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

Attached files

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EX-99.2 - EXHIBIT 99.2 - PNC FINANCIAL SERVICES GROUP, INC.	a3q20earningsslidesfinal.htm
8-K - 8-K - PNC FINANCIAL SERVICES GROUP, INC.	q320208-kfs.htm

Exhibit 99.1

THE PNC FINANCIAL SERVICES GROUP, INC.

FINANCIAL SUPPLEMENT

THIRD QUARTER 2020

(Unaudited)

THE PNC FINANCIAL SERVICES GROUP, INC.

FINANCIAL SUPPLEMENT

THIRD QUARTER 2020

(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	9-10
Accruing Loans Past Due	11-12

Business Segment Results:
Descriptions	13
Period End Employees	13
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 14, 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.

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 $.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 and prior period BlackRock investment balances have been reclassified to the Asset held for sale line on the Consolidated Balance Sheet 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 2020 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 Credit Losses Under CECL	8
9	Allowance for Credit Losses by Loan Class	8
10	Nonperforming Assets by Type	9
11	Change in Nonperforming Assets	10
12	Largest Individual Nonperforming Assets	10
13	Accruing Loans Past Due 30 to 59 Days	11
14	Accruing Loans Past Due 60 to 89 Days	11
15	Accruing Loans Past Due 90 Days or More	12
16	Period End Employees	13
17	Summary of Business Segment Income and Revenue	14
18	Retail Banking	15-16
19	Corporate & Institutional Banking	17
20	Asset Management Group	18



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 1

Table 1: Consolidated Income Statement (Unaudited)



	Three months ended															Nine months ended
	September 30			June 30			March 31			December 31			September 30			September 30			September 30
In millions, except per share data	2020			2020			2020			2019			2019			2020			2019
Interest Income
Loans	$	2,116		$	2,257		$	2,480		$	2,573		$	2,678		$	6,853		$	7,952
Investment securities	490			527			582			560			617			1,599			1,866
Other	70			71			138			201			208			279			610
Total interest income	2,676			2,855			3,200			3,334			3,503			8,731			10,428
Interest Expense
Deposits	74			141			375			468			531			590			1,518
Borrowed funds	118			187			314			378			468			619			1,433
Total interest expense	192			328			689			846			999			1,209			2,951
Net interest income	2,484			2,527			2,511			2,488			2,504			7,522			7,477
Noninterest Income
Asset management	215			199			201			216			213			615			646
Consumer services	390			330			377			390			402			1,097			1,165
Corporate services	479			512			526			499			469			1,517			1,415
Residential mortgage	137			158			210			87			134			505			281
Service charges on deposits	119			79			168			185			178			366			517
Other (a)	457			271			343			456			342			1,071			1,017
Total noninterest income	1,797			1,549			1,825			1,833			1,738			5,171			5,041
Total revenue	4,281			4,076			4,336			4,321			4,242			12,693			12,518
Provision For Credit Losses	52			2,463			914			221			183			3,429			552
Noninterest Expense
Personnel	1,410			1,373			1,369			1,468			1,400			4,152			4,179
Occupancy	205			199			207			201			206			611			633
Equipment	292			301			287			348			291			880			862
Marketing	67			47			58			77			76			172			224
Other	557			595			622			668			650			1,774			1,914
Total noninterest expense	2,531			2,515			2,543			2,762			2,623			7,589			7,812
Income (loss) from continuing operations before income taxes and noncontrolling interests	1,698			(902		)	879			1,338			1,436			1,675			4,154
Income taxes (benefit) from continuing operations	166			(158		)	120			195			255			128			706
Net income (loss) from continuing operations	1,532			(744		)	759			1,143			1,181			1,547			3,448
Income from discontinued operations before taxes				5,596			181			288			251			5,777			700
Income taxes from discontinued operations				1,197			25			50			40			1,222			111
Net income from discontinued operations				4,399			156			238			211			4,555			589
Net income	1,532			3,655			915			1,381			1,392			6,102			4,037
Less: Net income attributable to noncontrolling interests	13			7			7			14			13			27			35
Preferred stock dividends (b)	63			55			63			55			63			181			181
Preferred stock discount accretion and redemptions	1			1			1			1			1			3			3
Net income attributable to common shareholders	$	1,455		$	3,592		$	844		$	1,311		$	1,315		$	5,891		$	3,818
Earnings Per Common Share
Basic earnings (loss) from continuing operations	$	3.40		$	(1.90	)	$	1.59		$	2.44		$	2.47		$	3.11		$	7.15
Basic earnings from discontinued operations				10.28			.37			.54			.48			10.61			1.30
Total basic earnings	$	3.40		$	8.40		$	1.96		$	2.98		$	2.95		$	13.73		$	8.45
Diluted earnings (loss) from continuing operations	$	3.39		$	(1.90	)	$	1.59		$	2.43		$	2.47		$	3.11		$	7.13
Diluted earnings from discontinued operations				10.28			.36			.54			.47			10.59			1.29
Total diluted earnings	$	3.39		$	8.40		$	1.95		$	2.97		$	2.94		$	13.70		$	8.42
Average Common Shares Outstanding
Basic	426			426			429			437			444			427			450
Diluted	426			426			430			438			445			428			451
Efficiency	59		%	62		%	59		%	64		%	62		%	60		%	62		%
Noninterest income to total revenue	42		%	38		%	42		%	42		%	41		%	41		%	40		%
Effective tax rate from continuing operations (c)	9.8		%	17.5		%	13.7		%	14.6		%	17.8		%	7.6		%	17.0		%


(a)	Includes net gains on sales of securities of $32 million, $40 million, $182 million, $12 million, and $3 million for the quarters ended September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019 and September 30, 2019, respectively, and $254 million and $36 million for the nine months ended September 30, 2020 and September 30, 2019, respectively.


(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)



	September 30			June 30			March 31			December 31			September 30
In millions, except par value	2020			2020			2020			2019			2019
Assets
Cash and due from banks	$	6,629		$	6,338		$	7,493		$	5,061		$	5,671
Interest-earning deposits with banks (a)	70,959			50,233			19,986			23,413			19,036
Loans held for sale (b)	1,787			1,443			1,693			1,083			1,872
Asset held for sale (c)							8,511			8,558			8,321
Investment securities – available for sale	89,747			97,052			89,077			69,163			69,057
Investment securities – held to maturity	1,438			1,441			1,469			17,661			18,826
Loans (b)	249,279			258,236			264,643			239,843			237,377
Allowance for loan and lease losses (d)	(5,751		)	(5,928		)	(3,944		)	(2,742		)	(2,738		)
Net loans	243,528			252,308			260,699			237,101			234,639
Equity investments	4,938			4,943			4,694			5,176			5,004
Mortgage servicing rights	1,113			1,067			1,082			1,644			1,483
Goodwill	9,233			9,233			9,233			9,233			9,233
Other (b)	32,445			34,920			41,556			32,202			35,774
Total assets	$	461,817		$	458,978		$	445,493		$	410,295		$	408,916
Liabilities
Deposits
Noninterest-bearing	$	107,281		$	99,458		$	81,614		$	72,779		$	74,077
Interest-bearing	247,798			246,539			223,590			215,761			211,506
Total deposits	355,079			345,997			305,204			288,540			285,583
Borrowed funds
Federal Home Loan Bank borrowings	5,500			8,500			23,491			16,341			21,901
Bank notes and senior debt	26,839			27,704			31,438			29,010			27,148
Subordinated debt	6,465			6,500			6,475			6,134			5,473
Other (b)	3,306			4,322			11,995			8,778			6,832
Total borrowed funds	42,110			47,026			73,399			60,263			61,354
Allowance for unfunded lending related commitments (d)	689			662			450			318			304
Accrued expenses and other liabilities	10,629			12,345			17,150			11,831			12,220
Total liabilities	408,507			406,030			396,203			360,952			359,461
Equity
Preferred stock (e)
Common stock - $5 par value
Authorized 800 shares, issued 542 shares	2,712			2,712			2,712			2,712			2,711
Capital surplus	15,836			16,284			16,288			16,369			16,297
Retained earnings	45,947			44,986			41,885			42,215			41,413
Accumulated other comprehensive income	2,997			3,069			2,518			799			837
Common stock held in treasury at cost:118, 117, 118, 109 and 103 shares	(14,216		)	(14,128		)	(14,140		)	(12,781		)	(11,838		)
Total shareholders’ equity	53,276			52,923			49,263			49,314			49,420
Noncontrolling interests	34			25			27			29			35
Total equity	53,310			52,948			49,290			49,343			49,455
Total liabilities and equity	$	461,817		$	458,978		$	445,493		$	410,295		$	408,916


(a)	Amounts include balances held with the Federal Reserve Bank of Cleveland of $70.6 billion, $50.0 billion, $19.6 billion, $23.2 billion and $18.8 billion as of September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019 and September 30, 2019, respectively.


(b)	Amounts include assets and liabilities for which PNC has elected the fair value option. Our second quarter 2020 Form 10-Q included, and our third quarter 2020 Form 10-Q will include, additional information regarding these items.

(c)

Represents our held for sale investment in BlackRock. In the second quarter of 2020, PNC divested its entire holding in BlackRock. Prior period BlackRock investment balances have been reclassified to the Asset held for sale line in accordance with ASC 205-20, Presentation of Financial Statements - Discontinued Operations. Our second quarter 2020 Form 10-Q included additional information related to the Blackrock divestiture.

(d)

Amounts as of September 30, 2020 and June 30, 2020 and March 31, 2020 reflect the impact of adopting Accounting Standards Update 2016-13, Financial Instruments - Credit Losses, which is commonly referred to as the Current Expected Credit Losses (CECL) standard and our transition from an incurred loss methodology for these reserves to an expected credit loss methodology. Our 2019 10-K and our first and second quarter 2020 Form 10-Qs included, and our third quarter 2020 Form 10-Q will include, additional information related to our adoption of this standard.


(e)	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										Nine months ended
	September 30		June 30		March 31		December 31		September 30		September 30		September 30
In millions	2020		2020		2020		2019		2019		2020		2019
Assets
Interest-earning assets:
Investment securities
Securities available for sale
Residential mortgage-backed
Agency	$	52,215	$	52,500	$	49,636	$	33,937	$	32,926	$	51,453	$	30,714
Non-agency	1,437		1,529		1,617		1,582		1,716		1,527		1,802
Commercial mortgage-backed	6,927		7,232		6,734		6,054		5,728		6,964		5,549
Asset-backed	5,033		5,309		5,003		5,059		5,208		5,115		5,247
U.S. Treasury and government agencies	18,724		15,457		15,938		15,966		17,573		16,714		18,207
Other	4,723		4,952		4,024		2,849		3,053		4,567		3,316
Total securities available for sale	89,059		86,979		82,952		65,447		66,204		86,340		64,835
Securities held to maturity
Residential mortgage-backed	—		—		—		14,943		15,768		—		15,582
Commercial mortgage-backed	—		—		—		498		544		—		571
Asset-backed	—		22		51		54		79		24		143
U.S. Treasury and government agencies	788		783		779		774		769		783		765
Other	655		646		640		1,794		1,802		648		1,823
Total securities held to maturity	1,443		1,451		1,470		18,063		18,962		1,455		18,884
Total investment securities	90,502		88,430		84,422		83,510		85,166		87,795		83,719
Loans
Commercial and industrial	139,795		153,595		128,723		124,876		125,356		140,701		123,069
Commercial real estate	29,081		28,707		28,275		28,670		28,855		28,689		28,477
Equipment lease financing	6,771		7,035		7,066		7,199		7,272		6,958		7,273
Consumer	54,692		56,485		57,680		56,765		55,702		56,279		55,303
Residential real estate	22,753		22,292		21,828		21,341		20,497		22,292		19,602
Total loans	253,092		268,114		243,572		238,851		237,682		254,919		233,724
Interest-earning deposits with banks (b)	60,327		34,600		17,569		23,316		15,632		37,582		14,708
Other interest-earning assets	9,752		10,867		9,468		11,371		14,094		10,028		12,780
Total interest-earning assets	413,673		402,011		355,031		357,048		352,574		390,324		344,931
Noninterest-earning assets	48,466		55,302		57,405		54,371		54,135		53,705		51,668
Total assets	$	462,139	$	457,313	$	412,436	$	411,419	$	406,709	$	444,029	$	396,599
Liabilities and Equity
Interest-bearing liabilities:
Interest-bearing deposits
Money market	$	63,598	$	61,346	$	53,287	$	56,209	$	56,271	$	59,426	$	55,268
Demand	87,226		82,881		70,931		69,496		65,444		80,371		64,459
Savings	77,479		75,345		69,977		66,827		64,054		74,279		61,627
Time deposits	20,248		21,873		21,141		21,600		21,173		21,084		20,017
Total interest-bearing deposits	248,551		241,445		215,336		214,132		206,942		235,160		201,371
Borrowed funds
Federal Home Loan Bank borrowings	7,196		12,559		13,440		18,944		25,883		11,051		23,368
Bank notes and senior debt	25,858		28,298		29,988		27,403		27,409		28,040		26,571
Subordinated debt	5,936		5,937		5,934		5,760		5,189		5,935		5,530
Other	4,354		6,435		7,826		7,926		5,452		6,199		6,564
Total borrowed funds	43,344		53,229		57,188		60,033		63,933		51,225		62,033
Total interest-bearing liabilities	291,895		294,674		272,524		274,165		270,875		286,385		263,404
Noninterest-bearing liabilities and equity:
Noninterest-bearing deposits	101,931		93,776		74,396		73,626		72,149		90,078		71,736
Accrued expenses and other liabilities	15,341		16,989		16,437		14,541		14,529		16,251		12,975
Equity	52,972		51,874		49,079		49,087		49,156		51,315		48,484
Total liabilities and equity	$	462,139	$	457,313	$	412,436	$	411,419	$	406,709	$	444,029	$	396,599


(a)	Calculated using average daily balances.

(b)

Amounts include average balances held with the Federal Reserve Bank of Cleveland of $60.0 billion, $34.2 billion, $17.3 billion, $23.0 billion and $15.3 billion for the three months ended September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019, and September 30, 2019, respectively, and $37.3 billion and $14.4 billion for the nine months ended September 30, 2020 and September 30, 2019, respectively.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 4



Table 4: Details of Net Interest Margin (Unaudited)
	Three months ended										Nine months ended
	September 30		June 30		March 31		December 31		September 30		September 30		September 30
	2020		2020		2020		2019		2019		2020		2019
Average yields/rates (a)
Yield on interest-earning assets
Investment securities
Securities available for sale
Residential mortgage-backed
Agency	2.03	%	2.29	%	2.63	%	2.48	%	2.70	%	2.31	%	2.85	%
Non-agency	7.26	%	7.13	%	7.87	%	8.09	%	8.89	%	7.43	%	8.04	%
Commercial mortgage-backed	2.50	%	2.59	%	2.95	%	2.30	%	2.97	%	2.68	%	3.05	%
Asset-backed	2.44	%	2.60	%	3.05	%	3.26	%	3.31	%	2.70	%	3.33	%
U.S. Treasury and government agencies	1.64	%	1.77	%	2.29	%	2.31	%	2.44	%	1.88	%	2.47	%
Other	3.39	%	3.47	%	3.69	%	3.36	%	3.41	%	3.51	%	3.36	%
Total securities available for sale	2.16	%	2.39	%	2.77	%	2.65	%	2.90	%	2.43	%	2.97	%
Securities held to maturity
Residential mortgage-backed	—		—		—		2.63	%	2.78	%	—		2.91	%
Commercial mortgage-backed	—		—		—		4.44	%	3.68	%	—		3.59	%
Asset-backed	—		2.38	%	2.77	%	3.02	%	5.48	%	2.66	%	4.18	%
U.S. Treasury and government agencies	2.86	%	2.84	%	2.84	%	2.86	%	2.86	%	2.85	%	2.84	%
Other	4.20	%	4.27	%	4.48	%	4.47	%	4.40	%	4.32	%	4.41	%
Total securities held to maturity	3.47	%	3.47	%	3.56	%	2.87	%	2.98	%	3.50	%	3.08	%
Total investment securities	2.18	%	2.41	%	2.78	%	2.70	%	2.91	%	2.45	%	3.00	%
Loans
Commercial and industrial	2.82	%	2.83	%	3.62	%	3.88	%	4.06	%	3.07	%	4.20	%
Commercial real estate	2.65	%	2.84	%	3.64	%	3.89	%	4.40	%	3.03	%	4.40	%
Equipment lease financing	3.80	%	3.82	%	3.93	%	3.87	%	3.82	%	3.85	%	3.94	%
Consumer	4.69	%	4.86	%	5.38	%	5.45	%	5.61	%	4.98	%	5.57	%
Residential real estate	3.74	%	3.86	%	3.96	%	4.10	%	4.21	%	3.85	%	4.25	%
Total loans	3.32	%	3.37	%	4.08	%	4.27	%	4.47	%	3.58	%	4.54	%
Interest-earning deposits with banks	.10	%	.10	%	1.27	%	1.66	%	2.17	%	.28	%	2.32	%
Other interest-earning assets	2.23	%	2.26	%	3.51	%	3.65	%	3.49	%	2.64	%	3.70	%
Total yield on interest-earning assets	2.57	%	2.85	%	3.62	%	3.71	%	3.95	%	2.98	%	4.04	%
Rate on interest-bearing liabilities
Interest-bearing deposits
Money market	.07	%	.15	%	.72	%	.93	%	1.14	%	.29	%	1.15	%
Demand	.05	%	.08	%	.41	%	.51	%	.58	%	.17	%	.55	%
Savings	.11	%	.31	%	.79	%	.97	%	1.14	%	.39	%	1.15	%
Time deposits	.58	%	.80	%	1.34	%	1.52	%	1.66	%	.91	%	1.63	%
Total interest-bearing deposits	.12	%	.23	%	.70	%	.87	%	1.02	%	.34	%	1.01	%
Borrowed funds
Federal Home Loan Bank borrowings	.47	%	1.00	%	1.69	%	2.11	%	2.48	%	1.16	%	2.63	%
Bank notes and senior debt	1.08	%	1.56	%	2.41	%	2.77	%	3.21	%	1.72	%	3.35	%
Subordinated debt	1.51	%	1.91	%	2.73	%	3.06	%	3.53	%	2.05	%	4.09	%
Other	1.31	%	.92	%	1.69	%	1.89	%	2.43	%	1.33	%	2.44	%
Total borrowed funds	1.06	%	1.39	%	2.18	%	2.47	%	2.87	%	1.59	%	3.05	%
Total rate on interest-bearing liabilities	.26	%	.44	%	1.00	%	1.21	%	1.45	%	.56	%	1.48	%
Interest rate spread	2.31	%	2.41	%	2.62	%	2.50	%	2.50	%	2.42	%	2.56	%
Benefit from use of noninterest bearing sources (b)	.08		.11		.22		.28		.34		.15		.35
Net interest margin	2.39	%	2.52	%	2.84	%	2.78	%	2.84	%	2.57	%	2.91	%

(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 September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019 and September 30, 2019 were $17 million, $19 million, $22 million, $23 million and $25 million, respectively. The taxable-equivalent adjustments to net interest income for the nine months ended September 30, 2020 and September 30, 2019 were $58 million and $79 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													Nine months ended
	September 30		June 30			March 31		December 31			September 30			September 30			September 30
In millions, except per share data	2020		2020			2020		2019			2019			2020			2019
Basic
Net income (loss) from continuing operations	$	1,532	$	(744	)	$	759	$	1,143		$	1,181		$	1,547		$	3,448
Less:
Net income attributable to noncontrolling interests	13		7			7		14			13			27			35
Preferred stock dividends (a)	63		55			63		55			63			181			181
Preferred stock discount accretion and redemptions	1		1			1		1			1			3			3
Net income (loss) from continuing operations attributable to common shareholders	1,455		(807		)	688		1,073			1,104			1,336			3,229
Less: Dividends and undistributed earnings allocated to nonvested restricted shares	8		1			3		5			5			7			13
Net income (loss) from continuing operations attributable to basic common shareholders	$	1,447	$	(808	)	$	685	$	1,068		$	1,099		$	1,329		$	3,216
Net income from discontinued operations attributable to common shareholders			$	4,399		$	156	$	238		$	211		$	4,555		$	589
Less: Undistributed earnings allocated to nonvested restricted shares			21			1		1			1		0	22			2
Net income from discontinued operations attributable to basic common shareholders			$	4,378		$	155	$	237		$	210		$	4,533		$	587
Basic weighted-average common shares outstanding	426		426			429		437			444			427			450
Basic earnings (loss) per common share from continuing operations	$	3.40	$	(1.90	)	$	1.59	$	2.44		$	2.47		$	3.11		$	7.15
Basic earnings per common share from discontinued operations			$	10.28		$	.37	$	.54		$	.48		$	10.61		$	1.30
Basic earnings per common share	$	3.40	$	8.40		$	1.96	$	2.98		$	2.95		$	13.73		$	8.45
Diluted
Net income (loss) from continuing operations attributable to diluted common shareholders	$	1,447	$	(808	)	$	685	$	1,068		$	1,099		$	1,329		$	3,216
Net income from discontinued operations attributable to basic common shareholders			$	4,378		$	155	$	237		$	210		$	4,533		$	587
Less: Impact of earnings per share dilution from discontinued operations			1			1		3			2		0	2		0	7
Net income from discontinued operations attributable to diluted common shareholders			$	4,377		$	154	$	234		$	208		$	4,531		$	580
Basic weighted-average common shares outstanding	426		426			429		437			444			427			450
Dilutive potential common shares						1		1		0.000004	1			1			1
Diluted weighted-average common shares outstanding	426		426			430		438			445			428			451
Diluted earnings (loss) per common share from continuing operations	$	3.39	$	(1.90	)	$	1.59	$	2.43		$	2.47		$	3.11		$	7.13
Diluted earnings per common share from discontinued operations			$	10.28		$	.36	$	.54		$	.47		$	10.59		$	1.29
Diluted earnings per common share	$	3.39	$	8.40		$	1.95	$	2.97		$	2.94		$	13.70		$	8.42


(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.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 6

Table 6: Details of Loans (Unaudited)



	September 30		June 30		March 31		December 31		September 30
In millions	2020		2020		2020		2019		2019
Commercial
Commercial and industrial
Manufacturing	$	22,551	$	25,590	$	27,225	$	21,540	$	21,846
Retail/wholesale trade	20,287		21,747		24,408		21,565		21,761
Service providers	20,260		21,347		19,411		16,112		16,189
Real estate related (a)	14,040		14,634		14,843		12,346		12,294
Financial services	15,005		13,596		13,473		11,318		10,437
Health care	9,368		10,109		9,238		8,035		8,137
Transportation and warehousing	7,295		7,771		8,160		7,474		7,216
Other industries	28,381		29,541		32,373		26,947		26,134
Total commercial and industrial	137,187		144,335		149,131		125,337		124,014
Commercial real estate	29,028		28,763		28,544		28,110		28,884
Equipment lease financing	6,479		7,097		7,061		7,155		7,290
Total commercial	172,694		180,195		184,736		160,602		160,188
Consumer
Home equity	24,539		24,879		25,081		25,085		24,971
Residential real estate	22,886		22,469		22,250		21,821		21,082
Automobile	14,977		16,157		17,194		16,754		16,004
Credit card	6,303		6,575		7,132		7,308		6,815
Education	3,051		3,132		3,247		3,336		3,461
Other consumer	4,829		4,829		5,003		4,937		4,856
Total consumer	76,585		78,041		79,907		79,241		77,189
Total loans	$	249,279	$	258,236	$	264,643	$	239,843	$	237,377

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



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 7

Allowance for Credit Losses (Unaudited)

Table 7: Change in Allowance for Loan and Lease Losses



	Three months ended															Nine months ended
	September 30			June 30			March 31			December 31			September 30			September 30			September 30
Dollars in millions	2020			2020			2020			2019			2019			2020			2019
Allowance for loan and lease losses
Beginning balance	$	5,928		$	3,944		$	2,742		$	2,738		$	2,721		$	2,742		$	2,629
Adoption of ASU 2016-03 (a)							463									463
Gross charge-offs:
Commercial and industrial	(59		)	(112		)	(78		)	(67		)	(41		)	(249		)	(116		)
Commercial real estate	(1		)	—			—			(2		)	(11		)	(1		)	(16		)
Equipment lease financing	(4		)	(10		)	(5		)	(9		)	(2		)	(19		)	(6		)
Home equity	(12		)	(8		)	(11		)	(16		)	(11		)	(31		)	(52		)
Residential real estate	(2		)	—			(2		)	(4		)	(1		)	(4		)	(5		)
Automobile	(57		)	(69		)	(84		)	(78		)	(71		)	(210		)	(183		)
Credit card	(74		)	(76		)	(78		)	(70		)	(61		)	(228		)	(193		)
Education	(3		)	(4		)	(6		)	(6		)	(7		)	(13		)	(20		)
Other consumer	(35		)	(35		)	(40		)	(39		)	(36		)	(110		)	(92		)
Total gross charge-offs	(247		)	(314		)	(304		)	(291		)	(241		)	(865		)	(683		)
Recoveries:
Commercial and industrial	21			13			18			14			14			52			45
Commercial real estate	2			—			4			3			3			6			8
Equipment lease financing	3			2			2			2			2			7			6
Home equity	15			15			14			18			20			44			56
Residential real estate	4			4			4			3			4			12			11
Automobile	31			29			35			29			30			95			85
Credit card	9			9			8			6			7			26			21
Education	2			2			2			2			2			6			6
Other consumer	5			4			5			5			4			14			12
Total recoveries	92			78			92			82			86			262			250
Net (charge-offs) / recoveries:
Commercial and industrial	(38		)	(99		)	(60		)	(53		)	(27		)	(197		)	(71		)
Commercial real estate	1			—			4			1			(8		)	5			(8		)
Equipment lease financing	(1		)	(8		)	(3		)	(7		)	—			(12		)	—
Home equity	3			7			3			2			9			13			4
Residential real estate	2			4			2			(1		)	3			8			6
Automobile	(26		)	(40		)	(49		)	(49		)	(41		)	(115		)	(98		)
Credit card	(65		)	(67		)	(70		)	(64		)	(54		)	(202		)	(172		)
Education	(1		)	(2		)	(4		)	(4		)	(5		)	(7		)	(14		)
Other consumer	(30		)	(31		)	(35		)	(34		)	(32		)	(96		)	(80		)
Total net (charge-offs)	(155		)	(236		)	(212		)	(209		)	(155		)	(603		)	(433		)
Provision for (recapture of) credit losses (b)	(23		)	2,220			952			221			183			3,149			552
Net (increase) in allowance for unfunded loan commitments and letters of credit	—			—			—			(14		)	(13		)	—			(19		)
Other	1			—			(1		)	6			2			—			9
Ending balance	$	5,751		$	5,928		$	3,944		$	2,742		$	2,738		$	5,751		$	2,738
Supplemental Information
Net charge-offs
Commercial net charge-offs	$	(38	)	$	(107	)	$	(59	)	$	(59	)	$	(35	)	$	(204	)	$	(79	)
Consumer net charge-offs	(117		)	(129		)	(153		)	(150		)	(120		)	(399		)	(354		)
Total net charge-offs	$	(155	)	$	(236	)	$	(212	)	$	(209	)	$	(155	)	$	(603	)	$	(433	)
Net charge-offs to average loans (annualized)	.24		%	.35		%	.35		%	.35		%	.26		%	.32		%	.25		%
Commercial	.09		%	.23		%	.14		%	.15		%	.09		%	.15		%	.07		%
Consumer	.60		%	.66		%	.77		%	.76		%	.62		%	.68		%	.63		%

(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 2019 Form 10-K and our first and second quarter 2020 Form 10-Qs included, and our third quarter 2020 Form 10-Q will include, additional information related to our adoption of the CECL standard.


(b)	See Table 8 for the components of the Provision for credit losses under CECL being reported on the Consolidated Income Statement.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 8

Allowance for Credit Losses (Unaudited) (Continued)

Table 8: Components of the Provision for Credit Losses Under CECL



	Three months ended								Nine months ended
	September 30			June 30		March 31			September 30
In millions	2020			2020		2020			2020
Provision for credit losses
Loans and leases	$	(23	)	$	2,220	$	952		$	3,149
Unfunded lending related commitments	27			212		(47		)	192
Investment securities	39			30		—			69
Other financial assets	9			1		9			19
Total provision for credit losses	$	52		$	2,463	914			$	3,429

Table 9: Allowance for Credit Losses by Loan Class (a)



	September 30, 2020						June 30, 2020						December 31, 2019
Dollars in millions	Allowance Amount		Total Loans		% of Total Loans		Allowance Amount		Total Loans		% of Total Loans		Allowance Amount		Total Loans		% of Total Loans
Allowance for loan and lease losses
Commercial
Commercial and industrial	$	2,735	$	137,187	1.99	%	$	2,834	$	144,335	1.96	%	$	1,489	$	125,337	1.19	%
Commercial real estate	630		29,028		2.17	%	382		28,763		1.33	%	278		28,110		.99	%
Equipment lease financing	163		6,479		2.52	%	164		7,097		2.31	%	45		7,155		.63	%
Total commercial	3,528		172,694		2.04	%	3,380		180,195		1.88	%	1,812		160,602		1.13	%
Consumer
Home equity	349		24,539		1.42	%	382		24,879		1.54	%	87		25,085		.35	%
Residential real estate	28		22,886		.12	%	50		22,469		.22	%	258		21,821		1.18	%
Automobile	404		14,977		2.70	%	450		16,157		2.79	%	160		16,754		.95	%
Credit card	891		6,303		14.14	%	1,010		6,575		15.36	%	288		7,308		3.94	%
Education	136		3,051		4.46	%	151		3,132		4.82	%	17		3,336		.51	%
Other consumer	415		4,829		8.59	%	505		4,829		10.46	%	120		4,937		2.43	%
Total consumer	2,223		76,585		2.90	%	2,548		78,041		3.26	%	930		79,241		1.17	%
Total	5,751		$	249,279	2.31	%	5,928		$	258,236	2.30	%	2,742		$	239,843	1.14	%
Allowance for unfunded lending related commitments	689						662						318
Allowance for credit losses	$	6,440					$	6,590					$	3,060

Supplemental Information
Allowance for credit losses to total loans					2.58	%					2.55	%					1.28	%
Commercial					2.38	%					2.18	%					1.33	%
Consumer					3.04	%					3.41	%					1.18	%

(a) Excludes allowances for investment securities and other financial assets, which together totaled $98 million and $51 million at September 30, 2020 and June 30, 2020,

respectively.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 9

Details of Nonperforming Assets (Unaudited)

Table 10: Nonperforming Assets by Type



	September 30			June 30			March 31			December 31			September 30
Dollars in millions	2020			2020			2020			2019			2019
Nonperforming loans, including TDRs
Commercial
Commercial and industrial
Retail/wholesale trade	$	90		$	117		$	121		$	74		$	61
Manufacturing	80			58			79			102			109
Service providers	69			57			63			53			55
Real estate related (a)	140			158			25			24			33
Health care	20			19			14			17			17
Transportation and warehousing	14			20			23			18			13
Other industries	264			264			169			137			203
Total commercial and industrial	677			693			494			425			491
Commercial real estate	217			43			42			44			75
Equipment lease financing	21			22			30			32			10
Total commercial	915			758			566			501			576
Consumer (b)
Home equity	639			636			617			669			685
Residential real estate	339			305			292			315			325
Automobile	171			156			154			135			128
Credit card	13			15			10			11			9
Other consumer	8			6			5			4			5
Total consumer	1,170			1,118			1,078			1,134			1,152
Total nonperforming loans (c) (d)	2,085			1,876			1,644			1,635			1,728
OREO and foreclosed assets	67			79			111			117			119
Total nonperforming assets	$	2,152		$	1,955		$	1,755		$	1,752		$	1,847
Nonperforming loans to total loans	.84		%	.73		%	.62		%	.68		%	.73		%
Nonperforming assets to total loans, OREO and foreclosed assets	.86		%	.76		%	.66		%	.73		%	.78		%
Nonperforming assets to total assets	.47		%	.43		%	.39		%	.43		%	.45		%
Allowance for loan and lease losses to nonperforming loans (e)	276		%	316		%	240		%	168		%	158		%


(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. Amounts in 2019 also excluded purchased impaired loans.


(d)	In connection with the adoption of the CECL standard, nonperforming loans as of September 30, 2020, June 30, 2020 and March 31, 2020 include purchased credit deteriorated loans. Our 2019 Form 10-K and our first and second quarter 2020 Form 10-Qs included, and our third quarter 2020 Form 10-Q will include, additional information related to our adoption of the CECL standard.


(e)	Ratios at September 30, 2020, June 30, 2020 and March 31, 2020 reflect the transition impact on our allowance for loan and lease losses from the adoption of the CECL standard along with the increases in reserves during 2020 due to the significant economic impact of COVID-19 and loan growth.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 10

Details of Nonperforming Assets (Unaudited) (Continued)

Table 11: Change in Nonperforming Assets



	July 1, 2020 -			April 1, 2020 -			January 1, 2020 -			October 1, 2019 -			July 1, 2019 -
In millions	September 30, 2020			June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019
Beginning balance	$	1,955		$	1,755		$	1,752		$	1,847		$	1,850
New nonperforming assets	512			458			391			357			290
Charge-offs and valuation adjustments	(75		)	(104		)	(145		)	(218		)	(112		)
Principal activity, including paydowns and payoffs	(175		)	(85		)	(158		)	(157		)	(122		)
Asset sales and transfers to loans held for sale	(20		)	(28		)	(20		)	(21		)	(34		)
Returned to performing status	(45		)	(41		)	(65		)	(56		)	(25		)
Ending balance	$	2,152		$	1,955		$	1,755		$	1,752		$	1,847

Table 12: Largest Individual Nonperforming Assets (a)



September 30, 2020 - Dollars in millions
Ranking	Outstandings		Industry
1	$	142	Real Estate and Rental and Leasing
2	85		Real Estate and Rental and Leasing
3	35		Real Estate and Rental and Leasing
4	34		Wholesale Trade
5	33		Real Estate and Rental and Leasing
6	33		Mining, Quarrying, and Oil and Gas Extraction
7	29		Information
8	27		Mining, Quarrying, and Oil and Gas Extraction
9	23		Mining, Quarrying, and Oil and Gas Extraction
10	20		Mining, Quarrying, and Oil and Gas Extraction
Total	$	461
As a percent of total nonperforming assets			21%


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



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 11

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 as of September 30, 2020 and June 30, 2020 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 as of September 30, 2020 and June 30, 2020 based on the contractual terms of the loan, even where borrowers may not be making payments on their loans during the modification period. Our second quarter 2020 Form 10-Q included, and our third quarter 2020 Form 10-Q will include, additional information on COVID-19 related loan modifications.

Table 13: Accruing Loans Past Due 30 to 59 Days (a) (b)



	Amount										Percent of Total Outstandings
	Sept. 30		Jun. 30		Mar. 31		Dec. 31		Sept. 30		Sept. 30		Jun. 30		Mar. 31		Dec. 31		Sept. 30
Dollars in millions	2020		2020		2020		2019		2019		2020		2020		2020		2019		2019
Commercial and industrial	$	56	$	49	$	97	$	102	$	82	.04	%	.03	%	.07	%	.08	%	.07	%
Commercial real estate	6		51		6		4		3		.02	%	.18	%	.02	%	.01	%	.01	%
Equipment lease financing	7		8		42		49		6		.11	%	.11	%	.59	%	.68	%	.08	%
Home equity	48		70		65		58		53		.20	%	.28	%	.26	%	.23	%	.21	%
Residential real estate
Non government insured	99		135		121		90		76		.43	%	.60	%	.54	%	.41	%	.36	%
Government insured	89		63		52		50		53		.39	%	.28	%	.23	%	.23	%	.25	%
Automobile	116		105		177		178		145		.77	%	.65	%	1.03	%	1.06	%	.91	%
Credit card	44		53		59		60		56		.70	%	.81	%	.83	%	.82	%	.82	%
Education
Non government insured	6		3		7		7		8		.20	%	.10	%	.22	%	.21	%	.23	%
Government insured	51		36		45		48		48		1.67	%	1.15	%	1.39	%	1.44	%	1.39	%
Other consumer	17		17		17		15		17		.35	%	.35	%	.34	%	.30	%	.35	%
Total	$	539	$	590	$	688	$	661	$	547	.22	%	.23	%	.26	%	.28	%	.23	%

Table 14: Accruing Loans Past Due 60 to 89 Days (a) (b)



	Amount										Percent of Total Outstandings
	Sept. 30		Jun. 30		Mar. 31		Dec. 31		Sept. 30		Sept. 30		Jun. 30		Mar. 31		Dec. 31		Sept. 30
Dollars in millions	2020		2020		2020		2019		2019		2020		2020		2020		2019		2019
Commercial and industrial	$	37	$	28	$	22	$	30	$	49	.03	%	.02	%	.01	%	.02	%	.04	%
Commercial real estate	6		4		1		1		3		.02	%	.01	%	.00	%	.00	%	.01	%
Equipment lease financing	4		9		2		5		4		.06	%	.13	%	.03	%	.07	%	.05	%
Home equity	22		27		28		24		24		.09	%	.11	%	.11	%	.10	%	.10	%
Residential real estate
Non government insured	22		34		30		16		20		.10	%	.15	%	.13	%	.07	%	.09	%
Government insured	58		59		52		53		57		.25	%	.26	%	.23	%	.24	%	.27	%
Automobile	32		34		49		47		36		.21	%	.21	%	.28	%	.28	%	.22	%
Credit card	33		38		37		37		33		.52	%	.58	%	.52	%	.51	%	.48	%
Education
Non government insured	2		2		4		3		5		.07	%	.06	%	.12	%	.09	%	.14	%
Government insured	24		21		26		31		30		.79	%	.67	%	.80	%	.93	%	.87	%
Other consumer	11		8		10		11		8		.23	%	.17	%	.20	%	.22	%	.16	%
Total	$	251	$	264	$	261	$	258	$	269	.10	%	.10	%	.10	%	.11	%	.11	%



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 12

Accruing Loans Past Due (Unaudited) (Continued)

Table 15: Accruing Loans Past Due 90 Days or More (a) (b)



	Amount										Percent of Total Outstandings
	Sept. 30		Jun. 30		Mar. 31		Dec. 31		Sept. 30		Sept. 30		Jun. 30		Mar. 31		Dec. 31		Sept. 30
Dollars in millions	2020		2020		2020		2019		2019		2020		2020		2020		2019		2019
Commercial and industrial	$	36	$	34	$	51	$	85	$	64	.03	%	.02	%	.03	%	.07	%	.05	%
Residential real estate
Non government insured	28		19		18		14		15		.12	%	.08	%	.08	%	.06	%	.07	%
Government insured	241		245		282		301		287		1.05	%	1.09	%	1.27	%	1.38	%	1.36	%
Automobile	12		19		19		18		11		.08	%	.12	%	.11	%	.11	%	.07	%
Credit card	60		61		70		67		57		.95	%	.93	%	.98	%	.92	%	.84	%
Education
Non government insured	1		1		2		2		3		.03	%	.03	%	.06	%	.06	%	.09	%
Government insured	62		65		82		89		87		2.03	%	2.08	%	2.53	%	2.67	%	2.51	%
Other consumer	8		12		10		9		8		.17	%	.25	%	.20	%	.18	%	.16	%
Total	$	448	$	456	$	534	$	585	$	532	.18	%	.18	%	.20	%	.24	%	.22	%

(a) Excludes loans held for sale, amounts in 2019 also excluded purchased impaired loans.

(b) In connection with the adoption of the CECL standard, accruing loans past due as of September 30, 2020, June 30, 2020 and March 31, 2020 include purchased credit deteriorated loans. Our 2019 Form 10-K and our first and second quarter 2020 Form 10-Qs included, and our third quarter 2020 Form 10-Q will include, additional information related to our adoption of the CECL standard.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 13

Business Segment Descriptions (Unaudited)

Retail Banking provides deposit, lending, brokerage, insurance services, investment management and cash management products and services to consumer and small business customers. Our customers are serviced through our branch network, ATMs, call centers, online banking and mobile channels. The branch network is located primarily in markets across the Mid-Atlantic, Midwest 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. The Treasury Management business provides payables, receivables, deposit and account services, liquidity and investments, and online and mobile banking products and services to our clients. Capital markets-related products and services include foreign exchange, derivatives, 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.

Table 16: Period End Employees



	September 30	June 30	March 31	December 31	September 30
	2020	2020	2020	2019	2019
Full-time employees
Retail Banking	27,808	29,051	28,737	28,270	28,279
Other full-time employees	21,997	21,752	21,776	21,747	21,701
Total full-time employees	49,805	50,803	50,513	50,017	49,980
Part-time employees
Retail Banking	1,593	1,854	1,780	1,759	1,823
Other part-time employees	104	476	129	142	153
Total part-time employees	1,697	2,330	1,909	1,901	1,976
Total	51,502	53,133	52,422	51,918	51,956



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 14

Table 17: Summary of Business Segment Income and Revenue (Unaudited) (a)



	Three months ended											Nine months ended
	September 30		June 30			March 31		December 31		September 30		September 30		September 30
In millions	2020		2020			2020		2019		2019		2020		2019
Income
Retail Banking	$	530	$	(223	)	$	201	$	277	$	347	$	508	$	936
Corporate & Institutional Banking	670		(358		)	370		649		645		682		1,799
Asset Management Group	91		28			54		91		46		173		171
Other	241		(191		)	134		126		143		184		542
Net income (loss) from continuing operations	$	1,532	$	(744	)	$	759	$	1,143	$	1,181	$	1,547	$	3,448

Revenue
Retail Banking	$	2,056	$	1,975		$	2,244	$	2,054	$	2,137	$	6,275	$	6,114
Corporate & Institutional Banking	1,748		1,790			1,660		1,615		1,584		5,198		4,636
Asset Management Group	310		293			292		352		286		895		927
Other	167		18			140		300		235		325		841
Total revenue	$	4,281	$	4,076		$	4,336	$	4,321	$	4,242	$	12,693	$	12,518

(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.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 15

Table 18: Retail Banking (Unaudited) (a)



	Three months ended															Nine months ended
	September 30			June 30			March 31			December 31			September 30			September 30			September 30
Dollars in millions	2020			2020			2020			2019			2019			2020			2019
Income Statement
Net interest income	$	1,383		$	1,390		$	1,456		$	1,402		$	1,393		$	4,229		$	4,118
Noninterest income	673			585			788			652			744			2,046			1,996
Total revenue	2,056			1,975			2,244			2,054			2,137			6,275			6,114
Provision for (recapture of) credit losses	(157		)	761			445			161			147			1,049			356
Noninterest expense	1,521			1,500			1,536			1,530			1,536			4,557			4,531
Pretax earnings (loss)	692			(286		)	263			363			454			669			1,227
Income taxes (benefit)	162			(63		)	62			86			107			161			291
Earnings	$	530		$	(223	)	$	201		$	277		$	347		$	508		$	936
Average Balance Sheet
Loans held for sale	$	700		$	829		$	779		$	747		$	760		$	769		$	586
Loans
Consumer
Home equity	$	22,647		$	22,790		$	22,736		$	22,590		$	22,434		$	22,723		$	22,679
Residential real estate	18,435			18,244			17,964			17,352			16,630			18,215			15,806
Automobile	15,573			16,688			17,096			16,427			15,761			16,449			15,201
Credit card	6,408			6,690			7,207			6,985			6,624			6,767			6,403
Education	3,119			3,218			3,343			3,428			3,538			3,226			3,672
Other consumer	2,262			2,454			2,533			2,418			2,309			2,417			2,187
Total consumer	68,444			70,084			70,879			69,200			67,296			69,797			65,948
Commercial	13,356			13,612			10,524			10,323			10,379			12,298			10,440
Total loans	$	81,800		$	83,696		$	81,403		$	79,523		$	77,675		$	82,095		$	76,388
Total assets	$	98,731		$	102,103		$	97,062		$	94,967		$	93,222		$	98,764		$	92,282
Deposits
Noninterest-bearing demand	$	43,752		$	39,134		$	32,225		$	32,674		$	32,092		$	38,390		$	31,338
Interest-bearing demand	49,274			47,339			42,865			41,689			41,420			46,501			42,207
Money market	23,816			22,942			22,866			23,927			24,807			23,210			25,786
Savings	70,236			67,947			62,781			59,877			57,752			67,000			55,659
Certificates of deposit	10,852			11,661			12,233			12,598			12,766			11,579			12,619
Total deposits	$	197,930		$	189,023		$	172,970		$	170,765		$	168,837		$	186,680		$	167,609
Performance Ratios
Return on average assets	2.13		%	(.88		)%	.84		%	1.16		%	1.48		%	.69		%	1.36		%
Noninterest income to total revenue	33		%	30		%	35		%	32		%	35		%	33		%	33		%
Efficiency	74		%	76		%	68		%	74		%	72		%	73		%	74		%


(a)	See note (a) on page 14.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 16

Retail Banking (Unaudited) (Continued)



	Three months ended															Nine months ended
	September 30			June 30			March 31			December 31			September 30			September 30			September 30
Dollars in millions, except as noted	2020			2020			2020			2019			2019			2020			2019
Supplemental Noninterest Income Information
Consumer services	$	371		$	315		$	372		$	382		$	397		$	1,058		$	1,148
Residential mortgage	$	137		$	158		$	210		$	87		$	134		$	505		$	281
Service charges on deposits	$	118		$	80		$	166		$	183		$	178		$	364		$	504
Residential Mortgage Information
Residential mortgage servicing statistics (in billions, except as noted) (a)
Serviced portfolio balance (b)	$	119		$	122		$	118		$	120		$	123
Serviced portfolio acquisitions	$	8		$	11		$	2		$	3		$	3		$	21		$	9
MSR asset value (b)	$	0.6		$	0.6		$	0.6		$	1.0		$	0.9
MSR capitalization value (in basis points) (b)	50			47			51			83			72
Servicing income: (in millions)
Servicing fees, net (c)	$	25		$	36		$	44		$	39		$	44		$	105		$	139
Mortgage servicing rights valuation, net of economic hedge	$	17		$	20		$	101		$	9		$	40		$	138		$	38
Residential mortgage loan statistics
Loan origination volume (in billions)	$	4.0		$	4.2		$	3.2		$	3.5		$	3.4		$	11.4		$	8.0
Loan sale margin percentage	3.62		%	3.67		%	3.16		%	2.42		%	2.59		%	3.51		%	2.41		%
Percentage of originations represented by:
Purchase volume (d)	44		%	34		%	36		%	40		%	44		%	38		%	50		%
Refinance volume	56		%	66		%	64		%	60		%	56		%	62		%	50		%
Other Information (b)
Customer-related statistics (average)
Non-teller deposit transactions (e)	67		%	65		%	59		%	58		%	58		%	63		%	57		%
Digital consumer customers (f)	75		%	73		%	71		%	71		%	70		%	73		%	69		%
Credit-related statistics
Nonperforming assets	$	1,077		$	1,037		$	1,011		$	1,046		$	1,056
Net charge-offs - loans and leases	$	125		$	142		$	166		$	154		$	128		$	433		$	380
Other statistics
ATMs	9,058			9,058			9,048			9,091			9,102
Branches (g)	2,207			2,256			2,277			2,296			2,310
Brokerage account client assets (in billions) (h)	$	55		$	53		$	49		$	54		$	52


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


(b)	Presented as of period end, except for average customer-related statistics and net charge-offs, which are both shown for the three and nine months ended, 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)	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 17

Table 19: Corporate & Institutional Banking (Unaudited) (a)



	Three months ended															Nine months ended
	September 30			June 30			March 31			December 31			September 30			September 30			September 30
Dollars in millions	2020			2020			2020			2019			2019			2020			2019
Income Statement
Net interest income	$	1,025		$	1,064		$	966		$	969		$	930		$	3,055		$	2,745
Noninterest income	723			726			694			646			654			2,143			1,891
Total revenue	1,748			1,790			1,660			1,615			1,584			5,198			4,636
Provision for credit losses	211			1,585			458			65			48			2,254			219
Noninterest expense	666			673			722			726			703			2,061			2,087
Pretax earnings (loss)	871			(468		)	480			824			833			883			2,330
Income taxes (benefit)	201			(110		)	110			175			188			201			531
Earnings	$	670		$	(358	)	$	370		$	649		$	645		$	682		$	1,799
Average Balance Sheet
Loans held for sale	$	904		$	704		$	395		$	616		$	720		$	669		$	467
Loans
Commercial
Commercial and industrial	$	125,187		$	138,992		$	117,288		$	114,113		$	114,701		$	127,149		$	112,371
Commercial real estate	27,511			27,106			26,589			26,586			26,570			27,070			26,257
Equipment lease financing	6,772			7,036			7,066			7,200			7,272			6,957			7,273
Total commercial	159,470			173,134			150,943			147,899			148,543			161,176			145,901
Consumer	11			8			9			11			13			9			16
Total loans	$	159,481		$	173,142		$	150,952		$	147,910		$	148,556		$	161,185		$	145,917
Total assets	$	183,266		$	199,254		$	172,502		$	167,555		$	168,193		$	185,001		$	163,126
Deposits
Noninterest-bearing demand	$	56,433		$	53,157		$	40,651		$	39,513		$	38,740		$	50,104		$	39,016
Interest-bearing demand	29,730			27,674			21,101			20,851			20,523			26,182			19,027
Money market	38,015			36,595			28,468			30,264			29,456			34,373			27,358
Other	8,956			9,546			7,868			7,916			7,100			8,789			6,258
Total deposits	$	133,134		$	126,972		$	98,088		$	98,544		$	95,819		$	119,448		$	91,659
Performance Ratios
Return on average assets	1.45		%	(.72		)%	.87		%	1.54		%	1.52		%	.49		%	1.47		%
Noninterest income to total revenue	41		%	41		%	42		%	40		%	41		%	41		%	41		%
Efficiency	38		%	38		%	43		%	45		%	44		%	40		%	45		%
Other Information
Consolidated revenue from:
Treasury Management (b)	$	452		$	469		$	491		$	494		$	460		$	1,412		$	1,372
Capital Markets (b)	$	345		$	388		$	344		$	291		$	290		$	1,077		$	849
Commercial mortgage banking activities
Commercial mortgage loans held for sale (c)	$	46		$	42		$	29		$	24		$	38		$	117		$	73
Commercial mortgage loan servicing income (d)	76			67			69			71			71			212			190
Commercial mortgage servicing rights valuation, net of economic hedge (e)	16			22			20			2			1			58			17
Total	$	138		$	131		$	118		$	97		$	110		$	387		$	280
MSR asset value (f)	$	515		$	490		$	477		$	649		$	595
Average Loans by C&IB business
Corporate Banking	$	81,617		$	91,634		$	78,057		$	75,665		$	74,883		$	83,762		$	73,460
Real Estate	40,592			42,124			37,368			36,908			38,172			40,030			37,231
Business Credit	21,845			23,943			23,251			22,900			22,824			23,009			22,480
Commercial Banking	11,770			10,708			7,784			7,793			7,947			10,093			8,048
Other	3,657			4,733			4,492			4,644			4,730			4,291			4,698
Total average loans	$	159,481		$	173,142		$	150,952		$	147,910		$	148,556		$	161,185		$	145,917
Credit-related statistics
Nonperforming assets (f)	$	832		$	674		$	508		$	444		$	526
Net charge-offs - loans and leases	$	32		$	99		$	50		$	47		$	30		$	181		$	58


(a)	See note (a) on page 14.


(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.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 18

Table 20: Asset Management Group (Unaudited) (a)



	Three months ended															Nine months ended
	September 30			June 30			March 31			December 31			September 30			September 30			September 30
Dollars in millions, except as noted	2020			2020			2020			2019			2019			2020			2019
Income Statement
Net interest income	$	89		$	89		$	88		$	80		$	70		$	266		$	208
Noninterest income	221			204			204			272			216			629			719
Total revenue	310			293			292			352			286			895			927
Provision for (recapture of) credit losses	(19		)	39			3			1			(1		)	23			(2		)
Noninterest expense	211			217			219			232			228			647			707
Pretax earnings	118			37			70			119			59			225			222
Income taxes	27			9			16			28			13			52			51
Earnings	$	91		$	28		$	54		$	91		$	46		$	173		$	171
Average Balance Sheet
Loans
Consumer
Residential real estate	$	2,976		$	2,636		$	2,385		$	2,193		$	1,980		$	2,667		$	1,833
Other consumer	4,065			3,975			4,052			4,145			4,207			4,031			4,261
Total consumer	$	7,041		$	6,611		$	6,437		$	6,338		$	6,187		$	6,698		$	6,094
Commercial	$	810		$	883		$	856		$	793		$	758		$	849		$	747
Total loans	$	7,851		$	7,494		$	7,293		$	7,131		$	6,945		$	7,547		$	6,841
Total assets	$	8,361		$	7,958		$	7,801		$	7,697		$	7,331		$	8,041		$	7,247
Deposits
Noninterest-bearing demand	$	1,692		$	1,421		$	1,468		$	1,407		$	1,299		$	1,528		$	1,344
Interest-bearing demand	8,101			7,742			6,850			6,846			3,393			7,566			3,121
Money market	1,542			1,597			1,709			1,773			1,740			1,616			1,852
Savings	7,243			7,398			7,197			6,950			6,302			7,279			5,969
Other	554			722			847			898			893			707			797
Total deposits	$	19,132		$	18,880		$	18,071		$	17,874		$	13,627		$	18,696		$	13,083
Performance Ratios
Return on average assets	4.32		%	1.41		%	2.81		%	4.69		%	2.49		%	2.88		%	3.15		%
Noninterest income to total revenue	71		%	70		%	70		%	77		%	76		%	70		%	78		%
Efficiency	68		%	74		%	75		%	66		%	80		%	72		%	76		%
Other Information
Nonperforming assets (b)	$	39		$	38		$	34		$	39		$	42
Net charge-offs (recoveries) - loans and leases	$	1		—			$	(1	)	$	4		—			—			$	1
Client Assets Under Administration (in billions) (b) (c)
Discretionary client assets under management	$	158		$	151		$	136		$	154		$	163
Nondiscretionary client assets under administration	142			138			128			143			135
Total	$	300		$	289		$	264		$	297		$	298
Discretionary client assets under management
Personal	$	99		$	94		$	84		$	99		$	98
Institutional	59			57			52			55			65
Total	$	158		$	151		$	136		$	154		$	163


(a)	See note (a) on page 14.


(b)	As of period end.


(c)	Excludes brokerage account client assets.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 19

Glossary of Terms

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.

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 (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 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).

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.

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.

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.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 20

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.

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 - Basel III 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 is 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) - Assuming a credit obligor enters default status, an estimate of loss, based on collateral type, collateral value, loan exposure, and other factors. 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 asserts. 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.



THE PNC FINANCIAL SERVICES GROUP, INC.		Page 21

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

Off-balance sheet credit exposures - Standby letters of credit, financial guarantees, commitments to extend credit and similar unfunded obligations that are not unilaterally, unconditionally, cancelable at PNC’s 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).

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. Certain assets that have a government-guarantee which are classified as other receivables are excluded.

Probability of default (PD) - An estimate of the likelihood that a credit obligor will enter into default status.

Purchased credit deteriorated assets - 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.

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.

Reasonable and supportable forecast period (RSFP) - In context of CECL, the period for which forecasts and projections of macroeconomic variables have been determined to be reasonable and supportable, and are used as inputs for ACL measurement.

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.

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 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.

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