PNC FINANCIAL SERVICES GROUP, INC. - FORM 8-K - EX-99.1 - EXHIBIT 99.1

Attached files

file	filename
EX-99.2 - EXHIBIT 99.2 - PNC FINANCIAL SERVICES GROUP, INC.	a1q18earningsslides8k.htm
8-K - FORM 8-K - PNC FINANCIAL SERVICES GROUP, INC.	q120188-kfs.htm

Exhibit 99.1

THE PNC FINANCIAL SERVICES GROUP, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2018

(Unaudited)

THE PNC FINANCIAL SERVICES GROUP, INC.

FINANCIAL SUPPLEMENT

FIRST QUARTER 2018

(UNAUDITED)



Consolidated Results:	Page
Income Statement	1
Balance Sheet	2
Average Balance Sheet	3
Details of Net Interest Margin	4
Per Share Related Information	5
Loans	5
Allowance for Loan and Lease Losses	6
Nonperforming Assets	7-8
Accruing Loans Past Due	9

Business Segment Results:
Descriptions	10
Period End Employees	10
Income and Revenue	11
Retail Banking	12-13
Corporate & Institutional Banking	14
Asset Management Group	15

Glossary of Terms	16-18

The information contained in this Financial Supplement is preliminary, unaudited and based on data available on April 13, 2018. 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, including residential mortgage, corporate and institutional banking and asset management, providing many of its products and services nationally. PNC's primary geographic markets are located in the Mid-Atlantic, Midwest and Southeast. PNC also provides certain products and services internationally.



THE PNC FINANCIAL SERVICES GROUP, INC.
Cross Reference Index to First Quarter 2018 Financial Supplement (Unaudited)
Financial Supplement Table Reference

Table	Description	Page
1	Consolidated Income Statement	1
2	Consolidated Balance Sheet	2
3	Average Consolidated Balance Sheet	3
4	Details of Net Interest Margin	4
5	Per Share Related Information	5
6	Details of Loans	5
7	Change in Allowance for Loan and Lease Losses	6
8	Nonperforming Assets by Type	7
9	Change in Nonperforming Assets	8
10	Largest Individual Nonperforming Assets at September 30, 2017	8
11	Accruing Loans Past Due 30 to 59 Days	9
12	Accruing Loans Past Due 60 to 89 Days	9
13	Accruing Loans Past Due 90 Days or More	9
14	Period End Employees	10
15	Summary of Business Segment Income and Revenue	11
16	Retail Banking	12-13
17	Corporate & Institutional Banking	14
18	Asset Management Group	15



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 1

Table 1: Consolidated Income Statement (Unaudited)



	Three months ended
	March 31			December 31			September 30			June 30			March 31
In millions, except per share data	2018			2017			2017			2017			2017
Interest Income
Loans	$	2,228		$	2,154		$	2,140		$	2,040		$	1,904
Investment securities	512			509			501			495			493
Other	178			162			154			139			123
Total interest income	2,918			2,825			2,795			2,674			2,520
Interest Expense
Deposits	213			190			170			143			120
Borrowed funds	344			290			280			273			240
Total interest expense	557			480			450			416			360
Net interest income	2,361			2,345			2,345			2,258			2,160
Noninterest Income
Asset management	455			720			421			398			403
Consumer services	357			366			357			360			332
Corporate services (a)	429			458			404			466			414
Residential mortgage	97			29			104			104			113
Service charges on deposits	167			183			181			170			161
Other (a) (b)	245			159			313			304			301
Total noninterest income	1,750			1,915			1,780			1,802			1,724
Total revenue	4,111			4,260			4,125			4,060			3,884
Provision For Credit Losses	92			125			130			98			88
Noninterest Expense
Personnel	1,354			1,449			1,286			1,276			1,257
Occupancy	218			240			204			202			222
Equipment	273			274			259			281			251
Marketing	55			60			62			67			55
Other	627			1,038			645			653			617
Total noninterest expense	2,527			3,061			2,456			2,479			2,402
Income before income taxes (benefit) and noncontrolling interests	1,492			1,074			1,539			1,483			1,394
Income taxes (benefit)	253			(1,017		)	413			386			320
Net income	1,239			2,091			1,126			1,097			1,074
Less: Net income attributable to noncontrolling interests	10			11			12			10			17
Preferred stock dividends (c)	63			55			63			55			63
Preferred stock discount accretion and redemptions	1			2			1			2			21
Net income attributable to common shareholders	$	1,165		$	2,023		$	1,050		$	1,030		$	973
Earnings Per Common Share
Basic	$	2.45		$	4.23		$	2.18		$	2.12		$	1.99
Diluted	$	2.43		$	4.18		$	2.16		$	2.10		$	1.96
Average Common Shares Outstanding
Basic	473			476			479			484			487
Diluted	476			480			483			488			492
Efficiency	61		%	72		%	60		%	61		%	62		%
Noninterest income to total revenue	43		%	45		%	43		%	44		%	44		%
Effective tax rate (d)	17.0		%	(94.7		)%	26.8		%	26.0		%	23.0		%


(a)	Effective for the first quarter 2018, we have reclassified operating lease income to corporate services noninterest income from other noninterest income. Prior period amounts were reclassified for operating lease income of $35 million, $34 million, $31 million, and $21 million for the three months ended December 31, 2017, September 30, 2017, June 30, 2017 and March 31, 2017, respectively.


(b)	Includes net gains (losses) on sales of securities of $(1) million, $(3) million, $(1) million, $13 million, and $(2) million for the quarters ended March 31, 2018, December 31, 2017, September 30, 2017, June 30, 2017 and March 31, 2017, respectively.


(c)	Dividends are payable quarterly other than Series O, Series R and Series S preferred stock, which are payable semiannually, with the Series O payable in different quarters than the Series R and Series S preferred stock.

(d)

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 first quarter 2018 results reflected the change in the statutory federal income tax rate from 35% to 21%, effective as of January 1, 2018, as a result of the new federal tax legislation. The fourth quarter 2017 results benefited from an income tax benefit from the new federal tax legislation primarily attributable to revaluation of deferred tax liabilities at the lower statutory tax rate. Where certain income tax effects could be reasonably estimated, these were included as provisional amounts as of December 31, 2017. As a result, these provisional amounts could be adjusted during the measurement period, which will end in December 2018. No changes were made to these provisional amounts during the first quarter of 2018.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 2

Table 2: Consolidated Balance Sheet (Unaudited)



	March 31			December 31			September 30			June 30			March 31
In millions, except par value	2018			2017			2017			2017			2017
Assets
Cash and due from banks	$	4,649		$	5,249		$	4,736		$	5,039		$	5,003
Interest-earning deposits with banks (a)	28,821			28,595			24,713			22,482			27,877
Loans held for sale (b)	965			2,655			1,764			2,030			1,414
Investment securities – available for sale	56,018			57,618			57,254			58,878			59,339
Investment securities – held to maturity	18,544			18,513			17,740			17,553			17,093
Loans (b)	221,614			220,458			221,109			218,034			212,826
Allowance for loan and lease losses	(2,604		)	(2,611		)	(2,605		)	(2,561		)	(2,561		)
Net loans	219,010			217,847			218,504			215,473			210,265
Equity investments (c)	12,008			11,392			11,009			10,819			10,900
Mortgage servicing rights	1,979			1,832			1,854			1,867			1,867
Goodwill	9,218			9,173			9,163			9,163			9,103
Other (b)	27,949			27,894			28,454			28,886			28,083
Total assets	$	379,161		$	380,768		$	375,191		$	372,190		$	370,944
Liabilities
Deposits
Noninterest-bearing	$	78,303		$	79,864		$	79,967		$	79,550		$	79,246
Interest-bearing	186,401			185,189			180,768			179,626			181,464
Total deposits	264,704			265,053			260,735			259,176			260,710
Borrowed funds
Federal Home Loan Bank borrowings	19,537			21,037			20,538			19,039			19,549
Bank notes and senior debt	28,773			28,062			26,467			26,054			23,745
Subordinated debt	5,121			5,200			5,601			6,111			6,889
Other (b)	4,608			4,789			4,958			5,202			4,879
Total borrowed funds	58,039			59,088			57,564			56,406			55,062
Allowance for unfunded loan commitments and letters of credit	290			297			293			304			305
Accrued expenses and other liabilities	9,093			8,745			10,147			10,119			8,964
Total liabilities	332,126			333,183			328,739			326,005			325,041
Equity
Preferred stock (d)
Common stock - $5 par value
Authorized 800 shares, issued 542 shares	2,710			2,710			2,710			2,710			2,709
Capital surplus	16,227			16,374			16,343			16,326			16,275
Retained earnings	36,266			35,481			33,819			33,133			32,372
Accumulated other comprehensive income (loss)	(699		)	(148		)	(22		)	(98		)	(279		)
Common stock held in treasury at cost: 72, 69, 66, 62 and 57 shares	(7,535		)	(6,904		)	(6,462		)	(5,987		)	(5,323		)
Total shareholders’ equity	46,969			47,513			46,388			46,084			45,754
Noncontrolling interests	66			72			64			101			149
Total equity	47,035			47,585			46,452			46,185			45,903
Total liabilities and equity	$	379,161		$	380,768		$	375,191		$	372,190		$	370,944


(a)	Amounts include balances held with the Federal Reserve Bank of Cleveland of $28.6 billion, $28.3 billion, $24.3 billion, $22.1 billion and $27.5 billion as of March 31, 2018, December 31, 2017, September 30, 2017, June 30, 2017 and March 31, 2017, respectively.


(b)	Amounts include assets and liabilities for which PNC has elected the fair value option. Our 2017 Form 10-K included, and our first quarter 2018 Form 10-Q will include, additional information regarding these items.


(c)	Amounts include our equity interest in BlackRock. The amount at March 31, 2018 includes $603 million of trading and available for sale securities that were reclassified to Equity investments on January 1, 2018 in accordance with the adoption of Accounting Standard Update 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities.


(d)	Par value less than $.5 million at each date.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 3



Table 3: Average Consolidated Balance Sheet (Unaudited) (a)
	Three months ended
	March 31		December 31		September 30		June 30		March 31
In millions	2018		2017		2017		2017		2017
Assets
Interest-earning assets:
Investment securities
Securities available for sale
Residential mortgage-backed
Agency	$	25,438	$	25,338	$	25,493	$	25,862	$	26,385
Non-agency	2,398		2,577		2,758		2,947		3,127
Commercial mortgage-backed	4,534		4,542		4,838		5,493		5,919
Asset-backed	5,158		5,330		5,546		5,863		5,992
U.S. Treasury and government agencies	14,307		13,646		13,081		12,881		13,101
Other	4,233		4,940		5,011		5,093		5,293
Total securities available for sale	56,068		56,373		56,727		58,139		59,817
Securities held to maturity
Residential mortgage-backed	14,818		13,976		13,549		12,790		11,852
Commercial mortgage-backed	902		963		1,211		1,393		1,458
Asset-backed	199		220		358		490		556
U.S. Treasury and government agencies	743		739		561		533		529
Other	1,926		1,974		2,000		2,007		2,041
Total securities held to maturity	18,588		17,872		17,679		17,213		16,436
Total investment securities	74,656		74,245		74,406		75,352		76,253
Loans
Commercial	111,462		111,365		109,503		106,944		103,084
Commercial real estate	28,901		29,432		29,676		29,655		29,178
Equipment lease financing	7,845		7,670		7,704		7,602		7,497
Consumer	55,588		55,814		56,062		56,342		56,843
Residential real estate	17,308		16,840		16,273		15,830		15,651
Total loans	221,104		221,121		219,218		216,373		212,253
Interest-earning deposits with banks (b)	25,667		25,567		23,859		22,543		24,192
Other interest-earning assets	7,904		8,759		9,024		9,748		8,395
Total interest-earning assets	329,331		329,692		326,507		324,016		321,093
Noninterest-earning assets	46,944		47,136		46,890		46,286		45,323
Total assets	$	376,275	$	376,828	$	373,397	$	370,302	$	366,416
Liabilities and Equity
Interest-bearing liabilities:
Interest-bearing deposits
Money market	$	58,523	$	60,954	$	62,325	$	62,157	$	63,921
Demand	59,620		57,128		56,743		57,513		56,797
Savings	48,451		45,817		43,869		42,128		39,095
Time deposits	16,844		17,438		17,571		17,214		17,058
Total interest-bearing deposits	183,438		181,337		180,508		179,012		176,871
Borrowed funds
Federal Home Loan Bank borrowings	20,721		19,565		19,190		20,405		20,416
Bank notes and senior debt	28,987		27,778		26,602		24,817		22,992
Subordinated debt	5,179		5,433		5,970		6,607		7,102
Other	4,751		5,261		5,254		5,695		4,432
Total borrowed funds	59,638		58,037		57,016		57,524		54,942
Total interest-bearing liabilities	243,076		239,374		237,524		236,536		231,813
Noninterest-bearing liabilities and equity:
Noninterest-bearing deposits	77,222		80,152		78,931		77,375		78,050
Accrued expenses and other liabilities	9,118		10,801		10,749		10,432		10,081
Equity	46,859		46,501		46,193		45,959		46,472
Total liabilities and equity	$	376,275	$	376,828	$	373,397	$	370,302	$	366,416


(a)	Calculated using average daily balances.


(b)	Amounts include balances held with the Federal Reserve Bank of Cleveland of $25.4 billion, $25.3 billion, $23.4 billion, $22.1 billion and $23.7 billion for the three months ended March 31, 2018, December 31, 2017, September 30, 2017, June 30, 2017 and March 31, 2017, respectively.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 4



Table 4: Details of Net Interest Margin (Unaudited) (a)
	Three months ended
	March 31		December 31		September 30		June 30		March 31
	2018		2017		2017		2017		2017
Average yields/rates
Yield on interest-earning assets
Investment securities
Securities available for sale
Residential mortgage-backed
Agency	2.60	%	2.58	%	2.61	%	2.51	%	2.57	%
Non-agency	5.99	%	4.29	%	5.91	%	5.58	%	5.59	%
Commercial mortgage-backed	2.75	%	4.68	%	2.71	%	2.56	%	2.35	%
Asset-backed	2.87	%	2.82	%	2.53	%	2.48	%	2.50	%
U.S. Treasury and government agencies	2.07	%	1.79	%	1.83	%	1.78	%	1.66	%
Other	3.39	%	3.32	%	3.08	%	3.08	%	2.93	%
Total securities available for sale	2.71	%	2.73	%	2.63	%	2.56	%	2.53	%
Securities held to maturity
Residential mortgage-backed	2.84	%	2.74	%	2.81	%	2.82	%	2.79	%
Commercial mortgage-backed	3.76	%	4.11	%	4.42	%	4.30	%	3.50	%
Asset-backed	2.90	%	2.66	%	2.53	%	2.35	%	2.21	%
U.S. Treasury and government agencies	2.80	%	2.85	%	3.07	%	3.10	%	3.07	%
Other	4.44	%	5.28	%	5.30	%	5.28	%	5.34	%
Total securities held to maturity	3.05	%	3.10	%	3.20	%	3.22	%	3.16	%
Total investment securities	2.79	%	2.82	%	2.77	%	2.71	%	2.67	%
Loans
Commercial	3.74	%	3.59	%	3.54	%	3.45	%	3.24	%
Commercial real estate	3.81	%	3.68	%	3.65	%	3.48	%	3.27	%
Equipment lease financing	3.68	%	2.33	%	3.71	%	3.65	%	3.34	%
Consumer	4.87	%	4.72	%	4.67	%	4.52	%	4.47	%
Residential real estate	4.40	%	4.41	%	4.45	%	4.55	%	4.55	%
Total loans	4.09	%	3.91	%	3.92	%	3.82	%	3.67	%
Interest-earning deposits with banks	1.52	%	1.33	%	1.26	%	1.04	%	.81	%
Other interest-earning assets	4.00	%	3.55	%	3.47	%	3.38	%	3.54	%
Total yield on interest-earning assets	3.59	%	3.45	%	3.45	%	3.35	%	3.22	%
Rate on interest-bearing liabilities
Interest-bearing deposits
Money market	.54	%	.45	%	.41	%	.30	%	.23	%
Demand	.21	%	.17	%	.14	%	.12	%	.10	%
Savings	.57	%	.51	%	.45	%	.45	%	.42	%
Time deposits	.88	%	.85	%	.79	%	.73	%	.69	%
Total interest-bearing deposits	.47	%	.42	%	.37	%	.32	%	.28	%
Borrowed funds
Federal Home Loan Bank borrowings	1.76	%	1.48	%	1.37	%	1.23	%	1.09	%
Bank notes and senior debt	2.43	%	2.04	%	2.05	%	2.00	%	1.85	%
Subordinated debt	3.91	%	3.49	%	3.48	%	3.66	%	3.49	%
Other	2.18	%	1.74	%	1.60	%	1.67	%	1.36	%
Total borrowed funds	2.31	%	1.96	%	1.93	%	1.89	%	1.74	%
Total rate on interest-bearing liabilities	.91	%	.79	%	.75	%	.70	%	.62	%
Interest rate spread	2.68	%	2.66	%	2.70	%	2.65	%	2.60	%
Impact of noninterest-bearing sources (b)	.23		.22		.21		.19		.17
Net interest margin	2.91	%	2.88	%	2.91	%	2.84	%	2.77	%

(a)

Calculated as annualized taxable-equivalent net interest income divided by average earning assets. To provide more meaningful comparisons of net interest yields for all earning assets, as well as net interest margins, we use interest income on a taxable-equivalent basis in calculating net interest 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 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 March 31, 2018, December 31, 2017, September 30, 2017, June 30, 2017 and March 31, 2017, were $29 million, $54 million, $55 million, $54 million and $52 million, respectively. Taxable equivalent amounts for the 2018 period were calculated using a statutory federal income tax rate of 21%, reflecting the enactment of the new federal tax legislation effective January 1, 2018. Amounts for the 2017 periods were calculated using the previously applicable statutory federal income tax rate of 35%.


(b)	Represents the positive effects of investing noninterest-bearing sources in interest-earning assets.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 5



Table 5: Per Share Related Information (Unaudited)
	Three months ended
	March 31		December 31		September 30		June 30		March 31
In millions, except per share data	2018		2017		2017		2017		2017
Basic
Net income	$	1,239	$	2,091	$	1,126	$	1,097	$	1,074
Less:
Net income (loss) attributable to noncontrolling interests	10		11		12		10		17
Preferred stock dividends (a)	63		55		63		55		63
Preferred stock discount accretion and redemptions	1		2		1		2		21
Net income attributable to common shareholders	1,165		2,023		1,050		1,030		973
Less:
Dividends and undistributed earnings allocated to nonvested restricted shares	5		8		5		4		6
Net income attributable to basic common shares	$	1,160	$	2,015	$	1,045	$	1,026	$	967
Basic weighted-average common shares outstanding	473		476		479		484		487
Basic earnings per common share	$	2.45	$	4.23	$	2.18	$	2.12	$	1.99
Diluted
Net income attributable to basic common shares	$	1,160	$	2,015	$	1,045	$	1,026	$	967
Less: Impact of BlackRock earnings per share dilution	2		8		3		1		4
Net income attributable to diluted common shares	$	1,158	$	2,007	$	1,042	$	1,025	$	963
Basic weighted-average common shares outstanding	473		476		479		484		487
Dilutive potential common shares	3		4		4		4		5
Diluted weighted-average common shares outstanding	476		480		483		488		492
Diluted earnings per common share	$	2.43	$	4.18	$	2.16	$	2.10	$	1.96


(a)	Dividends are payable quarterly other than the Series O, Series R and Series S preferred stock, which are payable semiannually, with the Series O payable in different quarters than the Series R and Series S preferred stock.

Table 6: Details of Loans (Unaudited)



	March 31		December 31		September 30		June 30		March 31
In millions	2018		2017		2017		2017		2017
Commercial lending
Commercial
Manufacturing	$	21,367	$	20,578	$	20,658	$	20,533	$	20,054
Retail/wholesale trade	18,232		17,846		18,256		18,101		17,446
Service providers	14,554		15,100		15,014		15,111		14,185
Real estate related (a)	12,701		12,496		12,174		12,179		11,690
Health care	9,937		9,739		9,659		9,541		9,603
Financial services	9,479		8,532		10,968		8,493		7,710
Transportation and warehousing	5,488		5,609		5,597		5,589		5,260
Other industries	20,550		20,627		18,991		19,010		17,817
Total commercial	112,308		110,527		111,317		108,557		103,765
Commercial real estate	28,835		28,978		29,516		29,489		29,435
Equipment lease financing	7,802		7,934		7,694		7,719		7,462
Total commercial lending	148,945		147,439		148,527		145,765		140,662
Consumer lending
Home equity	27,699		28,364		28,811		29,219		29,577
Residential real estate	17,456		17,212		16,601		16,049		15,781
Credit card	5,657		5,699		5,375		5,211		5,112
Other consumer
Automobile	13,295		12,880		12,743		12,488		12,337
Education	4,228		4,454		4,620		4,751		4,974
Other	4,334		4,410		4,432		4,551		4,383
Total consumer lending	72,669		73,019		72,582		72,269		72,164
Total loans	$	221,614	$	220,458	$	221,109	$	218,034	$	212,826

(a) Includes loans to customers in the real estate and construction industries.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 6

Allowance for Loan and Lease Losses (Unaudited)

Table 7: Change in Allowance for Loan and Lease Losses



	March 31			December 31			September 30			June 30			March 31
Three months ended - in millions	2018			2017			2017			2017			2017
Beginning balance	$	2,611		$	2,605		$	2,561		$	2,561		$	2,589
Gross charge-offs:
Commercial	(28		)	(46		)	(39		)	(48		)	(53		)
Commercial real estate	(6		)	(15		)	(6		)	(2		)	(1		)
Equipment lease financing	(2		)	(5		)	(4		)	(1		)	(1		)
Home equity	(28		)	(25		)	(26		)	(38		)	(34		)
Residential real estate	(2		)	(1		)	(4		)				(4		)
Credit card	(56		)	(46		)	(44		)	(46		)	(46		)
Other consumer
Automobile	(38		)	(37		)	(31		)	(28		)	(30		)
Education	(9		)	(11		)	(7		)	(9		)	(7		)
Other	(24		)	(23		)	(24		)	(22		)	(22		)
Total gross charge-offs	(193		)	(209		)	(185		)	(194		)	(198		)
Recoveries:
Commercial	16			20			17			20			24
Commercial real estate	6			7			6			8			7
Equipment lease financing	4			3			2			1			1
Home equity	21			24			24			23			20
Residential real estate	4			6			4			4			4
Credit card	6			5			5			6			5
Other consumer
Automobile	17			15			15			15			13
Education	2			2			2			2			2
Other	4			4			4			5			4
Total recoveries	80			86			79			84			80
Net (charge-offs) / recoveries:
Commercial	(12		)	(26		)	(22		)	(28		)	(29		)
Commercial real estate				(8		)				6			6
Equipment lease financing	2			(2		)	(2		)
Home equity	(7		)	(1		)	(2		)	(15		)	(14		)
Residential real estate	2			5						4
Credit card	(50		)	(41		)	(39		)	(40		)	(41		)
Other consumer
Automobile	(21		)	(22		)	(16		)	(13		)	(17		)
Education	(7		)	(9		)	(5		)	(7		)	(5		)
Other	(20		)	(19		)	(20		)	(17		)	(18		)
Total net (charge-offs)	(113		)	(123		)	(106		)	(110		)	(118		)
Provision for credit losses	92			125			130			98			88
Net decrease / (increase) in allowance for unfunded loan commitments and letters of credit	7			(4		)	11			1			(4		)
Other	7			8			9			11			6
Ending balance	$	2,604		$	2,611		$	2,605		$	2,561		$	2,561
Supplemental Information
Net charge-offs to average loans (for the three months ended) (annualized)	.21		%	.22		%	.19		%	.20		%	.23		%
Allowance for loan and lease losses to total loans	1.18		%	1.18		%	1.18		%	1.17		%	1.20		%
Commercial lending net charge-offs	$	(10	)	$	(36	)	$	(24	)	$	(22	)	$	(23	)
Consumer lending net charge-offs	(103		)	(87		)	(82		)	(88		)	(95		)
Total net charge-offs	$	(113	)	$	(123	)	$	(106	)	$	(110	)	$	(118	)
Net charge-offs to average loans
Commercial lending	.03		%	.10		%	.06		%	.06		%	.07		%
Consumer lending	.57		%	.48		%	.45		%	.49		%	.53		%



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 7

Details of Nonperforming Assets (Unaudited)

Table 8: Nonperforming Assets by Type



	March 31			December 31			September 30			June 30			March 31
In millions	2018			2017			2017			2017			2017
Nonperforming loans, including TDRs
Commercial lending
Commercial
Retail/wholesale trade	$	126		$	115		$	76		$	86		$	106
Manufacturing	67			55			63			65			41
Service providers	36			35			48			52			44
Real estate related (a)	25			33			37			26			28
Health care	13			15			23			33			23
Transportation and warehousing	3			27			15			16			3
Other industries	156			149			157			190			155
Total commercial	426			429			419			468			400
Commercial real estate	107			123			128			127			137
Equipment lease financing	4			2			3			4			12
Total commercial lending	537			554			550			599			549
Consumer lending (b)
Home equity	820			818			814			837			900
Residential real estate	391			400			423			439			473
Credit card	6			6			5			5			4
Other consumer
Automobile	79			76			71			66			61
Education and other	9			11			10			11			11
Total consumer lending	1,305			1,311			1,323			1,358			1,449
Total nonperforming loans (c)	1,842			1,865			1,873			1,957			1,998
OREO, foreclosed and other assets	162			170			194			196			214
Total nonperforming assets	$	2,004		$	2,035		$	2,067		$	2,153		$	2,212
Nonperforming loans to total loans	.83		%	.85		%	.85		%	.90		%	.94		%
Nonperforming assets to total loans, OREO, foreclosed and other assets	.90		%	.92		%	.93		%	.99		%	1.04		%
Nonperforming assets to total assets	.53		%	.53		%	.55		%	.58		%	.60		%
Allowance for loan and lease losses to nonperforming loans	141		%	140		%	139		%	131		%	128		%


(a)	Includes loans related to customers in the real estate and construction industries.


(b)	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.


(c)	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.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 8

Details of Nonperforming Assets (Unaudited) (Continued)

Table 9: Change in Nonperforming Assets



	January 1, 2018 -			October 1, 2017 -			July 1, 2017 -			April 1, 2017 -			January 1, 2017 -
In millions	March 31, 2018			December 31, 2017			September 30, 2017			June 30, 2017			March 31, 2017
Beginning balance	$	2,035		$	2,067		$	2,153		$	2,212		$	2,374
New nonperforming assets	249			307			303			436			330
Charge-offs and valuation adjustments	(137		)	(141		)	(142		)	(152		)	(150		)
Principal activity, including paydowns and payoffs	(81		)	(87		)	(162		)	(161		)	(228		)
Asset sales and transfers to loans held for sale	(29		)	(40		)	(38		)	(58		)	(42		)
Returned to performing status	(33		)	(71		)	(47		)	(124		)	(72		)
Ending balance	$	2,004		$	2,035		$	2,067		$	2,153		$	2,212

Table 10: Largest Individual Nonperforming Assets at March 31, 2018 (a)



In millions
Ranking	Outstandings	Industry
1	$41	Wholesale Trade
2	39	Wholesale Trade
3	39	Information
4	27	Mining, Quarrying, and Oil and Gas Extraction
5	25	Mining, Quarrying, and Oil and Gas Extraction
6	20	Manufacturing
7	15	Manufacturing
8	13	Real Estate and Rental and Leasing
9	13	Transportation and Warehousing
10	13	Mining, Quarrying, and Oil and Gas Extraction
Total	$245
As a percent of total nonperforming assets		12%

(a) Amounts shown are not net of related allowance for loan and lease losses, if applicable.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 9

Accruing Loans Past Due (Unaudited)

Table 11: Accruing Loans Past Due 30 to 59 Days (a)



	Amount										Percent of Total Outstandings
	Mar. 31		Dec. 31		Sept. 30		Jun. 30		Mar. 31		Mar. 31		Dec. 31		Sept. 30		Jun. 30		Mar. 31
Dollars in millions	2018		2017		2017		2017		2017		2018		2017		2017		2017		2017
Commercial	$	53	$	45	$	44	$	42	$	62	.05	%	.04	%	.04	%	.04	%	.06	%
Commercial real estate	21		27		8		4		15		.07	%	.09	%	.03	%	.01	%	.05	%
Equipment lease financing	18		17		4		2		19		.23	%	.21	%	.05	%	.03	%	.25	%
Home equity	94		78		74		61		57		.34	%	.27	%	.26	%	.21	%	.19	%
Residential real estate
Non government insured	66		90		75		78		62		.38	%	.52	%	.45	%	.49	%	.39	%
Government insured	64		61		60		51		60		.37	%	.35	%	.36	%	.32	%	.38	%
Credit card	40		43		40		34		32		.71	%	.75	%	.74	%	.65	%	.63	%
Other consumer
Automobile	77		79		71		44		35		.58	%	.61	%	.56	%	.35	%	.28	%
Education and other
Non government insured	22		25		30		24		22		.26	%	.28	%	.33	%	.26	%	.24	%
Government insured	72		80		80		93		94		.84	%	.90	%	.88	%	1.00	%	1.00	%
Total	$	527	$	545	$	486	$	433	$	458	.24	%	.25	%	.22	%	.20	%	.22	%

Table 12: Accruing Loans Past Due 60 to 89 Days (a)



	Amount										Percent of Total Outstandings
	Mar. 31		Dec. 31		Sept. 30		Jun. 30		Mar. 31		Mar. 31		Dec. 31		Sept. 30		Jun. 30		Mar. 31
Dollars in millions	2018		2017		2017		2017		2017		2018		2017		2017		2017		2017
Commercial	$	22	$	25	$	28	$	26	$	29	.02	%	.02	%	.03	%	.02	%	.03	%
Commercial real estate	12		2		13		1		6		.04	%	.01	%	.04	%	.00	%	.02	%
Equipment lease financing	1		1		3		4				.01	%	.01	%	.04	%	.05	%
Home equity	31		26		31		24		23		.11	%	.09	%	.11	%	.08	%	.08	%
Residential real estate
Non government insured	16		21		17		14		23		.09	%	.12	%	.10	%	.09	%	.15	%
Government insured	54		53		54		55		54		.31	%	.31	%	.33	%	.34	%	.34	%
Credit card	26		26		25		20		21		.46	%	.46	%	.47	%	.38	%	.41	%
Other consumer
Automobile	18		20		16		12		10		.14	%	.16	%	.13	%	.10	%	.08	%
Education and other
Non government insured	11		12		15		9		11		.13	%	.14	%	.17	%	.10	%	.12	%
Government insured	43		52		53		54		50		.50	%	.59	%	.59	%	.58	%	.53	%
Total	$	234	$	238	$	255	$	219	$	227	.11	%	.11	%	.12	%	.10	%	.11	%

Table 13: Accruing Loans Past Due 90 Days or More (a)



	Amount										Percent of Total Outstandings
	Mar. 31		Dec. 31		Sept. 30		Jun. 30		Mar. 31		Mar. 31		Dec. 31		Sept. 30		Jun. 30		Mar. 31
Dollars in millions	2018		2017		2017		2017		2017		2018		2017		2017		2017		2017
Commercial	$	53	$	39	$	47	$	50	$	40	.05	%	.04	%	.04	%	.05	%	.04	%
Commercial real estate							2										.01	%
Residential real estate
Non government insured	13		24		12		11		10		.07	%	.14	%	.07	%	.07	%	.06	%
Government insured	360		462		406		400		422		2.06	%	2.68	%	2.45	%	2.49	%	2.67	%
Credit card	45		45		38		36		37		.80	%	.79	%	.71	%	.69	%	.72	%
Other consumer
Automobile	9		8		5		4		5		.07	%	.06	%	.04	%	.03	%	.04	%
Education and other
Non government insured	12		11		9		8		9		.14	%	.12	%	.10	%	.09	%	.10	%
Government insured	136		148		161		163		176		1.59	%	1.67	%	1.78	%	1.75	%	1.88	%
Total	$	628	$	737	$	678	$	674	$	699	.28	%	.33	%	.31	%	.31	%	.33	%

(a) Excludes loans held for sale and purchased impaired loans.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 10

Business Segment Descriptions (Unaudited)

Retail Banking provides deposit, lending, brokerage, insurance services, 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, Florida, North Carolina, Kentucky, Washington, D.C., Delaware, Virginia, Georgia, Alabama, Missouri, Wisconsin and South Carolina. Deposit products include checking, savings and money market accounts and certificates of deposit. Lending products include residential mortgages, home equity loans and lines of credit, auto loans, credit cards, education loans and personal and small business loans and lines of credit. The residential mortgage loans are directly originated within our branch network and nationwide, and are typically underwritten to government agency and/or third-party standards, and either sold, servicing retained, or held on our balance sheet. Brokerage, investment management and cash management products and services include managed, education, retirement and trust accounts.

Corporate & Institutional Banking provides lending, treasury management, and capital markets-related products and services to mid-sized and large corporations, and government and not-for-profit entities. Lending products include secured and unsecured loans, letters of credit and equipment leases. Treasury management services include cash and investment management, receivables management, disbursement services, funds transfer services, information reporting and global trade services. Capital markets-related products and services include foreign exchange, derivatives, securities underwriting, loan syndications, mergers and acquisitions advisory and equity capital markets advisory related services. We also provide commercial loan servicing and technology solutions for the commercial real estate finance industry. Products and services are provided nationally. We offer certain products and services internationally.

Asset Management Group provides personal wealth management for high net worth and ultra high net worth clients and institutional asset management. Wealth management products and services include investment and retirement planning, customized investment management, private banking, tailored credit solutions, and trust management and administration for individuals and their families. Our Hawthorn unit provides multi-generational family planning including estate, financial, tax planning, fiduciary, investment management and consulting, private banking, personal administrative services, asset custody and customized performance reporting to ultra high net worth families. Institutional asset management provides advisory, custody and retirement administration services. The business also offers PNC proprietary mutual funds. Institutional clients include corporations, unions, municipalities, non-profits, foundations and endowments, largely within our primary geographic markets.

BlackRock, in which we hold an equity investment, is a leading publicly-traded investment management firm providing a broad range of investment, risk management and technology 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, advisory and technology services and solutions to a broad base of institutional and wealth management investors. Our equity investment in BlackRock provides us with an additional source of noninterest income and increases our overall revenue diversification. BlackRock is a publicly-traded company, and additional information regarding its business is available in its filings with the Securities and Exchange Commission (SEC). At March 31, 2018, our economic interest in BlackRock was 22%.

Table 14: Period End Employees (a)



	March 31	December 31	September 30	June 30	March 31
	2018	2017	2017	2017	2017
Full-time employees
Retail Banking	29,903	29,604	29,486	29,463	29,606
Other full-time employees	21,055	20,754	20,637	20,399	20,065
Total full-time employees	50,958	50,358	50,123	49,862	49,671
Part-time employees
Retail Banking	2,337	2,368	2,422	2,554	2,492
Other part-time employees	189	180	223	540	192
Total part-time employees	2,526	2,548	2,645	3,094	2,684
Total	53,484	52,906	52,768	52,956	52,355

(a) In each of the second and third quarters of 2017, certain personnel were moved from Other into Retail Banking. Prior periods have been revised to reflect these changes.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 11

Table 15: Summary of Business Segment Income and Revenue (Unaudited) (a) (b)



	Three months ended
	March 31		December 31			September 30		June 30		March 31
In millions	2018		2017			2017		2017		2017
Income (loss)
Retail Banking	$	296	$	(145	)	$	232	$	230	$	213
Corporate & Institutional Banking	584		937			525		518		484
Asset Management Group	68		56			47		52		47
Other, including BlackRock (c)	291		1,243			322		297		330
Net income	$	1,239	$	2,091		$	1,126	$	1,097	$	1,074

Revenue
Retail Banking	$	1,853	$	1,535		$	1,819	$	1,784	$	1,724
Corporate & Institutional Banking	1,429		1,502			1,479		1,478		1,363
Asset Management Group	300		297			292		290		289
Other, including BlackRock (c)	529		926			535		508		508
Total revenue	$	4,111	$	4,260		$	4,125	$	4,060	$	3,884

(a)

Our business information is presented based on our internal management reporting practices. Net interest income in business segment results reflects PNC’s 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.

(b)

Our business segment results for the first quarter of 2018 reflected the change in the statutory federal income tax rate from 35% to 21%, effective as of January 1, 2018, as a result of the new federal tax legislation. Our business segment results for the fourth quarter of 2017 reflect the allocation of the impact of the new tax legislation to our business segments, primarily the revaluation of the net deferred tax positions allocated to the segments. Where certain income tax effects could be reasonably estimated, these were included as provisional amounts as of December 31, 2017. As a result, these provisional amounts could be adjusted during the measurement period, which will end in December 2018. No changes were made to these provisional amounts during the first quarter of 2018.


(c)	Includes earnings and gains or losses related to PNC's equity interest in BlackRock and residual activities that do not meet the criteria for disclosure as a separate reportable business. We provide additional information on these activities in our Form 10-K and Form 10-Q filings with the SEC.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 12

Table 16: Retail Banking (Unaudited) (a)



	Three months ended
	March 31			December 31			September 30			June 30			March 31
Dollars in millions	2018			2017			2017			2017			2017
Income Statement
Net interest income	$	1,218		$	1,190		$	1,176		$	1,139		$	1,121
Noninterest income	635			345			643			645			603
Total revenue	1,853			1,535			1,819			1,784			1,724
Provision for credit losses	69			149			77			50			71
Noninterest expense	1,395			1,391			1,375			1,370			1,315
Pretax earnings (loss)	389			(5		)	367			364			338
Income taxes	93			140			135			134			125
Earnings (loss)	$	296		$	(145	)	$	232		$	230		$	213
Average Balance Sheet
Loans held for sale	$	652		$	819		$	802		$	730		$	843
Loans
Consumer
Home equity	$	24,608		$	24,933		$	25,173		$	25,413		$	25,601
Automobile	13,105			12,767			12,484			12,220			12,146
Education	4,409			4,567			4,723			4,913			5,131
Credit cards	5,619			5,450			5,280			5,137			5,121
Other	1,765			1,793			1,787			1,760			1,756
Total consumer	49,506			49,510			49,447			49,443			49,755
Commercial and commercial real estate	10,527			10,513			10,630			10,925			11,006
Residential mortgage	13,420			12,950			12,382			11,918			11,688
Total loans	$	73,453		$	72,973		$	72,459		$	72,286		$	72,449
Total assets	$	88,734		$	88,883		$	88,642		$	88,671		$	87,109
Deposits
Noninterest-bearing demand	$	29,779		$	30,344		$	30,222		$	29,540		$	29,010
Interest-bearing demand	41,939			40,954			40,762			41,465			40,649
Money market	32,330			33,922			35,671			37,523			39,321
Savings	43,838			41,536			39,908			38,358			35,326
Certificates of deposit	12,082			12,554			12,962			13,304			13,735
Total deposits	$	159,968		$	159,310		$	159,525		$	160,190		$	158,041
Performance Ratios
Return on average assets	1.35		%	(.65		)%	1.04		%	1.04		%	.99		%
Noninterest income to total revenue	34		%	22		%	35		%	36		%	35		%
Efficiency	75		%	91		%	76		%	77		%	76		%


(a)	See notes (a) and (b) on page 11.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 13

Retail Banking (Unaudited) (Continued)



	Three months ended
	March 31			December 31			September 30			June 30			March 31
Dollars in millions, except as noted	2018			2017			2017			2017			2017
Supplemental Noninterest Income Information
Consumer services	$	266		$	279		$	273		$	277		$	250
Brokerage	$	86		$	81		$	77		$	78		$	76
Residential mortgage	$	97		$	29		$	104		$	104		$	113
Service charges on deposits	$	160		$	177		$	174		$	163		$	154
Residential Mortgage Information
Residential mortgage servicing statistics (in billions, except as noted) (a)
Serviced portfolio balance (b)	$	125		$	127		$	129		$	131		$	130
Serviced portfolio acquisitions	$	1		$	1		$	2		$	8		$	8
MSR asset value (b)	$	1.3		$	1.2		$	1.2		$	1.2		$	1.3
MSR capitalization value (in basis points) (b)	101			92			95			95			97
Servicing income: (in millions)
Servicing fees, net (c)	$	51		$	45		$	46		$	44		$	52
Mortgage servicing rights valuation, net of economic hedge	$	9		$	(60	)	$	7		$	11		$	12
Residential mortgage loan statistics
Loan origination volume (in billions)	$	1.7		$	2.4		$	2.5		$	2.2		$	1.9
Loan sale margin percentage	2.83		%	2.71		%	2.80		%	2.74		%	2.96		%
Percentage of originations represented by:
Purchase volume (d)	56		%	50		%	57		%	61		%	43		%
Refinance volume	44		%	50		%	43		%	39		%	57		%
Other Information (b)
Customer-related statistics (average)
Non-teller deposit transactions (e)	54		%	54		%	54		%	52		%	52		%
Digital consumer customers (f)	64		%	63		%	62		%	62		%	61		%
Credit-related statistics
Nonperforming assets	$	1,131		$	1,129		$	1,126		$	1,149		$	1,209
Net charge-offs	$	100		$	99		$	85		$	87		$	100
Other statistics
ATMs	9,047			9,051			8,987			8,972			8,976
Branches (g)	2,442			2,459			2,474			2,481			2,508
Brokerage account client assets (in billions) (h)	$	49		$	49		$	48		$	46		$	46


(a)	Represents mortgage loan servicing balances for third parties and the related income.


(b)	Presented as of period end, except for customer-related statistics, which are quarterly averages, and net charge-offs, which are for the three months ended.


(c)	Servicing fees net of impact of decrease in MSR value due to passage of time, including the impact from both regularly scheduled loan prepayments and loans that were paid down or paid off during the period.


(d)	Mortgages with borrowers as part of residential real estate purchase transactions.


(e)	Percentage of total consumer and business banking deposit transactions processed at an ATM or through our mobile banking application.


(f)	Represents consumer checking relationships that process the majority of their transactions through non-teller channels.


(g)	Excludes stand-alone mortgage offices and satellite offices (e.g., drive-ups, electronic branches and retirement centers) that provide limited products and/or services.


(h)	Includes cash and money market balances.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 14

Table 17: Corporate & Institutional Banking (Unaudited) (a)



	Three months ended
	March 31			December 31			September 30			June 30			March 31
Dollars in millions	2018			2017			2017			2017			2017
Income Statement
Net interest income	$	882		$	898		$	924		$	890		$	839
Noninterest income	547			604			555			588			524
Total revenue	1,429			1,502			1,479			1,478			1,363
Provision for credit losses (benefit)	41			(14		)	62			87			25
Noninterest expense	626			643			599			602			584
Pretax earnings	762			873			818			789			754
Income taxes (benefit)	178			(64		)	293			271			270
Earnings	$	584		$	937		$	525		$	518		$	484
Average Balance Sheet
Loans held for sale	$	1,189		$	845		$	917		$	716		$	1,116
Loans
Commercial	$	100,802		$	100,726		$	98,794		$	96,012		$	92,116
Commercial real estate	26,732			27,259			27,559			27,575			27,091
Equipment lease financing	7,845			7,670			7,704			7,602			7,497
Total commercial lending	135,379			135,655			134,057			131,189			126,704
Consumer	77			107			222			278			331
Total loans	$	135,456		$	135,762		$	134,279		$	131,467		$	127,035
Total assets	$	151,909		$	151,721		$	150,948		$	148,267		$	142,592
Deposits
Noninterest-bearing demand	$	45,896		$	48,116		$	47,180		$	46,327		$	47,423
Money market	23,406			23,992			23,413			21,321			21,086
Other	18,592			17,247			16,879			16,016			15,391
Total deposits	$	87,894		$	89,355		$	87,472		$	83,664		$	83,900
Performance Ratios
Return on average assets	1.56		%	2.45		%	1.38		%	1.40		%	1.38		%
Noninterest income to total revenue	38		%	40		%	38		%	40		%	38		%
Efficiency	44		%	43		%	41		%	41		%	43		%
Other Information
Consolidated revenue from: (b)
Treasury Management (c)	$	419		$	401		$	384		$	372		$	359
Capital Markets (c)	$	258		$	271		$	231		$	268		$	247
Commercial mortgage banking activities
Commercial mortgage loans held for sale (d)	$	14		$	42		$	22		$	38		$	13
Commercial mortgage loan servicing income (e)	55			59			56			55			58
Commercial mortgage servicing rights valuation, net of economic hedge (f)	4			13			6			19			16
Total	$	73		$	114		$	84		$	112		$	87
Average Loans by C&IB business
Corporate Banking	$	57,856		$	57,064		$	56,867		$	54,937		$	53,839
Real Estate	37,252			38,949			38,516			38,318			37,136
Business Credit	16,818			16,612			16,097			15,645			14,839
Equipment Finance	14,243			13,912			13,744			13,481			12,478
Commercial Banking	7,066			6,957			7,042			7,124			7,041
Other	2,221			2,268			2,013			1,962			1,702
Total average loans	$	135,456		$	135,762		$	134,279		$	131,467		$	127,035
MSR asset value (g)	$	723		$	668		$	628		$	618		$	606
Credit-related statistics
Nonperforming assets (g)	$	508		$	531		$	549		$	586		$	546
Net charge-offs	$	9		$	29		$	22		$	21		$	21


(a)	See notes (a) and (b) on page 11.


(b)	Represents consolidated amounts.


(c)	Includes amounts reported in net interest income and noninterest income, predominantly in corporate service fees.


(d)	Includes other noninterest income for valuations on commercial mortgage loans held for sale and related commitments, derivative valuations, originations fees, 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 service fees) from loan servicing net of reduction in commercial mortgage servicing rights due to time decay 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.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 15

Table 18: Asset Management Group (Unaudited) (a)



	Three months ended
	March 31			December 31			September 30			June 30			March 31
Dollars in millions, except as noted	2018			2017			2017			2017			2017
Income Statement
Net interest income	$	74		$	71		$	72		$	73		$	71
Noninterest income	226			226			220			217			218
Total revenue	300			297			292			290			289
Provision for credit losses (benefit)	(7		)	7			3			(7		)	(2		)
Noninterest expense	218			217			214			215			217
Pretax earnings	89			73			75			82			74
Income taxes	21			17			28			30			27
Earnings	$	68		$	56		$	47		$	52		$	47
Average Balance Sheet
Loans
Consumer	$	4,785		$	4,894		$	4,977		$	5,089		$	5,113
Commercial and commercial real estate	733			745			680			700			728
Residential mortgage	1,517			1,433			1,330			1,246			1,190
Total loans	$	7,035		$	7,072		$	6,987		$	7,035		$	7,031
Total assets	$	7,499		$	7,545		$	7,464		$	7,516		$	7,476
Deposits
Noninterest-bearing demand	$	1,466		$	1,609		$	1,464		$	1,468		$	1,433
Interest-bearing demand	3,540			3,517			3,469			3,704			3,829
Money market	2,577			2,863			3,058			3,219			3,500
Savings	4,613			4,282			3,961			3,770			3,768
Other	305			288			237			230			246
Total deposits	$	12,501		$	12,559		$	12,189		$	12,391		$	12,776
Performance Ratios
Return on average assets	3.68		%	2.94		%	2.50		%	2.78		%	2.55		%
Noninterest income to total revenue	75		%	76		%	75		%	75		%	75		%
Efficiency	73		%	73		%	73		%	74		%	75		%
Other Information
Nonperforming assets (b)	$	52		$	49		$	45		$	49		$	51
Net charge-offs	$	6		$	(1	)	$	3		$	1		$	1
Client Assets Under Administration (in billions) (b) (c)
Discretionary client assets under management	$	148		$	151		$	146		$	141		$	141
Nondiscretionary client assets under administration	129			131			129			125			123
Total	$	277		$	282		$	275		$	266		$	264
Discretionary client assets under management
Personal	$	92		$	94		$	90		$	89		$	87
Institutional	56			57			56			52			54
Total	$	148		$	151		$	146		$	141		$	141


(a)	See notes (a) and (b) on page 11.


(b)	As of period end.


(c)	Excludes brokerage account client assets.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 16

Glossary of Terms

Adjusted average total assets - Primarily consisted 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).

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 those transferred from available for sale and pension and other postretirement benefit plans, subject to phase-in limits, less goodwill, net of associated deferred tax liabilities, less other disallowed intangibles, net of deferred tax liabilities and plus/less other adjustments. Significant common stock investments in unconsolidated financial institutions, as well as mortgage servicing rights and deferred tax assets, must then be deducted to the extent such items individually exceed 10%, or in the aggregate exceed 15%, of our adjusted Basel III common equity Tier 1 capital.

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 qualifying 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).

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 - Total shareholders' equity less the liquidation value of preferred stock.

Credit valuation adjustment - Represents an adjustment to the fair value of our derivatives for our own and counterparties’ non-performance risk.

Criticized commercial loans - Loans with potential or identified weaknesses based upon internal risk ratings that comply with the regulatory classification definitions of “Special Mention,” “Substandard” or “Doubtful.”

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: 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.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 17

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.

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. Our product set includes loans priced using LIBOR as a benchmark.

Loan-to-value ratio (LTV) - A calculation of a loan's 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%.

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.

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, foreclosed and other 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).



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 18

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), foreclosed and other assets - Assets taken in settlement of troubled loans primarily through deed-in-lieu of foreclosure or foreclosure. Foreclosed and other 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.

Probability of default (PD) - An internal risk rating that indicates the likelihood that a credit obligor will enter into default status.

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.

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.

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 income - The interest income earned on certain assets that is completely or partially exempt from federal income tax. 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.

Troubled debt restructuring (TDR) - A loan whose terms have been restructured in a manner that grants a concession to a borrower experiencing financial difficulties.

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.

Attached files

Stock widget

Investing forum