Attached files
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| 8-K - FORM 8-K - PNC FINANCIAL SERVICES GROUP, INC. | d83088d8k.htm |
| EX-99.1 - EX-99.1 - PNC FINANCIAL SERVICES GROUP, INC. | d83088dex991.htm |
 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 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 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.
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 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 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. |
 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 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. |
 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, PNC’s 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 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. |
 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 PNC’s 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. |