false0000713676 0000713676 2020-01-15 2020-01-15 0000713676 exch:XNYS us-gaap:CommonStockMember 2020-01-15 2020-01-15 0000713676 exch:XNYS pnc:SeriesQPreferredStockMember 2020-01-15 2020-01-15 0000713676 exch:XNYS pnc:SeriesPPreferredStockMember 2020-01-15 2020-01-15


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
January 15, 2020
Date of Report (Date of earliest event reported)
THE PNC FINANCIAL SERVICES GROUP, INC.
(Exact name of registrant as specified in its charter)
Commission File Number 001-09718
Pennsylvania
25-1435979
(State or other jurisdiction of
(I.R.S. Employer
incorporation)
Identification No.)
The Tower at PNC Plaza
300 Fifth Avenue
Pittsburgh, Pennsylvania 15222-2401
(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    
Common Stock, par value $5.00
PNC
New York Stock Exchange
Depositary Shares Each Representing a 1/4,000 Interest in a Share of Fixed-to-
Floating Rate Non-Cumulative Perpetual Preferred Stock, Series P
PNC P
New York Stock Exchange
Depositary Shares Each Representing a 1/4,000 Interest in a Share of 5.375%
Non-Cumulative Perpetual Preferred Stock, Series Q
PNC Q
New York Stock Exchange
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 January 15, 2020, The PNC Financial Services Group, Inc. (“the Corporation”) issued a press release regarding the Corporation's earnings and business results for fourth quarter and full year 2019. 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 January 15, 2020, the Corporation held a conference call for investors regarding the Corporation’s earnings and business results for fourth quarter and full year 2019. 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.
 

- 2 -





SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
THE PNC FINANCIAL SERVICES GROUP, INC.
(Registrant)
Date:
January 15, 2020
By:
/s/ Gregory H. Kozich
 
 
 
Gregory H. Kozich
 
 
 
Senior Vice President and Controller
 - 3 -


Exhibit 99.1

PNCBANKLOGOA10.JPG



THE PNC FINANCIAL SERVICES GROUP, INC.

FINANCIAL SUPPLEMENT
FOURTH QUARTER 2019
(Unaudited)




THE PNC FINANCIAL SERVICES GROUP, INC.
FINANCIAL SUPPLEMENT
FOURTH QUARTER 2019
(UNAUDITED)



Consolidated Results:
Page
1
2
3
4
5
5
6
7-8
9
 
 
Business Segment Results:
 
10
10
11
12-13
14
15
 
 
16-18


The information contained in this Financial Supplement is preliminary, unaudited and based on data available on January 15, 2020. We have reclassified certain prior period amounts to be consistent with the current period presentation, which we believe is more meaningful to readers of our consolidated financial statements. This information speaks only as of the particular date or dates included in the schedules. We do not undertake any obligation to, and disclaim any duty to, correct or update any of the information provided in this Financial Supplement. Our future financial performance is subject to risks and uncertainties as described in our United States Securities and Exchange Commission (SEC) filings.

BUSINESS
PNC is one of the largest diversified financial services companies in the United States and is headquartered in Pittsburgh, Pennsylvania. PNC has businesses engaged in retail banking, including residential mortgage, corporate and institutional banking and asset management, providing many of its products and services nationally. PNC's retail branch network is located primarily in markets across the Mid-Atlantic, Midwest and Southeast. PNC also has strategic international offices in four countries outside the U.S.



THE PNC FINANCIAL SERVICES GROUP, INC.
 
Cross Reference Index to Fourth Quarter 2019 Financial Supplement (Unaudited)
Financial Supplement Table Reference
 
 
 
Table
Description
Page
1
1
2
2
3
3
4
4
5
5
6
5
7
6
8
7
9
8
10
8
11
9
12
9
13
9
14
10
15
11
16
12-13
17
14
18
15


THE PNC FINANCIAL SERVICES GROUP, INC.

Page 1 


Table 1: Consolidated Income Statement (Unaudited)
 
Three months ended
 
 
Year ended
 
December 31
 
September 30
 
June 30
 
March 31
 
December 31
 
 
December 31
 
December 31
In millions, except per share data
2019
 
2019
 
2019
 
2019
 
2018
 
 
2019
 
2018
Interest Income
 
 

 
 
 
 
 

 
 
 
 
 
Loans
$
2,573

 
$
2,678

 
$
2,672

 
$
2,602

 
$
2,555

 
 
$
10,525

 
$
9,580

Investment securities
560

 
617

 
629

 
620

 
608

 
 
2,426

 
2,261

Other
201

 
208

 
196

 
206

 
196

 
 
811

 
741

Total interest income
3,334

 
3,503

 
3,497

 
3,428

 
3,359

 
 
13,762

 
12,582

Interest Expense


 


 
 
 
 
 


 
 


 
 
Deposits
468

 
531

 
515

 
472

 
419

 
 
1,986

 
1,229

Borrowed funds
378

 
468

 
484

 
481

 
459

 
 
1,811

 
1,632

Total interest expense
846

 
999

 
999

 
953

 
878

 
 
3,797

 
2,861

Net interest income
2,488

 
2,504

 
2,498

 
2,475

 
2,481

 
 
9,965

 
9,721

Noninterest Income


 


 
 
 
 
 


 
 


 
 
Asset management
504

 
464

 
445

 
437

 
428

 
 
1,850

 
1,825

Consumer services
390

 
402

 
392

 
371

 
387

 
 
1,555

 
1,502

Corporate services
499

 
469

 
484

 
462

 
468

 
 
1,914

 
1,849

Residential mortgage
87

 
134

 
82

 
65

 
59

 
 
368

 
316

Service charges on deposits
185

 
178

 
171

 
168

 
192

 
 
702

 
714

Other (a)
456

 
342

 
367

 
308

 
325

 
 
1,473

 
1,205

Total noninterest income
2,121

 
1,989

 
1,941

 
1,811

 
1,859

 
 
7,862

 
7,411

Total revenue
4,609

 
4,493

 
4,439

 
4,286

 
4,340

 
 
17,827

 
17,132

Provision For Credit Losses
221

 
183

 
180

 
189

 
148

 
 
773

 
408

Noninterest Expense


 


 
 
 
 
 


 
 


 
 
Personnel
1,468

 
1,400

 
1,365

 
1,414

 
1,348

 
 
5,647

 
5,471

Occupancy
201

 
206

 
212

 
215

 
202

 
 
834

 
818

Equipment
348

 
291

 
298

 
273

 
285

 
 
1,210

 
1,103

Marketing
77

 
76

 
83

 
65

 
84

 
 
301

 
285

Other
668

 
650

 
653

 
611

 
658

 
 
2,582

 
2,619

Total noninterest expense
2,762

 
2,623

 
2,611

 
2,578

 
2,577

 
 
10,574

 
10,296

Income before income taxes and
noncontrolling interests
1,626

 
1,687

 
1,648

 
1,519

 
1,615

 
 
6,480

 
6,428

Income taxes
245

 
295

 
274

 
248

 
264

 
 
1,062

 
1,082

Net income
1,381

 
1,392

 
1,374

 
1,271

 
1,351

 
 
5,418

 
5,346

Less: Net income attributable to
noncontrolling interests
14

 
13

 
12

 
10

 
14

 
 
49

 
45

Preferred stock dividends (b)
55

 
63

 
55

 
63

 
55

 
 
236

 
236

Preferred stock discount accretion and
redemptions
1

 
1

 
1

 
1

 
1

 
 
4

 
4

Net income attributable to common
shareholders
$
1,311

 
$
1,315

 
$
1,306

 
$
1,197

 
$
1,281

 
 
$
5,129

 
$
5,061

Earnings Per Common Share


 
 
 
 
 
 
 
 
 
 


 
 
Basic
$
2.98

 
$
2.95

 
$
2.89

 
$
2.62

 
$
2.77

 
 
$
11.43

 
$
10.79

Diluted
$
2.97

 
$
2.94

 
$
2.88

 
$
2.61

 
$
2.75

 
 
$
11.39

 
$
10.71

Average Common Shares Outstanding


 
 
 
 
 
 
 
 
 
 


 
 
Basic
437

 
444

 
451

 
455

 
461

 
 
447

 
467

Diluted
438

 
445

 
452

 
456

 
463

 
 
448

 
470

Efficiency
60
%
 
58
%
 
59
%
 
60
%
 
59
%
 
 
59
%
 
60
%
Noninterest income to total revenue
46
%
 
44
%
 
44
%
 
42
%
 
43
%
 
 
44
%
 
43
%
Effective tax rate (c)
15.1
%
 
17.5
%
 
16.6
%
 
16.3
%
 
16.3
%
 
 
16.4
%
 
16.8
%

(a)
Includes net gains on sales of securities of $12 million, $3 million, $20 million, $13 million, and $5 million for the quarters ended December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019 and December 31, 2018, respectively, and $48 million for full year 2019. The amount for full year 2018 was less than $.5 million.
(b)
Dividends are payable quarterly other than Series O, Series R and Series S preferred stock, which are payable semiannually, with the Series O payable in different quarters than the Series R and Series S preferred stock.
(c)
The effective income tax rates are generally lower than the statutory rate due to the relationship of pretax income to tax credits and earnings that are not subject to tax.



THE PNC FINANCIAL SERVICES GROUP, INC.

Page 2 

Table 2: Consolidated Balance Sheet (Unaudited)
 
December 31
 
September 30
 
June 30
 
March 31
 
December 31
In millions, except par value
2019
 
2019
 
2019
 
2019
 
2018
Assets
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
5,061

 
$
5,671

 
$
5,416

 
$
5,062

 
$
5,608

Interest-earning deposits with banks (a)
23,413

 
19,036

 
18,362

 
15,261

 
10,893

Loans held for sale (b)
1,083

 
1,872

 
1,144

 
686

 
994

Investment securities – available for sale
69,163

 
69,057

 
69,355

 
65,051

 
63,389

Investment securities – held to maturity
17,661

 
18,826

 
18,948

 
18,818

 
19,312

Loans (b)
239,843

 
237,377

 
237,215

 
232,293

 
226,245

Allowance for loan and lease losses
(2,742
)
 
(2,738
)
 
(2,721
)
 
(2,692
)
 
(2,629
)
Net loans
237,101

 
234,639

 
234,494

 
229,601

 
223,616

Equity investments (c)
13,734

 
13,325

 
13,001

 
12,567

 
12,894

Mortgage servicing rights
1,644

 
1,483

 
1,627

 
1,812

 
1,983

Goodwill
9,233

 
9,233

 
9,221

 
9,218

 
9,218

Other (b)
32,202

 
35,774

 
34,193

 
34,761

 
34,408

Total assets
$
410,295

 
$
408,916

 
$
405,761

 
$
392,837

 
$
382,315

Liabilities
 
 
 
 
 
 
 
 
 
Deposits
 
 
 
 
 
 
 
 
 
Noninterest-bearing
$
72,779

 
$
74,077

 
$
69,867

 
$
71,606

 
$
73,960

Interest-bearing
215,761

 
211,506

 
203,393

 
199,615

 
193,879

Total deposits
288,540

 
285,583

 
273,260

 
271,221

 
267,839

Borrowed funds
 
 
 
 
 
 
 
 
 
Federal Home Loan Bank borrowings
16,341

 
21,901

 
29,376

 
20,501

 
21,501

Bank notes and senior debt
29,010

 
27,148

 
27,694

 
25,598

 
25,018

Subordinated debt
6,134

 
5,473

 
5,406

 
5,977

 
5,895

Other (b)
8,778

 
6,832

 
6,549

 
7,784

 
5,005

Total borrowed funds
60,263

 
61,354

 
69,025

 
59,860

 
57,419

Allowance for unfunded loan commitments and letters of credit
318

 
304

 
291

 
279

 
285

Accrued expenses and other liabilities
11,831

 
12,220

 
13,804

 
12,902

 
9,002

Total liabilities
360,952

 
359,461

 
356,380

 
344,262

 
334,545

Equity
 
 
 
 
 
 
 
 
 
Preferred stock (d)
 
 
 
 
 
 
 
 
 
Common stock - $5 par value
 
 
 
 
 
 
 
 
 
Authorized 800 shares, issued 542 shares
2,712

 
2,711

 
2,711

 
2,711

 
2,711

Capital surplus
16,369

 
16,297

 
16,248

 
16,173

 
16,277

Retained earnings
42,215

 
41,413

 
40,616

 
39,742

 
38,919

Accumulated other comprehensive income (loss)
799

 
837

 
631

 
(5
)
 
(725
)
Common stock held in treasury at cost:109, 103, 95, 90 and 85 shares
(12,781
)
 
(11,838
)
 
(10,866
)
 
(10,085
)
 
(9,454
)
Total shareholders’ equity
49,314

 
49,420

 
49,340

 
48,536

 
47,728

Noncontrolling interests
29

 
35

 
41

 
39

 
42

Total equity
49,343

 
49,455

 
49,381

 
48,575

 
47,770

Total liabilities and equity
$
410,295

 
$
408,916

 
$
405,761

 
$
392,837

 
$
382,315

 
(a)
Amounts include balances held with the Federal Reserve Bank of Cleveland of $23.2 billion, $18.8 billion, $18.1 billion, $15.0 billion and $10.5 billion as of December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019 and December 31, 2018, respectively.
(b)
Amounts include assets and liabilities for which PNC has elected the fair value option. Our third quarter 2019 Form 10-Q included, and our 2019 Form 10-K will include, additional information regarding these items.
(c)
Amounts include our equity investment in BlackRock.
(d)
Par value less than $.5 million at each date.


THE PNC FINANCIAL SERVICES GROUP, INC.

Page 3 

Table 3: Average Consolidated Balance Sheet (Unaudited) (a)
 
 
 
 
 
 
Three months ended
 
 
Year ended
 
December 31
 
September 30
 
June 30
 
March 31
 
December 31
 
 
December 31
 
December 31
In millions
2019
 
2019
 
2019
 
2019
 
2018
 
 
2019
 
2018
Assets

 

 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets:

 

 
 
 
 
 
 
 
 
 
 
 
Investment securities

 

 
 
 
 
 
 
 
 
 
 
 
Securities available for sale

 

 
 
 
 
 
 
 
 
 
 
 
Residential mortgage-backed

 

 
 
 
 
 
 
 
 
 
 
 
Agency
$
33,937

 
$
32,926

 
$
30,169

 
$
29,002

 
$
28,375

 
 
$
31,526

 
$
27,156

Non-agency
1,582

 
1,716

 
1,801

 
1,890

 
1,993

 
 
1,746

 
2,196

Commercial mortgage-backed
6,054

 
5,728

 
5,545

 
5,368

 
4,830

 
 
5,676

 
4,545

Asset-backed
5,059

 
5,208

 
5,395

 
5,136

 
5,186

 
 
5,199

 
5,242

U.S. Treasury and government agencies
15,966

 
17,573

 
18,815

 
18,240

 
18,443

 
 
17,642

 
16,319

Other
2,849

 
3,053

 
3,237

 
3,671

 
3,920

 
 
3,200

 
4,064

Total securities available for sale
65,447

 
66,204

 
64,962

 
63,307

 
62,747

 
 
64,989

 
59,522

Securities held to maturity


 


 
 
 
 
 
 
 
 
 
 
 
Residential mortgage-backed
14,943

 
15,768

 
15,350

 
15,627

 
15,941

 
 
15,421

 
15,670

Commercial mortgage-backed
498

 
544

 
570

 
600

 
648

 
 
553

 
767

Asset-backed
54

 
79

 
172

 
177

 
185

 
 
120

 
192

U.S. Treasury and government agencies
774

 
769

 
765

 
760

 
756

 
 
767

 
749

Other
1,794

 
1,802

 
1,822

 
1,847

 
1,856

 
 
1,816

 
1,884

Total securities held to maturity
18,063

 
18,962

 
18,679

 
19,011

 
19,386

 
 
18,677

 
19,262

Total investment securities
83,510

 
85,166

 
83,641

 
82,318

 
82,133

 
 
83,666

 
78,784

Loans


 


 
 
 
 
 
 
 
 
 
 
 
Commercial
124,876

 
125,356

 
124,441

 
119,345

 
116,596

 
 
123,524

 
113,837

Commercial real estate
28,670

 
28,855

 
28,423

 
28,147

 
28,382

 
 
28,526

 
28,756

Equipment lease financing
7,199

 
7,272

 
7,283

 
7,263

 
7,216

 
 
7,255

 
7,437

Consumer
56,765

 
55,702

 
55,202

 
54,996

 
55,331

 
 
55,671

 
55,438

Residential real estate
21,341

 
20,497

 
19,496

 
18,794

 
18,405

 
 
20,040

 
17,810

Total loans
238,851

 
237,682

 
234,845

 
228,545

 
225,930

 
 
235,016

 
223,278

Interest-earning deposits with banks (b)
23,316

 
15,632

 
13,469

 
15,017

 
16,691

 
 
16,878

 
20,603

Other interest-earning assets
11,371

 
14,094

 
13,145

 
11,068

 
10,431

 
 
12,425

 
8,093

Total interest-earning assets
357,048

 
352,574

 
345,100

 
336,948

 
335,185

 
 
347,985

 
330,758

Noninterest-earning assets
54,371

 
54,135

 
51,862

 
48,950

 
47,906

 
 
52,350

 
47,477

Total assets
$
411,419

 
$
406,709

 
$
396,962

 
$
385,898

 
$
383,091

 
 
$
400,335

 
$
378,235

Liabilities and Equity


 


 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:


 


 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits


 


 
 
 
 
 
 
 
 
 
 
 
Money market
$
56,209

 
$
56,271

 
$
54,814

 
$
54,702

 
$
55,228

 
 
$
55,505

 
$
56,353

Demand
69,496

 
65,444

 
64,431

 
63,480

 
62,207

 
 
65,729

 
60,599

Savings
66,827

 
64,054

 
61,949

 
58,821

 
55,065

 
 
62,938

 
51,908

Time deposits
21,600

 
21,173

 
20,040

 
18,813

 
18,743

 
 
20,416

 
17,501

Total interest-bearing deposits
214,132

 
206,942

 
201,234

 
195,816

 
191,243

 
 
204,588

 
186,361

Borrowed funds


 


 
 
 
 
 
 
 
 
 
 
 
Federal Home Loan Bank borrowings
18,944

 
25,883

 
22,681

 
21,491

 
20,683

 
 
22,253

 
20,970

Bank notes and senior debt
27,403

 
27,409

 
26,865

 
25,418

 
26,380

 
 
26,781

 
27,855

Subordinated debt
5,760

 
5,189

 
5,526

 
5,883

 
5,874

 
 
5,588

 
5,292

Other
7,926

 
5,452

 
7,263

 
6,991

 
5,847

 
 
6,906

 
5,189

Total borrowed funds
60,033

 
63,933

 
62,335

 
59,783

 
58,784

 
 
61,528

 
59,306

Total interest-bearing liabilities
274,165

 
270,875

 
263,569

 
255,599

 
250,027

 
 
266,116

 
245,667

Noninterest-bearing liabilities and equity:


 


 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
73,626

 
72,149

 
71,648

 
71,402

 
75,228

 
 
72,212

 
76,303

Accrued expenses and other liabilities
14,541

 
14,529

 
13,122

 
11,242

 
10,833

 
 
13,371

 
9,440

Equity
49,087

 
49,156

 
48,623

 
47,655

 
47,003

 
 
48,636

 
46,825

Total liabilities and equity
$
411,419

 
$
406,709

 
$
396,962

 
$
385,898

 
$
383,091

 
 
$
400,335

 
$
378,235


(a)
Calculated using average daily balances.
(b)
Amounts include average balances held with the Federal Reserve Bank of Cleveland of $23.0 billion, $15.3 billion, $13.2 billion, $14.7 billion and $16.4 billion for the three months ended December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019, and December 31, 2018, respectively, and $16.6 billion and $20.3 billion for the years ended December 31, 2019 and December 31, 2018, respectfully.


THE PNC FINANCIAL SERVICES GROUP, INC.

Page 4 

Table 4: Details of Net Interest Margin (Unaudited)
 
Three months ended
 
 
Year ended
 
December 31
 
September 30
 
June 30
 
March 31
 
December 31
 
 
December 31
 
December 31
 
2019
 
2019
 
2019
 
2019
 
2018
 
 
2019
 
2018
Average yields/rates (a)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Yield on interest-earning assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Securities available for sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage-backed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency
2.48
%
 
2.70
%
 
2.93
%
 
2.94
%
 
2.86
%
 
 
2.75
%
 
2.72
%
Non-agency
8.09
%
 
8.89
%
 
7.99
%
 
7.31
%
 
7.08
%
 
 
8.08
%
 
6.65
%
Commercial mortgage-backed
2.30
%
 
2.97
%
 
3.06
%
 
3.13
%
 
2.99
%
 
 
2.85
%
 
2.82
%
Asset-backed
3.26
%
 
3.31
%
 
3.34
%
 
3.35
%
 
3.24
%
 
 
3.31
%
 
3.15
%
U.S. Treasury and government agencies
2.31
%
 
2.44
%
 
2.48
%
 
2.49
%
 
2.41
%
 
 
2.47
%
 
2.29
%
Other
3.36
%
 
3.41
%
 
3.33
%
 
3.34
%
 
3.37
%
 
 
3.34
%
 
3.49
%
Total securities available for sale
2.65
%
 
2.90
%
 
3.01
%
 
3.01
%
 
2.93
%
 
 
2.90
%
 
2.85
%
Securities held to maturity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage-backed
2.63
%
 
2.78
%
 
2.93
%
 
3.01
%
 
2.98
%
 
 
2.84
%
 
2.91
%
Commercial mortgage-backed
4.44
%
 
3.68
%
 
3.57
%
 
3.53
%
 
3.68
%
 
 
3.80
%
 
3.78
%
Asset-backed
3.02
%
 
5.48
%
 
3.92
%
 
3.83
%
 
3.76
%
 
 
4.17
%
 
3.65
%
U.S. Treasury and government agencies
2.86
%
 
2.86
%
 
2.84
%
 
2.81
%
 
2.86
%
 
 
2.87
%
 
2.80
%
Other
4.47
%
 
4.40
%
 
4.44
%
 
4.40
%
 
4.41
%
 
 
4.41
%
 
4.35
%
Total securities held to maturity
2.87
%
 
2.98
%
 
3.10
%
 
3.16
%
 
3.14
%
 
 
3.03
%
 
3.09
%
Total investment securities
2.70
%
 
2.91
%
 
3.03
%
 
3.05
%
 
2.98
%
 
 
2.93
%
 
2.91
%
Loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
3.88
%
 
4.06
%
 
4.22
%
 
4.33
%
 
4.17
%
 
 
4.17
%
 
4.05
%
Commercial real estate
3.89
%
 
4.40
%
 
4.43
%
 
4.37
%
 
4.42
%
 
 
4.33
%
 
4.15
%
Equipment lease financing
3.87
%
 
3.82
%
 
4.06
%
 
3.93
%
 
3.77
%
 
 
3.93
%
 
3.59
%
Consumer
5.45
%
 
5.61
%
 
5.56
%
 
5.54
%
 
5.32
%
 
 
5.54
%
 
5.08
%
Residential real estate
4.10
%
 
4.21
%
 
4.27
%
 
4.29
%
 
4.41
%
 
 
4.21
%
 
4.40
%
Total loans
4.27
%
 
4.47
%
 
4.56
%
 
4.61
%
 
4.49
%
 
 
4.51
%
 
4.33
%
Interest-earning deposits with banks
1.66
%
 
2.17
%
 
2.38
%
 
2.43
%
 
2.25
%
 
 
2.09
%
 
1.84
%
Other interest-earning assets
3.65
%
 
3.49
%
 
3.55
%
 
4.14
%
 
3.93
%
 
 
3.69
%
 
4.47
%
Total yield on interest-earning assets
3.71
%
 
3.95
%
 
4.06
%
 
4.11
%
 
3.99
%
 
 
3.98
%
 
3.84
%
Rate on interest-bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market
.93
%
 
1.14
%
 
1.17
%
 
1.15
%
 
.99
%
 
 
1.10
%
 
.74
%
Demand
.51
%
 
.58
%
 
.55
%
 
.52
%
 
.46
%
 
 
.54
%
 
.31
%
Savings
.97
%
 
1.14
%
 
1.19
%
 
1.13
%
 
1.04
%
 
 
1.11
%
 
.82
%
Time deposits
1.52
%
 
1.66
%
 
1.67
%
 
1.55
%
 
1.38
%
 
 
1.60
%
 
1.11
%
Total interest-bearing deposits
.87
%
 
1.02
%
 
1.03
%
 
.98
%
 
.87
%
 
 
.97
%
 
.66
%
Borrowed funds
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal Home Loan Bank borrowings
2.11
%
 
2.48
%
 
2.69
%
 
2.77
%
 
2.57
%
 
 
2.56
%
 
2.28
%
Bank notes and senior debt
2.77
%
 
3.21
%
 
3.36
%
 
3.50
%
 
3.31
%
 
 
3.24
%
 
2.94
%
Subordinated debt
3.06
%
 
3.53
%
 
4.17
%
 
4.50
%
 
4.44
%
 
 
3.83
%
 
4.23
%
Other 
1.89
%
 
2.43
%
 
2.44
%
 
2.44
%
 
2.36
%
 
 
2.30
%
 
2.16
%
Total borrowed funds
2.47
%
 
2.87
%
 
3.08
%
 
3.21
%
 
3.07
%
 
 
2.94
%
 
2.75
%
Total rate on interest-bearing liabilities
1.21
%
 
1.45
%
 
1.51
%
 
1.50
%
 
1.38
%
 
 
1.43
%
 
1.16
%
Interest rate spread
2.50
%
 
2.50
%
 
2.55
%
 
2.61
%
 
2.61
%
 
 
2.55
%
 
2.68
%
Benefit from use of noninterest bearing sources (b)
.28

 
.34

 
.36

 
.37

 
.35

 
 
.34

 
.29

Net interest margin
2.78
%

2.84
%
 
2.91
%
 
2.98
%
 
2.96
%
 
 
2.89
%
 
2.97
%

(a)
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 generally accepted accounting principles (GAAP) in the Consolidated Income Statement. The taxable-equivalent adjustments to net interest income for the three months ended December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019 and December 31, 2018 were $23 million, $25 million, $27 million, $27 million and $28 million, respectively. The taxable-equivalent adjustments to net interest income for the years ended December 31, 2019 and December 31, 2018 were $103 million and $115 million, respectively.
(b)
Represents the positive effects of investing noninterest-bearing sources in interest-earning assets.


THE PNC FINANCIAL SERVICES GROUP, INC.

Page 5 

Table 5: Per Share Related Information (Unaudited)
 
 
 
 
 
 
 
 
Three months ended
 
 
Year ended
 
December 31
 
September 30
 
June 30
 
March 31
 
December 31
 
 
December 31
 
December 31
In millions, except per share data
2019
 
2019
 
2019
 
2019
 
2018
 
 
2019
 
2018
Basic
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
$
1,381

 
$
1,392

 
$
1,374

 
$
1,271

 
$
1,351

 
 
$
5,418

 
$
5,346

Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to noncontrolling interests
14

 
13

 
12

 
10

 
14

 
 
49

 
45

Preferred stock dividends (a)
55

 
63

 
55

 
63

 
55

 
 
236

 
236

Preferred stock discount accretion and redemptions
1

 
1

 
1

 
1

 
1

 
 
4

 
4

Net income attributable to common shareholders
1,311

 
1,315

 
1,306

 
1,197

 
1,281

 
 
5,129

 
5,061

Less: Dividends and undistributed earnings allocated
    to nonvested restricted shares
6

 
6

 
4

 
5

 
5

 
 
21

 
21

Net income attributable to basic common shares
$
1,305

 
$
1,309

 
$
1,302

 
$
1,192

 
$
1,276

 
 
$
5,108

 
$
5,040

Basic weighted-average common shares outstanding
437

 
444

 
451

 
455

 
461

 
 
447

 
467

Basic earnings per common share
$
2.98

 
$
2.95

 
$
2.89

 
$
2.62

 
$
2.77

 
 
$
11.43

 
$
10.79

Diluted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to basic common shares
$
1,305

 
$
1,309

 
$
1,302

 
$
1,192

 
$
1,276

 
 
$
5,108

 
$
5,040

Less: Impact of BlackRock earnings per share dilution
3

 
2

 
2

 
3

 
2

 
 
10

 
9

Net income attributable to diluted common shares
$
1,302

 
$
1,307

 
$
1,300

 
$
1,189

 
$
1,274

 
 
$
5,098

 
$
5,031

Basic weighted-average common shares outstanding
437

 
444

 
451

 
455

 
461

 
 
447

 
467

Dilutive potential common shares
1

 
1

 
1

 
1

 
2

 
 
1

 
3

Diluted weighted-average common shares outstanding
438

 
445

 
452

 
456

 
463

 
 
448

 
470

Diluted earnings per common share
$
2.97

 
$
2.94

 
$
2.88

 
$
2.61

 
$
2.75

 
 
$
11.39

 
$
10.71

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

Table 6: Details of Loans (Unaudited)
 
 
December 31
 
September 30
 
June 30
 
March 31
 
December 31
In millions
 
2019
 
2019
 
2019
 
2019
 
2018
Commercial lending
 
 
 
 
 
 
 
 
 
 
Commercial
 
 
 
 
 
 
 
 
 
 
Manufacturing
 
$
21,540

 
$
21,846

 
$
22,191

 
$
22,575

 
$
21,207

Retail/wholesale trade
 
21,565

 
21,761

 
22,280

 
21,655

 
20,850

Service providers
 
16,112

 
16,189

 
15,387

 
15,266

 
14,869

Real estate related (a)
 
12,346

 
12,294

 
12,264

 
12,287

 
12,312

Financial services
 
11,318

 
10,437

 
11,916

 
10,475

 
9,500

Health care
 
8,035

 
8,137

 
8,594

 
8,731

 
8,886

Transportation and warehousing
 
7,474

 
7,216

 
6,588

 
6,744

 
5,781

Other industries
 
26,947

 
26,134

 
26,404

 
25,260

 
23,429

Total commercial
 
125,337

 
124,014

 
125,624

 
122,993

 
116,834

Commercial real estate
 
28,110

 
28,884

 
28,570

 
28,101

 
28,140

Equipment lease financing
 
7,155

 
7,290

 
7,409

 
7,348

 
7,308

Total commercial lending
 
160,602

 
160,188

 
161,603

 
158,442

 
152,282

Consumer lending
 
 
 
 
 
 
 
 
 
 
Home equity
 
25,085

 
24,971

 
25,132

 
25,500

 
26,123

Residential real estate
 
21,821

 
21,082

 
20,092

 
19,107

 
18,657

Automobile
 
16,754

 
16,004

 
15,612

 
14,707

 
14,419

Credit card
 
7,308

 
6,815

 
6,511

 
6,267

 
6,357

Education
 
3,336

 
3,461

 
3,555

 
3,707

 
3,822

Other consumer
 
4,937

 
4,856

 
4,710

 
4,563

 
4,585

Total consumer lending
 
79,241

 
77,189

 
75,612

 
73,851

 
73,963

Total loans
 
$
239,843

 
$
237,377

 
$
237,215

 
$
232,293

 
$
226,245


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


THE PNC FINANCIAL SERVICES GROUP, INC.

Page 6 

Allowance for Loan and Lease Losses (Unaudited)

Table 7: Change in Allowance for Loan and Lease Losses
 
 
December 31
 
September 30
 
June 30
 
March 31
 
December 31
Three months ended - dollars in millions
 
2019
 
2019
 
2019
 
2019
 
2018
Beginning balance
 
$
2,738

 
$
2,721

 
$
2,692

 
$
2,629

 
$
2,584

Gross charge-offs:
 
 
 
 
 
 
 
 
 
 
Commercial
 
(67
)
 
(41
)
 
(50
)
 
(25
)
 
(30
)
Commercial real estate
 
(2
)
 
(11
)
 
(2
)
 
(3
)
 
 
Equipment lease financing
 
(9
)
 
(2
)
 
(1
)
 
(3
)
 
(2
)
Home equity
 
(16
)
 
(11
)
 
(18
)
 
(23
)
 
(25
)
Residential real estate
 
(4
)
 
(1
)
 
(2
)
 
(2
)
 
3

Automobile
 
(78
)
 
(71
)
 
(54
)
 
(58
)
 
(54
)
Credit card
 
(70
)
 
(61
)
 
(65
)
 
(67
)
 
(56
)
Education
 
(6
)
 
(7
)
 
(7
)
 
(6
)
 
(7
)
Other consumer
 
(39
)
 
(36
)
 
(28
)
 
(28
)
 
(29
)
Total gross charge-offs
 
(291
)
 
(241
)
 
(227
)
 
(215
)
 
(200
)
Recoveries:
 
 
 
 
 
 
 
 
 
 
Commercial
 
14

 
14

 
17

 
14

 
17

Commercial real estate
 
3

 
3

 
2

 
3

 
6

Equipment lease financing
 
2

 
2

 
2

 
2

 
2

Home equity
 
18

 
20

 
18

 
18

 
31

Residential real estate
 
3

 
4

 
4

 
3

 
3

Automobile
 
29

 
30

 
29

 
26

 
21

Credit card
 
6

 
7

 
7

 
7

 
6

Education
 
2

 
2

 
2

 
2

 
2

Other consumer
 
5

 
4

 
4

 
4

 
5

Total recoveries
 
82

 
86

 
85

 
79

 
93

Net (charge-offs) / recoveries:
 
 
 
 
 
 
 
 
 
 
Commercial
 
(53
)
 
(27
)
 
(33
)
 
(11
)
 
(13
)
Commercial real estate
 
1

 
(8
)
 

 

 
6

Equipment lease financing
 
(7
)
 

 
1

 
(1
)
 

Home equity
 
2

 
9

 

 
(5
)
 
6

Residential real estate
 
(1
)
 
3

 
2

 
1

 
6

Automobile
 
(49
)
 
(41
)
 
(25
)
 
(32
)
 
(33
)
Credit card
 
(64
)
 
(54
)
 
(58
)
 
(60
)
 
(50
)
Education
 
(4
)
 
(5
)
 
(5
)
 
(4
)
 
(5
)
Other consumer
 
(34
)
 
(32
)
 
(24
)
 
(24
)
 
(24
)
Total net (charge-offs)
 
(209
)
 
(155
)
 
(142
)
 
(136
)
 
(107
)
Provision for credit losses
 
221

 
183

 
180

 
189

 
148

Net (increase) / decrease in allowance for unfunded loan
commitments and letters of credit

 
(14
)
 
(13
)
 
(12
)
 
6

 
3

Other
 
6

 
2

 
3

 
4

 
1

Ending balance
 
$
2,742

 
$
2,738

 
$
2,721

 
$
2,692

 
$
2,629

Supplemental Information
 
 
 
 
 
 
 
 
 
 
Net charge-offs to average loans (annualized)
 
.35
%
 
.26
%
 
.24
%
 
.24
%
 
.19
%
Allowance for loan and lease losses to total loans
 
1.14
%
 
1.15
%
 
1.15
%
 
1.16
%
 
1.16
%
Commercial lending net charge-offs
 
$
(59
)
 
$
(35
)
 
$
(32
)
 
$
(12
)
 
$
(7
)
Consumer lending net charge-offs
 
(150
)
 
(120
)
 
(110
)
 
(124
)
 
(100
)
Total net charge-offs
 
$
(209
)
 
$
(155
)
 
$
(142
)
 
$
(136
)
 
$
(107
)
Net charge-offs to average loans (annualized)
 
 
 
 
 
 
 
 
 
 
Commercial lending
 
.15
%
 
.09
%
 
.08
%
 
.03
%
 
.02
%
Consumer lending
 
.76
%
 
.62
%
 
.59
%
 
.68
%
 
.54
%


THE PNC FINANCIAL SERVICES GROUP, INC.

Page 7 

Details of Nonperforming Assets (Unaudited)

Table 8: Nonperforming Assets by Type
 
 
December 31
 
September 30
 
June 30
 
March 31
 
December 31
Dollars in millions
 
2019
 
2019
 
2019
 
2019
 
2018
Nonperforming loans, including TDRs
 
 
 
 
 
 
 
 
 
 
Commercial lending
 
 
 
 
 
 
 
 
 
 
Commercial
 
 
 
 
 
 
 
 
 
 
Retail/wholesale trade
 
$
74

 
$
61

 
$
42

 
$
35

 
$
38

Manufacturing
 
102

 
109

 
88

 
88

 
54

Service providers
 
53

 
55

 
53

 
52

 
50

Real estate related (a)
 
24

 
33

 
19

 
16

 
17

Health care
 
17

 
17

 
15

 
19

 
20

Transportation and warehousing
 
18

 
13

 
21

 
8

 
8

Other industries
 
137

 
203

 
203

 
151

 
159

Total commercial
 
425

 
491

 
441

 
369

 
346

Commercial real estate
 
44

 
75

 
93

 
54

 
75

Equipment lease financing
 
32

 
10

 
6

 
7

 
11

Total commercial lending
 
501

 
576

 
540

 
430

 
432

Consumer lending (b)
 
 
 
 
 
 
 
 
 
 
Home equity
 
669

 
685

 
712

 
763

 
797

Residential real estate
 
315

 
325

 
339

 
339

 
350

Automobile
 
135

 
128

 
118

 
107

 
100

Credit card
 
11

 
9

 
8

 
7

 
7

Other consumer
 
4

 
5

 
7

 
7

 
8

Total consumer lending
 
1,134

 
1,152

 
1,184

 
1,223

 
1,262

Total nonperforming loans (c)
 
1,635

 
1,728

 
1,724

 
1,653

 
1,694

OREO and foreclosed assets
 
117

 
119

 
126

 
132

 
114

Total nonperforming assets
 
$
1,752

 
$
1,847

 
$
1,850

 
$
1,785

 
$
1,808

Nonperforming loans to total loans
 
.68
%
 
.73
%
 
.73
%
 
.71
%
 
.75
%
Nonperforming assets to total loans, OREO and foreclosed assets
 
.73
%
 
.78
%
 
.78
%
 
.77
%
 
.80
%
Nonperforming assets to total assets
 
.43
%
 
.45
%
 
.46
%
 
.45
%
 
.47
%
Allowance for loan and lease losses to nonperforming loans
 
168
%
 
158
%
 
158
%
 
163
%
 
155
%

(a)
Includes loans related to customers in the real estate and construction industries.
(b)
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.
(c)
Nonperforming loans exclude certain government insured or guaranteed loans, loans held for sale, loans accounted for under the fair value option and purchased impaired loans.




THE PNC FINANCIAL SERVICES GROUP, INC.

Page 8 

Details of Nonperforming Assets (Unaudited) (Continued)

Table 9: Change in Nonperforming Assets
 
 
October 1, 2019

 
July 1, 2019

 
April 1, 2019

 
January 1, 2019

 
October 1, 2018

In millions
 
December 31, 2019

 
September 30, 2019

 
June 30, 2019

 
March 31, 2019

 
December 31, 2018

Beginning balance
 
$
1,847

 
$
1,850

 
$
1,785

 
$
1,808

 
$
1,825

New nonperforming assets
 
357

 
290

 
408

 
287

 
325

Charge-offs and valuation adjustments
 
(218
)
 
(112
)
 
(170
)
 
(164
)
 
(148
)
Principal activity, including paydowns and payoffs
 
(157
)
 
(122
)
 
(101
)
 
(92
)
 
(97
)
Asset sales and transfers to loans held for sale
 
(21
)
 
(34
)
 
(27
)
 
(13
)
 
(38
)
Returned to performing status
 
(56
)
 
(25
)
 
(45
)
 
(41
)
 
(59
)
Ending balance
 
$
1,752

 
$
1,847

 
$
1,850

 
$
1,785

 
$
1,808


Table 10: Largest Individual Nonperforming Assets (a)
December 31, 2019 - Dollars in millions
 
 
Ranking
 
Outstandings

 
Industry
1
 
$
29

 
Retail Trade
2
 
27

 
Mining, Quarrying, and Oil and Gas Extraction
3
 
26

 
Manufacturing
4
 
21

 
Mining, Quarrying, and Oil and Gas Extraction
5
 
16

 
Manufacturing
6
 
15

 
Service Providers
7
 
14

 
Accommodation and Food Services
8
 
13

 
Mining, Quarrying, and Oil and Gas Extraction
9
 
11

 
Manufacturing
10
 
11

 
Manufacturing
Total
 
$
183

 
 
As a percent of total nonperforming assets
 
10%
 
 
(a) Amounts shown are not net of related allowance for loan and lease losses, if applicable.


THE PNC FINANCIAL SERVICES GROUP, INC.

Page 9 

Accruing Loans Past Due (Unaudited)

Table 11: Accruing Loans Past Due 30 to 59 Days (a)
 
 
Amount
 
Percent of Total Outstandings
 
 
Dec. 31
 
Sept. 30
 
Jun. 30
 
Mar. 31
 
Dec. 31
 
Dec. 31
 
Sept. 30
 
Jun. 30
 
Mar. 31
 
Dec. 31
Dollars in millions
 
2019
 
2019
 
2019
 
2019
 
2018
 
2019
 
2019
 
2019
 
2019
 
2018
Commercial
 
$
102

 
$
82

 
$
105

 
$
80

 
$
82

 
.08
%
 
.07
%
 
.08
%
 
.07
%
 
.07
%
Commercial real estate
 
4

 
3

 
9

 
43

 
6

 
.01
%
 
.01
%
 
.03
%
 
.15
%
 
.02
%
Equipment lease financing
 
49

 
6

 
7

 
84

 
56

 
.68
%
 
.08
%
 
.09
%
 
1.14
%
 
.77
%
Home equity
 
58

 
53

 
56

 
59

 
66

 
.23
%
 
.21
%
 
.22
%
 
.23
%
 
.25
%
Residential real estate
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non government insured
 
90

 
76

 
80

 
91

 
75

 
.41
%
 
.36
%
 
.40
%
 
.48
%
 
.40
%
Government insured
 
50

 
53

 
54

 
62

 
60

 
.23
%
 
.25
%
 
.27
%
 
.32
%
 
.32
%
Automobile
 
178

 
145

 
119

 
97

 
113

 
1.06
%
 
.91
%
 
.76
%
 
.66
%
 
.78
%
Credit card
 
60

 
56

 
47

 
45

 
46

 
.82
%
 
.82
%
 
.72
%
 
.72
%
 
.72
%
Education
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non government insured
 
7

 
8

 
7

 
9

 
10

 
.21
%
 
.23
%
 
.20
%
 
.24
%
 
.26
%
Government insured
 
48

 
48

 
53

 
54

 
59

 
1.44
%
 
1.39
%
 
1.49
%
 
1.46
%
 
1.54
%
Other consumer
 
15

 
17

 
13

 
10

 
12

 
.30
%
 
.35
%
 
.28
%
 
.22
%
 
.26
%
Total
 
$
661

 
$
547

 
$
550

 
$
634

 
$
585

 
.28
%
 
.23
%
 
.23
%
 
.27
%
 
.26
%
 
Table 12: Accruing Loans Past Due 60 to 89 Days (a)
 
 
Amount
 
Percent of Total Outstandings
 
 
Dec. 31
 
Sept. 30
 
Jun. 30
 
Mar. 31
 
Dec. 31
 
Dec. 31
 
Sept. 30
 
Jun. 30
 
Mar. 31
 
Dec. 31
Dollars in millions
 
2019
 
2019
 
2019
 
2019
 
2018
 
2019
 
2019
 
2019
 
2019
 
2018
Commercial
 
$
30

 
$
49

 
$
33

 
$
25

 
$
54

 
.02
%
 
.04
%
 
.03
%
 
.02
%
 
.05
%
Commercial real estate
 
1

 
3

 
1

 
1

 
3

 
.00
%
 
.01
%
 
.00
%
 
.00
%
 
.01
%
Equipment lease financing
 
5

 
4

 
3

 
5

 
12

 
.07
%
 
.05
%
 
.04
%
 
.07
%
 
.16
%
Home equity
 
24

 
24

 
20

 
21

 
25

 
.10
%
 
.10
%
 
.08
%
 
.08
%
 
.10
%
Residential real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non government insured
 
16

 
20

 
20

 
13

 
17

 
.07
%
 
.09
%
 
.10
%
 
.07
%
 
.09
%
Government insured
 
53

 
57

 
55

 
49

 
56

 
.24
%
 
.27
%
 
.27
%
 
.26
%
 
.30
%
Automobile
 
47

 
36

 
29

 
26

 
29

 
.28
%
 
.22
%
 
.19
%
 
.18
%
 
.20
%
Credit card
 
37

 
33

 
29

 
28

 
29

 
.51
%
 
.48
%
 
.45
%
 
.45
%
 
.46
%
Education
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non government insured
 
3

 
5

 
4

 
5

 
4

 
.09
%
 
.14
%
 
.11
%
 
.13
%
 
.10
%
Government insured
 
31

 
30

 
32

 
33

 
37

 
.93
%
 
.87
%
 
.90
%
 
.89
%
 
.97
%
Other consumer
 
11

 
8

 
9

 
6

 
5

 
.22
%
 
.16
%
 
.19
%
 
.13
%
 
.11
%
Total
 
$
258

 
$
269

 
$
235

 
$
212

 
$
271

 
.11
%
 
.11
%
 
.10
%
 
.09
%
 
.12
%

Table 13: Accruing Loans Past Due 90 Days or More (a)
 
 
Amount
 
Percent of Total Outstandings
 
 
Dec. 31
 
Sept. 30
 
Jun. 30
 
Mar. 31
 
Dec. 31
 
Dec. 31
 
Sept. 30
 
Jun. 30
 
Mar. 31
 
Dec. 31
Dollars in millions
 
2019
 
2019
 
2019
 
2019
 
2018
 
2019
 
2019
 
2019
 
2019
 
2018
Commercial
 
$
85

 
$
64

 
$
59

 
$
71

 
$
52

 
.07
%
 
.05
%
 
.05
%
 
.06
%
 
.04
%
Residential real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non government insured
 
14

 
15

 
13

 
18

 
19

 
.06
%
 
.07
%
 
.06
%
 
.09
%
 
.10
%
Government insured
 
301

 
287

 
293

 
305

 
344

 
1.38
%
 
1.36
%
 
1.46
%
 
1.60
%
 
1.84
%
Automobile
 
18

 
11

 
8

 
10

 
12

 
.11
%
 
.07
%
 
.05
%
 
.07
%
 
.08
%
Credit card
 
67

 
57

 
48

 
53

 
53

 
.92
%
 
.84
%
 
.74
%
 
.85
%
 
.83
%
Education
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non government insured
 
2

 
3

 
3

 
3

 
3

 
.06
%
 
.09
%
 
.08
%
 
.08
%
 
.08
%
Government insured
 
89

 
87

 
92

 
123

 
138

 
2.67
%
 
2.51
%
 
2.59
%
 
3.32
%
 
3.61
%
Other consumer
 
9

 
8

 
8

 
7

 
8

 
.18
%
 
.16
%
 
.17
%
 
.15
%
 
.17
%
Total
 
$
585

 
$
532

 
$
524

 
$
590

 
$
629

 
.24
%
 
.22
%
 
.22
%
 
.25
%
 
.28
%
(a) Excludes loans held for sale and purchased impaired loans.


THE PNC FINANCIAL SERVICES GROUP, INC.

Page 10 

 
Business Segment Descriptions (Unaudited)

Retail Banking provides deposit, lending, brokerage, insurance services, investment management and cash management 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 and Southeast. In 2018, Retail Banking launched its national expansion strategy designed to grow customers with digitally-led banking and an ultra-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 government agency and/or third-party standards, and either sold, servicing retained, or held on our balance sheet. Brokerage, investment management and cash management products and services include managed, education, retirement and trust accounts.

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

Asset Management Group provides personal wealth management for high net worth and ultra high net worth clients and institutional asset management. The Asset Management group is comprised of three distinct operating units:
Wealth management provides products and services to individuals and their families including investment and retirement planning, customized investment management, private banking, and trust management and administration for individuals and their families.
Our Hawthorn unit provides multi-generational family planning including estate, financial, tax planning, fiduciary, investment management and consulting, private banking, personal administrative services, asset custody and customized performance reporting to ultra high net worth clients.
Institutional asset management provides outsourced chief investment officer, custody, private real estate, cash and fixed income client solutions, and fiduciary retirement advisory services to institutional clients including corporations, healthcare systems, insurance companies, unions, municipalities and non-profits.

BlackRock, in which we hold an equity investment, is a leading publicly-traded investment management firm providing a broad range of investment and technology services to institutional and retail clients worldwide. Using a diverse platform of alpha-seeking active, index and cash management investment strategies across asset classes, BlackRock tailors investment outcomes and asset allocation solutions for clients. Product offerings include single- and multi-asset class portfolios investing in equities, fixed income, alternatives and money market instruments. BlackRock also offers technology services, including an investment and risk management technology platform, as well as advisory services and solutions to a broad base of institutional and wealth management clients. Our equity investment in BlackRock provides us with an additional source of noninterest income and increases our overall revenue diversification. BlackRock is a publicly-traded company, and additional information regarding its business is available in its filings with the Securities and Exchange Commission (SEC). At December 31, 2019, our economic interest in BlackRock was 22%.

Table 14: Period End Employees
 
December 31
 
September 30
 
June 30
 
March 31
 
December 31
 
2019
 
2019
 
2019
 
2019
 
2018
Full-time employees
 
 
 
 
 
 
 
 
 
Retail Banking
28,270

 
28,279

 
28,671

 
28,992

 
29,180

Other full-time employees
21,747

 
21,701

 
21,571

 
21,652

 
21,748

Total full-time employees
50,017

 
49,980

 
50,242

 
50,644

 
50,928

Part-time employees
 
 
 
 
 
 
 
 
 
Retail Banking
1,759

 
1,823

 
2,037

 
1,887

 
1,974

Other part-time employees
142

 
153

 
518

 
180

 
161

Total part-time employees
1,901

 
1,976

 
2,555

 
2,067

 
2,135

Total
51,918

 
51,956

 
52,797

 
52,711

 
53,063

 



THE PNC FINANCIAL SERVICES GROUP, INC.

Page 11 

Table 15: Summary of Business Segment Income and Revenue (Unaudited) (a)
 
Three months ended
 
 
Year ended
 
December 31
 
September 30
 
June 30
 
March 31
 
December 31
 
 
December 31
 
December 31
In millions
2019
 
2019
 
2019
 
2019
 
2018
 
 
2019
 
2018
Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail Banking
$
277

 
$
347

 
$
325

 
$
264

 
$
313

 
 
$
1,213

 
$
1,064

Corporate & Institutional Banking
649

 
645

 
602

 
552

 
651

 
 
2,448

 
2,508

Asset Management Group
91

 
46

 
80

 
45

 
42

 
 
262

 
202

Other, including BlackRock (b)
364

 
354

 
367

 
410

 
345

 
 
1,495

 
1,572

Net income
$
1,381

 
$
1,392

 
$
1,374

 
$
1,271

 
$
1,351

 
 
$
5,418

 
$
5,346

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail Banking
$
2,054

 
$
2,137

 
$
2,033

 
$
1,944

 
$
2,015

 
 
$
8,168

 
$
7,750

Corporate & Institutional Banking
1,615

 
1,584

 
1,578

 
1,474

 
1,562

 
 
6,251

 
6,043

Asset Management Group
352

 
286

 
354

 
287

 
286

 
 
1,279

 
1,179

Other, including BlackRock (b)
588

 
486

 
474

 
581

 
477

 
 
2,129

 
2,160

Total revenue
$
4,609

 
$
4,493

 
$
4,439

 
$
4,286

 
$
4,340

 
 
$
17,827

 
$
17,132


(a)
Our business information is presented based on our internal management reporting practices. Net interest income in business segment results reflects PNC’s internal funds transfer pricing methodology. Assets receive a funding charge and liabilities and capital receive a funding credit based on a transfer pricing methodology that incorporates product repricing characteristics, tenor and other factors.
(b)
Includes earnings and gains or losses related to PNC's equity investment in BlackRock and residual activities that do not meet the criteria for disclosure as a separate reportable business. We provide additional information on these activities in our Form 10-K and Form 10-Q filings with the SEC.


THE PNC FINANCIAL SERVICES GROUP, INC.

Page 12 

Table 16: Retail Banking (Unaudited) (a)
 
Three months ended
 
 
Year ended
 
December 31
 
September 30
 
June 30
 
March 31
 
December 31
 
 
December 31
 
December 31
Dollars in millions
2019
 
2019
 
2019
 
2019
 
2018
 
 
2019
 
2018
Income Statement
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
1,402

 
$
1,393

 
$
1,376

 
$
1,349

 
$
1,319

 
 
$
5,520

 
$
5,119

Noninterest income
652

 
744

 
657

 
595

 
696

 
 
2,648

 
2,631

Total revenue
2,054

 
2,137

 
2,033

 
1,944

 
2,015

 
 
8,168

 
7,750

Provision for credit losses
161

 
147

 
81

 
128

 
119

 
 
517

 
373

Noninterest expense
1,530

 
1,536

 
1,527

 
1,468

 
1,487

 
 
6,061

 
5,978

Pretax earnings
363

 
454

 
425

 
348

 
409

 
 
1,590

 
1,399

Income taxes
86

 
107

 
100

 
84

 
96

 
 
377

 
335

Earnings
$
277

 
$
347

 
$
325

 
$
264

 
$
313

 
 
$
1,213

 
$
1,064

Average Balance Sheet


 
 
 
 
 
 
 
 
 
 
 
 
 
Loans held for sale
$
747

 
$
760

 
$
554

 
$
441

 
$
559

 
 
$
627

 
$
636

Loans


 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer


 
 
 
 
 
 
 
 
 
 
 
 
 
Home equity
$
22,590

 
$
22,434

 
$
22,620

 
$
22,990

 
$
23,407

 
 
$
22,657

 
$
23,991

Automobile
16,427

 
15,761

 
15,222

 
14,608

 
14,375

 
 
15,510

 
13,827

Education
3,428

 
3,538

 
3,665

 
3,816

 
3,918

 
 
3,611

 
4,135

Credit cards
6,985

 
6,624

 
6,376

 
6,204

 
6,112

 
 
6,550

 
5,838

Other
2,418

 
2,309

 
2,179

 
2,068

 
1,985

 
 
2,244

 
1,843

Total consumer
51,848

 
50,666

 
50,062

 
49,686

 
49,797

 
 
50,572

 
49,634

Commercial and commercial real estate
10,323

 
10,379

 
10,481

 
10,461

 
10,339

 
 
10,410

 
10,383

Residential mortgage
17,352

 
16,630

 
15,737

 
15,034

 
14,637

 
 
16,196

 
13,985

Total loans
$
79,523

 
$
77,675

 
$
76,280

 
$
75,181

 
$
74,773

 
 
$
77,178

 
$
74,002

Total assets
$
94,967

 
$
93,222

 
$
92,350

 
$
91,255

 
$
91,164

 
 
$
92,959

 
$
89,739

Deposits


 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing demand
$
32,674

 
$
32,092

 
$
31,516

 
$
30,389

 
$
31,011

 
 
$
31,675

 
$
30,670

Interest-bearing demand
41,689

 
41,420

 
42,735

 
42,477

 
41,655

 
 
42,077

 
42,042

Money market
23,927

 
24,807

 
25,799

 
26,773

 
27,256

 
 
25,317

 
29,798

Savings
59,877

 
57,752

 
56,075

 
53,100

 
49,771

 
 
56,722

 
47,019

Certificates of deposit
12,598

 
12,766

 
12,704

 
12,381

 
12,153

 
 
12,613

 
12,007

Total deposits
$
170,765

 
$
168,837

 
$
168,829

 
$
165,120

 
$
161,846

 
 
$
168,404

 
$
161,536

Performance Ratios
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average assets
1.16
%
 
1.48
%
 
1.41
%
 
1.17
%
 
1.36
%
 
 
1.30
%
 
1.19
%
Noninterest income to total revenue
32
%
 
35
%
 
32
%
 
31
%
 
35
%
 
 
32
%
 
34
%
Efficiency
74
%
 
72
%
 
75
%
 
76
%
 
74
%
 
 
74
%
 
77
%
 
(a)
See note (a) on page 11.


THE PNC FINANCIAL SERVICES GROUP, INC.

Page 13 

Retail Banking (Unaudited) (Continued)
 
Three months ended
 
Year ended
 
December 31
 
September 30
 
June 30
 
March 31
 
December 31
 
December 31
 
December 31
Dollars in millions, except as noted
2019
 
2019
 
2019
 
2019
 
2018
 
2019
 
2018
Supplemental Noninterest Income
    Information
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer services
$
293

 
$
305

 
$
299

 
$
277

 
$
291

 
$
1,174

 
$
1,128

Brokerage
$
89

 
$
92

 
$
86

 
$
89

 
$
90

 
$
356

 
$
350

Residential mortgage
$
87

 
$
134

 
$
82

 
$
65

 
$
59

 
$
368

 
$
316

Service charges on deposits
$
183

 
$
178

 
$
164

 
$
162

 
$
185

 
$
687

 
$
688

Residential Mortgage Information
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage servicing statistics
(in billions, except as noted) (a)
 
 
 
 
 
 
 
 
 
 
 
 
 
Serviced portfolio balance (b)
$
120

 
$
123

 
$
124

 
$
123

 
$
125

 
 
 
 
Serviced portfolio acquisitions
$
3

 
$
3

 
$
5

 
$
1

 
$
2

 
$
12

 
$
12

MSR asset value (b)
$
1.0

 
$
0.9

 
$
1.0

 
$
1.1

 
$
1.3

 
 
 
 
MSR capitalization value (in basis points) (b)
83

 
72

 
80

 
92

 
100

 
 
 
 
Servicing income: (in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
Servicing fees, net (c)
$
39

 
$
44

 
$
42

 
$
53

 
$
49

 
$
178

 
$
181

Mortgage servicing rights valuation, net of
economic hedge
$
9

 
$
40

 
$
7

 
$
(9
)
 
$
(19
)
 
$
47

 
$
3

Residential mortgage loan statistics
 
 
 
 
 
 
 
 
 
 
 
 
 
Loan origination volume (in billions)
$
3.5

 
$
3.4

 
$
2.9

 
$
1.7

 
$
1.6

 
$
11.5

 
$
7.4

Loan sale margin percentage
2.42
%
 
2.59
%
 
2.24
%
 
2.35
%
 
2.49
%
 
2.41
%
 
2.41
%
Percentage of originations represented by:
 
 
 
 
 
 
 
 
 
 
 
 
 
Purchase volume (d)
40
%
 
44
%
 
54
%
 
56
%
 
67
%
 
47
%
 
67
%
Refinance volume
60
%
 
56
%
 
46
%
 
44
%
 
33
%
 
53
%
 
33
%
Other Information (b)
 
 
 
 
 
 
 
 
 
 
 
 
 
Customer-related statistics (average)
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-teller deposit transactions (e)
58
%
 
58
%
 
56
%
 
57
%
 
55
%
 
57
%
 
55
%
Digital consumer customers (f)
71
%
 
70
%
 
69
%
 
68
%
 
67
%
 
69
%
 
66
%
Credit-related statistics
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonperforming assets
$
1,046

 
$
1,056

 
$
1,074

 
$
1,109

 
$
1,126

 
 
 
 
Net charge-offs
$
154

 
$
128

 
$
120

 
$
132

 
$
112

 
$
534

 
$
420

Other statistics
 
 
 
 
 
 
 
 
 
 
 
 
 
ATMs
9,091

 
9,102

 
9,072

 
9,112

 
9,162

 
 
 
 
Branches (g)
2,296

 
2,310

 
2,321

 
2,347

 
2,372

 
 
 
 
Brokerage account client assets (in billions) (h)
$
54

 
$
52

 
$
52

 
$
51

 
$
47

 
 
 
 

(a)
Represents mortgage loan servicing balances for third parties and the related income.
(b)
Presented as of period end, except for customer-related statistics, which are quarterly averages, and net charge-offs, which are for the three months ended.
(c)
Servicing fees net of impact of decrease in MSR value due to passage of time, including the impact from both regularly scheduled loan 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)
Percentage of total consumer and business banking deposit transactions processed at an ATM or through our mobile banking application.
(f)
Represents consumer checking relationships that process the majority of their transactions through non-teller channels.
(g)
Excludes stand-alone mortgage offices and satellite offices (e.g., drive-ups, electronic branches and retirement centers) that provide limited products and/or services.
(h)
Includes cash and money market balances.



THE PNC FINANCIAL SERVICES GROUP, INC.

Page 14 

Table 17: Corporate & Institutional Banking (Unaudited) (a)
 
Three months ended
 
Year ended
 
December 31
 
September 30
 
June 30
 
March 31
 
December 31
 
December 31
 
December 31
Dollars in millions
2019
 
2019
 
2019
 
2019
 
2018
 
2019
 
2018
Income Statement
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
969

 
$
930

 
$
917

 
$
898

 
$
930

 
$
3,714

 
$
3,637

Noninterest income
646

 
654

 
661

 
576

 
632

 
2,537

 
2,406

Total revenue
1,615

 
1,584

 
1,578

 
1,474

 
1,562

 
6,251

 
6,043

Provision for credit losses (benefit)
65

 
48

 
100

 
71

 
42

 
284

 
85

Noninterest expense
726

 
703

 
698

 
686

 
687

 
2,813

 
2,706

Pretax earnings
824

 
833

 
780

 
717

 
833

 
3,154

 
3,252

Income taxes
175

 
188

 
178

 
165

 
182

 
706

 
744

Earnings
$
649

 
$
645

 
$
602

 
$
552

 
$
651

 
$
2,448

 
$
2,508

Average Balance Sheet
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans held for sale
$
616

 
$
720

 
$
330

 
$
347

 
$
669

 
$
505

 
$
739

Loans
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
114,113

 
$
114,701

 
$
113,702

 
$
108,641

 
$
106,082

 
$
112,809

 
$
103,285

Commercial real estate
26,586

 
26,570

 
26,224

 
25,971

 
26,183

 
26,340

 
26,569

Equipment lease financing
7,200

 
7,272

 
7,284

 
7,264

 
7,216

 
7,255

 
7,437

Total commercial lending
147,899

 
148,543

 
147,210

 
141,876

 
139,481

 
146,404

 
137,291

Consumer
11

 
13

 
16

 
20

 
22

 
15

 
42

Total loans
$
147,910

 
$
148,556

 
$
147,226

 
$
141,896

 
$
139,503

 
$
146,419

 
$
137,333

Total assets
$
167,555

 
$
168,193

 
$
163,897

 
$
157,169

 
$
156,997

 
$
164,243

 
$
154,119

Deposits
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing demand
$
39,513

 
$
38,740

 
$
38,765

 
$
39,551

 
$
42,678

 
$
39,141

 
$
44,099

Interest-bearing demand
20,851

 
20,523

 
18,702

 
17,827

 
17,385

 
19,487

 
15,114

Money market
30,264

 
29,456

 
26,948

 
25,630

 
25,691

 
28,091

 
24,060

Other
7,916

 
7,100

 
6,109

 
5,547

 
6,038

 
6,676

 
5,136

Total deposits
$
98,544

 
$
95,819

 
$
90,524

 
$
88,555

 
$
91,792

 
$
93,395

 
$
88,409

Performance Ratios
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average assets
1.54
%
 
1.52
%
 
1.47
%
 
1.42
%
 
1.65
%
 
1.49
%
 
1.63
%
Noninterest income to total revenue
40
%
 
41
%
 
42
%
 
39
%
 
40
%
 
41
%
 
40
%
Efficiency
45
%
 
44
%
 
44
%
 
47
%
 
44
%
 
45
%
 
45
%
Other Information
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated revenue from:
 
 
 
 
 
 
 
 
 
 
 
 
 
Treasury Management (b)
$
494

 
$
460

 
$
467

 
$
445

 
$
461

 
$
1,866

 
$
1,779

Capital Markets (b)
$
291

 
$
290

 
$
313

 
$
246

 
$
272

 
$
1,140

 
$
1,088

Commercial mortgage banking activities
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial mortgage loans held for sale (c)
$
24

 
$
38

 
$
20

 
$
15

 
$
29

 
$
97

 
$
107

Commercial mortgage loan servicing income (d)
71

 
71

 
65

 
54

 
68

 
261

 
247

Commercial mortgage servicing rights
    valuation, net of economic hedge (e)
2

 
1

 
11

 
5

 
1

 
19

 
27

Total
$
97

 
$
110

 
$
96

 
$
74

 
$
98

 
$
377

 
$
381

MSR asset value (f)
$
649

 
$
595

 
$
630

 
$
681

 
$
726

 
 
 
 
Average Loans by C&IB business (g)
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate Banking
$
75,665

 
$
74,883

 
$
74,366

 
$
71,089

 
$
67,567

 
$
74,016

 
$
66,503

Real Estate
36,908

 
38,172

 
37,143

 
36,357

 
38,141

 
37,149

 
37,571

Business Credit
22,900

 
22,824

 
22,877

 
21,728

 
21,431

 
22,586

 
20,800

Commercial Banking
7,793

 
7,947

 
8,080

 
8,118

 
8,031

 
7,984

 
8,109

Other
4,644

 
4,730

 
4,760

 
4,604

 
4,333

 
4,684

 
4,350

Total average loans
$
147,910

 
$
148,556

 
$
147,226

 
$
141,896

 
$
139,503

 
$
146,419

 
$
137,333

Credit-related statistics
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonperforming assets (f)
$
444

 
$
526

 
$
497

 
$
388

 
$
377

 
 
 
 
Net charge-offs
$
47

 
$
30

 
$
23

 
$
5

 
$
2

 
$
105

 
$
10

 
(a)
See note (a) on page 11.
(b)
Amounts 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.
(g)
As a result of our first quarter 2019 C&IB business realignment, average loans previously reported as Equipment Finance were reclassified to other C&IB businesses for all periods presented.


THE PNC FINANCIAL SERVICES GROUP, INC.

Page 15 

Table 18: Asset Management Group (Unaudited) (a)
 
Three months ended
 
 
Year ended
 
December 31
 
September 30
 
June 30
 
March 31
 
December 31
 
 
December 31
 
December 31
Dollars in millions, except as noted
2019
 
2019
 
2019
 
2019
 
2018
 
 
2019
 
2018
Income Statement
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
80

 
$
70

 
$
68

 
$
70

 
$
70

 
 
$
288

 
$
287

Noninterest income
272

 
216

 
286

 
217

 
216

 
 
991

 
892

Total revenue
352

 
286

 
354

 
287

 
286

 
 
1,279

 
1,179

Provision for credit losses (benefit)
1

 
(1
)
 

 
(1
)
 

 
 
(1
)
 
2

Noninterest expense
232

 
228

 
249

 
230

 
232

 
 
939

 
913

Pretax earnings
119

 
59

 
105

 
58

 
54

 
 
341

 
264

Income taxes
28

 
13

 
25

 
13

 
12

 
 
79

 
62

Earnings
$
91

 
$
46

 
$
80

 
$
45

 
$
42

 
 
$
262

 
$
202

Average Balance Sheet
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer
$
4,145

 
$
4,207

 
$
4,216

 
$
4,362

 
$
4,522

 
 
$
4,232

 
$
4,656

Commercial and commercial real estate
793

 
758

 
731

 
752

 
705

 
 
759

 
727

Residential mortgage
2,193

 
1,980

 
1,792

 
1,723

 
1,666

 
 
1,923

 
1,588

Total loans
$
7,131

 
$
6,945

 
$
6,739

 
$
6,837

 
$
6,893

 
 
$
6,914

 
$
6,971

Total assets
$
7,697

 
$
7,331

 
$
7,150

 
$
7,259

 
$
7,328

 
 
$
7,360

 
$
7,423

Deposits
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing demand
$
1,407

 
$
1,299

 
$
1,347

 
$
1,388

 
$
1,469

 
 
$
1,360

 
$
1,458

Interest-bearing demand
6,846

 
3,393

 
2,891

 
3,076

 
3,055

 
 
4,060

 
3,323

Money market
1,773

 
1,740

 
1,785

 
2,036

 
2,001

 
 
1,832

 
2,253

Savings
6,950

 
6,302

 
5,875

 
5,723

 
5,294

 
 
6,216

 
4,890

Other
898

 
893

 
797

 
697

 
634

 
 
822

 
466

Total deposits
$
17,874

 
$
13,627

 
$
12,695

 
$
12,920

 
$
12,453

 
 
$
14,290

 
$
12,390

Performance Ratios
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average assets
4.69
%
 
2.49
%
 
4.49
%
 
2.51
%
 
2.27
%
 
 
3.56
%
 
2.72
%
Noninterest income to total revenue
77
%
 
76
%
 
81
%
 
76
%
 
76
%
 
 
77
%
 
76
%
Efficiency
66
%
 
80
%
 
70
%
 
80
%
 
81
%
 
 
73
%
 
77
%
Other Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonperforming assets (b)
$
39

 
$
42

 
$
45

 
$
48

 
$
46

 
 
 
 
 
Net charge-offs
$
4

 
$

 
$

 
$
1

 
$
1

 
 
$
5

 
$
9

Client Assets Under Administration (in billions)
    (b) (c)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Discretionary client assets under management
$
154

 
$
163

 
$
162

 
$
158

 
$
148

 
 
 
 
 
Nondiscretionary client assets under administration
143

 
135

 
132

 
130

 
124

 
 
 
 
 
Total
$
297

 
$
298

 
$
294

 
$
288

 
$
272

 
 
 
 
 
Discretionary client assets under management
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Personal
$
99

 
$
98

 
$
99

 
$
95

 
$
87

 
 
 
 
 
Institutional
55

 
65

 
63

 
63

 
61

 
 
 
 
 
Total
$
154

 
$
163

 
$
162

 
$
158

 
$
148

 
 
 
 
 
 
(a)
See note (a) on page 11.
(b)
As of period end.
(c)
Excludes brokerage account client assets.


THE PNC FINANCIAL SERVICES GROUP, INC.

Page 16 

Glossary of Terms

Adjusted average total assets - Primarily consisted of total average quarterly (or annual) assets plus (less) unrealized losses (gains) on investment securities, less goodwill and certain other intangible assets (net of eligible deferred taxes).

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

Basel III common equity Tier 1 capital ratio - Common equity Tier 1 capital divided by period-end risk-weighted assets (as applicable).

Basel III Tier 1 capital - Common equity Tier 1 capital, plus qualifying preferred stock, plus certain trust preferred capital securities, plus certain noncontrolling interests that are held by others and plus/less other adjustments.

Basel III Tier 1 capital ratio - Tier 1 capital divided by period-end risk-weighted assets (as applicable).

Basel III Total capital - Tier 1 capital plus qualifying subordinated debt, plus certain trust preferred securities, plus, under the Basel III transitional rules and the standardized approach, the allowance for loan and lease losses included in Tier 2 capital and other.

Basel III Total capital ratio - Total capital divided by period-end risk-weighted assets (as applicable).

Charge-off - Process of removing a loan or portion of a loan from our balance sheet because it is considered uncollectible. We also record a charge-off when a loan is transferred from portfolio holdings to held for sale by reducing the loan carrying amount to the fair value of the loan, if fair value is less than carrying amount.

Combined loan-to-value ratio (CLTV) - This is the aggregate principal balance(s) of the mortgages on a property divided by its appraised value or purchase price.

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

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

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

Discretionary client assets under management - Assets over which we have sole or shared investment authority for our customers/clients. We do not include these assets on our Consolidated Balance Sheet.

Duration of equity - An estimate of the rate sensitivity of our economic value of equity. A negative duration of equity is associated with asset sensitivity (i.e., positioned for rising interest rates), while a positive value implies liability sensitivity (i.e., positioned for declining interest rates). For example, if the duration of equity is -1.5 years, the economic value of equity increases by 1.5% for each 100 basis point increase in interest rates.

Earning assets - Assets that generate income, which include: interest-earning deposits with banks; loans held for sale; loans; investment securities; and certain other assets.

Effective duration - A measurement, expressed in years, that, when multiplied by a change in interest rates, would approximate the percentage change in value of on- and off- balance sheet positions.

Efficiency - Noninterest expense divided by total revenue.

Fair value - The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.



THE PNC FINANCIAL SERVICES GROUP, INC.

Page 17 

Fee income - When referring to the components of Noninterest income, we use the term fee income to refer to the following categories within Noninterest income: Asset management; Consumer services; Corporate services; Residential mortgage; and Service charges on deposits.

FICO score - A credit bureau-based industry standard score created by Fair Isaac Co. which predicts the likelihood of borrower default. We use FICO scores both in underwriting and assessing credit risk in our consumer lending portfolio. Lower FICO scores indicate likely higher risk of default, while higher FICO scores indicate likely lower risk of default. FICO scores are updated on a periodic basis.

Futures and forward contracts - Contracts in which the buyer agrees to purchase and the seller agrees to deliver a specific financial instrument at a predetermined price or yield. May be settled either in cash or by delivery of the underlying financial instrument.

GAAP - Accounting principles generally accepted in the United States of America.

Impaired loans - Loans are determined to be impaired when, based on current information and events, it is probable that all contractually required payments will not be collected. Impaired loans include commercial nonperforming loans and consumer and commercial TDRs, regardless of nonperforming status. Excluded from impaired loans are nonperforming leases, loans held for sale, loans accounted for under the fair value option, smaller balance homogenous type loans and purchased impaired loans.

Leverage ratio - Tier 1 capital divided by average quarterly adjusted total assets.

LIBOR - Acronym for London InterBank Offered Rate. LIBOR is the average interest rate charged when banks in the London wholesale money market (or interbank market) borrow unsecured funds from each other. LIBOR rates are used as a benchmark for interest rates on a global basis. Our product set includes loans priced using LIBOR as a benchmark.

Loan-to-value ratio (LTV) - A calculation of a loan's collateral coverage that is used both in underwriting and assessing credit risk in our lending portfolio. LTV is the sum total of loan obligations secured by collateral divided by the market value of that same collateral. Market values of the collateral are based on an independent valuation of the collateral. For example, a LTV of less than 90% is better secured and has less credit risk than a LTV of greater than or equal to 90%.

Loss given default (LGD) - An estimate of loss, net of recovery based on collateral type, collateral value, loan exposure, and other factors. Each loan has its own LGD. The LGD risk rating measures the percentage of exposure of a specific credit obligation that we expect to lose if default occurs. LGD is net of recovery, through any means, including but not limited to the liquidation of collateral or deficiency judgments rendered from foreclosure or bankruptcy proceedings.

Nonaccrual loans - Loans for which we do not accrue interest income. Nonaccrual loans include nonperforming loans, in addition to loans accounted for under fair value option and loans accounted for as held for sale for which full collection of contractual principal and/or interest is not probable.

Nondiscretionary client assets under administration - Assets we hold for our customers/clients in a nondiscretionary, custodial capacity. We do not include these assets on our Consolidated Balance Sheet.

Nonperforming assets - Nonperforming assets include nonperforming loans, OREO and foreclosed assets, but exclude certain government insured or guaranteed loans for which we expect to collect substantially all principal and interest, loans held for sale, loans accounted for under the fair value option and purchased impaired loans. We do not accrue interest income on assets classified as nonperforming.

Nonperforming loans - Loans accounted for at amortized cost for which we do not accrue interest income. Nonperforming loans include loans to commercial, commercial real estate, equipment lease financing, home equity, residential real estate, automobile, credit card and other consumer customers as well as TDRs which have not returned to performing status. Nonperforming loans exclude certain government insured or guaranteed loans for which we expect to collect substantially all principal and interest, loans held for sale, loans accounted for under the fair value option and purchased impaired loans. Nonperforming loans exclude purchased impaired loans as we are currently accreting interest income over the expected life of the loans.

Notional amount - A number of currency units, shares, or other units specified in a derivative contract.

Operating leverage - The period to period dollar or percentage change in total revenue (GAAP basis) less the dollar or percentage change in noninterest expense. A positive variance indicates that revenue growth exceeded expense growth (i.e., positive operating leverage) while a negative variance implies expense growth exceeded revenue growth (i.e., negative operating leverage).



THE PNC FINANCIAL SERVICES GROUP, INC.

Page 18 

Options - Contracts that grant the purchaser, for a premium payment, the right, but not the obligation, to either purchase or sell the associated financial instrument at a set price during a specified period or at a specified date in the future.

Other real estate owned (OREO) 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. Excludes certain assets that have a government-guarantee which are classified as other receivables.

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

Recovery - Cash proceeds received on a loan that we had previously charged off. We credit the amount received to the allowance for loan and lease losses.

Risk-weighted assets - Computed by the assignment of specific risk-weights (as defined by the Board of Governors of the Federal Reserve System) to assets and off-balance sheet instruments.

Servicing rights - An intangible asset or liability created by an obligation to service assets for others. Typical servicing rights include the right to receive a fee for collecting and forwarding payments on loans and related taxes and insurance premiums held in escrow.

Taxable-equivalent interest income - The interest income earned on certain assets that is completely or partially exempt from federal income tax. These tax-exempt instruments typically yield lower returns than taxable investments. To provide more meaningful comparisons of yields and margins for all interest-earning assets, we use interest income on a taxable-equivalent basis in calculating average yields and net interest margins by increasing the interest income earned on tax-exempt assets to make it fully equivalent to interest income earned on other taxable investments. This adjustment is not permitted under GAAP on the Consolidated Income Statement.

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

Yield curve - A graph showing the relationship between the yields on financial instruments or market indices of the same credit quality with different maturities. For example, a “normal” or “positive” yield curve exists when long-term bonds have higher yields than short-term bonds. A “flat” yield curve exists when yields are the same for short-term and long-term bonds. A “steep” yield curve exists when yields on long-term bonds are significantly higher than on short-term bonds. An “inverted” or “negative” yield curve exists when short-term bonds have higher yields than long-term bonds.


Exhibit 99.2 Fourth Quarter 2019 Earnings Conference Call January 15, 2020 The PNC Financial Services Group


 
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 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 2018 Form 10-K, subsequent 2019 Form 10-Qs, 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 in this presentation or in our SEC filings. Future events or circumstances may change our outlook and may also affect the nature of the assumptions, risks and uncertainties to which our forward-looking statements are subject. Forward-looking statements in this presentation speak only as of the date of this presentation. We do not assume any duty and do not undertake to update those statements. Actual results or future events could differ, possibly materially, from those anticipated in forward-looking statements, as well as from historical performance. As a result, we caution against undue reliance on any forward- looking statements. We include non-GAAP financial information in this presentation. Non-GAAP financial information includes financial metrics such as fee income, tangible book value, pretax, pre-provision earnings and return on tangible common equity. 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. 2


 
2019 Highlights Net Income . Delivered a successful year $5.4 billion – Diluted EPS increased 6% – Total revenue up 4% Diluted Earnings Per Share – Generated positive operating leverage and $11.39 improved efficiency – Grew a strong, well positioned balance sheet Average Loan Growth – Maintained strong credit quality 5.3% . Returned significant capital to shareholders Operating Leverage – Announced today a $1 billion increase in 1.4% share repurchase authorization through 2Q20 . Continued to invest in our strategic priorities to Efficiency Ratio create long-term shareholder value 59% − Growth rates compared to full year 2018. 3


 
Balance Sheet: Grew Loans and Deposits Change vs. Average balances, $ billions 4Q19 3Q19 4Q18 Highlights . LQ growth in corporate banking more than offset by a Commercial lending $160.8 ($0.7) $8.6 decline in multifamily warehouse lending Consumer lending 78.1 1.9 4.4 . Growth primarily in resi mortgage, auto, credit card Total loans $238.9 $1.2 $13.0 . 6% year-over-year growth Investment securities $83.5 ($1.7) $1.4 . Portfolio runoff primarily in treasuries . Reflects deposit growth, but balances are expected to Federal Reserve Bank balances $23.0 $7.7 $6.6 decline with modified LCR Deposits $287.8 $8.7 $21.3 . 3% linked quarter growth; 8% year-over-year growth . Returned $5.4 billion to shareholders in 2019 Common shareholders’ equity $45.1 – $2.1 − 25.9 million shares repurchased for $3.5 billion and dividends of $1.9 billion 12/31/19 9/30/19 12/31/18 Basel III common equity Tier 1 capital ratio 9.5% 9.6% 9.6% . Maintained strong capital position Tangible book value per common share $83.30 $82.37 $75.42 . 10% increase over 12/31/18 − Basel III common equity Tier 1 capital ratio – December 31, 2019 ratio is estimated. All ratios calculated based on the standardized approach. − Tangible book value per common share (Non-GAAP) – See Reconciliation in Appendix. − LQ – Linked Quarter. 4


 
Balance Sheet: Loan Growth Core Funded with Deposits Loans Deposits 6% Year-over-Year Growth 8% Year-over-Year Growth $287.8 $237.7 $238.9 $279.1 $225.9 $266.5 $214.2 $161.5 $160.8 $207.0 $152.2 $191.2 1.02% 4.49% 4.47% 0.87% 0.87% 4.27% Average Average balances, $ billions Average Average balances, $ billions $73.7 $76.2 $78.1 $75.3 $72.1 $73.6 4Q18 3Q19 4Q19 4Q18 3Q19 4Q19 Consumer Commercial Total Loan Yield Noninterest-bearing Interest-bearing Deposit Rate 5


 
Income Statement: Full Year Positive Operating Leverage Change Change vs. vs. $ millions 4Q19 3Q19 FY19 FY18 Full Year Highlights Net interest income $2,488 ($16) $9,965 $244 . Record net interest income Fee income 1,665 18 6,389 183 . Fee growth of 3% . Includes sales of retirement recordkeeping business Other noninterest income 456 114 1,473 268 and proprietary mutual funds Total revenue $4,609 $116 $17,827 695 . Record revenue Noninterest expense $2,762 $139 $10,574 $278 . Improved efficiency ratio to 59% Pretax, pre-provision earnings $1,847 ($23) $7,253 $417 . Effective tax rate of 16.4% Provision $221 $38 $773 $365 . Overall credit quality remained strong Net income $1,381 ($11) $5,418 $72 4Q19 3Q19 FY19 FY18 Diluted EPS $2.97 $2.94 $11.39 $10.71 . 6% EPS growth − Pretax, pre-provision earnings (Non-GAAP) – See Reconciliation in Appendix. − FY – Full Year. 6


 
Income Statement: Diverse Business Mix Drove Record Revenue Total Revenue Noninterest Income 20000 6% Compound Annual Growth Rate 6% Growth in 2019 $17,827 3.40% 18000 Change vs. Change vs. $17,132 $16,329 $9,965 $ millions 4Q19 3Q19 FY19 FY18 16000 $9,721 3.20% $15,162 $9,108 Asset management $504 $40 $1,850 $25 14000 $8,391 3.00% 2.97% Consumer services 390 (12) 1,555 53 12000 2.87% 2.89% 2.80% 10000 Corporate services 499 30 1,914 65 2.73% 8000 2.60% Residential mortgage 87 (47) 368 52 $ millions $7,862 $7,221 $7,411 6000 $6,771 Service charges on deposits 185 7 702 (12) 2.40% 4000 Fee income $1,665 $18 $6,389 $183 2.20% 2000 Other noninterest income 456 114 1,473 268 0 2.00% 2016 2017 2018 2019 Noninterest income $2,121 $132 $7,862 $451 Noninterest Income NII NIM − NII – Net Interest Income. − NIM – Net Interest Margin. 7


 
Income Statement: Focused on Expense Management Noninterest Expense Noninterest Expense Increased 3% in 2019 Improving Efficiency Ratio 100.00% Invested in Strategies, Technology, and Employees 90.00% Change vs. Change vs. 10000 $10,398 $10,574 $10,296 $ millions 4Q19 3Q19 FY19 FY18 $9,476 80.00% 70.00% Personnel $1,468 $68 $5,647 $176 8000 64% 62% 60.00% 60% 59% Occupancy 201 (5) 834 16 6000 50.00% Equipment 348 57 1,210 107 40.00% $ millions 4000 30.00% Marketing 77 1 301 16 20.00% 2000 Other 668 18 2,582 (37) 10.00% 0 0.00% Noninterest expense $2,762 $139 $10,574 $278 2016 2017 2018 2019 Noninterest Expense Efficiency Ratio 8


 
Credit: Maintained Strong Credit Quality Net Charge-offs and Provision NCO / Average Loans for 4Q19: 0.35% $773 $221 $209 $642 $189 $180 $183 $148 $155 $136 $142 $420 $408 $107 1.16% $ millions 1.16% 1.16% 1.15% 1.15% 1.14% 1.14% 4Q18 1Q19 2Q19 3Q19 4Q19 2018 2019 Net Charge-offs Provision ALLL to Total Loans Nonperforming Loans Delinquencies $1,800 1.20% $1,600 1.10% $2,144 $1,400 $1,640 $2,126 $1,576 1.00% $1,520 $1,485 $1,504 $1,865 $1,200 $1,694 0.90% 1.03% $1,635 $1,000 1.02% 0.80% 0.80% $800 0.75% 0.85% 0.70% $600 0.69% 0.66% 0.75% 0.63% 0.60% $400 $ millions 0.68% $ millions 0.50% $200 $- 0.40% 12/31/15 12/31/16 12/31/17 12/31/18 12/31/19 12/31/15 12/31/16 12/31/17 12/31/18 12/31/19 NPLs Nonperforming Loans to Total Loans Delinquencies Delinquencies to Total Loans − ALLL – Allowance for Loan and Lease Losses. − NCO / Average Loans represents annualized net charge-offs (NCO) to average loans for the three months ended. − Delinquencies represent accruing loans past due 30-days or more. Delinquencies to Total Loans represents delinquencies divided by period end loans. 9


 
Outlook: Full Year 2020 Compared to Full Year 2019 Balance Average Loans Up 4 - 5% Sheet Revenue Up low-end of low-single digits Income Noninterest expense Stable Statement Effective tax rate 17.5% Positioned to deliver full year positive operating leverage − 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, revenue and noninterest expense outlook represents estimated percentage change for full year 2020 compared to full year 2019. 10


 
Outlook: First Quarter 2020 Compared to Fourth Quarter 2019 Balance Average Loans Up approximately 1% Sheet Net interest income Down approximately 1% Fee income Down approximately 3% Income Other noninterest income $300 - $350 million Statement Noninterest expense Down mid-single digits Loan loss provision $225 - $300 million − 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, net interest income, fee income and noninterest expense outlook represents estimated percentage change for first quarter 2020 compared to fourth quarter 2019. − The range for Other Noninterest Income excludes net securities gains and activities related to Visa Class B common shares. 11


 
Appendix: Cautionary Statement Regarding Forward-Looking Information This presentation includes “snapshot” information about PNC used by way of illustration and is not intended as a full business or financial review. It should not be viewed in isolation but rather in the context of all of the information made available by PNC in its SEC filings. We also make statements in this presentation, and we may from time to time make other statements, regarding our outlook for earnings, revenues, expenses, 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 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 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 the following: − 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 and market interest rates. − 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. − Slowing or reversal of the current U.S. economic expansion. − Commodity price volatility. 12


 
Appendix: Cautionary Statement Regarding Forward-Looking Information . 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 views that: − U.S. economic growth, after accelerating a few years ago, has slowed since mid-2018 and is expected to slow further in 2020. Slower global economic growth, trade tensions, reduced fiscal stimulus, and aerospace production cuts are the primary drivers of softer U.S. growth. − Job growth will continue in 2020, but at a slower pace from 2019 due to both difficulty in finding workers and slower economic growth. The unemployment rate is expected to increase slightly in the near term, but the labor market will remain tight, pushing wages higher and supporting continued gains in consumer spending. − Near-term risks are generally to the downside, including a further softening in the global economy, a further escalation in trade tensions, and geopolitical concerns. But there are some upside risks as well, such as a quick U.S.-China trade deal and stronger labor force growth. − Inflation slowed in 2019, to below the Federal Open Market Committee's (FOMC's) 2% objective, but is expected to gradually increase over the next two years. − We do not expect further federal funds rate cuts in 2020. The federal funds rate is modestly positive for near-term economic growth in its current range of 1.50 to 1.75 percent. . PNC’s ability to take certain capital actions, including returning capital to shareholders, is subject to review by the Federal Reserve Board as part of PNC’s comprehensive capital plan for the applicable period in connection with the Federal Reserve Board’s Comprehensive Capital Analysis and Review (CCAR) process and to the acceptance of such capital plan and non-objection to such capital actions by the Federal Reserve Board. . 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. 13


 
Appendix: Cautionary Statement Regarding Forward-Looking Information . 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. . Business and operating results also include impacts relating to our equity interest in BlackRock, Inc. and rely to a significant extent on information provided to us by BlackRock. Risks and uncertainties that could affect BlackRock are discussed in more detail by BlackRock in its SEC filings. . We grow our business in part 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 2018 Form 10-K and subsequent 2019 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. Any annualized, pro forma, estimated, third party or consensus numbers in this presentation are used for illustrative or comparative purposes only and may not reflect actual results. Any consensus earnings estimates are calculated based on the earnings projections made by analysts who cover that company. The analysts’ opinions, estimates or forecasts (and therefore the consensus earnings estimates) are theirs alone, are not those of PNC or its management, and may not reflect PNC’s or other company’s actual or anticipated results. 14


 
Appendix: Non-GAAP to GAAP Reconciliation Return on Tangible Common Equity (Non-GAAP) For the year ended For the three months ended Dec. 31, Dec. 31, $ millions 2019 2018 Dec. 31, 2019 Sep. 30, 2019 Return on average common shareholders' equity 11.50% 11.83% 11.54% 11.56% Average common shareholders' equity $44,606 $42,779 $ 45,063 $ 45,127 Average Goodwill and Other intangible assets (9,452) (9,501) (9,448) (9,455) Average deferred tax liabilities on Goodwill and Other intangible assets 190 192 189 191 Average tangible common equity $35,344 $33,470 $ 35,804 $ 35,863 Net income attributable to common shareholders $ 5,129 $ 5,061 $ 1,311 $ 1,315 Net income attributable to common shareholders, if annualized $ 5,129 $ 5,061 $ 5,201 $ 5,217 Return on average tangible common equity 14.51% 15.12% 14.53% 14.55% 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. 15


 
Appendix: Non-GAAP to GAAP Reconciliation Tangible Book Value per Common Share (Non-GAAP) % Change 12/31/19 12/31/19 $ millions, except per share data Dec. 31, Sep. 30, Dec. 31, vs. vs. 2019 2019 2018 9/30/19 12/31/18 Book value per common share $104.59 $103.37 $95.72 1% 9% Tangible book value per common share Common shareholders' equity $45,321 $45,428 $43,742 Goodwill and Other intangible assets (9,441) (9,459) (9,467) Deferred tax liabilities on Goodwill and Other intangible assets 187 191 190 Tangible common shareholders' equity $36,067 $36,160 $34,465 Period-end common shares outstanding (in millions) 433 439 457 Tangible book value per common share (Non-GAAP) $83.30 $82.37 $75.42 1% 10% Tangible book value per common share is a non-GAAP financial 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. 16


 
Appendix: Non-GAAP to GAAP Reconciliation Pretax, Pre-Provision Earnings (Non-GAAP) For the year ended For the three months ended % Change % Change Dec. 31, Dec. 31, 2019 vs. Dec. 31, Sep. 30, 4Q19 vs. $ millions 2019 2018 2018 2019 2019 3Q19 Net interest income $9,965 $9,721 3% $2,488 $2,504 (1%) Noninterest income 7,862 7,411 6% 2,121 1,989 7% Total revenue $17,827 $17,132 4% $4,609 $4,493 3% Noninterest expense 10,574 10,296 3% 2,762 2,623 5% Pretax pre-provision earnings $7,253 $6,836 6% $1,847 $1,870 (1%) Net income $5,418 $5,346 1% $1,381 $1,392 (1%) We believe that pretax, pre-provision earnings, a non-GAAP financial measure, is useful as a tool to help evaluate the ability to provide for credit costs through operations. 17