SEGMENT REPORTING

We have four reportable business segments:


•	Retail Banking


•	Corporate & Institutional Banking


•	Asset Management Group


•	BlackRock

Results of individual businesses are presented based on our internal management reporting practices. There is no comprehensive, authoritative body of guidance for management accounting equivalent to GAAP; therefore, the financial results of our individual businesses are not necessarily comparable with similar information for any other company. We periodically refine our internal methodologies as management reporting practices are enhanced. To the extent significant and practicable, retrospective application of new methodologies is made to prior period reportable business segment results and disclosures to create comparability with the current period.

Total business segment financial results differ from total consolidated net income. The impact of these differences is reflected in the “Other” category in the business segment tables. “Other” includes residual activities that do not meet the criteria for disclosure as a separate reportable business, such as asset and liability management activities including net securities gains or losses, other-than-temporary impairment of investment securities, certain trading activities, certain non-strategic runoff consumer loan portfolios, private equity investments, intercompany eliminations, certain corporate overhead, tax adjustments that are not allocated to business segments, gains or losses related to BlackRock transactions, integration costs, exited businesses, 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. Assets, revenue and earnings attributable to foreign activities were not material in the periods presented for comparative purposes.

Financial results are presented, to the extent practicable, as if each business operated on a stand-alone basis. Additionally, we have aggregated the results for corporate support functions within “Other” for financial reporting purposes.

In the fourth quarter of 2018, we updated our internal management reporting processes relating to our segment reporting disclosures. Certain expenses that were previously recorded within “Other” were reclassified to our reportable segments. These expenses largely related to items that were previously considered corporate expenses, but were either closely aligned to processes and revenue functions within our business segments or were an allocation of expenses that the business segment would have incurred if it operated on a standalone basis. These reclassifications were retrospectively applied to the periods presented in this Note 22. Additionally, certain fourth quarter 2017 net income tax benefits that were previously reported in "Other" in the fourth quarter of 2017 were reclassified within that period, in order to align the accounting of certain tax positions with the business segments that recorded the underlying activity.

Net interest income in business segment results reflects our 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.

A portion of capital is intended to cover unexpected losses and is assigned to our business segments using our risk-based economic capital model, including consideration of the goodwill at those business segments as well as the diversification of risk among the business segments, ultimately reflecting our portfolio risk adjusted capital allocation.

We have allocated the allowances for loan and lease losses and for unfunded loan commitments and letters of credit based on the loan exposures within each business segment’s portfolio. Key reserve assumptions and estimation processes react to and are influenced by observed changes in loan portfolio performance experience, the financial strength of the borrower and economic conditions. Key reserve assumptions are periodically updated.

Business Segment Products and Services

Retail Banking provides deposit, lending, brokerage, insurance services, investment management and cash management products and services to consumer and small business customers. Our customers are serviced through our branch network, ATMs, call centers, online banking and mobile channels. The branch network is located in markets across the Mid-Atlantic, Midwest and Southeast. In 2018, Retail Banking launched its national retail digital strategy designed to grow customers with digitally-led banking and an ultra-thin branch network in markets outside of our existing retail branch network. Deposit products include checking, savings and money market accounts and certificates of deposit. Lending products include residential mortgages, home equity loans and lines of credit, auto loans, credit cards, education loans and personal and small business loans and lines of credit. The residential mortgage loans are directly originated within our branch network and nationwide, and are typically underwritten to government agency and/or third-party standards, and either sold, servicing retained, or held on our balance sheet. Brokerage, investment management and cash management products and services include managed, education, retirement and trust accounts.

Corporate & Institutional Banking provides lending, treasury management, and capital markets-related products and services to mid-sized and large corporations, and 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 underwriting, loan syndications, mergers and acquisitions advisory and equity capital markets advisory related services. We also provide commercial loan servicing and technology solutions for the commercial real estate finance industry. Products and services are provided nationally.

Asset Management Group provides 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. Our Hawthorn unit provides multi-generational family planning including estate, financial, tax planning, fiduciary, investment management and consulting, private banking, personal administrative services, asset custody and customized performance reporting to ultra high net worth families. Institutional asset management provides outsourced chief investment officer, custody, private real estate, cash and fixed income client solutions, and retirement administration services to institutional clients such as corporations, healthcare systems, insurance companies, unions, municipalities and non-profits. The business also offers PNC proprietary mutual funds and investment strategies.

BlackRock, in which we hold an equity investment, is a leading publicly-traded investment management firm providing a broad range of investment and technology services to institutional and retail clients worldwide. Using a diverse platform of alpha-seeking active, index and cash management investment strategies across asset classes, BlackRock tailors 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 technology services, including an investment and risk management technology platform, as well as advisory services and solutions to a broad base of institutional and wealth management clients.

Our equity investment in BlackRock provides us with an additional source of noninterest income and increases our overall revenue diversification. 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 December 31, 2018, our economic interest in BlackRock was 22%. We received cash dividends from BlackRock of $420 million, $354 million, and $331 million during 2018, 2017 and 2016, respectively.

Table 99: Results of Businesses



Year ended December 31 In millions	Retail Banking		Corporate & Institutional Banking		Asset Management Group			BlackRock			Other			Consolidated (a)
2018
Income Statement
Net interest income	$	5,119	$	3,551	$	287					$	764		$	9,721
Noninterest income	2,631		2,406		892			$	935		547			7,411
Total revenue	7,750		5,957		1,179			935			1,311			17,132
Provision for credit losses (benefit)	373		85		2						(52		)	408
Depreciation and amortization	206		186		52						496			940
Other noninterest expense	5,772		2,520		861						203			9,356
Income (loss) before income taxes (benefit) and noncontrolling interests	1,399		3,166		264			935			664			6,428
Income taxes (benefit)	335		658		62			154			(127		)	1,082
Net income	$	1,064	$	2,508	$	202		$	781		$	791		$	5,346
Average Assets (b)	$	89,739	$	154,119	$	7,423		$	8,061		$	118,893		$	378,235
2017
Income Statement
Net interest income	$	4,625	$	3,396	$	287					$	800		$	9,108
Noninterest income	2,236		2,271		881			$	1,078		755			7,221
Total revenue	6,861		5,667		1,168			1,078			1,555			16,329
Provision for credit losses (benefit)	347		160		1						(67		)	441
Depreciation and amortization	177		184		50						510			921
Other noninterest expense	5,569		2,370		855						683			9,477
Income (loss) before income taxes (benefit) and noncontrolling interests	768		2,953		262			1,078			429			5,490
Income taxes (benefit)	321		520		75			(686		)	(128		)	102
Net income	$	447	$	2,433	$	187		$	1,764		$	557		$	5,388
Average Assets (b)	$	88,663	$	148,414	$	7,511		$	7,677		$	119,504		$	371,769
2016
Income Statement
Net interest income	$	4,509	$	3,181	$	300					$	401		$	8,391
Noninterest income	2,693		2,035		851			$	685		507			6,771
Total revenue	7,202		5,216		1,151			685			908			15,162
Provision for credit losses (benefit)	297		177		(6		)				(35		)	433
Depreciation and amortization	175		153		45						470			843
Other noninterest expense	5,347		2,174		813						299			8,633
Income (loss) before income taxes (benefit) and noncontrolling interests	1,383		2,712		299			685			174			5,253
Income taxes (benefit)	510		871		110			153			(376		)	1,268
Net income	$	873	$	1,841	$	189		$	532		$	550		$	3,985
Average Assets (b)	$	85,871	$	140,309	$	7,707		$	7,118		$	120,255		$	361,260


(a)	There were no material intersegment revenues for 2018, 2017 and 2016.


(b)	Period-end balances for BlackRock.