PNC Financial Services : 3Q21 ER Financial Supplement.pdf

THE PNC FINANCIAL SERVICES GROUP, INC.

FINANCIAL SUPPLEMENT

THIRD QUARTER 2021

(Unaudited)

THE PNC FINANCIAL SERVICES GROUP, INC.
FINANCIAL SUPPLEMENT
THIRD QUARTER 2021
(UNAUDITED)
Consolidated Results:	Page
Income Statement	1
Balance Sheet	2
Average Balance Sheet	3
Details of Net Interest Margin	4
Per Share Related Information	5
Loans	6
Allowance for Credit Losses	7-8
Nonperforming Assets	9
Accruing Loans Past Due	10-12
Business Segment Results:
Descriptions	13
Period End Employees	13
Net Income and Revenue	14
Retail Banking	15-16
Corporate & Institutional Banking	17
Asset Management Group	18
Glossary of Terms	19-21

The information contained in this Financial Supplement is preliminary, unaudited and based on data available on October 15, 2021. We have reclassified certain prior period amounts to be consistent with the current period presentation, which we believe is more meaningful to readers of our consolidated financial statements. This information speaks only as of the particular date or dates included in the schedules. We do not undertake any obligation to, and disclaim any duty to, correct or update any of the information provided in this Financial Supplement. Our future financial performance is subject to risks and uncertainties as described in our United States Securities and Exchange Commission (SEC) filings.

BUSINESS

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

ACQUISITION OF BBVA USA BANCSHARES, INC.

On June 1, 2021, PNC acquired BBVA USA Bancshares Inc. (BBVA), a U.S. financial holding company conducting its business operations primarily through its U.S. banking subsidiary, BBVA USA. PNC paid $11.5 billion in cash as consideration for the acquisition, and added $82.2 billion of deposits and $60.5 billion of loans to PNC's Consolidated Balance Sheet as a result of the acquisition.

As of October 12, 2021, PNC has converted approximately 2.6 million customers, 9,000 employees and nearly 600 branches across seven states, merging BBVA USA into PNC Bank. PNC's third quarter earnings results reflect the full quarter benefit of BBVA's acquired business operations, and our second quarter results reflect BBVA business operations for the month of June 2021. PNC's balance sheets at both September 30, 2021 and June 30, 2021 include BBVA's balances. Our second quarter 2021 Form 10-Q included additional information on the June 1, 2021 acquisition of BBVA.

DISCONTINUED OPERATIONS

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

THE PNC FINANCIAL SERVICES GROUP, INC.

Cross Reference Index to Third Quarter 2021 Financial Supplement (Unaudited)

Financial Supplement Table Reference

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

THE PNC FINANCIAL SERVICES GROUP, INC.																		Page 1
Table 1: Consolidated Income Statement (Unaudited) (a)
					Three months ended								Nine months ended
In millions, except per share data	September 30		June 30		March 31		December 31		September 30			September 30		September 30
	2021			2021			2021			2020			2020				2021			2020
Interest Income
Loans	$	2,437		$	2,160	$	1,996	$	2,074	$	2,116		$	6,593	$	6,853
Investment securities		460			469			421			442			490				1,350			1,599
Other		78			72			66			60			70				216			279
Total interest income		2,975			2,701			2,483			2,576			2,676				8,159			8,731
Interest Expense
Deposits		29			30			40			53			74				99			590
Borrowed funds		90			90			95			99			118				275			619
Total interest expense		119			120			135			152			192				374			1,209
Net interest income		2,856			2,581			2,348			2,424			2,484				7,785			7,522
Noninterest Income
Asset management		248			239			226			221			215				713			615
Consumer services		496			457			384			387			390				1,337			1,097
Corporate services		842			688			555			650			479				2,085			1,517
Residential mortgage		147			103			105			99			137				355			505
Service charges on deposits		159			131			119			134			119				409			366
Other (b)		449			468			483			293			457				1,400			1,071
Total noninterest income		2,341			2,086			1,872			1,784			1,797				6,299			5,171
Total revenue		5,197			4,667			4,220			4,208			4,281				14,084			12,693
Provision For (Recapture of) Credit Losses		(203)			302			(551)			(254)			52				(452)			3,429
Noninterest Expense
Personnel		1,986			1,640			1,477			1,521			1,410				5,103			4,152
Occupancy		248			217			215			215			205				680			611
Equipment		355			326			293			296			292				974			880
Marketing		103			74			45			64			67				222			172
Other		895			793			544			612			557				2,232			1,774
Total noninterest expense		3,587			3,050			2,574			2,708			2,531				9,211			7,589
Income from continuing operations before income		1,813			1,315			2,197			1,754			1,698				5,325			1,675
taxes and noncontrolling interests
Income taxes from continuing operations		323			212			371			298			166				906			128
Net income from continuing operations		1,490			1,103			1,826			1,456			1,532				4,419			1,547
Income from discontinued operations before taxes																					5,777
Income taxes from discontinued operations																					1,222
Net income from discontinued operations																					4,555
Net income		1,490			1,103			1,826			1,456			1,532				4,419			6,102
Less: Net income attributable to noncontrolling		16			12			10			14			13				38			27
interests
Preferred stock dividends (c)		57			48			57			48			63				162			181
Preferred stock discount accretion and		1			1			1			1			1				3			3
redemptions
Net income attributable to common shareholders	$	1,416		$	1,042		$	1,758		$	1,393		$	1,455			$	4,216		$	5,891
Earnings Per Common Share
Basic earnings from continuing operations	$	3.31		$	2.43	$	4.11	$	3.26	$	3.40		$	9.84	$	3.11
Basic earnings from discontinued operations																					10.61
Total basic earnings	$	3.31		$	2.43		$	4.11		$	3.26		$	3.40			$	9.84		$	13.73
Diluted earnings from continuing operations	$	3.30		$	2.43		$	4.10		$	3.26		$	3.39			$	9.83		$	3.11
Diluted earnings from discontinued operations																					10.59
Total diluted earnings	$	3.30		$	2.43	$	4.10		$	3.26		$	3.39			$	9.83		$	13.70
Average Common Shares Outstanding
Basic		426			427			426			425			426				426			427
Diluted		426			427			426			426			426				427			428
Efficiency		69 %			65 %			61 %			64 %			59 %				65 %			60 %
Noninterest income to total revenue		45 %			45 %			44 %			42 %			42 %				45 %			41 %
Effective tax rate from continuing operations (d)		17.8 %			16.1 %			16.9 %			17.0 %			9.8 %				17.0 %			7.6 %

1. Results reflect the BBVA acquisition beginning in the month of June 2021.
2. Includes net gains on sales of securities of $15 million, $10 million, $25 million, $51 million and $32 million for the quarters ended September 30, 2021, June 30, 2021, March 31, 2021, December 31, 2020 and September 30, 2020, respectively. Amounts for the nine months ended September 30, 2021 and 2020 were $50 million and $254 million, respectively.
3. Dividends are payable quarterly other than Series R and Series S preferred stock, which are payable semiannually. On September 13, 2021, PNC issued 1,500,000 depositary shares of Series T preferred stock with a $1 par value. Beginning on December 15, dividends will be paid on the Series T on a quarterly basis (March 15, June 15, September 15 and December 15 of each year).
4. The effective income tax rates are generally lower than the statutory rate due to the relationship of pretax income to tax credits and earnings that are not subject to tax.

THE PNC FINANCIAL SERVICES GROUP, INC.														Page 2
Table 2: Consolidated Balance Sheet (Unaudited) (a)
In millions, except par value	September 30			June 30			March 31		December 31		September 30
	2021			2021			2021			2020			2020
Assets
Cash and due from banks	$	8,843	$	8,724	$	7,455	$	7,017	$	6,629
Interest-earning deposits with banks (b)		75,478			72,447			86,161			85,173			70,959
Loans held for sale (c)		2,121			2,227			1,967			1,597			1,787
Investment securities - available for sale		124,127			125,058			96,799			87,358			89,747
Investment securities - held to maturity		1,479			1,485			1,456			1,441			1,438
Loans (c)		290,230			294,704			237,013			241,928			249,279
Allowance for loan and lease losses		(5,355)			(5,730)			(4,714)			(5,361)			(5,751)
Net loans		284,875			288,974			232,299			236,567			243,528
Equity investments		7,737			7,521			6,386			6,052			4,938
Mortgage servicing rights		1,833			1,793			1,680			1,242			1,113
Goodwill		10,885			10,958			9,317			9,233			9,233
Other (c)		36,137			35,025			30,894			30,999			32,445
Total assets	$	553,515	$	554,212	$	474,414	$	466,679	$	461,817
Liabilities
Deposits
Noninterest-bearing	$	156,305	$	154,190	$	120,641	$	112,637	$	107,281
Interest-bearing		292,597			298,693			254,426			252,708			247,798
Total deposits		448,902			452,883			375,067			365,345			355,079
Borrowed funds
Federal Home Loan Bank borrowings								1,500			3,500			5,500
Bank notes and senior debt		22,993			24,408			22,139			24,271			26,839
Subordinated debt		7,074			7,120			6,241			6,403			6,465
Other (c)		3,404			3,285			3,150			3,021			3,306
Total borrowed funds		33,471			34,813			33,030			37,195			42,110
Allowance for unfunded lending related commitments		646			645			507			584			689
Accrued expenses and other liabilities		14,199			11,186			11,931			9,514			10,629
Total liabilities		497,218			499,527			420,535			412,638			408,507
Equity
Preferred stock (d)
Common stock - $5 par value
Authorized 800 shares, issued 543, 543, 543, 543, and 542 shares		2,713			2,713			2,713			2,713			2,712
Capital surplus		17,453			15,928			15,879			15,884			15,836
Retained earnings		49,541			48,663			48,113			46,848			45,947
Accumulated other comprehensive income		1,079			1,463			1,290			2,770			2,997
Common stock held in treasury at cost:120, 118, 118, 119, and 118 shares		(14,527)			(14,140)			(14,146)			(14,205)			(14,216)
Total shareholders' equity		56,259			54,627			53,849			54,010			53,276
Noncontrolling interests		38			58			30			31			34
Total equity		56,297			54,685			53,879			54,041			53,310
Total liabilities and equity	$	553,515	$	554,212	$	474,414	$	466,679	$	461,817

1. BBVA balances are included at September 30, 2021 and June 30, 2021.
2. Amounts include balances held with the Federal Reserve Bank of $75.1 billion, $71.9 billion, $85.8 billion, $84.9 billion and $70.6 billion as of September 30, 2021, June 30, 2021, March 31, 2021, December 31, 2020 and September 30, 2020, respectively.
3. Amounts include assets and liabilities for which PNC has elected the fair value option. Our second quarter 2021 Form 10-Q included, and our third quarter 2021 Form 10-Q will include, additional information regarding these items.
4. Par value less than $0.5 million at each date.