PNC FINANCIAL SERVICES GROUP, INC.

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PNC FINANCIAL SERVICES : FINANCIAL SUPPLEMENT FOURTH QUARTER 2021 - Form 8-K

01/18/2022 | 11:30am EDT
THE PNC FINANCIAL SERVICES GROUP, INC.
FINANCIAL SUPPLEMENT
FOURTH QUARTER 2021
(UNAUDITED)

The information contained in this Financial Supplement is preliminary, unaudited and based on data available on January 18, 2022. We have reclassified certain prior period amounts to be consistent with the current period presentation, which we believe is more meaningful to readers of our consolidated financial statements. This information speaks only as of the particular date or dates included in the schedules. We do not undertake any obligation to, and disclaim any duty to, correct or update any of the information provided in this Financial Supplement. Our future financial performance is subject to risks and uncertainties as described in our United States Securities and Exchange Commission (SEC) filings.

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

ACQUISITION OF BBVA USA BANCSHARES, INC.
On June 1, 2021, PNC acquired BBVA USA Bancshares Inc. (BBVA), a U.S. financial holding company conducting its business operations primarily through its U.S. banking subsidiary, BBVA USA. PNC paid $11.5 billion in cash as consideration for the acquisition.

On October 8, 2021, BBVA USA merged into PNC Bank. As of October 12, 2021, PNC converted approximately 2.6 million
customers, 9,000 employees and over 600 branches across seven states. Our results for the year ended 2021 reflect the benefit of BBVA's acquired business operations for the period since the acquisition closed on June 1, 2021. PNC's balance sheets at December 31, 2021, September 30, 2021 and June 30, 2021 include BBVA's balances.

DISCONTINUED OPERATIONS
On May 15, 2020, PNC completed the sale of its 31.6 million shares of BlackRock, Inc., common and preferred stock through a registered secondary offering. In addition, BlackRock repurchased 2.65 million shares from PNC. The total proceeds from the sale were $14.2 billion in cash, net of $0.2 billion in expenses, and resulted in a gain on sale of $4.3 billion. Additionally, PNC contributed 500,000 BlackRock shares to the PNC Foundation on May 18, 2020. As a result, PNC has divested its entire holding in BlackRock. PNC and its affiliates only hold shares of BlackRock stock in a fiduciary capacity for clients of PNC and its affiliates. Activity for BlackRock for all periods presented on the Consolidated Income Statement have been reclassified to discontinued operations in accordance with Accounting Standard Codification (ASC) 205-20, Presentation of Financial Statements - Discontinued Operations.


THE PNC FINANCIAL SERVICES GROUP, INC.
Cross Reference Index to Fourth Quarter 2021 Financial Supplement (Unaudited)
Financial Supplement Table Reference
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THE PNC FINANCIAL SERVICES GROUP, INC.

Page 1

Table 1: Consolidated Income Statement (Unaudited)
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 2021 2021 2021 2021 2020 2021 2020
Interest Income
Loans $ 2,414 $ 2,437 $ 2,160 $ 1,996 $ 2,074 $ 9,007 $ 8,927
Investment securities 484 460 469 421 442 1,834 2,041
Other 77 78 72 66 60 293 339
Total interest income 2,975 2,975 2,701 2,483 2,576 11,134 11,307
Interest Expense
Deposits 27 29 30 40 53 126 643
Borrowed funds 86 90 90 95 99 361 718
Total interest expense 113 119 120 135 152 487 1,361
Net interest income 2,862 2,856 2,581 2,348 2,424 10,647 9,946
Noninterest Income
Asset management 251 248 239 226 221 964 836
Consumer services 508 496 457 384 387 1,845 1,484
Corporate services 839 842 688 555 650 2,924 2,167
Residential mortgage 101 147 103 105 99 456 604
Service charges on deposits 126 159 131 119 134 535 500
Other (a) 440 449 468 483 293 1,840 1,364
Total noninterest income 2,265 2,341 2,086 1,872 1,784 8,564 6,955
Total revenue 5,127 5,197 4,667 4,220 4,208 19,211 16,901
Provision For (Recapture of) Credit Losses (327) (203) 302 (551) (254) (779) 3,175
Noninterest Expense
Personnel 2,038 1,986 1,640 1,477 1,521 7,141 5,673
Occupancy 260 248 217 215 215 940 826
Equipment 437 355 326 293 296 1,411 1,176
Marketing 97 103 74 45 64 319 236
Other 959 895 793 544 612 3,191 2,386
Total noninterest expense 3,791 3,587 3,050 2,574 2,708 13,002 10,297
Income from continuing operations before income taxes and noncontrolling interests 1,663 1,813 1,315 2,197 1,754 6,988 3,429
Income taxes from continuing operations 357 323 212 371 298 1,263 426
Net income from continuing operations 1,306 1,490 1,103 1,826 1,456 5,725 3,003
Income from discontinued operations before taxes 5,777
Income taxes from discontinued operations 1,222
Net income from discontinued operations 4,555
Net income 1,306 1,490 1,103 1,826 1,456 5,725 7,558
Less: Net income attributable to noncontrolling interests 13 16 12 10 14 51 41
Preferred stock dividends (b) 71 57 48 57 48 233 229
Preferred stock discount accretion and
redemptions
2 1 1 1 1 5 4
Net income attributable to common shareholders $ 1,220 $ 1,416 $ 1,042 $ 1,758 $ 1,393 $ 5,436 $ 7,284
Earnings Per Common Share
Basic earnings from continuing operations $ 2.87 $ 3.31 $ 2.43 $ 4.11 $ 3.26 $ 12.71 $ 6.37
Basic earnings from discontinued operations 10.62
Total basic earnings $ 2.87 $ 3.31 $ 2.43 $ 4.11 $ 3.26 $ 12.71 $ 16.99
Diluted earnings from continuing operations $ 2.86 $ 3.30 $ 2.43 $ 4.10 $ 3.26 $ 12.70 $ 6.36
Diluted earnings from discontinued operations 10.60
Total diluted earnings $ 2.86 $ 3.30 $ 2.43 $ 4.10 $ 3.26 $ 12.70 $ 16.96
Average Common Shares Outstanding
Basic 424 426 427 426 425 426 427
Diluted 424 426 427 426 426 426 427
Efficiency 74 % 69 % 65 % 61 % 64 % 68 % 61 %
Noninterest income to total revenue 44 % 45 % 45 % 44 % 42 % 45 % 41 %
Effective tax rate from continuing operations (c) 21.5 % 17.8 % 16.1 % 16.9 % 17.0 % 18.1 % 12.4 %
(a)Includes net gains on sales of securities of $14 million, $15 million, $10 million, $25 million, and $51 million for the quarters ended December 31, 2021, September 30, 2021, June 30, 2021, March 31, 2021 and December 31, 2020, respectively, and $64 million and $305 million for the twelve months ended December 31, 2021 and December 31, 2020, respectively.
(b)Dividends are payable quarterly other than Series R and Series S preferred stock, which are payable semiannually.
(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 2021 2021 2021 2021 2020
Assets
Cash and due from banks $ 8,004 $ 8,843 $ 8,724 $ 7,455 $ 7,017
Interest-earning deposits with banks (a) 74,250 75,478 72,447 86,161 85,173
Loans held for sale (b) 2,231 2,121 2,227 1,967 1,597
Investment securities - available for sale 131,536 124,127 125,058 96,799 87,358
Investment securities - held to maturity 1,426 1,479 1,485 1,456 1,441
Loans (b) 288,372 290,230 294,704 237,013 241,928
Allowance for loan and lease losses (4,868) (5,355) (5,730) (4,714) (5,361)
Net loans 283,504 284,875 288,974 232,299 236,567
Equity investments 8,180 7,737 7,521 6,386 6,052
Mortgage servicing rights 1,818 1,833 1,793 1,680 1,242
Goodwill 10,916 10,885 10,958 9,317 9,233
Other (b) 36,583 36,137 35,025 30,894 30,999
Total assets $ 558,448 $ 553,515 $ 554,212 $ 474,414 $ 466,679
Liabilities
Deposits
Noninterest-bearing $ 155,175 $ 156,305 $ 154,190 $ 120,641 $ 112,637
Interest-bearing 302,103 292,597 298,693 254,426 252,708
Total deposits 457,278 448,902 452,883 375,067 365,345
Borrowed funds
Federal Home Loan Bank borrowings 1,500 3,500
Bank notes and senior debt 20,661 22,993 24,408 22,139 24,271
Subordinated debt 6,996 7,074 7,120 6,241 6,403
Other (b) 3,127 3,404 3,285 3,150 3,021
Total borrowed funds 30,784 33,471 34,813 33,030 37,195
Allowance for unfunded lending related commitments 662 646 645 507 584
Accrued expenses and other liabilities 13,998 14,199 11,186 11,931 9,514
Total liabilities 502,722 497,218 499,527 420,535 412,638
Equity
Preferred stock (c)
Common stock - $5 par value
Authorized 800 shares, issued 543 shares 2,713 2,713 2,713 2,713 2,713
Capital surplus 17,457 17,453 15,928 15,879 15,884
Retained earnings 50,228 49,541 48,663 48,113 46,848
Accumulated other comprehensive income 409 1,079 1,463 1,290 2,770
Common stock held in treasury at cost: 123, 120, 118, 118, and 119 shares (15,112) (14,527) (14,140) (14,146) (14,205)
Total shareholders' equity 55,695 56,259 54,627 53,849 54,010
Noncontrolling interests 31 38 58 30 31
Total equity 55,726 56,297 54,685 53,879 54,041
Total liabilities and equity $ 558,448 $ 553,515 $ 554,212 $ 474,414 $ 466,679
(a)Amounts include balances held with the Federal Reserve Bank of $73.8 billion, $75.1 billion, $71.9 billion, $85.8 billion and $84.9 billion as of December 31, 2021, September 30, 2021, June 30, 2021, March 31, 2021 and December 31, 2020, respectively.
(b)Amounts include assets and liabilities for which PNC has elected the fair value option. Our 2021 Form 10-Qs included, and our 2021 Form 10-K will include, additional information regarding these items.
(c)Par value less than $0.5 million at each date.


THE PNC FINANCIAL SERVICES GROUP, INC.

Page 3
Table 3: Average Consolidated Balance Sheet (Unaudited) (a)
Three months ended Year ended
December 31 September 30 June 30 March 31 December 31 December 31 December 31
In millions 2021 2021 2021 2021 2020 2021 2020
Assets
Interest-earning assets:
Investment securities
Securities available for sale
Residential mortgage-backed
Agency $ 64,521 $ 63,163 $ 56,042 $ 45,298 $ 48,036 $ 57,325 $ 50,594
Non-agency 974 1,051 1,142 1,236 1,337 1,100 1,480
Commercial mortgage-backed 5,538 6,134 6,465 6,241 6,568 6,093 6,865
Asset-backed 6,206 5,608 5,855 5,304 5,017 5,745 5,090
U.S. Treasury and government agencies 44,415 38,149 32,419 22,309 18,783 34,394 17,234
Other 4,741 4,994 5,107 4,561 4,561 4,852 4,564
Total securities available for sale 126,395 119,099 107,030 84,949 84,302 109,509 85,827
Securities held to maturity
Asset-backed 18
U.S. Treasury and government agencies 812 807 802 797 793 805 786
Other 642 680 671 650 650 660 648
Total securities held to maturity 1,454 1,487 1,473 1,447 1,443 1,465 1,452
Total investment securities 127,849 120,586 108,503 86,396 85,745 110,974 87,279
Loans
Commercial and industrial 152,355 152,964 137,892 129,996 134,944 143,389 139,254
Commercial real estate 35,256 37,054 31,611 28,598 28,991 33,159 28,765
Equipment lease financing 6,183 6,300 6,332 6,332 6,380 6,286 6,812
Consumer 56,244 57,533 52,575 50,904 52,872 54,338 55,423
Residential real estate 38,872 37,475 27,197 22,305 22,638 31,524 22,379
Total loans 288,910 291,326 255,607 238,135 245,825 268,696 252,633
Interest-earning deposits with banks (b) 75,377 80,274 78,522 85,410 76,374 79,869 47,333
Other interest-earning assets 9,112 9,113 8,079 7,829 8,134 8,539 9,553
Total interest-earning assets 501,248 501,299 450,711 417,770 416,078 468,078 396,798
Noninterest-earning assets 59,032 57,943 53,718 50,450 48,901 55,317 52,497
Total assets $ 560,280 $ 559,242 $ 504,429 $ 468,220 $ 464,979 $ 523,395 $ 449,295
Liabilities and Equity
Interest-bearing liabilities:
Interest-bearing deposits
Money market $ 65,214 $ 82,911 $ 64,990 $ 59,083 $ 62,621 $ 68,124 $ 60,229
Demand 108,345 106,588 99,091 91,619 88,026 101,471 82,295
Savings 104,644 89,679 87,307 82,926 79,430 91,194 75,574
Time deposits 18,029 19,293 18,048 18,449 19,448 18,439 20,673
Total interest-bearing deposits 296,232 298,471 269,436 252,077 249,525 279,228 238,771
Borrowed funds
Federal Home Loan Bank borrowings 265 2,411 4,761 661 9,470
Bank notes and senior debt 21,581 22,573 22,620 22,799 24,022 22,390 27,030
Subordinated debt 6,779 6,787 6,218 5,929 5,936 6,432 5,936
Other 5,987 4,992 5,046 4,057 3,433 5,025 5,502
Total borrowed funds 34,347 34,352 34,149 35,196 38,152 34,508 47,938
Total interest-bearing liabilities 330,579 332,823 303,585 287,273 287,677 313,736 286,709
Noninterest-bearing liabilities and equity:
Noninterest-bearing deposits 156,549 155,948 132,283 113,299 109,878 139,683 95,055
Accrued expenses and other liabilities 17,726 15,332 14,755 14,258 14,348 15,528 15,774
Equity 55,426 55,139 53,806 53,390 53,076 54,448 51,757
Total liabilities and equity $ 560,280 $ 559,242 $ 504,429 $ 468,220 $ 464,979 $ 523,395 $ 449,295
(a)Calculated using average daily balances.
(b)Amounts include average balances held with the Federal Reserve Bank of Cleveland of $75.1 billion, $80.1 billion, $78.3 billion, $85.2 billion and $76.1 billion for the three months ended December 31, 2021, September 30, 2021, June 30, 2021, March 31, 2021 and December 31, 2020, and $79.6 billion and $47.0 billion for the twelve months ended December 31, 2021 and December 31, 2020, respectively.


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
2021 2021 2021 2021 2020 2021 2020
Average yields/rates (a)
Yield on interest-earning assets
Investment securities
Securities available for sale
Residential mortgage-backed
Agency 1.47 % 1.41 % 1.61 % 1.72 % 1.81 % 1.54 % 2.19 %
Non-agency 7.36 % 8.07 % 7.85 % 7.24 % 7.15 % 7.64 % 7.36 %
Commercial mortgage-backed 2.37 % 2.34 % 2.49 % 2.58 % 2.66 % 2.45 % 2.67 %
Asset-backed 1.48 % 1.50 % 2.07 % 1.84 % 2.04 % 1.72 % 2.53 %
U.S. Treasury and government agencies 1.17 % 1.18 % 1.30 % 1.68 % 1.77 % 1.30 % 1.88 %
Other 2.77 % 2.90 % 3.00 % 3.28 % 3.45 % 2.97 % 3.51 %
Total securities available for sale 1.50 % 1.51 % 1.73 % 1.95 % 2.05 % 1.65 % 2.35 %
Securities held to maturity
U.S. Treasury and government agencies 2.89 % 2.88 % 2.86 % 2.83 % 2.88 % 2.86 % 2.80 %
Other 4.20 % 4.33 % 3.67 % 4.17 % 4.20 % 4.09 % 4.32 %
Total securities held to maturity 3.47 % 3.54 % 3.23 % 3.43 % 3.47 % 3.41 % 3.44 %
Total investment securities 1.52 % 1.54 % 1.75 % 1.97 % 2.08 % 1.67 % 2.36 %
Loans
Commercial and industrial 2.90 % 2.80 % 2.89 % 2.91 % 2.87 % 2.92 % 3.07 %
Commercial real estate 2.86 % 3.17 % 2.92 % 2.80 % 2.63 % 2.99 % 2.98 %
Equipment lease financing 3.81 % 3.83 % 3.76 % 3.90 % 3.90 % 3.82 % 3.86 %
Consumer 4.71 % 4.85 % 4.82 % 4.78 % 4.74 % 4.79 % 4.93 %
Residential real estate 3.26 % 3.15 % 3.50 % 3.53 % 3.69 % 3.32 % 3.81 %
Total loans 3.32 % 3.32 % 3.38 % 3.38 % 3.35 % 3.37 % 3.55 %
Interest-earning deposits with banks 0.15 % 0.16 % 0.11 % 0.10 % 0.10 % 0.13 % 0.21 %
Other interest-earning assets 2.14 % 2.03 % 2.46 % 2.34 % 1.99 % 2.23 % 2.50 %
Total yield on interest-earning assets 2.36 % 2.36 % 2.40 % 2.40 % 2.46 % 2.39 % 2.87 %
Rate on interest-bearing liabilities
Interest-bearing deposits
Money market 0.02 % 0.03 % 0.03 % 0.03 % 0.05 % 0.03 % 0.23 %
Demand 0.02 % 0.03 % 0.03 % 0.04 % 0.04 % 0.03 % 0.13 %
Savings 0.04 % 0.04 % 0.05 % 0.06 % 0.08 % 0.05 % 0.31 %
Time deposits 0.11 % 0.12 % 0.20 % 0.32 % 0.41 % 0.18 % 0.79 %
Total interest-bearing deposits 0.04 % 0.04 % 0.05 % 0.06 % 0.08 % 0.05 % 0.27 %
Borrowed funds
Federal Home Loan Bank borrowings 0.35 % 0.43 % 0.40 % 0.45 % 1.09 %
Bank notes and senior debt 0.94 % 0.97 % 0.98 % 1.04 % 1.00 % 1.00 % 1.58 %
Subordinated debt 1.28 % 1.28 % 1.35 % 1.43 % 1.38 % 1.34 % 1.89 %
Other
0.79 % 0.93 % 0.97 % 1.21 % 1.39 % 0.96 % 1.36 %
Total borrowed funds 0.98 % 1.03 % 1.04 % 1.09 % 1.02 % 1.05 % 1.50 %
Total rate on interest-bearing liabilities 0.13 % 0.14 % 0.16 % 0.19 % 0.21 % 0.16 % 0.47 %
Interest rate spread 2.23 % 2.22 % 2.24 % 2.21 % 2.25 % 2.23 % 2.40 %
Benefit from use of noninterest bearing sources (b) 0.04 % 0.05 % 0.05 % 0.06 % 0.07 % 0.06 % 0.13 %
Net interest margin 2.27 % 2.27 % 2.29 % 2.27 % 2.32 % 2.29 % 2.53 %
(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 GAAP in the Consolidated Income Statement. The taxable-equivalent adjustments to net interest income for the three months ended December 31, 2021, September 30, 2021, June 30, 2021, March 31, 2021 and December 31, 2020 were $22 million, $22 million, $15 million, $15 million and $17 million, respectively. The taxable-equivalent adjustments to net interest income for the twelve months ended December 31, 2021 and December 31, 2020 were $74 million and $75 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: Details of Loans (Unaudited)
December 31 September 30 June 30 March 31 December 31
In millions 2021 2021 2021 2021 2020
Commercial
Commercial and industrial $ 152,933 $ 152,735 $ 155,300 $ 129,798 $ 132,073
Commercial real estate 34,015 36,195 37,964 28,319 28,716
Equipment lease financing 6,130 6,257 6,376 6,389 6,414
Total commercial 193,078 195,187 199,640 164,506 167,203
Consumer
Residential real estate 39,712 38,214 36,846 22,418 22,560
Home equity 24,061 24,479 25,174 23,493 24,088
Automobile 16,635 17,265 17,551 13,584 14,218
Credit card 6,626 6,466 6,528 5,675 6,215
Education 2,533 2,653 2,726 2,842 2,946
Other consumer 5,727 5,966 6,239 4,495 4,698
Total consumer 95,294 95,043 95,064 72,507 74,725
Total loans $ 288,372 $ 290,230 $ 294,704 $ 237,013 $ 241,928


THE PNC FINANCIAL SERVICES GROUP, INC.

Page 6
Allowance for Credit Losses (Unaudited)

Table 6: Change in Allowance for Loan and Lease Losses
Three months ended Year ended
December 31 September 30 June 30 March 31 December 31 December 31 December 31
Dollars in millions 2021 2021 2021 2021 2020 2021 2020
Allowance for loan and lease losses
Beginning balance $ 5,355 $ 5,730 $ 4,714 $ 5,361 $ 5,751 $ 5,361 $ 2,742
Adoption of ASU 2016-03 (a) 463
Acquisition PCD reserves (59) 1,115 1,056
Gross charge-offs:
Commercial and industrial (35) (46) (245) (59) (133) (385) (382)
Commercial real estate (2) (1) (28) (5) (1) (36) (2)
Equipment lease financing (4) (3) (1) (5) (4) (13) (23)
Residential real estate (4) (4) (3) (4) (6) (15) (10)
Home equity (4) (2) (7) (7) (11) (20) (42)
Automobile (49) (33) (35) (52) (55) (169) (265)
Credit card (60) (62) (65) (69) (72) (256) (300)
Education (4) (3) (3) (5) (3) (15) (16)
Other consumer (62) (52) (41) (37) (42) (192) (152)
Total gross charge-offs (224) (206) (428) (243) (327) (1,101) (1,192)
Recoveries:
Commercial and industrial 20 25 29 14 23 88 75
Commercial real estate 2 2 2 1 3 7 9
Equipment lease financing 3 2 3 3 3 11 10
Residential real estate 8 9 6 5 4 28 16
Home equity 23 25 21 17 17 86 61
Automobile 26 38 41 38 33 143 128
Credit card 10 13 11 12 9 46 35
Education 2 2 2 2 2 8 8
Other consumer 6 9 7 5 4 27 18
Total recoveries 100 125 122 97 98 444 360
Net (charge-offs) / recoveries:
Commercial and industrial (15) (21) (216) (45) (110) (297) (307)
Commercial real estate 1 (26) (4) 2 (29) 7
Equipment lease financing (1) (1) 2 (2) (1) (2) (13)
Residential real estate 4 5 3 1 (2) 13 6
Home equity 19 23 14 10 6 66 19
Automobile (23) 5 6 (14) (22) (26) (137)
Credit card (50) (49) (54) (57) (63) (210) (265)
Education (2) (1) (1) (3) (1) (7) (8)
Other consumer (56) (43) (34) (32) (38) (165) (134)
Total net (charge-offs) (b) (124) (81) (306) (146) (229) (657) (832)
Provision for (recapture of) credit losses (c) (362) (229) 206 (502) (164) (887) 2,985
Other (1) (6) 1 1 3 (5) 3
Ending balance $ 4,868 $ 5,355 $ 5,730 $ 4,714 $ 5,361 $ 4,868 $ 5,361
Supplemental Information
Net charge-offs
Commercial net charge-offs $ (16) $ (21) $ (240) $ (51) $ (109) $ (328) $ (313)
Consumer net charge-offs (108) (60) (66) (95) (120) (329) (519)
Total net charge-offs (b) $ (124) $ (81) $ (306) $ (146) $ (229) $ (657) $ (832)
Net charge-offs to average loans (d) 0.17 % 0.11 % 0.48 % 0.25 % 0.37 % 0.24 % 0.33 %
Commercial 0.03 % 0.04 % 0.55 % 0.13 % 0.25 % 0.18 % 0.18 %
Consumer 0.45 % 0.25 % 0.33 % 0.53 % 0.63 % 0.38 % 0.67 %
(a) Represents the impact of adopting ASU 2016-13, Financial Instruments - Credit Losses on January 1, 2020, and our transition from an incurred loss methodology for our reserves to an expected credit loss methodology. Our 2020 Form 10-K included additional information related to our adoption of the CECL standard.
(b) Amounts for the three months ended June 30, 2021 included $248 million attributable to BBVA, primarily related to commercial industrial loans, which were largely the result of required purchase accounting treatment for the BBVA acquisition on June 1, 2021.
(c) See Table 7 for the components of the Provision for (recapture of) credit losses being reported on the Consolidated Income Statement.
(d) Three month period percentages are annualized.


THE PNC FINANCIAL SERVICES GROUP, INC.

Page 7
Allowance for Credit Losses (Unaudited) (Continued)

Table 7: Components of the Provision for (Recapture of) Credit Losses
Three months ended Year ended
December 31 September 30 June 30 March 31 December 31 December 31 December 31
In millions 2021 2021 2021 (a) 2021 2020 2021 (a) 2020
Provision for (recapture of) credit losses
Loans and leases $ (362) $ (229) $ 206 $ (502) $ (164) (887) $ 2,985
Unfunded lending related commitments 16 1 92 (77) (105) 32 87
Investment securities 25 26 11 51 80
Other financial assets 19 4 2 4 25 23
Total provision for (recapture of) credit losses $ (327) $ (203) $ 302 $ (551) $ (254) $ (779) $ 3,175
(a) Amounts include $1.0 billion of provision for credit losses that was recorded as part of the BBVA acquisition on June 1, 2021.

Table 8: Allowance for Credit Losses by Loan Class (a)
December 31, 2021 September 30, 2021 December 31, 2020

Dollars in millions
Allowance Amount Total Loans % of Total Loans Allowance Amount Total Loans % of Total Loans Allowance Amount Total Loans % of Total Loans
Allowance for loan and lease losses
Commercial
Commercial and industrial $ 1,879 $ 152,933 1.23 % $ 2,173 $ 152,735 1.42 % $ 2,300 $ 132,073 1.74 %
Commercial real estate 1,216 34,015 3.57 % 1,312 36,195 3.62 % 880 28,716 3.06 %
Equipment lease financing 90 6,130 1.47 % 118 6,257 1.89 % 157 6,414 2.45 %
Total commercial 3,185 193,078 1.65 % 3,603 195,187 1.85 % 3,337 167,203 2.00 %
Consumer
Residential real estate 21 39,712 0.05 % 42 38,214 0.11 % 28 22,560 0.12 %
Home equity 149 24,061 0.62 % 167 24,479 0.68 % 313 24,088 1.30 %
Automobile 372 16,635 2.24 % 365 17,265 2.11 % 379 14,218 2.67 %
Credit card 712 6,626 10.75 % 701 6,466 10.84 % 816 6,215 13.13 %
Education 71 2,533 2.80 % 81 2,653 3.05 % 129 2,946 4.38 %
Other consumer 358 5,727 6.25 % 396 5,966 6.64 % 359 4,698 7.64 %
Total consumer 1,683 95,294 1.77 % 1,752 95,043 1.84 % 2,024 74,725 2.71 %
Total
4,868 $ 288,372 1.69 % 5,355 $ 290,230 1.85 % 5,361 $ 241,928 2.22 %
Allowance for unfunded lending related commitments
662 646 584
Allowance for credit losses
$ 5,530 $ 6,001 $ 5,945
Supplemental Information
Allowance for credit losses to total loans
1.92 % 2.07 % 2.46 %
Commercial 1.94 % 2.12 % 2.29 %
Consumer 1.87 % 1.96 % 2.84 %

(a) Excludes allowances for investment securities and other financial assets, which together totaled $171 million, $162 million and $109 million at December 31, 2021, September 30, 2021 and December 31, 2020, respectively.

THE PNC FINANCIAL SERVICES GROUP, INC.

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Details of Nonperforming Assets (Unaudited)

Table 9: Nonperforming Assets by Type
December 31 September 30 June 30 March 31 December 31
Dollars in millions 2021 2021 2021 2021 2020
Nonperforming loans, including TDRs
Commercial
Commercial and industrial
Service providers $ 188 $ 220 $ 206 $ 79 $ 90
Real estate related (a) 64 49 78 48 95
Manufacturing 52 62 65 55 81
Retail/wholesale trade 50 59 71 66 61
Health care 46 56 71 19 20
Transportation and warehousing 18 21 18 18 20
Other industries 378 362 421 227 299
Total commercial and industrial 796 829 930 512 666
Commercial real estate 364 365 501 221 224
Equipment lease financing 8 10 15 16 33
Total commercial 1,168 1,204 1,446 749 923
Consumer (b)
Residential real estate 517 533 503 541 528
Home equity 596 592 626 656 645
Automobile 183 184 191 178 175
Credit card 7 7 7 7 8
Other consumer 9 8 6 7 7
Total consumer 1,312 1,324 1,333 1,389 1,363
Total nonperforming loans (c) 2,480 2,528 2,779 2,138 2,286
OREO and foreclosed assets 26 31 39 41 51
Total nonperforming assets $ 2,506 $ 2,559 $ 2,818 $ 2,179 $ 2,337
Nonperforming loans to total loans 0.86 % 0.87 % 0.94 % 0.90 % 0.94 %
Nonperforming assets to total loans, OREO and foreclosed assets 0.87 % 0.88 % 0.96 % 0.92 % 0.97 %
Nonperforming assets to total assets 0.45 % 0.46 % 0.51 % 0.46 % 0.50 %
Allowance for loan and lease losses to nonperforming loans 196 % 212 % 206 % 220 % 235 %
(a)Represents 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 and loans accounted for under the fair value option.

Table 10: Change in Nonperforming Assets
October 1, 2021 - July 1, 2021 - April 1, 2021 - January 1, 2021 - October 1, 2020 -
In millions December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020
Beginning balance $ 2,559 $ 2,818 $ 2,179 $ 2,337 $ 2,152
Acquired nonperforming assets (a) 880
New nonperforming assets 395 365 207 249 586
Charge-offs and valuation adjustments (53) (71) (61) (70) (97)
Principal activity, including paydowns and payoffs (240) (333) (264) (186) (185)
Asset sales and transfers to loans held for sale (3) (30) (15) (86) (14)
Returned to performing status (152) (190) (108) (65) (105)
Ending balance $ 2,506 $ 2,559 $ 2,818 $ 2,179 $ 2,337
(a)Represents nonperforming assets acquired as a part of the BBVA acquisition on June 1, 2021 and includes $871 million of loans and $9 million of OREO and foreclosed assets. Our second quarter 2021 Form 10-Q included additional information on the BBVA acquisition.


THE PNC FINANCIAL SERVICES GROUP, INC.

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Accruing Loans Past Due (Unaudited)

Pursuant to the interagency guidance issued in April 2020 and in connection with the credit reporting rules from the U.S. Coronavirus Aid, Relief and Economic Security Act (CARES Act), the delinquency status of loans modified due to COVID-19 related hardships are reported for all periods presented in alignment with the rules set forth for banks to report delinquency status to the credit agencies. These rules require that COVID-19 related loan modifications be reported as follows:
•if current at the time of modification, the loan remains current throughout the modification period,
•if delinquent at the time of modification and the borrower was not made current as part of the modification, the loan maintains its reported as delinquent status during the modification period, or
•if delinquent at the time of modification and the borrower was made current as part of the modification or became current during the modification period, the loan is reported as current.
As a result, certain loans modified due to COVID-19 related hardships are not being reported as past due for the periods presented based on the contractual terms of the loan, even where borrowers may not be making payments on their loans during the modification period. Our third quarter 2021 Form 10-Q included, and our 2021 Form 10-K will include, additional information on COVID-19 related loan modifications.

Table 11: Accruing Loans Past Due 30 to 59 Days (a)
December 31 September 30 June 30 March 31 December 31
Dollars in millions 2021 2021 2021 2021 2020
Commercial
Commercial and industrial $ 235 $ 97 $ 72 $ 80 $ 106
Commercial real estate 46 68 5 12 6
Equipment lease financing 25 5 3 21 31
Total commercial 306 170 80 113 143
Consumer
Residential real estate
Non government insured (b) 310 178 182 61 89
Government insured 69 81 88 101 92
Home equity 53 45 44 43 50
Automobile 146 114 98 76 134
Credit card 49 42 37 31 43
Education
Non government insured 5 5 5 6 5
Government insured
38 40 41 43 50
Other consumer 35 34 31 11 14
Total consumer 705 539 526 372 477
Total $ 1,011 $ 709 $ 606 $ 485 $ 620
Supplemental Information
Total accruing loans past due 30-59 days to total loans 0.35 % 0.24 % 0.21 % 0.20 % 0.26 %
Commercial 0.16 % 0.09 % 0.04 % 0.07 % 0.09 %
Consumer 0.74 % 0.57 % 0.55 % 0.51 % 0.64 %
(a)Excludes loans held for sale.
(b)Amounts as of September 30, 2021 and June 30, 2021 have been revised to align the methodology of acquired residential real estate loans attributable to BBVA to PNC's methodology, which resulted in an increase of $50 million and $58 million as of September 30, 2021 and June 30, 2021, respectively. This change was made as a result of the conversion of bank systems completed in October 2021.


THE PNC FINANCIAL SERVICES GROUP, INC.

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Accruing Loans Past Due (Unaudited) (Continued)

Table 12: Accruing Loans Past Due 60 to 89 Days (a)
December 31 September 30 June 30 March 31 December 31
Dollars in millions 2021 2021 2021 2021 2020
Commercial
Commercial and industrial $ 72 $ 50 $ 27 $ 13 $ 26
Commercial real estate 24 2 3 1 1
Equipment lease financing 2 4 4 1 5
Total commercial 98 56 34 15 32
Consumer
Residential real estate
Non government insured (b) 78 53 53 13 16
Government insured 41 45 52 60 62
Home equity 18 18 17 20 21
Automobile 40 23 20 19 34
Credit card 33 27 24 24 30
Education
Non government insured
2 3 2 3 2
Government insured
23 23 20 22 27
Other consumer 22 15 16 6 10
Total consumer 257 207 204 167 202
Total $ 355 $ 263 $ 238 $ 182 $ 234
Supplemental Information
Total accruing loans past due 60-89 days to total loans 0.12 % 0.09 % 0.08 % 0.08 % 0.10 %
Commercial 0.05 % 0.03 % 0.02 % 0.01 % 0.02 %
Consumer 0.27 % 0.22 % 0.21 % 0.23 % 0.27 %
(a)Excludes loans held for sale.
(b)Amounts as of September 30, 2021 and June 30, 2021 have been revised to align the methodology of acquired residential real estate loans attributable to BBVA to PNC's methodology, which resulted in an increase of $18 million and $23 million as of September 30, 2021 and June 30, 2021, respectively. This change was made as a result of the conversion of bank systems completed in October 2021.


THE PNC FINANCIAL SERVICES GROUP, INC.

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Accruing Loans Past Due (Unaudited) (Continued)

Table 13: Accruing Loans Past Due 90 Days or More (a)
December 31 September 30 June 30 March 31 December 31
Dollars in millions 2021 2021 2021 2021 2020
Commercial
Commercial and industrial $ 132 $ 56 $ 45 $ 63 $ 30
Commercial real estate 1 11 2
Total commercial 133 67 47 63 30
Consumer
Residential real estate
Non government insured (b) 59 33 44 17 27
Government insured 269 268 297 258 292
Automobile 14 4 3 6 12
Credit card 62 53 59 52 60
Education
Non government insured 2 1 1 2 2
Government insured
63 60 66 74 75
Other consumer 17 11 14 7 11
Total consumer 486 430 484 416 479
Total $ 619 $ 497 $ 531 $ 479 $ 509
Supplemental Information
Total accruing loans past due 90 days or more to total loans 0.21 % 0.17 % 0.18 % 0.20 % 0.21 %
Commercial 0.07 % 0.03 % 0.02 % 0.04 % 0.02 %
Consumer 0.51 % 0.45 % 0.51 % 0.57 % 0.64 %
Total accruing loans past due $ 1,985 $ 1,469 $ 1,375 $ 1,146 $ 1,363
Commercial $ 537 $ 293 $ 161 $ 191 $ 205
Consumer $ 1,448 $ 1,176 $ 1,214 $ 955 $ 1,158
Total accruing loans past due to total loans 0.69 % 0.51 % 0.47 % 0.48 % 0.56 %
Commercial 0.28 % 0.15 % 0.08 % 0.12 % 0.12 %
Consumer 1.52 % 1.24 % 1.28 % 1.32 % 1.55 %
(a)Excludes loans held for sale.
(b)Amounts as of September 30, 2021 and June 30, 2021 have been revised to align the methodology of acquired residential real estate loans attributable to BBVA to PNC's methodology, which resulted in an increase of $5 million and $4 million as of September 30, 2021 and June 30, 2021, respectively. This change was made as a result of the conversion of bank systems completed in October 2021.


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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. As a result of the BBVA acquisition, we have become a coast-to-coast Retail Bank. Our national expansion strategy is designed to grow customers with digitally-led banking and a thin branch network as we expand into new markets. Deposit products include checking, savings and money market accounts and certificates of deposit. Lending products include residential mortgages, home equity loans and lines of credit, auto loans, credit cards, education loans and personal and small business loans and lines of credit. The residential mortgage loans are directly originated within our branch network and nationwide, and are typically underwritten to agency and/or third-party standards, and either sold, servicing retained or held on our balance sheet. Brokerage, investment management and cash management products and services include managed, education, retirement and trust accounts.

Corporate & Institutional Bankingprovides lending, treasury management, and capital markets-related products and services to mid-sized and large corporations, and government and not-for-profit entities. Lending products include secured and unsecured loans, letters of credit and equipment leases. The Treasury Management business provides corporations with cash and investment management services, receivables and disbursement management services, funds transfer services, international payment services and access to online/mobile information management and reporting services. Within Treasury Management, PNC Global Transfers (formerly BBVA Transfer Services, Inc.) provides wholesale money transfer processing capabilities between the U.S. and Mexico and other countries primarily in Central America and South America. Capital markets-related products and services include foreign exchange, derivatives, fixed income, securities underwriting, loan syndications, mergers and acquisitions advisory and equity capital markets advisory related services. We also provide commercial loan servicing and technology solutions for the commercial real estate finance industry. Products and services are provided nationally.

Asset Management Group provides private banking for high net worth and ultra high net worth clients and institutional asset management. The Asset Management group is comprised of two distinct operating units:
•PNC Private Bank provides products and services to emerging affluent, high net worth and ultra high net worth individuals and their families including investment and retirement planning, customized investment management, credit and cash management solutions, and trust management and administration. In addition, multi-generational family planning services are also provided to ultra high net worth individuals and families which include estate, financial, tax, fiduciary and customized performance reporting through PNC Private Bank Hawthorn.
•Institutional Asset Management provides outsourced chief investment officer, custody, private real estate, cash and fixed income client solutions, and retirement plan fiduciary investment services to institutional clients including corporations, healthcare systems, insurance companies, unions, municipalities and non-profits.

Table 14: Period End Employees
December 31 September 30 June 30 March 31 December 31
2021 2021 2021 2021 2020
Full-time employees
Retail Banking 32,563 33,188 33,471 27,690 27,621
Other full-time employees 25,105 25,442 25,512 22,281 21,928
Total full-time employees 57,668 58,630 58,983 49,971 49,549
Part-time employees
Retail Banking 1,669 1,616 1,821 1,697 1,611
Other part-time employees 89 94 431 101 97
Total part-time employees 1,758 1,710 2,252 1,798 1,708
Total 59,426 60,340 61,235 51,769 51,257


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Table 15: Summary of Business Segment Net 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 2021 2021 2021 2021 2020 2021 2020
Income
Retail Banking $ 362 $ 447 $ 232 $ 607 $ 336 $ 1,648 $ 844
Corporate & Institutional Banking 1,334 1,123 809 1,058 992 4,324 1,674
Asset Management Group 106 114 87 99 82 406 255
Other (509) (210) (37) 52 32 (704) 189
Net income from continuing operations
excluding noncontrolling interests
$ 1,293 $ 1,474 $ 1,091 $ 1,816 $ 1,442 $ 5,674 $ 2,962
Revenue
Retail Banking $ 2,408 $ 2,375 $ 2,203 $ 2,016 $ 1,853 $ 9,002 $ 8,128
Corporate & Institutional Banking 2,281 2,306 1,959 1,808 1,913 8,354 7,111
Asset Management Group 388 397 356 322 316 1,463 1,211
Other 50 119 149 74 126 392 451
Total revenue $ 5,127 $ 5,197 $ 4,667 $ 4,220 $ 4,208 $ 19,211 $ 16,901

(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.

Prior to the conversion of bank systems and branches on October 12, 2021, PNC Bank and BBVA customers were served through their respective PNC Bank and BBVA USA branches, websites and mobile apps, financial advisors and relationship managers. Following conversion, there were changes in the segmentation of BBVA USA customers as we integrated data to PNC applications, finalized the review of customer relationships and better aligned customers with PNC's products and services. These changes are reflected in fourth quarter reporting and are considered immaterial.

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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 2021 2021 2021 2021 2020 2021 2020
Income Statement
Net interest income $ 1,634 $ 1,713 $ 1,497 $ 1,362 $ 1,380 $ 6,206 $ 5,609
Noninterest income 774 662 706 654 473 2,796 2,519
Total revenue 2,408 2,375 2,203 2,016 1,853 9,002 8,128
Provision for (recapture of) credit losses 55 (113) 214 (257) (81) (101) 968
Noninterest expense 1,874 1,889 1,677 1,476 1,482 6,916 6,019
Pretax earnings 479 599 312 797 452 2,187 1,141
Income taxes 112 140 73 183 105 508 266
Noncontrolling interests 5 12 7 7 11 31 31
Earnings $ 362 $ 447 $ 232 $ 607 $ 336 $ 1,648 $ 844
Average Balance Sheet
Loans held for sale $ 1,425 $ 1,583 $ 1,405 $ 891 $ 672 $ 1,328 $ 745
Loans
Consumer
Residential real estate $ 30,888 $ 30,702 $ 21,653 $ 17,468 $ 18,042 $ 25,230 $ 18,171
Home equity 22,572 23,047 22,080 21,833 22,366 22,387 22,633
Automobile 16,944 17,377 14,888 13,890 14,536 15,787 15,968
Credit card 6,513 6,484 5,900 5,819 6,218 6,182 6,629
Education 2,620 2,712 2,812 2,938 3,027 2,770 3,176
Other consumer 2,612 2,892 2,175 1,898 2,086 2,397 2,334
Total consumer 82,149 83,214 69,508 63,846 66,275 74,753 68,911
Commercial 12,844 15,895 14,796 13,743 13,391 14,321 12,573
Total loans $ 94,993 $ 99,109 $ 84,304 $ 77,589 $ 79,666 $ 89,074 $ 81,484
Total assets $ 114,656 $ 117,394 $ 100,948 $ 92,891 $ 94,303 $ 106,551 $ 97,643
Deposits
Noninterest-bearing $ 65,510 $ 65,985 $ 54,260 $ 44,845 $ 43,818 $ 57,729 $ 39,754
Interest-bearing 197,312 196,006 178,946 163,389 157,011 184,040 150,482
Total deposits $ 262,822 $ 261,991 $ 233,206 $ 208,234 $ 200,829 $ 241,769 $ 190,236
Performance Ratios
Return on average assets 1.25 % 1.51 % 0.92 % 2.65 % 1.41 % 1.55 % 0.86 %
Noninterest income to total revenue 32 % 28 % 32 % 32 % 26 % 31 % 31 %
Efficiency 78 % 80 % 76 % 73 % 80 % 77 % 74 %
(a)See note (a) on page 13.

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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 2021 2021 2021 2021 2020 2021 2020
Supplemental Noninterest Income
Information
Consumer services $ 479 $ 470 $ 435 $ 368 $ 369 $ 1,752 $ 1,427
Residential mortgage $ 101 $ 147 $ 103 $ 105 $ 99 $ 456 $ 604
Service charges on deposits $ 136 $ 158 $ 129 $ 119 $ 133 $ 542 $ 497
Residential Mortgage Information
Residential mortgage servicing statistics
(in billions, except as noted) (a)
Serviced portfolio balance (b) $ 133 $ 139 $ 145 $ 117 $ 121
Serviced portfolio acquisitions $ 2 $ 2 $ 33 $ 7 $ 12 $ 44 $ 33
MSR asset value (b) $ 1.1 $ 1.1 $ 1.1 $ 1.0 $ 0.7
MSR capitalization value (in basis points) (b) 81 81 77 83 56
Servicing income: (in millions)
Servicing fees, net (c) $ 14 $ 18 $ (3) $ 5 $ 13 $ 34 $ 118
Mortgage servicing rights valuation, net of
economic hedge
$ 2 $ 24 $ 24 $ 14 $ (1) $ 64 $ 137
Residential mortgage loan statistics
Loan origination volume (in billions) $ 6.6 $ 7.4 $ 6.5 $ 4.3 $ 3.7 $ 24.8 $ 15.1
Loan sale margin percentage 2.55 % 3.01 % 2.67 % 3.28 % 3.75 % 2.84 % 3.57 %
Percentage of originations represented by:
Purchase volume (d) 38 % 47 % 48 % 34 % 45 % 43 % 40 %
Refinance volume 62 % 53 % 52 % 66 % 55 % 57 % 60 %
Other Information (b)
Customer-related statistics (average) (e)
Non-teller deposit transactions (f) 64 % 66 % 65 % 66 % 66 % 65 % 64 %
Digital consumer customers (g) 79 % 80 % 80 % 79 % 77 % 79 % 74 %
Credit-related statistics
Nonperforming assets $ 1,220 $ 1,220 $ 1,245 $ 1,229 $ 1,211
Net charge-offs - loans and leases $ 124 $ 82 $ 79 $ 108 $ 136 $ 393 $ 569
Other statistics
ATMs 9,523 9,572 9,636 8,874 8,900
Branches (h) 2,629 2,712 2,724 2,137 2,162
Brokerage account client assets (in billions) (i) $ 78 $ 76 $ 83 $ 61 $ 59

(a)Represents mortgage loan servicing balances for third parties and the related income.
(b)Presented as of period end, except for average customer-related statistics and net charge-offs, which are both shown for the three months and year ended, respectively.
(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)Amounts prior to the three months ended December 31, 2021 represent PNC legacy only statistics. Fourth quarter statistics included BBVA activity following the conversion on October 12, 2021.
(f)Percentage of total consumer and business banking deposit transactions processed at an ATM or through our mobile banking application.
(g)Represents consumer checking relationships that process the majority of their transactions through non-teller channels.
(h)Excludes stand-alone mortgage offices and satellite offices (e.g., drive-ups, electronic branches and retirement centers) that provide limited products and/or services.
(i)Includes cash and money market balances.


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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 2021 2021 2021 2021 2020 2021 2020
Income Statement
Net interest income $ 1,228 $ 1,250 $ 1,092 $ 1,001 $ 994 $ 4,571 $ 4,049
Noninterest income 1,053 1,056 867 807 919 3,783 3,062
Total revenue 2,281 2,306 1,959 1,808 1,913 8,354 7,111
Provision for (recapture of) credit losses (369) (99) 104 (282) (166) (646) 2,088
Noninterest expense 975 980 813 711 801 3,479 2,856
Pretax earnings 1,675 1,425 1,042 1,379 1,278 5,521 2,167
Income taxes 337 299 229 318 282 1,183 483
Noncontrolling interests 4 3 4 3 4 14 10
Earnings $ 1,334 $ 1,123 $ 809 $ 1,058 $ 992 $ 4,324 $ 1,674
Average Balance Sheet
Loans held for sale $ 539 $ 541 $ 564 $ 691 $ 1,039 $ 583 $ 762
Loans
Commercial
Commercial and industrial $ 137,079 $ 134,128 $ 121,232 $ 114,944 $ 120,297 $ 126,928 $ 125,426
Commercial real estate 33,559 35,368 30,118 27,182 27,509 31,584 27,180
Equipment lease financing 6,184 6,300 6,332 6,332 6,381 6,286 6,813
Total commercial 176,822 175,796 157,682 148,458 154,187 164,798 159,419
Consumer 12 20 13 9 10 13 10
Total loans $ 176,834 $ 175,816 $ 157,695 $ 148,467 $ 154,197 $ 164,811 $ 159,429
Total assets $ 198,910 $ 202,268 $ 181,770 $ 170,531 $ 177,792 $ 188,479 $ 183,189
Deposits
Noninterest-bearing $ 88,023 $ 85,869 $ 75,570 $ 66,666 $ 64,334 $ 79,109 $ 53,681
Interest-bearing 72,397 77,247 69,443 69,668 74,426 72,210 70,622
Total deposits $ 160,420 $ 163,116 $ 145,013 $ 136,334 $ 138,760 $ 151,319 $ 124,303
Performance Ratios
Return on average assets 2.66 % 2.20 % 1.79 % 2.52 % 2.21 % 2.29 % 0.91 %
Noninterest income to total revenue 46 % 46 % 44 % 45 % 48 % 45 % 43 %
Efficiency 43 % 42 % 42 % 39 % 42 % 42 % 40 %
Other Information
Consolidated revenue from:
Treasury Management (b) $ 560 $ 592 $ 523 $ 494 $ 472 $ 2,169 $ 1,884
Capital Markets (b) $ 571 $ 577 $ 432 $ 403 $ 530 $ 1,983 $ 1,607
Commercial mortgage banking activities:
Commercial mortgage loans held for sale (c) $ 42 $ 44 $ 29 $ 30 $ 45 $ 145 $ 162
Commercial mortgage loan servicing income (d) 90 88 66 90 82 334 294
Commercial mortgage servicing rights valuation, net of economic hedge (e) 16 14 33 17 14 80 72
Total $ 148 $ 146 $ 128 $ 137 $ 141 $ 559 $ 528
MSR asset value (f) $ 740 $ 703 $ 682 $ 702 $ 569
Average loans by C&IB business
Corporate Banking $ 87,284 $ 85,208 $ 77,645 $ 74,459 $ 76,664 $ 81,069 $ 81,977
Real Estate 44,787 47,335 41,188 38,395 41,427 42,936 40,381
Business Credit 26,065 25,540 22,965 21,552 21,337 24,047 22,589
Commercial Banking 10,924 13,458 12,513 10,807 11,375 12,054 10,415
Other 7,774 4,275 3,384 3,254 3,394 4,705 4,067
Total average loans $ 176,834 $ 175,816 $ 157,695 $ 148,467 $ 154,197 $ 164,811 $ 159,429
Credit-related statistics
Nonperforming assets (f) $ 1,007 $ 1,061 $ 1,274 $ 658 $ 827
Net charge-offs - loans and leases $ (1) $ 13 $ 233 $ 44 $ 99 $ 289 $ 280

(a)See note (a) on page 13.
(b)Amounts are reported in net interest income and noninterest income.
(c)Represents other noninterest income for valuations on commercial mortgage loans held for sale and related commitments, derivative valuations, originations fees, gains on sale of loans held for sale and net interest income on loans held for sale.
(d)Represents net interest income and noninterest income (primarily in corporate service fees) from loan servicing net of reduction in commercial mortgage servicing rights due to amortization expense and payoffs. Commercial mortgage servicing rights valuation, net of economic hedge is shown separately.
(e)Amounts are reported in corporate service fees.
(f)Presented as of period end.

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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 2021 2021 2021 2021 2020 2021 2020
Income Statement
Net interest income $ 130 $ 141 $ 112 $ 93 $ 91 $ 476 $ 357
Noninterest income 258 256 244 229 225 987 854
Total revenue 388 397 356 322 316 1,463 1,211
Provision for (recapture of) credit losses (15) (6) 23 (9) (2) (7) 21
Noninterest expense 265 255 219 202 211 941 858
Pretax earnings 138 148 114 129 107 529 332
Income taxes 32 34 27 30 25 123 77
Earnings $ 106 $ 114 $ 87 $ 99 $ 82 $ 406 $ 255
Average Balance Sheet
Loans
Consumer
Residential real estate $ 6,295 $ 5,727 $ 4,439 $ 3,635 $ 3,326 $ 5,033 $ 2,832
Other consumer 4,535 4,544 4,190 4,008 4,077 4,321 4,042
Total consumer 10,830 10,271 8,629 7,643 7,403 9,354 6,874
Commercial 2,093 2,693 1,415 756 774 1,746 831
Total loans $ 12,923 $ 12,964 $ 10,044 $ 8,399 $ 8,177 $ 11,100 $ 7,705
Total assets $ 13,317 $ 13,805 $ 10,640 $ 8,873 $ 8,615 $ 11,677 $ 8,186
Deposits
Noninterest-bearing $ 3,025 $ 4,332 $ 2,537 $ 1,754 $ 1,689 $ 2,919 $ 1,568
Interest-bearing 26,318 24,984 20,894 18,825 17,880 22,782 17,347
Total deposits $ 29,343 $ 29,316 $ 23,431 $ 20,579 $ 19,569 $ 25,701 $ 18,915
Performance Ratios
Return on average assets 3.16 % 3.28 % 3.28 % 4.52 % 3.78 % 3.48 % 3.12 %
Noninterest income to total revenue 66 % 64 % 69 % 71 % 71 % 67 % 71 %
Efficiency 68 % 64 % 62 % 63 % 67 % 64 % 71 %
Other Information
Nonperforming assets (b) $ 62 $ 80 $ 85 $ 68 $ 66
Net charge-offs (recoveries) - loans and leases $ 1 $ (1) $ 2 $ 1 $ 2 $ 1
Brokerage account client assets (in billions) (b) $ 5 $ 5 $ 5
Client Assets Under Administration (in billions) (b) (c)
Discretionary client assets under management $ 192 $ 183 $ 183 $ 173 $ 170
Nondiscretionary client assets under administration 175 170 172 161 154
Total $ 367 $ 353 $ 355 $ 334 $ 324
Discretionary client assets under management
Personal $ 123 $ 117 $ 119 $ 110 $ 108
Institutional 69 66 64 63 62
Total $ 192 $ 183 $ 183 $ 173 $ 170
(a)See note (a) on page 13.
(b)As of period end.
(c)Excludes brokerage account client assets.

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Glossary of Terms

2019 Tailoring Rules - Rules adopted by the federal banking agencies to better tailor the application of their capital, liquidity, and enhanced prudential requirements for banking organizations to the asset size and risk profile (as measured by certain regulatory metrics) of the banking organization. Effective January 1, 2020, the agencies' capital and liquidity rules classify all BHCs with $100 billion or more in total assets into one of four categories (Category I, Category II, Category III, and Category IV).

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

Allowance for credit losses (ACL) - A valuation account that is deducted from or added to the amortized cost basis of the related
financial assets to present the net carrying value at the amount expected to be collected on the financial asset.

Amortized cost basis - Amount at which a financial asset is originated or acquired, adjusted for applicable accretion or amortization of premiums, discounts and net deferred fees or costs, collection of cash, charge-offs, foreign exchange and fair value hedge accounting adjustments.

Basel III common equity Tier 1 (CET1) capital (Tailoring Rules) - Common stock plus related surplus, net of treasury stock, plus retained earnings, less goodwill, net of associated deferred tax liabilities, less other disallowed intangibles, net of deferred tax liabilities and plus/less other adjustments. Investments in unconsolidated financial institutions, as well as mortgage servicing rights and deferred tax assets, must then be deducted to the extent such items (net of associated deferred tax liabilities) individually exceed 25% of our adjusted Basel III common equity Tier 1 capital.

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

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

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

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

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

BBVA - BBVA USA Bancshares, Inc.

BBVA, S.A. - Banco Bilbao Vizcaya Argentaria, S.A.

BBVA USA - BBVA USA, the Alabama-chartered bank subsidiary of BBVA USA Bancshares, Inc.

BlackRock - BlackRock, Inc.

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

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

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

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

Current Expected Credit Loss (CECL) - Methodology for estimating the allowance for credit losses on in-scope financial assets held at amortized cost and unfunded lending related commitments which uses a combination of expected losses over a reasonable and supportable forecast period, a reversion period and long run average credit losses for their estimated contractual term.


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

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

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

Efficiency - Noninterest expense divided by total revenue.

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

Fee income - Refers to the following categories within Noninterest income: Asset management; Consumer services; Corporate services; Residential mortgage; and Service charges on deposits.

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

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

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

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

Nonperforming assets - Nonperforming assets include nonperforming loans, OREO and foreclosed assets. We do not accrue interest income on assets classified as nonperforming.

Nonperforming loans - Loans accounted for at amortized cost whose credit quality has deteriorated to the extent that full collection of contractual principal and interest is not probable, including TDRs which have not returned to performing status. Interest income is not recognized on nonperforming loans. Nonperforming loans exclude certain government insured or guaranteed loans for which we expect to collect substantially all principal and interest, loans held for sale and loans accounted for under the fair value option.

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

Other real estate owned (OREO) and foreclosed assets - Assets taken in settlement of troubled loans primarily through deed-in-lieu of foreclosure or foreclosure. Foreclosed assets include real and personal property. Certain assets that have a government-guarantee which are classified as other receivables are excluded.

Purchased credit deteriorated assets (PCD) - Acquired loans or debt securities that, at acquisition, are determined to have experienced a more-than-insignificant deterioration in credit quality since origination or issuance.

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

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

Supplementary leverage ratio - Basel III Tier 1 capital divided by Supplementary leverage exposure.

Taxable-equivalent interest income - The interest income earned on certain assets that is completely or partially exempt from federal income tax. These tax-exempt instruments typically yield lower returns than taxable investments. To provide more meaningful comparisons of yields and margins for all interest-earning assets, we use interest income on a taxable-equivalent basis in calculating average yields and net interest margins by increasing the interest income earned on tax-exempt assets to make it fully equivalent to

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interest income earned on other taxable investments. This adjustment is not permitted under GAAP on the Consolidated Income Statement.

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

Unfunded lending related commitments - Standby letters of credit, financial guarantees, commitments to extend credit and similar unfunded obligations that are not unilaterally, unconditionally, cancelable at PNC's option.

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


Disclaimer

The PNC Financial Services Group Inc. published this content on 18 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 January 2022 16:29:04 UTC.


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Financials (USD)
Sales 2022 20 952 M - -
Net income 2022 5 903 M - -
Net Debt 2022 - - -
P/E ratio 2022 11,0x
Yield 2022 3,65%
Capitalization 65 114 M 65 114 M -
Capi. / Sales 2022 3,11x
Capi. / Sales 2023 2,86x
Nbr of Employees 58 547
Free-Float 75,4%
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Number of Analysts 24
Last Close Price 157,44 $
Average target price 206,28 $
Spread / Average Target 31,0%
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Managers and Directors
William Stanton Demchak President
Robert Q. Reilly Chief Financial Officer & Executive Vice President
Ganesh Krishnan Chief Information Officer & Executive VP
E. William Parsley Chief Operating Officer & Executive Vice President
Gagan Singh Chief Investment Officer & Executive VP