UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of The Securities Exchange Act of 1934
October 14, 2015
Date of Report (Date of earliest event reported)
THE PNC FINANCIAL SERVICES GROUP, INC.
(Exact name of registrant as specified in its charter)
Commission File Number 001-09718
Pennsylvania | 25-1435979 | |
(State or other jurisdiction of incorporation) |
(I.R.S. Employer Identification No.) |
One PNC Plaza
249 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2707
(Address of principal executive offices, including zip code)
(412) 762-2000
(Registrants telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On October 14, 2015, The PNC Financial Services Group, Inc. (the Corporation) issued a press release and held a conference call for investors regarding the Corporations earnings and business results for the third quarter of 2015. The Corporation also provided supplementary financial information on its web site, including financial information disclosed in connection with its press release, and provided electronic presentation slides on its web site used in connection with the related investor conference call. Copies of the supplementary financial information and electronic presentation slides are included in this Report as Exhibits 99.1 and 99.2, respectively, and are furnished herewith.
Item 9.01 Financial Statements and Exhibits.
(d) | Exhibits. The exhibits listed on the Exhibit Index accompanying this Form 8-K are furnished herewith. |
- 2 -
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
THE PNC FINANCIAL SERVICES GROUP, INC. (Registrant) | ||||||
Date: October 14, 2015 | By: | /s/ Gregory H. Kozich | ||||
Gregory H. Kozich | ||||||
Senior Vice President and Controller |
- 3 -
EXHIBIT INDEX
Number |
Description |
Method of Filing |
||||
99.1 | Financial Supplement (unaudited) for Third Quarter 2015 | Furnished herewith | ||||
99.2 | Electronic presentation slides for earnings release conference call | Furnished herewith |
- 4 -
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 PNCs 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 | |||||||||||||||||||||||
|
|
|
|
|
|
|
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|
|
|
|
|
|||||||||||||||||
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 | |||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net interest income |
2,062 | 2,052 | 2,072 | 2,097 | 2,104 | 6,186 | 6,428 | |||||||||||||||||||||||
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|
|||||||||||||||||
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 | |||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total noninterest income |
1,713 | 1,814 | 1,659 | 1,850 | 1,737 | 5,186 | 5,000 | |||||||||||||||||||||||
|
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|
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|
|||||||||||||||||
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 | |||||||||||||||||||||||
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|
|||||||||||||||||
Total noninterest expense |
2,352 | 2,366 | 2,349 | 2,539 | 2,357 | 7,067 | 6,949 | |||||||||||||||||||||||
|
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|
|||||||||||||||||
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 | |||||||||||||||||||||||
|
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|
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|
|
|
|
|
|||||||||||||||||
Net income |
1,073 | 1,044 | 1,004 | 1,057 | 1,038 | 3,121 | 3,150 | |||||||||||||||||||||||
|
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|
|
|
|
|
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|
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|
|||||||||||||||||
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 | |||||||||||||||||||||||
|
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|
|||||||||||||||||
Net income attributable to common shareholders |
$ | 991 | $ | 992 | $ | 933 | $ | 988 | $ | 966 | $ | 2,916 | $ | 2,959 | ||||||||||||||||
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|
|||||||||||||||||
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 | ||||||||||||||||
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|
|||||||||||||||||
Average Common Shares Outstanding |
||||||||||||||||||||||||||||||
Basic |
512 | 517 | 521 | 524 | 529 | 516 | 531 | |||||||||||||||||||||||
Diluted |
520 | 525 | 529 | 532 | 537 | 525 | 539 | |||||||||||||||||||||||
|
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|
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|
|
|
|
|
|
|
|||||||||||||||||
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 | % | ||||||||||||||||
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|
|
|
(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 | ) | ||||||||||
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|
|||||||||||
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 | |||||||||||||||
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|
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|
|
|
|
|||||||||||
Total assets |
$ | 362,125 | $ | 353,945 | $ | 350,960 | $ | 345,072 | $ | 334,424 | ||||||||||
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|
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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 | |||||||||||||||
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|
|||||||||||
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 | |||||||||||||||
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|
|
|
|
|
|
|||||||||||
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 | |||||||||||||||
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|||||||||||
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 | ) | ||||||||||
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|
|
|
|
|
|
|
|
|||||||||||
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 | ||||||||||
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|
|
|
|
|
|
|
|
|
(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 | |||||||||||||||||||||||
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|
|||||||||||||||||
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 | |||||||||||||||||||||||
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|||||||||||||||||
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 | |||||||||||||||||||||||
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|||||||||||||||||
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 | |||||||||||||||||||||||
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|||||||||||||||||
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 | ||||||||||||||||
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(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 | % | ||||||||||
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(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 | |||||||||||||||||||||||
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|||||||||||||||||
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 | |||||||||||||||||||||||
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|||||||||||||||||
Total securities held to maturity |
13,534 | 13,511 | 12,474 | 11,475 | 11,689 | 13,177 | 11,634 | |||||||||||||||||||||||
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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 | |||||||||||||||||||||||
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|
|||||||||||||||||
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 | |||||||||||||||||||||||
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|
|
|||||||||||||||||
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 | |||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total assets |
$ | 358,587 | $ | 352,640 | $ | 348,057 | $ | 339,646 | $ | 329,445 | $ | 353,133 | $ | 323,878 | ||||||||||||||||
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(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 | |||||||||||||||||||||||
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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 | |||||||||||||||||||||||
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Total borrowed funds |
57,531 | 57,165 | 56,352 | 52,370 | 49,336 | 57,018 | 47,620 | |||||||||||||||||||||||
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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 | |||||||||||||||||||||||
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Total liabilities and equity |
$ | 358,587 | $ | 352,640 | $ | 348,057 | $ | 339,646 | $ | 329,445 | $ | 353,133 | $ | 323,878 | ||||||||||||||||
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(a) Calculated using average daily balances. |
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Table 6: Supplemental Average Balance Sheet Information (Unaudited)
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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 | |||||||||||||||||||||||
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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 | ||||||||||||||||
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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 | |||||||||||||||||||||||
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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 | |||||||||||||||||||||||
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|||||||||||||||||
Net interest margin |
2.67 | % | 2.73 | % | 2.82 | % | 2.89 | % | 2.98 | % | 2.74 | % | 3.12 | % | ||||||||||||||||
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(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 | |||||||||||||||||||||||
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|
|
|
|
|
|
|||||||||||||||||
Total net interest income |
$ | 2,062 | $ | 2,052 | $ | 2,072 | $ | 2,097 | $ | 2,104 | $ | 6,186 | $ | 6,428 | ||||||||||||||||
|
|
|
|
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|
|
|
|
|
|
|
|
|
(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 | % | ||||||||||||||||
|
|
|
|
|
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|
|
|
|
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|
|
|
(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 | |||||||||||||||
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|
|
|
|
|
|
|
|
|
|||||||||||
Total OREO and foreclosed assets (e) |
313 | 326 | 349 | 370 | 363 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total nonperforming assets |
$ | 2,490 | $ | 2,578 | $ | 2,754 | $ | 2,880 | $ | 2,975 | ||||||||||
|
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|
|
|
|
|
|||||||||||
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 | |||||||||||||||
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|
(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 | ) | ||||||||||
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|
|
|
|
|
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|
|
|
|||||||||||
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 | ||||||||||
|
|
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|
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|
|
|
|
|
|||||||||||
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 | ||||||||||
|
|
|
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|
|
|
|
|
|
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 | |||||||||||||||||||||||||
|
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|
|
(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 PNCs 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 | ||||||||||||||||
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(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 PNCs 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 PNCs 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 PNCs 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 | |||||||||||||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
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 | |||||||||||||||||||||||
|
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|
|
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|
|
|
(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 | |||||||||||||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
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 | % | ||||||||||||||||||||
|
|
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|
|
|
|
|
|
|
|||||||||||||||||||||
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 | ) | ||||||||||||||||
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|
|
|
|
|||||||||||||||||
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 | ||||||||||||
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|
|
(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 | |||||||||||||||||||||||
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|
|
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|
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|
|
|
|||||||||||||||||
Earnings |
$ | 44 | $ | 62 | $ | 37 | $ | 45 | $ | 46 | $ | 143 | $ | 136 | ||||||||||||||||
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|
|||||||||||||||||
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 | |||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
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|
|||||||||||||||||
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 | ||||||||||||||||
|
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|
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|
|||||||||||||||||
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 | ||||||||||||||||
|
|
|
|
|
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|
|
|
|
|
|
|
|
|||||||||||||||||
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 | ) | ||||||||||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
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 | ||||||||||||||||
|
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|
|
|||||||||||||||||
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 | |||||||||||||||||||||||
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|
|
|||||||||||||||||
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 | ) | ||||||||||||||||
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|
|||||||||||||||||
End of period |
$ | 122 | $ | 115 | $ | 113 | $ | 108 | $ | 111 | $ | 122 | $ | 111 | ||||||||||||||||
|
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|
|||||||||||||||||
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 | |||||||||||||||||||||||||
|
|
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|
|
|||||||||||||||||
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 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
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|
|
|||||||||||||||||
End of period |
$ | 95 | $ | 97 | $ | 106 | $ | 107 | $ | 108 | $ | 95 | $ | 108 | ||||||||||||||||
|
|
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|
|
|
|
|
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|
|
|||||||||||||||||
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 | ||||||||||||||||||||
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(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 |
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INCOME STATEMENT |
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Net interest income |
$ | 90 | $ | 100 | $ | 112 | $ | 122 | $ | 146 | $ | 302 | $ | 425 | ||||||||||||||||
Noninterest income |
16 | 9 | 9 | 18 | 6 | 34 | 22 | |||||||||||||||||||||||
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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 | |||||||||||||||||||||||
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Pretax earnings |
108 | 88 | 128 | 121 | 130 | 324 | 460 | |||||||||||||||||||||||
Income taxes |
40 | 32 | 47 | 45 | 48 | 119 | 169 | |||||||||||||||||||||||
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Earnings |
$ | 68 | $ | 56 | $ | 81 | $ | 76 | $ | 82 | $ | 205 | $ | 291 | ||||||||||||||||
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AVERAGE BALANCE SHEET |
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Commercial Lending: |
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Commercial/Commercial real estate |
$ | 102 | $ | 114 | $ | 125 | $ | 149 | $ | 164 | $ | 114 | $ | 190 | ||||||||||||||||
Lease financing |
632 | 629 | 625 | 645 | 689 | 628 | 686 | |||||||||||||||||||||||
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Total commercial lending |
734 | 743 | 750 | 794 | 853 | 742 | 876 | |||||||||||||||||||||||
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Consumer Lending: |
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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 | |||||||||||||||||||||||
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Total consumer lending |
6,447 | 6,877 | 7,205 | 7,553 | 8,122 | 6,840 | 8,429 | |||||||||||||||||||||||
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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 | ) | ||||||||||||||||
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Total assets |
$ | 6,460 | $ | 6,914 | $ | 7,276 | $ | 7,669 | $ | 8,231 | $ | 6,880 | $ | 8,563 | ||||||||||||||||
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Deposits and other liabilities |
$ | 218 | $ | 222 | $ | 224 | $ | 219 | $ | 223 | $ | 221 | $ | 227 | ||||||||||||||||
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Total liabilities |
$ | 218 | $ | 222 | $ | 224 | $ | 219 | $ | 223 | $ | 221 | $ | 227 | ||||||||||||||||
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PERFORMANCE RATIOS |
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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 | |||||||||||||||||||||||
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OTHER INFORMATION |
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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) |
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Commercial Lending: |
||||||||||||||||||||||||||||||
Commercial/Commercial real estate |
$ | 98 | $ | 108 | $ | 120 | $ | 130 | $ | 162 | ||||||||||||||||||||
Lease financing |
633 | 630 | 626 | 625 | 691 | |||||||||||||||||||||||||
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Total commercial lending |
731 | 738 | 746 | 755 | 853 | |||||||||||||||||||||||||
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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 | |||||||||||||||||||||||||
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Total consumer lending |
6,211 | 6,706 | 7,083 | 7,381 | 7,907 | |||||||||||||||||||||||||
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Total loans |
$ | 6,942 | $ | 7,444 | $ | 7,829 | $ | 8,136 | $ | 8,760 | ||||||||||||||||||||
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(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 borrowers perceived creditworthiness.
Credit valuation adjustment (CVA) - Represents an adjustment to the fair value of our derivatives for our own and counterparties non-performance risk.
THE PNC FINANCIAL SERVICES GROUP, INC. | Page 24 |
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. PNCs product set includes loans priced using LIBOR as a benchmark.
Loan-to-value ratio (LTV) - A calculation of a loans 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%.
THE PNC FINANCIAL SERVICES GROUP, INC. | Page 25 |
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 investments 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.
THE PNC FINANCIAL SERVICES GROUP, INC. | Page 26 |
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.
THE PNC FINANCIAL SERVICES GROUP, INC. | Page 27 |
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.
The PNC Financial Services Group, Inc.
Third Quarter 2015
Earnings Conference Call
October 14, 2015
Exhibit 99.2 |
2 Cautionary Statement Regarding Forward-Looking Information and Adjusted Information Our earnings conference call presentation is not intended as a full business or financial review and should be viewed in
the context of all of the information made available by PNC in its SEC filings
and on its corporate website. The presentation contains
forward-looking statements regarding our outlook for earnings, revenues, expenses, capital and liquidity levels and ratios, asset levels, asset quality, financial position, and other matters regarding or affecting
PNC and its future business and operations. Forward-looking statements are
necessarily subject to numerous assumptions, risks and
uncertainties, which change over time. The forward-looking statements in this presentation are qualified by the factors affecting forward-looking statements identified in the more detailed Cautionary Statement
included in the Appendix, which is included in the version of the presentation
materials posted on our corporate website, and in our SEC
filings. We provide greater detail regarding these as well as other factors in our 2014 Form 10-K and our 2015 Form 10-Qs, and in our subsequent SEC filings. Our forward-looking statements may also be
subject to other risks and uncertainties, including those we may discuss in
this presentation or in our SEC filings. Future events or
circumstances may change our outlook and may also affect the nature of the assumptions, risks and uncertainties to which our forward-looking statements are subject. Forward-looking statements in this presentation
speak only as of the date of this presentation. We do not assume any duty and
do not undertake to update those statements. Actual results or
future events could differ, possibly materially, from those anticipated in forward-looking statements, as well as from historical performance. In this presentation, we may sometimes include non-GAAP financial information. Non-GAAP financial information
includes metrics such as pre-tax provision earnings, tangible book value,
and taxable equivalent net interest income, as well as adjusted
results and certain information used to review components of reported information. When we do so, we provide GAAP reconciliations for such information. Such reconciliations may be found in our presentation, in
these slides, including the Appendix, in other materials on our corporate
website, and in our SEC filings. This information supplements our
results as reported in accordance with GAAP and should not be viewed in isolation from, or as a substitute for, our GAAP results. We believe that this information and the related reconciliations may be useful
to investors, analysts, regulators and others to help understand and evaluate
our financial results. We may also use annualized, pro forma,
estimated or third party numbers for illustrative or comparative purposes only. These may not reflect actual results. References to our corporate website are to www.pnc.com under About UsInvestor Relations. Our SEC filings are available both on our corporate website and on the SECs website at www.sec.gov. We include web addresses here as inactive textual references only. Information on these websites is not part of this presentation. |
3 3Q15 Highlights Solid third quarter Grew deposits and securities Revenue impacted by noninterest income decline Well-controlled expenses Lower effective tax rate of 20% Overall credit quality relatively stable Strong capital and liquidity maintained Progress on strategic priorities Fee income grew 3% YTD15 compared with YTD14 (1) 3Q15 financial summary Net income Diluted EPS Return on average assets $1.1 billion $1.90 1.19% ( 1) Fee income refers to noninterest income in the following categories: asset management, consumer services, corporate services,
residential mortgage, and service charges on deposits. See
reconcilement section in the Appendix. |
4 Investment securities increased $2.6 billion largely funded by deposit growth Total loans decreased $0.6 billion Total deposits grew $5.6 billion due to higher money market and demand deposits Common shares outstanding down 6 million The estimated Liquidity Coverage Ratio at September 30, 2015 exceeded 100 percent for both PNC and PNC Bank, N.A. Total commercial grew $7.7 billion TBV (2) grew 7% Stable Loan Balances and Strong Capital Position Category (billions) 3Q15 2Q15 3Q14 Investment securities $62.1 4% 14% Total commercial lending $130.8 0% 6% Total consumer lending 74.0 (1%) (4%) Total loans $204.8 0% 3% Interest-earning deposits with banks $37.3 15% 69% Total assets $358.6 2% 9% Total deposits $243.4 2% 9% Total equity $45.7 0% 0% Ratios: Sept. 30, 2015 Jun. 30, 2015 Sept. 30, 2014 Pro forma fully phased-in Basel III common equity Tier 1 10.1% 10.0% 10.1% Tangible book value per common share $63.37 $61.75 $59.24 Average Balances Linked quarter: Highlights (Avg. Balances) (1) September 30, 2015 ratio estimated. See Estimated Transitional Basel III and Pro forma Fully Phased-In Basel III Common Equity
Tier 1 Capital Ratios slides and related information in the
Appendix for further details. Calculated on a pro forma basis without the benefit of the Basel III phase-in provisions. For 3Q15, 2Q15 and 3Q14, the pro forma fully phased-in Basel III common equity Tier 1 ratios were calculated based on
standardized approach RWAs and rules. (2) See Appendix for
additional information related to tangible book value per common share. Capital: (1) % change from: TBV: (2) Prior Year Quarter: |
5 Revenue declined NII stable Core NII grew (6) Fee income declined Noninterest income decreased largely due to higher second quarter gains on asset sales Noninterest expense declined Provision for credit losses increased Effective tax rate of 20% reflects reserve releases and builds ROAA (5) stable Fee income declined Consumer services grew 7% Corporate services up 3% Linked Quarter Results Largely as Expected Highlights Linked Quarter: 3Q15 2Q15 3Q14 Net interest income $2,062 0% (2%) Fee income (1) 1,398 (3%) (2%) Total other income (2) 315 (16%) 1% Total noninterest income 1,713 (6%) (1%) Total revenue 3,775 (2%) (2%) Noninterest expense 2,352 (1%) 0% Pretax, pre-provision earnings (1,3) 1,423 (5%) (4%) Provision 81 76% 47% Pretax earnings (4) $1,342 (8%) (6%) Income taxes 269 (34%) (31%) Net income $1,073 3% 3% Net income attributable to diluted common shares $987 0% 3% % change from: 3Q15 2Q15 3Q14 Returns ROAA (5) 1.19% 1.19% 1.25% ROACE (5) 9.61% 9.75% 9.52% Prior Year Quarter: (millions) (1) See Reconcilement section of the Appendix. (2) Total other noninterest income includes net gains (losses) on sales of securities and
other income (including gains on asset dispositions).
(3),(4),(5) See Notes A, B and C, respectively, in the Appendix for additional details (6) Core net interest income (Core NII) is total net interest income (NII), as reported, less related purchase accounting accretion (scheduled and
excess cash recoveries) (PAA). See Note D and
reconciliation in the Appendix. |
6 Overall credit quality remained relatively stable NPAs and NPLs decreased Overall delinquencies increased Net charge-offs increased and were .19% of average loans (5) Provision for credit losses increased Maintained appropriate reserves 3Q15 2Q15 3Q14 2Q15 3Q14 Nonperforming loans (NPLs) (1,2) $2,177 $2,252 $2,612 (3%) (17%) Total Past Due (1,3) $1,663 $1,641 $2,006 1% (17%) Commercial Lending $14 ($27) ($4) NM NM Consumer Lending $82 $94 $86 (13%) (5%) Total Net Charge-offs $96 $67 $82 43% 17% Provision $81 $46 $55 76% 47% 3Q15 2Q15 3Q14 Loan loss reserves to total loans (4) 1.58% 1.59% 1.70% Credit Quality Relatively Stable Highlights (millions) % change from: Linked Quarter: We estimate the expected change to derecognition policies for purchased impaired pooled consumer loans will reduce 4Q15 total loan balances and associated allowance for loan losses each by approximately $475 million Purchased Impaired Loans NPAs refer to nonperforming assets. As of quarter end except net charge-offs and provision, which are for the quarter. (1) Does not
include purchased impaired loans or loans held for sale. (2) Does
not include foreclosed and other assets. Excludes certain government insured or guaranteed loans and loans accounted for under the fair value option. (3) Includes loans that are government guaranteed/insured, primarily residential
mortgages. Past due loans in this category totaled $1.1 billion
in 3Q15. (4) 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. (5) Net charge-offs to average loans for 3Q15 (annualized).
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7 Outlook (1) 4Q15 vs. 3Q15 Balance sheet Loans Modest Growth Income statement Net interest income Stable Fee income Stable Noninterest expense Stable Loan loss provision $50-$100 million (1) Refer to Cautionary Statement in the Appendix, including economic and other assumptions. Does not take into account impact of
potential legal and regulatory contingencies.
|
8 Cautionary Statement Regarding Forward-Looking Information Appendix This presentation includes snapshot information about PNC used by way of illustration and is not intended as a full business
or financial review. It should not be viewed in isolation but
rather in the context of all of the information made available by PNC in its SEC filings.
We also make statements in this presentation, and we may from time to time make
other statements, regarding our outlook for earnings, revenues, expenses, capital and liquidity levels and ratios, asset levels, asset quality, financial position, and other matters regarding or affecting PNC
and its future business and operations that are
forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements are typically identified by words such as believe, plan, expect, anticipate, see,
look, intend, outlook, project, forecast, estimate, goal, will, should and other similar words and expressions. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking
statements speak only as of the date made. We do not assume any
duty and do not undertake to update forward-looking statements. Actual results or future events could differ, possibly materially, from those anticipated in forward-looking statements, as well as from historical performance. Our forward-looking statements are subject to the following principal risks and uncertainties. Our businesses, financial results and balance sheet values are affected by business and economic conditions, including the following: Changes in interest rates and valuations in debt, equity and other financial markets. Disruptions in the U.S. and global financial markets. The impact on financial markets and the economy of any changes in the credit ratings of U.S. Treasury obligations and other U.S.
government-backed debt, as well as issues surrounding the
levels of U.S. and European government debt and concerns regarding the creditworthiness of certain sovereign governments, supranationals and financial institutions in Europe. Actions by the Federal Reserve, U.S. Treasury and other government agencies, including those that impact money supply and market interest
rates. Changes in customers, suppliers and other counterparties performance and creditworthiness. Slowing or reversal of the current U.S. economic expansion. Continued residual effects of recessionary conditions and uneven spread of positive impacts of recovery on the economy and our
counterparties, including adverse impacts on levels of
unemployment, loan utilization rates, delinquencies, defaults and counterparty ability to meet credit and other obligations.
Changes in customer preferences and behavior, whether due to changing business and economic conditions, legislative and regulatory
initiatives, or other factors. Our forward-looking financial statements are subject to the risk that economic and financial market conditions will be substantially
different than we are currently expecting. These statements are
based on our current view that the U.S. economic expansion will speed up to an above trend growth rate near 2.5 percent in the second half of 2015, boosted by lower oil/energy prices and solid job gains, and that short-term interest rates and
bond yields will rise slowly during the remainder of 2015. These
forward-looking statements also do not, unless otherwise indicated, take into account the impact of potential legal and regulatory contingencies. |
9 Cautionary Statement Regarding Forward-Looking Information (continued) Appendix PNCs ability to take certain capital actions, including paying dividends and any plans to increase common stock dividends,
repurchase common
stock under current or future programs, or issue or redeem preferred stock or other regulatory capital instruments, is subject to the review of such proposed actions by the Federal Reserve as part of PNCs comprehensive capital plan for the applicable period in
connection with the regulators Comprehensive Capital
Analysis and Review (CCAR) process and to the acceptance of such capital plan and non-objection to such capital actions by the Federal Reserve. PNCs regulatory capital ratios in the future will depend on, among other things, the companys financial performance, the scope and terms of final capital regulations then in effect (particularly those implementing the Basel Capital Accords), and management actions affecting
the composition
of PNCs balance sheet. In addition, PNCs ability to determine, evaluate and forecast regulatory capital ratios, and to take actions (such as capital distributions) based on actual or forecasted capital ratios, will be dependent at least in part on the
development, validation and regulatory approval of related
models. Legal
and regulatory developments could have an impact on our ability to operate our businesses, financial condition, results of operations, competitive position, reputation, or pursuit of attractive acquisition opportunities. Reputational impacts could affect matters such as
business generation and retention, liquidity, funding, and
ability to attract and retain management. These developments could include:
Changes resulting from legislative and regulatory reforms, including major reform of the regulatory oversight structure of the financial
services industry and changes to laws and regulations involving
tax, pension, bankruptcy, consumer protection, and other industry
aspects, and changes in accounting policies and principles. We will be
impacted by extensive reforms provided for in the Dodd-Frank
Wall Street Reform and Consumer Protection Act (the Dodd-Frank
Act) and otherwise growing out of the most recent financial crisis, the precise nature, extent and timing of which, and their impact on us, remains uncertain.
Changes to regulations governing bank capital and liquidity standards, including due to the Dodd-Frank Act and to Basel-related
initiatives.
Unfavorable resolution of legal proceedings or other claims and regulatory and other governmental investigations or other inquiries. In
addition to matters relating to PNCs current and
historical business and activities, such matters may include proceedings, claims, investigations, or inquiries relating to pre-acquisition business and activities of acquired companies, such as National City. These
matters may result in monetary judgments or settlements or other
remedies, including fines, penalties, restitution or alterations in our business practices, and in additional expenses and collateral costs, and may cause reputational harm to PNC.
Results of the regulatory examination and supervision process, including our failure to satisfy requirements of agreements with
governmental agencies.
Impact on business and operating results of any costs associated with obtaining rights in intellectual property claimed by others and of
adequacy of our intellectual property protection in
general. |
10 Cautionary Statement Regarding Forward-Looking Information (continued) Appendix Business and operating results are affected by our ability to identify and effectively manage risks inherent in our businesses,
including, where appropriate, through effective use of
third-party insurance, derivatives, and capital management techniques, and to meet evolving regulatory capital and liquidity standards. In particular, our results currently depend on our ability to manage elevated levels of impaired assets.
Business
and operating results also include impacts relating to our equity interest in BlackRock, Inc. and rely to a significant extent on information provided to us by BlackRock. Risks and uncertainties that could affect BlackRock are discussed in more detail by BlackRock in its SEC filings. We grow our business in part by acquiring from time to time other financial services companies, financial services assets and related deposits and other liabilities. Acquisition risks and uncertainties include those presented by the nature of the business acquired, including in some cases those associated with our entry into new businesses or new geographic or other markets and risks resulting from our inexperience in those new areas, as well as risks and uncertainties related to the acquisition transactions themselves, regulatory issues, and the integration of the acquired businesses into PNC after closing. Competition can have an impact on customer acquisition, growth and retention and on credit spreads and product pricing, which can affect market share, deposits and revenues. Industry restructuring in the current environment could also impact our business and financial performance
through changes in counterparty creditworthiness and performance
and in the competitive and regulatory landscape. Our ability to anticipate and respond to technological changes can also impact our ability to respond to customer needs and meet competitive demands.
Business and operating results can also be affected by widespread natural and
other disasters, pandemics, dislocations, terrorist activities,
cyberattacks or international hostilities through impacts on the economy and
financial markets generally or on us or our counterparties specifically. We provide greater detail regarding these as well as other factors in our 2014 Form 10-K and our 2015 Form 10-Qs, including in
the Risk Factors and Risk Management sections and the Legal
Proceedings and Commitments and Guarantees Notes of the Notes To Consolidated Financial Statements in those reports, and in our subsequent SEC filings. Our forward-looking statements may also be subject to other risks and uncertainties, including those we may discuss elsewhere in this presentation or in our SEC filings, accessible on the SECs website at www.sec.gov and on our corporate
website at www.pnc.com/secfilings. We have included these web
addresses as inactive textual references only. Information on these websites is not part of this document. Any annualized, pro forma, estimated, third party or consensus numbers in this presentation are used for illustrative or comparative
purposes only and may not reflect actual results. Any consensus
earnings estimates are calculated based on the earnings projections made by analysts who cover that company. The analysts opinions, estimates or forecasts (and therefore the consensus earnings estimates) are theirs alone, are not those of PNC
or its management, and may not reflect PNCs or other
companys actual or anticipated results. |
11 Notes Appendix Explanatory Notes (B) Pretax earnings is income before income taxes and noncontrolling interests.
(A) Pretax, pre-provision earnings is defined as total revenue less
noninterest expense. We believe that pretax pre-provision
earnings, a non-GAAP financial measure, is useful as a tool to help
evaluate the ability to provide for credit costs through
operations. (C) ROAA is Return on Average Assets and ROACE is Return on Average Common Shareholders' Equity.
(D) PNC believes that core net interest income, a non-GAAP financial
measure, is useful in evaluating the performance of our
interest-based activities. |
12 Estimated Transitional Basel III and Pro forma Fully Phased- In Basel III Common Equity Tier 1 Capital Ratios Appendix As a result of the staggered effective dates of the final U.S. Basel III regulatory capital rules (Basel III rules),
as well as the fact that PNC remains in the parallel run qualification phase
for the advanced approaches, PNCs regulatory risk-based
capital ratios in 2015 are calculated using the standardized approach effective January 1, 2015, for determining risk-weighted assets, and the definitions of, and deductions from, regulatory capital
under the Basel III rules (as such definitions and deductions are
phased-in for 2015). We refer to the capital ratios
calculated using the phased-in Basel III provisions in effect for 2015 and, for the risk-based ratios, standardized approach risk-weighted assets as the 2015 Transitional Basel III ratios. Under the standardized
approach for determining credit risk-weighted assets, exposures are
generally assigned a predefined risk weight. Exposures to high
volatility commercial real estate, past due exposures, equity exposures and securitization exposures are generally subject to higher risk weights than other types of exposures.
We provide information on the next slide regarding PNCs estimated 2015
and 2014 Transitional Basel III common equity Tier 1 ratios and
PNCs estimated pro forma fully phased-in Basel III common equity Tier 1 ratio. Under the Basel III rules adopted by the U.S. banking agencies, significant
common stock investments in unconsolidated financial institutions, mortgage
servicing rights and deferred tax assets must be deducted from
capital (subject to a phase-in schedule) to the extent they
individually exceed 10%, or in the aggregate exceed 15%, of the institution's adjusted common equity Tier 1 capital. Also, Basel III regulatory capital includes (subject to a phase-in schedule)
accumulated other comprehensive income related to securities currently and
previously held as available for sale, as well as pension and
other postretirement plans. PNC's regulatory risk-based
capital ratios in 2014 were based on the definitions of, and deductions from, regulatory capital under the Basel III rules (as such definitions and deductions were phased-in
for 2014) and Basel I risk-weighted assets (but subject to certain
adjustments as defined by the Basel III rules). We refer to the
2014 capital ratios calculated using these phased-in Basel III
provisions and Basel I risk-weighted assets as the 2014 Transitional Basel
III ratios. |
13 Estimated Transitional Basel III and Pro forma Fully Phased- In Basel III Common Equity Tier 1 Capital Ratios 2014 Transitional Basel III Dollars in millions Sept. 30, 2015 Jun. 30, 2015 Sept. 30, 2014 Sept. 30, 2015 Jun. 30, 2015 Sept. 30, 2014 Common stock, related surplus, and retained earnings, net of treasury $40,883 $40,688 $39,808 $40,883 $40,688 $39,808 Less regulatory capital adjustments: Goodwill and disallowed intangibles, net of deferred tax liabilities (8,986) (8,999) (8,914) (9,197) (9,223) (9,234) Basel III total threshold deductions (448) (430) (214) (1,145) (1,159) (1,067) Accumulated other comprehensive income (a) 63 22 100 158 53 501 All other adjustments (120) (101) (28) (171) (148) (93) Estimated Basel III Common equity Tier 1 capital 31,392 $ 31,180 $
30,752 $
30,528
$
30,211 $ 29,915 $ Estimated Basel I risk-weighted assets calculated in accordance with transition rules (b) N/A N/A 277,348 $
N/A
N/A N/A Estimated Basel III standardized approach risk-weighted assets (c) 295,656 $ 293,862 $
N/A 303,753 $ 301,688 $ 295,665 $ Estimated Basel III advanced approaches risk-weighted assets (d) N/A N/A N/A 285,482 $ 286,277 $ 289,405 $ Estimated Basel III Common equity Tier 1 capital ratio 10.6% 10.6% 11.1% 10.1% 10.0% 10.1% Risk-weight and associated rules utilized Basel I (with 2014 transition adjustments) 2015 Transitional Basel III Pro forma Fully Phased-In Basel III Standardized Standardized (with 2015 transition adjustments) stock PNC utilizes the pro forma fully phased-in Basel III capital ratios to assess its capital position (without the benefit of
phase-ins), including comparison to similar estimates made by
other financial institutions. Our Basel III capital ratios and estimates may be impacted by additional regulatory guidance or analysis, and, in the case of those ratios calculated using
the advanced approaches, the ongoing evolution, validation and regulatory
approval of PNCs models integral to the calculation of advanced approaches risk-weighted assets.
(a) Represents net adjustments related to accumulated other comprehensive income
for securities currently and previously held as available for sale, as well as pension and other postretirement plans. (b) Includes credit and market risk-weighted assets. (c) Basel III standardized approach risk-weighted assets were estimated based on the Basel III standardized approach rules and include
credit and market risk-weighted assets. (d) Basel III
advanced approaches risk-weighted assets were estimated based on the Basel III advanced approaches rules, and include credit, market and operational risk-weighted assets.
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14 Tangible Book Value per Common Share Appendix % Change Tangible Book Value per Common Share Ratio 9/30/15 vs. 6/30/15 9/30/15 vs. 9/30/14 Dollars in millions, except per share data Sept. 30, 2015 Jun. 30, 2015 Sept. 30, 2014 Book value per common share 81.42 $ 79.64 $ 76.71 $ 2% 6% Tangible book value per common share Common shareholders' equity 41,498 $ 41,066 $ 40,536 $ Goodwill and Other Intangible Assets (a) (9,510) (9,538) (9,559) Deferred tax liabilities on Goodwill and Other Intangible Assets 313 315 325 Tangible common shareholders' equity
32,301 $ 31,843 $ 31,302 $ Period-end common shares outstanding (in millions) 510 516 528 Tangible book value per common share (Non-GAAP)
63.37 $ 61.75 $ 59.24 $ 3% 7% Tangible book value per common share is a non-GAAP measure and is calculated based on tangible common
shareholders equity divided by period-end common shares outstanding.
We believe this non-GAAP measure serves as a useful tool to
help evaluate the strength and discipline of a company's capital management strategies and as an additional, conservative measure of total company value. (a) Excludes the impact from mortgage servicing rights of $1.5 billion at September 30, 2015, $1.6 billion at June 30,
2015, and $1.5 billion at September 30, 2014.
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15 Non-GAAP to GAAP Reconcilement Appendix For the three months ended $ in millions Sept. 30, 2015 Jun. 30, 2015 % Change Sept. 30, 2014 % Change Net interest income $2,062 $2,052 0% $2,104 (2%) Noninterest income $1,713 $1,814 (6%) $1,737 (1%) Total revenue $3,775 $3,866 (2%) $3,841 (2%) Noninterest expense ($2,352) ($2,366) (1%) ($2,357) (%) Pretax pre-provision earnings (1) $1,423 $1,500 (5%) $1,484 (4%) Net income $1,073 $1,044 3% $1,038 3% (1) PNC believes that pretax, pre-provision earnings, a non-GAAP financial measure, is useful as a tool to
help evaluate the ability to provide for credit costs through
operations. For the three months ended
For the nine months ended
$ in millions
Sept. 30, 2015
Jun. 30, 2015
% Change Sept. 30, 2014 % Change Sept. 30, 2015 Sept. 30, 2014 % Change Asset management $376 $416 (10%) $411 (9%) $1,168 $1,137 3% Consumer services $341 $334 2% $320 7% $986 $933 6% Corporate services $384 $369 4% $374 3% $1,097 $1,018 8% Residential mortgage $125 $164 (24%) $140 (11%) $453 $483 (6%) Service charges on deposits $172 $156 10% $179 (4%) $481 $482 (%) Total fee income $1,398 $1,439 (3%) $1,424 (2%) $4,185 $4,053 3% Total other income(1) $315 $375 (16%) $313 1% $1,001 $947 6% Total noninterest income, as reported $1,713 $1,814 (6%) $1,737 (1%) $5,186 $5,000 4% (1) Total other noninterest income includes net gains (losses) on sales of securities and other income (including gains
on asset dispositions). |
16 Non-GAAP to GAAP Reconcilement Appendix $ in millions Sept. 30, 2015 Jun. 30, 2015 Mar. 31, 2015 Dec. 31, 2014 Sept. 30, 2014 Net interest margin, as reported 2.67% 2.73% 2.82% 2.89% 2.98% Purchase accounting accretion (1) $90 $111 $128 $126 $147 Purchase accounting accretion, if annualized $357 $445 $519 $500 $583 Avg. interest earning assets $312,868 $306,719 $301,673 $293,905 $284,951 Annualized purchase accounting accretion/Avg. interest-earning assets
0.10% 0.14% 0.17% 0.17% 0.20% Core net interest margin (2) 2.57% 2.59% 2.65% 2.72% 2.78% For the three months ended (1) Purchase accounting accretion is scheduled purchase accounting accretion plus excess cash recoveries.
(2) PNC believes 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. The adjustment represents annualized purchase accounting accretion divided by average
interest-earning assets. For the three months
ended $ in millions
Sept. 30, 2015
Jun. 30, 2015
% Change Sept. 30, 2014 % Change Net Interest Income Core net interest income (a) $1,972 $1,941 2% $1,957 1% Total purchase accounting accretion Scheduled accretion net of contractual interest 71 83 (14%) 116 (39%) Excess cash recoveries 19 28 (32%) 31 (39%) Total purchase accounting accretion 90 111 (19%) 147 (39%) Total net interest income $2,062 $2,052 0% $2,104 (2%) (a) We believe that core net interest income, a non-GAAP financial measure, is useful in evaluating the performance of
our interest-based activities. |
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