| Total Equity and Other Comprehensive Income Disclosure |
NOTE 11 TOTAL EQUITY AND OTHER COMPREHENSIVE INCOME
Activity in total equity for the nine months ended September 30, 2018 and 2017 follows: Table 69: Rollforward of Total Equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Shareholders’ Equity | | | | | In millions | Shares Outstanding Common Stock |
| | Common Stock |
| Capital Surplus - Preferred Stock |
| Capital Surplus - Common Stock and Other |
| Retained Earnings |
| Accumulated Other Comprehensive Income (Loss) |
| Treasury Stock |
| | Non- controlling Interests |
| Total Equity |
| | Balance at January 1, 2017 | 485 |
| | $ | 2,709 |
| $ | 3,977 |
| $ | 12,674 |
| $ | 31,670 |
| $ | (265 | ) | $ | (5,066 | ) | | $ | 1,155 |
| $ | 46,854 |
| | Net income | | | | | | 3,258 |
| | | | 39 |
| 3,297 |
| | Other comprehensive income (loss), net of tax | | | | | | | 243 |
| | | | 243 |
| | Cash dividends declared | | | | | | | | | | |
|
| | Common ($1.85 per share) | | | | | | (904 | ) | | | | | (904 | ) | | Preferred | | | | | | (181 | ) | | | | | (181 | ) | | Preferred stock discount accretion | | | | 5 |
| | (5 | ) | | | | |
|
| | Redemption of noncontrolling interests (a) | | | | | | (19 | ) | | | | (981 | ) | (1,000 | ) | | Common stock activity (b) | | | 1 |
| | 9 |
| | | | | | 10 |
| | Treasury stock activity | (9 | ) | | | | (274 | ) | | | (1,396 | ) | | | (1,670 | ) | | Other | | | | | (48 | ) | | | | | (149 | ) | (197 | ) | | Balance at September 30, 2017 (c) | 476 |
| | $ | 2,710 |
| $ | 3,982 |
| $ | 12,361 |
| $ | 33,819 |
| $ | (22 | ) | $ | (6,462 | ) | | $ | 64 |
| $ | 46,452 |
| | Balance at December 31, 2017 | 473 |
| | $ | 2,710 |
| $ | 3,985 |
| $ | 12,389 |
| $ | 35,481 |
| $ | (148 | ) | $ | (6,904 | ) | | $ | 72 |
| $ | 47,585 |
| | Cumulative effect of ASU adoptions (d) | | | | | | (22 | ) | 6 |
| | | | (16 | ) | | Balance at January 1, 2018 | 473 |
| | $ | 2,710 |
| $ | 3,985 |
| $ | 12,389 |
| $ | 35,459 |
| $ | (142 | ) | $ | (6,904 | ) | | $ | 72 |
| $ | 47,569 |
| | Net income | | | | | | 3,964 |
| | | | 31 |
| 3,995 |
| | Other comprehensive income (loss), net of tax | | | | | | | (1,118 | ) | | | | (1,118 | ) | | Cash dividends declared | | | | | | | | | | | | | Common ($2.45 per share) | | | | | | (1,159 | ) | | | | | (1,159 | ) | | Preferred | | | | | | (181 | ) | | | | | (181 | ) | | Preferred stock discount accretion | | | | 3 |
| | (3 | ) | | | | | | | Common stock activity (b) | | | | | 10 |
| | | | | | 10 |
| | Treasury stock activity | (11 | ) | | | | (31 | ) | | | (1,867 | ) | | | (1,898 | ) | | Other | | | | (6 | ) | (51 | ) | | | | | (59 | ) | (116 | ) | | Balance at September 30, 2018 (c) | 462 |
| | $ | 2,710 |
| $ | 3,982 |
| $ | 12,317 |
| $ | 38,080 |
| $ | (1,260 | ) | $ | (8,771 | ) | | $ | 44 |
| $ | 47,102 |
| |
| | (a) | See Note 15 Equity in our 2017 Form 10-K for additional information on the redemption of Perpetual Trust Securities. |
| | (b) | Common stock activity totaled less than .5 million shares issued. |
| | (c) | The par value of our preferred stock outstanding was less than $.5 million at each date and, therefore, is excluded from this presentation. |
| | (d) | Represents the cumulative effect of adopting ASU 2014-09, ASU 2016-01, ASU 2017-12 and ASU 2018-02. See the Recently Adopted Accounting Standards portion of Note 1 Accounting Policies in our First Quarter 2018 Form 10-Q for additional detail on the adoption of these ASUs. |
Warrants We had 2.0 million and 3.5 million warrants outstanding at September 30, 2018 and December 31, 2017, respectively. As of September 30, 2018, each warrant entitles the holder to purchase one share of PNC common stock at an exercise price of $67.016 per share. In accordance with the terms of the warrants, the warrants are exercised on a non-cash net basis with the warrant holder receiving PNC common shares determined based on the excess of the market price of PNC common stock on the exercise date over the exercise price of the warrant. The outstanding warrants will expire as of December 31, 2018 and are considered in the calculation of diluted earnings per common share in Note 10 Earnings Per Share in this Report.
On October 4, 2018, PNC declared a quarterly common stock dividend of $.95 per share to shareholders of record as of October 17, 2018. In accordance with the terms of the warrants, the declaration of a dividend in excess of $.66 per share may result in an adjustment to the warrant exercise price and to the warrant share number. As a result of this dividend, the warrant exercise price was reduced from $67.016 to $66.861 per share on October 17, 2018 and the warrant share number remained 1.00. Other Comprehensive Income
Details of other comprehensive income (loss) are as follows: Table 70: Other Comprehensive Income (Loss) | | | | | | | | | | | | | | | | | | Three months ended
September 30 | | | Nine months ended
September 30 | | In millions | 2018 |
| 2017 |
| | | 2018 |
| 2017 |
| | Net unrealized gains (losses) on non-OTTI securities | | | | | | | | Increase in net unrealized gains (losses) on non-OTTI securities | $ | (323 | ) | $ | 68 |
| | | $ | (1,129 | ) | $ | 304 |
| | Less: Net gains (losses) realized as a yield adjustment reclassified to investment securities interest income | 3 |
| 10 |
| | | 9 |
| 20 |
| | Less: Net gains (losses) realized on sales of securities reclassified to noninterest income | (2 | ) | (3 | ) | | | (13 | ) | 3 |
| | Net increase (decrease), pre-tax | (324 | ) | 61 |
| | | (1,125 | ) | 281 |
| | Effect of income taxes | 73 |
| (20 | ) | | | 259 |
| (103 | ) | | Net increase (decrease), after-tax | (251 | ) | 41 |
| | | (866 | ) | 178 |
| | Net unrealized gains (losses) on OTTI securities | | | | | | | | Increase in net unrealized gains (losses) on OTTI securities | (1 | ) | 66 |
| | | 16 |
| 165 |
| | Less: OTTI losses realized on securities reclassified to noninterest income | |
|
| | |
|
| (1 | ) | | Less: Net gains (losses) realized on sales of securities reclassified to noninterest income | |
|
| | | | 2 |
| | Net increase (decrease), pre-tax | (1 | ) | 66 |
| | | 16 |
| 164 |
| | Effect of income taxes | 1 |
| (22 | ) | | | (4 | ) | (60 | ) | | Net increase (decrease), after-tax | — |
| 44 |
| | | 12 |
| 104 |
| | Net unrealized gains (losses) on cash flow hedge derivatives | | | | | | | | Increase in net unrealized gains (losses) on cash flow hedge derivatives | (62 | ) | (2 | ) | | | (317 | ) | 15 |
| | Less: Net gains (losses) realized as a yield adjustment reclassified to loan interest income | 6 |
| 38 |
| | | 43 |
| 128 |
| | Less: Net gains (losses) realized as a yield adjustment reclassified to investment securities interest income | 2 |
| 5 |
| | | 9 |
| 16 |
| | Less: Net gains (losses) realized on sales of securities reclassified to noninterest income | 1 |
| 2 |
| | | 8 |
| 5 |
| | Net increase (decrease), pre-tax | (71 | ) | (47 | ) | | | (377 | ) | (134 | ) | | Effect of income taxes | 17 |
| 17 |
| | | 87 |
| 49 |
| | Net increase (decrease), after-tax | (54 | ) | (30 | ) | | | (290 | ) | (85 | ) | | Pension and other postretirement benefit plan adjustments | | | | | | | | Net pension and other postretirement benefit activity | |
|
| | | 66 |
| (38 | ) | | Amortization of actuarial loss (gain) reclassified to other noninterest expense | 1 |
| 12 |
| | | 3 |
| 36 |
| | Amortization of prior service cost (credit) reclassified to other noninterest expense | | (1 | ) | | | 1 |
| (4 | ) | | Net increase (decrease), pre-tax | 1 |
| 11 |
| | | 70 |
| (6 | ) | | Effect of income taxes | | (4 | ) | | | (16 | ) | 2 |
| | Net increase (decrease), after-tax | 1 |
| 7 |
| | | 54 |
| (4 | ) | | Other | | | | | | | | PNC’s portion of BlackRock’s OCI | (22 | ) | 4 |
| | | (37 | ) | 26 |
| | Net investment hedge derivatives | 17 |
| (26 | ) | | | 47 |
| (76 | ) | | Foreign currency translation adjustments and other | (12 | ) | 28 |
| | | (35 | ) | 82 |
| | Net increase (decrease), pre-tax | (17 | ) | 6 |
| | | (25 | ) | 32 |
| | Effect of income taxes | 1 |
| 8 |
| | | (3 | ) | 18 |
| | Net increase (decrease), after-tax | (16 | ) | 14 |
| | | (28 | ) | 50 |
| | Total other comprehensive income (loss), pre-tax | (412 | ) | 97 |
| | | (1,441 | ) | 337 |
| | Total other comprehensive income (loss), tax effect | 92 |
| (21 | ) | | | 323 |
| (94 | ) | | Total other comprehensive income (loss), after-tax | $ | (320 | ) | $ | 76 |
| | | $ | (1,118 | ) | $ | 243 |
| |
Table 71: Accumulated Other Comprehensive Income (Loss) Components | | | | | | | | | | | | | | | | | | | | | | | | | | In millions, after-tax | Net unrealized gains (losses) on non-OTTI securities |
| | Net unrealized gains (losses) on OTTI securities |
| | Net unrealized gains (losses) on cash flow hedge derivatives |
| | Pension and other postretirement benefit plan adjustments |
| | Other |
| | Total |
| | Balance at June 30, 2017 | $ | 189 |
| | $ | 166 |
| | $ | 278 |
| | $ | (564 | ) | | $ | (167 | ) | | $ | (98 | ) | | Net activity | 41 |
| | 44 |
| | (30 | ) | | 7 |
| | 14 |
| | 76 |
| | Balance at September 30, 2017 | $ | 230 |
| | $ | 210 |
| | $ | 248 |
| | $ | (557 | ) | | $ | (153 | ) | | $ | (22 | ) | | Balance at June 30, 2018 | $ | (494 | ) | | $ | 227 |
| | $ | (52 | ) | | $ | (489 | ) | | $ | (132 | ) | | $ | (940 | ) | | Net activity | (251 | ) | | | | (54 | ) | | 1 |
| | (16 | ) | | (320 | ) | | Balance at September 30, 2018 | $ | (745 | ) | | $ | 227 |
| | $ | (106 | ) | | $ | (488 | ) | | $ | (148 | ) | | $ | (1,260 | ) | | Balance at December 31, 2016 | $ | 52 |
| | $ | 106 |
| | $ | 333 |
| | $ | (553 | ) | | $ | (203 | ) | | $ | (265 | ) | | Net activity | 178 |
| | 104 |
| | (85 | ) | | (4 | ) | | 50 |
| | 243 |
| | Balance at September 30, 2017 | $ | 230 |
| | $ | 210 |
| | $ | 248 |
| | $ | (557 | ) | | $ | (153 | ) | | $ | (22 | ) | | Balance at December 31, 2017 | $ | 62 |
| | $ | 215 |
| | $ | 151 |
| | $ | (446 | ) | | $ | (130 | ) | | $ | (148 | ) | | Cumulative effect of adopting ASU 2018-02 (a) | 59 |
| | | | 33 |
| | (96 | ) | | 10 |
| | 6 |
| | Balance at January 1, 2018 | 121 |
| | 215 |
| | 184 |
| | (542 | ) | | (120 | ) | | (142 | ) | | Net activity | (866 | ) | | 12 |
| | (290 | ) | | 54 |
| | (28 | ) | | (1,118 | ) | | Balance at September 30, 2018 | $ | (745 | ) | | $ | 227 |
| | $ | (106 | ) | | $ | (488 | ) | | $ | (148 | ) | | $ | (1,260 | ) | |
| | (a) | Represents the cumulative impact of adopting ASU 2018-02 which permits the reclassification to retained earnings of the income tax effects stranded within AOCI. See the Recently Adopted Accounting Standards portion of Note 1 Accounting Policies in our First Quarter 2018 Form 10-Q for additional detail on this adoption. |
|