Attached files
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| EX-99.1 - EX-99.1 - PNC FINANCIAL SERVICES GROUP, INC. | d81108dex991.htm |
| 8-K - FORM 8-K - PNC FINANCIAL SERVICES GROUP, INC. | d81108d8k.htm |
 The PNC Financial Services Group, Inc.
Second Quarter 2015
Earnings Conference Call
July 15, 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 first quarter 2015 Form 10-Q, 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, pre-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 Us–Investor Relations.” Our SEC filings are available both on our corporate website and on the SEC’s 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 2Q15 Highlights Successful second quarter – Revenue growth driven by higher noninterest income – Stable core NII (1) – Well-managed expenses – Overall credit quality improved – Strong capital maintained Progress on strategic priorities – Fee income grew 7% linked quarter and 5% compared to 2Q14 (2) – OCC mortgage servicing consent order terminated 2Q15 financial summary Net income Diluted EPS from net income Return on average assets $1.0 billion $1.88 1.19% ( 1) 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 also Note A in
the Appendix. (2) See Reconcilement section of the Appendix. |
 4 Higher Commercial Loans, Deposits and Liquidity Investment securities increase of $2.3 billion funded by deposit growth Total loans increased $0.2 billion – Total Commercial grew $1.4 billion – Total Consumer declined $1.2 billion Total deposits grew $4.8 billion Highlights (Avg. Balances) Category (billions) 2Q15 1Q15 2Q14 Investment securities $59.4 4% 6% Total commercial lending $130.7 1% 7% Total consumer lending $74.7 (2%) (3%) Total loans $205.4 0% 3% Interest-earning deposits with banks $32.4 6% 121% Total assets $352.6 1% 9% Total deposits $237.8 2% 8% Total equity $45.9 0% 1% Average Balances Linked Quarter: Prior Year Quarter: Total loans grew $6.2 billion Non-strategic loans declined $1.7 billion primarily impacting Consumer lending Total deposits increased $17.9 billion % change from: |
 5 Common shares outstanding down 4 million Repurchased 5.9 million common shares for approximately $0.6 billion during the quarter (3) The estimated Liquidity Coverage Ratio at June 30, 2015 exceeded 100 percent for both PNC and PNC Bank, N.A. Strong Capital and Liquidity Position (1) See Note B in the Appendix for additional details. (2) June 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 2Q15, 1Q15 and 2Q14, the pro
forma fully phased-in Basel III common equity Tier 1 ratios were calculated
based on standardized approach RWAs and rules. (3) Repurchased under our 2015 capital plan authorization of up to $2.875 billion of common stock over the five quarter period starting in 2Q15. Through 2Q16, ability to purchase full amount is subject to factors
such as market and general economic conditions, economic capital
and regulatory capital conditions, alternative uses of capital, regulatory and contractual limitations, issuances related to employee benefit plans and the potential impact on credit ratings. (4) See
Appendix for additional information related to tangible book value per common
share. Highlights
Risk-weighted
assets (RWAs):
Jun. 30, 2015 Mar. 31, 2015 Jun. 30, 2014 Estimated fully phased-in Basel III standardized approach RWAs (1) $301,619 $302,784 $295,217 Pro forma fully phased-In Basel III common equity Tier 1 10.0% 10.0% 10.0% Linked Quarter: Prior Year Quarter: Pro forma fully phased-in Basel III common equity Tier I capital ratio remained strong Tangible book value per common share grew 6% (4) Jun. 30, 2015 Mar. 31, 2015 Jun. 30, 2014 Book value per common share $79.64 $78.99 $75.62 Tangible book value per common share (4) $61.75 $61.21 $58.22 Common shares outstanding (millions) 516 520 532 Capital ratio: (2) (millions) |
 6 Revenue growth driven by strong fee income and higher gains on asset sales Pretax, pre-provision earnings increase largely reflects strong noninterest income growth and slightly higher expense Overall credit quality improved Solid Profitability Driven by Higher Noninterest Income
Highlights (1) (2),(3) See Notes C, D and E, respectively, in the Appendix for additional details. (4) See Reconcilement section of the Appendix. Linked Quarter: (millions) 2Q15 1Q15 2Q14 Net interest income $2,052 (1%) (4%) Noninterest income 1,814 9% 8% Total revenue 3,866 4% 1% Noninterest expense 2,366 1% 2% Pretax, pre-provision earnings (1,4) 1,500 9% 1% Provision 46 (15%) (36%) Pretax earnings (2) $1,454 9% 3% Net income $1,044 4% (1%) Net income attributable to diluted common shares $987 7% (1%) Prior Year Quarter: Revenue growth driven by higher noninterest income partially offset by lower NII Noninterest expense increase primarily reflects investments in technology and business infrastructure Credit costs declined as overall credit quality continued to improve % change from: 2Q15 1Q15 2Q14 Returns ROAA (3) 1.19% 1.17% 1.31% ROACE (3) 9.75% 9.32% 10.12% |
 7 Average interest-earning assets grew 2% NII declined 1% largely due to lower PAA NIM down primarily due to: – Lower PAA – Increased liquidity position Average interest-earning assets increased 10% NII decreased 4% due to core NII and PAA decline Core NII Stable (1) Core NIM is net interest margin (NIM) less (annualized PAA/average interest-earning assets). See Reconcilement section of the Appendix. Core NII $1,941 ($3) ($41) Plus purchase accounting accretion (PAA) 111 (17) (36) Total NII $2,052 (20) (77) 2Q15 1Q15 2Q14 Margins Net interest margin (NIM) 2.73% 2.82% 3.12% Core NIM (1) 2.59% 2.65% 2.92% Highlights Linked Quarter: 2Q15 1Q15 2Q14 Average interest-earning assets (billions) $306.7 $5.0 $28.4 (millions) Prior Year Quarter: $ change from: |
 8 Strong fee income growth of 7% (2) from our diversified businesses Noninterest income growth of 9% reflected higher fee income and gains on asset sales including gain on VISA sales of $79 million Fee income grew 5% (2) – Asset management up 15% – Corporate services grew 8% – Consumer services grew 3% Fee income excluding residential mortgage grew 8% (2) Noninterest income reflected higher quality revenues from fee income Strong Fee Income Growth Highlights (1) Asset management includes the Asset Management Group (AMG) and BlackRock. (2) See Reconcilement section of the Appendix. (3) Total other noninterest income includes net gains (losses) on sales of securities and other income (including gains on asset dispositions). Linked Quarter: (millions) 2Q15 1Q15 2Q14 Asset management (1) $416 $40 $54 Consumer services 334 23 11 Corporate services 369 25 26 Residential mortgage 164 - (18) Service charges on deposits 156 3 - Fee income (2) 1,439 91 73 Total other noninterest income (3) 375 64 60 Total noninterest income $1,814 $155 $133 2Q15 1Q15 2Q14 Noninterest income to total revenue 47% 44% 44% Prior Year Quarter: $ change from: |
 9 Disciplined Expense Management While Investing for Growth Noninterest expense increased 1% – Higher variable compensation costs related to higher business activity – Increased technology expense and related costs for third party services – Lower charges related to historic tax credits (2) Highlights Linked Quarter: (1) See Note F in
the Appendix. (2) Asset impairment charges related to historic tax credits recorded as reductions to the associated investment asset balances. In prior periods, these credits were recorded as a reduction of income tax expense. This change in application of historic tax
credits was not material to our financial results but did result
in the increase in our effective tax rate to 28.2 percent up from 24.4 percent in the first quarter. (millions) 2Q15 1Q15 2Q14 Personnel $1,200 $43 $28 Occupancy 209 (7) 10 Equipment 231 9 27 Marketing 67 5 (1) Other 659 (33) (26) Total noninterest expense $2,366 $17 $38 2Q15 1Q15 2Q14 Efficiency ratio (1) 61% 63% 61% Prior Year Quarter: Noninterest expense increased due to investments in technology and business infrastructure and higher compensation costs $ change from: |
 10 Overall credit quality improved 2Q15 1Q15 2Q14 1Q15 2Q14 Nonperforming loans (1,2) $2,252 $2,405 $2,801 (6%) (20%) Total Past Due (1,3) $1,641 $1,750 $2,098 (6%) (22%) Commercial Lending ($27) $1 $29 NM NM Consumer Lending $94 $102 $116 (8%) (19%) Total Net Charge-offs $67 $103 $145 (35%) (54%) Provision $46 $54 $72 (15%) (36%) 2Q15 1Q15 2Q14 Loan loss reserves to total loans (4) 1.59% 1.61% 1.72% Credit Quality Improved Highlights (millions) Overall credit quality improved – Overall delinquencies declined – Net charge-offs decreased and were .13% of average loans (5) – Provision for credit losses declined Maintained appropriate reserves % change from: 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 2Q15. (4) See Note G in the Appendix for additional details. (5) Net charge-offs to average loans for 2Q15 (annualized). Linked Quarter: Prior Year Quarter: |
 11 Outlook (1) – 3Q15 vs. 2Q15 Balance sheet Loans Modest Growth Income statement Net interest income Stable Fee income (2) 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. (2) Fee income refers to noninterest income in the following categories: asset management, consumer services, corporate services, residential mortgage, and service charges on deposits. |
 12 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 3.2 percent in the second half of 2015, boosted by lower oil/energy prices, and that short-term interest rates and bond yields will rise
slowly in the latter half of 2015. These forward-looking
statements also do not, unless otherwise indicated, take into account the impact of potential legal and regulatory contingencies. |
 13 Cautionary Statement Regarding Forward-Looking Information (continued) Appendix PNC’s 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 PNC’s 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. PNC’s regulatory capital ratios in the future will depend on, among other things, the company’s 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 PNC’s balance sheet. In addition, PNC’s 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 PNC’s 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. |
 14 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 first quarter 2015 10-Q, 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 SEC’s 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 PNC’s or other company’s actual or anticipated results. |
 15 Notes Appendix Explanatory Notes (A) PNC believes that core net interest income, a non-GAAP financial measure, is useful in evaluating the performance of our
interest-based activities.
(B) 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. (G) The allowance for
loan and lease losses includes impairment reserves attributable to purchased impaired loans. (D) Pretax earnings is income before income taxes and noncontrolling interests.
(F) Efficiency ratio calculated as noninterest expense divided by total
revenue. (C) 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.
(E) ROAA is Return on Average Assets and ROACE is Return on Average Common
Shareholders' Equity. |
 16 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, PNC’s regulatory
risk-based capital ratios in 2015 will be calculated using the standardized approach 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 the 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 PNC’s estimated 2015
and 2014 Transitional Basel III common equity Tier 1 ratios and
PNC’s 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. |
 17 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 Jun. 30, 2015 Mar. 31, 2015 Jun. 30, 2014 Jun. 30, 2015 Mar. 31, 2015 Jun. 30, 2014 Common stock, related surplus, and retained earnings, net of treasury stock
$40,688 $40,374 $39,380 $40,688 $40,374 $39,380 Less regulatory capital adjustments: Goodwill and disallowed intangibles, net of deferred tax liabilities (8,998) (9,011) (8,923) (9,223)
(9,249) (9,262) Basel III total threshold deductions (431) (414) (216) (1,151)
(1,045) (1,075) Accumulated other comprehensive income (a) 21 115 115 53 288 576 All other adjustments (104) (112) (5) (152) (150) (74) Estimated Basel III Common equity Tier 1 capital 31,176 $
30,952 $
30,351 $
30,215
$
30,218 $ 29,545 $ Estimated Basel I risk-weighted assets calculated in accordance with transition
rules (b) N/A N/A 277,126 $
N/A
N/A N/A Estimated Basel III standardized approach risk-weighted assets (c) 293,700 $ 295,114 $
N/A 301,619 $ 302,784 $ 295,217 $ Estimated Basel III advanced approaches risk-weighted assets (d) N/A N/A N/A 287,518 $ 287,293 $ 290,063 $ Estimated Basel III Common equity Tier 1 capital ratio 10.6% 10.5% 11.0% 10.0% 10.0% 10.0% Risk-weight and associated rules utilized Basel I (with 2014 transition adjustments) (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. 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 PNC’s models integral to the calculation of advanced approaches
risk-weighted assets. 2015 Transitional Basel
III Pro forma Fully Phased-In Basel III
Standardized Standardized (with 2015 transition adjustments) |
 18 Tangible Book Value per Common Share Appendix % Change Tangible Book Value per Common Share Ratio 6/30/15 vs. 3/31/15 6/30/15 vs. 6/30/14 Dollars in millions, except per share data Jun. 30, 2015 Mar. 31, 2015 Jun. 30, 2014 Book value per common share 79.64 $ 78.99 $ 75.62 $ 1% 5% Tangible book value per common share Common shareholders' equity 41,066 $ 41,077 $ 40,261 $ Goodwill and Other Intangible Assets (a) (9,538) (9,566) (9,590) Deferred tax liabilities on Goodwill and Other Intangible Assets 315 317 327 Tangible common shareholders' equity
31,843 $ 31,828 $ 30,998 $ Period-end common shares outstanding (in millions) 516 520 532 Tangible book value per common share (Non-GAAP)
61.75 $ 61.21 $ 58.22 $ 1% 6% 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
$1.6 billion at June 30, 2015, $1.3 billion at March 31, 2015, and $1.5 billion at June 30, 2014. |
 19 Non-GAAP to GAAP Reconcilement Appendix For the three months ended $ in millions Jun. 30, 2015 Mar. 31, 2015 % Change Jun. 30, 2014 % Change Asset management $416 $376 11% $362 15% Consumer services $334 $311 7% $323 3% Corporate services $369 $344 7% $343 8% Residential mortgage $164 $164 0% $182 (10%) Service charges on deposits $156 $153 2% $156 0% Total fee income $1,439 $1,348 7% $1,366 5% Residential mortgage $164 $164 $182 Fee income, adjusted for residential mortgage $1,275 $1,184 8% $1,184 8% Net gains (losses) on sales of securities $8 $42 ($6) Other $367 $269 $321 Total noninterest income, as reported $1,814 $1,659 9% $1,681 8% For the three months ended $ in millions Jun. 30, 2015 Mar. 31, 2015 % Change Jun. 30, 2014 % Change Net interest income $2,052 $2,072 (1%) $2,129 (4%) Noninterest income $1,814 $1,659 9% $1,681 8% Total revenue $3,866 $3,731 4% $3,810 1% Noninterest expense ($2,366) ($2,349) 1% ($2,328) 2% Pretax pre-provision earnings (1) $1,500 $1,382 9% $1,482 1% Net income $1,044 $1,004 4% $1,052 (1%) (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. |
 20 Non-GAAP to GAAP Reconcilement Appendix $ in millions Jun. 30, 2015 Mar. 31, 2015 Dec. 31, 2014 Sept. 30, 2014 Jun. 30, 2014 Net interest margin, as reported 2.73% 2.82% 2.89% 2.98% 3.12% Purchase accounting accretion (1) $111 $128 $126 $147 $147 Purchase accounting accretion, if annualized $445 $519 $500 $583 $590 Avg. interest earning assets $306,719 $301,673 $293,905 $284,951 $278,369 Annualized purchase accounting accretion/Avg. interest-earning assets
0.14% 0.17% 0.17% 0.20% 0.20% Core net interest margin (2) 2.59% 2.65% 2.72% 2.78% 2.92% 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
Jun. 30, 2015
Mar. 31, 2015
% Change Jun. 30, 2014 % Change Net Interest Income Core net interest income (a) $1,941 $1,944 0% $1,982 (2%) Total purchase accounting accretion Scheduled accretion net of contractual interest 83 95 (13%) 112 (26%) Excess cash recoveries 28 33 (15%) 35 (20%) Total purchase accounting accretion 111 128 (13%) 147 (24%) Total net interest income $2,052 $2,072 (1%) $2,129 (4%) (a) We believe that core net interest income, a non-GAAP financial measure, is useful in evaluating the performance of our
interest-based activities.
|