Exhibit 99.1
The PNC Financial Services Group, Inc.
Historical financial information as adjusted, for informational purposes only, as if (1) the anticipated deconsolidation of BlackRock from PNC’s consolidated financial statements had occurred January 1, 2003, and (2) PNC’s investment in BlackRock had been accounted for under the equity method subsequent to that date.
| Page | ||
| Condensed Consolidated Income Statement – As Adjusted (Unaudited) | ||
| Three months ended June 30, 2006, March 31, 2006, December 31, 2005, September 30, 2005 and June 30, 2005 |
1 | |
| Years ended December 31, 2005, 2004 and 2003 |
7 | |
| Illustrative Impact Of Equity Method Of Accounting For BlackRock (Unaudited) | ||
| Three months ended June 30, 2006 |
2 | |
| Three months ended March 31, 2006 |
3 | |
| Three months ended December 31, 2005 |
4 | |
| Three months ended September 30, 2005 |
5 | |
| Three months ended June 30, 2005 |
6 | |
| Year ended December 31, 2005 |
8 | |
| Year ended December 31, 2004 |
9 | |
| Year ended December 31, 2003 |
10 | |
THE PNC FINANCIAL SERVICES GROUP, INC.
Condensed Consolidated Income Statement - As Adjusted (Unaudited)
| For the three months ended - in millions |
June 30 2006 |
March 31 2006 |
December 31 2005 |
September 30 2005 |
June 30 2005 |
|||||||||||||||
| Net Interest Income |
||||||||||||||||||||
| Interest income |
$ | 1,120 | $ | 1,061 | $ | 1,027 | $ | 991 | $ | 896 | ||||||||||
| Interest expense |
568 | 508 | 477 | 434 | 365 | |||||||||||||||
| Net interest income |
552 | 553 | 550 | 557 | 531 | |||||||||||||||
| Provision for (recoveries of) credit losses |
44 | 22 | 24 | 16 | (27 | ) | ||||||||||||||
| Net interest income less provision for (recoveries of) credit losses |
508 | 531 | 526 | 541 | 558 | |||||||||||||||
| Noninterest Income |
||||||||||||||||||||
| Asset management |
80 | 76 | 77 | 77 | 74 | |||||||||||||||
| BlackRock investment (a) |
44 | 52 | 50 | 40 | 36 | |||||||||||||||
| Other |
789 | 703 | 709 | 721 | 583 | |||||||||||||||
| Total noninterest income |
913 | 831 | 836 | 838 | 693 | |||||||||||||||
| Noninterest Expense |
||||||||||||||||||||
| Compensation and benefits |
457 | 450 | 451 | 476 | 436 | |||||||||||||||
| Other (b) |
424 | 418 | 418 | 454 | 406 | |||||||||||||||
| Total noninterest expense |
881 | 868 | 869 | 930 | 842 | |||||||||||||||
| Income before income taxes |
540 | 494 | 493 | 449 | 409 | |||||||||||||||
| Income taxes |
159 | 140 | 138 | 115 | 127 | |||||||||||||||
| Net income |
$ | 381 | $ | 354 | $ | 355 | $ | 334 | $ | 282 | ||||||||||
| Noninterest income to total revenue |
62 | % | 60 | % | 60 | % | 60 | % | 57 | % | ||||||||||
| Efficiency (c) |
60 | % | 63 | % | 63 | % | 67 | % | 69 | % | ||||||||||
| (a) | BlackRock investment revenue represents PNC’s 69% or 70%, as applicable, ownership interest in earnings of BlackRock adjusted for certain costs related to PNC’s funding obligation for the LTIP. |
| (b) | Other noninterest expense includes PNC’s remaining minority and noncontrolling interests which is immaterial after the BlackRock deconsolidation. |
| (c) | Calculated as noninterest expense divided by the sum of net interest income and noninterest income. |
Note: “As adjusted” financial information shows the impact of the change in accounting for BlackRock that is expected subsequent to the anticipated BlackRock/MLIM closing. Historical financial information has been adjusted for the deconsolidation of BlackRock, and BlackRock is shown as if accounted for under the equity method.
Page 1
THE PNC FINANCIAL SERVICES GROUP, INC.
Illustrative Impact Of Equity Method Of Accounting For BlackRock (Unaudited)
| For the three months ended June 30, 2006 - |
PNC As Reported |
Deconsolidation | BlackRock Equity Method (a) |
PNC LTIP Costs (b) |
Minority Interests Reclass (c) |
PNC As Adjusted |
|||||||||||||||||||
| BlackRock | BlackRock Minority Interest |
||||||||||||||||||||||||
| Net Interest Income |
|||||||||||||||||||||||||
| Interest income |
$ | 1,126 | $ | (6 | ) | $ | 1,120 | ||||||||||||||||||
| Interest expense |
570 | (2 | ) | 568 | |||||||||||||||||||||
| Net interest income |
556 | (4 | ) | 552 | |||||||||||||||||||||
| Provision for credit losses |
44 | 44 | |||||||||||||||||||||||
| Net interest income less provision for credit losses |
512 | (4 | ) | 508 | |||||||||||||||||||||
| Noninterest Income |
|||||||||||||||||||||||||
| Asset management |
429 | (349 | ) | 80 | |||||||||||||||||||||
| BlackRock investment |
$ | 44 | 44 | ||||||||||||||||||||||
| Other |
801 | (12 | ) | 789 | |||||||||||||||||||||
| Total noninterest income |
1,230 | (361 | ) | 44 | 913 | ||||||||||||||||||||
| Noninterest Expense |
|||||||||||||||||||||||||
| Compensation and benefits |
634 | (177 | ) | 457 | |||||||||||||||||||||
| Other |
515 | (87 | ) | $ | (4 | ) | 424 | ||||||||||||||||||
| Total noninterest expense |
1,149 | (264 | ) | (4 | ) | 881 | |||||||||||||||||||
| Income before minority and noncontrolling interests and income taxes |
593 | (101 | ) | 44 | 4 | 540 | |||||||||||||||||||
| Minority and noncontrolling interests in income of consolidated entities |
15 | $ | (19 | ) | 4 | ||||||||||||||||||||
| Income taxes |
197 | (38 | ) | 159 | |||||||||||||||||||||
| Net income |
$ | 381 | $ | (63 | ) | $ | 19 | $ | 44 | $ | 381 | ||||||||||||||
| Noninterest income to total revenue |
69 | % | 62 | % | |||||||||||||||||||||
| Efficiency |
64 | % | 60 | % | |||||||||||||||||||||
| (a) | BlackRock investment revenue represents PNC’s 69% ownership interest in earnings of BlackRock. |
| (b) | Represents certain costs related to PNC’s funding obligation for the LTIP that were less than $.5 million for the three months ended June 30, 2006. |
| (c) | After deconsolidation of BlackRock, PNC’s remaining minority and noncontrolling interests is immaterial and therefore has been reclassified into other noninterest expense. |
Note: “As adjusted” financial information shows the impact of the change in accounting for BlackRock that is expected subsequent to the anticipated BlackRock/MLIM closing. Historical financial information has been adjusted for the deconsolidation of BlackRock, and BlackRock is shown as if accounted for under the equity method.
Page 2
THE PNC FINANCIAL SERVICES GROUP, INC.
Illustrative Impact Of Equity Method Of Accounting For BlackRock (Unaudited)
| PNC As Reported |
Deconsolidation | BlackRock Equity Method (a) |
PNC LTIP Costs (b) |
Minority Interests Reclass (c) |
PNC As Adjusted |
|||||||||||||||||||||
| For the three months ended March 31, 2006 - in millions |
BlackRock | BlackRock Minority Interest |
||||||||||||||||||||||||
| Net Interest Income |
||||||||||||||||||||||||||
| Interest income |
$ | 1,066 | $ | (5 | ) | $ | 1,061 | |||||||||||||||||||
| Interest expense |
510 | (2 | ) | 508 | ||||||||||||||||||||||
| Net interest income |
556 | (3 | ) | 553 | ||||||||||||||||||||||
| Provision for credit losses |
22 | 22 | ||||||||||||||||||||||||
| Net interest income less provision for credit losses |
534 | (3 | ) | 531 | ||||||||||||||||||||||
| Noninterest Income |
||||||||||||||||||||||||||
| Asset management |
461 | (385 | ) | 76 | ||||||||||||||||||||||
| BlackRock investment |
$ | 49 | $ | 3 | 52 | |||||||||||||||||||||
| Other |
724 | (21 | ) | 703 | ||||||||||||||||||||||
| Total noninterest income |
1,185 | (406 | ) | 49 | 3 | 831 | ||||||||||||||||||||
| Noninterest Expense |
||||||||||||||||||||||||||
| Compensation and benefits |
642 | (192 | ) | 450 | ||||||||||||||||||||||
| Other |
529 | (104 | ) | 3 | $ | (10 | ) | 418 | ||||||||||||||||||
| Total noninterest expense |
1,171 | (296 | ) | 3 | (10 | ) | 868 | |||||||||||||||||||
| Income before minority and noncontrolling interests and income taxes |
548 | (113 | ) | 49 | 10 | 494 | ||||||||||||||||||||
| Minority and noncontrolling interests in income of consolidated entities |
13 | (1 | ) | $ | (22 | ) | 10 | |||||||||||||||||||
| Income taxes |
181 | (41 | ) | 140 | ||||||||||||||||||||||
| Net income |
$ | 354 | $ | (71 | ) | $ | 22 | $ | 49 | $ | 354 | |||||||||||||||
| Noninterest income to total revenue |
68 | % | 60 | % | ||||||||||||||||||||||
| Efficiency |
67 | % | 63 | % | ||||||||||||||||||||||
| (a) | BlackRock investment revenue represents PNC’s 69% ownership interest in earnings of BlackRock. |
| (b) | Represents certain credits related to PNC’s funding obligation for the LTIP. |
| (c) | After deconsolidation of BlackRock, PNC’s remaining minority and noncontrolling interests is immaterial and therefore has been reclassified into other noninterest expense. |
Note: “As adjusted” financial information shows the impact of the change in accounting for BlackRock that is expected subsequent to the anticipated BlackRock/MLIM closing. Historical financial information has been adjusted for the deconsolidation of BlackRock, and BlackRock is shown as if accounted for under the equity method.
Page 3
THE PNC FINANCIAL SERVICES GROUP, INC.
Illustrative Impact Of Equity Method Of Accounting For BlackRock (Unaudited)
| PNC As |
Deconsolidation | BlackRock |
PNC |
Minority |
PNC As |
||||||||||||||||||||||
| For the three months ended December 31, 2005 - in millions |
BlackRock | BlackRock Minority Interest |
|||||||||||||||||||||||||
| Net Interest Income |
|||||||||||||||||||||||||||
| Interest income |
$ | 1,034 | $ | (7 | ) | $ | 1,027 | ||||||||||||||||||||
| Interest expense |
479 | (2 | ) | 477 | |||||||||||||||||||||||
| Net interest income |
555 | (5 | ) | 550 | |||||||||||||||||||||||
| Provision for credit losses |
24 | 24 | |||||||||||||||||||||||||
| Net interest income less provision for credit losses |
531 | (5 | ) | 526 | |||||||||||||||||||||||
| Noninterest Income |
|||||||||||||||||||||||||||
| Asset management |
431 | (354 | ) | 77 | |||||||||||||||||||||||
| BlackRock investment |
$ | 51 | $ | (1 | ) | 50 | |||||||||||||||||||||
| Other |
723 | (14 | ) | 709 | |||||||||||||||||||||||
| Total noninterest income |
1,154 | (368 | ) | 51 | (1 | ) | 836 | ||||||||||||||||||||
| Noninterest Expense |
|||||||||||||||||||||||||||
| Compensation and benefits |
633 | (182 | ) | 451 | |||||||||||||||||||||||
| Other |
512 | (74 | ) | (1 | ) | $ | (19 | ) | 418 | ||||||||||||||||||
| Total noninterest expense |
1,145 | (256 | ) | (1 | ) | (19 | ) | 869 | |||||||||||||||||||
| Income before minority and noncontrolling interests and income taxes |
540 | (117 | ) | 51 | 19 | 493 | |||||||||||||||||||||
| Minority and noncontrolling interests in income of consolidated entities |
4 | (1 | ) | $ | (22 | ) | 19 | ||||||||||||||||||||
| Income taxes |
181 | (43 | ) | 138 | |||||||||||||||||||||||
| Net income |
$ | 355 | $ | (73 | ) | $ | 22 | $ | 51 | $ | 355 | ||||||||||||||||
| Noninterest income to total revenue |
68 | % | 60 | % | |||||||||||||||||||||||
| Efficiency |
67 | % | 63 | % | |||||||||||||||||||||||
| (a) | BlackRock investment revenue represents PNC’s 70% ownership interest in earnings of BlackRock. |
| (b) | Represents certain costs related to PNC’s funding obligation for the LTIP. |
| (c) | After deconsolidation of BlackRock, PNC’s remaining minority and noncontrolling interests is immaterial and therefore has been reclassified into other noninterest expense. |
Note: “As adjusted” financial information shows the impact of the change in accounting for BlackRock that is expected subsequent to the anticipated BlackRock/MLIM closing. Historical financial information has been adjusted for the deconsolidation of BlackRock, and BlackRock is shown as if accounted for under the equity method.
Page 4
THE PNC FINANCIAL SERVICES GROUP, INC.
Illustrative Impact Of Equity Method Of Accounting For BlackRock (Unaudited)
| For the three months ended September 30, 2005 - in millions |
PNC As Reported |
Deconsolidation | BlackRock Equity Method (a) |
PNC Costs (b) |
Minority Interests Reclass (c) |
PNC As Adjusted |
|||||||||||||||||||||
| BlackRock | BlackRock Minority Interest |
||||||||||||||||||||||||||
| Net Interest Income |
|||||||||||||||||||||||||||
| Interest income |
$ | 995 | $ | (4 | ) | $ | 991 | ||||||||||||||||||||
| Interest expense |
436 | (2 | ) | 434 | |||||||||||||||||||||||
| Net interest income |
559 | (2 | ) | 557 | |||||||||||||||||||||||
| Provision for credit losses |
16 | 16 | |||||||||||||||||||||||||
| Net interest income less provision for credit losses |
543 | (2 | ) | 541 | |||||||||||||||||||||||
| Noninterest Income |
|||||||||||||||||||||||||||
| Asset management |
364 | (287 | ) | 77 | |||||||||||||||||||||||
| BlackRock investment |
$ | 42 | $ | (2 | ) | 40 | |||||||||||||||||||||
| Other |
752 | (31 | ) | 721 | |||||||||||||||||||||||
| Total noninterest income |
1,116 | (318 | ) | 42 | (2 | ) | 838 | ||||||||||||||||||||
| Noninterest Expense |
|||||||||||||||||||||||||||
| Compensation and benefits |
631 | (155 | ) | 476 | |||||||||||||||||||||||
| Other |
528 | (66 | ) | (2 | ) | $ | (6 | ) | 454 | ||||||||||||||||||
| Total noninterest expense |
1,159 | (221 | ) | (2 | ) | (6 | ) | 930 | |||||||||||||||||||
| Income before minority and noncontrolling interests and income taxes |
500 | (99 | ) | 42 | 6 | 449 | |||||||||||||||||||||
| Minority and noncontrolling interests in income of consolidated entities |
14 | (1 | ) | $ | (19 | ) | 6 | ||||||||||||||||||||
| Income taxes |
152 | (37 | ) | 115 | |||||||||||||||||||||||
| Net income |
$ | 334 | $ | (61 | ) | $ | 19 | $ | 42 | $ | 334 | ||||||||||||||||
| Noninterest income to total revenue |
67 | % | 60 | % | |||||||||||||||||||||||
| Efficiency |
69 | % | 67 | % | |||||||||||||||||||||||
| (a) | BlackRock investment revenue represents PNC’s 70% ownership interest in earnings of BlackRock. |
| (b) | Represents certain costs related to PNC’s funding obligation for the LTIP. |
| (c) | After deconsolidation of BlackRock, PNC’s remaining minority and noncontrolling interests is immaterial and therefore has been reclassified into other noninterest expense. |
Note: “As adjusted” financial information shows the impact of the change in accounting for BlackRock that is expected subsequent to the anticipated BlackRock/MLIM closing. Historical financial information has been adjusted for the deconsolidation of BlackRock, and BlackRock is shown as if accounted for under the equity method.
Page 5
THE PNC FINANCIAL SERVICES GROUP, INC.
Illustrative Impact Of Equity Method Of Accounting For BlackRock (Unaudited)
| For the three months ended June 30, 2005 - in millions |
PNC As Reported |
Deconsolidation | BlackRock Equity Method (a) |
PNC LTIP Costs (b) |
Minority Interests Reclass (c) |
PNC As Adjusted |
|||||||||||||||||||||
| BlackRock | BlackRock Minority Interest |
||||||||||||||||||||||||||
| Net Interest Income |
|||||||||||||||||||||||||||
| Interest income |
$ | 901 | $ | (5 | ) | $ | 896 | ||||||||||||||||||||
| Interest expense |
367 | (2 | ) | 365 | |||||||||||||||||||||||
| Net interest income |
534 | (3 | ) | 531 | |||||||||||||||||||||||
| Provision for (recoveries of) credit losses |
(27 | ) | (27 | ) | |||||||||||||||||||||||
| Net interest income less provision for (recoveries of) credit losses |
561 | (3 | ) | 558 | |||||||||||||||||||||||
| Noninterest Income |
|||||||||||||||||||||||||||
| Asset management |
334 | (260 | ) | 74 | |||||||||||||||||||||||
| BlackRock investment |
$ | 37 | $ | (1 | ) | 36 | |||||||||||||||||||||
| Other |
595 | (12 | ) | 583 | |||||||||||||||||||||||
| Total noninterest income |
929 | (272 | ) | 37 | (1 | ) | 693 | ||||||||||||||||||||
| Noninterest Expense |
|||||||||||||||||||||||||||
| Compensation and benefits |
567 | (131 | ) | 436 | |||||||||||||||||||||||
| Other |
473 | (58 | ) | (1 | ) | $ | (8 | ) | 406 | ||||||||||||||||||
| Total noninterest expense |
1,040 | (189 | ) | (1 | ) | (8 | ) | 842 | |||||||||||||||||||
| Income before minority and noncontrolling interests and income taxes |
450 | (86 | ) | 37 | 8 | 409 | |||||||||||||||||||||
| Minority and noncontrolling interests in income of consolidated entities |
9 | (1 | ) | $ | (16 | ) | 8 | ||||||||||||||||||||
| Income taxes |
159 | (32 | ) | 127 | |||||||||||||||||||||||
| Net income |
$ | 282 | $ | (53 | ) | $ | 16 | $ | 37 | $ | 282 | ||||||||||||||||
| Noninterest income to total revenue |
63 | % | 57 | % | |||||||||||||||||||||||
| Efficiency |
71 | % | 69 | % | |||||||||||||||||||||||
| (a) | BlackRock investment revenue represents PNC’s 70% ownership interest in earnings of BlackRock. |
| (b) | Represents certain costs related to PNC’s funding obligation for the LTIP. |
| (c) | After deconsolidation of BlackRock, PNC’s remaining minority and noncontrolling interests is immaterial and therefore has been reclassified into other noninterest expense. |
Note: “As adjusted” financial information shows the impact of the change in accounting for BlackRock that is expected subsequent to the anticipated BlackRock/MLIM closing. Historical financial information has been adjusted for the deconsolidation of BlackRock, and BlackRock is shown as if accounted for under the equity method.
Page 6
THE PNC FINANCIAL SERVICES GROUP, INC.
Condensed Consolidated Income Statement - As Adjusted (Unaudited)
| For the year ended December 31 - in millions |
2005 | 2004 | 2003 | |||||||||
| Net Interest Income |
||||||||||||
| Interest income |
$ | 3,714 | $ | 2,737 | $ | 2,695 | ||||||
| Interest expense |
1,572 | 782 | 715 | |||||||||
| Net interest income |
2,142 | 1,955 | 1,980 | |||||||||
| Provision for credit losses |
21 | 52 | 177 | |||||||||
| Net interest income less provision for credit losses |
2,121 | 1,903 | 1,803 | |||||||||
| Noninterest Income |
||||||||||||
| Asset management |
300 | 279 | 273 | |||||||||
| BlackRock investment (a) |
158 | 95 | 108 | |||||||||
| Other |
2,659 | 2,548 | 2,386 | |||||||||
| Total noninterest income |
3,117 | 2,922 | 2,767 | |||||||||
| Noninterest Expense |
||||||||||||
| Compensation and benefits |
1,798 | 1,673 | 1,576 | |||||||||
| Other (b) |
1,650 | 1,469 | 1,522 | |||||||||
| Total noninterest expense |
3,448 | 3,142 | 3,098 | |||||||||
| Income before income taxes |
1,790 | 1,683 | 1,472 | |||||||||
| Income taxes |
465 | 486 | 443 | |||||||||
| Income before cumulative effect of accounting change |
1,325 | 1,197 | 1,029 | |||||||||
| Cumulative effect of accounting change (less applicable income tax benefit of $14) |
(28 | ) | ||||||||||
| Net income |
$ | 1,325 | $ | 1,197 | $ | 1,001 | ||||||
| Noninterest income to total revenue |
59 | % | 60 | % | 58 | % | ||||||
| Efficiency |
66 | % | 64 | % | 65 | % | ||||||
| (a) | BlackRock investment revenue represents PNC’s 70% or 71%, as applicable, ownership interest in BlackRock adjusted for certain costs related to PNC’s funding obligation for the LTIP. |
| (b) | Other noninterest expense includes PNC’s remaining minority and noncontrolling interests which is immaterial after the BlackRock deconsolidation. |
Note: “As adjusted” financial information shows the impact of the change in accounting for BlackRock that is expected subsequent to the anticipated BlackRock/MLIM closing. Historical financial information has been adjusted for the deconsolidation of BlackRock, and BlackRock is shown as if accounted for under the equity method.
Page 7
THE PNC FINANCIAL SERVICES GROUP, INC.
Illustrative Impact Of Equity Method Of Accounting For BlackRock (Unaudited)
| PNC As |
Deconsolidation | BlackRock |
PNC |
Minority |
PNC As |
||||||||||||||||||||||
| For the year ended December 31, 2005 - in millions |
BlackRock | BlackRock Minority Interest |
|||||||||||||||||||||||||
| Net Interest Income |
|||||||||||||||||||||||||||
| Interest income |
$ | 3,734 | $ | (20 | ) | $ | 3,714 | ||||||||||||||||||||
| Interest expense |
1,580 | (8 | ) | 1,572 | |||||||||||||||||||||||
| Net interest income |
2,154 | (12 | ) | 2,142 | |||||||||||||||||||||||
| Provision for credit losses |
21 | 21 | |||||||||||||||||||||||||
| Net interest income less provision for credit losses |
2,133 | (12 | ) | 2,121 | |||||||||||||||||||||||
| Noninterest Income |
|||||||||||||||||||||||||||
| Asset management |
1,443 | (1,143 | ) | 300 | |||||||||||||||||||||||
| BlackRock investment |
$ | 163 | $ | (5 | ) | 158 | |||||||||||||||||||||
| Other |
2,730 | (71 | ) | 2,659 | |||||||||||||||||||||||
| Total noninterest income |
4,173 | (1,214 | ) | 163 | (5 | ) | 3,117 | ||||||||||||||||||||
| Noninterest Expense |
|||||||||||||||||||||||||||
| Compensation and benefits |
2,393 | (595 | ) | 1,798 | |||||||||||||||||||||||
| Other |
1,951 | (255 | ) | (5 | ) | $ | (41 | ) | 1,650 | ||||||||||||||||||
| Total noninterest expense |
4,344 | (850 | ) | (5 | ) | (41 | ) | 3,448 | |||||||||||||||||||
| Income before minority and noncontrolling interests and income taxes |
1,962 | (376 | ) | 163 | 41 | 1,790 | |||||||||||||||||||||
| Minority and noncontrolling interests in income of consolidated entities |
33 | (3 | ) | $ | (71 | ) | 41 | ||||||||||||||||||||
| Income taxes |
604 | (139 | ) | 465 | |||||||||||||||||||||||
| Net income |
$ | 1,325 | $ | (234 | ) | $ | 71 | $ | 163 | $ | 1,325 | ||||||||||||||||
| Noninterest income to total revenue |
66 | % | 59 | % | |||||||||||||||||||||||
| Efficiency |
69 | % | 66 | % | |||||||||||||||||||||||
| (a) | BlackRock investment revenue represents PNC’s 70% ownership interest in earnings of BlackRock. |
| (b) | Represents certain costs related to PNC’s funding obligation for the LTIP. |
| (c) | After deconsolidation of BlackRock, PNC’s remaining minority and noncontrolling interests is immaterial and therefore has been reclassified into other noninterest expense. |
Note: “As adjusted” financial information shows the impact of the change in accounting for BlackRock that is expected subsequent to the anticipated BlackRock/MLIM closing. Historical financial information has been adjusted for the deconsolidation of BlackRock, and BlackRock is shown as if accounted for under the equity method.
Page 8
THE PNC FINANCIAL SERVICES GROUP, INC.
Illustrative Impact Of Equity Method Of Accounting For BlackRock (Unaudited)
| PNC As |
Deconsolidation | BlackRock |
PNC |
Minority |
PNC As |
||||||||||||||||||||||
| For the year ended December 31, 2004 - in millions |
BlackRock | BlackRock Minority Interest |
|||||||||||||||||||||||||
| Net Interest Income |
|||||||||||||||||||||||||||
| Interest income |
$ | 2,752 | $ | (15 | ) | $ | 2,737 | ||||||||||||||||||||
| Interest expense |
783 | (1 | ) | 782 | |||||||||||||||||||||||
| Net interest income |
1,969 | (14 | ) | 1,955 | |||||||||||||||||||||||
| Provision for credit losses |
52 | 52 | |||||||||||||||||||||||||
| Net interest income less provision for credit losses |
1,917 | (14 | ) | 1,903 | |||||||||||||||||||||||
| Noninterest Income |
|||||||||||||||||||||||||||
| Asset management |
994 | (715 | ) | 279 | |||||||||||||||||||||||
| BlackRock investment |
$ | 101 | $ | (6 | ) | 95 | |||||||||||||||||||||
| Other |
2,578 | (30 | ) | 2,548 | |||||||||||||||||||||||
| Total noninterest income |
3,572 | (745 | ) | 101 | (6 | ) | 2,922 | ||||||||||||||||||||
| Noninterest Expense |
|||||||||||||||||||||||||||
| Compensation and benefits |
2,064 | (391 | ) | 1,673 | |||||||||||||||||||||||
| Other |
1,680 | (168 | ) | (6 | ) | $ | (37 | ) | 1,469 | ||||||||||||||||||
| Total noninterest expense |
3,744 | (559 | ) | (6 | ) | (37 | ) | 3,142 | |||||||||||||||||||
| Income before minority and noncontrolling interests and income taxes |
1,745 | (200 | ) | 101 | 37 | 1,683 | |||||||||||||||||||||
| Minority and noncontrolling interests in income of consolidated entities |
10 | (5 | ) | $ | (42 | ) | 37 | ||||||||||||||||||||
| Income taxes |
538 | (52 | ) | 486 | |||||||||||||||||||||||
| Net income |
$ | 1,197 | $ | (143 | ) | $ | 42 | $ | 101 | $ | 1,197 | ||||||||||||||||
| Noninterest income to total revenue |
64 | % | 60 | % | |||||||||||||||||||||||
| Efficiency |
68 | % | 64 | % | |||||||||||||||||||||||
| (a) | BlackRock investment revenue represents PNC’s 71% ownership interest in earnings of BlackRock. |
| (b) | Represents certain costs related to PNC’s funding obligation for the LTIP. |
| (c) | After deconsolidation of BlackRock, PNC’s remaining minority and noncontrolling interests is immaterial and therefore has been reclassified into other noninterest expense. |
Note: “As adjusted” financial information shows the impact of the change in accounting for BlackRock that is expected subsequent to the anticipated BlackRock/MLIM closing. Historical financial information has been adjusted for the deconsolidation of BlackRock, and BlackRock is shown as if accounted for under the equity method.
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THE PNC FINANCIAL SERVICES GROUP, INC.
Illustrative Impact Of Equity Method Of Accounting For BlackRock (Unaudited)
| PNC As |
Deconsolidation | BlackRock |
Minority |
PNC As |
|||||||||||||||||||
| For the year ended December 31, 2003 - in millions |
BlackRock | BlackRock Minority Interest |
|||||||||||||||||||||
| Net Interest Income |
|||||||||||||||||||||||
| Interest income |
$ | 2,712 | $ | (17 | ) | $ | 2,695 | ||||||||||||||||
| Interest expense |
716 | (1 | ) | 715 | |||||||||||||||||||
| Net interest income |
1,996 | (16 | ) | 1,980 | |||||||||||||||||||
| Provision for credit losses |
177 | 177 | |||||||||||||||||||||
| Net interest income less provision for credit losses |
1,819 | (16 | ) | 1,803 | |||||||||||||||||||
| Noninterest Income |
|||||||||||||||||||||||
| Asset management |
861 | (588 | ) | 273 | |||||||||||||||||||
| BlackRock investment |
$ | 108 | 108 | ||||||||||||||||||||
| Other |
2,402 | (16 | ) | 2,386 | |||||||||||||||||||
| Total noninterest income |
3,263 | (604 | ) | 108 | 2,767 | ||||||||||||||||||
| Noninterest Expense |
|||||||||||||||||||||||
| Compensation and benefits |
1,804 | (228 | ) | 1,576 | |||||||||||||||||||
| Other |
1,678 | (141 | ) | $ | (15 | ) | 1,522 | ||||||||||||||||
| Total noninterest expense |
3,482 | (369 | ) | (15 | ) | 3,098 | |||||||||||||||||
| Income before minority and noncontrolling interests and income taxes |
1,600 | (251 | ) | 108 | 15 | 1,472 | |||||||||||||||||
| Minority and noncontrolling interests in income of consolidated entities |
32 | $ | (47 | ) | 15 | ||||||||||||||||||
| Income taxes |
539 | (96 | ) | 443 | |||||||||||||||||||
| Income before cumulative effect of accounting change |
1,029 | (155 | ) | 47 | 108 | 1,029 | |||||||||||||||||
| Cumulative effect of accounting change (less applicable income tax benefit of $14) |
(28 | ) | (28 | ) | |||||||||||||||||||
| Net income |
$ | 1,001 | $ | (155 | ) | $ | 47 | $ | 108 | $ | 1,001 | ||||||||||||
| Noninterest income to total revenue |
62 | % | 58 | % | |||||||||||||||||||
| Efficiency |
66 | % | 65 | % | |||||||||||||||||||
| (a) | BlackRock investment revenue represents PNC’s 70% ownership interest in earnings of BlackRock. |
| (b) | After deconsolidation of BlackRock, PNC’s remaining minority and noncontrolling interests is immaterial and therefore has been reclassified into other noninterest expense. |
Note: “As adjusted” financial information shows the impact of the change in accounting for BlackRock that is expected subsequent to the anticipated BlackRock/MLIM closing. Historical financial information has been adjusted for the deconsolidation of BlackRock, and BlackRock is shown as if accounted for under the equity method.
Page 10