 61 239 227 Brokerage 51 46 46 41 44 184 195 Consumer services 63 65 64 59 61 251 239 Corporate services 123 132 114 116 151 485 526 Equity management (4) (17) (4) (14) (25) (51) Net securities gains 15 19 26 56 1 116 89 Investments held by certain variable interest entities 10 9 19 Other 115 94 86 70 66 365 303 - -------------------------------------------------------------------------------------------------------------------------------- Total noninterest income $ 861 $ 825 $ 776 $ 795 $ 766 $3,257 $3,197 ================================================================================================================================ Net gains (losses) on institutional loans held for sale (included in "Corporate services" above) $ 16 $ 23 $ 15 $ 15 $ 52 $ 69 $ 147 Noninterest income to total revenue (a) 62 % 63 % 60 % 61 % 59 % 62 % 59 %
Quarter ended Year ended ---------------------------------------------------------- ------------------------ December 31 September 30 June 30 March 31 December 31 December 31 December 31 NONINTEREST EXPENSE 2003 2003 2003 2003 2002 2003 2002 - ------------------------------------------------------------------------------------------------------------------------------------ Staff $ 472 $ 448 $ 446 $ 438 $ 408 $1,804 $1,701 Net occupancy 65 63 64 90 62 282 243 Equipment 71 67 69 69 68 276 271 Marketing 15 16 18 15 11 64 51 Distributions on capital securities (b) 14 14 14 28 58 Other 235 233 324 230 228 1,022 903 - --------------------------------------------------------------------------------------------------------------------------------- Total noninterest expense $ 858 $ 827 $ 935 $ 856 $ 791 $3,476 $3,227 ================================================================================================================================= Legal and consulting fees related to regulatory compliance and certain legal proceedings (included in "Other" above) $ 1 $ 1 $ 5 $ 2 $ 10 $ 9 $ 30 Costs incurred under DOJ agreement (included in "Other" above) (c) $ 115 $ 115 Efficiency (d) 66 % 63 % 72 % 66 % 63 % 67 % 60 % =================================================================================================================================
(a) Calculated as total noninterest income divided by the sum of net interest income and noninterest income. (b) The Corporation adopted Statement of Financial Accounting Standards No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity," (SFAS 150) effective July 1, 2003, as required by SFAS 150, the Corporation's mandatorily redeemable capital securities of subsidiary trusts totaling $848 million were reclassified in the third quarter of 2003 from between the liabilities and shareholders' equity sections of the Consolidated Balance Sheet to borrowed funds. The dividends paid on these financial instruments, previously classified as noninterest expense, were recharacterized as interest expense. Reclassification of prior period amounts was not permitted under SFAS 150. (c) See "Agreement with Department of Justice" in the Corporation's July 21, 2003 second quarter 2003 earnings press release included as Exhibit 99.1 to the Corporation's Form 8-K on that date for further information regarding amounts for the quarter ended June 30, 2003. (d) The efficiency ratio for all periods presented is computed as noninterest expense divided by the sum of net interest income and noninterest income. THE PNC FINANCIAL SERVICES GROUP, INC. Page 22 CONSOLIDATED AVERAGE BALANCE SHEET (Unaudited)
December 31 December 31 Year ended - in millions 2003 2002 - ------------------------------------------------------------------------------------------------------------------------------- ASSETS Interest-earning assets Loans held for sale $ 1,664 $ 2,897 Securities 14,674 11,999 Loans, net of unearned income Commercial 14,796 15,922 Commercial real estate 2,072 2,451 Consumer 10,617 9,545 Residential mortgage 3,148 4,639 Lease financing 3,695 4,173 Other 359 393 - ------------------------------------------------------------------------------------------------------------------------------ Total loans, net of unearned income 34,687 37,123 Other 4,147 3,326 - ------------------------------------------------------------------------------------------------------------------------------ Total interest-earning assets 55,172 55,345 Allowance for credit losses (668) (628) Other noninterest-earning assets 12,775 11,872 - ------------------------------------------------------------------------------------------------------------------------------ Total assets $ 67,279 $ 66,589 ============================================================================================================================== LIABILITIES, MINORITY AND NONCONTROLLING INTERESTS, CAPITAL SECURITIES AND SHAREHOLDERS' EQUITY Interest-bearing liabilities Interest-bearing deposits Demand and money market $ 22,360 $ 21,514 Savings 2,106 2,033 Retail certificates of deposit 8,810 10,361 Other time 266 556 Deposits in foreign offices 283 360 - ------------------------------------------------------------------------------------------------------------------------------ Total interest-bearing deposits 33,825 34,824 Borrowed funds 10,491 10,712 - ------------------------------------------------------------------------------------------------------------------------------ Total interest-bearing liabilities 44,316 45,536 Demand and other noninterest-bearing deposits 10,637 9,294 Allowance for unfunded loan commitments and letters of credit 82 80 Accrued expenses and other liabilities 4,855 4,326 - ------------------------------------------------------------------------------------------------------------------------------ Total liabilities 59,890 59,236 Minority and noncontrolling interests in consolidated subsidiaries 317 212 Mandatorily redeemable capital securities of subsidiary trusts 421 848 Shareholders' equity 6,651 6,293 - ------------------------------------------------------------------------------------------------------------------------------ Total liabilities, minority interest, capital securities and shareholders' equity $ 67,279 $ 66,589 ============================================================================================================================== SUPPLEMENTAL AVERAGE BALANCE SHEET INFORMATION Federal funds sold $ 491 $ 1,319 - ------------------------------------------------------------------------------------------------------------------------------ Interest-bearing deposits $ 33,825 $ 34,824 Demand and other noninterest-bearing deposits 10,637 9,294 - ------------------------------------------------------------------------------------------------------------------------------ Total deposits $ 44,462 $ 44,118 - ------------------------------------------------------------------------------------------------------------------------------ Common shareholders' equity $ 6,642 $ 6,283 - ------------------------------------------------------------------------------------------------------------------------------
THE PNC FINANCIAL SERVICES GROUP, INC. Page 23 CONSOLIDATED AVERAGE BALANCE SHEET (Unaudited)
December 31 September 30 June 30 March 31 December 31 Three months ended - in millions 2003 2003 2003 2003 2002 - --------------------------------------------------------------------------------------------------------------------------------- ASSETS Interest-earning assets Loans held for sale $ 1,645 $ 1,480 $ 1,754 $ 1,782 $ 1,985 Securities 15,617 15,295 14,672 13,078 12,852 Loans, net of unearned income Commercial 14,465 14,712 14,965 15,050 15,426 Commercial real estate 1,825 2,034 2,169 2,265 2,382 Consumer 11,300 10,832 10,346 9,974 9,739 Residential mortgage 2,932 2,807 3,244 3,619 3,554 Lease financing 3,477 3,633 3,767 3,909 4,000 Other 353 360 360 363 356 - ------------------------------------------------------------------------------------------------------------------------------- Total loans, net of unearned income 34,352 34,378 34,851 35,180 35,457 Other 5,478 5,142 1,979 3,958 3,631 - ------------------------------------------------------------------------------------------------------------------------------- Total interest-earning assets 57,092 56,295 53,256 53,998 53,925 Allowance for credit losses (645) (674) (671) (682) (655) Other noninterest-earning assets 12,647 12,832 12,980 12,639 12,572 - ------------------------------------------------------------------------------------------------------------------------------- Total assets $ 69,094 $ 68,453 $65,565 $65,955 $65,842 =============================================================================================================================== LIABILITIES, MINORITY AND NONCONTROLLING INTERESTS, CAPITAL SECURITIES AND SHAREHOLDERS' EQUITY Interest-bearing liabilities Interest-bearing deposits Demand and money market $ 22,745 $ 22,475 $22,141 $22,073 $21,713 Savings 2,099 2,133 2,131 2,058 2,020 Retail certificates of deposit 8,268 8,460 8,892 9,638 9,977 Other time 265 264 269 265 269 Deposits in foreign offices 466 238 220 206 192 - ------------------------------------------------------------------------------------------------------------------------------- Total interest-bearing deposits 33,843 33,570 33,653 34,240 34,171 Borrowed funds 12,405 12,099 8,701 8,702 9,045 - ------------------------------------------------------------------------------------------------------------------------------- Total interest-bearing liabilities 46,248 45,669 42,354 42,942 43,216 Demand and other noninterest-bearing deposits 11,070 11,040 10,278 10,146 9,933 Allowance for unfunded loan commitments and letters of credit 88 77 77 84 79 Accrued expenses and other liabilities 4,688 4,827 4,980 4,928 4,829 - ------------------------------------------------------------------------------------------------------------------------------- Total liabilities 62,094 61,613 57,689 58,100 58,057 Minority and noncontrolling interests in consolidated entities 471 295 252 251 261 Mandatorily redeemable capital securities of subsidiary trusts 848 848 848 Shareholders' equity 6,529 6,545 6,776 6,756 6,676 - ------------------------------------------------------------------------------------------------------------------------------- Total liabilities, minority interest, capital securities and shareholders' equity $ 69,094 $ 68,453 $65,565 $65,955 $65,842 =============================================================================================================================== SUPPLEMENTAL AVERAGE BALANCE SHEET INFORMATION Federal funds sold $ 12 $ 46 $ 116 $ 1,813 $ 1,426 - ------------------------------------------------------------------------------------------------------------------------------- Interest-bearing deposits $ 33,843 $ 33,570 $33,653 $34,240 $34,171 Demand and other noninterest-bearing deposits 11,070 11,040 10,278 10,146 9,933 - ------------------------------------------------------------------------------------------------------------------------------- Total deposits $ 44,913 $ 44,610 $43,931 $44,386 $44,104 - ------------------------------------------------------------------------------------------------------------------------------- Common shareholders' equity $ 6,520 $ 6,536 $ 6,767 $ 6,746 $ 6,666 - -------------------------------------------------------------------------------------------------------------------------------
THE PNC FINANCIAL SERVICES GROUP, INC. Page 24 DETAILS OF LOANS AND LOANS HELD FOR SALE (Unaudited) LOANS
December 31 September 30 June 30 March 31 December 31 Period ended-in millions 2003 2003 2003 2003 2002 - -------------------------------------------------------------------------------------------------------------------------- Commercial Retail/wholesale $ 4,197 $ 4,093 $ 4,109 $ 4,147 $ 4,161 Manufacturing 3,321 3,618 3,591 3,685 3,454 Service providers 1,822 1,865 1,936 1,978 1,906 Real estate related 1,303 1,454 1,479 1,441 1,481 Financial services 1,169 1,251 1,274 1,255 1,218 Communications 93 68 78 110 124 Health care 403 413 407 422 458 Other 1,855 1,861 1,919 2,035 2,185 - ------------------------------------------------------------------------------------------------------------------------ Total commercial 14,163 14,623 14,793 15,073 14,987 - ------------------------------------------------------------------------------------------------------------------------ Commercial real estate Real estate project 1,392 1,429 1,563 1,749 1,750 Mortgage 432 464 464 492 517 - ------------------------------------------------------------------------------------------------------------------------ Total commercial real estate 1,824 1,893 2,027 2,241 2,267 - ------------------------------------------------------------------------------------------------------------------------ Consumer Home equity 9,790 9,486 8,876 8,435 8,108 Automobile 543 522 509 476 484 Other 1,099 1,151 1,166 1,209 1,262 - ------------------------------------------------------------------------------------------------------------------------ Total consumer 11,432 11,159 10,551 10,120 9,854 - ------------------------------------------------------------------------------------------------------------------------ Residential mortgage 2,886 2,894 3,114 3,627 3,921 Lease financing Equipment 3,691 3,684 3,580 3,500 3,560 Vehicles 744 934 1,130 1,346 1,521 - ------------------------------------------------------------------------------------------------------------------------ Total lease financing 4,435 4,618 4,710 4,846 5,081 - ------------------------------------------------------------------------------------------------------------------------ Other 349 364 357 356 415 Unearned income (1,009) (1,037) (1,018) (1,018) (1,075) - ------------------------------------------------------------------------------------------------------------------------ Total, net of unearned income $34,080 $34,514 $ 34,534 $ 35,245 $35,450 ======================================================================================================================== WHOLESALE LENDING STATISTICS Portfolio composition-total exposure Investment grade equivalent or better 52 % 52 % 53 % 51 % 52 % Non-investment grade-secured lending 25 25 24 25 24 Non-investment grade 23 23 23 24 24 - ------------------------------------------------------------------------------------------------------------------------ Total 100 % 100 % 100 % 100 % 100 % - ------------------------------------------------------------------------------------------------------------------------ Client relationships >$50 million-total exposure $12,396 $12,662 $ 12,852 $ 13,086 $13,392 Client relationships >$50 million-customers 138 139 143 145 140 ======================================================================================================================== CONSUMER LOAN STATISTICS (a) Net charge-offs to loans .29 % .24 % .27 % .24 % .24 % ========================================================================================================================
LOANS HELD FOR SALE
December 31 September 30 June 30 March 31 December 31 Period ended - in millions 2003 2003 2003 2003 2002 - ----------------------------------------------------------------------------------------------------------------------------- Education loans $1,014 $1,140 $1,059 $1,243 $1,035 Institutional lending repositioning 70 98 126 181 298 Other 316 293 290 278 274 - --------------------------------------------------------------------------------------------------------------------------- Total $1,400 $1,531 $1,475 $1,702 $1,607 ===========================================================================================================================
INSTITUTIONAL LENDING REPOSITIONING
December 31 September 30 June 30 March 31 December 31 Period ended - in millions 2003 2003 2003 2003 2002 - ----------------------------------------------------------------------------------------------------------------------------- Loans held for sale Credit exposure $104 $150 $199 $344 $626 Outstandings 70 98 126 181 298 Exit portfolio Credit exposure 51 61 251 374 438 Outstandings 10 11 9 4 ==========================================================================================================================
(a) Includes consumer, residential mortgage and vehicle leasing. THE PNC FINANCIAL SERVICES GROUP, INC. Page 25 ALLOWANCES FOR CREDIT LOSSES AND UNFUNDED LOAN COMMITMENTS AND LETTERS OF CREDIT (Unaudited) CHANGE IN ALLOWANCE FOR CREDIT LOSSES
December 31 September 30 June 30 March 31 December 31 Three months ended - in millions 2003 2003 2003 2003 2002 - -------------------------------------------------------------------------------------------------------------------------- Beginning balance $648 $673 $680 $673 $648 Charge-offs Commercial (53) (56) (27) (32) (27) Commercial real estate (1) (2) (1) Consumer (10) (9) (10) (10) (10) Residential mortgage (2) (1) (1) Lease financing (4) (5) (29) (8) (5) - --------------------------------------------------------------------------------------------------------------------- Total charge-offs (69) (72) (69) (50) (43) Recoveries Commercial 15 5 2 10 3 Commercial real estate 1 1 Consumer 3 3 3 3 3 Residential mortgage 1 Lease financing 1 1 1 1 - --------------------------------------------------------------------------------------------------------------------- Total recoveries 20 9 6 14 8 Net charge-offs Commercial (38) (51) (25) (22) (24) Commercial real estate 1 (1) (2) Consumer (7) (6) (7) (7) (7) Residential mortgage (2) (1) Lease financing (3) (5) (28) (7) (4) - --------------------------------------------------------------------------------------------------------------------- Total net charge-offs (49) (63) (63) (36) (35) Provision for credit losses 34 50 57 36 65 Acquired allowance (NBOC acquisition) (1) Net change in allowance for unfunded loan commitments and letters of credit (1) (11) (1) 7 (5) - --------------------------------------------------------------------------------------------------------------------- Ending balance $632 $648 $673 $680 $673 =====================================================================================================================
CHANGE IN ALLOWANCE FOR UNFUNDED LOAN COMMITMENTS AND LETTERS OF CREDIT
December 31 September 30 June 30 March 31 December 31 Three months ended - in millions 2003 2003 2003 2003 2002 - -------------------------------------------------------------------------------------------------------------------------- Beginning balance $89 $78 $77 $84 $79 Net change in allowance for unfunded loan commitments and letters of credit 1 11 1 (7) 5 - --------------------------------------------------------------------------------------------------------------------- Ending balance $90 $89 $78 $77 $84 =====================================================================================================================
NET UNFUNDED COMMITMENTS
December 31 September 30 June 30 March 31 December 31 In millions 2003 2003 2003 2003 2002 - -------------------------------------------------------------------------------------------------------------------------- Net unfunded commitments $25,187 $24,664 $25,514 $25,652 $26,858 =======================================================================================================================
THE PNC FINANCIAL SERVICES GROUP, INC. Page 26 DETAILS OF NONPERFORMING ASSETS (Unaudited) NONPERFORMING ASSETS BY TYPE
December 31 September 30 June 30 March 31 December 31 Period ended - in millions 2003 2003 2003 2003 2002 - ---------------------------------------------------------------------------------------------------------------------------------- Nonaccrual loans Commercial $213 $286 $ 296 $252 $226 Commercial real estate 6 4 6 13 7 Consumer 11 10 11 11 11 Residential mortgage (a) 24 8 7 7 7 Lease financing 11 15 6 51 57 - ---------------------------------------------------------------------------------------------------------------------------- Total nonaccrual loans 265 323 326 334 308 Troubled debt restructured loan 1 1 1 1 1 - ---------------------------------------------------------------------------------------------------------------------------- Total nonperforming loans 266 324 327 335 309 Nonperforming loans held for sale (b) 27 35 45 61 97 Foreclosed and other assets Lease 17 18 19 Residential mortgage 9 9 7 6 6 Other 9 10 6 6 6 - ---------------------------------------------------------------------------------------------------------------------------- Total foreclosed and other assets 35 37 32 12 12 - ---------------------------------------------------------------------------------------------------------------------------- Total nonperforming assets (c) $328 $396 $ 404 $408 $418 - ---------------------------------------------------------------------------------------------------------------------------- Nonperforming loans to total loans .78% .94% .95% .95% .87% Nonperforming assets to total loans, loans held for sale and foreclosed assets .92 1.10 1.12 1.10 1.13 Nonperforming assets to total assets .48 .58 .60 .59 .63 ============================================================================================================================ (a) During the fourth quarter of 2003, the Corporation accelerated the timeframe for recognizing delinquent, well-secured residential mortgage loans as nonperforming. This change resulted in the classification of an additional $15 million of residential mortgages as nonperforming assets at December 31, 2003. (b) Includes troubled debt restructured loans held for sale $ 10 $ 9 $ 11 $ 12 $ 17 (c) Excludes equity management assets carried at estimated fair value (December 31, 2003, September 30, 2003, June 30, 2003, March 31, 2003 and December 31, 2002 amounts include troubled debt restructured assets of $5 million, $7 million, $3 million, $3 million and $12 million, respectively). $ 37 $ 38 $ 39 $ 30 $ 40
CHANGE IN NONPERFORMING ASSETS
Three months Year December 31, 2003 - in millions ended ended - ------------------------------------------------------------------------------------------- Beginning of period $396 $418 Purchases 42 Transferred from accrual 111 467 Returned to performing (1) (5) Principal reductions and payoffs (110) (331) Asset sales (20) (54) Charge-offs and valuation adjustments (48) (209) - ------------------------------------------------------------------------------------------- December 31 $328 $328 ===========================================================================================
THE PNC FINANCIAL SERVICES GROUP, INC. Page 27 DETAILS OF NONPERFORMING ASSETS (Unaudited) NONPERFORMING ASSETS BY BUSINESS
December 31 September 30 June 30 March 31 December 31 Period ended - in millions 2003 2003 2003 2003 2002 - ------------------------------------------------------------------------------------------------------------------------ REGIONAL COMMUNITY BANKING Nonperforming loans (a) $ 78 $ 63 $ 65 $ 76 $ 72 Foreclosed and other assets 12 11 10 10 10 ---------------------------------------------------------------- Total $ 90 $ 74 $ 75 $ 86 $ 82 ---------------------------------------------------------------- WHOLESALE BANKING-CORPORATE BANKING Nonperforming loans $ 71 $118 $121 $114 $104 Nonperforming loans held for sale 24 28 36 52 83 Foreclosed and other assets 21 22 19 ---------------------------------------------------------------- Total $116 $168 $176 $166 $187 ---------------------------------------------------------------- WHOLESALE BANKING-PNC REAL ESTATE FINANCE Nonperforming loans $ 2 $ 1 $ 1 $ 10 $ 2 Nonperforming loans held for sale 2 Foreclosed and other assets 1 2 2 ---------------------------------------------------------------- Total $ 3 $ 3 $ 3 $ 12 $ 2 ---------------------------------------------------------------- WHOLESALE BANKING-PNC BUSINESS CREDIT Nonperforming loans $104 $132 $135 $130 $126 Nonperforming loans held for sale 3 7 9 7 14 Foreclosed and other assets 1 1 1 2 2 ---------------------------------------------------------------- Total $108 $140 $145 $139 $142 ---------------------------------------------------------------- PNC ADVISORS Nonperforming loans $ 11 $ 10 $ 5 $ 5 $ 5 Foreclosed and other assets 1 ---------------------------------------------------------------- Total $ 11 $ 11 $ 5 $ 5 $ 5 ---------------------------------------------------------------- CONSOLIDATED TOTALS Nonperforming loans $266 $324 $327 $335 $309 Nonperforming loans held for sale 27 35 45 61 97 Foreclosed and other assets 35 37 32 12 12 ---------------------------------------------------------------- Total $328 $396 $404 $408 $418 ================================================================
LARGEST NONPERFORMING LOANS AT DECEMBER 31, 2003 - IN MILLIONS (b)
PNC Corporate Banking PNC Business Credit - ------------------------------------------------------------------------------------------------------------------------------------ Ranking Outstandings Industry Outstandings Industry Outstandings Industry - ------------------------------------------------------------------------------------------------------------------------------------ 1 $ 29 Retail/Wholesale $17 Service Provider $ 29 Retail/Wholesale 2 17 Service Provider 12 Manufacturing 17 Service Provider 3 17 Service Provider 12 Other Media/Comm 7 Paper and Forest Prod 4 12 Manufacturing 8 Manufacturing 6 Steel 5 12 Other Media/Comm 8 Manufacturing 5 Auto MFG and Related 6 8 Manufacturing 6 Finance 5 Manufacturing 7 8 Manufacturing 5 Manufacturing 5 Manufacturing 8 8 Service Provider 5 Contractors 4 Manufacturing 9 7 Paper and Forest Prod 5 Manufacturing 4 Service Provider 10 6 Steel 4 Health Care 3 Manufacturing - ------------------------------------------------------------------------------------------------------------------------------------ Total $124 $82 $ 85 - ------------------------------------------------------------------------------------------------------------------------------------ As a percent of nonperforming assets 38% 71% 79% ====================================================================================================================================
(a) See Note (a) on page 26 of this financial supplement. The impact of this change was reflected in the amount at December 31, 2003. (b) Amounts are not net of allowance for credit losses, if applicable. Page 28 GLOSSARY OF TERMS Accounting/administration net assets - Net domestic and foreign pooled investment assets for which PNC provides accounting and administration services. These assets are not included on PNC's consolidated balance sheet. Adjusted average total assets - Primarily comprised of total average quarterly assets plus (less) unrealized losses (gains) on available-for-sale debt securities, less goodwill and certain other intangible assets. Annualized - Adjusted to reflect a full year of activity. Assets under management - Assets over which PNC has sole or shared investment authority for its customers/clients. These assets are not included on PNC's consolidated balance sheet. Assigned capital - 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, to the extent practicable, the financial results of each business as if it 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 - All assets, including pooled investment assets, held on behalf of clients under safekeeping arrangements. Such assets are not reported on PNC's consolidated balance sheet. Assets held in custody at other institutions on behalf of PNC are included in the appropriate asset categories as if held physically by PNC. Earning assets - Assets that generate income, which include: short-term investments; loans held for sale; loans, net of unearned income; securities; federal funds sold and certain other assets. Efficiency - Noninterest expense divided by the sum of net interest income and noninterest income. Institutional lending repositioning - A 2001 PNC strategic action taken 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 1 risk-based capital divided by adjusted average total assets. Net interest margin - Annualized taxable-equivalent net interest income divided by average earning assets. Nondiscretionary assets under administration - Assets held by PNC for customers/clients in a non-discretionary, custodial capacity. These assets are not included on PNC's consolidated balance sheet. Noninterest income to total revenue - Total noninterest income divided by total revenue. Total revenue includes total noninterest income plus net interest income. Page 29 Nonperforming assets - Nonperforming assets include nonaccrual loans, troubled debt restructured loans, nonaccrual loans held for sale, foreclosed and other 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 and other assets. Recovery - Cash proceeds received on a loan that had previously been charged off. The amount received is credited to the allowance for credit losses. Return on assigned capital - Annualized net income divided by assigned capital. Return on average assets - Annualized net income or annualized income from continuing operations divided by average assets. Return on average equity - Annualized net income or annualized income from continuing operations divided by average shareholders' equity. Risk-weighted assets - Primarily 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. Securitization - The process by which financial assets are legally 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 1 risk-based capital - Tier 1 capital equals: total shareholders' equity, plus trust preferred capital securities, plus certain minority interests 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 1 capital purposes. Tier 1 risk-based capital ratio - Tier 1 risk-based capital divided by risk-weighted assets. Total assets serviced - Total domestic and foreign pooled investment assets for which PNC provides related fund processing services. These assets are not included on PNC's consolidated balance sheet. Total deposits - The sum of total transaction deposits, savings accounts, certificates of deposit, other time deposits and deposits in foreign offices. Total risk-based capital - Tier 1 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 risk-based capital ratio - Total risk-based capital divided by risk-weighted assets. Page 30 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 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. PNC MultiFamily Capital is a national provider of financial services for the multi-family housing industry, particularly affordable, senior and healthcare housing. - 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. PNC Advisors provides services to individuals and corporations primarily within PNC's geographic footprint. 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 among the largest providers of mutual fund transfer agency and accounting and administration services in the United States, offering a wide range of fund processing services to the investment management industry. PFPC also provides processing solutions to the international marketplace through its Ireland and Luxembourg operations.