Exhibit 99.1

 

LOGO

THE PNC FINANCIAL SERVICES GROUP, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2015

(Unaudited)


THE PNC FINANCIAL SERVICES GROUP, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2015

(UNAUDITED)

 

     Page  

Consolidated Results:

  

Income Statement

     1   

Balance Sheet

     2   

Per Share Related Information

     3   

Capital Ratios

     3   

Average Balance Sheet

     4-5   

Details of Net Interest Margin

     6   

Total and Core Net Interest Income and Net Interest Margin

     7   

Loans, Loans Held for Sale and Commitments to Extend Credit

     8   

Allowances for Credit Losses

     9   

Purchase Accounting Accretion, Accretable Yield and Valuation of Purchased Impaired Loans

     10   

Nonperforming Assets and Troubled Debt Restructurings

     11-12   

Accruing Loans Past Due

     13   

Business Segment Results:

  

Descriptions

     14   

Period End Employees

     14   

Income and Revenue

     15   

Retail Banking

     16-17   

Corporate & Institutional Banking

     18-19   

Asset Management Group

     20   

Residential Mortgage Banking

     21   

Non-Strategic Assets Portfolio

     22   

Glossary of Terms

     23-27   

The information contained in this Financial Supplement is preliminary, unaudited and based on data available on April 15, 2015. We have reclassified certain prior period amounts to be consistent with the current period presentation, which we believe is more meaningful to readers of our consolidated financial statements. This information speaks only as of the particular date or dates included in the schedules. We do not undertake any obligation to, and disclaim any duty to, correct or update any of the information provided in this Financial Supplement. Our future financial performance is subject to risks and uncertainties as described in our United States Securities and Exchange Commission (SEC) filings.

BUSINESS

PNC is one of the largest diversified financial services companies in the United States and is headquartered in Pittsburgh, Pennsylvania. PNC has businesses engaged in retail banking, corporate and institutional banking, asset management and residential mortgage banking, providing many of its products and services nationally, as well as other products and services in PNC’s primary geographic markets located in Pennsylvania, Ohio, New Jersey, Michigan, Illinois, Maryland, Indiana, North Carolina, Florida, Kentucky, Washington, D.C., Delaware, Virginia, Alabama, Missouri, Georgia, Wisconsin and South Carolina. PNC also provides certain products and services internationally.


The PNC Financial Services Group, Inc.

Cross-Reference Index to First Quarter 2015 Financial Supplement (Unaudited)

Financial Supplement Table Reference

 

Table

 

Description

   Page  
1   Consolidated Income Statement      1   
2   Consolidated Balance Sheet      2   
3   Per Share Related Information      3   
4   Capital Ratios      3   
5   Average Consolidated Balance Sheet      4-5   
6   Supplemental Average Balance Sheet Information      5   
7   Details of Net Interest Margin      6   
8   Total and Core Net Interest Income      7   
9   Details of Net Interest Margin      7   
10   Details of Core Net Interest Margin      7   
11   Details of Loans      8   
12   Details of Loans Held for Sale      8   
13   Commitments to Extend Credit      8   
14   Change in Allowance for Loan and Lease Losses      9   
15   Change in Allowance for Unfunded Loan Commitments and Letters of Credit      9   
16   Accretion - Purchased Impaired Loans      10   
17   Purchased Impaired Loans - Accretable Yield      10   
18   Valuation of Purchased Impaired Loans      10   
19   Nonperforming Assets By Type      11   
20   Change in Nonperforming Assets      12   
21   Largest Individual Nonperforming Assets at March 31, 2015      12   
22   Summary of Troubled Debt Restructurings      12   
23   Accruing Loans Past Due 30 To 59 Days      13   
24   Accruing Loans Past Due 60 To 89 Days      13   
25   Accruing Loans Past Due 90 Days or More      13   
26   Period End Employees      14   
27   Summary of Business Segment Income and Revenue      15   
28   Retail Banking      16-17   
29   Corporate & Institutional Banking      18-19   
30   Asset Management Group      20   
31   Residential Mortgage Banking      21   
32   Non-Strategic Assets Portfolio      22   


THE PNC FINANCIAL SERVICES GROUP, INC. Page 1

 

Table 1: Consolidated Income Statement (Unaudited)

 

    Three months ended  

In millions, except per share data

  March 31
2015
    December 31
2014
    September 30
2014
    June 30
2014
    March 31
2014
 

Interest Income

         

Loans

  $ 1,802      $ 1,835      $ 1,848      $ 1,845      $ 1,899   

Investment securities

    406        398        387        412        427   

Other

    111        104        93        99        84   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest income

  2,319      2,337      2,328      2,356      2,410   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest Expense

Deposits

  92      86      81      80      78   

Borrowed funds

  155      154      143      147      137   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest expense

  247      240      224      227      215   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

  2,072      2,097      2,104      2,129      2,195   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Noninterest Income

Asset management

  376      376      411      362      364   

Consumer services

  311      321      320      323      290   

Corporate services

  344      397      374      343      301   

Residential mortgage

  164      135      140      182      161   

Service charges on deposits

  153      180      179      156      147   

Net gains (losses) on sales of securities (a)

  42      —        —        (6   10   

Net other-than-temporary impairments

  (1   (7   (1   (1   (2

Other

  270      448      314      322      311   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total noninterest income

  1,659      1,850      1,737      1,681      1,582   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

  3,731      3,947      3,841      3,810      3,777   

Provision For Credit Losses

  54      52      55      72      94   

Noninterest Expense

Personnel

  1,157      1,170      1,189      1,172      1,080   

Occupancy

  216      216      200      199      218   

Equipment

  222      234      220      204      201   

Marketing

  62      67      66      68      52   

Other

  692      852      682      685      713   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total noninterest expense

  2,349      2,539      2,357      2,328      2,264   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes and noncontrolling interests

  1,328      1,356      1,429      1,410      1,419   

Income taxes

  324      299      391      358      359   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  1,004      1,057      1,038      1,052      1,060   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Less: Net income (loss) attributable to noncontrolling interests

  1      21      1      3      (2

Preferred stock dividends and discount accretion and redemptions

  70      48      71      48      70   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to common shareholders

$ 933    $ 988    $ 966    $ 1,001    $ 992   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings Per Common Share

Basic

$ 1.79    $ 1.88    $ 1.82    $ 1.88    $ 1.86   

Diluted

$ 1.75    $ 1.84    $ 1.79    $ 1.85    $ 1.82   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average Common Shares Outstanding

Basic

  521      524      529      532      532   

Diluted

  529      532      537      539      539   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Efficiency

  63   64   61   61   60

Noninterest income to total revenue

  44   47   45   44   42

Effective tax rate (b)

  24.4   22.1   27.4   25.4   25.3
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) Net gains (losses) on sales of securities was less than $.5 million for both the three months ended December 31, 2014 and September 30, 2014, respectively.
(b) The effective income tax rates are generally lower than the statutory rate due to the relationship of pretax income to tax credits and earnings that are not subject to tax.


THE PNC FINANCIAL SERVICES GROUP, INC. Page 2

 

Table 2: Consolidated Balance Sheet (Unaudited)

 

In millions, except par value

   March 31
2015
    December 31
2014
    September 30
2014
    June 30
2014
    March 31
2014
 

Assets

          

Cash and due from banks (a)

   $ 4,151      $ 4,360      $ 4,164      $ 4,892      $ 4,723   

Federal funds sold and resale agreements (b)

     1,893        1,852        1,761        1,526        1,143   

Trading securities

     2,151        2,353        2,650        2,228        2,381   

Interest-earning deposits with banks (a) (c)

     31,198        31,779        26,247        16,876        14,877   

Loans held for sale (b)

     2,423        2,262        2,143        2,228        2,102   

Investment securities

     60,768        55,823        55,039        56,602        58,644   

Loans (a) (b)

     204,722        204,817        200,872        200,984        198,242   

Allowance for loan and lease losses (a)

     (3,306     (3,331     (3,406     (3,453     (3,530
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loans

  201,416      201,486      197,466      197,531      194,712   

Goodwill

  9,103      9,103      9,074      9,074      9,074   

Mortgage servicing rights

  1,333      1,351      1,510      1,482      1,568   

Other intangible assets

  463      493      484      515      547   

Equity investments (a) (d)

  10,523      10,728      10,763      10,583      10,337   

Other (a) (b)

  25,538      23,482      23,123      23,527      23,315   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

$ 350,960    $ 345,072    $ 334,424    $ 327,064    $ 323,423   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities

Deposits

Noninterest-bearing

$ 74,944    $ 73,479    $ 72,963    $ 71,001    $ 70,063   

Interest-bearing

  161,559      158,755      153,341      151,553      152,319   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

  236,503      232,234      226,304      222,554      222,382   

Borrowed funds

Federal funds purchased and repurchase agreements

  2,202      3,510      3,499      3,132      3,233   

Federal Home Loan Bank borrowings

  21,224      20,005      16,471      15,023      13,911   

Bank notes and senior debt

  16,205      15,750      15,327      14,102      13,861   

Subordinated debt

  9,228      9,151      9,046      9,099      8,289   

Commercial paper

  4,399      4,995      4,809      4,999      4,923   

Other (a) (b)

  3,571      3,357      3,175      2,711      2,589   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total borrowed funds

  56,829      56,768      52,327      49,066      46,806   

Allowance for unfunded loan commitments and letters of credit

  234      259      251      232      228   

Accrued expenses (a)

  5,039      5,187      5,090      4,753      4,808   

Other (a)

  5,917      4,550      4,457      4,666      4,281   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

  304,522      298,998      288,429      281,271      278,505   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Equity

Preferred stock (e)

Common stock - $5 par value

Authorized 800 shares, issued 541, 541, 540, 540, and 540 shares

  2,706      2,705      2,703      2,703      2,700   

Capital surplus - preferred stock

  3,948      3,946      3,945      3,944      3,943   

Capital surplus - common stock and other

  12,561      12,627      12,573      12,506      12,394   

Retained earnings

  26,882      26,200      25,464      24,755      24,010   

Accumulated other comprehensive income (loss)

  703      503      727      881      656   

Common stock held in treasury at cost: 21, 18, 12, 8 and 6 shares

  (1,775   (1,430   (931   (584   (382
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total shareholders’ equity

  45,025      44,551      44,481      44,205      43,321   

Noncontrolling interests

  1,413      1,523      1,514      1,588      1,597   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total equity

  46,438      46,074      45,995      45,793      44,918   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and equity

$ 350,960    $ 345,072    $ 334,424    $ 327,064    $ 323,423   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) Amounts include consolidated variable interest entities. Our 2014 Form 10-K included, and our first quarter 2015 Form 10-Q will include, additional information regarding these items.
(b) Amounts include assets and liabilities for which PNC has elected the fair value option. Our 2014 Form 10-K included, and our first quarter 2015 Form 10-Q will include, additional information regarding these items.
(c) Amounts include balances held with the Federal Reserve Bank of Cleveland of $30.8 billion, $31.4 billion, $25.9 billion, $16.5 billion and $14.5 billion as of March 31, 2015, December 31, 2014, September 30, 2014, June 30, 2014 and March 31, 2014, respectively.
(d) Amounts include our equity interest in BlackRock.
(e) Par value less than $.5 million at each date.


THE PNC FINANCIAL SERVICES GROUP, INC. Page 3

 

Table 3: Per Share Related Information (Unaudited)

 

     Three months ended  

In millions, except per share data

   March 31
2015
     December 31
2014
     September 30
2014
     June 30
2014
     March 31
2014
 

Basic

              

Net income

   $ 1,004       $ 1,057       $ 1,038       $ 1,052       $ 1,060   

Less:

              

Net income (loss) attributable to noncontrolling interests

     1         21         1         3         (2

Preferred stock dividends and discount accretion and redemptions

     70         48         71         48         70   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net income attributable to common shareholders

  933      988      966      1,001      992   

Less:

Dividends and undistributed earnings allocated to nonvested restricted shares

  2      2      3      3      3   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net income attributable to basic common shares

$ 931    $ 986    $ 963    $ 998    $ 989   

Basic weighted-average common shares outstanding

  521      524      529      532      532   

Basic earnings per common share

$ 1.79    $ 1.88    $ 1.82    $ 1.88    $ 1.86   

Diluted

Net income attributable to basic common shares

$ 931    $ 986    $ 963    $ 998    $ 989   

Less: Impact of BlackRock earnings per share dilution

  5      5      4      3      6   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net income attributable to diluted common shares

$ 926    $ 981    $ 959    $ 995    $ 983   

Basic weighted-average common shares outstanding

  521      524      529      532      532   

Dilutive potential common shares

  8      8      8      7      7   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted-average common shares outstanding

  529      532      537      539      539   

Diluted earnings per common share

$ 1.75    $ 1.84    $ 1.79    $ 1.85    $ 1.82   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Table 4: Capital Ratios (Unaudited)

 

     March 31
2015
    December 31
2014
    September 30
2014
    June 30
2014
    March 31
2014
 

Transitional Basel III (a) (b)

          

Common equity Tier 1

     10.4     10.9     11.1     11.0     10.8

Tier 1 risk-based

     12.0        12.6        12.8        12.7        12.6   

Total capital risk-based

     14.9        15.8        16.1        16.0        15.8   

Leverage

     10.5        10.8        11.1        11.2        11.1   

Common shareholders’ equity to assets

     11.7     11.8     12.1     12.3     12.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) The ratios as of March 31, 2015 are estimated. See Capital Ratios discussion in the Banking Regulation and Supervision section of Item 1 Business and in the Consolidated Balance Sheet Review section in Item 7 of our 2014 Form 10-K. Our first quarter 2015 Form 10-Q will include additional discussion on these capital ratios.
(b) Calculated using the regulatory capital methodology applicable to PNC during each period presented.


THE PNC FINANCIAL SERVICES GROUP, INC. Page 4

 

Table 5: Average Consolidated Balance Sheet (Unaudited) (a)

 

     Three months ended  

In millions

   March 31
2015
    December 31
2014
    September 30
2014
    June 30
2014
    March 31
2014
 

Assets

          

Interest-earning assets:

          

Investment securities

          

Securities available for sale

          

Residential mortgage-backed

          

Agency

   $ 19,290      $ 17,745      $ 18,134      $ 19,207      $ 20,721   

Non-agency

     4,657        4,832        5,021        5,204        5,375   

Commercial mortgage-backed

     6,260        5,799        5,147        5,295        5,576   

Asset-backed

     5,140        5,089        5,207        5,400        5,593   

U.S. Treasury and government agencies

     5,142        5,140        5,142        4,883        4,169   

State and municipal

     1,969        1,935        1,913        2,104        2,652   

Other debt

     1,777        1,780        1,763        2,028        2,505   

Corporate stocks and other

     457        433        404        362        409   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total securities available for sale

  44,692      42,753      42,731      44,483      47,000   

Securities held to maturity

Residential mortgage-backed

  7,035      5,832      5,778      5,977      5,995   

Commercial mortgage-backed

  2,097      2,257      2,409      2,560      2,748   

Asset-backed

  755      767      874      990      1,004   

U.S. Treasury and government agencies

  249      247      245      242      240   

State and municipal

  2,018      2,048      2,058      1,732      1,055   

Other

  320      324      325      331      337   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total securities held to maturity

  12,474      11,475      11,689      11,832      11,379   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total investment securities

  57,166      54,228      54,420      56,315      58,379   

Loans

Commercial

  97,866      95,646      92,547      91,866      89,517   

Commercial real estate

  23,924      23,176      22,961      22,775      21,652   

Equipment lease financing

  7,539      7,621      7,610      7,564      7,470   

Consumer

  61,476      62,213      62,351      62,472      63,093   

Residential real estate

  14,350      14,223      14,359      14,556      14,849   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans

  205,155      202,879      199,828      199,233      196,581   

Interest-earning deposits with banks

  30,405      27,701      22,108      14,650      12,157   

Loans held for sale

  2,246      2,205      2,272      2,060      1,949   

Federal funds sold and resale agreements

  1,655      1,771      1,409      1,184      1,416   

Other

  5,046      5,121      4,914      4,927      5,296   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest-earning assets

  301,673      293,905      284,951      278,369      275,778   

Noninterest-earning assets:

Allowance for loan and lease losses

  (3,317   (3,383   (3,445   (3,512   (3,591

Cash and due from banks

  4,067      4,176      3,934      3,776      3,890   

Other

  45,634      44,948      44,005      43,887      43,485   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

$ 348,057    $ 339,646    $ 329,445    $ 322,520    $ 319,562   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) Calculated using average daily balances.


THE PNC FINANCIAL SERVICES GROUP, INC. Page 5

 

Table 5: Average Consolidated Balance Sheet (Unaudited) (Continued) (a)

 

     Three months ended  

In millions

   March 31
2015
     December 31
2014
     September 30
2014
     June 30
2014
     March 31
2014
 

Liabilities and Equity

              

Interest-bearing liabilities:

              

Interest-bearing deposits

              

Money market

   $ 79,994       $ 77,696       $ 76,014       $ 74,261       $ 74,034   

Demand

     46,131         44,389         43,112         43,316         42,635   

Savings

     13,053         12,410         12,152         11,976         11,408   

Retail certificates of deposit

     18,541         18,700         19,317         20,012         20,538   

Time deposits in foreign offices and other time

     2,192         2,754         2,235         2,168         2,069   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total interest-bearing deposits

  159,911      155,949      152,830      151,733      150,684   

Borrowed funds

Federal funds purchased and repurchase agreements

  3,116      3,339      3,319      3,343      4,250   

Federal Home Loan Bank borrowings

  20,774      16,786      15,328      14,193      13,100   

Bank notes and senior debt

  15,351      15,395      14,221      13,490      13,327   

Subordinated debt

  8,851      8,812      8,804      8,570      8,040   

Commercial paper

  4,986      4,735      4,863      4,917      4,931   

Other

  3,274      3,303      2,801      2,591      2,740   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total borrowed funds

  56,352      52,370      49,336      47,104      46,388   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total interest-bearing liabilities

  216,263      208,319      202,166      198,837      197,072   

Noninterest-bearing liabilities and equity:

Noninterest-bearing deposits

  73,178      73,468      70,993      68,219      67,679   

Allowance for unfunded loan commitments and letters of credit

  260      251      232      228      241   

Accrued expenses and other liabilities

  12,326      11,639      10,307      10,035      10,123   

Equity

  46,030      45,969      45,747      45,201      44,447   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total liabilities and equity

$ 348,057    $ 339,646    $ 329,445    $ 322,520    $ 319,562   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(a) Calculated using average daily balances.

  

Table 6: Supplemental Average Balance Sheet Information (Unaudited)

 

  

Deposits and Common Shareholders’ Equity

Interest-bearing deposits

$ 159,911    $ 155,949    $ 152,830    $ 151,733    $ 150,684   

Noninterest-bearing deposits

  73,178      73,468      70,993      68,219      67,679   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total deposits

$ 233,089    $ 229,417    $ 223,823    $ 219,952    $ 218,363   

Transaction deposits

$ 199,303    $ 195,553    $ 190,119    $ 185,796    $ 184,348   

Common shareholders’ equity

$ 40,603    $ 40,522    $ 40,238    $ 39,659    $ 38,838   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 


THE PNC FINANCIAL SERVICES GROUP, INC. Page 6

 

Table 7: Details of Net Interest Margin (Unaudited) (a)

 

     Three months ended  
     March 31     December 31     September 30     June 30     March 31  
     2015     2014     2014     2014     2014  

Average yields/rates

          

Yield on interest-earning assets

          

Investment securities

          

Securities available for sale

          

Residential mortgage-backed

          

Agency

     2.67     2.72     2.64     2.62     2.64

Non-agency

     4.51        4.33        4.64        5.19        4.91   

Commercial mortgage-backed

     3.19        3.37        3.61        3.59        3.49   

Asset-backed

     2.08        2.15        2.01        1.96        1.79   

U.S. Treasury and government agencies

     1.27        1.21        1.01        1.20        1.30   

State and municipal

     4.45        4.58        3.98        4.27        4.78   

Other debt

     2.53        3.25        2.41        2.35        2.39   

Corporate stocks and other

     .10        .11        .10        .11        .10   

Total securities available for sale

     2.75        2.82        2.75        2.84        2.86   

Securities held to maturity

          

Residential mortgage-backed

     3.26        3.60        3.35        3.55        3.55   

Commercial mortgage-backed

     4.16        4.09        3.99        3.76        4.09   

Asset-backed

     1.52        1.50        1.75        1.54        1.51   

U.S. Treasury and government agencies

     3.77        3.82        3.81        3.80        3.77   

State and municipal

     5.52        5.50        5.50        5.47        5.61   

Other

     2.89        3.02        2.84        2.87        3.00   

Total securities held to maturity

     3.67        3.88        3.73        3.69        3.68   

Total investment securities

     2.95        3.05        2.96        3.02        3.02   

Loans

          

Commercial

     2.98        3.04        3.17        3.24        3.50   

Commercial real estate

     3.80        3.88        3.90        4.04        4.20   

Equipment lease financing

     3.47        3.97        3.48        3.61        3.64   

Consumer

     4.21        4.11        4.16        4.16        4.26   

Residential real estate

     4.88        4.90        5.03        4.86        5.09   

Total loans

     3.59        3.63        3.71        3.75        3.95   

Interest-earning deposits with banks

     .25        .29        .23        .27        .23   

Loans held for sale

     4.20        4.67        4.48        4.79        4.71   

Federal funds sold and resale agreements

     .22        .28        .38        .49        .32   

Other

     5.43        4.56        4.24        5.26        4.02   

Total yield on interest-earning assets

     3.15        3.21        3.30        3.44        3.58   

Rate on interest-bearing liabilities

          

Interest-bearing deposits

          

Money market

     .24        .20        .18        .18        .17   

Demand

     .06        .06        .05        .05        .05   

Savings

     .15        .14        .12        .10        .08   

Retail certificates of deposit

     .71        .72        .73        .74        .75   

Time deposits in foreign offices and other time

     .19        .20        .18        .17        .18   

Total interest-bearing deposits

     .23        .22        .21        .21        .21   

Borrowed funds

          

Federal funds purchased and repurchase agreements

     .12        .11        .08        .07        .11   

Federal Home Loan Bank borrowings

     .45        .46        .48        .50        .50   

Bank notes and senior debt

     1.36        1.35        1.33        1.51        1.49   

Subordinated debt

     2.64        2.64        2.40        2.65        2.54   

Commercial paper

     .34        .31        .30        .29        .28   

Other

     1.99        2.25        2.62        2.60        2.20   

Total borrowed funds

     1.10        1.17        1.14        1.24        1.18   

Total rate on interest-bearing liabilities

     .46        .45        .44        .45        .44   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest rate spread

     2.69        2.76        2.86        2.99        3.14   

Impact of noninterest-bearing sources (b)

     .13        .13        .12        .13        .12   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest margin

     2.82     2.89     2.98     3.12     3.26
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) Calculated as annualized taxable-equivalent net interest income divided by average earning assets. The interest income earned on certain earning assets is completely or partially exempt from federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments. To provide more meaningful comparisons of yields and margins for all earning assets in calculating net interest margins, in this table we use net interest income on a taxable-equivalent basis by increasing the interest income earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments. This adjustment is not permitted under generally accepted accounting principles (GAAP) in the Consolidated Income Statement. The taxable-equivalent adjustments to net interest income for the three months ended March 31, 2015, December 31, 2014, September 30, 2014, June 30, 2014 and March 31, 2014, were $49 million, $49 million, $47 million, $47 million and $46 million, respectively.
(b) Represents the positive effects of investing noninterest-bearing sources in interest-earning assets.


THE PNC FINANCIAL SERVICES GROUP, INC. Page 7

 

Total and Core Net Interest Income and Net Interest Margin (Unaudited)

Table 8: Total and Core Net Interest Income

 

     Three months ended  

In millions

   March 31
2015
     December 31
2014
     September 30
2014
     June 30
2014
     March 31
2014
 

Core net interest income (a)

   $ 1,944       $ 1,971       $ 1,957       $ 1,982       $ 2,032   

Total purchase accounting
accretion (b)

     128         126         147         147         163   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total net interest income

$ 2,072    $ 2,097    $ 2,104    $ 2,129    $ 2,195   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) We believe that core net interest income, a non-GAAP financial measure, is useful in evaluating the performance of our interest-based activities.
(b) Total purchase accounting accretion includes purchase accounting accretion on purchased impaired loans. Refer to Table 16: Accretion - Purchased Impaired Loans for details for certain of these periods.

Table 9: Details of Net Interest Margin (c)

 

     Three months ended  

In millions

   March 31
2015
    December 31
2014
    September 30
2014
    June 30
2014
    March 31
2014
 

Average yields/rates

          

Yield on interest-earning assets

          

Total investment securities

     2.95     3.05     2.96     3.02     3.02

Total loans

     3.59        3.63        3.71        3.75        3.95   

Other

     1.14        1.15        1.19        1.76        1.62   

Total yield on interest-earning assets

     3.15        3.21        3.30        3.44        3.58   

Rate on interest-bearing liabilities

          

Total interest-bearing deposits

     .23        .22        .21        .21        .21   

Total borrowed funds

     1.10        1.17        1.14        1.24        1.18   

Total rate on interest-bearing liabilities

     .46        .45        .44        .45        .44   

Interest rate spread

     2.69        2.76        2.86        2.99        3.14   

Impact of noninterest-bearing sources

     .13        .13        .12        .13        .12   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest margin

  2.82   2.89   2.98   3.12   3.26
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(c)    See note (a) on page 6.

Table 10: Details of Core Net Interest Margin (d)

 

     Three months ended  

In millions

   March 31
2015
    December 31
2014
    September 30
2014
    June 30
2014
    March 31
2014
 

Average yields/rates

          

Yield on interest-earning assets

          

Total investment securities

     2.89     2.98     2.89     2.96     2.96

Total loans

     3.33        3.38        3.42        3.46        3.62   

Other

     1.13        1.14        1.19        1.74        1.64   

Total yield on interest-earning assets

     2.96        3.02        3.08        3.22        3.33   

Rate on interest-bearing liabilities

          

Total interest-bearing deposits

     .24        .23        .23        .23        .23   

Total borrowed funds

     .99        1.03        1.00        1.10        1.04   

Total rate on interest-bearing liabilities

     .44        .43        .42        .43        .43   

Interest rate spread

     2.52        2.59        2.66        2.79        2.90   

Impact of noninterest-bearing sources

     .13        .13        .12        .13        .12   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Core net interest margin

  2.65      2.72      2.78      2.92      3.02   

Purchase accounting accretion impact on net interest margin

  .17      .17      .20      .20      .24   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest margin

  2.82   2.89   2.98   3.12   3.26
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(d) We believe that core net interest margin, a non-GAAP financial measure, is useful as a tool to help evaluate the impact of purchase accounting accretion on net interest margin. To calculate core net interest margin, each calculated margin in the table has been adjusted by annualized purchase accounting accretion divided by average interest-earning assets.


THE PNC FINANCIAL SERVICES GROUP, INC. Page 8

 

Table 11: Details of Loans (Unaudited)

 

In millions

   March 31
2015
     December 31
2014
     September 30
2014
     June 30
2014
     March 31
2014
 

Commercial

              

Retail/wholesale trade

   $ 17,126       $ 16,972       $ 16,162       $ 16,146       $ 16,157   

Manufacturing

     20,057         18,744         18,649         18,683         17,185   

Service providers

     13,916         14,103         13,603         13,734         13,576   

Real estate related (a)

     10,744         10,812         10,722         10,908         10,856   

Financial services

     6,306         6,178         5,218         4,846         4,720   

Health care

     9,192         9,017         9,095         8,939         8,836   

Other industries

     20,309         21,594         20,051         20,280         19,771   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial

  97,650      97,420      93,500      93,536      91,101   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Commercial real estate

Real estate projects (b)

  15,057      14,577      14,564      14,535      14,268   

Commercial mortgage

  9,498      8,685      8,378      8,384      7,883   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial real estate

  24,555      23,262      22,942      22,919      22,151   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Equipment lease financing

  7,470      7,686      7,621      7,628      7,521   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial lending

  129,675      128,368      124,063      124,083      120,773   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Consumer

Home equity

Lines of credit

  19,918      20,361      20,667      20,959      21,277   

Installment

  14,147      14,316      14,388      14,507      14,595   

Credit card

  4,434      4,612      4,449      4,435      4,309   

Other consumer

Education

  6,448      6,626      6,978      7,118      7,360   

Automobile

  11,120      11,616      11,548      11,005      10,906   

Other

  4,491      4,511      4,428      4,317      4,216   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total consumer

  60,558      62,042      62,458      62,341      62,663   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Residential real estate

Residential mortgage

  13,982      13,885      13,805      13,965      14,179   

Residential construction

  507      522      546      595      627   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total residential real estate

  14,489      14,407      14,351      14,560      14,806   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total consumer lending

  75,047      76,449      76,809      76,901      77,469   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total loans (c)

$ 204,722    $ 204,817    $ 200,872    $ 200,984    $ 198,242   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

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

(b)     Includes both construction loans and intermediate financing for projects.

         

        

(c)      Includes purchased impaired loans:

$ 4,675    $ 4,858    $ 5,167    $ 5,557    $ 5,824   

 

Table 12: Details of Loans Held for Sale (Unaudited)

 

  

In millions

   March 31
2015
     December 31
2014
     September 30
2014
     June 30
2014
     March 31
2014
 

Commercial mortgage

   $ 1,037       $ 922       $ 891       $ 900       $ 732   

Residential mortgage

     1,249         1,279         1,211         1,271         1,088   

Other

     137         61         41         57         282   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 2,423    $ 2,262    $ 2,143    $ 2,228    $ 2,102   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

Table 13: Commitments to Extend Credit (Unaudited)

 

  

In millions

   March 31
2015
     December 31
2014
     September 30
2014
     June 30
2014
     March 31
2014
 

Commitments to extend credit (a)

   $ 137,960       $ 139,687       $ 136,795       $ 131,446       $ 129,644   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) Commitments to extend credit, or net unfunded loan commitments, represent arrangements to lend funds or provide liquidity subject to specified contractual conditions.


THE PNC FINANCIAL SERVICES GROUP, INC. Page 9

 

Allowances for Loan and Lease Losses and Unfunded Loan Commitments and Letters of Credit (Unaudited)

Table 14: Change in Allowance for Loan and Lease Losses

 

Three months ended - in millions

   March 31
2015
    December 31
2014
    September 30
2014
    June 30
2014
    March 31
2014
 

Beginning balance

   $ 3,331      $ 3,406      $ 3,453      $ 3,530      $ 3,609   

Gross charge-offs:

          

Commercial

     (34     (45     (60     (86     (85

Commercial real estate

     (12     (24     (14     (14     (18

Equipment lease financing

       (5     (3     (4     (2

Home equity

     (52     (62     (50     (68     (95

Residential real estate

       (14     (11     (7     (8

Credit card

     (43     (38     (40     (42     (43

Other consumer

     (48     (47     (44     (43     (49
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total gross charge-offs

  (189   (235   (222   (264   (300

Recoveries:

Commercial

  32      51      62      43      51   

Commercial real estate

  12      20      15      29      20   

Equipment lease financing

  1      4      4      3      3   

Home equity

  20      20      19      20      19   

Residential real estate

  2      3      21      3      (1

Credit card

  5      5      5      6      5   

Other consumer

  14      14      14      15      17   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total recoveries

  86      117      140      119      114   

Net (charge-offs) recoveries:

Commercial

  (2   6      2      (43   (34

Commercial real estate

  (4   1      15      2   

Equipment lease financing

  1      (1   1      (1   1   

Home equity

  (32   (42   (31   (48   (76

Residential real estate

  2      (11   10      (4   (9

Credit card

  (38   (33   (35   (36   (38

Other consumer

  (34   (33   (30   (28   (32
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net charge-offs

  (103   (118   (82   (145   (186

Provision for credit losses

  54      52      55      72      94   

Other

  (1   (1   (1   (1

Net change in allowance for unfunded loan commitments and letters of credit

  25      (8   (19   (4   14   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

$ 3,306    $ 3,331    $ 3,406    $ 3,453    $ 3,530   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Information

Net charge-offs to average loans (for the three months ended) (annualized)

  .20   .23   .16   .29   .38

Allowance for loan and lease losses to total loans

  1.61      1.63      1.70      1.72      1.78   

Commercial lending net charge-offs

$ (1 $ 1    $ 4    $ (29 $ (31

Consumer lending net charge-offs

  (102   (119   (86   (116   (155
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net charge-offs

$ (103 $ (118 $ (82 $ (145 $ (186

Net charge-offs to average loans

Commercial lending

  .00   .00   (.01 )%    .10   .11

Consumer lending

  .55      .62      .44      .60      .81   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Table 15: Change in Allowance for Unfunded Loan Commitments and Letters of Credit

 

Three months ended - in millions

   March 31
2015
    December 31
2014
     September 30
2014
     June 30
2014
     March 31
2014
 

Beginning balance

   $ 259      $ 251       $ 232       $ 228       $ 242   

Net change in allowance for unfunded loan commitments and letters of credit

     (25     8         19         4         (14
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Ending balance

$ 234    $ 259    $ 251    $ 232    $ 228   
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 


THE PNC FINANCIAL SERVICES GROUP, INC. Page 10

 

Purchase Accounting Accretion, Accretable Yield and Valuation of Purchased Impaired Loans (Unaudited)

Table 16: Accretion - Purchased Impaired Loans

 

     Three months ended  
     March 31     December 31     March 31  

In millions

   2015     2014     2014  

Impaired loans

      

Scheduled accretion

   $ 99      $ 106      $ 125   

Reversal of contractual interest on impaired loans

     (55     (58     (68
  

 

 

   

 

 

   

 

 

 

Scheduled accretion net of contractual interest

  44      48      57   

Excess cash recoveries (a)

  33      32      29   
  

 

 

   

 

 

   

 

 

 

Total impaired loans

$ 77    $ 80    $ 86   
  

 

 

   

 

 

   

 

 

 

 

(a) Relates to excess cash recoveries for purchased impaired commercial loans.

Table 17: Purchased Impaired Loans - Accretable Yield

 

In millions

                 

January 1, 2015

   $ 1,558     

January 1, 2014

   $ 2,055   

Scheduled accretion

     (99  

Scheduled accretion

     (125

Excess cash recoveries

     (33  

Excess cash recoveries

     (29

Net reclassifications to (from) accretable from (to) non-accretable and other activity (a)

     58     

Net reclassifications to (from) accretable from (to) non-accretable and other activity (a)

     87   
  

 

 

      

 

 

 

March 31, 2015 (b)

$ 1,484   

March 31, 2014

$ 1,988   
  

 

 

      

 

 

 

 

(a) Approximately 90% and 95% of the net reclassification for the quarters ended March 31, 2015 and 2014, respectively, were driven by the consumer portfolio and were due to improvements of cash expected to be collected on loans in future periods. The remaining net reclassifications were predominantly due to future cash flow changes in the commercial portfolio.
(b) As of March 31, 2015, we estimate that the reversal of contractual interest on purchased impaired loans will total approximately $.8 billion in future periods. This will offset the total net accretable interest in future interest income of $1.5 billion on purchased impaired loans.

Table 18: Valuation of Purchased Impaired Loans

 

     March 31, 2015     December 31, 2014  

Dollars in millions

   Balance     Net Investment     Balance     Net Investment  

Commercial and commercial real estate loans:

        

Outstanding balance (a)

   $ 398        $ 466     

Recorded investment

     276          310     

Allowance for loan losses

     (80       (79  
  

 

 

     

 

 

   

Net investment/Carrying value

  196      49   231      50
  

 

 

     

 

 

   

Consumer and residential mortgage loans:

Outstanding balance (a)

  4,343      4,541   

Recorded investment

  4,399      4,548   

Allowance for loan losses

  (781   (793
  

 

 

     

 

 

   

Net investment/Carrying value

  3,618      83   3,755      83
  

 

 

     

 

 

   

Total purchased impaired loans:

Outstanding balance (a)

  4,741      5,007   

Recorded investment

  4,675      4,858   

Allowance for loan losses

  (861   (872
  

 

 

     

 

 

   

Net investment/Carrying value

$ 3,814      80 $ 3,986      80
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) Outstanding balance represents the balance on the loan servicing system for active loans. It is possible for the outstanding balance to be lower than the recorded investment for certain loans due to the use of pool accounting. Our 2014 Form 10-K included, and our first quarter 2015 Form 10-Q will include, additional information on purchased impaired loans.


THE PNC FINANCIAL SERVICES GROUP, INC. Page 11

 

Details of Nonperforming Assets (Unaudited)

Table 19: Nonperforming Assets by Type

 

In millions

   March 31
2015
    December 31
2014
    September 30
2014
    June 30
2014
    March 31
2014
 

Nonperforming loans, including TDRs (a)

          

Commercial lending

          

Commercial

          

Retail/wholesale trade

   $ 46      $ 48      $ 62      $ 70      $ 49   

Manufacturing

     59        59        44        69        63   

Service providers

     63        67        82        94        90   

Real estate related (b)

     66        66        76        79        122   

Financial services

     1        4        5        5        5   

Health care

     28        28        23        23        17   

Other industries

     17        18        28        54        91   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

  280      290      320      394      437   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commercial real estate

Real estate projects

  257      290      346      370      401   

Commercial mortgage

  36      44      49      65      79   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial real estate

  293      334      395      435      480   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Equipment lease financing

  2      2      3      4      6   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial lending

  575      626      718      833      923   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consumer lending (c)

Home equity

  1,101      1,112      1,090      1,093      1,117   

Residential real estate

Residential mortgage

  653      694      725      799      829   

Residential construction

  12      12      18      17      13   

Credit card

  3      3      3      3      4   

Other consumer

  61      63      58      56      61   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer lending

  1,830      1,884      1,894      1,968      2,024   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total nonperforming loans (d)

  2,405      2,510      2,612      2,801      2,947   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

OREO and foreclosed assets

Other real estate owned (OREO)

  331      351      353      352      343   

Foreclosed and other assets

  18      19      10      15      14   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total OREO and foreclosed assets (e)

  349      370      363      367      357   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total nonperforming assets

$ 2,754    $ 2,880    $ 2,975    $ 3,168    $ 3,304   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Nonperforming loans to total loans

  1.17   1.23   1.30   1.39   1.49

Nonperforming assets to total loans, OREO and foreclosed assets

  1.34      1.40      1.48      1.57      1.66   

Nonperforming assets to total assets

  .78      .83      .89      .97      1.02   

Allowance for loan and lease losses to nonperforming loans (f)

  137      133      130      123      120   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) See analysis of troubled debt restructurings (TDRs) on page 12.
(b) Includes loans related to customers in the real estate and construction industries.
(c) Excludes most consumer loans and lines of credit, not secured by residential real estate, which are charged off after 120 to 180 days past due and are not placed on nonperforming status.
(d) Nonperforming loans exclude certain government insured or guaranteed loans, loans held for sale, loans accounted for under the fair value option and purchased impaired loans.
(e) The recorded investment of loans collateralized by residential real estate property that are in process of foreclosure was $.7 billion, $.8 billion, $.7 billion, $.9 billion and $.9 billion at March 31, 2015, December 31, 2014, September 30, 2014, June 30, 2014 and March 31, 2014, which included $.5 billion, $.5 billion, $.5 billion, $.6 billion and $.6 billion, respectively, of loans that are government insured/guaranteed.
(f) The allowance for loan and lease losses includes impairment reserves attributable to purchased impaired loans.


THE PNC FINANCIAL SERVICES GROUP, INC. Page 12

 

Details of Nonperforming Assets and Troubled Debt Restructurings (Unaudited)

Table 20: Change in Nonperforming Assets

 

In millions

   January 1, 2015 -
March 31, 2015
    October 1, 2014 -
December 31, 2014
    July 1, 2014 -
September 30, 2014
    April 1, 2014 -
June 30, 2014
    January 1, 2014 -
March 31, 2014
 

Beginning balance

   $ 2,880      $ 2,975      $ 3,168      $ 3,304      $ 3,457   

New nonperforming assets

     336        470        380        644        633   

Charge-offs and valuation adjustments

     (124     (158     (127     (148     (152

Principal activity, including paydowns and payoffs

     (170     (183     (195     (300     (323

Asset sales and transfers to loans held for sale

     (93     (130     (143     (212     (85

Returned to performing status

     (75     (94     (108     (120     (226
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

$ 2,754    $ 2,880    $ 2,975    $ 3,168    $ 3,304   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Table 21: Largest Individual Nonperforming Assets at March 31, 2015 (a)

 

In millions

Ranking

   Outstandings     

Industry

1    $ 35       Real Estate, Rental and Leasing
2      16       Manufacturing
3      15       Real Estate, Rental and Leasing
4      10       Manufacturing
5      8       Manufacturing
6      8       Construction
7      8       Wholesale Trade
8      8       Real Estate, Rental and Leasing
9      7       Real Estate, Rental and Leasing
10      7       Health Care and Social Assistance
  

 

 

    
Total $ 122   
  

 

 

    
As a percent of total nonperforming assets 4%

 

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

Table 22: Summary of Troubled Debt Restructurings

 

In millions

   March 31
2015
     December 31
2014
     September 30
2014
     June 30
2014
     March 31
2014
 

Total consumer lending

   $ 2,020       $ 2,041       $ 2,064       $ 2,121       $ 2,134   

Total commercial lending

     510         542         552         546         579   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total TDRs

$ 2,530    $ 2,583    $ 2,616    $ 2,667    $ 2,713   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Nonperforming

$ 1,317    $ 1,370    $ 1,303    $ 1,369    $ 1,405   

Accruing (a)

  1,089      1,083      1,174      1,153      1,151   

Credit card

  124      130      139      145      157   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total TDRs

$ 2,530    $ 2,583    $ 2,616    $ 2,667    $ 2,713   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Loans whose terms have been restructured in a manner that grants a concession to a borrower experiencing financial difficulties are considered troubled debt restructurings (TDRs). TDRs typically result from our loss mitigation activities and include rate reductions, principal forgiveness, postponement/reduction of scheduled amortization, and extensions, which are intended to minimize economic loss and to avoid foreclosure or repossession of collateral. Certain consumer government insured or guaranteed loans which were evaluated for TDR consideration, loans held for sale, loans accounted for under the fair value option, and pooled purchased impaired loans are not classified as TDRs.

 

(a) Accruing loans have demonstrated a period of at least six months of current performance under the restructured terms and are excluded from nonperforming loans. Loans where borrowers have been discharged from bankruptcy and have not formally reaffirmed their loan obligation and loans to borrowers not currently obligated to make principal and interest payments under the restructured terms are not returned to accrual status.


THE PNC FINANCIAL SERVICES GROUP, INC. Page 13

 

Accruing Loans Past Due (Unaudited)

Table 23: Accruing Loans Past Due 30 to 59 Days (a)

 

     Amount      Percent of Total Outstandings  

Dollars in millions

   Mar. 31
2015
     Dec. 31
2014
     Sept. 30
2014
     Jun. 30
2014
     Mar. 31
2014
     Mar. 31
2015
    Dec. 31
2014
    Sept. 30
2014
    Jun. 30
2014
    Mar. 31
2014
 

Commercial

   $ 73       $ 73       $ 46       $ 71       $ 93         .07     .07     .05     .08     .10

Commercial real estate

     24         23         47         17         35         .10        .10        .20        .07        .16   

Equipment lease financing

     16         11         4         4         17         .21        .14        .05        .05        .23   

Home equity

     61         70         67         65         76         .18        .20        .19        .18        .21   

Residential real estate

                         

Non government insured

     72         95         87         87         101         .50        .66        .61        .60        .68   

Government insured

     70         68         76         74         82         .48        .47        .53        .51        .55   

Credit card

     25         28         27         26         26         .56        .61        .61        .59        .60   

Other consumer

                         

Non government insured

     52         62         56         50         51         .24        .27        .24        .22        .23   

Government insured

     126         152         164         154         149         .57        .67        .71        .69        .66   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

            

Total

$ 519    $ 582    $ 574    $ 548    $ 630      .25      .28      .29      .27      .32   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Table 24: Accruing Loans Past Due 60 to 89 Days (a)

 

     Amount      Percent of Total Outstandings  

Dollars in millions

   Mar. 31
2015
     Dec. 31
2014
     Sept. 30
2014
     Jun. 30
2014
     Mar. 31
2014
     Mar. 31
2015
    Dec. 31
2014
    Sept. 30
2014
    Jun. 30
2014
    Mar. 31
2014
 

Commercial

   $ 20       $ 24       $ 19       $ 26       $ 20         .02     .02     .02     .03     .02

Commercial real estate

     23         2         6         48         25         .09        .01        .03        .21        .11   

Equipment lease financing

        1         1         1              .01        .01        .01     

Home equity

     30         32         25         27         32         .09        .09        .07        .08        .09   

Residential real estate

                         

Non government insured

     18         25         24         21         27         .12        .17        .17        .14        .18   

Government insured

     35         43         41         48         43         .24        .30        .29        .33        .29   

Credit card

     17         20         18         18         19         .38        .43        .41        .41        .44   

Other consumer

                         

Non government insured

     18         19         20         15         16         .08        .08        .09        .07        .07   

Government insured

     82         93         100         94         104         .37        .41        .44        .42        .46   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

            

Total

$ 243    $ 259    $ 254    $ 298    $ 286      .12      .13      .13      .15      .14   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Table 25: Accruing Loans Past Due 90 Days or More (a)

 

     Amount      Percent of Total Outstandings  

Dollars in millions

   Mar. 31
2015
     Dec. 31
2014
     Sept. 30
2014
     Jun. 30
2014
     Mar. 31
2014
     Mar. 31
2015
    Dec. 31
2014
    Sept. 30
2014
    Jun. 30
2014
    Mar. 31
2014
 

Commercial

   $ 35       $ 37       $ 39       $ 35       $ 28         .04     .04     .04     .04     .03

Commercial real estate

           1                   .00       

Equipment lease financing

                         

Residential real estate

                         

Non government insured

     26         23         24         23         30         .18        .16        .17        .16        .20   

Government insured

     634         719         785         872         924         4.38        4.99        5.47        5.99        6.24   

Credit card

     32         33         29         29         31         .72        .72        .65        .65        .72   

Other consumer

                         

Non government insured

     17         16         13         12         13         .08        .07        .06        .05        .06   

Government insured

     244         277         287         281         284         1.11        1.22        1.25        1.25        1.26   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

            

Total

$ 988    $ 1,105    $ 1,178    $ 1,252    $ 1,310      .48      .54      .59      .62      .66   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) Excludes loans held for sale and purchased impaired loans.


THE PNC FINANCIAL SERVICES GROUP, INC. Page 14

 

Business Segment Descriptions (Unaudited)

Retail Banking provides deposit, lending, brokerage, investment management and cash management services to consumer and small business customers within our primary geographic markets. Our customers are serviced through our branch network, ATMs, call centers, online banking and mobile channels. The branch network is located primarily in Pennsylvania, Ohio, New Jersey, Michigan, Illinois, Maryland, Indiana, North Carolina, Florida, Kentucky, Washington, D.C., Delaware, Virginia, Alabama, Missouri, Georgia, Wisconsin and South Carolina.

Corporate & Institutional Banking provides lending, treasury management, and capital markets-related products and services to mid-sized and large corporations, government and not-for-profit entities. Lending products include secured and unsecured loans, letters of credit and equipment leases. Treasury management services include cash and investment management, receivables management, disbursement services, funds transfer services, information reporting, and global trade services. Capital markets-related products and services include foreign exchange, derivatives, securities, loan syndications, mergers and acquisitions advisory, equity capital markets advisory and related services. We also provide commercial loan servicing and real estate advisory and technology solutions for the commercial real estate finance industry. Products and services are generally provided within our primary geographic markets, with certain products and services offered nationally and internationally.

Asset Management Group includes personal wealth management for high net worth and ultra high net worth clients and institutional asset management. Wealth management products and services include investment and retirement planning, customized investment management, private banking, tailored credit solutions, and trust management and administration for individuals and their families. Hawthorn provides multi-generational family planning including wealth strategy, investment management, private banking, tax and estate planning guidance, performance reporting and personal administration services to ultra high net worth families. Institutional asset management provides investment management, custody administration and retirement administration services. Institutional clients include corporations, unions, municipalities, non-profits, foundations and endowments, primarily located in our geographic footprint.

Residential Mortgage Banking directly originates first lien residential mortgage loans on a nationwide basis with a significant presence within the retail banking footprint. Mortgage loans represent loans collateralized by one-to-four-family residential real estate. These loans are typically underwritten to government agency and/or third-party standards, and either sold, servicing retained, or held on PNC’s balance sheet. Loan sales are primarily to secondary mortgage conduits of FNMA, FHLMC, Federal Home Loan Banks and third-party investors, or are securitized and issued under the GNMA program. The mortgage servicing operation performs all functions related to servicing mortgage loans, primarily those in first lien position, for various investors and for loans owned by PNC.

Non-Strategic Assets Portfolio includes a consumer portfolio of mainly residential mortgage and brokered home equity loans and lines of credit, and a small commercial/commercial real estate loan and lease portfolio. We obtained a significant portion of these non-strategic assets through acquisitions of other companies.

BlackRock, in which we hold an equity investment, is a leading publicly traded investment management firm providing a broad range of investment and risk management services to institutional and retail clients worldwide. Using a diverse platform of active and index investment strategies across asset classes, BlackRock develops investment outcomes and asset allocation solutions for clients. Product offerings include single- and multi-asset class portfolios investing in equities, fixed income, alternatives and money market instruments. BlackRock also offers an investment and risk management technology platform, risk analytics and advisory services and solutions to a broad base of institutional investors. We hold our equity investment in BlackRock as a key component of our diversified revenue strategy. BlackRock is a publicly traded company, and additional information regarding its business is available in its filings with the Securities and Exchange Commission (SEC). At March 31, 2015, our economic interest in BlackRock was 22%.

Table 26: Period End Employees

 

     March 31
2015
     December 31
2014
     September 30
2014
     June 30
2014
     March 31
2014
 

Full-time employees

              

Retail Banking

     22,063         22,216         22,103         22,148         22,104   

Other full-time employees (a)

     27,696         27,529         27,528         27,765         27,740   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total full-time employees

  49,759      49,745      49,631      49,913      49,844   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Part-time employees

Retail Banking

  3,150      3,274      3,410      3,644      3,761   

Other part-time employees (a)

  563      568      614      802      510   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total part-time employees

  3,713      3,842      4,024      4,446      4,271   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

  53,472      53,587      53,655      54,359      54,115   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(a) Includes period end employees for all businesses other than Retail Banking and includes operations, technology and staff services employees other than staff directly employed by Retail Banking.


THE PNC FINANCIAL SERVICES GROUP, INC. Page 15

 

Table 27: Summary of Business Segment Income and Revenue (Unaudited) (a) (b)

 

     Three months ended  

In millions

   March 31
2015
     December 31
2014
    September 30
2014
     June 30
2014
     March 31
2014
 

Income (Loss)

             

Retail Banking

   $ 202       $ 172      $ 173       $ 225       $ 158   

Corporate & Institutional Banking

     482         564        549         470         523   

Asset Management Group

     37         45        46         53         37   

Residential Mortgage Banking

     28         (9     12         36         (4

Non-Strategic Assets Portfolio

     81         76        82         99         110   

Other, including BlackRock (b) (c)

     174         209        176         169         236   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Net income

$ 1,004    $ 1,057    $ 1,038    $ 1,052    $ 1,060   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Revenue

Retail Banking

$ 1,526    $ 1,520    $ 1,521    $ 1,514    $ 1,494   

Corporate & Institutional Banking

  1,284      1,444      1,386      1,348      1,298   

Asset Management Group

  281      281      277      279      270   

Residential Mortgage Banking

  207      182      185      227      206   

Non-Strategic Assets Portfolio

  121      140      152      147      148   

Other, including BlackRock (b) (c)

  312      380      320      295      361   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total revenue

$ 3,731    $ 3,947    $ 3,841    $ 3,810    $ 3,777   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

(a) Our business information is presented based on our internal management reporting practices. We periodically refine our internal methodologies as management reporting practices are enhanced. Net interest income in business segment results reflects PNC’s internal funds transfer pricing methodology. Assets receive a funding charge and liabilities and capital receive a funding credit based on a transfer pricing methodology that incorporates product repricing characteristics, tenor and other factors. In the first quarter of 2015, enhancements were made to PNC’s funds transfer pricing methodology primarily for costs related to the new regulatory short-term liquidity standards. The enhancements incorporate an additional charge assigned to assets, including for unfunded loan commitments. Conversely, a higher transfer pricing credit has been assigned to those deposits that are accorded higher value under Liquidity Coverage Ratio rules for liquidity purposes. These adjustments apply to business segment results prospectively beginning with the first quarter of 2015. Excluding any changes in business volumes, the estimated impact of this change to net interest income for Retail Banking and Corporate & Institutional Banking were approximately an increase of $55 million and a decrease of $60 million, respectively, for the first quarter of 2015. The impacts to the other business segments were not significant. Prior periods have not been adjusted.
(b) We consider BlackRock to be a separate reportable business segment but have combined its results with Other for this presentation. Our first quarter 2015 Form 10-Q will include additional information regarding BlackRock.
(c) Includes earnings and gains or losses related to PNC’s equity interest in BlackRock and residual activities that do not meet the criteria for disclosure as a separate reportable business, such as gains or losses related to BlackRock transactions, integration costs, asset and liability management activities including net securities gains or losses, other-than-temporary impairment of investment securities and certain trading activities, exited businesses, private equity investments, intercompany eliminations, most corporate overhead, tax adjustments that are not allocated to business segments and differences between business segment performance reporting and financial statement reporting (GAAP), including the presentation of net income attributable to noncontrolling interests as the segments’ results exclude their portion of net income attributable to noncontrolling interests.


THE PNC FINANCIAL SERVICES GROUP, INC. Page 16

 

Table 28: Retail Banking (Unaudited) (a)

 

    Three months ended  

Dollars in millions

  March 31
2015
    December 31
2014
    September 30
2014
    June 30
2014
    March 31
2014
 

INCOME STATEMENT

         

Net interest income

  $ 1,038      $ 986      $ 985      $ 973      $ 980   

Noninterest income

         

Service charges on deposits

    146        172        173        148        140   

Brokerage

    67        64        60        61        55   

Consumer services

    233        247        248        248        218   

Other

    42        51        55        84        101   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total noninterest income

  488      534      536      541      514   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

  1,526      1,520      1,521      1,514      1,494   

Provision for credit losses

  49      54      74      4      145   

Noninterest expense

  1,158      1,195      1,175      1,155      1,100   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Pretax earnings

  319      271      272      355      249   

Income taxes

  117      99      99      130      91   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings

$ 202    $ 172    $ 173    $ 225    $ 158   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

AVERAGE BALANCE SHEET

Loans

Consumer

Home equity

$ 28,152    $ 28,457    $ 28,684    $ 28,959    $ 29,317   

Indirect auto

  9,287      9,209      9,192      9,092      8,994   

Indirect other

  603      635      675      726      777   

Education

  6,626      6,895      7,100      7,298      7,547   

Credit cards

  4,444      4,475      4,401      4,307      4,271   

Other

  2,347      2,345      2,277      2,189      2,137   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer

  51,459      52,016      52,329      52,571      53,043   

Commercial and commercial real estate

  10,654      10,698      10,801      10,922      11,051   

Floor plan

  2,213      2,180      2,021      2,291      2,373   

Residential mortgage

  734      552      584      623      647   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans

  65,060      65,446      65,735      66,407      67,114   

Goodwill and other intangible assets

  5,990      6,007      6,025      6,043      6,062   

Other assets

  2,967      2,946      2,922      2,753      2,744   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

$ 74,017    $ 74,399    $ 74,682    $ 75,203    $ 75,920   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Deposits

Noninterest-bearing demand

$ 22,591    $ 22,860    $ 22,392    $ 21,907    $ 21,359   

Interest-bearing demand

  35,650      34,298      33,900      34,272      33,490   

Money market

  53,105      51,204      50,204      50,142      49,484   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total transaction deposits

  111,346      108,362      106,496      106,321      104,333   

Savings

  12,888      12,244      11,997      11,845      11,288   

Certificates of deposit

  17,318      17,959      18,720      19,354      19,882   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

  141,552      138,565      137,213      137,520      135,503   

Other liabilities

  617      555      507      411      398   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

$ 142,169    $ 139,120    $ 137,720    $ 137,931    $ 135,901   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

PERFORMANCE RATIOS

Return on average assets

  1.11   .92   .92   1.20   .84

Noninterest income to total revenue

  32      35      35      36      34   

Efficiency

  76      79      77      76      74   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) See note (a) on page 15.


THE PNC FINANCIAL SERVICES GROUP, INC. Page 17

 

Table 28: Retail Banking (Unaudited) (Continued)

 

     Three months ended  

Dollars in millions, except as noted

   March 31
2015
    December 31
2014
    September 30
2014
    June 30
2014
    March 31
2014
 

OTHER INFORMATION (a)

         .       

Credit-related statistics:

          

Commercial nonperforming assets

   $ 131      $ 139      $ 146      $ 158      $ 172   

Consumer nonperforming assets

     1,043        1,059        1,037        1,037        1,059   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total nonperforming assets

$ 1,174    $ 1,198    $ 1,183    $ 1,195    $ 1,231   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Purchased impaired loans (b)

$ 553    $ 575    $ 600    $ 631    $ 663   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commercial lending net charge-offs (recoveries)

$ 1    $ (2 $ 2    $ 11    $ 20   

Credit card lending net charge-offs

  38      33      35      37      37   

Consumer lending (excluding credit card) net charge-offs

  60      73      56      68      88   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net charge-offs

$ 99    $ 104    $ 93    $ 116    $ 145   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commercial lending annualized net charge-off ratio

  .03   (.06 )%    .06   .33   .60

Credit card lending annualized net charge-off ratio

  3.47   2.93   3.16   3.45   3.51

Consumer lending (excluding credit card) annualized net charge-off ratio

  .51   .60   .46   .56   .72
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total annualized net charge-off ratio

  .62   .63   .56   .70   .88
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Home equity portfolio credit statistics: (c)

% of first lien positions at origination (d)

  54   54   53   53   53

Weighted-average loan-to-value ratios (LTVs) (d) (e)

  76   77   78   79   79

Weighted-average updated FICO scores (f)

  748      748      747      748      745   

Annualized net charge-off ratio

  .42   .52   .35   .54   .75

Delinquency data - % of total loans: (g)

Loans 30 - 59 days past due

  .18   .20   .19   .19   .21

Loans 60 - 89 days past due

  .09   .09   .07   .07   .08
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accruing loans past due

  .27   .29   .26   .26   .29
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Nonperforming loans

  3.12   3.13   3.04   3.08   3.12
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other statistics:

ATMs

  8,754      8,605      8,178      7,977      8,001   

Branches (h)

  2,660      2,697      2,691      2,695      2,703   

Brokerage account client assets (billions) (i)

$ 44    $ 43    $ 43    $ 43    $ 41   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Customer-related statistics (average):

Non-teller deposit transactions (j)

  40   38   36   33   31

Digital consumer customers (k)

  50   49   47   45   43
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) Presented as of period end, except for net charge-offs and annualized net charge-off ratios, which are for the three months ended, and customer-related statistics which are quarterly averages.
(b) Recorded investment of purchased impaired loans related to acquisitions.
(c) Lien position, LTV and FICO statistics are based upon customer balances.
(d) Lien positions and LTV calculations reflect management assumptions where data limitations exist.
(e) LTV statistics are based upon current information.
(f) Represents FICO scores that are updated at least quarterly.
(g) Data based upon recorded investment. Past due amounts exclude purchased impaired loans, even if contractually past due, as we are currently accreting interest income over the expected life of the loans.
(h) Excludes satellite offices (e.g., drive-ups, electronic branches and retirement centers) that provide limited products and/or services.
(i) Amounts include cash and money market balances.
(j) Percentage of total deposit transactions processed at an ATM or through our mobile banking application.
(k) Represents consumer checking relationships that process the majority of their transactions through non-teller channels.


THE PNC FINANCIAL SERVICES GROUP, INC. Page 18

 

Table 29: Corporate & Institutional Banking (Unaudited) (a)

 

    Three months ended  

Dollars in millions

  March 31
2015
    December 31
2014
    September 30
2014
    June 30
2014
    March 31
2014
 

INCOME STATEMENT

         

Net interest income

  $ 855      $ 956      $ 922      $ 921      $ 934   

Noninterest income

         

Corporate service fees

    310        369        346        312        268   

Other

    119        119        118        115        96   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Noninterest income

  429      488      464      427      364   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

  1,284      1,444      1,386      1,348      1,298   

Provision for credit losses (benefit)

  17      21      (4   103      (13

Noninterest expense

  514      544      528      504      488   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Pretax earnings

  753      879      862      741      823   

Income taxes

  271      315      313      271      300   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings

$ 482    $ 564    $ 549    $ 470    $ 523   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

AVERAGE BALANCE SHEET

Loans

Commercial

$ 84,712    $ 82,066    $ 79,083    $ 78,022    $ 75,506   

Commercial real estate

  22,090      21,720      21,492      21,234      20,039   

Equipment lease financing

  6,914      6,977      6,922      6,878      6,789   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial lending

  113,716      110,763      107,497      106,134      102,334   

Consumer

  1,352      1,442      1,203      1,016      1,125   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans

  115,068      112,205      108,700      107,150      103,459   

Goodwill and other intangible assets

  3,835      3,867      3,806      3,804      3,826   

Loans held for sale

  1,106      1,103      1,092      932      894   

Other assets

  11,169      10,784      10,073      10,139      9,758   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

$ 131,178    $ 127,959    $ 123,671    $ 122,025    $ 117,937   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Deposits

Noninterest-bearing demand

$ 46,976    $ 46,769    $ 44,730    $ 42,521    $ 42,772   

Money market

  22,286      22,706      21,821      20,277      20,678   

Other

  9,340      8,883      7,839      7,565      7,531   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

  78,602      78,358      74,390      70,363      70,981   

Other liabilities

  8,271      7,833      7,412      7,476      7,476   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

$ 86,873    $ 86,191    $ 81,802    $ 77,839    $ 78,457   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

PERFORMANCE RATIOS

Return on average assets

  1.49   1.75   1.76   1.54   1.80

Noninterest income to total revenue

  33      34      33      32      28   

Efficiency

  40      38      38      37      38   

 

(a) See note (a) on page 15.


THE PNC FINANCIAL SERVICES GROUP, INC. Page 19

 

Table 29: Corporate & Institutional Banking (Unaudited) (Continued) (a)

 

     Three months ended  

Dollars in millions, except as noted

   March 31
2015
    December 31
2014
    September 30
2014
    June 30
2014
    March 31
2014
 

COMMERCIAL LOAN SERVICING

PORTFOLIO - SERVICED FOR PNC AND OTHERS
(in billions)

          

Beginning of period

   $ 377      $ 363      $ 353      $ 351      $ 347   

Acquisitions/additions

     29        35        25        17        22   

Repayments/transfers

     (16     (21     (15     (15     (18
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period

$ 390    $ 377    $ 363    $ 353    $ 351   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

OTHER INFORMATION

Consolidated revenue from: (b)

Treasury Management (c)

$ 319    $ 338    $ 326    $ 313    $ 311   

Capital Markets (d)

$ 180    $ 230    $ 212    $ 178    $ 157   

Commercial mortgage banking activities

Commercial mortgage loans held for sale (e)

$ 26    $ 42    $ 32    $ 33    $ 19   

Commercial mortgage loan servicing income (f)

  56      58      56      53      55   

Commercial mortgage servicing rights valuation, net of economic hedge (g)

  16      5      8      14      11   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

$ 98    $ 105    $ 96    $ 100    $ 85   

Average Loans (by C&IB business)

Corporate Banking

$ 58,227    $ 56,746    $ 54,678    $ 53,633    $ 52,253   

Real Estate

  29,918      29,163      28,111      27,642      26,003   

Business Credit

  14,217      13,849      13,481      13,198      12,534   

Equipment Finance

  10,941      10,805      10,582      10,290      10,210   

Other

  1,765      1,642      1,848      2,387      2,459   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total average loans

$ 115,068    $ 112,205    $ 108,700    $ 107,150    $ 103,459   

Total loans (h)

$ 114,946    $ 113,935    $ 109,792    $ 108,990    $ 105,398   

Net carrying amount of commercial mortgage servicing rights (h)

$ 494    $ 506    $ 532    $ 515    $ 529   

Credit-related statistics:

Nonperforming assets (h)

$ 516    $ 557    $ 616    $ 715    $ 786   

Purchased impaired loans (h) (i)

$ 221    $ 246    $ 316    $ 370    $ 428   

Net charge-offs (recoveries)

$ (1 $ (2 $ (7 $ 15    $ 2   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) See note (a) on page 15.
(b) Represents consolidated PNC amounts. Our first quarter 2015 Form 10-Q will include additional information regarding these items.
(c) Includes amounts reported in net interest income and corporate service fees.
(d) Includes amounts reported in net interest income, corporate service fees and other noninterest income.
(e) Includes other noninterest income for valuations on commercial mortgage loans held for sale and related commitments, derivative valuations, origination fees, and gains on sale of loans held for sale and net interest income on loans held for sale.
(f) Includes net interest income and noninterest income, primarily in corporate services fees, from loan servicing and ancillary services, net of changes in fair value on commercial mortgage servicing rights due to time and payoffs. Commercial mortgage servicing rights valuation, net of economic hedge is shown separately.
(g) Includes amounts reported in corporate service fees.
(h) Presented as of period end.
(i) Recorded investment of purchased impaired loans related to acquisitions.


THE PNC FINANCIAL SERVICES GROUP, INC. Page 20

 

Table 30: Asset Management Group (Unaudited) (a)

 

     Three months ended  

Dollars in millions, except as noted

   March 31
2015
    December 31
2014
    September 30
2014
    June 30
2014
    March 31
2014
 

INCOME STATEMENT

          

Net interest income

   $ 73      $ 74      $ 72      $ 72      $ 71   

Noninterest income

     208        207        205        207        199   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

  281      281      277      279      270   

Provision for credit losses (benefit)

  12      (3   (4   (6   12   

Noninterest expense

  210      211      209      202      199   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Pretax earnings

  59      73      72      83      59   

Income taxes

  22      28      26      30      22   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings

$ 37    $ 45    $ 46    $ 53    $ 37   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

AVERAGE BALANCE SHEET

Loans

Consumer

$ 5,650    $ 5,606    $ 5,497    $ 5,411    $ 5,311   

Commercial and commercial real estate

  932      954      970      998      1,023   

Residential mortgage

  865      854      822      789      771   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans

  7,447      7,414      7,289      7,198      7,105   

Goodwill and other intangible assets

  238      247      255      264      272   

Other assets

  258      255      231      223      222   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

$ 7,943    $ 7,916    $ 7,775    $ 7,685    $ 7,599   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Deposits

Noninterest-bearing demand

$ 1,345    $ 1,436    $ 1,362    $ 1,327    $ 1,338   

Interest-bearing demand

  4,241      4,152      3,857      3,912      3,893   

Money market

  4,621      4,025      4,005      3,857      3,889   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total transaction deposits

  10,207      9,613      9,224      9,096      9,120   

CDs/IRAs/savings deposits

  455      467      463      446      436   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

  10,662      10,080      9,687      9,542      9,556   

Other liabilities

  47      53      51      48      53   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

$ 10,709    $ 10,133    $ 9,738    $ 9,590    $ 9,609   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

PERFORMANCE RATIOS

Return on average assets

  1.89   2.26   2.35   2.77   1.97

Noninterest income to total revenue

  74      74      74      74      74   

Efficiency

  75      75      75      72      74   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

OTHER INFORMATION

Total nonperforming assets (b)

$ 63    $ 66    $ 73    $ 76    $ 80   

Purchased impaired loans (b) (c)

$ 82    $ 83    $ 89    $ 94    $ 96   

Total net charge-offs

$ 4    $ —      $ —      $ 2    $ 1   

CLIENT ASSETS UNDER ADMINISTRATION
(in billions) (b) (d)

Personal

$ 115    $ 115    $ 113    $ 113    $ 112   

Institutional

  150      148      146      144      143   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

$ 265    $ 263    $ 259    $ 257    $ 255   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Asset Type

Equity

$ 151    $ 151    $ 147    $ 149    $ 145   

Fixed income

  74      72      72      71      66   

Liquidity/Other

  40      40      40      37      44   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

$ 265    $ 263    $ 259    $ 257    $ 255   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Discretionary client assets under management

Personal

$ 88    $ 87    $ 85    $ 85    $ 84   

Institutional

  48      48      47      46      46   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

$ 136    $ 135    $ 132    $ 131    $ 130   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Asset Type

Equity

$ 75    $ 75    $ 72    $ 73    $ 71   

Fixed income

  41      40      40      40      34   

Liquidity/Other

  20      20      20      18      25   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

$ 136    $ 135    $ 132    $ 131    $ 130   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Nondiscretionary client assets under administration

Personal

$ 27    $ 28    $ 28    $ 28    $ 28   

Institutional

  102      100      99      98      97   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

$ 129    $ 128    $ 127    $ 126    $ 125   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Asset Type

Equity

$ 76    $ 76    $ 75    $ 76    $ 74   

Fixed income

  33      32      32      31      32   

Liquidity/Other

  20      20      20      19      19   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

$ 129    $ 128    $ 127    $ 126    $ 125   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) See note (a) on page 15.
(b) As of period end.
(c) Recorded investment of purchased impaired loans related to acquisitions.
(d) Excludes brokerage account client assets.


THE PNC FINANCIAL SERVICES GROUP, INC. Page 21

 

Table 31: Residential Mortgage Banking (Unaudited) (a)

 

     Three months ended  

Dollars in millions, except as noted

   March 31
2015
    December 31
2014
    September 30
2014
    June 30
2014
    March 31
2014
 

INCOME STATEMENT

          

Net interest income

   $ 30      $ 34      $ 38      $ 37      $ 40   

Noninterest income

          

Loan servicing revenue

          

Servicing fees

     48        54        53        56        61   

Mortgage servicing rights valuation, net of economic hedge

     25        1        11        1        (1

Loan sales revenue

          

Benefit / (provision) for residential mortgage repurchase obligations

     (1     (4     (13     (2     19   

Loan sales revenue

     105        97        98        137        88   

Other

         (2     (2     (1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total noninterest income

  177      148      147      190      166   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

  207      182      185      227      206   

Provision for credit losses (benefit)

  2      (1   (1   1      (1

Noninterest expense

  161      196      168      169      213   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Pretax earnings (loss)

  44      (13   18      57      (6

Income taxes (benefit)

  16      (4   6      21      (2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings (loss)

$ 28    $ (9 $ 12    $ 36    $ (4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

AVERAGE BALANCE SHEET

Portfolio loans

$ 1,282    $ 1,479    $ 1,506    $ 1,742    $ 2,036   

Loans held for sale

  1,147      1,090      1,186      1,135      1,068   

Mortgage servicing rights (MSR)

  843      948      1,002      1,035      1,073   

Other assets

  3,973      4,246      3,724      3,574      4,600   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

$ 7,245    $ 7,763    $ 7,418    $ 7,486    $ 8,777   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Deposits

$ 2,215    $ 2,302    $ 2,415    $ 2,318    $ 2,100   

Borrowings and other liabilities

  2,840      3,057      2,601      2,403      3,464   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

$ 5,055    $ 5,359    $ 5,016    $ 4,721    $ 5,564   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

PERFORMANCE RATIOS

Return on average assets

  1.57   (.46 )%    .64   1.93   (.18 )% 

Noninterest income to total revenue

  86      81      79      84      81   

Efficiency

  78      108      91      74      103   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

RESIDENTIAL MORTGAGE SERVICING PORTFOLIO SERVICED FOR THIRD PARTIES
(in billions)

Beginning of period

$ 108    $ 111    $ 111    $ 114    $ 114   

Acquisitions

  8      2      2   

Additions

  2      1      3      2      2   

Repayments/transfers

  (5   (4   (5   (5   (4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period

$ 113    $ 108    $ 111    $ 111    $ 114   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Servicing portfolio - third-party statistics: (b)

Fixed rate

  94   94   94   94   94

Adjustable rate/balloon

  6   6   6   6   6

Weighted-average interest rate

  4.41   4.47   4.49   4.54   4.56

MSR asset value (in billions)

$ .8    $ .8    $ 1.0    $ 1.0    $ 1.1   

MSR capitalization value (in basis points)

  74      78      88      87      92   

Weighted-average servicing fee (in basis points)

  27      27      27      27      28   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

RESIDENTIAL MORTGAGE REPURCHASE RESERVE

Beginning of period

$ 107    $ 108    $ 101    $ 103    $ 131   

(Benefit) / Provision

  1      4      13      2      (19

Losses - loan repurchases

  (2   (5   (6   (4   (9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

End of period

$ 106    $ 107    $ 108    $ 101    $ 103   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

OTHER INFORMATION

Loan origination volume (in billions)

$ 2.6    $ 2.4    $ 2.6    $ 2.6    $ 1.9   

Loan sale margin percentage

  4.09   3.96   3.80   5.38   4.53

Percentage of originations represented by:

Purchase volume (c)

  31   42   50   50   37

Refinance volume

  69   58   50   50   63

Total nonperforming assets (b)

$ 105    $ 120    $ 135    $ 160    $ 173   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) See note (a) on page 15.
(b) As of period end.
(c) Mortgages with borrowers as part of residential real estate purchase transactions.


THE PNC FINANCIAL SERVICES GROUP, INC. Page 22

 

Table 32: Non-Strategic Assets Portfolio (Unaudited) (a)

 

     Three months ended  

Dollars in millions

   March 31
2015
    December 31
2014
    September 30
2014
    June 30
2014
    March 31
2014
 

INCOME STATEMENT

          

Net interest income

   $ 112      $ 122      $ 146      $ 137      $ 142   

Noninterest income

     9        18        6        10        6   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

  121      140      152      147      148   

Provision for credit losses (benefit)

  (31   (20   (8   (39   (52

Noninterest expense

  24      39      30      30      26   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Pretax earnings

  128      121      130      156      174   

Income taxes

  47      45      48      57      64   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings

$ 81    $ 76    $ 82    $ 99    $ 110   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

AVERAGE BALANCE SHEET

Commercial Lending:

Commercial/Commercial real estate

$ 125    $ 149    $ 164    $ 187    $ 220   

Lease financing

  625      645      689      686      681   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial lending

  750      794      853      873      901   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consumer Lending:

Home equity

  3,021      3,154      3,328      3,483      3,625   

Residential real estate

  4,184      4,399      4,794      4,961      5,104   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer lending

  7,205      7,553      8,122      8,444      8,729   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total portfolio loans

  7,955      8,347      8,975      9,317      9,630   

Other assets (b)

  (679   (678   (744   (740   (741
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

$ 7,276    $ 7,669    $ 8,231    $ 8,577    $ 8,889   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Deposits and other liabilities

$ 224    $ 219    $ 223    $ 227    $ 231   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

$ 224    $ 219    $ 223    $ 227    $ 231   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

PERFORMANCE RATIOS

Return on average assets

  4.51   3.93   3.95   4.63   5.02

Noninterest income to total revenue

  7      13      4      7      4   

Efficiency

  20      28      20      20      18   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

OTHER INFORMATION

Nonperforming assets (c)

$ 669    $ 710    $ 731    $ 798    $ 798   

Purchased impaired loans (c) (d)

$ 3,808    $ 3,943    $ 4,147    $ 4,497    $ 4,654   

Net charge-offs (recoveries)

$ —      $ 12    $ (6 $ 10    $ 31   

Annualized net charge-off ratio

  (.00 )%    .57   (.27 )%    .43   1.31

LOANS (c)

Commercial Lending:

Commercial/Commercial real estate

$ 120    $ 130    $ 162    $ 176    $ 201   

Lease financing

  626      625      691      688      683   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial lending

  746      755      853      864      884   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consumer Lending:

Home equity

  2,944      3,091      3,242      3,410      3,554   

Residential real estate

  4,139      4,290      4,665      4,928      5,092   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer lending

  7,083      7,381      7,907      8,338      8,646   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans

$ 7,829    $ 8,136    $ 8,760    $ 9,202    $ 9,530   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) See note (a) on page 15.
(b) Other assets were negative in all periods presented due to the allowance for loan and lease losses.
(c) As of period end.
(d) Recorded investment of purchased impaired loans related to acquisitions.


THE PNC FINANCIAL SERVICES GROUP, INC. Page 23

 

Glossary Of Terms

Accretable net interest (Accretable yield) - The excess of cash flows expected to be collected on a purchased impaired loan over the carrying value of the loan. The accretable net interest is recognized into interest income over the remaining life of the loan using the constant effective yield method.

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

Annualized - Adjusted to reflect a full year of activity.

Basel III common equity Tier 1 capital - Common stock plus related surplus, net of treasury stock, plus retained earnings, plus accumulated other comprehensive income for securities currently and previously held as available for sale, plus accumulated other comprehensive income for pension and other postretirement benefit plans, less goodwill, net of associated deferred tax liabilities, less other disallowed intangibles, net of deferred tax liabilities and plus/less other adjustments.

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

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

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

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

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

Basis point - One hundredth of a percentage point.

Carrying value of purchased impaired loans - The net value on the balance sheet which represents the recorded investment less any valuation allowance.

Cash recoveries - Cash recoveries used in the context of purchased impaired loans represent cash payments for a single purchased impaired loan not included within a pool of loans from customers that exceeded the recorded investment of that loan.

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

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

Common shareholders’ equity to total assets - Common shareholders’ equity divided by total assets. Common shareholders’ equity equals total shareholders’ equity less the liquidation value of preferred stock.

Core net interest income - Core net interest income is total net interest income less purchase accounting accretion.

Credit spread - The difference in yield between debt issues of similar maturity. The excess of yield attributable to credit spread is often used as a measure of relative creditworthiness, with a reduction in the credit spread reflecting an improvement in the borrower’s perceived creditworthiness.

Derivatives - Financial contracts whose value is derived from changes in publicly traded securities, interest rates, currency exchange rates or market indices. Derivatives cover a wide assortment of financial contracts, including but not limited to forward contracts, futures, options and swaps.

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


THE PNC FINANCIAL SERVICES GROUP, INC. Page 24

 

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

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

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

Efficiency - Noninterest expense divided by total revenue.

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

Fee income - When referring to the components of Noninterest income, we use the term fee income to refer to the following categories within Noninterest income: Asset management; Consumer services; Corporate services; Residential mortgage; and Service charges on deposits.

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

Funds transfer pricing - A management accounting methodology designed to recognize the net interest income effects of sources and uses of funds provided by the assets and liabilities of a business segment. We assign these balances LIBOR-based funding rates at origination that represent the interest cost for us to raise/invest funds with similar maturity and repricing structures.

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

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

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

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

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

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

Loss given default (LGD) - An estimate of loss, net of recovery based on collateral type, collateral value, loan exposure, or the guarantor(s) quality and guaranty type (full or partial). Each loan has its own LGD. The LGD risk rating measures the percentage of exposure of a specific credit obligation that we expect to lose if default occurs. LGD is net of recovery, through any means, including but not limited to the liquidation of collateral or deficiency judgments rendered from foreclosure or bankruptcy proceedings.


THE PNC FINANCIAL SERVICES GROUP, INC. Page 25

 

Net interest margin - Annualized taxable-equivalent net interest income divided by average earning assets.

Nonaccretable difference - Contractually required payments receivable on a purchased impaired loan in excess of the cash flows expected to be collected.

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

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

Nonperforming assets - Nonperforming assets include nonperforming loans and OREO and foreclosed assets, but exclude certain government insured or guaranteed loans for which we expect to collect substantially all principal and interest, loans held for sale, loans accounted for under the fair value option and purchased impaired loans. We do not accrue interest income on assets classified as nonperforming.

Nonperforming loans - Loans accounted for at amortized cost for which we do not accrue interest income. Nonperforming loans include loans to commercial, commercial real estate, equipment lease financing, home equity, residential real estate, credit card and other consumer customers as well as TDRs which have not returned to performing status. Nonperforming loans exclude certain government insured or guaranteed loans for which we expect to collect substantially all principal and interest, loans held for sale, loans accounted for under the fair value option and purchased impaired loans. Nonperforming loans exclude purchased impaired loans as we are currently accreting interest income over the expected life of the loans.

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

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

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

Other real estate owned (OREO) and foreclosed assets - Assets taken in settlement of troubled loans primarily through deed-in-lieu of foreclosure or foreclosure. Foreclosed assets include real and personal property, equity interests in corporations, partnerships, and limited liability companies.

Other-than-temporary impairment (OTTI) - When the fair value of a security is less than its amortized cost basis, an assessment is performed to determine whether the impairment is other-than-temporary. If we intend to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, an other-than-temporary impairment is considered to have occurred. In such cases, an other-than-temporary impairment is recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. Further, if we do not expect to recover the entire amortized cost of the security, an other-than-temporary impairment is considered to have occurred. However for debt securities, if we do not intend to sell the security and it is not more likely than not that we will be required to sell the security before its recovery, the other-than-temporary loss is separated into (a) the amount representing the credit loss, and (b) the amount related to all other factors. The other-than-temporary impairment related to credit losses is recognized in earnings while the amount related to all other factors is recognized in other comprehensive income, net of tax.

Parent company liquidity coverage - Liquid assets divided by funding obligations within a two year period.

Pretax earnings - Income before income taxes and noncontrolling interests.

Pretax, pre-provision earnings - Total revenue less noninterest expense.


THE PNC FINANCIAL SERVICES GROUP, INC. Page 26

 

Primary client relationship - A corporate banking client relationship with annual revenue generation of $10,000 to $50,000 or more, and for Asset Management Group, a client relationship with annual revenue generation of $10,000 or more.

Probability of default (PD) - An internal risk rating that indicates the likelihood that a credit obligor will enter into default status.

Purchase accounting accretion - Accretion of the discounts and premiums on acquired assets and liabilities. The purchase accounting accretion is recognized in net interest income over the weighted-average life of the financial instruments using the constant effective yield method. Accretion for a single purchased impaired loan not included within a pool of loans includes any cash recoveries on that loan received in excess of the recorded investment.

Purchased impaired loans - Acquired loans (or pools of loans) determined to be credit impaired under FASB ASC 310-30 (AICPA SOP 03-3). Loans (or pools of loans) are determined to be impaired if there is evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected.

Recorded investment (purchased impaired loans) - The initial investment of a purchased impaired loan plus interest accretion and less any cash payments and writedowns to date. The recorded investment excludes any valuation allowance which is included in our allowance for loan and lease losses.

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

Residential development loans - Project-specific loans to commercial customers for the construction or development of residential real estate including land, single family homes, condominiums and other residential properties.

Return on average assets - Annualized net income divided by average assets.

Return on average capital - Annualized net income divided by average capital.

Return on average common shareholders’ equity - Annualized net income attributable to common shareholders divided by average common shareholders’ equity.

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

Securitization - The process of legally transforming financial assets into securities.

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

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 taxable investments. To provide more meaningful comparisons of yields and margins for all interest-earning assets, we use interest income on a taxable-equivalent basis in calculating average yields and net interest margins by increasing the interest income earned on tax-exempt assets to make it fully equivalent to interest income earned on other taxable investments. This adjustment is not permitted under GAAP on the Consolidated Income Statement.

Total equity - Total shareholders’ equity plus noncontrolling interests.

Transaction deposits - The sum of interest-bearing money market deposits, interest-bearing demand deposits, and noninterest-bearing deposits.

Transitional Basel III common equity – Common equity calculated under Basel III using phased in definitions and deductions applicable to PNC for 2014.

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


THE PNC FINANCIAL SERVICES GROUP, INC. Page 27

 

Watchlist - A list of criticized loans, credit exposure or other assets compiled for internal monitoring purposes. We define criticized exposure for this purpose as exposure with an internal risk rating of other assets especially mentioned, substandard, doubtful or loss.

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