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THE PNC FINANCIAL SERVICES GROUP, INC.

FINANCIAL SUPPLEMENT

THIRD QUARTER 2015

(Unaudited)


THE PNC FINANCIAL SERVICES GROUP, INC.

FINANCIAL SUPPLEMENT

THIRD 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 October 14, 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 Third 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 September 30, 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         Nine months ended  

In millions, except per share data

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

Interest Income

               

Loans

  $ 1,804      $ 1,791      $ 1,802      $ 1,835      $ 1,848        $ 5,397      $ 5,592   

Investment securities

    423        407        406        398        387          1,236        1,226   

Other

    114        107        111        104        93          332        276   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

Total interest income

    2,341        2,305        2,319        2,337        2,328          6,965        7,094   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

Interest Expense

               

Deposits

    107        98        92        86        81          297        239   

Borrowed funds

    172        155        155        154        143          482        427   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

Total interest expense

    279        253        247        240        224          779        666   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

Net interest income

    2,062        2,052        2,072        2,097        2,104          6,186        6,428   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

Noninterest Income

               

Asset management

    376        416        376        376        411          1,168        1,137   

Consumer services

    341        334        311        321        320          986        933   

Corporate services

    384        369        344        397        374          1,097        1,018   

Residential mortgage

    125        164        164        135        140          453        483   

Service charges on deposits

    172        156        153        180        179          481        482   

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

    (9     8        42        —          —            41        4   

Other

    324        367        269        441        313          960        943   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

Total noninterest income

    1,713        1,814        1,659        1,850        1,737          5,186        5,000   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

Total revenue

    3,775        3,866        3,731        3,947        3,841          11,372        11,428   

Provision For Credit Losses

    81        46        54        52        55          181        221   

Noninterest Expense

               

Personnel

    1,222        1,200        1,157        1,170        1,189          3,579        3,441   

Occupancy

    209        209        216        216        200          634        617   

Equipment

    227        231        222        234        220          680        625   

Marketing

    64        67        62        67        66          193        186   

Other

    630        659        692        852        682          1,981        2,080   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

Total noninterest expense

    2,352        2,366        2,349        2,539        2,357          7,067        6,949   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

Income before income taxes and noncontrolling interests

    1,342        1,454        1,328        1,356        1,429          4,124        4,258   

Income taxes

    269        410        324        299        391          1,003        1,108   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

Net income

    1,073        1,044        1,004        1,057        1,038          3,121        3,150   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

Less: Net income (loss) attributable to noncontrolling interests

    18        4        1        21        1          23        2   

Preferred stock dividends and discount accretion and redemptions (b)

    64        48        70        48        71          182        189   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

Net income attributable to common shareholders

  $ 991      $ 992      $ 933      $ 988      $ 966        $ 2,916      $ 2,959   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

Earnings Per Common Share

               

Basic

  $ 1.93      $ 1.92      $ 1.79      $ 1.88      $ 1.82        $ 5.64      $ 5.55   

Diluted

  $ 1.90      $ 1.88      $ 1.75      $ 1.84      $ 1.79        $ 5.52      $ 5.45   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

Average Common Shares Outstanding

               

Basic

    512        517        521        524        529          516        531   

Diluted

    520        525        529        532        537          525        539   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

Efficiency

    62     61     63     64     61       62     61

Noninterest income to total revenue

    45     47     44     47     45       46     44

Effective tax rate (c)

    20.0     28.2     24.4     22.1     27.4       24.3     26.0
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

   

 

 

 

 

(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) Dividends are payable quarterly other than Series O and Series R preferred stock, which are payable semiannually in different quarters.
(c) 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

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

Assets

         

Cash and due from banks (a)

  $ 3,835      $ 4,412      $ 4,151      $ 4,360      $ 4,164   

Federal funds sold and resale agreements (b)

    1,534        1,971        1,893        1,852        1,761   

Trading securities

    1,901        2,334        2,151        2,353        2,650   

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

    34,224        33,969        31,198        31,779        26,247   

Loans held for sale (b)

    2,060        2,357        2,423        2,262        2,143   

Investment securities

    68,066        61,362        60,768        55,823        55,039   

Loans (a) (b)

    204,983        205,153        204,722        204,817        200,872   

Allowance for loan and lease losses (a)

    (3,237     (3,272     (3,306     (3,331     (3,406
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loans

    201,746        201,881        201,416        201,486        197,466   

Goodwill

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

Mortgage servicing rights

    1,467        1,558        1,333        1,351        1,510   

Other intangible assets

    407        435        463        493        484   

Equity investments (a) (d)

    10,497        10,531        10,523        10,728        10,763   

Other (a) (b)

    27,285        24,032        25,538        23,482        23,123   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

  $ 362,125      $ 353,945      $ 350,960      $ 345,072      $ 334,424   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities

         

Deposits

         

Noninterest-bearing

  $ 78,239      $ 77,369      $ 74,944      $ 73,479      $ 72,963   

Interest-bearing

    166,740        162,335        161,559        158,755        153,341   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

    244,979        239,704        236,503        232,234        226,304   

Borrowed funds

         

Federal funds purchased and repurchase agreements

    2,077        2,190        2,202        3,510        3,499   

Federal Home Loan Bank borrowings

    21,664        22,193        21,224        20,005        16,471   

Bank notes and senior debt

    19,749        18,529        16,205        15,750        15,327   

Subordinated debt

    9,242        9,121        9,228        9,151        9,046   

Commercial paper

    1,125        2,956        4,399        4,995        4,809   

Other (a) (b)

    2,806        3,287        3,571        3,357        3,175   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total borrowed funds

    56,663        58,276        56,829        56,768        52,327   

Allowance for unfunded loan commitments and letters of credit

    266        246        234        259        251   

Accrued expenses (a)

    5,185        5,031        5,039        5,187        5,090   

Other (a)

    8,754        4,776        5,917        4,550        4,457   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

    315,847        308,033        304,522        298,998        288,429   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Equity

         

Preferred stock (e)

         

Common stock - $5 par value

         

Authorized 800 shares, issued 542, 542, 541, 541, and 540 shares

    2,708        2,708        2,706        2,705        2,703   

Capital surplus - preferred stock

    3,450        3,449        3,948        3,946        3,945   

Capital surplus - common stock and other

    12,675        12,632        12,561        12,627        12,573   

Retained earnings

    28,337        27,609        26,882        26,200        25,464   

Accumulated other comprehensive income (loss)

    615        379        703        503        727   

Common stock held in treasury at cost: 32, 26, 21, 18 and 12 shares

    (2,837     (2,262     (1,775     (1,430     (931
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total shareholders’ equity

    44,948        44,515        45,025        44,551        44,481   

Noncontrolling interests

    1,330        1,397        1,413        1,523        1,514   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total equity

    46,278        45,912        46,438        46,074        45,995   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and equity

  $ 362,125      $ 353,945      $ 350,960      $ 345,072      $ 334,424   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) Amounts include consolidated variable interest entities. Our second quarter 2015 Form 10-Q included, and our third 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 second quarter 2015 Form 10-Q included, and our third 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 $33.8 billion, $33.6 billion, $30.8 billion, $31.4 billion, and $25.9 billion as of September 30, 2015, June 30, 2015, March 31, 2015, December 31, 2014, and September 30, 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           Nine months ended  

In millions, except per share data

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

Basic

                        

Net income

   $ 1,073       $ 1,044       $ 1,004       $ 1,057       $ 1,038           $ 3,121       $ 3,150   

Less:

                        

Net income (loss) attributable to noncontrolling interests

     18         4         1         21         1             23         2   

Preferred stock dividends and discount accretion and redemptions (a)

     64         48         70         48         71             182         189   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Net income attributable to common shareholders

     991         992         933         988         966             2,916         2,959   

Less:

                        

Dividends and undistributed earnings allocated to nonvested restricted shares

     —           —           2         2         3             2         9   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Net income attributable to basic common shares

   $ 991       $ 992       $ 931       $ 986       $ 963           $ 2,914       $ 2,950   

Basic weighted-average common shares outstanding

     512         517         521         524         529             516         531   

Basic earnings per common share

   $ 1.93       $ 1.92       $ 1.79       $ 1.88       $ 1.82           $ 5.64       $ 5.55   
 

Diluted

                        

Net income attributable to basic common shares

   $ 991       $ 992       $ 931       $ 986       $ 963           $ 2,914       $ 2,950   

Less: Impact of BlackRock earnings per share dilution

     4         5         5         5         4             14         13   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Net income attributable to diluted common shares

   $ 987       $ 987       $ 926       $ 981       $ 959           $ 2,900       $ 2,937   

Basic weighted-average common shares outstanding

     512         517         521         524         529             516         531   

Dilutive potential common shares

     8         8         8         8         8             9         8   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Diluted weighted-average common shares outstanding

     520         525         529         532         537             525         539   

Diluted earnings per common share

   $ 1.90       $ 1.88       $ 1.75       $ 1.84       $ 1.79           $ 5.52       $ 5.45   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

 

(a) Dividends are payable quarterly other than Series O and Series R preferred stock, which are payable semiannually in different quarters.

Table 4: Capital Ratios (Unaudited)

 

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

Transitional Basel III (a) (b)

          

Common equity Tier 1

     10.6     10.6     10.5     10.9     11.1

Tier 1 risk-based

     12.0        12.0        12.0        12.6        12.8   

Total capital risk-based

     14.8        14.9        15.0        15.8        16.1   

Leverage

     10.2        10.3        10.5        10.8        11.1   

Common shareholders’ equity to assets

     11.5     11.6     11.7     11.8     12.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) The ratios as of September 30, 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 second quarter 2015 Form 10-Q included, and our third 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           Nine months ended  

In millions

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

Assets

                   

Interest-earning assets:

                   

Investment securities

                   

Securities available for sale

                   

Residential mortgage-backed

                   

Agency

   $ 21,813      $ 20,550      $ 19,290      $ 17,745      $ 18,134           $ 20,560      $ 19,344   

Non-agency

     4,279        4,480        4,657        4,832        5,021             4,471        5,199   

Commercial mortgage-backed

     6,228        6,286        6,260        5,799        5,147             6,258        5,339   

Asset-backed

     5,287        5,228        5,140        5,089        5,207             5,219        5,399   

U.S. Treasury and government agencies

     6,558        5,204        5,142        5,140        5,142             5,640        4,734   

State and municipal

     1,995        1,973        1,969        1,935        1,913             1,979        2,220   

Other debt

     1,837        1,796        1,777        1,780        1,763             1,803        2,096   

Corporate stocks and other

     542        414        457        433        404             471        392   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Total securities available for sale

     48,539        45,931        44,692        42,753        42,731             46,401        44,723   

Securities held to maturity

                   

Residential mortgage-backed

     8,352        8,196        7,035        5,832        5,778             7,865        5,903   

Commercial mortgage-backed

     1,927        2,005        2,097        2,257        2,409             2,009        2,584   

Asset-backed

     733        743        755        767        874             744        956   

U.S. Treasury and government agencies

     254        252        249        247        245             252        242   

State and municipal

     1,979        2,004        2,018        2,048        2,058             2,000        1,618   

Other

     289        311        320        324        325             307        331   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Total securities held to maturity

     13,534        13,511        12,474        11,475        11,689             13,177        11,634   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Total investment securities

     62,073        59,442        57,166        54,228        54,420             59,578        56,357   

Loans

                   

Commercial

     97,926        98,364        97,866        95,646        92,547             98,053        91,321   

Commercial real estate

     25,228        24,812        23,924        23,176        22,961             24,659        22,468   

Equipment lease financing

     7,683        7,556        7,539        7,621        7,610             7,593        7,548   

Consumer

     59,584        60,240        61,476        62,213        62,351             60,426        62,636   

Residential real estate

     14,406        14,416        14,350        14,223        14,359             14,391        14,586   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Total loans

     204,827        205,388        205,155        202,879        199,828             205,122        198,559   

Interest-earning deposits with banks

     37,289        32,368        30,405        27,701        22,108             33,380        16,341   

Loans held for sale

     2,048        2,092        2,246        2,205        2,272             2,128        2,095   

Federal funds sold and resale agreements

     1,598        1,959        1,655        1,771        1,409             1,737        1,336   

Other

     5,033        5,470        5,046        5,121        4,914             5,183        5,045   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Total interest-earning assets

     312,868        306,719        301,673        293,905        284,951             307,128        279,733   

Noninterest-earning assets:

                   

Allowance for loan and lease losses

     (3,265     (3,309     (3,317     (3,383     (3,445          (3,297     (3,515

Cash and due from banks

     3,890        3,954        4,067        4,176        3,934             3,969        3,867   

Other

     45,094        45,276        45,634        44,948        44,005             45,333        43,793   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Total assets

   $ 358,587      $ 352,640      $ 348,057      $ 339,646      $ 329,445           $ 353,133      $ 323,878   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

 

(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           Nine months ended  

In millions

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

Liabilities and Equity

                        

Interest-bearing liabilities:

                        

Interest-bearing deposits

                        

Money market

   $ 84,554       $ 81,857       $ 79,994       $ 77,696       $ 76,014           $ 82,151       $ 74,777   

Demand

     46,390         46,281         46,131         44,389         43,112             46,269         43,023   

Savings

     14,150         13,775         13,053         12,410         12,152             13,663         11,848   

Retail certificates of deposit

     18,392         18,334         18,541         18,700         19,317             18,422         19,951   

Time deposits in foreign offices and other time

     2,361         2,300         2,192         2,754         2,235             2,285         2,158   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total interest-bearing deposits

     165,847         162,547         159,911         155,949         152,830             162,790         151,757   

Borrowed funds

                        

Federal funds purchased and repurchase agreements

     2,298         2,718         3,116         3,339         3,319             2,708         3,634   

Federal Home Loan Bank borrowings

     21,882         22,001         20,774         16,786         15,328             21,556         14,215   

Bank notes and senior debt

     19,455         16,408         15,351         15,395         14,221             17,087         13,682   

Subordinated debt

     8,882         8,861         8,851         8,812         8,804             8,862         8,475   

Commercial paper

     1,867         3,640         4,986         4,735         4,863             3,486         4,903   

Other

     3,147         3,537         3,274         3,303         2,801             3,319         2,711   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total borrowed funds

     57,531         57,165         56,352         52,370         49,336             57,018         47,620   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total interest-bearing liabilities

     223,378         219,712         216,263         208,319         202,166             219,808         199,377   

Noninterest-bearing liabilities and equity:

                        

Noninterest-bearing deposits

     77,553         75,299         73,178         73,468         70,993             75,359         68,976   

Allowance for unfunded loan commitments and letters of credit

     246         234         260         251         232             246         234   

Accrued expenses and other liabilities

     11,667         11,540         12,326         11,639         10,307             11,845         10,155   

Equity

     45,743         45,855         46,030         45,969         45,747             45,875         45,136   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total liabilities and equity

   $ 358,587       $ 352,640       $ 348,057       $ 339,646       $ 329,445           $ 353,133       $ 323,878   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

(a)    Calculated using average daily balances.

       

       

Table 6: Supplemental Average Balance Sheet Information (Unaudited)

 

  

       

Deposits and Common Shareholders’ Equity

                        

Interest-bearing deposits

   $ 165,847       $ 162,547       $ 159,911       $ 155,949       $ 152,830           $ 162,790       $ 151,757   

Noninterest-bearing deposits

     77,553         75,299         73,178         73,468         70,993             75,359         68,976   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total deposits

   $ 243,400       $ 237,846       $ 233,089       $ 229,417       $ 223,823           $ 238,149       $ 220,733   

Transaction deposits

   $ 208,497       $ 203,437       $ 199,303       $ 195,553       $ 190,119           $ 203,779       $ 186,776   

Common shareholders’ equity

   $ 40,910       $ 40,818       $ 40,603       $ 40,522       $ 40,238           $ 40,778       $ 39,584   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 


THE PNC FINANCIAL SERVICES GROUP, INC.    Page 6

 

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

 

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

Average yields/rates

                   

Yield on interest-earning assets

                   

Investment securities

                   

Securities available for sale

                   

Residential mortgage-backed

                   

Agency

     2.47     2.43     2.67     2.72     2.64          2.52     2.63

Non-agency

     4.83        4.70        4.51        4.33        4.64             4.68        4.92   

Commercial mortgage-backed

     3.20        3.03        3.19        3.37        3.61             3.14        3.56   

Asset-backed

     2.15        2.12        2.08        2.15        2.01             2.12        1.92   

U.S. Treasury and government agencies

     1.36        1.12        1.27        1.21        1.01             1.26        1.16   

State and municipal

     4.83        4.76        4.45        4.58        3.98             4.68        4.40   

Other debt

     2.44        4.01        2.53        3.25        2.41             2.99        2.39   

Corporate stocks and other

     .26        .10        .10        .11        .10             .16        .10   

Total securities available for sale

     2.66        2.69        2.75        2.82        2.75             2.70        2.82   

Securities held to maturity

                   

Residential mortgage-backed

     3.05        2.95        3.26        3.60        3.35             3.07        3.49   

Commercial mortgage-backed

     3.65        3.63        4.16        4.09        3.99             3.82        3.93   

Asset-backed

     1.57        1.53        1.52        1.50        1.75             1.54        1.60   

U.S. Treasury and government agencies

     3.82        3.81        3.77        3.82        3.81             3.80        3.80   

State and municipal

     5.50        5.49        5.52        5.50        5.50             5.50        5.50   

Other

     3.37        3.12        2.89        3.02        2.84             3.11        2.91   

Total securities held to maturity

     3.43        3.37        3.67        3.88        3.73             3.49        3.70   

Total investment securities

     2.83        2.85        2.95        3.05        2.96             2.87        3.00   

Loans

                   

Commercial

     3.02        3.00        2.98        3.04        3.17             3.00        3.30   

Commercial real estate

     3.35        3.44        3.80        3.88        3.90             3.52        4.04   

Equipment lease financing

     3.42        3.45        3.47        3.97        3.48             3.45        3.58   

Consumer

     4.18        4.13        4.21        4.11        4.16             4.17        4.19   

Residential real estate

     4.76        4.91        4.88        4.90        5.03             4.85        5.00   

Total loans

     3.54        3.54        3.59        3.63        3.71             3.55        3.80   

Interest-earning deposits with banks

     .25        .25        .25        .29        .23             .25        .24   

Loans held for sale

     4.23        4.33        4.20        4.67        4.48             4.25        4.65   

Federal funds sold and resale agreements

     .33        .22        .22        .28        .38             .25        .39   

Other

     5.33        4.65        5.43        4.56        4.24             5.13        4.49   

Total yield on interest-earning assets

     3.02        3.06        3.15        3.21        3.30             3.08        3.43   

Rate on interest-bearing liabilities

                   

Interest-bearing deposits

                   

Money market

     .29        .27        .24        .20        .18             .27        .18   

Demand

     .06        .05        .06        .06        .05             .05        .05   

Savings

     .18        .17        .15        .14        .12             .17        .10   

Retail certificates of deposit

     .68        .68        .71        .72        .73             .69        .74   

Time deposits in foreign offices and other time

     .17        .16        .19        .20        .18             .18        .18   

Total interest-bearing deposits

     .26        .24        .23        .22        .21             .24        .21   

Borrowed funds

                   

Federal funds purchased and repurchase agreements

     .14        .14        .12        .11        .08             .13        .09   

Federal Home Loan Bank borrowings

     .49        .46        .45        .46        .48             .47        .49   

Bank notes and senior debt

     1.27        1.19        1.36        1.35        1.33             1.27        1.44   

Subordinated debt

     2.81        2.61        2.64        2.64        2.40             2.69        2.53   

Commercial paper

     .38        .35        .34        .31        .30             .35        .29   

Other

     2.03        1.95        1.99        2.25        2.62             1.99        2.48   

Total borrowed funds

     1.18        1.07        1.10        1.17        1.14             1.12        1.19   

Total rate on interest-bearing liabilities

     .49        .46        .46        .45        .44             .47        .44   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Interest rate spread

     2.53        2.60        2.69        2.76        2.86             2.61        2.99   

Impact of noninterest-bearing sources (b)

     .14        .13        .13        .13        .12             .13        .13   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Net interest margin

     2.67     2.73     2.82     2.89     2.98          2.74     3.12
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

 

(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 September 30, 2015, June 30, 2015, March 31, 2015, December 31, 2014 and September 30, 2014, were $50 million, $49 million, $49 million, $49 million and $47 million, respectively. The taxable-equivalent adjustments to net interest income for the nine months ended September 30, 2015 and September 30, 2014 were $148 million and $140 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           Nine months ended  

In millions

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

Core net interest income (a)

   $ 1,972       $ 1,941       $ 1,944       $ 1,971       $ 1,957           $ 5,857       $ 5,971   

Total purchase accounting accretion (b)

     90         111         128         126         147             329         457   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total net interest income

   $ 2,062       $ 2,052       $ 2,072       $ 2,097       $ 2,104           $ 6,186       $ 6,428   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

 

(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           Nine months ended  

In millions

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

Average yields/rates

                   

Yield on interest-earning assets

                   

Total investment securities

     2.83     2.85     2.95     3.05     2.96          2.87     3.00

Total loans

     3.54        3.54        3.59        3.63        3.71             3.55        3.80   

Other

     .99        1.03        1.14        1.15        1.19             1.05        1.48   

Total yield on interest-earning assets

     3.02        3.06        3.15        3.21        3.30             3.08        3.43   
 

Rate on interest-bearing liabilities

                   

Total interest-bearing deposits

     .26        .24        .23        .22        .21             .24        .21   

Total borrowed funds

     1.18        1.07        1.10        1.17        1.14             1.12        1.19   

Total rate on interest-bearing liabilities

     .49        .46        .46        .45        .44             .47        .44   
 

Interest rate spread

     2.53        2.60        2.69        2.76        2.86             2.61        2.99   

Impact of noninterest-bearing sources

     .14        .13        .13        .13        .12             .13        .13   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Net interest margin

     2.67     2.73     2.82     2.89     2.98          2.74     3.12
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

 

(c) See note (a) on page 6.

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

 

     Three months ended           Nine months ended  

In millions

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

Average yields/rates

                   

Yield on interest-earning assets

                   

Total investment securities

     2.77     2.78     2.89     2.98     2.89          2.81     2.94

Total loans

     3.36        3.32        3.33        3.38        3.42             3.33        3.49   

Other

     .99        1.03        1.13        1.14        1.19             1.05        1.48   

Total yield on interest-earning assets

     2.89        2.90        2.96        3.02        3.08             2.92        3.20   
 

Rate on interest-bearing liabilities

                   

Total interest-bearing deposits

     .26        .25        .24        .23        .23             .25        .23   

Total borrowed funds

     1.06        .96        .99        1.03        1.00             1.01        1.05   

Total rate on interest-bearing liabilities

     .46        .44        .44        .43        .42             .45        .42   
 

Interest rate spread

     2.43        2.46        2.52        2.59        2.66             2.47        2.78   

Impact of noninterest-bearing sources

     .14        .13        .13        .13        .12             .13        .13   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Core net interest margin

     2.57        2.59        2.65        2.72        2.78             2.60        2.91   

Purchase accounting accretion impact on net interest margin

     .10        .14        .17        .17        .20             .14        .21   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Net interest margin

     2.67     2.73     2.82     2.89     2.98          2.74     3.12
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

 

(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

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

Commercial

              

Retail/wholesale trade

   $ 16,986       $ 17,162       $ 17,126       $ 16,972       $ 16,162   

Manufacturing

     19,649         19,775         20,057         18,744         18,649   

Service providers

     13,550         14,054         13,916         14,103         13,603   

Real estate related (a)

     11,492         10,931         10,744         10,812         10,722   

Financial services

     5,511         5,966         6,306         6,178         5,218   

Health care

     9,397         9,396         9,192         9,017         9,095   

Other industries

     20,842         20,849         20,309         21,594         20,051   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial

     97,427         98,133         97,650         97,420         93,500   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Commercial real estate

              

Real estate projects (b)

     15,333         15,142         15,057         14,577         14,564   

Commercial mortgage

     10,760         9,664         9,498         8,685         8,378   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial real estate

     26,093         24,806         24,555         23,262         22,942   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Equipment lease financing

     7,644         7,783         7,470         7,686         7,621   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total commercial lending

     131,164         130,722         129,675         128,368         124,063   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Consumer

              

Home equity

              

Lines of credit

     19,309         19,589         19,918         20,361         20,667   

Installment

     13,697         13,946         14,147         14,316         14,388   

Credit card

     4,600         4,520         4,434         4,612         4,449   

Other consumer

              

Education

     6,070         6,212         6,448         6,626         6,978   

Automobile

     11,039         11,057         11,120         11,616         11,548   

Other

     4,612         4,575         4,491         4,511         4,428   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total consumer

     59,327         59,899         60,558         62,042         62,458   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Residential real estate

              

Residential mortgage

     14,038         14,041         13,982         13,885         13,805   

Residential construction

     454         491         507         522         546   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total residential real estate

     14,492         14,532         14,489         14,407         14,351   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total consumer lending

     73,819         74,431         75,047         76,449         76,809   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total loans (c)

   $ 204,983       $ 205,153       $ 204,722       $ 204,817       $ 200,872   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(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:

   $ 4,167       $ 4,465       $ 4,675       $ 4,858       $ 5,167   

 

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

 

  

In millions

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

Commercial mortgage

   $ 860       $ 784       $ 1,037       $ 922       $ 891   

Residential mortgage

     1,128         1,369         1,249         1,279         1,211   

Other

     72         204         137         61         41   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 2,060       $ 2,357       $ 2,423       $ 2,262       $ 2,143   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

Table 13: Commitments to Extend Credit (Unaudited)

 

  

In millions

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

Commitments to extend credit (a)

   $ 141,370       $ 138,242       $ 137,960       $ 138,592       $ 136,795   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(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

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

Beginning balance

  $ 3,272      $ 3,306      $ 3,331      $ 3,406      $ 3,453   

Gross charge-offs:

         

Commercial

    (63     (48     (34     (45     (60

Commercial real estate

    (4     (13     (12     (24     (14

Equipment lease financing

    (1     (1       (5     (3

Home equity

    (37     (50     (52     (62     (50

Residential real estate

    (11     (6       (14     (11

Credit card

    (37     (41     (43     (38     (40

Other consumer

    (44     (44     (48     (47     (44
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total gross charge-offs

    (197     (203     (189     (235     (222

Recoveries:

         

Commercial

    42        65        32        51        62   

Commercial real estate

    11        23        12        20        15   

Equipment lease financing

    1        1        1        4        4   

Home equity

    25        24        20        20        19   

Residential real estate

    4        4        2        3        21   

Credit card

    5        6        5        5        5   

Other consumer

    13        13        14        14        14   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total recoveries

    101        136        86        117        140   

Net (charge-offs) recoveries:

         

Commercial

    (21     17        (2     6        2   

Commercial real estate

    7        10        —          (4     1   

Equipment lease financing

    —          —          1        (1     1   

Home equity

    (12     (26     (32     (42     (31

Residential real estate

    (7     (2     2        (11     10   

Credit card

    (32     (35     (38     (33     (35

Other consumer

    (31     (31     (34     (33     (30
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net charge-offs

    (96     (67     (103     (118     (82

Provision for credit losses

    81        46        54        52        55   

Other

      (1     (1     (1     (1

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

    (20     (12     25        (8     (19
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

  $ 3,237      $ 3,272      $ 3,306      $ 3,331      $ 3,406   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Information

         

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

    .19     .13     .20     .23     .16

Allowance for loan and lease losses to total loans (a)

    1.58        1.59        1.61        1.63        1.70   

Commercial lending net charge-offs

  $ (14   $ 27      $ (1   $ 1      $ 4   

Consumer lending net charge-offs

    (82     (94     (102     (119     (86
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net charge-offs

  $ (96   $ (67   $ (103   $ (118   $ (82

Net charge-offs to average loans

         

Commercial lending

    .04     (.08 )%      .00     .00     (.01 )% 

Consumer lending

    .44        .51        .55        .62        .44   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) This ratio will be impacted by the expected change in derecognition policies for purchased impaired loans that are pooled and accounted for as a single asset. It is estimated that the implementation of this policy change in the fourth quarter of 2015 will reduce the purchased impaired loan recorded investment balance included in total loans and associated allowance for loan and lease losses balance each by approximately $475 million. Our second quarter 2015 Form 10-Q included, and our third quarter 2015 Form 10-Q will include, additional discussion on this policy change.

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

 

Three months ended - in millions

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

Beginning balance

   $ 246       $ 234       $ 259      $ 251       $ 232   

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

     20         12         (25     8         19   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Ending balance

   $ 266       $ 246       $ 234      $ 259       $ 251   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 


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     Nine months ended  

In millions

   September 30
2015
    June 30
2015
    September 30
2014
    September 30
2015
    September 30
2014
 

Impaired loans

          

Scheduled accretion

   $ 88      $ 92      $ 109      $ 279      $ 354   

Reversal of contractual interest on impaired loans

     (57     (52     (57     (164     (195
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Scheduled accretion net of contractual interest

     31        40        52        115        159   

Excess cash recoveries (a)

     19        28        31        80        95   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total impaired loans

   $ 50      $ 68      $ 83      $ 195      $ 254   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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

Table 17: Purchased Impaired Loans - Accretable Yield

 

In millions

                 

July 1, 2015

   $ 1,443     

January 1, 2015

   $ 1,558   

Accretion (including excess cash recoveries)

     (107  

Accretion (including excess cash recoveries)

     (359

Disposals

     (57  

Disposals

     (66

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

     72     

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

     218   
  

 

 

      

 

 

 

September 30, 2015 (b)

   $ 1,351     

September 30, 2015 (b)

   $ 1,351   
  

 

 

      

 

 

 

 

(a) Approximately 60% and 66% of the net reclassification for the third quarter and first nine months of 2015, 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 September 30, 2015, we estimate that the reversal of contractual interest on purchased impaired loans will total approximately $0.7 billion in future periods. This will offset the total net accretable interest in future interest income of $1.4 billion on purchased impaired loans.

Table 18: Valuation of Purchased Impaired Loans

 

     September 30, 2015     June 30, 2015     December 31, 2014  

Dollars in millions

   Balance     Net Investment     Balance     Net Investment     Balance     Net Investment  

Commercial and commercial real estate loans:

            

Outstanding balance (a)

   $ 296        $ 346        $ 466     

Recorded investment

     204          235          310     

Allowance for loan losses

     (67       (67       (79  
  

 

 

     

 

 

     

 

 

   

Net investment/Carrying value

     137        46     168        49     231        50
  

 

 

     

 

 

     

 

 

   

Consumer and residential mortgage loans:

            

Outstanding balance (a)

     3,854          4,136          4,541     

Recorded investment

     3,963          4,230          4,548     

Allowance for loan losses

     (751       (788       (793  
  

 

 

     

 

 

     

 

 

   

Net investment/Carrying value

     3,212        83     3,442        83     3,755        83
  

 

 

     

 

 

     

 

 

   

Total purchased impaired loans:

            

Outstanding balance (a)

     4,150          4,482          5,007     

Recorded investment

     4,167          4,465          4,858     

Allowance for loan losses

     (818       (855       (872  
  

 

 

     

 

 

     

 

 

   

Net investment/Carrying value

   $ 3,349        81   $ 3,610        81   $ 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 and second quarter 2015 Form 10-Q included, and our third 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

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

Nonperforming loans, including TDRs (a)

          

Commercial lending

          

Commercial

          

Retail/wholesale trade

   $ 41      $ 43      $ 46      $ 48      $ 62   

Manufacturing

     73        55        59        59        44   

Service providers

     57        50        63        67        82   

Real estate related (b)

     45        46        66        66        76   

Financial services

     3        2        1        4        5   

Health care

     26        28        28        28        23   

Other industries

     56        34        17        18        28   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial

     301        258        280        290        320   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commercial real estate

          

Real estate projects

     184        211        257        290        346   

Commercial mortgage

     28        31        36        44        49   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial real estate

     212        242        293        334        395   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Equipment lease financing

     7        3        2        2        3   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total commercial lending

     520        503        575        626        718   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consumer lending (c)

          

Home equity

     1,029        1,057        1,101        1,112        1,090   

Residential real estate

          

Residential mortgage

     565        623        653        694        725   

Residential construction

     6        10        12        12        18   

Credit card

     3        3        3        3        3   

Other consumer

     54        56        61        63        58   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total consumer lending

     1,657        1,749        1,830        1,884        1,894   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total nonperforming loans (d)

     2,177        2,252        2,405        2,510        2,612   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

OREO and foreclosed assets

          

Other real estate owned (OREO)

     293        302        331        351        353   

Foreclosed and other assets

     20        24        18        19        10   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total OREO and foreclosed assets (e)

     313        326        349        370        363   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total nonperforming assets

   $ 2,490      $ 2,578      $ 2,754      $ 2,880      $ 2,975   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Nonperforming loans to total loans

     1.06     1.10     1.17     1.23     1.30

Nonperforming assets to total loans, OREO and foreclosed assets

     1.21        1.25        1.34        1.40        1.48   

Nonperforming assets to total assets

     .69        .73        .78        .83        .89   

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

     149        145        137        133        130   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(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 $.6 billion, $.6 billion, $.7 billion, $.8 billion and $.7 billion at September 30, 2015, June 30, 2015, March 31, 2015, December 31, 2014, and September 30, 2014, which included $.3 billion, $.4 billion, $.5 billion, $.5 billion and $.5 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.
(g) In this ratio, the allowance for loan and lease losses will be impacted by the expected fourth quarter of 2015 change in derecognition policies for purchased impaired loans that are pooled and accounted for as a single asset. See footnote (a) of Table 14: Change in Allowance for Loan and Lease Losses on page 9 for additional information on this policy change.


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

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

Beginning balance

   $ 2,578      $ 2,754      $ 2,880      $ 2,975      $ 3,168   

New nonperforming assets

     381        372        336        470        380   

Charge-offs and valuation adjustments

     (114     (129     (124     (158     (127

Principal activity, including paydowns and payoffs

     (167     (207     (170     (183     (195

Asset sales and transfers to loans held for sale

     (106     (97     (93     (130     (143

Returned to performing status

     (82     (115     (75     (94     (108
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

   $ 2,490      $ 2,578      $ 2,754      $ 2,880      $ 2,975   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Table 21: Largest Individual Nonperforming Assets at September 30, 2015 (a)

 

In millions

Ranking

   Outstandings     

Industry

1    $ 34       Real Estate, Rental and Leasing
2      26       Mining, Quarrying, Oil and Gas Extraction
3      17       Construction
4      13       Manufacturing
5      11       Manufacturing
6      10       Manufacturing
7      10       Wholesale Trade
8      9       Construction
9      8       Educational Services
10      8       Manufacturing
  

 

 

    
Total    $ 146      
  

 

 

    
As a percent of total nonperforming assets 6%

 

(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

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

Total consumer lending

   $ 1,948       $ 2,002       $ 2,020       $ 2,041       $ 2,064   

Total commercial lending

     420         414         510         542         552   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total TDRs

   $ 2,368       $ 2,416       $ 2,530       $ 2,583       $ 2,616   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Nonperforming

   $ 1,171       $ 1,208       $ 1,317       $ 1,370       $ 1,303   

Accruing (a)

     1,085         1,091         1,089         1,083         1,174   

Credit card

     112         117         124         130         139   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total TDRs

   $ 2,368       $ 2,416       $ 2,530       $ 2,583       $ 2,616   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

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

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

Commercial

   $ 56       $ 83       $ 73       $ 73       $ 46         .06     .08     .07     .07     .05

Commercial real estate

     32         5         24         23         47         .12        .02        .10        .10        .20   

Equipment lease financing

     2         2         16         11         4         .03        .03        .21        .14        .05   

Home equity

     69         65         61         70         67         .21        .19        .18        .20        .19   

Residential real estate

                         

Non government insured

     84         78         72         95         87         .58        .54        .50        .66        .61   

Government insured

     62         64         70         68         76         .43        .44        .48        .47        .53   

Credit card

     26         23         25         28         27         .57        .51        .56        .61        .61   

Other consumer

                         

Non government insured

     58         51         52         62         56         .27        .23        .24        .27        .24   

Government insured

     119         121         126         152         164         .55        .55        .57        .67        .71   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

            

Total

   $ 508       $ 492       $ 519       $ 582       $ 574         .25        .24        .25        .28        .29   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

 

     Amount      Percent of Total Outstandings  

Dollars in millions

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

Commercial

   $ 39       $ 32       $ 20       $ 24       $ 19         .04     .03     .02     .02     .02

Commercial real estate

     17         5         23         2         6         .07        .02        .09        .01        .03   

Equipment lease financing

              1         1               .01        .01   

Home equity

     31         25         30         32         25         .09        .07        .09        .09        .07   

Residential real estate

                         

Non government insured

     18         20         18         25         24         .12        .14        .12        .17        .17   

Government insured

     40         38         35         43         41         .28        .26        .24        .30        .29   

Credit card

     18         17         17         20         18         .39        .38        .38        .43        .41   

Other consumer

                         

Non government insured

     22         17         18         19         20         .10        .08        .08        .08        .09   

Government insured

     80         81         82         93         100         .37        .37        .37        .41        .44   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

            

Total

   $ 265       $ 235       $ 243       $ 259       $ 254         .13        .11        .12        .13        .13   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

 

     Amount      Percent of Total Outstandings  

Dollars in millions

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

Commercial

   $ 36       $ 35       $ 35       $ 37       $ 39         .04     .04     .04     .04     .04

Commercial real estate

        1               1           .00            .00   

Residential real estate

                         

Non government insured

     27         19         26         23         24         .19        .13        .18        .16        .17   

Government insured

     558         585         634         719         785         3.85        4.03        4.38        4.99        5.47   

Credit card

     30         29         32         33         29         .65        .64        .72        .72        .65   

Other consumer

                         

Non government insured

     15         13         17         16         13         .07        .06        .08        .07        .06   

Government insured

     224         232         244         277         287         1.03        1.06        1.11        1.22        1.25   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

            

Total

   $ 890       $ 914       $ 988       $ 1,105       $ 1,178         .43        .45        .48        .54        .59   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(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. The business also offers PNC proprietary mutual funds. 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 September 30, 2015, our economic interest in BlackRock was 22%.

Table 26: Period End Employees

 

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

Full-time employees

              

Retail Banking

     21,960         22,117         22,063         22,216         22,103   

Other full-time employees (a)

     27,639         27,659         27,696         27,529         27,528   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total full-time employees

     49,599         49,776         49,759         49,745         49,631   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Part-time employees

              

Retail Banking

     2,985         3,112         3,150         3,274         3,410   

Other part-time employees (a)

     564         821         563         568         614   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total part-time employees

     3,549         3,933         3,713         3,842         4,024   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     53,148         53,709         53,472         53,587         53,655   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(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          Nine months ended  

In millions

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

Income (Loss)

                     

Retail Banking

   $ 251      $ 241       $ 202       $ 172      $ 173          $ 694       $ 556   

Corporate & Institutional Banking

     502        508         482         564        549            1,492         1,542   

Asset Management Group

     44        62         37         45        46            143         136   

Residential Mortgage Banking

     (4     19         28         (9     12            43         44   

Non-Strategic Assets Portfolio

     68        56         81         76        82            205         291   

Other, including BlackRock (b) (c)

     212        158         174         209        176            544         581   
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

       

 

 

    

 

 

 

Net income

   $ 1,073      $ 1,044       $ 1,004       $ 1,057      $ 1,038          $ 3,121       $ 3,150   
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

       

 

 

    

 

 

 

Revenue

                     

Retail Banking

   $ 1,643      $ 1,635       $ 1,526       $ 1,520      $ 1,521          $ 4,804       $ 4,529   

Corporate & Institutional Banking

     1,363        1,363         1,284         1,444        1,386            4,010         4,032   

Asset Management Group

     278        314         281         281        277            873         826   

Residential Mortgage Banking

     166        206         207         182        185            579         618   

Non-Strategic Assets Portfolio

     106        109         121         140        152            336         447   

Other, including BlackRock (b) (c)

     219        239         312         380        320            770         976   
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

       

 

 

    

 

 

 

Total revenue

   $ 3,775      $ 3,866       $ 3,731       $ 3,947      $ 3,841          $ 11,372       $ 11,428   
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

       

 

 

    

 

 

 

 

(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 the regulatory rules for liquidity purposes. These adjustments apply to business segment results, primarily favorably impacting Retail Banking and adversely impacting Corporate & Institutional Banking, prospectively beginning with the first quarter of 2015. Prior periods have not been adjusted due to the impracticability of estimating the impact of the change for prior periods.
(b) We consider BlackRock to be a separate reportable business segment but have combined its results with Other for this presentation. Our third 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          Nine months ended  

Dollars in millions

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

INCOME STATEMENT

                 

Net interest income

  $ 1,069      $ 1,045      $ 1,038      $ 986      $ 985          $ 3,152      $ 2,938   

Noninterest income

                 

Service charges on deposits

    165        148        146        172        173            459        461   

Brokerage

    74        71        67        64        60            212        176   

Consumer services

    260        254        233        247        248            747        714   

Other

    75        117        42        51        55            234        240   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Total noninterest income

    574        590        488        534        536            1,652        1,591   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Total revenue

    1,643        1,635        1,526        1,520        1,521            4,804        4,529   

Provision for credit losses

    57        45        49        54        74            151        223   

Noninterest expense

    1,190        1,210        1,158        1,195        1,175            3,558        3,430   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Pretax earnings

    396        380        319        271        272            1,095        876   

Income taxes

    145        139        117        99        99            401        320   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Earnings

  $ 251      $ 241      $ 202      $ 172      $ 173          $ 694      $ 556   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

AVERAGE BALANCE SHEET

                 

Loans

                 

Consumer

                 

Home equity

  $ 27,508      $ 27,775      $ 28,152      $ 28,457      $ 28,684          $ 27,810      $ 28,985   

Indirect auto

    9,380        9,287        9,287        9,209        9,192            9,318        9,093   

Indirect other

    518        561        603        635        675            559        726   

Education

    6,197        6,387        6,626        6,895        7,100            6,402        7,314   

Credit cards

    4,537        4,447        4,444        4,475        4,401            4,476        4,327   

Other

    2,426        2,373        2,347        2,345        2,277            2,383        2,200   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Total consumer

    50,566        50,830        51,459        52,016        52,329            50,948        52,645   

Commercial and commercial real estate

    10,518        10,571        10,654        10,698        10,801            10,580        10,924   

Floor plan

    2,093        2,188        2,213        2,180        2,021            2,164        2,227   

Residential mortgage

    649        726        734        552        584            704        618   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Total loans

    63,826        64,315        65,060        65,446        65,735            64,396        66,414   

Goodwill and other intangible assets

    5,961        5,975        5,990        6,007        6,025            5,975        6,043   

Other assets

    3,129        3,079        2,967        2,946        2,922            3,059        2,807   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Total assets

  $ 72,916      $ 73,369      $ 74,017      $ 74,399      $ 74,682          $ 73,430      $ 75,264   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Deposits

                 

Noninterest-bearing demand

  $ 24,018      $ 23,434      $ 22,591      $ 22,860      $ 22,392          $ 23,353      $ 21,890   

Interest-bearing demand

    35,918        36,454        35,650        34,298        33,900            36,009        33,889   

Money market

    56,163        55,026        53,105        51,204        50,204            54,775        49,945   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Total transaction deposits

    116,099        114,914        111,346        108,362        106,496            114,137        105,724   

Savings

    13,914        13,599        12,888        12,244        11,997            13,471        11,713   

Certificates of deposit

    16,234        16,749        17,318        17,959        18,720            16,763        19,314   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Total deposits

    146,247        145,262        141,552        138,565        137,213            144,371        136,751   

Other liabilities

    632        588        617        555        507            612        440   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Total liabilities

  $ 146,879      $ 145,850      $ 142,169      $ 139,120      $ 137,720          $ 144,983      $ 137,191   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

PERFORMANCE RATIOS

                 

Return on average assets

    1.37     1.32     1.11     .92     .92         1.26     .99

Noninterest income to total revenue

    35        36        32        35        35            34        35   

Efficiency

    72        74        76        79        77            74        76   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

 

(a) See note (a) on page 15.


THE PNC FINANCIAL SERVICES GROUP, INC.    Page 17

 

Table 28: Retail Banking (Unaudited) (Continued)

 

     Three months ended          Nine months ended  

Dollars in millions, except as noted

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

OTHER INFORMATION (a)

                  

Credit-related statistics:

                  

Commercial nonperforming assets

   $ 116      $ 126      $ 131      $ 139      $ 146           

Consumer nonperforming assets

     976        1,001        1,043        1,059        1,037           
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

         

Total nonperforming assets

   $ 1,092      $ 1,127      $ 1,174      $ 1,198      $ 1,183           
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

         

Purchased impaired loans (b)

   $ 516      $ 531      $ 553      $ 575      $ 600           
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

         

Commercial lending net charge-offs (recoveries)

   $ (7   $ 1      $ 1      $ (2   $ 2          $ (5   $ 33   

Credit card lending net charge-offs

     31        35        38        33        35            104        109   

Consumer lending (excluding credit card) net charge-offs

     42        50        60        73        56            152        212   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Total net charge-offs

   $ 66      $ 86      $ 99      $ 104      $ 93          $ 251      $ 354   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Commercial lending annualized net charge-off ratio

     (.23 )%      .02     .03     (.06 )%      .06         (.06 )%      .34

Credit card lending annualized net charge-off ratio

     2.77     3.15     3.47     2.93     3.16         3.11     3.37

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

     .36     .43     .51     .60     .46         .43     .58
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Total annualized net charge-off ratio

     .41     .53     .62     .63     .56         .52     .71
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Home equity portfolio credit statistics: (c)

                  

% of first lien positions at origination (d)

     56     55     54     54     53        

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

     74     76     76     77     78        

Weighted-average updated FICO scores (f)

     751        751        748        748        747           

Annualized net charge-off ratio

     .16     .34     .42     .52     .35         .31     .55

Delinquency data - % of total loans: (g)

                  

Loans 30 - 59 days past due

     .20     .20     .18     .20     .19        

Loans 60 - 89 days past due

     .09     .08     .09     .09     .07        
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

         

Accruing loans past due

     .29     .28     .27     .29     .26        
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

         

Nonperforming loans

     3.09     3.13     3.12     3.13     3.04        
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

         

Other statistics:

                  

ATMs

     8,996        8,880        8,754        8,605        8,178           

Branches (h)

     2,645        2,644        2,660        2,697        2,691           

Brokerage account client assets (billions) (i)

   $ 42      $ 44      $ 44      $ 43      $ 43           
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

         

Customer-related statistics (average):

                  

Non-teller deposit transactions (j)

     45     42     40     38     36         43     34

Digital consumer customers (k)

     53     52     50     49     47         52     45
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

 

(a) Presented as of period end, except for net charge-offs and annualized net charge-off ratios, which are for the three months and nine months ended, respectively, and customer-related statistics which are averages for the quarterly and year-to-date periods, respectively.
(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 consumer and business banking 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          Nine months ended  

Dollars in millions

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

INCOME STATEMENT

                 

Net interest income

  $ 887      $ 871      $ 855      $ 956      $ 922          $ 2,613      $ 2,777   

Noninterest income

                 

Corporate service fees

    356        341        310        369        346            1,007        926   

Other

    120        151        119        119        118            390        329   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Noninterest income

    476        492        429        488        464            1,397        1,255   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Total revenue

    1,363        1,363        1,284        1,444        1,386            4,010        4,032   

Provision for credit losses (benefit)

    46        20        17        21        (4         83        86   

Noninterest expense

    533        547        514        544        528            1,594        1,520   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Pretax earnings

    784        796        753        879        862            2,333        2,426   

Income taxes

    282        288        271        315        313            841        884   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Earnings

  $ 502      $ 508      $ 482      $ 564      $ 549          $ 1,492      $ 1,542   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

AVERAGE BALANCE SHEET

                 

Loans

                 

Commercial

  $ 85,452      $ 85,739      $ 84,712      $ 82,066      $ 79,083          $ 85,304      $ 77,550   

Commercial real estate

    22,965        22,545        22,090        21,720        21,492            22,536        20,927   

Equipment lease financing

    7,052        6,927        6,914        6,977        6,922            6,965        6,863   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Total commercial lending

    115,469        115,211        113,716        110,763        107,497            114,805        105,340   

Consumer

    694        875        1,352        1,442        1,203            971        1,116   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Total loans

    116,163        116,086        115,068        112,205        108,700            115,776        106,456   

Goodwill and other intangible assets

    3,870        3,845        3,835        3,867        3,806            3,850        3,812   

Loans held for sale

    826        990        1,106        1,103        1,092            973        973   

Other assets

    10,754        11,318        11,169        10,784        10,073            11,079        9,991   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Total assets

  $ 131,613      $ 132,239      $ 131,178      $ 127,959      $ 123,671          $ 131,678      $ 121,232   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Deposits

                 

Noninterest-bearing demand

  $ 49,584      $ 47,916      $ 46,976      $ 46,769      $ 44,730          $ 48,168      $ 43,348   

Money market

    22,942        21,722        22,286        22,706        21,821            22,319        20,930   

Other

    10,578        9,396        9,340        8,883        7,839            9,776        7,646   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Total deposits

    83,104        79,034        78,602        78,358        74,390            80,263        71,924   

Other liabilities

    7,518        7,897        8,271        7,833        7,412            7,893        7,454   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Total liabilities

  $ 90,622      $ 86,931      $ 86,873      $ 86,191      $ 81,802          $ 88,156      $ 79,378   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

PERFORMANCE RATIOS

                 

Return on average assets

    1.51     1.54     1.49     1.75     1.76         1.51     1.70

Noninterest income to total revenue

    35        36        33        34        33            35        31   

Efficiency

    39        40        40        38        38            40        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          Nine months ended  

Dollars in millions, except as noted

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

COMMERCIAL LOAN SERVICING PORTFOLIO - SERVICED FOR PNC AND OTHERS (in billions)

                 

Beginning of period

  $ 436      $ 390      $ 377      $ 363      $ 353          $ 377      $ 347   

Acquisitions/additions

    29        67        29        35        25            125        64   

Repayments/transfers

    (24     (21     (16     (21     (15         (61     (48
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

End of period

  $ 441      $ 436      $ 390      $ 377      $ 363          $ 441      $ 363   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

OTHER INFORMATION

                 

Consolidated revenue from: (b)

                 

Treasury Management (c)

  $ 346      $ 334      $ 319      $ 338      $ 326          $ 999      $ 950   

Capital Markets (c)

  $ 207      $ 205      $ 180      $ 230      $ 212          $ 592      $ 547   

Commercial mortgage banking activities

                 

Commercial mortgage loans held for sale (d)

  $ 21      $ 47      $ 26      $ 42      $ 32          $ 94      $ 84   

Commercial mortgage loan servicing income (e)

    70        65        56        58        56            191        164   

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

    1        8        16        5        8            25        33   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Total

  $ 92      $ 120      $ 98      $ 105      $ 96          $ 310      $ 281   

Average Loans (by C&IB business)

                 

Corporate Banking

  $ 57,685      $ 58,419      $ 58,227      $ 56,746      $ 54,678          $ 58,108      $ 53,530   

Real Estate

    31,356        30,574        29,918        29,163        28,111            30,621        27,260   

Business Credit

    14,678        14,610        14,217        13,849        13,481            14,503        13,074   

Equipment Finance

    10,990        10,936        10,941        10,805        10,582            10,956        10,362   

Other

    1,454        1,547        1,765        1,642        1,848            1,588        2,230   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Total average loans

  $ 116,163      $ 116,086      $ 115,068      $ 112,205      $ 108,700          $ 115,776      $ 106,456   

Total loans (g)

  $ 116,238      $ 115,708      $ 114,946      $ 113,935      $ 109,792           

Net carrying amount of commercial mortgage servicing rights (g)

  $ 505      $ 543      $ 494      $ 506      $ 532           

Credit-related statistics:

                 

Nonperforming assets (g)

  $ 484      $ 463      $ 516      $ 557      $ 616           

Purchased impaired loans (g) (h)

  $ 153      $ 181      $ 221      $ 246      $ 316           

Net charge-offs (recoveries)

  $ 26      $ (19   $ (1   $ (2   $ (7       $ 6      $ 10   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

 

(a) See note (a) on page 15.
(b) Represents consolidated PNC amounts. Our third quarter 2015 Form 10-Q will include additional information regarding these items.
(c) Includes amounts reported in net interest income, corporate service fees and other noninterest income.
(d) 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.
(e) 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.
(f) Includes amounts reported in corporate service fees.
(g) Presented as of period end.
(h) 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           Nine months ended  

Dollars in millions, except as noted

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

INCOME STATEMENT

                   

Net interest income

   $ 71      $ 71      $ 73      $ 74      $ 72           $ 215      $ 215   

Noninterest income

     207        243        208        207        205             658        611   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Total revenue

     278        314        281        281        277             873        826   

Provision for credit losses (benefit)

     (2     1        12        (3     (4          11        2   

Noninterest expense

     211        215        210        211        209             636        610   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Pretax earnings

     69        98        59        73        72             226        214   

Income taxes

     25        36        22        28        26             83        78   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Earnings

   $ 44      $ 62      $ 37      $ 45      $ 46           $ 143      $ 136   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

AVERAGE BALANCE SHEET

                   

Loans

                   

Consumer

   $ 5,630      $ 5,687      $ 5,650      $ 5,606      $ 5,497           $ 5,656      $ 5,407   

Commercial and commercial real estate

     865        943        932        954        970             901        997   

Residential mortgage

     939        893        865        854        822             899        794   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Total loans

     7,434        7,523        7,447        7,414        7,289             7,456        7,198   

Goodwill and other intangible assets

     222        230        238        247        255             230        264   

Other assets

     246        252        258        255        231             236        225   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Total assets

   $ 7,902      $ 8,005      $ 7,943      $ 7,916      $ 7,775           $ 7,922      $ 7,687   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Deposits

                   

Noninterest-bearing demand

   $ 1,220      $ 1,343      $ 1,345      $ 1,436      $ 1,362           $ 1,207      $ 1,342   

Interest-bearing demand

     4,125        4,013        4,241        4,152        3,857             4,126        3,887   

Money market

     5,462        5,125        4,621        4,025        4,005             5,072        3,918   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Total transaction deposits

     10,807        10,481        10,207        9,613        9,224             10,405        9,147   

CDs/IRAs/savings deposits

     505        455        455        467        463             472        448   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Total deposits

     11,312        10,936        10,662        10,080        9,687             10,877        9,595   

Other liabilities

     42        43        47        53        51             43        51   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Total liabilities

   $ 11,354      $ 10,979      $ 10,709      $ 10,133      $ 9,738           $ 10,920      $ 9,646   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

PERFORMANCE RATIOS

                   

Return on average assets

     2.21     3.11     1.89     2.26     2.35          2.41     2.37

Noninterest income to total revenue

     74        77        74        74        74             75        74   

Efficiency

     76        68        75        75        75             73        74   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

OTHER INFORMATION

                   

Total nonperforming assets (b)

   $ 52      $ 56      $ 63      $ 66      $ 73            

Purchased impaired loans (b) (c)

   $ 75      $ 77      $ 82      $ 83      $ 89            

Total net charge-offs

   $ 3      $ 7      $ 4      $ —        $ —             $ 14      $ 3   

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

                   

Personal

   $ 110      $ 113      $ 115      $ 115      $ 113            

Institutional

     146        149        150        148        146            
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

Total

   $ 256      $ 262      $ 265        263        259            
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

Asset Type

                   

Equity

   $ 142      $ 152      $ 151      $ 151      $ 147            

Fixed income

     73        73        74        72        72            

Liquidity/Other

     41        37        40        40        40            
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

Total

   $ 256      $ 262      $ 265      $ 263      $ 259            
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

Discretionary client assets under management

                   

Personal

   $ 84      $ 86      $ 88      $ 87      $ 85            

Institutional

     48        48        48        48        47            
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

Total

   $ 132      $ 134      $ 136        135        132            
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

Asset Type

                   

Equity

   $ 70      $ 75      $ 75      $ 75      $ 72            

Fixed income

     40        41        41        40        40            

Liquidity/Other

     22        18        20        20        20            
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

Total

   $ 132      $ 134      $ 136      $ 135      $ 132            
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

Nondiscretionary client assets under administration

                   

Personal

   $ 26      $ 27      $ 27      $ 28      $ 28            

Institutional

     98        101        102        100        99            
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

Total

   $ 124      $ 128      $ 129        128        127            
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

Asset Type

                   

Equity

   $ 72      $ 77      $ 76      $ 76      $ 75            

Fixed income

     33        32        33        32        32            

Liquidity/Other

     19        19        20        20        20            
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

Total

   $ 124      $ 128      $ 129      $ 128      $ 127            
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

 

(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          Nine months ended  

Dollars in millions, except as noted

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

INCOME STATEMENT

                 

Net interest income

  $ 31      $ 30      $ 30      $ 34      $ 38          $ 91      $ 115   

Noninterest income

                 

Loan servicing revenue

                 

Servicing fees

    49        46        48        54        53            143        170   

Mortgage servicing rights valuation, net of economic hedge

    12        33        25        1        11            70        11   

Loan sales revenue

    75        99        104        93        85            278        327   

Other

    (1     (2         (2         (3     (5
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Total noninterest income

    135        176        177        148        147            488        503   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Total revenue

    166        206        207        182        185            579        618   

Provision for credit losses (benefit)

    2        (2     2        (1     (1         2        (1

Noninterest expense

    171        178        161        196        168            510        550   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Pretax earnings (loss)

    (7     30        44        (13     18            67        69   

Income taxes (benefit)

    (3     11        16        (4     6            24        25   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Earnings (loss)

  $ (4   $ 19      $ 28      $ (9   $ 12          $ 43      $ 44   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

AVERAGE BALANCE SHEET

                 

Portfolio loans

  $ 1,080      $ 1,163      $ 1,282      $ 1,479      $ 1,506          $ 1,175      $ 1,759   

Loans held for sale

    1,225        1,107        1,147        1,090        1,186            1,160        1,130   

Mortgage servicing rights (MSR)

    1,108        948        843        948        1,002            967        1,036   

Other assets

    3,100        3,918        3,973        4,246        3,724            3,660        3,964   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Total assets

  $ 6,513      $ 7,136      $ 7,245      $ 7,763      $ 7,418          $ 6,962      $ 7,889   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Deposits

  $ 2,529      $ 2,497      $ 2,215      $ 2,302      $ 2,415          $ 2,415      $ 2,279   

Borrowings and other liabilities

    1,462        2,436        2,840        3,057        2,601            2,241        2,819   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

Total liabilities

  $ 3,991      $ 4,933      $ 5,055      $ 5,359      $ 5,016          $ 4,656      $ 5,098   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

PERFORMANCE RATIOS

                 

Return on average assets

    (.24 )%      1.07     1.57     (.46 )%      .64         .83     .75

Noninterest income to total revenue

    81        85        86        81        79            84        81   

Efficiency

    103        86        78        108        91            88        89   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

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

                 

Beginning of period

  $ 115      $ 113      $ 108      $ 111      $ 111          $ 108      $ 114   

Acquisitions

    10        6        8          2            24        4   

Additions

    2        2        2        1        3            6        7   

Repayments/transfers

    (5     (6     (5     (4     (5         (16     (14
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

End of period

  $ 122      $ 115      $ 113      $ 108      $ 111          $ 122      $ 111   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

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

    4.29     4.35     4.41     4.47     4.49        

MSR asset value (in billions)

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

MSR capitalization value (in basis points)

    79        88        74        78        88           

Weighted-average servicing fee (in basis points)

    27        27        27        27        27           
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

RESIDENTIAL MORTGAGE REPURCHASE RESERVE

                 

Beginning of period

  $ 97      $ 106      $ 107      $ 108      $ 101          $ 107      $ 131   

(Benefit) / Provision

    2        1        1        4        13            4        (4

Losses - loan repurchases

    (4     (10     (2     (5     (6         (16     (19
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

End of period

  $ 95      $ 97      $ 106      $ 107      $ 108          $ 95      $ 108   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

OTHER INFORMATION

                 

Loan origination volume (in billions)

  $ 2.7      $ 2.9      $ 2.6      $ 2.4      $ 2.6          $ 8.2      $ 7.1   

Loan sale margin percentage

    2.80     3.44     4.09     3.96     3.80         3.43     4.57

Percentage of originations represented by:

                 

Purchase volume (c)

    55     50     31     42     50         46     47

Refinance volume

    45     50     69     58     50         54     53

Total nonperforming assets (b)

  $ 88      $ 88      $ 105      $ 120      $ 135           
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

 

   

 

 

 

 

(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           Nine months ended  

Dollars in millions

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

INCOME STATEMENT

                   

Net interest income

   $ 90      $ 100      $ 112      $ 122      $ 146           $ 302      $ 425   

Noninterest income

     16        9        9        18        6             34        22   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Total revenue

     106        109        121        140        152             336        447   

Provision for credit losses (benefit)

     (25     (5     (31     (20     (8          (61     (99

Noninterest expense

     23        26        24        39        30             73        86   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Pretax earnings

     108        88        128        121        130             324        460   

Income taxes

     40        32        47        45        48             119        169   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Earnings

   $ 68      $ 56      $ 81      $ 76      $ 82           $ 205      $ 291   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

AVERAGE BALANCE SHEET

                   

Commercial Lending:

                   

Commercial/Commercial real estate

   $ 102      $ 114      $ 125      $ 149      $ 164           $ 114      $ 190   

Lease financing

     632        629        625        645        689             628        686   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Total commercial lending

     734        743        750        794        853             742        876   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Consumer Lending:

                   

Home equity

     2,706        2,854        3,021        3,154        3,328             2,859        3,477   

Residential real estate

     3,741        4,023        4,184        4,399        4,794             3,981        4,952   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Total consumer lending

     6,447        6,877        7,205        7,553        8,122             6,840        8,429   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Total portfolio loans

     7,181        7,620        7,955        8,347        8,975             7,582        9,305   

Other assets (b)

     (721     (706     (679     (678     (744          (702     (742
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Total assets

   $ 6,460      $ 6,914      $ 7,276      $ 7,669      $ 8,231           $ 6,880      $ 8,563   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Deposits and other liabilities

   $ 218      $ 222      $ 224      $ 219      $ 223           $ 221      $ 227   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

Total liabilities

   $ 218      $ 222      $ 224      $ 219      $ 223           $ 221      $ 227   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

PERFORMANCE RATIOS

                   

Return on average assets

     4.18     3.25     4.51     3.93     3.95          3.98     4.54

Noninterest income to total revenue

     15        8        7        13        4             10        5   

Efficiency

     22        24        20        28        20             22        19   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

OTHER INFORMATION

                   

Nonperforming assets (c)

   $ 571      $ 616      $ 669      $ 710      $ 731            

Purchased impaired loans (c) (d)

   $ 3,411      $ 3,663      $ 3,808      $ 3,943      $ 4,147            

Net charge-offs (recoveries)

   $ (1   $ (7   $ —        $ 12      $ (6        $ (8   $ 35   

Annualized net charge-off ratio

     (.05 )%      (.36 )%      —       .57     (.27 )%           (.14 )%      .50

LOANS (c)

                   

Commercial Lending:

                   

Commercial/Commercial real estate

   $ 98      $ 108      $ 120      $ 130      $ 162            

Lease financing

     633        630        626        625        691            
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

Total commercial lending

     731        738        746        755        853            
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

Consumer Lending:

                   

Home equity

     2,586        2,765        2,944        3,091        3,242            

Residential real estate

     3,625        3,941        4,139        4,290        4,665            
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

Total consumer lending

     6,211        6,706        7,083        7,381        7,907            
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

          

Total loans

   $ 6,942      $ 7,444      $ 7,829      $ 8,136      $ 8,760            
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

        

 

 

   

 

 

 

 

(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.

Credit valuation adjustment (CVA) - Represents an adjustment to the fair value of our derivatives for our own and counterparties’ non-performance risk.


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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.

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. 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.

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, a LTV of less than 90% is better secured and has less credit risk than a LTV of greater than or equal to 90%.


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Loss given default (LGD) - An estimate of loss, net of recovery based on collateral type, collateral value, loan exposure, and other factors. 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.

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. Excludes certain assets that have a government-guarantee which are classified as other receivables.

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.


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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 during the applicable presentation period.

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


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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.