EXECUTIVE SUMMARY

The PNC Financial Services Group, Inc. (PNC) is one of the largest diversified financial services companies in the United States and is headquartered in Pittsburgh, Pennsylvania.

We have businesses engaged in retail banking, corporate and institutional banking, asset management and residential mortgage banking, providing many of our products and services nationally, as well as other products and services in our 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. We also provide certain products and services internationally.

Key Strategic Goals

At PNC we manage our company for the long term. We are focused on the fundamentals of growing customers, loans, deposits and fee revenue and improving profitability, while investing for the future and managing risk, expenses and capital. We continue to invest in our products, markets and brand, and embrace our corporate responsibility to the communities where we do business.

We strive to expand and deepen customer relationships by offering a broad range of deposit, fee-based and credit products and services. We are focused on delivering those products and services where, when and how our customers choose with the goal of offering insight that addresses their specific needs. Our approach is concentrated on organically growing and deepening client relationships that meet our risk/return measures. Our strategies for growing fee income across our lines of business are focused on achieving deeper market penetration and cross selling our diverse product mix.

Our strategic priorities are designed to enhance value over the long term. A key priority is to drive growth in acquired and underpenetrated geographic markets, including in the Southeast. In addition, we are seeking to attract more of the investable assets of new and existing clients. PNC is focused on transforming our retail banking business to a more customer-centric and sustainable model while lowering delivery costs as customer banking preferences evolve. We are also working to build a stronger residential mortgage banking business with the goal of becoming the provider of choice for our customers. Additionally, we continue to focus on expense management while investing in technology and business infrastructure and streamlining our processes.

Our capital priorities are to support client growth and business investment, maintain appropriate capital in light of economic uncertainty and the Basel III framework and return excess capital to shareholders, in accordance with the capital plan included in our 2015 Comprehensive Capital Analysis and

Review (CCAR) submission to the Board of Governors of the Federal Reserve System (Federal Reserve). New regulatory short-term liquidity standards became effective for PNC and PNC Bank, National Association (PNC Bank) beginning January 1, 2015. For more detail, see the Balance Sheet, Liquidity and Capital Highlights portion of this Executive Summary, the Capital portion of the Consolidated Balance Sheet Review section and the Liquidity Risk Management portion of the Risk Management section of this Financial Review and the Supervision and Regulation section in Item 1 Business of our 2014 Form 10-K.

PNC faces a variety of risks that may impact various aspects of our risk profile from time to time. The extent of such impacts may vary depending on factors such as the current economic, political and regulatory environment, merger and acquisition activity and operational challenges. Many of these risks and our risk management strategies are described in more detail in our 2014 Form 10-K and elsewhere in this Report.

Recent Market and Industry Developments

There have been numerous legislative and regulatory developments and significant changes in the competitive landscape of our industry over the last several years. The United States and other governments have undertaken major reform of the regulation of the financial services industry, including engaging in new efforts to impose requirements designed to strengthen the stability of the financial system and protect consumers and investors. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), enacted in July 2010, mandates the most wide-ranging overhaul of financial industry regulation in decades. Many parts of the law are now in effect, and others are now in the implementation stage, which is likely to continue for several years. We expect to face additional regulation of our industry as a result of Dodd-Frank as well as other current and future initiatives intended to enhance the regulation of financial services companies, the stability of the financial system, the protection of consumers and investors, and the liquidity and solvency of financial institutions and markets. We also expect the scrutiny from our supervisors in the examination process and the enforcement of laws and regulations on both the federal and state levels to remain at elevated levels. Compliance with new regulations will increase our costs and reduce our revenue. Some new regulations may limit our ability to pursue certain desirable business opportunities.

On March 11, 2015, the Federal Reserve announced the results of its 2015 CCAR exercise. As we announced on that date, the Federal Reserve accepted the capital plan that PNC submitted in January 2015 and did not object to the capital actions included in that plan. See the Capital portion of the Consolidated Balance Sheet Review section of this Financial Review. Of the 30 other bank holding companies participating in 2015 CCAR, the Federal Reserve announced that it did not

 

object to the capital plans of 27 other bank holding companies, provided a conditional non-objection to the capital plan of one bank holding company based on qualitative grounds and objected to the capital plans of two other bank holding companies also for qualitative reasons.

For additional information concerning recent legislative and regulatory developments, as well as certain governmental, legislative and regulatory inquiries and investigations that may affect PNC, please see the Supervision and Regulation section of Item 1 Business, Item 1A Risk Factors, and Note 21 Legal Proceedings and Note 22 Commitments and Guarantees in the Notes To Consolidated Financial Statements in Item 8 of our 2014 Form 10-K, as well as Note 15 Legal Proceedings and Note 16 Commitments and Guarantees in the Notes To Consolidated Financial Statements in Part I, Item 1 of this Report.

Key Factors Affecting Financial Performance

Our financial performance is substantially affected by a number of external factors outside of our control, including the following:

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General economic conditions, including the continuity, speed and stamina of the current U.S. economic expansion in general and on our customers in particular,

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The monetary policy actions and statements of the Federal Reserve and the Federal Open Market Committee (FOMC),

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The level of, and direction, timing and magnitude of movement in, interest rates and the shape of the interest rate yield curve,

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The functioning and other performance of, and availability of liquidity in, the capital and other financial markets,

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Loan demand, utilization of credit commitments and standby letters of credit, and asset quality,

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Customer demand for non-loan products and services,

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Changes in the competitive and regulatory landscape and in counterparty creditworthiness and performance as the financial services industry restructures in the current environment,

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The impact of the extensive reforms enacted in the Dodd-Frank legislation and other legislative, regulatory and administrative initiatives and actions, including those outlined elsewhere in this Report, in our 2014 Form 10-K and in our other SEC filings, and

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The impact of market credit spreads on asset valuations.

In addition, our success will depend upon, among other things:

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Focused execution of strategic priorities for organic customer growth opportunities,

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Further success in growing profitability through the acquisition and retention of customers and deepening relationships,

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Driving growth in acquired and underpenetrated geographic markets, including our Southeast markets,

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Our ability to effectively manage PNC’s balance sheet and generate net interest income,

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Revenue growth from fee income and our ability to provide innovative and valued products to our customers,

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Our ability to utilize technology to develop and deliver products and services to our customers and protect PNC’s systems and customer information,

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Our ability to bolster our critical infrastructure and streamline our core processes,

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Our ability to manage and implement strategic business objectives within the changing regulatory environment,

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A sustained focus on expense management,

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Managing our credit risk in our portfolio,

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Managing the non-strategic assets portfolio and impaired assets,

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Continuing to maintain and grow our deposit base as a low-cost funding source,

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Prudent risk, liquidity and capital management related to our efforts to manage risk to acceptable levels and to meet evolving regulatory capital, capital planning, stress testing and liquidity standards,

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Actions we take within the capital and other financial markets,

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The impact of legal and regulatory-related contingencies, and

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The appropriateness of reserves needed for critical accounting estimates and related contingencies.

For additional information, please see the Cautionary Statement Regarding Forward-Looking Information section in this Financial Review and Item 1A Risk Factors in our 2014 Form 10-K.

Income Statement Highlights

 

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Net income for the first quarter of 2015 was $1.0 billion, or $1.75 per diluted common share, compared to $1.1 billion, or $1.82 per diluted common share for the first quarter of 2014. Net income decreased $56 million in the comparison, as a 4% increase in noninterest expense and a 1% decrease in revenue were partially offset by lower provision for credit losses. Lower revenue in the comparison reflected a 6% decline in net interest income, which was partially offset by a 5% increase in noninterest income. For additional detail, see the Consolidated Income Statement Review section in this Financial Review.

 

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Net interest income of $2.1 billion for the first quarter of 2015 decreased 6% compared with the first quarter of 2014, primarily driven by lower loan yields and a reduction in purchase accounting accretion, partially offset by commercial and commercial real estate loan growth.

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Net interest margin decreased to 2.82% for the first quarter of 2015 compared to 3.26% for the first quarter of 2014. The decline was principally due to the impact of balance sheet management activities related to regulatory short-term liquidity standards, lower loan yields and lower benefit from purchase accounting accretion.

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Noninterest income of $1.7 billion for the first quarter of 2015 increased 5% compared to the first quarter of 2014, due to strong client fee income growth and higher net securities gains, partially offset by the impact of a gain on sale of Visa Class B common shares in the prior year quarter.

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The provision for credit losses decreased to $54 million for the first quarter of 2015 compared to $94 million for the first quarter of 2014 reflecting overall credit quality improvement.

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Noninterest expense of $2.3 billion for the first quarter of 2015 increased 4% compared with the first quarter of 2014, primarily related to PNC’s investments in technology and business infrastructure in support of its strategic priorities and higher personnel expense, partially offset by lower legal and residential mortgage compliance costs.

Credit Quality Highlights

 

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Overall credit quality for the first quarter of 2015 improved modestly compared with the fourth quarter of 2014. For additional detail, see the Credit Risk Management portion of the Risk Management section of this Financial Review.

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Nonperforming assets decreased $.1 billion, or 4%, to $2.8 billion at March 31, 2015 compared to December 31, 2014. Nonperforming assets to total assets were 0.78% at March 31, 2015, compared to 0.83% at December 31, 2014.

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Overall loan delinquencies of $1.8 billion at March 31, 2015 decreased $.2 billion, or 10%, compared with December 31, 2014.

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The allowance for loan and lease losses was 1.61% of total loans and 137% of nonperforming loans at March 31, 2015, compared with 1.63% and 133% at December 31, 2014, respectively.

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Net charge-offs of $103 million for the first quarter of 2015 were down 45% compared to net charge-offs of $186 million for the first quarter of 2014. Annualized net charge-offs were 0.20% of average loans in the first quarter of 2015 and 0.38% of average loans in the first quarter of 2014.

Balance Sheet, Liquidity and Capital Highlights

 

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Total loans decreased by $.1 billion to $205 billion at March 31, 2015 compared to December 31, 2014, as loan activity declined from higher fourth quarter levels.

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Total commercial lending increased by $1.3 billion, or 1%, as a result of increases in commercial and commercial real estate loans.

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Total consumer lending decreased $1.4 billion, or 2%, due to declines in home equity, automobile, education and credit card loans. Of the decline in consumer lending, $.3 billion, or 21% of the decline, related to non-strategic loans.

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Investment securities increased by $4.9 billion, or 9%, during the first quarter to $61 billion at March 31, 2015, primarily funded by deposit growth.

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Total deposits increased by $4.3 billion, or 2%, to $237 billion at March 31, 2015 compared with December 31, 2014, driven by higher retail deposits.

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PNC’s well-positioned balance sheet remained core funded with a loans to deposits ratio of 87% at March 31, 2015.

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PNC maintained a strong liquidity position.

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New regulatory short-term liquidity standards became effective for PNC and PNC Bank as advanced approaches banking organizations beginning January 1, 2015, with a minimum phased-in Liquidity Coverage Ratio requirement of 80% in 2015, calculated as of month end.

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The Liquidity Coverage Ratio at March 31, 2015 exceeded 100% for both PNC and PNC Bank.

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PNC maintained a strong capital position.

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The Transitional Basel III common equity Tier 1 capital ratio was 10.5% at March 31, 2015 and 10.9% at December 31, 2014, calculated using the regulatory capital methodologies applicable to PNC during 2015 and 2014, respectively.

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Pro forma fully phased-in Basel III common equity Tier 1 capital ratio was an estimated 10.0% at March 31, 2015 and 10.0% at December 31, 2014 based on the standardized approach rules. See the Capital discussion and Table 18 in the Consolidated Balance Sheet Review section of this Financial Review and the December 31, 2014 capital ratio tables in the Statistical Information (Unaudited) section of this Report for more detail.

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PNC returned capital to shareholders.

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In the first quarter of 2015, in accordance with PNC’s 2014 capital plan and under the share repurchase authorization in effect during that period, we repurchased 4.4 million shares of common stock on the open market, with an

 

average price of $89.48 per share and an aggregate repurchase price of $.4 billion.

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These first quarter 2015 repurchases completed PNC’s common stock repurchase program for the four quarter period that began in second quarter 2014 with total repurchases of 17.3 million common shares for $1.5 billion.

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In connection with the 2015 CCAR, PNC submitted its 2015 capital plan, as approved by its Board of Directors, to the Federal Reserve in January 2015. As we announced on March 11, 2015, the Federal Reserve accepted the capital plan and did not object to our proposed capital actions, which included the new share repurchase programs and dividend increase discussed below.

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In March 2015, PNC announced new share repurchase programs of up to $2.875 billion for the five quarter period beginning in the second quarter of 2015. See the Capital portion of the Consolidated Balance Sheet review of this Financial Review for more detail on these share repurchase programs.

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In April 2015, the Board of Directors raised the quarterly dividend on common stock to 51 cents per share, an increase of 3 cents per share, or 6 percent, effective with the May dividend.

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On May 4, 2015, we redeemed $500 million of PNC’s Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series K, as well as all Depositary Shares representing interests therein. Each Depositary Share represented a 1/10 interest in a share of the Series K Preferred Stock. All 50,000 shares of Series K Preferred Stock, as well as all 500,000 Depositary Shares representing interests therein, were redeemed. The redemption price was $10,000 per share of Series K Preferred Stock equivalent to $1,000 per Depositary Share, plus declared and unpaid dividends to but excluding the redemption date.

Our Consolidated Income Statement and Consolidated Balance Sheet Review sections of this Item 7 describe in greater detail the various items that impacted our results during the first three months of 2015 and 2014 and balances at March 31, 2015 and December 31, 2014, respectively.

Our ability to take certain capital actions, including plans to pay or increase common stock dividends or to repurchase shares under current or future programs, is subject to the results of the supervisory assessment of capital adequacy undertaken by the Federal Reserve as part of the CCAR process.

See the Capital portion of the Consolidated Balance Sheet Review and the Liquidity Risk Management portion of the Risk Management section of this Financial Review for more detail on our 2015 capital and liquidity actions.

Average Consolidated Balance Sheet Highlights

Table 2: Summarized Average Balance Sheet

 

Three months ended March 31 Dollars in millions										Change
		2015				2014				$				%
Average assets
Interest-earning assets
Investment securities		$	57,166			$	58,379			$	(1,213	)			(2	)%
Loans			205,155				196,581				8,574				4	%
Interest-earning deposits with banks			30,405				12,157				18,248				150	%
Other			8,947				8,661				286				3	%
Total interest-earning assets			301,673				275,778				25,895				9	%
Noninterest-earning assets			46,384				43,784				2,600				6	%
Total average assets		$	348,057			$	319,562			$	28,495				9	%
Average liabilities and equity
Interest-bearing liabilities
Interest-bearing deposits		$	159,911			$	150,684			$	9,227				6	%
Borrowed funds			56,352				46,388				9,964				21	%
Total interest-bearing liabilities			216,263				197,072				19,191				10	%
Noninterest-bearing deposits			73,178				67,679				5,499				8	%
Other liabilities			12,586				10,364				2,222				21	%
Equity			46,030				44,447				1,583				4	%
Total average liabilities and equity		$	348,057			$	319,562			$	28,495				9	%

Average balances are generally indicative of underlying business trends apart from the impact of acquisitions and divestitures, while various seasonal and other factors can impact period-end balances. The Consolidated Balance Sheet Review section of this Financial Review provides information on changes in selected Consolidated Balance Sheet categories at March 31, 2015 compared with December 31, 2014. Total assets were $351.0 billion at March 31, 2015 compared with $345.1 billion at December 31, 2014.

Average investment securities declined in the first three months of 2015 compared with the first three months of 2014, due to a decrease in average residential mortgage-backed securities. Total investment securities comprised 19% of average interest-earning assets for the first quarter of 2015 and 21% for the first quarter of 2014.

 

Average total loans increased in the first quarter of 2015 compared to the prior year quarter, driven by increases in average commercial loans of $8.3 billion and average commercial real estate loans of $2.3 billion, which were due to growth primarily in Corporate Banking, Real Estate and Business Credit in our Corporate & Institutional Banking segment. Average consumer loans decreased $1.6 billion.

Average loans represented 68% of average interest-earning assets for the first quarter of 2015 and 71% of average interest-earning assets for the first quarter of 2014.

Average interest-earning deposits with banks, which are primarily maintained with the Federal Reserve Bank, increased in the first quarter of 2015 compared to first quarter 2014, reflecting higher balances maintained on deposit with the Federal Reserve Bank in part due to regulatory short-term liquidity standards phased in starting January 1, 2015.

The increase in average noninterest-earning assets for the first three months of 2015 compared to the first three months of 2014 was driven primarily by higher accounts receivable from trade date securities sales and available-for-sale securities valuations, both of which are included in noninterest-earning assets for average balance sheet purposes, and an increase in trading assets, primarily net derivatives.

Average total deposits increased $14.7 billion in the first quarter of 2015 compared with the prior year quarter, primarily due to an increase of $15.0 billion in average transaction deposits, which grew to $199.3 billion for the first quarter of 2015. Growth in both our Retail Banking and Corporate & Institutional Banking segments drove the increase in average

transaction deposits. These increases were partially offset by a decrease of $2.0 billion in average retail certificates of deposit attributable to run-off of maturing accounts.

Average total deposits represented 67% of average total assets for the first quarter of 2015 and 68% for the first quarter of 2014.

The increase in average borrowed funds in the current year first quarter compared with the prior year first quarter was primarily due to increases in average Federal Home Loan Bank (FHLB) borrowings and average bank notes and senior debt, partially offset by a decline in average federal funds purchased and repurchase agreements. The Liquidity Risk Management portion of the Risk Management section of this Financial Review includes additional information regarding our sources and uses of borrowed funds.

Business Segment Highlights

The Business Segments Review section of this Financial Review includes further analysis of our business segment results over the first three months of 2015 and 2014 including presentation differences from Note 17 Segment Reporting in our Notes To Consolidated Financial Statements in Part I, Item 1 of this Report. Note 17 Segment Reporting presents results of businesses for the first three months of 2015 and 2014.

We provide a reconciliation of total business segment earnings to PNC total consolidated net income as reported on a GAAP basis in Note 17 Segment Reporting in our Notes To Consolidated Financial Statements of this Report.

 

CONSOLIDATED INCOME STATEMENT REVIEW

Our Consolidated Income Statement is presented in Part I, Item 1 of this Report.

Net income for the first three months of 2015 was $1.0 billion, a decrease of 5% compared with $1.1 billion for the first three months of 2014. The decrease was driven by a 4% increase in noninterest expense and a 1% decrease in revenue, partially offset by lower provision for credit losses. Lower revenue in the comparison reflected a 6% decline in net interest income, which was partially offset by a 5% increase in noninterest income.

Net Interest Income

Table 4: Net Interest Income and Net Interest Margin

 

		Three months ended March 31
Dollars in millions		2015				2014
Net interest income		$	2,072			$	2,195
Net interest margin			2.82	%			3.26	%

Changes in net interest income and margin result from the interaction of the volume and composition of interest-earning assets and related yields, interest-bearing liabilities and related rates paid, and noninterest-bearing sources of funding. See the Statistical Information (Unaudited) – Average Consolidated Balance Sheet And Net Interest Analysis section of this Report and the discussion of purchase accounting accretion on purchased impaired loans in the Consolidated Balance Sheet Review section of this Financial Review for additional information.

Net interest income decreased by $123 million, or 6%, in the first quarter of 2015 compared with the first quarter of 2014 reflecting the ongoing low rate environment. Lower loan yields and a reduction in purchase accounting accretion were partially offset by commercial and commercial real estate loan growth. The decline in net interest income also included the impact from the second quarter 2014 correction to reclassify certain commercial facility fees from net interest income to noninterest income.

Net interest margin decreased in the comparison to the prior year quarter, driven by a 43 basis point decline in the yield on total interest-earning assets, which was principally due to the impact of balance sheet management activities related to regulatory short-term liquidity standards, lower loan yields and lower benefit from purchase accounting accretion. The decline also included the impact of the second quarter 2014 correction to reclassify certain commercial facility fees.

In the second quarter of 2015, we expect net interest income to remain stable compared with the first quarter of 2015.

For full year 2015, we expect purchase accounting accretion to be down approximately $225 million compared to 2014. Further, full year revenues are expected to remain under pressure as the delay in expected interest rate increases will make growing core net interest income (net interest income exclusive of purchase accounting accretion) that much more difficult.

Noninterest Income

Table 5: Noninterest Income

 

Three months ended March 31 Dollars in millions										Change
		2015				2014				$				%
Noninterest income
Asset management		$	376			$	364			$	12				3	%
Consumer services			311				290				21				7	%
Corporate services			344				301				43				14	%
Residential mortgage			164				161				3				2	%
Service charges on deposits			153				147				6				4	%
Net gains on sales of securities			42				10				32				320	%
Net other-than-temporary impairments			(1	)			(2	)			1				(50	)%
Other			270				311				(41	)			(13	)%
Total noninterest income		$	1,659			$	1,582			$	77				5	%

Noninterest income increased during the first quarter of 2015 compared to first quarter of 2014, reflecting strong client fee income growth and higher net securities gains, partially offset by the impact of a gain on sale of Visa Class B common shares in the prior year quarter. Noninterest income as a percentage of total revenue was 44% in the first quarter of 2015, up from 42% in the first quarter of 2014.

Higher asset management revenue in the first three months of 2015 was driven by increased earnings from our BlackRock investment, as well as stronger average equity markets and positive net flows, after adjustments for cyclical client activities. Discretionary client assets under management grew to $136 billion at March 31, 2015 compared with $130 billion at March 31, 2014.

Consumer service fees increased in the first quarter of 2015 compared to the prior year quarter primarily due to higher customer-initiated transaction volumes.

Corporate services revenue increased in the first quarter of 2015 compared to the first quarter of 2014, principally due to the impact of the second quarter 2014 correction to reclassify certain commercial facility fees from net interest income to noninterest income, an increase in treasury management fees and higher net hedging gains on commercial mortgage servicing rights, partially offset by lower mergers and acquisition advisory fees.

 

Residential mortgage fee revenue increased slightly in the first three months of 2015 compared to the prior year quarter, as higher net hedging gains on residential mortgage servicing rights were substantially offset by lower servicing fee revenue.

Service charges on deposits increased in the first quarter of 2015 compared to the prior year quarter, benefitting from changes in product offerings and higher customer-related activity.

Other noninterest income declined in the first quarter of 2015 compared to the prior year quarter primarily due to the impact of the first quarter 2014 gain on sale of 1 million Visa Class B common shares partially offset by higher customer-related trading revenue. As of March 31, 2015, we held approximately 7 million Visa Class B common shares with a fair value of approximately $740 million and a recorded investment of approximately $77 million.

Other noninterest income typically fluctuates from period to period depending on the nature and magnitude of transactions completed. Further details regarding our customer-related trading activities are included in the Market Risk Management – Customer-Related Trading Risk portion of the Risk Management section of this Financial Review. Further details regarding private and other equity investments are included in the Market Risk Management – Equity And Other Investment Risk section, and further details regarding gains or losses related to our equity investment in BlackRock are included in the Business Segments Review section.

In the second quarter of 2015, we expect the fee income categories of noninterest income (asset management, consumer services, corporate services, residential mortgage and service charges on deposits) to be up low single digits, on a percentage basis, compared to the first quarter of 2015, reflecting our continued focus on our strategic priorities.

Provision For Credit Losses

The provision for credit losses totaled $54 million for the first quarter of 2015 compared with $94 million for the first quarter of 2014. The decline in provision reflected overall credit quality improvement since the first quarter of 2014.

We expect our provision for credit losses in the second quarter of 2015 to be between $50 million and $100 million.

The Credit Risk Management portion of the Risk Management section of this Financial Review includes additional information regarding factors impacting the provision for credit losses.

Noninterest Expense

Noninterest expense increased $85 million, or 4%, to $2.3 billion for the first quarter of 2015 compared with first quarter 2014, primarily related to PNC’s investments in technology and business infrastructure in support of its strategic priorities and higher personnel expense, partially offset by lower legal and residential mortgage compliance costs.

In the first quarter of 2015 we have captured savings of more than 30 percent of our 2015 continuous improvement savings goal of $400 million, and we expect to achieve the full-year goal. We intend to fund our business and technology investments with the cost savings.

In the second quarter of 2015, we expect noninterest expense to be up low single digits, on a percentage basis, compared to the first quarter of 2015, due to the expected impact of seasonality as second quarter expenses typically increase compared to the first quarter.

For full year 2015, we expect noninterest expense to be stable compared to 2014.

Effective Income Tax Rate

The effective income tax rate was 24.4% in the first quarter of 2015 compared with 25.3% in the first quarter of 2014. The effective tax rate is generally lower than the statutory rate primarily due to tax credits PNC receives from our investments in low income housing and new markets investments, as well as earnings in other tax exempt investments.

We expect our 2015 effective tax rate to be approximately 25%.