Segment Reporting

9 Months Ended

Sep. 30, 2020

SEGMENT REPORTING

We have three reportable business segments:


•	Retail Banking


•	Corporate & Institutional Banking


•	Asset Management Group

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.

During the second quarter of 2020, we divested our entire 22.4% investment in BlackRock. See Note 2 Discontinued Operations for additional information on the sale and details on our results and cash flows for the three and nine months ended September 30, 2020 and 2019. Following the sale and donation, PNC only holds shares of BlackRock stock in a fiduciary capacity for clients of PNC.

Total business segment financial results differ from total consolidated net income. These differences are reflected in the “Other” category in Table 81. “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, ACL for investment securities, certain trading activities, certain runoff consumer loan portfolios, private equity investments, intercompany eliminations, certain corporate overhead, tax adjustments that are not allocated to business segments, 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. The “Other” category also includes our BlackRock held for sale asset. Assets, revenue and earnings attributable to foreign activities were not material in the period presented for comparison.

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.

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.

We have allocated the ALLL and the allowance for unfunded lending related commitments 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 Results

Table 81: Results of Businesses



Three months ended September 30 In millions	Retail Banking			Corporate & Institutional Banking		Asset Management Group			Other			Consolidated (a)
2020
Income Statement
Net interest income	$	1,383		$	1,012	$	89		$	—		$	2,484
Noninterest income	673			723		221			180			1,797
Total revenue	2,056			1,735		310			180			4,281
Provision for (recapture of) credit losses	(157		)	211		(19		)	17			52
Depreciation and amortization	64			50		11			121			246
Other noninterest expense	1,457			616		200			12			2,285
Income from continuing operations before income taxes (benefit) and noncontrolling interests	692			858		118			30			1,698
Income taxes (benefit)	162			188		27			(211		)	166
Net income from continuing operations	$	530		$	670	$	91		$	241		$	1,532
Average Assets	$	98,731		$	183,266	$	8,361		$	171,781		$	462,139
2019
Income Statement
Net interest income	$	1,393		$	911	$	70		$	130		$	2,504
Noninterest income	744			654		216			124			1,738
Total revenue	2,137			1,565		286			254			4,242
Provision for (recapture of) credit losses	147			48		(1		)	(11		)	183
Depreciation and amortization	60			51		11			125			247
Other noninterest expense	1,476			652		217			31			2,376
Income from continuing operations before income taxes (benefit) and noncontrolling interests	454			814		59			109			1,436
Income taxes (benefit)	107			169		13			(34		)	255
Net income from continuing operations	$	347		$	645	$	46		$	143		$	1,181
Average Assets	$	93,222		$	168,193	$	7,331		$	137,963		$	406,709
Nine months ended September 30 In millions	Retail Banking			Corporate & Institutional Banking		Asset Management Group			Other			Consolidated (a)
2020
Income Statement
Net interest income	$	4,229		$	3,014	$	266		$	13		$	7,522
Noninterest income	2,046			2,143		629			353			5,171
Total revenue	6,275			5,157		895			366			12,693
Provision for credit losses	1,049			2,254		23			103			3,429
Depreciation and amortization	188			149		34			366			737
Other noninterest expense	4,369			1,912		613			(42		)	6,852
Income (loss) from continuing operations before income taxes (benefit) and noncontrolling interests	669			842		225			(61		)	1,675
Income taxes (benefit)	161			160		52			(245		)	128
Net income from continuing operations	$	508		$	682	$	173		$	184		$	1,547
Average Assets	$	98,764		$	185,001	$	8,041		$	152,223		$	444,029
2019
Income Statement
Net interest income	$	4,118		$	2,685	$	208		$	466		$	7,477
Noninterest income	1,996			1,891		719			435			5,041
Total revenue	6,114			4,576		927			901			12,518
Provision for (recapture of) credit losses	356			219		(2		)	(21		)	552
Depreciation and amortization	170			151		51			366			738
Other noninterest expense	4,361			1,936		656			121			7,074
Income from continuing operations before income taxes (benefit) and noncontrolling interests	1,227			2,270		222			435			4,154
Income taxes (benefit)	291			471		51			(107		)	706
Net income from continuing operations	$	936		$	1,799	$	171		$	542		$	3,448
Average Assets	$	92,282		$	163,126	$	7,247		$	133,944		$	396,599


(a)	There were no material intersegment revenues for the three and nine months ended September 30, 2020 and 2019.

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 primarily in markets across the Mid-Atlantic, Midwest and Southeast. In 2018, Retail Banking launched its national expansion strategy designed to grow customers with digitally-led banking and a 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 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. The Treasury Management business provides payables, receivables, deposit and account services, liquidity and investments, and online and mobile banking products and services to our clients. 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. The Asset Management group is composed of three distinct operating units:


•	Wealth Management provides products and services to individuals and their families including investment and retirement planning, customized investment management, private banking, 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 clients.

•

Institutional asset management provides outsourced chief investment officer, custody, private real estate, cash and fixed income client solutions, and fiduciary retirement advisory services to institutional clients including corporations, healthcare systems, insurance companies, unions, municipalities and non-profits.