PNC 8-K
Pnc Financial Services Group, Inc. (PNC)
8-K
2021-10-15
For: 2021-10-15
View Original
Added on
April 11, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
THE PNC FINANCIAL SERVICES GROUP, INC.
(Exact name of registrant as specified in its charter)
Commission File Number 001-09718
| (State or other jurisdiction of | (I.R.S. Employer | ||||
| incorporation) | Identification No.) | ||||
The Tower at PNC Plaza
(Address of principal executive offices, including zip code)
(888 ) 762-2265
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||
Floating Rate Non-Cumulative Perpetual Preferred Stock, Series P | ||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On October 15, 2021 , The PNC Financial Services Group, Inc. (“the Corporation”) issued a press release regarding the Corporation’s earnings and business results for the third quarter of 2021. In connection therewith, the Corporation provided supplementary financial information on its web site. A copy of the Corporation’s supplementary financial information is included in this Report as Exhibit 99.1 and is furnished herewith.
Item 8.01 Other Events
On October 15, 2021 , the Corporation held a conference call for investors regarding the Corporation’s earnings and business results for the third quarter of 2021. The Corporation provided electronic presentation slides on its web site used in connection with the related investor conference call. Copies of the electronic presentation slides are included in this Report as Exhibit 99.2 and are furnished herewith.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Number | Description | Method of Filing | ||||||
| 99.1 | Furnished herewith | |||||||
| 99.2 | Furnished herewith | |||||||
| 104 | The cover page of this Current Report on Form 8-K, formatted in Inline XBRL. | |||||||
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
THE PNC FINANCIAL SERVICES GROUP, INC. (Registrant) | |||||||||||
| Date: | October 15, 2021 | By: | /s/ Gregory H. Kozich | ||||||||
| Gregory H. Kozich | |||||||||||
| Senior Vice President and Controller | |||||||||||
- 3 -
Exhibit 99.1
THE PNC FINANCIAL SERVICES GROUP, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2021
(Unaudited)
THE PNC FINANCIAL SERVICES GROUP, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2021
(UNAUDITED)
The information contained in this Financial Supplement is preliminary, unaudited and based on data available on October 15, 2021. 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 (U.S.) 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 retail branch network is located primarily in markets across the Mid-Atlantic, Midwest, Southeast and Southwest. PNC also has strategic international offices in four countries outside the U.S.
ACQUISITION OF BBVA USA BANCSHARES, INC.
On June 1, 2021, PNC acquired BBVA USA Bancshares Inc. (BBVA), a U.S. financial holding company conducting its business operations primarily through its U.S. banking subsidiary, BBVA USA. PNC paid $11.5 billion in cash as consideration for the acquisition, and added $82.2 billion of deposits and $60.5 billion of loans to PNC's Consolidated Balance Sheet as a result of the acquisition.
As of October 12, 2021, PNC has converted approximately 2.6 million customers, 9,000 employees and nearly 600 branches across seven states, merging BBVA USA into PNC Bank. PNC's third quarter earnings results reflect the full quarter benefit of BBVA's acquired business operations, and our second quarter results reflect BBVA business operations for the month of June 2021. PNC's balance sheets at both September 30, 2021 and June 30, 2021 include BBVA's balances. Our second quarter 2021 Form 10-Q included additional information on the June 1, 2021 acquisition of BBVA.
DISCONTINUED OPERATIONS
On May 15, 2020, PNC completed the sale of its 31.6 million shares of BlackRock, Inc., common and preferred stock through a registered secondary offering. In addition, BlackRock repurchased 2.65 million shares from PNC. The total proceeds from the sale were $14.2 billion in cash, net of $0.2 billion in expenses, and resulted in a gain on sale of $4.3 billion. Additionally, PNC contributed 500,000 BlackRock shares to the PNC Foundation on May 18, 2020. As a result, PNC has divested its entire holding in BlackRock. PNC and its affiliates only hold shares of BlackRock stock in a fiduciary capacity for clients of PNC and its affiliates. Activity for BlackRock for all periods presented on the Consolidated Income Statement have been reclassified to discontinued operations in accordance with Accounting Standard Codification (ASC) 205-20, Presentation of Financial Statements - Discontinued Operations.
| THE PNC FINANCIAL SERVICES GROUP, INC. | ||||||||
| Cross Reference Index to Third Quarter 2021 Financial Supplement (Unaudited) | ||||||||
| Financial Supplement Table Reference | ||||||||
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THE PNC FINANCIAL SERVICES GROUP, INC. | Page 1 | |||||||
Table 1: Consolidated Income Statement (Unaudited) (a)
| Three months ended | Nine months ended | |||||||||||||||||||||||||||||||||||||||||||
| September 30 | June 30 | March 31 | December 31 | September 30 | September 30 | September 30 | ||||||||||||||||||||||||||||||||||||||
| In millions, except per share data | 2021 | 2021 | 2021 | 2020 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||||
| Interest Income | ||||||||||||||||||||||||||||||||||||||||||||
| Loans | $ | 2,437 | $ | 2,160 | $ | 1,996 | $ | 2,074 | $ | 2,116 | $ | 6,593 | $ | 6,853 | ||||||||||||||||||||||||||||||
| Investment securities | 460 | 469 | 421 | 442 | 490 | 1,350 | 1,599 | |||||||||||||||||||||||||||||||||||||
| Other | 78 | 72 | 66 | 60 | 70 | 216 | 279 | |||||||||||||||||||||||||||||||||||||
| Total interest income | 2,975 | 2,701 | 2,483 | 2,576 | 2,676 | 8,159 | 8,731 | |||||||||||||||||||||||||||||||||||||
| Interest Expense | ||||||||||||||||||||||||||||||||||||||||||||
| Deposits | 29 | 30 | 40 | 53 | 74 | 99 | 590 | |||||||||||||||||||||||||||||||||||||
| Borrowed funds | 90 | 90 | 95 | 99 | 118 | 275 | 619 | |||||||||||||||||||||||||||||||||||||
| Total interest expense | 119 | 120 | 135 | 152 | 192 | 374 | 1,209 | |||||||||||||||||||||||||||||||||||||
| Net interest income | 2,856 | 2,581 | 2,348 | 2,424 | 2,484 | 7,785 | 7,522 | |||||||||||||||||||||||||||||||||||||
| Noninterest Income | ||||||||||||||||||||||||||||||||||||||||||||
| Asset management | 248 | 239 | 226 | 221 | 215 | 713 | 615 | |||||||||||||||||||||||||||||||||||||
| Consumer services | 496 | 457 | 384 | 387 | 390 | 1,337 | 1,097 | |||||||||||||||||||||||||||||||||||||
| Corporate services | 842 | 688 | 555 | 650 | 479 | 2,085 | 1,517 | |||||||||||||||||||||||||||||||||||||
| Residential mortgage | 147 | 103 | 105 | 99 | 137 | 355 | 505 | |||||||||||||||||||||||||||||||||||||
| Service charges on deposits | 159 | 131 | 119 | 134 | 119 | 409 | 366 | |||||||||||||||||||||||||||||||||||||
| Other (b) | 449 | 468 | 483 | 293 | 457 | 1,400 | 1,071 | |||||||||||||||||||||||||||||||||||||
| Total noninterest income | 2,341 | 2,086 | 1,872 | 1,784 | 1,797 | 6,299 | 5,171 | |||||||||||||||||||||||||||||||||||||
| Total revenue | 5,197 | 4,667 | 4,220 | 4,208 | 4,281 | 14,084 | 12,693 | |||||||||||||||||||||||||||||||||||||
| Provision For (Recapture of) Credit Losses | (203) | 302 | (551) | (254) | 52 | (452) | 3,429 | |||||||||||||||||||||||||||||||||||||
| Noninterest Expense | ||||||||||||||||||||||||||||||||||||||||||||
| Personnel | 1,986 | 1,640 | 1,477 | 1,521 | 1,410 | 5,103 | 4,152 | |||||||||||||||||||||||||||||||||||||
| Occupancy | 248 | 217 | 215 | 215 | 205 | 680 | 611 | |||||||||||||||||||||||||||||||||||||
| Equipment | 355 | 326 | 293 | 296 | 292 | 974 | 880 | |||||||||||||||||||||||||||||||||||||
| Marketing | 103 | 74 | 45 | 64 | 67 | 222 | 172 | |||||||||||||||||||||||||||||||||||||
| Other | 895 | 793 | 544 | 612 | 557 | 2,232 | 1,774 | |||||||||||||||||||||||||||||||||||||
| Total noninterest expense | 3,587 | 3,050 | 2,574 | 2,708 | 2,531 | 9,211 | 7,589 | |||||||||||||||||||||||||||||||||||||
| Income from continuing operations before income taxes and noncontrolling interests | 1,813 | 1,315 | 2,197 | 1,754 | 1,698 | 5,325 | 1,675 | |||||||||||||||||||||||||||||||||||||
| Income taxes from continuing operations | 323 | 212 | 371 | 298 | 166 | 906 | 128 | |||||||||||||||||||||||||||||||||||||
| Net income from continuing operations | 1,490 | 1,103 | 1,826 | 1,456 | 1,532 | 4,419 | 1,547 | |||||||||||||||||||||||||||||||||||||
| Income from discontinued operations before taxes | 5,777 | |||||||||||||||||||||||||||||||||||||||||||
| Income taxes from discontinued operations | 1,222 | |||||||||||||||||||||||||||||||||||||||||||
| Net income from discontinued operations | 4,555 | |||||||||||||||||||||||||||||||||||||||||||
| Net income | 1,490 | 1,103 | 1,826 | 1,456 | 1,532 | 4,419 | 6,102 | |||||||||||||||||||||||||||||||||||||
| Less: Net income attributable to noncontrolling interests | 16 | 12 | 10 | 14 | 13 | 38 | 27 | |||||||||||||||||||||||||||||||||||||
| Preferred stock dividends (c) | 57 | 48 | 57 | 48 | 63 | 162 | 181 | |||||||||||||||||||||||||||||||||||||
| Preferred stock discount accretion and redemptions | 1 | 1 | 1 | 1 | 1 | 3 | 3 | |||||||||||||||||||||||||||||||||||||
| Net income attributable to common shareholders | $ | 1,416 | $ | 1,042 | $ | 1,758 | $ | 1,393 | $ | 1,455 | $ | 4,216 | $ | 5,891 | ||||||||||||||||||||||||||||||
| Earnings Per Common Share | ||||||||||||||||||||||||||||||||||||||||||||
| Basic earnings from continuing operations | $ | 3.31 | $ | 2.43 | $ | 4.11 | $ | 3.26 | $ | 3.40 | $ | 9.84 | $ | 3.11 | ||||||||||||||||||||||||||||||
| Basic earnings from discontinued operations | 10.61 | |||||||||||||||||||||||||||||||||||||||||||
| Total basic earnings | $ | 3.31 | $ | 2.43 | $ | 4.11 | $ | 3.26 | $ | 3.40 | $ | 9.84 | $ | 13.73 | ||||||||||||||||||||||||||||||
| Diluted earnings from continuing operations | $ | 3.30 | $ | 2.43 | $ | 4.10 | $ | 3.26 | $ | 3.39 | $ | 9.83 | $ | 3.11 | ||||||||||||||||||||||||||||||
| Diluted earnings from discontinued operations | 10.59 | |||||||||||||||||||||||||||||||||||||||||||
| Total diluted earnings | $ | 3.30 | $ | 2.43 | $ | 4.10 | $ | 3.26 | $ | 3.39 | $ | 9.83 | $ | 13.70 | ||||||||||||||||||||||||||||||
| Average Common Shares Outstanding | ||||||||||||||||||||||||||||||||||||||||||||
| Basic | 426 | 427 | 426 | 425 | 426 | 426 | 427 | |||||||||||||||||||||||||||||||||||||
| Diluted | 426 | 427 | 426 | 426 | 426 | 427 | 428 | |||||||||||||||||||||||||||||||||||||
| Efficiency | 69 | % | 65 | % | 61 | % | 64 | % | 59 | % | 65 | % | 60 | % | ||||||||||||||||||||||||||||||
| Noninterest income to total revenue | 45 | % | 45 | % | 44 | % | 42 | % | 42 | % | 45 | % | 41 | % | ||||||||||||||||||||||||||||||
| Effective tax rate from continuing operations (d) | 17.8 | % | 16.1 | % | 16.9 | % | 17.0 | % | 9.8 | % | 17.0 | % | 7.6 | % | ||||||||||||||||||||||||||||||
(a)Results reflect the BBVA acquisition beginning in the month of June 2021.
(b)Includes net gains on sales of securities of $15 million, $10 million, $25 million, $51 million and $32 million for the quarters ended September 30, 2021, June 30, 2021, March 31, 2021, December 31, 2020 and September 30, 2020, respectively. Amounts for the nine months ended September 30, 2021 and 2020 were $50 million and $254 million, respectively.
(c)Dividends are payable quarterly other than Series R and Series S preferred stock, which are payable semiannually. On September 13, 2021, PNC issued 1,500,000 depositary shares of Series T preferred stock with a $1 par value. Beginning on December 15, dividends will be paid on the Series T on a quarterly basis (March 15, June 15, September 15 and December 15 of each year).
(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 PNC FINANCIAL SERVICES GROUP, INC. | Page 2 | |||||||
Table 2: Consolidated Balance Sheet (Unaudited) (a)
| September 30 | June 30 | March 31 | December 31 | September 30 | |||||||||||||||||||||||||
| In millions, except par value | 2021 | 2021 | 2021 | 2020 | 2020 | ||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
| Cash and due from banks | $ | 8,843 | $ | 8,724 | $ | 7,455 | $ | 7,017 | $ | 6,629 | |||||||||||||||||||
| Interest-earning deposits with banks (b) | 75,478 | 72,447 | 86,161 | 85,173 | 70,959 | ||||||||||||||||||||||||
| Loans held for sale (c) | 2,121 | 2,227 | 1,967 | 1,597 | 1,787 | ||||||||||||||||||||||||
| Investment securities – available for sale | 124,127 | 125,058 | 96,799 | 87,358 | 89,747 | ||||||||||||||||||||||||
| Investment securities – held to maturity | 1,479 | 1,485 | 1,456 | 1,441 | 1,438 | ||||||||||||||||||||||||
| Loans (c) | 290,230 | 294,704 | 237,013 | 241,928 | 249,279 | ||||||||||||||||||||||||
| Allowance for loan and lease losses | (5,355) | (5,730) | (4,714) | (5,361) | (5,751) | ||||||||||||||||||||||||
| Net loans | 284,875 | 288,974 | 232,299 | 236,567 | 243,528 | ||||||||||||||||||||||||
| Equity investments | 7,737 | 7,521 | 6,386 | 6,052 | 4,938 | ||||||||||||||||||||||||
| Mortgage servicing rights | 1,833 | 1,793 | 1,680 | 1,242 | 1,113 | ||||||||||||||||||||||||
| Goodwill | 10,885 | 10,958 | 9,317 | 9,233 | 9,233 | ||||||||||||||||||||||||
| Other (c) | 36,137 | 35,025 | 30,894 | 30,999 | 32,445 | ||||||||||||||||||||||||
| Total assets | $ | 553,515 | $ | 554,212 | $ | 474,414 | $ | 466,679 | $ | 461,817 | |||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||
| Deposits | |||||||||||||||||||||||||||||
| Noninterest-bearing | $ | 156,305 | $ | 154,190 | $ | 120,641 | $ | 112,637 | $ | 107,281 | |||||||||||||||||||
| Interest-bearing | 292,597 | 298,693 | 254,426 | 252,708 | 247,798 | ||||||||||||||||||||||||
| Total deposits | 448,902 | 452,883 | 375,067 | 365,345 | 355,079 | ||||||||||||||||||||||||
| Borrowed funds | |||||||||||||||||||||||||||||
| Federal Home Loan Bank borrowings | 1,500 | 3,500 | 5,500 | ||||||||||||||||||||||||||
| Bank notes and senior debt | 22,993 | 24,408 | 22,139 | 24,271 | 26,839 | ||||||||||||||||||||||||
| Subordinated debt | 7,074 | 7,120 | 6,241 | 6,403 | 6,465 | ||||||||||||||||||||||||
| Other (c) | 3,404 | 3,285 | 3,150 | 3,021 | 3,306 | ||||||||||||||||||||||||
| Total borrowed funds | 33,471 | 34,813 | 33,030 | 37,195 | 42,110 | ||||||||||||||||||||||||
| Allowance for unfunded lending related commitments | 646 | 645 | 507 | 584 | 689 | ||||||||||||||||||||||||
| Accrued expenses and other liabilities | 14,199 | 11,186 | 11,931 | 9,514 | 10,629 | ||||||||||||||||||||||||
| Total liabilities | 497,218 | 499,527 | 420,535 | 412,638 | 408,507 | ||||||||||||||||||||||||
| Equity | |||||||||||||||||||||||||||||
| Preferred stock (d) | |||||||||||||||||||||||||||||
| Common stock - $5 par value | |||||||||||||||||||||||||||||
| Authorized 800 shares, issued 543, 543, 543, 543, and 542 shares | 2,713 | 2,713 | 2,713 | 2,713 | 2,712 | ||||||||||||||||||||||||
| Capital surplus | 17,453 | 15,928 | 15,879 | 15,884 | 15,836 | ||||||||||||||||||||||||
| Retained earnings | 49,541 | 48,663 | 48,113 | 46,848 | 45,947 | ||||||||||||||||||||||||
| Accumulated other comprehensive income | 1,079 | 1,463 | 1,290 | 2,770 | 2,997 | ||||||||||||||||||||||||
| Common stock held in treasury at cost:120, 118, 118, 119, and 118 shares | (14,527) | (14,140) | (14,146) | (14,205) | (14,216) | ||||||||||||||||||||||||
| Total shareholders’ equity | 56,259 | 54,627 | 53,849 | 54,010 | 53,276 | ||||||||||||||||||||||||
| Noncontrolling interests | 38 | 58 | 30 | 31 | 34 | ||||||||||||||||||||||||
| Total equity | 56,297 | 54,685 | 53,879 | 54,041 | 53,310 | ||||||||||||||||||||||||
| Total liabilities and equity | $ | 553,515 | $ | 554,212 | $ | 474,414 | $ | 466,679 | $ | 461,817 | |||||||||||||||||||
(a)BBVA balances are included at September 30, 2021 and June 30, 2021.
(b)Amounts include balances held with the Federal Reserve Bank of $75.1 billion, $71.9 billion, $85.8 billion, $84.9 billion and $70.6 billion as of September 30, 2021, June 30, 2021, March 31, 2021, December 31, 2020 and September 30, 2020, respectively.
(c)Amounts include assets and liabilities for which PNC has elected the fair value option. Our second quarter 2021 Form 10-Q included, and our third quarter 2021 Form 10-Q will include, additional information regarding these items.
(d)Par value less than $0.5 million at each date.
THE PNC FINANCIAL SERVICES GROUP, INC. | Page 3 | |||||||
| Table 3: Average Consolidated Balance Sheet (Unaudited) (a) (b) | ||||||||||||||||||||||||||||||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||||||||||||||||||||||||||||||
| September 30 | June 30 | March 31 | December 31 | September 30 | September 30 | September 30 | ||||||||||||||||||||||||||||||||||||||
| In millions | 2021 | 2021 | 2021 | 2020 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||||||||||||||||||||||
| Investment securities | ||||||||||||||||||||||||||||||||||||||||||||
| Securities available for sale | ||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage-backed | ||||||||||||||||||||||||||||||||||||||||||||
| Agency | $ | 63,163 | $ | 56,042 | $ | 45,298 | $ | 48,036 | $ | 52,215 | $ | 54,900 | $ | 51,453 | ||||||||||||||||||||||||||||||
| Non-agency | 1,051 | 1,142 | 1,236 | 1,337 | 1,437 | 1,142 | 1,527 | |||||||||||||||||||||||||||||||||||||
| Commercial mortgage-backed | 6,134 | 6,465 | 6,241 | 6,568 | 6,927 | 6,280 | 6,964 | |||||||||||||||||||||||||||||||||||||
| Asset-backed | 5,608 | 5,855 | 5,304 | 5,017 | 5,033 | 5,590 | 5,115 | |||||||||||||||||||||||||||||||||||||
| U.S. Treasury and government agencies | 38,149 | 32,419 | 22,309 | 18,783 | 18,724 | 31,017 | 16,714 | |||||||||||||||||||||||||||||||||||||
| Other | 4,994 | 5,107 | 4,561 | 4,561 | 4,723 | 4,889 | 4,567 | |||||||||||||||||||||||||||||||||||||
| Total securities available for sale | 119,099 | 107,030 | 84,949 | 84,302 | 89,059 | 103,818 | 86,340 | |||||||||||||||||||||||||||||||||||||
| Securities held to maturity | ||||||||||||||||||||||||||||||||||||||||||||
| Asset-backed | 24 | |||||||||||||||||||||||||||||||||||||||||||
| U.S. Treasury and government agencies | 807 | 802 | 797 | 793 | 788 | 802 | 783 | |||||||||||||||||||||||||||||||||||||
| Other | 680 | 671 | 650 | 650 | 655 | 667 | 648 | |||||||||||||||||||||||||||||||||||||
| Total securities held to maturity | 1,487 | 1,473 | 1,447 | 1,443 | 1,443 | 1,469 | 1,455 | |||||||||||||||||||||||||||||||||||||
| Total investment securities | 120,586 | 108,503 | 86,396 | 85,745 | 90,502 | 105,287 | 87,795 | |||||||||||||||||||||||||||||||||||||
| Loans | ||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | 152,964 | 137,892 | 129,996 | 134,944 | 139,795 | 140,368 | 140,701 | |||||||||||||||||||||||||||||||||||||
| Commercial real estate | 37,054 | 31,611 | 28,598 | 28,991 | 29,081 | 32,452 | 28,689 | |||||||||||||||||||||||||||||||||||||
| Equipment lease financing | 6,300 | 6,332 | 6,332 | 6,380 | 6,771 | 6,321 | 6,958 | |||||||||||||||||||||||||||||||||||||
| Consumer | 57,533 | 52,575 | 50,904 | 52,872 | 54,692 | 53,695 | 56,279 | |||||||||||||||||||||||||||||||||||||
| Residential real estate | 37,475 | 27,197 | 22,305 | 22,638 | 22,753 | 29,048 | 22,292 | |||||||||||||||||||||||||||||||||||||
| Total loans | 291,326 | 255,607 | 238,135 | 245,825 | 253,092 | 261,884 | 254,919 | |||||||||||||||||||||||||||||||||||||
| Interest-earning deposits with banks (c) | 80,274 | 78,522 | 85,410 | 76,374 | 60,327 | 81,383 | 37,582 | |||||||||||||||||||||||||||||||||||||
| Other interest-earning assets | 9,113 | 8,079 | 7,829 | 8,134 | 9,752 | 8,345 | 10,028 | |||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | 501,299 | 450,711 | 417,770 | 416,078 | 413,673 | 456,899 | 390,324 | |||||||||||||||||||||||||||||||||||||
| Noninterest-earning assets | 57,943 | 53,718 | 50,450 | 48,901 | 48,466 | 54,065 | 53,705 | |||||||||||||||||||||||||||||||||||||
| Total assets | $ | 559,242 | $ | 504,429 | $ | 468,220 | $ | 464,979 | $ | 462,139 | $ | 510,964 | $ | 444,029 | ||||||||||||||||||||||||||||||
| Liabilities and Equity | ||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits | ||||||||||||||||||||||||||||||||||||||||||||
| Money market | $ | 82,911 | $ | 64,990 | $ | 59,083 | $ | 62,621 | $ | 63,598 | $ | 69,105 | $ | 59,426 | ||||||||||||||||||||||||||||||
| Demand | 106,588 | 99,091 | 91,619 | 88,026 | 87,226 | 99,154 | 80,371 | |||||||||||||||||||||||||||||||||||||
| Savings | 89,679 | 87,307 | 82,926 | 79,430 | 77,479 | 86,662 | 74,279 | |||||||||||||||||||||||||||||||||||||
| Time deposits | 19,293 | 18,048 | 18,449 | 19,448 | 20,248 | 18,577 | 21,084 | |||||||||||||||||||||||||||||||||||||
| Total interest-bearing deposits | 298,471 | 269,436 | 252,077 | 249,525 | 248,551 | 273,498 | 235,160 | |||||||||||||||||||||||||||||||||||||
| Borrowed funds | ||||||||||||||||||||||||||||||||||||||||||||
| Federal Home Loan Bank borrowings | 265 | 2,411 | 4,761 | 7,196 | 883 | 11,051 | ||||||||||||||||||||||||||||||||||||||
| Bank notes and senior debt | 22,573 | 22,620 | 22,799 | 24,022 | 25,858 | 22,663 | 28,040 | |||||||||||||||||||||||||||||||||||||
| Subordinated debt | 6,787 | 6,218 | 5,929 | 5,936 | 5,936 | 6,315 | 5,935 | |||||||||||||||||||||||||||||||||||||
| Other | 4,992 | 5,046 | 4,057 | 3,433 | 4,354 | 4,701 | 6,199 | |||||||||||||||||||||||||||||||||||||
| Total borrowed funds | 34,352 | 34,149 | 35,196 | 38,152 | 43,344 | 34,562 | 51,225 | |||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 332,823 | 303,585 | 287,273 | 287,677 | 291,895 | 308,060 | 286,385 | |||||||||||||||||||||||||||||||||||||
| Noninterest-bearing liabilities and equity: | ||||||||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing deposits | 155,948 | 132,283 | 113,299 | 109,878 | 101,931 | 133,999 | 90,078 | |||||||||||||||||||||||||||||||||||||
| Accrued expenses and other liabilities | 15,332 | 14,755 | 14,258 | 14,348 | 15,341 | 14,787 | 16,251 | |||||||||||||||||||||||||||||||||||||
| Equity | 55,139 | 53,806 | 53,390 | 53,076 | 52,972 | 54,118 | 51,315 | |||||||||||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 559,242 | $ | 504,429 | $ | 468,220 | $ | 464,979 | $ | 462,139 | $ | 510,964 | $ | 444,029 | ||||||||||||||||||||||||||||||
(a)Calculated using average daily balances.
(b)Results reflect the BBVA acquisition beginning in the month of June 2021.
(c)Amounts include average balances held with the Federal Reserve Bank of Cleveland of $80.1 billion, $78.3 billion, $85.2 billion, $76.1 billion and $60.0 billion for the three months ended September 30, 2021, June 30, 2021, March 31, 2021, December 31, 2020 and September 30, 2020, and $81.1 billion and $37.3 billion for the nine months ended September 30, 2021 and September 30, 2020, respectively.
THE PNC FINANCIAL SERVICES GROUP, INC. | Page 4 | |||||||
| Table 4: Details of Net Interest Margin (Unaudited) (a) | ||||||||||||||||||||||||||||||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||||||||||||||||||||||||||||||
| September 30 | June 30 | March 31 | December 31 | September 30 | September 30 | September 30 | ||||||||||||||||||||||||||||||||||||||
| 2021 | 2021 | 2021 | 2020 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||||||||||||
| Average yields/rates (b) | ||||||||||||||||||||||||||||||||||||||||||||
| Yield on interest-earning assets | ||||||||||||||||||||||||||||||||||||||||||||
| Investment securities | ||||||||||||||||||||||||||||||||||||||||||||
| Securities available for sale | ||||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage-backed | ||||||||||||||||||||||||||||||||||||||||||||
| Agency | 1.41 | % | 1.61 | % | 1.72 | % | 1.81 | % | 2.03 | % | 1.56 | % | 2.31 | % | ||||||||||||||||||||||||||||||
| Non-agency | 8.07 | % | 7.85 | % | 7.24 | % | 7.15 | % | 7.26 | % | 7.70 | % | 7.43 | % | ||||||||||||||||||||||||||||||
| Commercial mortgage-backed | 2.34 | % | 2.49 | % | 2.58 | % | 2.66 | % | 2.50 | % | 2.47 | % | 2.68 | % | ||||||||||||||||||||||||||||||
| Asset-backed | 1.50 | % | 2.07 | % | 1.84 | % | 2.04 | % | 2.44 | % | 1.80 | % | 2.70 | % | ||||||||||||||||||||||||||||||
| U.S. Treasury and government agencies | 1.18 | % | 1.30 | % | 1.68 | % | 1.77 | % | 1.64 | % | 1.34 | % | 1.88 | % | ||||||||||||||||||||||||||||||
| Other | 2.90 | % | 3.00 | % | 3.28 | % | 3.45 | % | 3.39 | % | 3.05 | % | 3.51 | % | ||||||||||||||||||||||||||||||
| Total securities available for sale | 1.51 | % | 1.73 | % | 1.95 | % | 2.05 | % | 2.16 | % | 1.70 | % | 2.43 | % | ||||||||||||||||||||||||||||||
| Securities held to maturity | ||||||||||||||||||||||||||||||||||||||||||||
| Asset-backed | 2.66 | % | ||||||||||||||||||||||||||||||||||||||||||
| U.S. Treasury and government agencies | 2.88 | % | 2.86 | % | 2.83 | % | 2.88 | % | 2.86 | % | 2.86 | % | 2.85 | % | ||||||||||||||||||||||||||||||
| Other | 4.33 | % | 3.67 | % | 4.17 | % | 4.20 | % | 4.20 | % | 4.05 | % | 4.32 | % | ||||||||||||||||||||||||||||||
| Total securities held to maturity | 3.54 | % | 3.23 | % | 3.43 | % | 3.47 | % | 3.47 | % | 3.40 | % | 3.50 | % | ||||||||||||||||||||||||||||||
| Total investment securities | 1.54 | % | 1.75 | % | 1.97 | % | 2.08 | % | 2.18 | % | 1.73 | % | 2.45 | % | ||||||||||||||||||||||||||||||
| Loans | ||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | 2.80 | % | 2.89 | % | 2.91 | % | 2.87 | % | 2.82 | % | 2.87 | % | 3.07 | % | ||||||||||||||||||||||||||||||
| Commercial real estate | 3.17 | % | 2.92 | % | 2.80 | % | 2.63 | % | 2.65 | % | 2.98 | % | 3.03 | % | ||||||||||||||||||||||||||||||
| Equipment lease financing | 3.83 | % | 3.76 | % | 3.90 | % | 3.90 | % | 3.80 | % | 3.83 | % | 3.85 | % | ||||||||||||||||||||||||||||||
| Consumer | 4.85 | % | 4.82 | % | 4.78 | % | 4.74 | % | 4.69 | % | 4.82 | % | 4.98 | % | ||||||||||||||||||||||||||||||
| Residential real estate | 3.15 | % | 3.50 | % | 3.53 | % | 3.69 | % | 3.74 | % | 3.35 | % | 3.85 | % | ||||||||||||||||||||||||||||||
| Total loans | 3.32 | % | 3.38 | % | 3.38 | % | 3.35 | % | 3.32 | % | 3.36 | % | 3.58 | % | ||||||||||||||||||||||||||||||
| Interest-earning deposits with banks | 0.16 | % | 0.11 | % | 0.10 | % | 0.10 | % | 0.10 | % | 0.12 | % | 0.28 | % | ||||||||||||||||||||||||||||||
| Other interest-earning assets | 2.03 | % | 2.46 | % | 2.34 | % | 1.99 | % | 2.23 | % | 2.27 | % | 2.64 | % | ||||||||||||||||||||||||||||||
| Total yield on interest-earning assets | 2.36 | % | 2.40 | % | 2.40 | % | 2.46 | % | 2.57 | % | 2.38 | % | 2.98 | % | ||||||||||||||||||||||||||||||
| Rate on interest-bearing liabilities | ||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits | ||||||||||||||||||||||||||||||||||||||||||||
| Money market | 0.03 | % | 0.03 | % | 0.03 | % | 0.05 | % | 0.07 | % | 0.03 | % | 0.29 | % | ||||||||||||||||||||||||||||||
| Demand | 0.03 | % | 0.03 | % | 0.04 | % | 0.04 | % | 0.05 | % | 0.03 | % | 0.17 | % | ||||||||||||||||||||||||||||||
| Savings | 0.04 | % | 0.05 | % | 0.06 | % | 0.08 | % | 0.11 | % | 0.05 | % | 0.39 | % | ||||||||||||||||||||||||||||||
| Time deposits | 0.12 | % | 0.20 | % | 0.32 | % | 0.41 | % | 0.58 | % | 0.21 | % | 0.91 | % | ||||||||||||||||||||||||||||||
| Total interest-bearing deposits | 0.04 | % | 0.05 | % | 0.06 | % | 0.08 | % | 0.12 | % | 0.05 | % | 0.34 | % | ||||||||||||||||||||||||||||||
| Borrowed funds | ||||||||||||||||||||||||||||||||||||||||||||
| Federal Home Loan Bank borrowings | 0.35 | % | 0.43 | % | 0.40 | % | 0.47 | % | 0.42 | % | 1.16 | % | ||||||||||||||||||||||||||||||||
| Bank notes and senior debt | 0.97 | % | 0.98 | % | 1.04 | % | 1.00 | % | 1.08 | % | 1.00 | % | 1.72 | % | ||||||||||||||||||||||||||||||
| Subordinated debt | 1.28 | % | 1.35 | % | 1.43 | % | 1.38 | % | 1.51 | % | 1.35 | % | 2.05 | % | ||||||||||||||||||||||||||||||
Other | 0.93 | % | 0.97 | % | 1.21 | % | 1.39 | % | 1.31 | % | 1.02 | % | 1.33 | % | ||||||||||||||||||||||||||||||
| Total borrowed funds | 1.03 | % | 1.04 | % | 1.09 | % | 1.02 | % | 1.06 | % | 1.05 | % | 1.59 | % | ||||||||||||||||||||||||||||||
| Total rate on interest-bearing liabilities | 0.14 | % | 0.16 | % | 0.19 | % | 0.21 | % | 0.26 | % | 0.16 | % | 0.56 | % | ||||||||||||||||||||||||||||||
| Interest rate spread | 2.22 | % | 2.24 | % | 2.21 | % | 2.25 | % | 2.31 | % | 2.22 | % | 2.42 | % | ||||||||||||||||||||||||||||||
| Benefit from use of noninterest bearing sources (c) | 0.05 | % | 0.05 | % | 0.06 | % | 0.07 | % | 0.08 | % | 0.06 | % | 0.15 | % | ||||||||||||||||||||||||||||||
| Net interest margin | 2.27 | % | 2.29 | % | 2.27 | % | 2.32 | % | 2.39 | % | 2.28 | % | 2.57 | % | ||||||||||||||||||||||||||||||
(a)Results reflect the BBVA acquisition beginning in the month of June 2021.
(b)Yields and rates are calculated using the applicable annualized interest income or interest expense divided by the applicable average earning assets or interest-bearing liabilities. Net interest margin is the total yield on interest-earning assets minus the total rate on interest-bearing liabilities and includes the benefit from use of noninterest-bearing sources. To provide more meaningful comparisons of net interest margins, we use net interest income on a taxable-equivalent basis in calculating average yields used in the calculation of net interest margin 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 GAAP in the Consolidated Income Statement. The taxable-equivalent adjustments to net interest income for the three months ended September 30, 2021, June 30, 2021, March 31, 2021, December 31, 2020 and September 30, 2020 were $22 million, $15 million, $15 million, $17 million and $17 million, respectively. The taxable-equivalent adjustments to net interest income for the nine months ended September 30, 2021 and September 30, 2020 were $52 million and $58 million, respectively.
(c)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 | Nine months ended | |||||||||||||||||||||||||||||||||||||||||||
| September 30 | June 30 | March 31 | December 31 | September 30 | September 30 | September 30 | ||||||||||||||||||||||||||||||||||||||
| In millions, except per share data | 2021 | 2021 | 2021 | 2020 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||||
| Basic | ||||||||||||||||||||||||||||||||||||||||||||
| Net income from continuing operations | $ | 1,490 | $ | 1,103 | $ | 1,826 | $ | 1,456 | $ | 1,532 | $ | 4,419 | $ | 1,547 | ||||||||||||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | 16 | 12 | 10 | 14 | 13 | 38 | 27 | |||||||||||||||||||||||||||||||||||||
| Preferred stock dividends | 57 | 48 | 57 | 48 | 63 | 162 | 181 | |||||||||||||||||||||||||||||||||||||
| Preferred stock discount accretion and redemptions | 1 | 1 | 1 | 1 | 1 | 3 | 3 | |||||||||||||||||||||||||||||||||||||
| Net income from continuing operations attributable to common shareholders | 1,416 | 1,042 | 1,758 | 1,393 | 1,455 | 4,216 | 1,336 | |||||||||||||||||||||||||||||||||||||
| Less: Dividends and undistributed earnings allocated to nonvested restricted shares | 8 | 5 | 8 | 6 | 8 | 21 | 7 | |||||||||||||||||||||||||||||||||||||
| Net income from continuing operations attributable to basic common shareholders | $ | 1,408 | $ | 1,037 | $ | 1,750 | $ | 1,387 | $ | 1,447 | $ | 4,195 | $ | 1,329 | ||||||||||||||||||||||||||||||
| Net income from discontinued operations attributable to common shareholders | $ | 4,555 | ||||||||||||||||||||||||||||||||||||||||||
| Less: Undistributed earnings allocated to nonvested restricted shares | 22 | |||||||||||||||||||||||||||||||||||||||||||
| Net income from discontinued operations attributable to basic common shareholders | $ | 4,533 | ||||||||||||||||||||||||||||||||||||||||||
| Basic weighted-average common shares outstanding | 426 | 427 | 426 | 425 | 426 | 426 | 427 | |||||||||||||||||||||||||||||||||||||
| Basic earnings per common share from continuing operations (a) | $ | 3.31 | $ | 2.43 | $ | 4.11 | $ | 3.26 | $ | 3.40 | $ | 9.84 | $ | 3.11 | ||||||||||||||||||||||||||||||
| Basic earnings per common share from discontinued operations (a) | $ | 10.61 | ||||||||||||||||||||||||||||||||||||||||||
| Basic earnings per common share | $ | 3.31 | $ | 2.43 | $ | 4.11 | $ | 3.26 | $ | 3.40 | $ | 9.84 | $ | 13.73 | ||||||||||||||||||||||||||||||
| Diluted | ||||||||||||||||||||||||||||||||||||||||||||
| Net income from continuing operations attributable to diluted common shareholder | $ | 1,408 | $ | 1,037 | $ | 1,750 | $ | 1,387 | $ | 1,447 | $ | 4,195 | $ | 1,329 | ||||||||||||||||||||||||||||||
| Net income from discontinued operations attributable to basic common shareholders | $ | 4,533 | ||||||||||||||||||||||||||||||||||||||||||
| Less: Impact of earnings per share dilution from discontinued operations | 2 | |||||||||||||||||||||||||||||||||||||||||||
| Net income from discontinued operations attributable to diluted common shareholders | $ | 4,531 | ||||||||||||||||||||||||||||||||||||||||||
| Basic weighted-average common shares outstanding | 426 | 427 | 426 | 425 | 426 | 426 | 427 | |||||||||||||||||||||||||||||||||||||
| Dilutive potential common shares | 1 | 1 | 1 | |||||||||||||||||||||||||||||||||||||||||
| Diluted weighted-average common shares outstanding | 426 | 427 | 426 | 426 | 426 | 427 | 428 | |||||||||||||||||||||||||||||||||||||
| Diluted earnings per common share from continuing operations (a) | $ | 3.30 | $ | 2.43 | $ | 4.10 | $ | 3.26 | $ | 3.39 | $ | 9.83 | $ | 3.11 | ||||||||||||||||||||||||||||||
| Diluted earnings per common share from discontinued operations (a) | $ | 10.59 | ||||||||||||||||||||||||||||||||||||||||||
| Diluted earnings per common share | $ | 3.30 | $ | 2.43 | $ | 4.10 | $ | 3.26 | $ | 3.39 | $ | 9.83 | $ | 13.70 | ||||||||||||||||||||||||||||||
(a)Dividends are payable quarterly other than Series R and Series S preferred stock, which are payable semiannually. On September 13, 2021, PNC issued 1,500,000 depositary shares of Series T preferred stock with a $1 par value. Beginning on December 15, dividends will be paid on the Series T on a quarterly basis (March 15, June 15, September 15 and December 15 of each year).
THE PNC FINANCIAL SERVICES GROUP, INC. | Page 6 | |||||||
Table 6: Details of Loans (Unaudited)
| September 30 | June 30 | March 31 | December 31 | September 30 | ||||||||||||||||||||||||||||
| In millions | 2021 (a) | 2021 (a) | 2021 | 2020 | 2020 | |||||||||||||||||||||||||||
| Commercial | ||||||||||||||||||||||||||||||||
| Commercial and industrial | $ | 152,735 | $ | 155,300 | $ | 129,798 | $ | 132,073 | $ | 137,187 | ||||||||||||||||||||||
| Commercial real estate | 36,195 | 37,964 | 28,319 | 28,716 | 29,028 | |||||||||||||||||||||||||||
| Equipment lease financing | 6,257 | 6,376 | 6,389 | 6,414 | 6,479 | |||||||||||||||||||||||||||
| Total commercial | 195,187 | 199,640 | 164,506 | 167,203 | 172,694 | |||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||||||||
| Residential real estate | 38,214 | 36,846 | 22,418 | 22,560 | 22,886 | |||||||||||||||||||||||||||
| Home equity | 24,479 | 25,174 | 23,493 | 24,088 | 24,539 | |||||||||||||||||||||||||||
| Automobile | 17,265 | 17,551 | 13,584 | 14,218 | 14,977 | |||||||||||||||||||||||||||
| Credit card | 6,466 | 6,528 | 5,675 | 6,215 | 6,303 | |||||||||||||||||||||||||||
| Education | 2,653 | 2,726 | 2,842 | 2,946 | 3,051 | |||||||||||||||||||||||||||
| Other consumer | 5,966 | 6,239 | 4,495 | 4,698 | 4,829 | |||||||||||||||||||||||||||
| Total consumer | 95,043 | 95,064 | 72,507 | 74,725 | 76,585 | |||||||||||||||||||||||||||
| Total loans | $ | 290,230 | $ | 294,704 | $ | 237,013 | $ | 241,928 | $ | 249,279 | ||||||||||||||||||||||
(a)Includes $55.6 billion of loans at September 30, 2021, $34.7 billion in the commercial portfolio and $20.9 billion in the consumer portfolio, attributable to BBVA. Comparable amounts at June 30, 2021 totaled $60.5 billion, with $38.5 billion and $22.0 billion in the commercial and consumer portfolios, respectively. Our second quarter 2021 Form 10-Q included additional information on the June 1, 2021 acquisition of BBVA.
THE PNC FINANCIAL SERVICES GROUP, INC. | Page 7 | |||||||
Allowance for Credit Losses (Unaudited)
Table 7: Change in Allowance for Loan and Lease Losses
| Three months ended | Nine months ended | ||||||||||||||||||||||||||||||||||||||||||||||
| September 30 | June 30 | March 31 | December 31 | September 30 | September 30 | September 30 | |||||||||||||||||||||||||||||||||||||||||
| Dollars in millions | 2021 | 2021 | 2021 | 2020 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||||||||||||||
Allowance for loan and lease losses | |||||||||||||||||||||||||||||||||||||||||||||||
| Beginning balance | $ | 5,730 | $ | 4,714 | $ | 5,361 | $ | 5,751 | $ | 5,928 | $ | 5,361 | $ | 2,742 | |||||||||||||||||||||||||||||||||
| Adoption of ASU 2016-03 (a) | 463 | ||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition PCD reserves | (59) | 1,115 | 1,056 | ||||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs: | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | (46) | (245) | (59) | (133) | (59) | (350) | (249) | ||||||||||||||||||||||||||||||||||||||||
| Commercial real estate | (1) | (28) | (5) | (1) | (1) | (34) | (1) | ||||||||||||||||||||||||||||||||||||||||
| Equipment lease financing | (3) | (1) | (5) | (4) | (4) | (9) | (19) | ||||||||||||||||||||||||||||||||||||||||
| Residential real estate | (4) | (3) | (4) | (6) | (2) | (11) | (4) | ||||||||||||||||||||||||||||||||||||||||
| Home equity | (2) | (7) | (7) | (11) | (12) | (16) | (31) | ||||||||||||||||||||||||||||||||||||||||
| Automobile | (33) | (35) | (52) | (55) | (57) | (120) | (210) | ||||||||||||||||||||||||||||||||||||||||
| Credit card | (62) | (65) | (69) | (72) | (74) | (196) | (228) | ||||||||||||||||||||||||||||||||||||||||
| Education | (3) | (3) | (5) | (3) | (3) | (11) | (13) | ||||||||||||||||||||||||||||||||||||||||
| Other consumer | (52) | (41) | (37) | (42) | (35) | (130) | (110) | ||||||||||||||||||||||||||||||||||||||||
| Total gross charge-offs | (206) | (428) | (243) | (327) | (247) | (877) | (865) | ||||||||||||||||||||||||||||||||||||||||
| Recoveries: | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | 25 | 29 | 14 | 23 | 21 | 68 | 52 | ||||||||||||||||||||||||||||||||||||||||
| Commercial real estate | 2 | 2 | 1 | 3 | 2 | 5 | 6 | ||||||||||||||||||||||||||||||||||||||||
| Equipment lease financing | 2 | 3 | 3 | 3 | 3 | 8 | 7 | ||||||||||||||||||||||||||||||||||||||||
| Residential real estate | 9 | 6 | 5 | 4 | 4 | 20 | 12 | ||||||||||||||||||||||||||||||||||||||||
| Home equity | 25 | 21 | 17 | 17 | 15 | 63 | 44 | ||||||||||||||||||||||||||||||||||||||||
| Automobile | 38 | 41 | 38 | 33 | 31 | 117 | 95 | ||||||||||||||||||||||||||||||||||||||||
| Credit card | 13 | 11 | 12 | 9 | 9 | 36 | 26 | ||||||||||||||||||||||||||||||||||||||||
| Education | 2 | 2 | 2 | 2 | 2 | 6 | 6 | ||||||||||||||||||||||||||||||||||||||||
| Other consumer | 9 | 7 | 5 | 4 | 5 | 21 | 14 | ||||||||||||||||||||||||||||||||||||||||
| Total recoveries | 125 | 122 | 97 | 98 | 92 | 344 | 262 | ||||||||||||||||||||||||||||||||||||||||
| Net (charge-offs) / recoveries: | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | (21) | (216) | (45) | (110) | (38) | (282) | (197) | ||||||||||||||||||||||||||||||||||||||||
| Commercial real estate | 1 | (26) | (4) | 2 | 1 | (29) | 5 | ||||||||||||||||||||||||||||||||||||||||
| Equipment lease financing | (1) | 2 | (2) | (1) | (1) | (1) | (12) | ||||||||||||||||||||||||||||||||||||||||
| Residential real estate | 5 | 3 | 1 | (2) | 2 | 9 | 8 | ||||||||||||||||||||||||||||||||||||||||
| Home equity | 23 | 14 | 10 | 6 | 3 | 47 | 13 | ||||||||||||||||||||||||||||||||||||||||
| Automobile | 5 | 6 | (14) | (22) | (26) | (3) | (115) | ||||||||||||||||||||||||||||||||||||||||
| Credit card | (49) | (54) | (57) | (63) | (65) | (160) | (202) | ||||||||||||||||||||||||||||||||||||||||
| Education | (1) | (1) | (3) | (1) | (1) | (5) | (7) | ||||||||||||||||||||||||||||||||||||||||
| Other consumer | (43) | (34) | (32) | (38) | (30) | (109) | (96) | ||||||||||||||||||||||||||||||||||||||||
| Total net (charge-offs) (b) | (81) | (306) | (146) | (229) | (155) | (533) | (603) | ||||||||||||||||||||||||||||||||||||||||
| Provision for (recapture of) credit losses (c) | (229) | 206 | (502) | (164) | (23) | (525) | 3,149 | ||||||||||||||||||||||||||||||||||||||||
| Other | (6) | 1 | 1 | 3 | 1 | (4) | |||||||||||||||||||||||||||||||||||||||||
| Ending balance | $ | 5,355 | $ | 5,730 | $ | 4,714 | $ | 5,361 | $ | 5,751 | $ | 5,355 | $ | 5,751 | |||||||||||||||||||||||||||||||||
| Supplemental Information | |||||||||||||||||||||||||||||||||||||||||||||||
| Net charge-offs | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial net charge-offs | $ | (21) | $ | (240) | $ | (51) | $ | (109) | $ | (38) | $ | (312) | $ | (204) | |||||||||||||||||||||||||||||||||
| Consumer net charge-offs | (60) | (66) | (95) | (120) | (117) | (221) | (399) | ||||||||||||||||||||||||||||||||||||||||
| Total net charge-offs (b) | $ | (81) | $ | (306) | $ | (146) | $ | (229) | $ | (155) | $ | (533) | $ | (603) | |||||||||||||||||||||||||||||||||
| Net charge-offs to average loans (annualized) | 0.11 | % | 0.48 | % | 0.25 | % | 0.37 | % | 0.24 | % | 0.27 | % | 0.32 | % | |||||||||||||||||||||||||||||||||
| Commercial | 0.04 | % | 0.55 | % | 0.13 | % | 0.25 | % | 0.09 | % | 0.23 | % | 0.15 | % | |||||||||||||||||||||||||||||||||
| Consumer | 0.25 | % | 0.33 | % | 0.53 | % | 0.63 | % | 0.60 | % | 0.36 | % | 0.68 | % | |||||||||||||||||||||||||||||||||
(a) Represents the impact of adopting ASU 2016-13, Financial Instruments - Credit Losses on January 1, 2020, and our transition from an incurred loss methodology for our reserves to an expected credit loss methodology. Our 2020 Form 10-K included additional information related to our adoption of the CECL standard.
(b) Amounts for the three months ended June 30, 2021 included $248 million attributable to BBVA, primarily related to commercial industrial loans, which were largely the result of required purchase accounting treatment for the BBVA acquisition on June 1, 2021.
(c) See Table 8 for the components of the Provision for (recapture of) credit losses being reported on the Consolidated Income Statement.
THE PNC FINANCIAL SERVICES GROUP, INC. | Page 8 | |||||||
Allowance for Credit Losses (Unaudited) (Continued)
Table 8: Components of the Provision for (Recapture of) Credit Losses
| Three months ended | Nine months ended | ||||||||||||||||||||||||||||||||||||||||||||||
| September 30 | June 30 | March 31 | December 31 | September 30 | September 30 | September 30 | |||||||||||||||||||||||||||||||||||||||||
| In millions | 2021 | 2021 (a) | 2021 | 2020 | 2020 | 2021 (a) | 2020 | ||||||||||||||||||||||||||||||||||||||||
| Provision for (recapture of) credit losses | |||||||||||||||||||||||||||||||||||||||||||||||
| Loans and leases | $ | (229) | $ | 206 | $ | (502) | $ | (164) | $ | (23) | (525) | $ | 3,149 | ||||||||||||||||||||||||||||||||||
| Unfunded lending related commitments | 1 | 92 | (77) | (105) | 27 | 16 | 192 | ||||||||||||||||||||||||||||||||||||||||
| Investment securities | 25 | 26 | 11 | 39 | 51 | 69 | |||||||||||||||||||||||||||||||||||||||||
| Other financial assets | 4 | 2 | 4 | 9 | 6 | 19 | |||||||||||||||||||||||||||||||||||||||||
| Total provision for (recapture of) credit losses | $ | (203) | $ | 302 | $ | (551) | $ | (254) | $ | 52 | $ | (452) | $ | 3,429 | |||||||||||||||||||||||||||||||||
(a) Amounts include $1.0 billion of provision for credit losses that was recorded as part of the BBVA acquisition on June 1, 2021.
Table 9: Allowance for Credit Losses by Loan Class (a)
| September 30, 2021 | June 30, 2021 | September 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||
Dollars in millions | Allowance Amount | Total Loans | % of Total Loans | Allowance Amount | Total Loans | % of Total Loans | Allowance Amount | Total Loans | % of Total Loans | |||||||||||||||||||||||||||||||||||
| Allowance for loan and lease losses | ||||||||||||||||||||||||||||||||||||||||||||
| Commercial | ||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | $ | 2,173 | $ | 152,735 | 1.42 | % | $ | 2,282 | $ | 155,300 | 1.47 | % | $ | 2,735 | $ | 137,187 | 1.99 | % | ||||||||||||||||||||||||||
| Commercial real estate | 1,312 | 36,195 | 3.62 | % | 1,404 | 37,964 | 3.70 | % | 630 | 29,028 | 2.17 | % | ||||||||||||||||||||||||||||||||
| Equipment lease financing | 118 | 6,257 | 1.89 | % | 126 | 6,376 | 1.98 | % | 163 | 6,479 | 2.52 | % | ||||||||||||||||||||||||||||||||
| Total commercial | 3,603 | 195,187 | 1.85 | % | 3,812 | 199,640 | 1.91 | % | 3,528 | 172,694 | 2.04 | % | ||||||||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||||||||||||||||||||
| Residential real estate | 42 | 38,214 | 0.11 | % | 63 | 36,846 | 0.17 | % | 28 | 22,886 | 0.12 | % | ||||||||||||||||||||||||||||||||
| Home equity | 167 | 24,479 | 0.68 | % | 188 | 25,174 | 0.75 | % | 349 | 24,539 | 1.42 | % | ||||||||||||||||||||||||||||||||
| Automobile | 365 | 17,265 | 2.11 | % | 421 | 17,551 | 2.40 | % | 404 | 14,977 | 2.70 | % | ||||||||||||||||||||||||||||||||
| Credit card | 701 | 6,466 | 10.84 | % | 711 | 6,528 | 10.89 | % | 891 | 6,303 | 14.14 | % | ||||||||||||||||||||||||||||||||
| Education | 81 | 2,653 | 3.05 | % | 98 | 2,726 | 3.60 | % | 136 | 3,051 | 4.46 | % | ||||||||||||||||||||||||||||||||
| Other consumer | 396 | 5,966 | 6.64 | % | 437 | 6,239 | 7.00 | % | 415 | 4,829 | 8.59 | % | ||||||||||||||||||||||||||||||||
| Total consumer | 1,752 | 95,043 | 1.84 | % | 1,918 | 95,064 | 2.02 | % | 2,223 | 76,585 | 2.90 | % | ||||||||||||||||||||||||||||||||
Total | 5,355 | $ | 290,230 | 1.85 | % | 5,730 | $ | 294,704 | 1.94 | % | 5,751 | $ | 249,279 | 2.31 | % | |||||||||||||||||||||||||||||
Allowance for unfunded lending related commitments | 646 | 645 | 689 | |||||||||||||||||||||||||||||||||||||||||
Allowance for credit losses | $ | 6,001 | $ | 6,375 | $ | 6,440 | ||||||||||||||||||||||||||||||||||||||
| Supplemental Information | ||||||||||||||||||||||||||||||||||||||||||||
Allowance for credit losses to total loans | 2.07 | % | 2.16 | % | 2.58 | % | ||||||||||||||||||||||||||||||||||||||
| Commercial | 2.12 | % | 2.18 | % | 2.38 | % | ||||||||||||||||||||||||||||||||||||||
| Consumer | 1.96 | % | 2.14 | % | 3.04 | % | ||||||||||||||||||||||||||||||||||||||
(a) Excludes allowances for investment securities and other financial assets, which together totaled $162 million, $138 million and $98 million at September 30, 2021, June 30, 2021 and September 30, 2020, respectively.
THE PNC FINANCIAL SERVICES GROUP, INC. | Page 9 | |||||||
Details of Nonperforming Assets (Unaudited)
Table 10: Nonperforming Assets by Type
| September 30 | June 30 | March 31 | December 31 | September 30 | ||||||||||||||||||||||||||||
| Dollars in millions | 2021 (a) | 2021 (a) | 2021 | 2020 | 2020 | |||||||||||||||||||||||||||
| Nonperforming loans, including TDRs | ||||||||||||||||||||||||||||||||
| Commercial | ||||||||||||||||||||||||||||||||
| Commercial and industrial | ||||||||||||||||||||||||||||||||
| Service providers | $ | 220 | $ | 206 | $ | 79 | $ | 90 | $ | 69 | ||||||||||||||||||||||
| Manufacturing | 62 | 65 | 55 | 81 | 80 | |||||||||||||||||||||||||||
| Retail/wholesale trade | 59 | 71 | 66 | 61 | 90 | |||||||||||||||||||||||||||
| Health care | 56 | 71 | 19 | 20 | 20 | |||||||||||||||||||||||||||
| Real estate related (b) | 49 | 78 | 48 | 95 | 140 | |||||||||||||||||||||||||||
| Transportation and warehousing | 21 | 18 | 18 | 20 | 14 | |||||||||||||||||||||||||||
| Other industries | 362 | 421 | 227 | 299 | 264 | |||||||||||||||||||||||||||
| Total commercial and industrial | 829 | 930 | 512 | 666 | 677 | |||||||||||||||||||||||||||
| Commercial real estate | 365 | 501 | 221 | 224 | 217 | |||||||||||||||||||||||||||
| Equipment lease financing | 10 | 15 | 16 | 33 | 21 | |||||||||||||||||||||||||||
| Total commercial | 1,204 | 1,446 | 749 | 923 | 915 | |||||||||||||||||||||||||||
| Consumer (c) | ||||||||||||||||||||||||||||||||
| Residential real estate | 533 | 503 | 541 | 528 | 339 | |||||||||||||||||||||||||||
| Home equity | 592 | 626 | 656 | 645 | 639 | |||||||||||||||||||||||||||
| Automobile | 184 | 191 | 178 | 175 | 171 | |||||||||||||||||||||||||||
| Credit card | 7 | 7 | 7 | 8 | 13 | |||||||||||||||||||||||||||
| Other consumer | 8 | 6 | 7 | 7 | 8 | |||||||||||||||||||||||||||
| Total consumer | 1,324 | 1,333 | 1,389 | 1,363 | 1,170 | |||||||||||||||||||||||||||
| Total nonperforming loans (d) | 2,528 | 2,779 | 2,138 | 2,286 | 2,085 | |||||||||||||||||||||||||||
| OREO and foreclosed assets | 31 | 39 | 41 | 51 | 67 | |||||||||||||||||||||||||||
| Total nonperforming assets | $ | 2,559 | $ | 2,818 | $ | 2,179 | $ | 2,337 | $ | 2,152 | ||||||||||||||||||||||
| Nonperforming loans to total loans | 0.87 | % | 0.94 | % | 0.90 | % | 0.94 | % | 0.84 | % | ||||||||||||||||||||||
| Nonperforming assets to total loans, OREO and foreclosed assets | 0.88 | % | 0.96 | % | 0.92 | % | 0.97 | % | 0.86 | % | ||||||||||||||||||||||
| Nonperforming assets to total assets | 0.46 | % | 0.51 | % | 0.46 | % | 0.50 | % | 0.47 | % | ||||||||||||||||||||||
| Allowance for loan and lease losses to nonperforming loans | 212 | % | 206 | % | 220 | % | 235 | % | 276 | % | ||||||||||||||||||||||
(a)Includes $715 million of nonperforming assets at September 30, 2021, $666 million in the commercial portfolio, $41 million in the consumer portfolio and $8 million of OREO and foreclosed assets, attributable to BBVA. Comparable amounts at June 30, 2021 totaled $880 million, $847 million, $24 million and $9 million, respectively. Our second quarter 2021 Form 10-Q included additional information on the June 1, 2021 acquisition of BBVA.
(b)Represents loans related to customers in the real estate and construction industries.
(c)Excludes most unsecured consumer loans and lines of credit, which are charged off after 120 to 180 days past due and are not placed on nonperforming status.
(d)Nonperforming loans exclude certain government insured or guaranteed loans, loans held for sale and loans accounted for under the fair value option.
Table 11: Change in Nonperforming Assets
| July 1, 2021 - | April 1, 2021 - | January 1, 2021 - | October 1, 2020 - | July 1, 2020 - | ||||||||||||||||||||||||||||
| In millions | September 30, 2021 | June 30, 2021 | March 31, 2021 | December 31, 2020 | September 30, 2020 | |||||||||||||||||||||||||||
| Beginning balance | $ | 2,818 | $ | 2,179 | $ | 2,337 | $ | 2,152 | $ | 1,955 | ||||||||||||||||||||||
| New nonperforming assets | 365 | 207 | 249 | 586 | 512 | |||||||||||||||||||||||||||
| Charge-offs and valuation adjustments | (71) | (61) | (70) | (97) | (75) | |||||||||||||||||||||||||||
| Principal activity, including paydowns and payoffs | (333) | (264) | (186) | (185) | (175) | |||||||||||||||||||||||||||
| Asset sales and transfers to loans held for sale | (30) | (15) | (86) | (14) | (20) | |||||||||||||||||||||||||||
| Returned to performing status | (190) | (108) | (65) | (105) | (45) | |||||||||||||||||||||||||||
| Acquired nonperforming assets (a) | 880 | |||||||||||||||||||||||||||||||
| Ending balance | $ | 2,559 | $ | 2,818 | $ | 2,179 | $ | 2,337 | $ | 2,152 | ||||||||||||||||||||||
(a)Represents nonperforming assets acquired as a part of the BBVA acquisition on June 1, 2021 and includes $871 million of loans and $9 million of OREO and foreclosed assets. Our second quarter 2021 Form 10-Q included additional information on the BBVA acquisition.
THE PNC FINANCIAL SERVICES GROUP, INC. | Page 10 | |||||||
Accruing Loans Past Due (Unaudited)
Pursuant to the interagency guidance issued in April 2020 and in connection with the credit reporting rules from the U.S. Coronavirus Aid, Relief and Economic Security Act (CARES Act), the delinquency status of loans modified due to COVID-19 related hardships are reported for all periods presented in alignment with the rules set forth for banks to report delinquency status to the credit agencies. These rules require that COVID-19 related loan modifications be reported as follows:
•if current at the time of modification, the loan remains current throughout the modification period,
•if delinquent at the time of modification and the borrower was not made current as part of the modification, the loan maintains its reported as delinquent status during the modification period, or
•if delinquent at the time of modification and the borrower was made current as part of the modification or became current during the modification period, the loan is reported as current.
As a result, certain loans modified due to COVID-19 related hardships are not being reported as past due for the periods presented based on the contractual terms of the loan, even where borrowers may not be making payments on their loans during the modification period. Our second quarter 2021 Form 10-Q included, and our third quarter 2021 Form 10-Q will include, additional information on COVID-19 related loan modifications.
Table 12: Accruing Loans Past Due 30 to 59 Days (a)
| September 30 | June 30 | March 31 | December 31 | September 30 | ||||||||||||||||||||||||||||
| Dollars in millions | 2021 (b) | 2021 (b) | 2021 | 2020 | 2020 | |||||||||||||||||||||||||||
| Commercial | ||||||||||||||||||||||||||||||||
| Commercial and industrial | $ | 97 | $ | 72 | $ | 80 | $ | 106 | $ | 56 | ||||||||||||||||||||||
| Commercial real estate | 68 | 5 | 12 | 6 | 6 | |||||||||||||||||||||||||||
| Equipment lease financing | 5 | 3 | 21 | 31 | 7 | |||||||||||||||||||||||||||
| Total commercial | 170 | 80 | 113 | 143 | 69 | |||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||||||||
| Residential real estate | ||||||||||||||||||||||||||||||||
| Non government insured | 128 | 124 | 61 | 89 | 99 | |||||||||||||||||||||||||||
| Government insured | 81 | 88 | 101 | 92 | 89 | |||||||||||||||||||||||||||
| Home equity | 45 | 44 | 43 | 50 | 48 | |||||||||||||||||||||||||||
| Automobile | 114 | 98 | 76 | 134 | 116 | |||||||||||||||||||||||||||
| Credit card | 42 | 37 | 31 | 43 | 44 | |||||||||||||||||||||||||||
| Education | ||||||||||||||||||||||||||||||||
Non government insured | 5 | 5 | 6 | 5 | 6 | |||||||||||||||||||||||||||
Government insured | 40 | 41 | 43 | 50 | 51 | |||||||||||||||||||||||||||
| Other consumer | 34 | 31 | 11 | 14 | 17 | |||||||||||||||||||||||||||
| Total consumer | 489 | 468 | 372 | 477 | 470 | |||||||||||||||||||||||||||
| Total | $ | 659 | $ | 548 | $ | 485 | $ | 620 | $ | 539 | ||||||||||||||||||||||
| Supplemental Information | ||||||||||||||||||||||||||||||||
| Total accruing loans past due 30-59 days to total loans | 0.23 | % | 0.19 | % | 0.20 | % | 0.26 | % | 0.22 | % | ||||||||||||||||||||||
| Commercial | 0.09 | % | 0.04 | % | 0.07 | % | 0.09 | % | 0.04 | % | ||||||||||||||||||||||
| Consumer | 0.51 | % | 0.49 | % | 0.51 | % | 0.64 | % | 0.61 | % | ||||||||||||||||||||||
(a)Excludes loans held for sale.
(b)Includes $220 million of accruing loans 30-59 days past due at September 30, 2021, $98 million in the commercial portfolio and $122 million in the consumer portfolio, attributable to BBVA. Comparable amounts at June 30, 2021 were $141 million, $30 million and $111 million, respectively.
THE PNC FINANCIAL SERVICES GROUP, INC. | Page 11 | |||||||
Accruing Loans Past Due (Unaudited) (Continued)
Table 13: Accruing Loans Past Due 60 to 89 Days (a)
| September 30 | June 30 | March 31 | December 31 | September 30 | ||||||||||||||||||||||||||||
| Dollars in millions | 2021 (b) | 2021 (b) | 2021 | 2020 | 2020 | |||||||||||||||||||||||||||
| Commercial | ||||||||||||||||||||||||||||||||
| Commercial and industrial | $ | 50 | $ | 27 | $ | 13 | $ | 26 | $ | 37 | ||||||||||||||||||||||
| Commercial real estate | 2 | 3 | 1 | 1 | 6 | |||||||||||||||||||||||||||
| Equipment lease financing | 4 | 4 | 1 | 5 | 4 | |||||||||||||||||||||||||||
| Total commercial | 56 | 34 | 15 | 32 | 47 | |||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||||||||
| Residential real estate | ||||||||||||||||||||||||||||||||
| Non government insured | 35 | 30 | 13 | 16 | 22 | |||||||||||||||||||||||||||
| Government insured | 45 | 52 | 60 | 62 | 58 | |||||||||||||||||||||||||||
| Home equity | 18 | 17 | 20 | 21 | 22 | |||||||||||||||||||||||||||
| Automobile | 23 | 20 | 19 | 34 | 32 | |||||||||||||||||||||||||||
| Credit card | 27 | 24 | 24 | 30 | 33 | |||||||||||||||||||||||||||
| Education | ||||||||||||||||||||||||||||||||
Non government insured | 3 | 2 | 3 | 2 | 2 | |||||||||||||||||||||||||||
Government insured | 23 | 20 | 22 | 27 | 24 | |||||||||||||||||||||||||||
| Other consumer | 15 | 16 | 6 | 10 | 11 | |||||||||||||||||||||||||||
| Total consumer | 189 | 181 | 167 | 202 | 204 | |||||||||||||||||||||||||||
| Total | $ | 245 | $ | 215 | $ | 182 | $ | 234 | $ | 251 | ||||||||||||||||||||||
| Supplemental Information | ||||||||||||||||||||||||||||||||
| Total accruing loans past due 60-89 days to total loans | 0.08 | % | 0.07 | % | 0.08 | % | 0.10 | % | 0.10 | % | ||||||||||||||||||||||
| Commercial | 0.03 | % | 0.02 | % | 0.01 | % | 0.02 | % | 0.03 | % | ||||||||||||||||||||||
| Consumer | 0.20 | % | 0.19 | % | 0.23 | % | 0.27 | % | 0.27 | % | ||||||||||||||||||||||
(a)Excludes loans held for sale.
(b)Includes $80 million of accruing loans 60-89 days past due at September 30, 2021, $26 million in the commercial portfolio and $54 million in the consumer portfolio, attributable to BBVA. Comparable amounts at June 30, 2021 were $56 million, $10 million and $46 million, respectively.
THE PNC FINANCIAL SERVICES GROUP, INC. | Page 12 | |||||||
Accruing Loans Past Due (Unaudited) (Continued)
Table 14: Accruing Loans Past Due 90 Days or More (a)
| September 30 | June 30 | March 31 | December 31 | September 30 | ||||||||||||||||||||||||||||
| Dollars in millions | 2021 (b) | 2021 (b) | 2021 | 2020 | 2020 | |||||||||||||||||||||||||||
| Commercial | ||||||||||||||||||||||||||||||||
| Commercial and industrial | $ | 56 | $ | 45 | $ | 63 | $ | 30 | $ | 36 | ||||||||||||||||||||||
| Commercial real estate | 11 | 2 | ||||||||||||||||||||||||||||||
| Total commercial | 67 | 47 | 63 | 30 | 36 | |||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||||||||
| Residential real estate | ||||||||||||||||||||||||||||||||
| Non government insured | 28 | 40 | 17 | 27 | 28 | |||||||||||||||||||||||||||
| Government insured | 268 | 297 | 258 | 292 | 241 | |||||||||||||||||||||||||||
| Automobile | 4 | 3 | 6 | 12 | 12 | |||||||||||||||||||||||||||
| Credit card | 53 | 59 | 52 | 60 | 60 | |||||||||||||||||||||||||||
| Education | ||||||||||||||||||||||||||||||||
Non government insured | 1 | 1 | 2 | 2 | 1 | |||||||||||||||||||||||||||
Government insured | 60 | 66 | 74 | 75 | 62 | |||||||||||||||||||||||||||
| Other consumer | 11 | 14 | 7 | 11 | 8 | |||||||||||||||||||||||||||
| Total consumer | 425 | 480 | 416 | 479 | 412 | |||||||||||||||||||||||||||
| Total | $ | 492 | $ | 527 | $ | 479 | $ | 509 | $ | 448 | ||||||||||||||||||||||
| Supplemental Information | ||||||||||||||||||||||||||||||||
| Total accruing loans past due 90 days or more to total loans | 0.17 | % | 0.18 | % | 0.20 | % | 0.21 | % | 0.18 | % | ||||||||||||||||||||||
| Commercial | 0.03 | % | 0.02 | % | 0.04 | % | 0.02 | % | 0.02 | % | ||||||||||||||||||||||
| Consumer | 0.45 | % | 0.50 | % | 0.57 | % | 0.64 | % | 0.54 | % | ||||||||||||||||||||||
| Total accruing loans past due | $ | 1,396 | $ | 1,290 | $ | 1,146 | $ | 1,363 | $ | 1,238 | ||||||||||||||||||||||
| Commercial | $ | 293 | $ | 161 | $ | 191 | $ | 205 | $ | 152 | ||||||||||||||||||||||
| Consumer | $ | 1,103 | $ | 1,129 | $ | 955 | $ | 1,158 | $ | 1,086 | ||||||||||||||||||||||
| Total accruing loans past due to total loans | 0.48 | % | 0.44 | % | 0.48 | % | 0.56 | % | 0.50 | % | ||||||||||||||||||||||
| Commercial | 0.15 | % | 0.08 | % | 0.12 | % | 0.12 | % | 0.09 | % | ||||||||||||||||||||||
| Consumer | 1.16 | % | 1.19 | % | 1.32 | % | 1.55 | % | 1.42 | % | ||||||||||||||||||||||
(a)Excludes loans held for sale.
(b)Includes $72 million of accruing loans 90 days or more past due at September 30, 2021, $6 million in the commercial portfolio and $66 million in the consumer portfolio, attributable to BBVA. Comparable amounts at June 30, 2021 were $94 million, $7 million and $87 million, respectively.
THE PNC FINANCIAL SERVICES GROUP, INC. | Page 13 | |||||||
Business Segment Descriptions (Unaudited)
Retail Banking provides deposit, lending, brokerage, insurance services, investment management and cash management products and services to consumer and small business customers. Our customers are serviced through our branch network, ATMs, call centers, online banking and mobile channels. The branch network is located primarily in markets across the Mid-Atlantic, Midwest, Southeast and Southwest. Our national expansion strategy is designed to grow customers with digitally-led banking and a thin branch network in markets outside of our existing retail branch network. Deposit products include checking, savings and money market accounts and certificates of deposit. Lending products include residential mortgages, home equity loans and lines of credit, auto loans, credit cards, education loans and personal and small business loans and lines of credit. The residential mortgage loans are directly originated within our branch network and nationwide, and are typically underwritten to agency and/or third-party standards, and either sold, servicing retained or held on our balance sheet. Brokerage, investment management and cash management products and services include managed, education, retirement and trust accounts.
Corporate & Institutional Banking provides lending, treasury management, and capital markets-related products and services to mid-sized and large corporations, and government and not-for-profit entities. Lending products include secured and unsecured loans, letters of credit and equipment leases. The Treasury Management business provides payables, receivables, deposit and account services, liquidity and investments, and online and mobile banking products and services to our clients. Capital markets-related products and services include foreign exchange, derivatives, fixed income, securities underwriting, loan syndications, mergers and acquisitions advisory and equity capital markets advisory related services. We also provide commercial loan servicing and technology solutions for the commercial real estate finance industry. Products and services are provided nationally.
Asset Management Group provides private banking for high net worth and ultra high net worth clients and institutional asset management. The Asset Management group is comprised of two distinct operating units:
•PNC Private Bank provides products and services to emerging affluent, high net worth and ultra high net worth individuals and their families including investment and retirement planning, customized investment management, credit and cash management solutions, and trust management and administration. In addition, multi-generational family planning services are also provided to ultra high net worth individuals and families which include estate, financial, tax, fiduciary and customized performance reporting through PNC Private Bank Hawthorn.
•Institutional Asset Management provides outsourced chief investment officer, custody, private real estate, cash and fixed income client solutions, and retirement plan fiduciary investment services to institutional clients including corporations, healthcare systems, insurance companies, unions, municipalities and non-profits.
Table 15: Period End Employees
| September 30 | June 30 | March 31 | December 31 | September 30 | |||||||||||||||||||||||||
| 2021 | 2021 | 2021 | 2020 | 2020 | |||||||||||||||||||||||||
| Full-time employees | |||||||||||||||||||||||||||||
| Retail Banking | 33,188 | 33,471 | 27,690 | 27,621 | 27,808 | ||||||||||||||||||||||||
| Other full-time employees | 25,442 | 25,512 | 22,281 | 21,928 | 21,997 | ||||||||||||||||||||||||
| Total full-time employees | 58,630 | 58,983 | 49,971 | 49,549 | 49,805 | ||||||||||||||||||||||||
| Part-time employees | |||||||||||||||||||||||||||||
| Retail Banking | 1,616 | 1,821 | 1,697 | 1,611 | 1,593 | ||||||||||||||||||||||||
| Other part-time employees | 94 | 431 | 101 | 97 | 104 | ||||||||||||||||||||||||
| Total part-time employees | 1,710 | 2,252 | 1,798 | 1,708 | 1,697 | ||||||||||||||||||||||||
| Total | 60,340 | 61,235 | 51,769 | 51,257 | 51,502 | ||||||||||||||||||||||||
THE PNC FINANCIAL SERVICES GROUP, INC. | Page 14 | |||||||
Table 16: Summary of Business Segment Net Income and Revenue (Unaudited) (a)
| Three months ended | Nine months ended | |||||||||||||||||||||||||||||||||||||||||||
| September 30 | June 30 | March 31 | December 31 | September 30 | September 30 | September 30 | ||||||||||||||||||||||||||||||||||||||
| In millions | 2021 | 2021 | 2021 | 2020 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||||
| Income | ||||||||||||||||||||||||||||||||||||||||||||
| Retail Banking | $ | 447 | $ | 232 | $ | 607 | $ | 336 | $ | 530 | $ | 1,286 | $ | 508 | ||||||||||||||||||||||||||||||
| Corporate & Institutional Banking | 1,123 | 809 | 1,058 | 992 | 670 | 2,990 | 682 | |||||||||||||||||||||||||||||||||||||
| Asset Management Group | 114 | 87 | 99 | 82 | 91 | 300 | 173 | |||||||||||||||||||||||||||||||||||||
| Other | (210) | (37) | 52 | 32 | 228 | (195) | 157 | |||||||||||||||||||||||||||||||||||||
| Net income from continuing operations excluding noncontrolling interest | $ | 1,474 | $ | 1,091 | $ | 1,816 | $ | 1,442 | $ | 1,519 | $ | 4,381 | $ | 1,520 | ||||||||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||||||||||||||||||||
| Retail Banking | $ | 2,375 | $ | 2,203 | $ | 2,016 | $ | 1,853 | $ | 2,056 | $ | 6,594 | $ | 6,275 | ||||||||||||||||||||||||||||||
| Corporate & Institutional Banking | 2,306 | 1,959 | 1,808 | 1,913 | 1,748 | 6,073 | 5,198 | |||||||||||||||||||||||||||||||||||||
| Asset Management Group | 397 | 356 | 322 | 316 | 310 | 1,075 | 895 | |||||||||||||||||||||||||||||||||||||
| Other | 119 | 149 | 74 | 126 | 167 | 342 | 325 | |||||||||||||||||||||||||||||||||||||
| Total revenue | $ | 5,197 | $ | 4,667 | $ | 4,220 | $ | 4,208 | $ | 4,281 | $ | 14,084 | $ | 12,693 | ||||||||||||||||||||||||||||||
(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.
Our third quarter 2021 business segment results reflect the full quarter benefit of BBVA's business operations, and our second quarter 2021 results reflect the impact of BBVA business operations for the month of June. Period end information presented includes BBVA's balances at both September 30, 2021 and June 30, 2021. Until the conversion of bank systems and branches on October 12, 2021, PNC Bank and BBVA customers were served through their respective PNC Bank and BBVA USA branches, websites and mobile apps, financial advisors and relationship managers. Upon conversion, there will be changes in the segmentation of BBVA USA customers as we integrate data to PNC applications, finalize the review of customer relationships and better align customers with PNC's products and services. These changes will be reflected in fourth quarter reporting.
THE PNC FINANCIAL SERVICES GROUP, INC. | Page 15 | |||||||
Table 17: Retail Banking (Unaudited) (a)
| Three months ended | Nine months ended | |||||||||||||||||||||||||||||||||||||||||||
| September 30 | June 30 | March 31 | December 31 | September 30 | September 30 | September 30 | ||||||||||||||||||||||||||||||||||||||
| Dollars in millions | 2021 | 2021 | 2021 | 2020 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||||
| Income Statement | ||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 1,713 | $ | 1,497 | $ | 1,362 | $ | 1,380 | $ | 1,383 | $ | 4,572 | $ | 4,229 | ||||||||||||||||||||||||||||||
| Noninterest income | 662 | 706 | 654 | 473 | 673 | 2,022 | 2,046 | |||||||||||||||||||||||||||||||||||||
| Total revenue | 2,375 | 2,203 | 2,016 | 1,853 | 2,056 | 6,594 | 6,275 | |||||||||||||||||||||||||||||||||||||
| Provision for (recapture of) credit losses | (113) | 214 | (257) | (81) | (157) | (156) | 1,049 | |||||||||||||||||||||||||||||||||||||
| Noninterest expense | 1,889 | 1,677 | 1,476 | 1,482 | 1,512 | 5,042 | 4,537 | |||||||||||||||||||||||||||||||||||||
| Pretax earnings | 599 | 312 | 797 | 452 | 701 | 1,708 | 689 | |||||||||||||||||||||||||||||||||||||
| Income taxes | 140 | 73 | 183 | 105 | 162 | 396 | 161 | |||||||||||||||||||||||||||||||||||||
| Noncontrolling interest | 12 | 7 | 7 | 11 | 9 | 26 | 20 | |||||||||||||||||||||||||||||||||||||
| Earnings | $ | 447 | $ | 232 | $ | 607 | $ | 336 | $ | 530 | $ | 1,286 | $ | 508 | ||||||||||||||||||||||||||||||
| Average Balance Sheet | ||||||||||||||||||||||||||||||||||||||||||||
| Loans held for sale | $ | 1,583 | $ | 1,405 | $ | 891 | $ | 672 | $ | 700 | $ | 1,296 | $ | 769 | ||||||||||||||||||||||||||||||
| Loans | ||||||||||||||||||||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||||||||||||||||||||
| Residential real estate | $ | 30,702 | $ | 21,653 | $ | 17,468 | $ | 18,042 | $ | 18,435 | $ | 23,323 | $ | 18,215 | ||||||||||||||||||||||||||||||
| Home equity | 23,047 | 22,080 | 21,833 | 22,366 | 22,647 | 22,324 | 22,723 | |||||||||||||||||||||||||||||||||||||
| Automobile | 17,377 | 14,888 | 13,890 | 14,536 | 15,573 | 15,398 | 16,449 | |||||||||||||||||||||||||||||||||||||
| Credit card | 6,484 | 5,900 | 5,819 | 6,218 | 6,408 | 6,070 | 6,767 | |||||||||||||||||||||||||||||||||||||
| Education | 2,712 | 2,812 | 2,938 | 3,027 | 3,119 | 2,820 | 3,226 | |||||||||||||||||||||||||||||||||||||
| Other consumer | 2,892 | 2,175 | 1,898 | 2,086 | 2,262 | 2,326 | 2,417 | |||||||||||||||||||||||||||||||||||||
| Total consumer | 83,214 | 69,508 | 63,846 | 66,275 | 68,444 | 72,261 | 69,797 | |||||||||||||||||||||||||||||||||||||
| Commercial | 15,895 | 14,796 | 13,743 | 13,391 | 13,356 | 14,819 | 12,298 | |||||||||||||||||||||||||||||||||||||
| Total loans | $ | 99,109 | $ | 84,304 | $ | 77,589 | $ | 79,666 | $ | 81,800 | $ | 87,080 | $ | 82,095 | ||||||||||||||||||||||||||||||
| Total assets | $ | 117,394 | $ | 100,948 | $ | 92,891 | $ | 94,303 | $ | 98,731 | $ | 103,820 | $ | 98,764 | ||||||||||||||||||||||||||||||
| Deposits | ||||||||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing demand | $ | 65,985 | $ | 54,260 | $ | 44,845 | $ | 43,818 | $ | 43,752 | $ | 55,107 | $ | 38,390 | ||||||||||||||||||||||||||||||
| Interest-bearing demand | 62,414 | 59,329 | 54,269 | 50,702 | 49,274 | 58,700 | 46,501 | |||||||||||||||||||||||||||||||||||||
| Money market | 40,471 | 29,998 | 24,198 | 24,112 | 23,816 | 31,639 | 23,210 | |||||||||||||||||||||||||||||||||||||
| Savings | 81,950 | 79,518 | 75,180 | 72,041 | 70,236 | 78,907 | 67,000 | |||||||||||||||||||||||||||||||||||||
| Certificates of deposit | 11,171 | 10,101 | 9,742 | 10,156 | 10,852 | 10,321 | 11,579 | |||||||||||||||||||||||||||||||||||||
| Total deposits | $ | 261,991 | $ | 233,206 | $ | 208,234 | $ | 200,829 | $ | 197,930 | $ | 234,674 | $ | 186,680 | ||||||||||||||||||||||||||||||
| Performance Ratios | ||||||||||||||||||||||||||||||||||||||||||||
| Return on average assets | 1.51 | % | 0.92 | % | 2.65 | % | 1.41 | % | 2.13 | % | 1.66 | % | 0.69 | % | ||||||||||||||||||||||||||||||
| Noninterest income to total revenue | 28 | % | 32 | % | 32 | % | 26 | % | 33 | % | 31 | % | 33 | % | ||||||||||||||||||||||||||||||
| Efficiency | 80 | % | 76 | % | 73 | % | 80 | % | 74 | % | 76 | % | 72 | % | ||||||||||||||||||||||||||||||
(a)See note (a) on page 14.
THE PNC FINANCIAL SERVICES GROUP, INC. | Page 16 | |||||||
Retail Banking (Unaudited) (Continued)
| Three months ended | Nine months ended | ||||||||||||||||||||||||||||||||||||||||
| September 30 | June 30 | March 31 | December 31 | September 30 | September 30 | September 30 | |||||||||||||||||||||||||||||||||||
| Dollars in millions, except as noted | 2021 | 2021 | 2021 | 2020 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||||||||
| Supplemental Noninterest Income Information | |||||||||||||||||||||||||||||||||||||||||
| Consumer services | $ | 470 | $ | 435 | $ | 368 | $ | 369 | $ | 371 | $ | 1,273 | $ | 1,058 | |||||||||||||||||||||||||||
| Residential mortgage | $ | 147 | $ | 103 | $ | 105 | $ | 99 | $ | 137 | $ | 355 | $ | 505 | |||||||||||||||||||||||||||
| Service charges on deposits | $ | 158 | $ | 129 | $ | 119 | $ | 133 | $ | 118 | $ | 406 | $ | 364 | |||||||||||||||||||||||||||
| Residential Mortgage Information | |||||||||||||||||||||||||||||||||||||||||
| Residential mortgage servicing statistics (in billions, except as noted) (a) | |||||||||||||||||||||||||||||||||||||||||
| Serviced portfolio balance (b) | $ | 139 | $ | 145 | $ | 117 | $ | 121 | $ | 119 | |||||||||||||||||||||||||||||||
| Serviced portfolio acquisitions | $ | 2 | $ | 33 | $ | 7 | $ | 12 | $ | 8 | $ | 42 | $ | 21 | |||||||||||||||||||||||||||
| MSR asset value (b) | $ | 1.1 | $ | 1.1 | $ | 1.0 | $ | 0.7 | $ | 0.6 | |||||||||||||||||||||||||||||||
| MSR capitalization value (in basis points) (b) | 81 | 77 | 83 | 56 | 50 | ||||||||||||||||||||||||||||||||||||
| Servicing income: (in millions) | |||||||||||||||||||||||||||||||||||||||||
| Servicing fees, net (c) | $ | 18 | $ | (3) | $ | 5 | $ | 13 | $ | 25 | $ | 20 | $ | 105 | |||||||||||||||||||||||||||
| Mortgage servicing rights valuation, net of economic hedge | $ | 24 | $ | 24 | $ | 14 | $ | (1) | $ | 17 | $ | 62 | $ | 138 | |||||||||||||||||||||||||||
| Residential mortgage loan statistics | |||||||||||||||||||||||||||||||||||||||||
| Loan origination volume (in billions) | $ | 7.4 | $ | 6.5 | $ | 4.3 | $ | 3.7 | $ | 4.0 | $ | 18.2 | $ | 11.4 | |||||||||||||||||||||||||||
| Loan sale margin percentage | 3.01 | % | 2.67 | % | 3.28 | % | 3.75 | % | 3.62 | % | 2.95 | % | 3.51 | % | |||||||||||||||||||||||||||
| Percentage of originations represented by: | |||||||||||||||||||||||||||||||||||||||||
| Purchase volume (d) | 47 | % | 48 | % | 34 | % | 45 | % | 44 | % | 45 | % | 38 | % | |||||||||||||||||||||||||||
| Refinance volume | 53 | % | 52 | % | 66 | % | 55 | % | 56 | % | 55 | % | 62 | % | |||||||||||||||||||||||||||
| Other Information (b) | |||||||||||||||||||||||||||||||||||||||||
| Customer-related statistics (average) (e) | |||||||||||||||||||||||||||||||||||||||||
| Non-teller deposit transactions (f) | 66 | % | 65 | % | 66 | % | 66 | % | 67 | % | 66 | % | 63 | % | |||||||||||||||||||||||||||
| Digital consumer customers (g) | 80 | % | 80 | % | 79 | % | 77 | % | 75 | % | 80 | % | 73 | % | |||||||||||||||||||||||||||
| Credit-related statistics | |||||||||||||||||||||||||||||||||||||||||
| Nonperforming assets | $ | 1,220 | $ | 1,245 | $ | 1,229 | $ | 1,211 | $ | 1,077 | |||||||||||||||||||||||||||||||
| Net charge-offs - loans and leases | $ | 82 | $ | 79 | $ | 108 | $ | 136 | $ | 125 | $ | 269 | $ | 433 | |||||||||||||||||||||||||||
| Other statistics | |||||||||||||||||||||||||||||||||||||||||
| ATMs | 9,572 | 9,636 | 8,874 | 8,900 | 9,058 | ||||||||||||||||||||||||||||||||||||
| Branches (h) | 2,712 | 2,724 | 2,137 | 2,162 | 2,207 | ||||||||||||||||||||||||||||||||||||
| Brokerage account client assets (in billions) (i) | $ | 76 | $ | 83 | $ | 61 | $ | 59 | $ | 55 | |||||||||||||||||||||||||||||||
(a)Represents mortgage loan servicing balances for third parties and the related income.
(b)Presented as of period end, except for average customer-related statistics and net charge-offs, which are both shown for the three and nine 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 payments, 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)Represents PNC legacy only, statistics will be refreshed to include BBVA activity in fourth quarter reporting after the conversion of bank systems and branches is completed.
(f)Percentage of total consumer and business banking deposit transactions processed at an ATM or through our mobile banking application.
(g)Represents consumer checking relationships that process the majority of their transactions through non-teller channels.
(h)Excludes stand-alone mortgage offices and satellite offices (e.g., drive-ups, electronic branches and retirement centers) that provide limited products and/or services.
(i)Includes cash and money market balances.
THE PNC FINANCIAL SERVICES GROUP, INC. | Page 17 | |||||||
Table 18: Corporate & Institutional Banking (Unaudited) (a)
| Three months ended | Nine months ended | ||||||||||||||||||||||||||||||||||||||||
| September 30 | June 30 | March 31 | December 31 | September 30 | September 30 | September 30 | |||||||||||||||||||||||||||||||||||
| Dollars in millions | 2021 | 2021 | 2021 | 2020 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||||||||
| Income Statement | |||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 1,250 | $ | 1,092 | $ | 1,001 | $ | 994 | $ | 1,025 | $ | 3,343 | $ | 3,055 | |||||||||||||||||||||||||||
| Noninterest income | 1,056 | 867 | 807 | 919 | 723 | 2,730 | 2,143 | ||||||||||||||||||||||||||||||||||
| Total revenue | 2,306 | 1,959 | 1,808 | 1,913 | 1,748 | 6,073 | 5,198 | ||||||||||||||||||||||||||||||||||
| Provision for (recapture of) credit losses | (99) | 104 | (282) | (166) | 211 | (277) | 2,254 | ||||||||||||||||||||||||||||||||||
| Noninterest expense | 980 | 813 | 711 | 801 | 663 | 2,504 | 2,055 | ||||||||||||||||||||||||||||||||||
| Pretax earnings | 1,425 | 1,042 | 1,379 | 1,278 | 874 | 3,846 | 889 | ||||||||||||||||||||||||||||||||||
| Income taxes | 299 | 229 | 318 | 282 | 201 | 846 | 201 | ||||||||||||||||||||||||||||||||||
| Noncontrolling interest | 3 | 4 | 3 | 4 | 3 | 10 | 6 | ||||||||||||||||||||||||||||||||||
| Earnings | $ | 1,123 | $ | 809 | $ | 1,058 | $ | 992 | $ | 670 | $ | 2,990 | $ | 682 | |||||||||||||||||||||||||||
| Average Balance Sheet | |||||||||||||||||||||||||||||||||||||||||
| Loans held for sale | $ | 541 | $ | 564 | $ | 691 | $ | 1,039 | $ | 904 | $ | 598 | $ | 669 | |||||||||||||||||||||||||||
| Loans | |||||||||||||||||||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | $ | 134,128 | $ | 121,232 | $ | 114,944 | $ | 120,297 | $ | 125,187 | $ | 123,505 | $ | 127,149 | |||||||||||||||||||||||||||
| Commercial real estate | 35,368 | 30,118 | 27,182 | 27,509 | 27,511 | 30,919 | 27,070 | ||||||||||||||||||||||||||||||||||
| Equipment lease financing | 6,300 | 6,332 | 6,332 | 6,381 | 6,772 | 6,321 | 6,957 | ||||||||||||||||||||||||||||||||||
| Total commercial | 175,796 | 157,682 | 148,458 | 154,187 | 159,470 | 160,745 | 161,176 | ||||||||||||||||||||||||||||||||||
| Consumer | 20 | 13 | 9 | 10 | 11 | 14 | 9 | ||||||||||||||||||||||||||||||||||
| Total loans | $ | 175,816 | $ | 157,695 | $ | 148,467 | $ | 154,197 | $ | 159,481 | $ | 160,759 | $ | 161,185 | |||||||||||||||||||||||||||
| Total assets | $ | 202,268 | $ | 181,770 | $ | 170,531 | $ | 177,792 | $ | 183,266 | $ | 184,964 | $ | 185,001 | |||||||||||||||||||||||||||
| Deposits | |||||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing demand | $ | 85,869 | $ | 75,570 | $ | 66,666 | $ | 64,334 | $ | 56,433 | $ | 76,105 | $ | 50,104 | |||||||||||||||||||||||||||
| Interest-bearing demand | 33,817 | 30,156 | 28,118 | 28,793 | 29,730 | 30,718 | 26,182 | ||||||||||||||||||||||||||||||||||
| Money market | 36,115 | 31,788 | 33,182 | 36,705 | 38,015 | 33,706 | 34,373 | ||||||||||||||||||||||||||||||||||
| Other | 7,315 | 7,499 | 8,368 | 8,928 | 8,956 | 7,723 | 8,789 | ||||||||||||||||||||||||||||||||||
| Total deposits | $ | 163,116 | $ | 145,013 | $ | 136,334 | $ | 138,760 | $ | 133,134 | $ | 148,252 | $ | 119,448 | |||||||||||||||||||||||||||
| Performance Ratios | |||||||||||||||||||||||||||||||||||||||||
| Return on average assets | 2.20 | % | 1.79 | % | 2.52 | % | 2.21 | % | 1.45 | % | 2.16 | % | 0.49 | % | |||||||||||||||||||||||||||
| Noninterest income to total revenue | 46 | % | 44 | % | 45 | % | 48 | % | 41 | % | 45 | % | 41 | % | |||||||||||||||||||||||||||
| Efficiency | 42 | % | 42 | % | 39 | % | 42 | % | 38 | % | 41 | % | 40 | % | |||||||||||||||||||||||||||
| Other Information | |||||||||||||||||||||||||||||||||||||||||
Consolidated revenue from: | |||||||||||||||||||||||||||||||||||||||||
| Treasury Management (b) | $ | 592 | $ | 523 | $ | 494 | $ | 472 | $ | 452 | $ | 1,609 | $ | 1,412 | |||||||||||||||||||||||||||
| Capital Markets (b) | $ | 577 | $ | 432 | $ | 403 | $ | 530 | $ | 345 | $ | 1,412 | $ | 1,077 | |||||||||||||||||||||||||||
| Commercial mortgage banking activities: | |||||||||||||||||||||||||||||||||||||||||
| Commercial mortgage loans held for sale (c) | $ | 44 | $ | 29 | $ | 30 | $ | 45 | $ | 46 | $ | 103 | $ | 117 | |||||||||||||||||||||||||||
| Commercial mortgage loan servicing income (d) | 88 | 66 | 90 | 82 | 76 | 244 | 212 | ||||||||||||||||||||||||||||||||||
| Commercial mortgage servicing rights valuation, net of economic hedge (e) | 14 | 33 | 17 | 14 | 16 | 64 | 58 | ||||||||||||||||||||||||||||||||||
| Total | $ | 146 | $ | 128 | $ | 137 | $ | 141 | $ | 138 | $ | 411 | $ | 387 | |||||||||||||||||||||||||||
| MSR asset value (f) | $ | 703 | $ | 682 | $ | 702 | $ | 569 | $ | 515 | |||||||||||||||||||||||||||||||
| Average loans by C&IB business | |||||||||||||||||||||||||||||||||||||||||
| Corporate Banking | $ | 85,208 | $ | 77,645 | $ | 74,459 | $ | 76,664 | $ | 81,617 | $ | 78,975 | $ | 83,762 | |||||||||||||||||||||||||||
| Real Estate | 47,335 | 41,188 | 38,395 | 41,427 | 40,592 | 42,313 | 40,030 | ||||||||||||||||||||||||||||||||||
| Business Credit | 25,540 | 22,965 | 21,552 | 21,337 | 21,845 | 23,367 | 23,009 | ||||||||||||||||||||||||||||||||||
| Commercial Banking | 13,458 | 12,513 | 10,807 | 11,375 | 11,770 | 12,435 | 10,093 | ||||||||||||||||||||||||||||||||||
| Other | 4,275 | 3,384 | 3,254 | 3,394 | 3,657 | 3,669 | 4,291 | ||||||||||||||||||||||||||||||||||
| Total average loans | $ | 175,816 | $ | 157,695 | $ | 148,467 | $ | 154,197 | $ | 159,481 | $ | 160,759 | $ | 161,185 | |||||||||||||||||||||||||||
Credit-related statistics | |||||||||||||||||||||||||||||||||||||||||
| Nonperforming assets (f) | $ | 1,061 | $ | 1,274 | $ | 658 | $ | 827 | $ | 832 | |||||||||||||||||||||||||||||||
| Net charge-offs - loans and leases | $ | 13 | $ | 233 | $ | 44 | $ | 99 | $ | 32 | $ | 290 | $ | 181 | |||||||||||||||||||||||||||
(a)See note (a) on page 14.
(b)Amounts are reported in net interest income and noninterest income.
(c)Represents 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.
(d)Represents net interest income and noninterest income (primarily in corporate service fees) from loan servicing net of reduction in commercial mortgage servicing rights due to amortization expense and payoffs. Commercial mortgage servicing rights valuation, net of economic hedge is shown separately.
(e)Amounts are reported in corporate service fees.
(f)Presented as of period end.
THE PNC FINANCIAL SERVICES GROUP, INC. | Page 18 | |||||||
Table 19: Asset Management Group (Unaudited) (a)
| Three months ended | Nine months ended | |||||||||||||||||||||||||||||||||||||||||||
| September 30 | June 30 | March 31 | December 31 | September 30 | September 30 | September 30 | ||||||||||||||||||||||||||||||||||||||
| Dollars in millions, except as noted | 2021 | 2021 | 2021 | 2020 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||||
| Income Statement | ||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 141 | $ | 112 | $ | 93 | $ | 91 | $ | 89 | $ | 346 | $ | 266 | ||||||||||||||||||||||||||||||
| Noninterest income | 256 | 244 | 229 | 225 | 221 | 729 | 629 | |||||||||||||||||||||||||||||||||||||
| Total revenue | 397 | 356 | 322 | 316 | 310 | 1,075 | 895 | |||||||||||||||||||||||||||||||||||||
| Provision for (recapture of) credit losses | (6) | 23 | (9) | (2) | (19) | 8 | 23 | |||||||||||||||||||||||||||||||||||||
| Noninterest expense | 255 | 219 | 202 | 211 | 211 | 676 | 647 | |||||||||||||||||||||||||||||||||||||
| Pretax earnings | 148 | 114 | 129 | 107 | 118 | 391 | 225 | |||||||||||||||||||||||||||||||||||||
| Income taxes | 34 | 27 | 30 | 25 | 27 | 91 | 52 | |||||||||||||||||||||||||||||||||||||
| Earnings | $ | 114 | $ | 87 | $ | 99 | $ | 82 | $ | 91 | $ | 300 | $ | 173 | ||||||||||||||||||||||||||||||
| Average Balance Sheet | ||||||||||||||||||||||||||||||||||||||||||||
| Loans | ||||||||||||||||||||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||||||||||||||||||||
| Residential real estate | $ | 5,727 | $ | 4,439 | $ | 3,635 | $ | 3,326 | $ | 2,976 | $ | 4,608 | $ | 2,667 | ||||||||||||||||||||||||||||||
| Other consumer | 4,544 | 4,190 | 4,008 | 4,077 | 4,065 | 4,249 | 4,031 | |||||||||||||||||||||||||||||||||||||
| Total consumer | 10,271 | 8,629 | 7,643 | 7,403 | 7,041 | 8,857 | 6,698 | |||||||||||||||||||||||||||||||||||||
| Commercial | 2,693 | 1,415 | 756 | 774 | 810 | 1,629 | 849 | |||||||||||||||||||||||||||||||||||||
| Total loans | $ | 12,964 | $ | 10,044 | $ | 8,399 | $ | 8,177 | $ | 7,851 | $ | 10,486 | $ | 7,547 | ||||||||||||||||||||||||||||||
| Total assets | $ | 13,805 | $ | 10,640 | $ | 8,873 | $ | 8,615 | $ | 8,361 | $ | 11,124 | $ | 8,041 | ||||||||||||||||||||||||||||||
| Deposits | ||||||||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing demand | $ | 4,332 | $ | 2,537 | $ | 1,754 | $ | 1,689 | $ | 1,692 | $ | 2,884 | $ | 1,528 | ||||||||||||||||||||||||||||||
| Interest-bearing demand | 10,200 | 9,477 | 9,104 | 8,404 | 8,101 | 9,597 | 7,566 | |||||||||||||||||||||||||||||||||||||
| Money market | 6,193 | 3,066 | 1,520 | 1,606 | 1,542 | 3,610 | 1,616 | |||||||||||||||||||||||||||||||||||||
| Savings | 7,729 | 7,789 | 7,747 | 7,388 | 7,243 | 7,755 | 7,279 | |||||||||||||||||||||||||||||||||||||
| Other | 862 | 562 | 454 | 482 | 554 | 628 | 707 | |||||||||||||||||||||||||||||||||||||
| Total deposits | $ | 29,316 | $ | 23,431 | $ | 20,579 | $ | 19,569 | $ | 19,132 | $ | 24,474 | $ | 18,696 | ||||||||||||||||||||||||||||||
| Performance Ratios | ||||||||||||||||||||||||||||||||||||||||||||
| Return on average assets | 3.28 | % | 3.28 | % | 4.52 | % | 3.78 | % | 4.32 | % | 3.61 | % | 2.88 | % | ||||||||||||||||||||||||||||||
| Noninterest income to total revenue | 64 | % | 69 | % | 71 | % | 71 | % | 71 | % | 68 | % | 70 | % | ||||||||||||||||||||||||||||||
| Efficiency | 64 | % | 62 | % | 63 | % | 67 | % | 68 | % | 63 | % | 72 | % | ||||||||||||||||||||||||||||||
| Other Information | ||||||||||||||||||||||||||||||||||||||||||||
| Nonperforming assets (b) | $ | 80 | $ | 85 | $ | 68 | $ | 66 | $ | 39 | ||||||||||||||||||||||||||||||||||
| Net charge-offs (recoveries) - loans and leases | $ | (1) | $ | 2 | $ | 1 | $ | 1 | $ | 1 | ||||||||||||||||||||||||||||||||||
| Brokerage account client assets (in billions) (b) | $ | 5 | $ | 5 | ||||||||||||||||||||||||||||||||||||||||
| Client Assets Under Administration (in billions) (b) (c) | ||||||||||||||||||||||||||||||||||||||||||||
| Discretionary client assets under management | $ | 183 | $ | 183 | $ | 173 | $ | 170 | $ | 158 | ||||||||||||||||||||||||||||||||||
| Nondiscretionary client assets under administration | 170 | 172 | 161 | 154 | 142 | |||||||||||||||||||||||||||||||||||||||
| Total | $ | 353 | $ | 355 | $ | 334 | $ | 324 | $ | 300 | ||||||||||||||||||||||||||||||||||
| Discretionary client assets under management | ||||||||||||||||||||||||||||||||||||||||||||
| Personal | $ | 117 | $ | 119 | $ | 110 | $ | 108 | $ | 99 | ||||||||||||||||||||||||||||||||||
| Institutional | 66 | 64 | 63 | 62 | 59 | |||||||||||||||||||||||||||||||||||||||
| Total | $ | 183 | $ | 183 | $ | 173 | $ | 170 | $ | 158 | ||||||||||||||||||||||||||||||||||
(a)See note (a) on page 14.
(b)As of period end.
(c)Excludes brokerage account client assets.
THE PNC FINANCIAL SERVICES GROUP, INC. | Page 19 | |||||||
Glossary of Terms
2019 Tailoring Rules – Rules adopted by the federal banking agencies to better tailor the application of their capital, liquidity, and enhanced prudential requirements for banking organizations to the asset size and risk profile (as measured by certain regulatory metrics) of the banking organization. Effective January 1, 2020, the agencies' capital and liquidity rules classify all BHCs with $100 billion or more in total assets into one of four categories (Category I, Category II, Category III, and Category IV).
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).
Allowance for credit losses (ACL) – A valuation account that is deducted from or added to the amortized cost basis of the related
financial assets to present the net carrying value at the amount expected to be collected on the financial asset.
Amortized cost basis - Amount at which a financial asset is originated or acquired, adjusted for applicable accretion or amortization of premiums, discounts and net deferred fees or costs, collection of cash, charge-offs, foreign exchange and fair value hedge accounting adjustments.
Basel III common equity Tier 1 (CET1) capital (Tailoring Rules) - Common stock plus related surplus, net of treasury stock, plus retained earnings, less goodwill, net of associated deferred tax liabilities, less other disallowed intangibles, net of deferred tax liabilities and plus/less other adjustments. Investments in unconsolidated financial institutions, as well as mortgage servicing rights and deferred tax assets, must then be deducted to the extent such items (net of associated deferred tax liabilities) individually exceed 25% 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 - Basel III Total capital divided by period-end risk-weighted assets (as applicable).
BBVA – BBVA USA Bancshares, Inc.
BBVA, S.A. – Banco Bilbao Vizcaya Argentaria, S.A.
BBVA USA – BBVA USA, the Alabama-chartered bank subsidiary of BBVA USA Bancshares, Inc.
BlackRock – BlackRock, Inc.
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.
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.”
Current Expected Credit Loss (CECL) - Methodology for estimating the allowance for credit losses on in-scope financial assets held at amortized cost and unfunded lending related commitments which uses a combination of expected losses over a reasonable and supportable forecast period, a reversion period and long run average credit losses for their estimated contractual term.
THE PNC FINANCIAL SERVICES GROUP, INC. | Page 20 | |||||||
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.
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.
Fee income - Refers 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.
GAAP - Accounting principles generally accepted in the United States of America.
Leverage ratio - Basel III Tier 1 capital divided by average quarterly adjusted total assets.
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, OREO and foreclosed assets. We do not accrue interest income on assets classified as nonperforming.
Nonperforming loans - Loans accounted for at amortized cost whose credit quality has deteriorated to the extent that full collection of contractual principal and interest is not probable, including TDRs which have not returned to performing status. Interest income is not recognized on nonperforming loans. Nonperforming loans exclude certain government insured or guaranteed loans for which we expect to collect substantially all principal and interest, loans held for sale and loans accounted for under the fair value option.
Operating leverage - The period to period dollar or percentage change in total revenue 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).
Other real estate owned (OREO) and foreclosed assets - Assets taken in settlement of troubled loans primarily through deed-in-lieu of foreclosure or foreclosure. Foreclosed assets include real and personal property. Certain assets that have a government-guarantee which are classified as other receivables are excluded.
Purchased credit deteriorated assets (PCD) - Acquired loans or debt securities that, at acquisition, are determined to have experienced a more-than-insignificant deterioration in credit quality since origination or issuance.
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 - Intangible assets or liabilities 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.
Supplementary leverage ratio - Basel III Tier 1 capital divided by Supplementary leverage exposure.
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
THE PNC FINANCIAL SERVICES GROUP, INC. | Page 21 | |||||||
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.
Unfunded lending related commitments - Standby letters of credit, financial guarantees, commitments to extend credit and similar unfunded obligations that are not unilaterally, unconditionally, cancelable at PNC’s option.
Yield curve - A graph showing the relationship between the yields on financial instruments or market indices of the same credit quality with different maturities. For example, a “normal” or “positive” yield curve exists when long-term bonds have higher yields than short-term bonds. A “flat” yield curve exists when yields are the same for short-term and long-term bonds. A “steep” yield curve exists when yields on long-term bonds are significantly higher than on short-term bonds. An “inverted” or “negative” yield curve exists when short-term bonds have higher yields than long-term bonds.
The PNC Financial Services Group Third Quarter 2021 Earnings Conference Call October 15, 2021 Exhibit 99.2
Cautionary Statement Regarding Forward-Looking and non-GAAP Financial 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 our corporate website. The presentation contains forward-looking statements regarding our outlook for financial performance, such as earnings, revenues, expenses, tax rates, 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. We provide greater detail regarding these as well as other factors in our 2020 Form 10-K and subsequent Form 10-Qs, and in our other subsequent SEC filings. Our forward-looking statements may also be subject to 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 any obligation 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. As a result, we caution against placing undue reliance on any forward-looking statements. We include non-GAAP financial information in this presentation. Non-GAAP financial information includes adjusted financial metrics such as fee income, tangible book value, pretax, pre-provision earnings, net interest margin, return on tangible common equity, and other adjusted metrics (including adjustments for merger and integration costs). Reconciliations for such financial information 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, and with respect to adjusted metrics, because we believe they better reflect the ongoing financial results and trends of our businesses and increase comparability of period-to-period 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. 1
Third Quarter 2021 Highlights 2− Adjusted metrics are calculated without the impact of $243 million in pre-tax integration costs. See non-GAAP reconciliations in the appendix for calculations of ROTCE (Return on Average Tangible Common Equity) and adjusted EPS, ROA (Return on Average Assets), ROE (Return on Average Common Equity), ROTCE, and Efficiency. Solid financial performance – Results include full quarter benefit of BBVA USA business – Record revenue driven by strong PNC legacy fee income – Expenses elevated due to integration costs and higher fee- generating business activity – Spot loan balances were down linked quarter; positive signs in PNC legacy portfolio which grew 2% excluding PPP forgiveness Completed conversion of BBVA USA into PNC Bank, NA – Announced, closed, and converted acquisition in under a year – Cost saves of $900 million remain on track Credit quality remains at historically strong levels Maintained robust capital and liquidity position Adjusted (non-GAAP) Reported EPS ROA ROE ROTCE Efficiency $3.30 1.06% 10.95% 14.03% 69% $3.75 1.19% 12.44% 15.94% 64%
Balance Sheet: Well-Positioned to Serve Customers 3 9/30/21 vs. 6/30/21 9/30/21 vs. 9/30/20 Spot balances; $ billions 9/30/21 $ Chg. % Chg. $ Chg. % Chg. Total loans $290.2 ($4.5) (2%) $40.9 16% Investment securities $125.6 ($0.9) (1%) $34.4 38% Federal Reserve Bank (FRB) balances $75.1 $3.2 4% $4.5 6% Deposits $448.9 ($4.0) (1%) $93.8 26% Borrowed funds $33.5 ($1.3) (4%) ($8.6) (20%) Common shareholders’ equity $51.3 $0.2 0% $1.5 3% 9/30/21 6/30/21 Chg. 9/30/20 Chg. Basel III common equity Tier 1 (CET1) capital ratio 10.2% 10.1% 10 bps 11.7% (150) bps Tangible book value per common share (non-GAAP) $94.82 $93.83 1% $95.71 (1%) − Basel III common equity Tier 1 capital ratio – Sept. 30, 2021 ratio is estimated. Details of the calculation are in the capital ratios table in the financial highlights section of the earnings release. − Tangible book value per common share (non-GAAP) – See reconciliation in appendix.
$294.7 $290.2 +$1.0 ($1.1) +$3.7 ($3.3) ($4.8) 6/30/2021 Legacy PPP BBVA USA 9/30/2021 Consumer Commercial Balance Sheet: Loan Portfolio Composition 4 Average Loans Growth Driven by Acquisition of BBVA USA $73.2 $79.8 $95.0 $164.9 $175.8 $196.3 $238.1 $255.6 $291.3 3.38% 3.38% 3.32% 2.70% 2.90% 3.10% 3.30% 3.50% 3.70% 3.90% 0 50 100 150 200 250 300 1Q21 2Q21 3Q21 Consumer Commercial Average Loan Yield BBVA USA Decline PPP Forgiveness Linked Quarter Change in Spot Loans Growth in PNC Legacy Core Commercial and Consumer Loans − Average PPP loans for the periods shown in the chart to the left were $9.3 billion in 3Q21, $13.1 billion in 2Q21, and $12.6 billion in 1Q21. − PNC legacy core commercial loans exclude the impact of PPP forgiveness. − As of 9/30/21 and 6/30/21, respectively, BBVA USA added $33.1 and $36.4 billion in commercial loans ex. PPP, $20.9 and $22.0 billion in consumer loans, and $1.7 and $2.1 billion in PPP loans. +$4.7 ($4.4) ($4.8) Av er ag e ba la nc es , $ b ill io ns Sp ot b al an ce s, $ b ill io ns PNC Legacy: Strong growth in Corporate Banking, Asset-Based Lending, and Residential Mortgage BBVA USA: Decline primarily driven by intentional runoff to right size certain portfolios PNC Legacy Growth
$452.9 $448.9 +$3.2 ($1.1) +$2.2 ($8.3) 6/30/2021 Legacy BBVA USA 9/30/2021 Noninterest-bearing Interest-bearing Balance Sheet: High Quality Low Cost Deposit Base 5 Av er ag e ba la nc es , $ b ill io ns Average Deposits Growth Driven by Acquisition of BBVA USA Linked Quarter Change in Spot Deposits Intentional Decline in Certain BBVA USA Portfolios Sp ot b al an ce s, $ b ill io ns $113.3 $132.3 $155.9 $252.1 $269.4 $298.5 $365.4 $401.7 $454.4 0.06% 0.05% 0.04% -0.70% -0.50% -0.30% -0.10% 0.10% 0.30% 0.50% 0.70% 0.90% 0 50 100 150 200 250 300 350 400 450 500 1Q21 2Q21 3Q21 Noninterest-bearing Interest-bearing Average Deposit Rate − As of 9/30/21 and 6/30/21, respectively, BBVA USA added $43.6 and $51.9 billion in interest-bearing deposits and $29.2 and $30.3 billion in noninterest-bearing deposits. NIBBBVA USA Decline PNC Legacy Growth +$5.4 ($9.4) PNC Legacy: Higher levels of commercial and consumer liquidity BBVA USA: Runoff reflected pricing rationalization in select deposit portfolios
Balance Sheet: Opportunity to Deploy Excess Liquidity 6 Sp ot b al an ce s, $ b ill io ns − Securities yield and Avg. IOR (Average daily rate for Interest on Reserve balances held at the Federal Reserve) presented as averages for the quarter indicated by the respective period end date. − At 6/30/21 BBVA USA added $12.0 billion in Federal Reserve Bank balances and $17.6 billion in Securities balances. Spot Securities and Federal Reserve Bank (FRB) Balances $84.9 $85.8 $71.9 $75.1 $88.8 $98.3 $126.5 $125.6 0.86% 1.34% 1.59% 1.32% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 0 20 40 60 80 100 120 140 12/31/20 3/31/21 6/30/21 9/30/21 FRB Balances Securities Average 10-Yr Treasury Yield Securities Yield Avg. IOR 2.08% 1.97% 1.75% 1.54% 0.10% 0.10% 0.11% 0.15% +$9.5 +$28.2 PNC Legacy: +$10.6 BBVA USA: +$17.6 ($0.9) +$5.4 4Q21 Forward Settling Securities
Income Statement: Record Revenue 7 − Non-GAAP reconciliations in the appendix slides. − Integration costs include integration expense of $235 million and $101 million in 3Q21 and 2Q21 and contra-revenue of ($8) million and ($10) million in 3Q21 and 2Q21. − Net interest margin is calculated using taxable-equivalent net interest income, a non-GAAP measure, a reconciliation of which is provided in the appendix. 3Q21 vs. 2Q21 3Q21 vs. 3Q20 $ millions 3Q21 $ Chg. % Chg. $ Chg. % Chg. Revenue $5,197 $530 11% $916 21% Noninterest expense 3,587 537 18% 1,056 42% Pretax, pre-provision earnings (non-GAAP) $1,610 ($7) (0%) ($140) (8%) Integration costs 243 132 119% --- --- Pretax, pre-provision earnings ex. integration costs (non-GAAP) $1,853 $125 7% --- --- Provision for (recapture of) credit losses ($203) ($505) n/m ($255) n/m Net income $1,490 $387 35% ($42) (3%) 3Q21 2Q21 Chg. 3Q20 Chg. Noninterest income to total revenue 45% 45% --- 42% 3 ppt Net interest margin 2.27% 2.29% (2 bps) 2.39% (12 bps) Diluted EPS $3.30 $2.43 36% $3.39 (3%) Diluted EPS ex. integration costs (non-GAAP) $3.75 $2.64 42% --- ---
Income Statement: Diversified Revenue Sources Drive Growth 8 Total Revenue Strong Noninterest Income $1,872 $2,086 $2,341 $2,348 $2,581 $2,856 $4,220 $4,667 $5,197 2.27% 2.29% 2.27% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 0 1000 2000 3000 4000 5000 1Q21 2Q21 3Q21 Noninterest Income Net Interest Income NIM Details of Revenue Well Positioned for Fee Growth in BBVA USA Geographies 2Q21 3Q21 $ millions PNC Legacy + BBVA USA + Integration Costs =Reported PNC Legacy + BBVA USA + Integration Costs = Reported Net interest income $2,345 $236 --- $2,581 $2,324 $532 --- $2,856 Asset management 235 4 --- 239 238 10 --- 248 Consumer services 442 15 --- 457 449 47 --- 496 Corporate services 661 27 --- 688 768 74 --- 842 Residential mortgage 100 3 --- 103 141 6 --- 147 Service charges on deposits 118 13 --- 131 112 47 --- 159 Fee income $1,556 $62 --- $1,618 $1,708 $184 --- $1,892 Other noninterest income 460 18 (10) 468 428 29 (8) 449 Noninterest income $2,016 $80 ($10) $2,086 $2,136 $213 ($8) $2,341 $ m ill io ns − NIM – Net interest margin, calculated based on average balances and using taxable-equivalent net interest income, a non-GAAP measure, a reconciliation of which is provided in the appendix. − BBVA USA net interest income in 2Q21 included a $30 million benefit from purchase accounting accretion.
Income Statement: Focused on Controlling Expenses 9 $ m ill io ns $2,574 $2,770 $2,846 $179 $506 $101 $235 $2,574 $3,050 $3,587 0 500 1000 1500 2000 2500 3000 3500 1Q21 2Q21 3Q21 PNC BBVA USA Integration Expense Noninterest Expense Impacted by BBVA USA and Higher Business Activity Details of Noninterest Expense Positioned to Improve Efficiency as Cost Saves are Realized Adjusted Efficiency Ratio: 63% − Efficiency ratio calculated as noninterest expense divided by total revenue. − Adjusted efficiency (non-GAAP) – See the reconciliation in the appendix. Adjusted Efficiency Ratio: 64% 2Q21 3Q21 $ millions PNC Legacy + BBVA USA + Integration Expense = Reported PNC Legacy + BBVA USA + Integration Expense = Reported Personnel $1,519 $97 $24 $1,640 $1,594 $252 $140 $1,986 Occupancy 205 12 0 217 205 42 1 248 Equipment 316 10 0 326 308 42 5 355 Marketing 71 3 0 74 86 4 13 103 Other 659 57 77 793 653 166 76 895 Noninterest expense $2,770 $179 $101 $3,050 $2,846 $506 $235 $3,587 Efficiency Ratio: 65% Efficiency Ratio: 69%Efficiency Ratio: 61%
Credit: Strong Credit Quality Performance 10 − 2Q21 charge-offs included $248 million related to BBVA USA that were primarily related to required purchase accounting treatment. − NCO / Average Loans represents annualized net charge-offs (NCO) to average loans for the three months ended. − Delinquencies represents accruing loans past due 30 days or more. Delinquencies to Total Loans represents delinquencies divided by spot loans. − Under the CARES Act credit reporting rules, certain loans modified due to pandemic-related hardships were considered current and not reported as past due for the dates shown. $0 $1,238 $1,363 $1,146 $1,290 $1,396 0 500 1000 1500 2000 2500 9/30/20 12/31/20 3/31/21 6/30/21 9/30/21$0 $2,085 $2,286 $2,138 $2,779 $2,528 0 500 1000 1500 2000 2500 9/30/20 12/31/20 3/31/21 6/30/21 9/30/21 $ m ill io ns Nonperforming Loans Delinquencies Net Charge-Offs $155 $229 $146 $306 $81 0 500 1000 1500 2000 2500 9/30/20 12/31/20 3/31/21 6/30/21 9/30/21 Credit Quality Metrics 3Q20 4Q20 1Q21 2Q21 3Q21 NPLs / Total Loans (Period End) 0.84% 0.94% 0.90% 0.94% 0.87% Delinquencies / Total Loans (Period End) 0.50% 0.56% 0.48% 0.44% 0.48% NCOs / Average Loans 0.24% 0.37% 0.25% 0.48% 0.11% Allowance for Credit Losses to Total Loans 2.58% 2.46% 2.20% 2.16% 2.07% Pre-BBVA USA Pre-BBVA USA Pre-BBVA USA
Outlook: Fourth Quarter 2021 Compared to Third Quarter 2021 11 − Refer to Cautionary Statement in the Appendix, including economic and other assumptions. Does not take into account impact of potential legal and regulatory contingencies. − Average loans excluding PPP loans, net interest income, fee income, and noninterest expense excluding integration expense outlooks represent estimated percentage change for fourth quarter 2021 compared to the respective third quarter 2021 figure presented in the table above. − The range for other noninterest income excludes net securities gains and activities related to Visa Class B common shares. − Average loans excluding PPP loans (non-GAAP) of $282.0 billion in 3Q21 exclude $9.3 billion in average PPP loans in 3Q21. − Noninterest expense excluding integration costs (non-GAAP) – See the reconciliation in the appendix. ($ millions; except average loans, $ billions) 3Q21 4Q21 Guidance Average loans excluding PPP loans (non-GAAP) $282.0 Up modestly Net interest income $2,856 Up modestly Fee income $1,892 Down 3 – 5% Other noninterest income $449 $375 - $425 million Noninterest expense excluding integration expense (non-GAAP) $3,352 Down 3 – 5% Net charge-offs $81 $100 - $150 million
Appendix: Cautionary Statement Regarding Forward-Looking Information 12 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 financial performance, such as earnings, revenues, expenses, tax rates, 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 necessarily subject to numerous assumptions, risks and uncertainties, which change over time. 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 speak only as of the date made. We do not assume any duty and do not undertake any obligation 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. As a result, we caution against placing undue reliance on any forward-looking statements. 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: − Changes in interest rates and valuations in debt, equity and other financial markets, − Disruptions in the U.S. and global financial markets, − Actions by the Federal Reserve Board, U.S. Treasury and other government agencies, including those that impact money supply, market interest rates and inflation, − Changes in customer behavior due to changing business and economic conditions or legislative or regulatory initiatives, − Changes in customers’, suppliers’ and other counterparties’ performance and creditworthiness, − Impacts of tariffs and other trade policies of the U.S. and its global trading partners, − The length and extent of the economic impacts of the COVID-19 pandemic, − The impact of the results of the 2020 U.S. elections, including on the regulatory landscape, capital markets, tax policy, infrastructure spending and social changes, and − Commodity price volatility.
Appendix: Cautionary Statement Regarding Forward-Looking Information 13 Our forward-looking financial statements are subject to the risk that economic and financial market conditions will be substantially different than those we are currently expecting and do not take into account potential legal and regulatory contingencies. These statements are based on our view that: − The U.S. economy is in an economic recovery, following a very severe but very short economic contraction in the first half of 2020 due to the COVID-19 pandemic and public health measures to contain it. − With the passage of the American Rescue Plan Act of 2021 and continued vaccine distribution, economic growth picked up in first half of 2021, and real GDP returned to its pre- pandemic level in the second quarter of 2021. The Delta variant and supply chain difficulties have been drags on growth in the second half of 2021, although the economy continues to expand. Growth will pick up at the end of 2021 as the impact of the Delta variant fades and supply chains normalize and will remain solid into 2022. Employment in September 2021 was still down by almost 5 million from before the pandemic; PNC expects employment to return to its pre-pandemic level in mid- 2022. − Compared to the spring of 2020 (when prices were falling), inflation accelerated in mid-2021 due to strong demand in specific segments and supply chain disruptions. Inflation has started to slow on a month-over-month basis but will remain elevated in the near term. − PNC expects the Federal Open Market Committee to keep the fed funds rate in its current range of 0.00 to 0.25 percent until mid-2023. PNC's ability to take certain capital actions, including returning capital to shareholders, is subject to PNC meeting or exceeding a stress capital buffer established by the Federal Reserve Board in connection with the Federal Reserve Board's Comprehensive Capital Analysis and Review (CCAR) process. 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 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 review 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 to laws and regulations, including changes affecting oversight of the financial services industry, consumer protection, bank capital and liquidity standards, pension, bankruptcy and other industry aspects, and changes in accounting policies and principles. − Unfavorable resolution of legal proceedings or other claims and regulatory and other governmental investigations or other inquiries. 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.
Appendix: Cautionary Statement Regarding Forward-Looking Information 14 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 systems and controls, third-party insurance, derivatives, and capital management techniques, and to meet evolving regulatory capital and liquidity standards. Our acquisition of BBVA USA Bancshares, Inc. presents us with risks and uncertainties related to the integration of the acquired business into PNC including: − The business of BBVA USA Bancshares, Inc., including its U.S. banking subsidiary, BBVA USA, going forward may not perform as we currently project or in a manner consistent with historical performance. As a result, the anticipated benefits, including estimated cost savings, of the transaction may be significantly more difficult or take longer to achieve than expected or may not be achieved in their entirety as a result of unexpected factors or events, including those that are outside of our control. − The integration of BBVA USA Bancshares, Inc., including its U.S. banking subsidiary, BBVA USA, with that of PNC and PNC Bank may be more difficult to achieve than anticipated or have unanticipated adverse results relating to BBVA USA Bancshares, Inc., including its U.S. banking subsidiary, BBVA USA, or our existing businesses. Our ability to integrate BBVA USA Bancshares, Inc., including its U.S. banking subsidiary, BBVA USA, successfully may be adversely affected by the fact that this transaction results in us entering several geographic markets where we did not previously have any meaningful presence. In addition to the BBVA USA Bancshares, Inc. transaction, we grow our business in part through acquisitions and new strategic initiatives. Risks and uncertainties include those presented by the nature of the business acquired and strategic initiative, 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. 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, system failures, security breaches, 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 2020 Form 10-K and in our subsequent Form 10-Qs, including in the Risk Factors and Risk Management sections and the Legal Proceedings and Commitments Notes of the Notes To Consolidated Financial Statements in those reports, and in our other 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.
Appendix: COVID-19 High Impact Industries 15 − PPP Lending within the Commercial Real Estate and Related Loans category is not material. − PNC balances as of 9/30/21 and BBVA USA balances as of 8/31/21; balances exclude securitizations. − Commercial & Industrial loans exclude PNC Real Estate business loans. Commercial real estate and related loans include commercial loans in the PNC Real Estate business. − BBVA USA contributed $6.2 billion in balances to the $21.2 billion of outstanding COVID-19 High Impact Industry loan balances shown above. $8.9 billion Commercial Real Estate and Related Loans Non-Essential Retail & Restaurants: Malls, lifestyle centers, outlets, restaurants Hotel: Full service, limited service, extended stay Seniors Housing: Assisted living, independent living $2.8 billion / 60% Utilization $3.4 billion / 85% Utilization $2.7 billion / 71% Utilization $21.2 billion Outstanding Loan Balances ($19.5 billion excluding PPP Loans) $12.3 billion Commercial & Industrial Loans ($10.6 billion excluding PPP Loans) Leisure Recreation: Restaurants, casinos, hotels, convention centers Healthcare Facilities: Elective, private practices Other Impacted Areas: Shipping, senior living, specialty education Consumer Services: Religious organizations, childcare $2.0 billion / 81% Utilization Includes $0.3 billion in PPP Loans $1.4 billion / 61% Utilization Includes $0.1 billion in PPP Loans $1.6 billion / 82% Utilization Includes $0.3 billion in PPP Loans Leisure Travel: Cruise, airlines, other travel / transportation $0.6 billion / 50% Utilization Includes $0.1 billion in PPP Loans Retail (non-essential): Retail excluding auto, gas, staples $1.0 billion / 20% Utilization Includes $0.1 billion in PPP Loans $5.7 billion / 62% Utilization Includes $0.8 billion in PPP Loans
Appendix: Oil & Gas Loans 16− PNC balances as of 9/30/21 and BBVA USA balances as of 8/31/21; balances exclude securitizations, loans held for sale, and commercial real estate loans. − BBVA USA contributed $1.6 billion in balances to the $3.9 billion of outstanding Oil & Gas loan balances shown above. $1.5 billion Exploration & Production (0.5% of Loans) Utilization Rate 30% $3.9 billion Outstanding Loan Balance Oil / Gas Mix 53% / 47% $1.4 billion Midstream and Downstream (0.5% of Loans) $1.0 billion Services (0.3% of Loans) Utilization Rate 47% Utilization Rate 21% Midstream Oil / Gas Mix 31% / 69% 1.4% Total Loans As of 9/30/21 $ billions $290.2 billion
Appendix: Well-Reserved for the Current Environment 17 Allowance for Credit Losses (ACL) ACL 6/30/21 ACL 9/30/21 $ m ill io ns $523 $149 $6,375 $6,001 2.16% 2.07% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 0 1000 2000 3000 4000 5000 6000 7000 8000 6/30/2021 Portfolio Econ 9/30/2021 Portfolio Changes Economic / Qualitative Factors − ACL is Allowance for Loan and Lease Losses plus Allowance for Unfunded Lending Related Commitments, and excludes Allowances for Investment Securities and Other Financial Assets. − Portfolio Changes primarily represent the impact of increases / decreases in loan balances, age and mix due to new originations / purchases, as well as credit quality and net charge-off activity. − Economic / Qualitative Factors primarily represent our evaluation and determination of an economic forecast applied to our loan portfolio, as well as updates to qualitative factor adjustments. ACL to Total LoansACL to Total Loans
Appendix: Non-GAAP to GAAP Reconciliation 18 Return On Average Tangible Common Equity (non-GAAP) For the three months ended $ millions Sept. 30, 2021 June 30, 2021 Sept. 30, 2020 Return on average common shareholders’ equity 10.95% 8.32% 11.76% Average common shareholders’ equity $51,278 $50,246 $49,099 Average Goodwill and Other intangible assets (11,498) (10,157) (9,401) Average deferred tax liabilities on Goodwill and Other intangible assets 250 237 188 Average tangible common equity $40,030 $40,326 $39,886 Net income attributable to common shareholders $1,416 $1,042 $1,455 Net income attributable to common shareholders, if annualized $5,617 $4,179 $5,772 Return on average tangible common equity (non-GAAP) 14.03% 10.36% 14.47% Return on average tangible common equity is a non-GAAP financial measure and is calculated based on annualized net income attributable to common shareholders divided by tangible common equity. We believe that return on average tangible common equity is useful as a tool to help measure and assess a company's use of common equity.
Appendix: Non-GAAP to GAAP Reconciliation 19 Tangible Book Value per Common Share (non-GAAP) For the three months ended $ millions, except per share data Sept. 30, 2021 June 30, 2021 Sept. 30, 2020 Book value per common share $121.16 $120.25 $117.44 Tangible book value per common share Common shareholders’ equity $51,250 $51,107 $49,760 Goodwill and Other intangible assets (11,419) (11,515) (9,396) Deferred tax liabilities on Goodwill and Other intangible assets 277 284 187 Tangible common shareholders' equity $40,108 $39,876 $40,551 Period-end common shares outstanding (in millions) 423 425 424 Tangible book value per common share (non-GAAP) $94.82 $93.83 $95.71 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.
Appendix: Non-GAAP to GAAP Reconciliation 20 Adjusted Income Statement Results (non-GAAP) For the three months ended $ millions Sept. 30, 2021 June 30, 2021 Sept. 30, 2020 Net interest income $2,856 $2,581 $2,484 Noninterest income 2,341 2,086 1,797 Total Revenue $5,197 $4,667 $4,281 Noninterest expense 3,587 3,050 2,531 Pretax, pre-provision earnings (non-GAAP) $1,610 $1,617 $1,750 Provision for (recapture of) credit losses (203) 302 52 Income taxes 323 212 166 Net income $1,490 $1,103 $1,532 Net income attributable to diluted common shares $1,408 $1,037 $1,447 Integration costs pre-tax $243 $111 --- Taxes related to integration costs 51 23 --- Integration costs after tax $192 $88 --- Adjusted net income attrib. to diluted common shares ex. integration costs (non-GAAP) $1,600 $1,125 --- Diluted weighted-average common shares outstanding 426 427 --- Diluted EPS ex. integration costs (non-GAAP) $3.75 $2.64 --- We believe that pretax, pre-provision earnings is a useful tool to help evaluate the ability to provide for credit costs through operations and provides an additional basis to compare results between periods by isolating the impact of provision for (recapture of) credit losses, which can vary significantly between periods. Additionally, we believe that adjusted net income attributable to diluted common shareholders excluding integration costs and diluted EPS excluding integration costs serve as useful tools in understanding PNC's results by providing greater comparability between periods, as well as demonstrating the effect of significant items. − Income taxes related to integration costs reflect the statutory tax rate of 21%.
Appendix: Non-GAAP to GAAP Reconciliation 21 Taxable-Equivalent Net Interest Income (non-GAAP) For the three months ended $ millions Sept. 30, 2021 June 30, 2021 Mar. 31, 2021 Dec. 31, 2020 Sept. 30, 2020 Net interest income $2,856 $2,581 $2,348 $2,424 $2,484 Taxable-equivalent adjustments 22 15 15 17 17 Taxable-equivalent net interest income (non-GAAP) $2,878 $2,596 $2,363 $2,441 $2,501 The interest income earned on certain earning assets is completely or partially exempt from federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments. To provide more meaningful comparisons of net interest income, we use interest income on a taxable-equivalent basis by increasing the interest income earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments. This adjustment is not permitted under GAAP. Taxable equivalent net interest income is only used for calculating net interest margin and net interest income shown elsewhere in this presentation is GAAP net interest income.
Appendix: Non-GAAP to GAAP Reconciliation 22 Noninterest Expense excluding Integration Expense and Adjusted Efficiency (non-GAAP) For the three months ended For the year ended $ millions Sept. 30, 2021 June 30, 2021 Sept. 30, 2020 Dec. 31, 2020 Noninterest expense $3,587 $3,050 $2,531 $10,297 Integration expense (235) (101) --- --- Noninterest expense excluding integration expense (non-GAAP) $3,352 $2,949 $2,531 $10,297 Revenue $5,197 $4,667 $4,281 $16,901 Integration costs – contra revenue (8) (10) --- --- Revenue excluding integrations cost - contra revenue (non-GAAP) $5,205 $4,677 $4,281 $16,091 Efficiency ratio 69% 65% 59% 61% Adjusted efficiency ratio (non-GAAP) 64% 63% --- --- We believe that noninterest expense excluding integration expense is a useful tool for the purposes of evaluating and guiding for future expenses that are operational in nature and expected to recur over time as opposed to those related to the integration of BBVA USA. While we expect to have more integration expense as the process continues, these costs are not core to the operation of our business on a forward basis. Also, we believe that noninterest expense excluding integration expense and adjusted efficiency serve as useful tools in understanding PNC's results by providing greater comparability between periods, demonstrating the effect of significant items, and providing useful measures for determining PNC's revenue and expenses that are core to our business operations and expected to recur over time.
Appendix: Non-GAAP to GAAP Reconciliation 23 Adjusted Metrics (non-GAAP) For the three months ended Sept. 30, 2021 $ millions, except for ratios and EPS Reported (j) Integration Costs (k) Adjusted (j-k) (non-GAAP) Total revenue (a) $5,197 ($8) $5,205 Noninterest expense (b) 3,587 235 3,352 Pretax, pre-provision earnings $1,610 ($243) $1,853 Provision for (recapture of) credit losses (203) --- (203) Income from continuing operations before taxes $1,813 ($243) $2,056 Income taxes (benefit) from continuing operations 323 (51) 374 Net income $1,490 ($192) $1,682 Net income, if annualized (c) $5,911 ($762) $6,673 Net income attributable to common shareholders $1,416 ($192) $1,608 Net income attributable to common shareholders, if annualized (d) $5,617 ($762) $6,379 Net income attributable to diluted common shareholders (e) $1,408 ($192) $1,600 Average assets (f) $559,242 --- $559,242 Average common shareholders’ equity (g) $51,278 --- $51,278 Average tangible common shareholders’ equity (h) $40,030 --- $40,030 Diluted weighted-average common shares outstanding (i) 426 --- 426 Return on average assets “ROA” (c/f) 1.06% 1.19% Return on average common shareholders’ equity “ROE” (d/g) 10.95% 12.44% Return on average tangible common shareholders’ equity “ROTCE” (d/h) 14.03% 15.94% Diluted earnings per share (e/i) $3.30 ($0.45) $3.75 Efficiency ratio (b/a) 69% 64% We believe these non-GAAP measures serve as useful tools in understanding PNC's results by providing greater comparability with prior periods, as well as demonstrating the effect of significant one-time items. − Income taxes related to integration costs reflect the statutory tax rate of 21%. Diluted weighted-average common shares outstanding used in the calculation of diluted earnings per share for integration costs are 426 million.