PNC FINANCIAL SERVICES GROUP, INC. - FORM 8-K - EX-99.1 - July 14, 2021

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Exhibit 99.1

pncbanklogoa18a.jpg



THE PNC FINANCIAL SERVICES GROUP, INC.

FINANCIAL SUPPLEMENT
SECOND QUARTER 2021
(Unaudited)



THE PNC FINANCIAL SERVICES GROUP, INC.
FINANCIAL SUPPLEMENT
SECOND QUARTER 2021
(UNAUDITED)

The information contained in this Financial Supplement is preliminary, unaudited and based on data available on July 14, 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.

PNC has three reportable business segments: Retail Banking, Corporate & Institutional Banking, and Asset Management Group. Business segment results and a description of each business will be included in PNC's second quarter 2021 Form 10-Q.

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. BBVA USA has more than 600 branches in Texas, Alabama, Arizona, California, Florida, Colorado and New Mexico. 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. PNC's second quarter earnings results reflect BBVA's acquired business operations for the month of June 2021 and PNC's balance sheet dated June 30, 2021 includes BBVA's balances. PNC's previously disclosed amounts do not include BBVA amounts. PNC's second quarter 2021 Form 10-Q will include additional information on this acquisition.

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 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.

Page 1

Table 1: Consolidated Income Statement (Unaudited)
Three months endedSix months ended
June 30March 31December 31September 30June 30June 30June 30
In millions, except per share data2021202120202020202020212020
Interest Income
Loans$2,160 $1,996 $2,074 $2,116 $2,257 $4,156 $4,737 
Investment securities469 421 442 490 527 890 1,109 
Other72 66 60 70 71 138 209 
Total interest income2,701 2,483 2,576 2,676 2,855 5,184 6,055 
Interest Expense
Deposits30 40 53 74 141 70 516 
Borrowed funds90 95 99 118 187 185 501 
Total interest expense120 135 152 192 328 255 1,017 
Net interest income2,581 2,348 2,424 2,484 2,527 4,929 5,038 
Noninterest Income
Asset management239 226 221 215 199 465 400 
Consumer services457 384 387 390 330 841 707 
Corporate services 688 555 650 479 512 1,243 1,038 
Residential mortgage103 105 99 137 158 208 368 
Service charges on deposits131 119 134 119 79 250 247 
Other (a)468 483 293 457 271 951 614 
Total noninterest income2,086 1,872 1,784 1,797 1,549 3,958 3,374 
Total revenue4,667 4,220 4,208 4,281 4,076 8,887 8,412 
Provision For (Recapture of) Credit Losses302 (551)(254)52 2,463 (249)3,377 
Noninterest Expense
Personnel1,640 1,477 1,521 1,410 1,373 3,117 2,742 
Occupancy217 215 215 205 199 432 406 
Equipment326 293 296 292 301 619 588 
Marketing74 45 64 67 47 119 105 
Other793 544 612 557 595 1,337 1,217 
Total noninterest expense3,050 2,574 2,708 2,531 2,515 5,624 5,058 
Income (loss) from continuing operations before income taxes and noncontrolling interests1,315 2,197 1,754 1,698 (902)3,512 (23)
Income taxes (benefit) from continuing operations212 371 298 166 (158)583 (38)
Net income (loss) from continuing operations1,103 1,826 1,456 1,532 (744)2,929 15 
Income from discontinued operations before taxes5,596 5,777 
Income taxes from discontinued operations1,197 1,222 
Net income from discontinued operations4,399 4,555 
Net income1,103 1,826 1,456 1,532 3,655 2,929 4,570 
Less: Net income attributable to noncontrolling interests12 10 14 13 7 22 14 
Preferred stock dividends (b)48 57 48 63 55 105 118 
Preferred stock discount accretion and
    redemptions		1 1 1 1 1 2 2 
Net income attributable to common shareholders$1,042 $1,758 $1,393 $1,455 $3,592 $2,800 $4,436 
Earnings Per Common Share
Basic earnings (loss) from continuing operations$2.43 $4.11 $3.26 $3.40 $(1.90)$6.54 $(0.29)
Basic earnings from discontinued operations 10.28 10.60 
Total basic earnings$2.43 $4.11 $3.26 $3.40 $8.40 $6.54 $10.33 
Diluted earnings (loss) from continuing operations$2.43 $4.10 $3.26 $3.39 $(1.90)$6.53 $(0.29)
Diluted earnings from discontinued operations10.28 10.59 
Total diluted earnings$2.43 $4.10 $3.26 $3.39 $8.40 $6.53 $10.32 
Average Common Shares Outstanding
Basic427 426 425 426 426 426 428 
Diluted427 426 426 426 426 427 428 
Efficiency65 %61 %64 %59 %62 %63 %60 %
Noninterest income to total revenue45 %44 %42 %42 %38 %45 %40 %
Effective tax rate from continuing operations (c)16.1 %16.9 %17.0 %9.8 %17.5 %16.6 %165.2 %
(a)Includes net gains on sales of securities of $10 million, $25 million, $51 million, $32 million and $40 million for the quarters ended June 30, 2021, March 31, 2021, December 31, 2020, September 30, 2020 and June 30, 2020, respectively. Amounts for the six months ended June 30, 2021 and June 30, 2020 were $35 million and $222 million, 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)
June 30March 31December 31September 30June 30
In millions, except par value20212021202020202020
Assets
Cash and due from banks$8,724 $7,455 $7,017 $6,629 $6,338 
Interest-earning deposits with banks (a)72,447 86,161 85,173 70,959 50,233 
Loans held for sale (b)2,227 1,967 1,597 1,787 1,443 
Investment securities – available for sale 125,058 96,799 87,358 89,747 97,052 
Investment securities – held to maturity1,485 1,456 1,441 1,438 1,441 
Loans (b)294,704 237,013 241,928 249,279 258,236 
Allowance for loan and lease losses (5,730)(4,714)(5,361)(5,751)(5,928)
Net loans288,974 232,299 236,567 243,528 252,308 
Equity investments7,521 6,386 6,052 4,938 4,943 
Mortgage servicing rights1,793 1,680 1,242 1,113 1,067 
Goodwill10,958 9,317 9,233 9,233 9,233 
Other (b) 35,025 30,894 30,999 32,445 34,920 
Total assets$554,212 $474,414 $466,679 $461,817 $458,978 
Liabilities
Deposits
Noninterest-bearing$154,190 $120,641 $112,637 $107,281 $99,458 
Interest-bearing298,693 254,426 252,708 247,798 246,539 
Total deposits452,883 375,067 365,345 355,079 345,997 
Borrowed funds
Federal Home Loan Bank borrowings1,500 3,500 5,500 8,500 
Bank notes and senior debt24,408 22,139 24,271 26,839 27,704 
Subordinated debt7,120 6,241 6,403 6,465 6,500 
Other (b)3,285 3,150 3,021 3,306 4,322 
Total borrowed funds34,813 33,030 37,195 42,110 47,026 
Allowance for unfunded lending related commitments 645 507 584 689 662 
Accrued expenses and other liabilities11,186 11,931 9,514 10,629 12,345 
Total liabilities499,527 420,535 412,638 408,507 406,030 
Equity
Preferred stock (c)
Common stock - $5 par value
Authorized 800 shares, issued 543, 543, 543, 542, and 542 shares2,713 2,713 2,713 2,712 2,712 
Capital surplus15,928 15,879 15,884 15,836 16,284 
Retained earnings48,663 48,113 46,848 45,947 44,986 
Accumulated other comprehensive income1,463 1,290 2,770 2,997 3,069 
Common stock held in treasury at cost:118, 118, 119, 118 and 117 shares(14,140)(14,146)(14,205)(14,216)(14,128)
Total shareholders’ equity54,627 53,849 54,010 53,276 52,923 
Noncontrolling interests58 30 31 34 25 
Total equity54,685 53,879 54,041 53,310 52,948 
Total liabilities and equity$554,212 $474,414 $466,679 $461,817 $458,978 
(a)Amounts include balances held with the Federal Reserve Bank of $71.9 billion, $85.8 billion, $84.9 billion, $70.6 billion and $50.0 billion as of June 30, 2021, March 31, 2021, December 31, 2020, September 30, 2020 and June 30, 2020, respectively.
(b)Amounts include assets and liabilities for which PNC has elected the fair value option. Our first quarter 2021 Form 10-Q included, and our second quarter 2021 Form 10-Q 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) (c)
Three months endedSix months ended
June 30March 31December 31September 30June 30June 30June 30
In millions2021202120202020202020212020
Assets
Interest-earning assets:
Investment securities
Securities available for sale
Residential mortgage-backed
Agency$56,042 $45,298 $48,036 $52,215 $52,500 $50,700 $51,068 
Non-agency1,142 1,2361,3371,4371,5291,1891,573 
Commercial mortgage-backed6,4656,2416,5686,9277,2326,3546,983 
Asset-backed5,8555,3045,0175,0335,3095,5815,156 
U.S. Treasury and government agencies32,41922,30918,78318,72415,45727,39215,697 
Other5,1074,5614,5614,7234,9524,8354,488 
Total securities available for sale107,03084,94984,30289,05986,97996,05184,965
Securities held to maturity
Asset-backed2237 
U.S. Treasury and government agencies802797793788783800781 
Other671650650655646660643 
Total securities held to maturity1,4731,4471,4431,4431,4511,4601,461
Total investment securities108,50386,39685,74590,50288,43097,51186,426
Loans
Commercial and industrial137,892129,996134,944139,795153,595133,966141,159 
Commercial real estate31,61128,59828,99129,08128,70730,11328,491 
Equipment lease financing6,3326,3326,3806,7717,0356,3327,051 
Consumer52,57550,90452,87254,69256,48551,74457,082 
Residential real estate27,19722,30522,63822,75322,29224,76422,060 
Total loans255,607238,135245,825253,092268,114246,919255,843
Interest-earning deposits with banks (b)78,52285,41076,37460,32734,60081,94726,085 
Other interest-earning assets8,0797,8298,1349,75210,8677,95510,167 
Total interest-earning assets450,711417,770416,078413,673402,011434,332378,521
Noninterest-earning assets53,71850,45048,90148,46655,30252,09356,353 
Total assets$504,429 $468,220 $464,979 $462,139 $457,313 $486,425 $434,874 
Liabilities and Equity
Interest-bearing liabilities:
Interest-bearing deposits
Money market$64,990 $59,083 $62,621 $63,598 $61,346 $62,053 $57,317 
Demand99,09191,61988,02687,22682,88195,37676,906 
Savings87,30782,92679,43077,47975,34585,12972,661 
Time deposits18,04818,44919,44820,24821,87318,24621,506 
Total interest-bearing deposits269,436252,077249,525248,551241,445260,804228,390
Borrowed funds
Federal Home Loan Bank borrowings2652,4114,7617,19612,5591,33213,000 
Bank notes and senior debt22,62022,79924,02225,85828,29822,70929,143 
Subordinated debt6,2185,9295,9365,9365,9376,0745,935 
Other5,0464,0573,4334,3546,4354,5557,131 
Total borrowed funds34,14935,19638,15243,34453,22934,67055,209
Total interest-bearing liabilities303,585287,273287,677291,895294,674295,474283,599
Noninterest-bearing liabilities and equity:
Noninterest-bearing deposits132,283113,299109,878101,93193,776122,84384,086 
Accrued expenses and other liabilities14,75514,25814,34815,34116,98914,50816,712 
Equity53,80653,39053,07652,97251,87453,60050,477 
Total liabilities and equity$504,429 $468,220 $464,979 $462,139 $457,313 $486,425 $434,874 

(a)Calculated using average daily balances.
(b)Amounts include average balances held with the Federal Reserve Bank of Cleveland of $78.3 billion, $85.2 billion, $76.1 billion, $60.0 billion and $34.2 billion for the three months ended June 30, 2021, March 31, 2021, December 31, 2020, September 30, 2020 and June 30, 2020, and $81.7 billion and $25.8 billion for the six months ended June 30, 2021 and June 30, 2020, respectively.
(c)Second quarter results reflect BBVA's acquired business operations for the month of June. Previously disclosed amounts do not include BBVA amounts.

THE PNC FINANCIAL SERVICES GROUP, INC.

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Table 4: Details of Net Interest Margin (Unaudited) (c)
Three months endedSix months ended
June 30March 31December 31September 30June 30June 30June 30
2021202120202020202020212020
Average yields/rates (a)
Yield on interest-earning assets
Investment securities
Securities available for sale
Residential mortgage-backed
Agency1.61 %1.72 %1.81 %2.03 %2.29 %1.66 %2.45 %
Non-agency7.85 %7.24 %7.15 %7.26 %7.13 %7.54 %7.51 %
Commercial mortgage-backed2.49 %2.58 %2.66 %2.50 %2.59 %2.54 %2.76 %
Asset-backed2.07 %1.84 %2.04 %2.44 %2.60 %1.96 %2.82 %
U.S. Treasury and government agencies1.30 %1.68 %1.77 %1.64 %1.77 %1.45 %2.03 %
Other3.00 %3.28 %3.45 %3.39 %3.47 %3.13 %3.57 %
Total securities available for sale1.73 %1.95 %2.05 %2.16 %2.39 %1.82 %2.58 %
Securities held to maturity
Asset-backed2.38 %2.65 %
U.S. Treasury and government agencies2.86 %2.83 %2.88 %2.86 %2.84 %2.85 %2.84 %
Other3.67 %4.17 %4.20 %4.20 %4.27 %3.91 %4.38 %
Total securities held to maturity3.23 %3.43 %3.47 %3.47 %3.47 %3.33 %3.51 %
Total investment securities1.75 %1.97 %2.08 %2.18 %2.41 %1.85 %2.59 %
Loans
Commercial and industrial2.89 %2.91 %2.87 %2.82 %2.83 %2.90 %3.19 %
Commercial real estate2.92 %2.80 %2.63 %2.65 %2.84 %2.86 %3.23 %
Equipment lease financing3.76 %3.90 %3.90 %3.80 %3.82 %3.83 %3.88 %
Consumer4.82 %4.78 %4.74 %4.69 %4.86 %4.80 %5.12 %
Residential real estate3.50 %3.53 %3.69 %3.74 %3.86 %3.51 %3.91 %
Total loans3.38 %3.38 %3.35 %3.32 %3.37 %3.38 %3.71 %
Interest-earning deposits with banks0.11 %0.10 %0.10 %0.10 %0.10 %0.10 %0.50 %
Other interest-earning assets2.46 %2.34 %1.99 %2.23 %2.26 %2.40 %2.84 %
Total yield on interest-earning assets2.40 %2.40 %2.46 %2.57 %2.85 %2.40 %3.21 %
Rate on interest-bearing liabilities
Interest-bearing deposits
Money market0.03 %0.03 %0.05 %0.07 %0.15 %0.03 %0.41 %
Demand0.03 %0.04 %0.04 %0.05 %0.08 %0.03 %0.23 %
Savings0.05 %0.06 %0.08 %0.11 %0.31 %0.05 %0.54 %
Time deposits0.20 %0.32 %0.41 %0.58 %0.80 %0.26 %1.06 %
Total interest-bearing deposits0.05 %0.06 %0.08 %0.12 %0.23 %0.05 %0.45 %
Borrowed funds
Federal Home Loan Bank borrowings0.35 %0.43 %0.40 %0.47 %1.00 %0.42 %1.36 %
Bank notes and senior debt0.98 %1.04 %1.00 %1.08 %1.56 %1.01 %2.00 %
Subordinated debt1.35 %1.43 %1.38 %1.51 %1.91 %1.39 %2.32 %
Other
0.97 %1.21 %1.39 %1.31 %0.92 %1.07 %1.34 %
Total borrowed funds1.04 %1.09 %1.02 %1.06 %1.39 %1.06 %1.80 %
Total rate on interest-bearing liabilities0.16 %0.19 %0.21 %0.26 %0.44 %0.17 %0.71 %
Interest rate spread2.24 %2.21 %2.25 %2.31 %2.41 %2.23 %2.50 %
Benefit from use of noninterest bearing sources (b)0.05 %0.06 %0.07 %0.08 %0.11 %0.05 %0.17 %
Net interest margin2.29 %2.27 %2.32 %2.39 %2.52 %2.28 %2.67 %

(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 June 30, 2021, March 31, 2021, December 31, 2020, September 30, 2020 and June 30, 2020 were $15 million, $15 million, $17 million, $17 million and $19 million, respectively. The taxable-equivalent adjustments to net interest income for the six months ended June 30, 2021 and June 30, 2020 were $30 million and $41 million, respectively.
(b)Represents the positive effects of investing noninterest-bearing sources in interest-earning assets.
(c)Second quarter results reflect BBVA's acquired business operations for the month of June. Previously disclosed amounts do not include BBVA amounts.

THE PNC FINANCIAL SERVICES GROUP, INC.

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Table 5: Per Share Related Information (Unaudited)
Three months endedSix months ended
June 30March 31December 31September 30June 30June 30June 30
In millions, except per share data2021202120202020202020212020
Basic
Net income (loss) from continuing operations$1,103 $1,826 $1,456 $1,532 $(744)$2,929 $15 
Less:
Net income attributable to noncontrolling interests12 10 14 13 7 22 14 
Preferred stock dividends48 57 48 63 55 105 118 
Preferred stock discount accretion and redemptions1 1 1 1 1 2 2 
Net income (loss) from continuing operations
   attributable to common shareholders		1,042 1,758 1,393 1,455 (807)2,800 (119)
Less: Dividends and undistributed earnings allocated
   to nonvested restricted shares		5 8 6 8 1 13 4 
Net income (loss) from continuing operations
   attributable to basic common shareholders		$1,037 $1,750 $1,387 $1,447 $(808)$2,787 $(123)
Net income from discontinued operations attributable
   to common shareholders		$4,399 $4,555 
Less: Undistributed earnings allocated to nonvested
    restricted shares		   21 22 
Net income from discontinued operations attributable
   to basic common shareholders		   $4,378 $4,533 
Basic weighted-average common shares outstanding427 426 425 426 426 426 428 
Basic earnings (loss) per common share from
   continuing operations (a)		$2.43 $4.11 $3.26 $3.40 $(1.90)$6.54 $(0.29)
Basic earnings per common share from discontinued
   operations (a)		$10.28 $10.60 
Basic earnings per common share$2.43 $4.11 $3.26 $3.40 $8.40 $6.54 $10.33 
Diluted
Net income (loss) from continuing operations
   attributable to diluted common shareholder		$1,037 $1,750 $1,387 $1,447 $(808)$2,787 $(123)
Net income from discontinued operations attributable
   to basic common shareholders		   $4,378 $4,533 
Less: Impact of earnings per share dilution from
   discontinued operations		   1 2 
Net income from discontinued operations attributable
   to diluted common shareholders		   $4,377 $4,531 
Basic weighted-average common shares outstanding427 426425 426 426 426 428 
Dilutive potential common shares1 1 
Diluted weighted-average common shares outstanding427 426 426 426 426 427 428 
Diluted earnings (loss) per common share from
   continuing operations (a)		$2.43 $4.10 $3.26 $3.39 $(1.90)$6.53 $(0.29)
Diluted earnings per common share from discontinued
   operations (a)		$10.28 $10.59 
Diluted earnings per common share $2.43 $4.10 $3.26 $3.39 $8.40 $6.53 $10.32 

(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.

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Table 6: Details of Loans (Unaudited)
June 30March 31December 31September 30June 30
In millions2021 (a)2021202020202020
Commercial
Commercial and industrial$155,300 $129,798 $132,073 $137,187 $144,335 
Commercial real estate37,964 28,319 28,716 29,028 28,763 
Equipment lease financing6,376 6,389 6,414 6,479 7,097 
Total commercial199,640164,506167,203172,694180,195
Consumer
Home equity25,174 23,493 24,088 24,539 24,879 
Residential real estate36,846 22,418 22,560 22,886 22,469 
Automobile17,551 13,584 14,218 14,977 16,157 
Credit card6,528 5,675 6,215 6,303 6,575 
Education2,726 2,842 2,946 3,051 3,132 
Other consumer6,239 4,495 4,698 4,829 4,829 
Total consumer95,064 72,507 74,725 76,585 78,041 
Total loans$294,704 $237,013 $241,928 $249,279 $258,236 
(a)Includes $60.5 billion of loans at June 30, 2021, $38.5 billion in the commercial portfolio and $22.0 billion in the consumer portfolio, that were acquired as a part of the BBVA acquisition on June 1, 2021. Additional information on this acquired loan portfolio will be included in our second quarter 2021 Form 10-Q.

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 endedSix months ended
June 30March 31December 31September 30June 30June 30June 30
Dollars in millions2021202120202020202020212020
Allowance for loan and lease losses
Beginning balance$4,714 $5,361 $5,751 $5,928 $3,944 $5,361 $2,742 
Adoption of ASU 2016-03 (a)463 
Acquisition PCD reserves1,115 1,115 
Gross charge-offs:
Commercial and industrial(40)(59)(133)(59)(112)(99)(190)
Commercial real estate(5)(1)(1)(5)
Equipment lease financing(1)(5)(4)(4)(10)(6)(15)
Home equity(7)(7)(11)(12)(8)(14)(19)
Residential real estate(3)(4)(6)(2)(7)(2)
Automobile(31)(52)(55)(57)(69)(83)(153)
Credit card(58)(69)(72)(74)(76)(127)(154)
Education(3)(5)(3)(3)(4)(8)(10)
Other consumer(31)(37)(42)(35)(35)(68)(75)
Acquired loan gross charge-offs (b)(254)(254)
Total gross charge-offs(428)(243)(327)(247)(314)(671)(618)
Recoveries:
Commercial and industrial28 14 23 21 13 42 31 
Commercial real estate2 1 3 2 3 4 
Equipment lease financing3 3 3 3 2 6 4 
Home equity21 17 17 15 15 38 29 
Residential real estate6 5 4 4 4 11 8 
Automobile39 38 33 31 29 77 64 
Credit card10 12 9 9 9 22 17 
Education2 2 2 2 2 4 4 
Other consumer5 5 4 5 4 10 9 
Acquired loan recoveries 6 6 
Total recoveries122 97 98 92 78 219 170 
Net (charge-offs) / recoveries:
Commercial and industrial(12)(45)(110)(38)(99)(57)(159)
Commercial real estate2 (4)2 1 (2)4 
Equipment lease financing2 (2)(1)(1)(8)(11)
Home equity14 10 6 3 7 24 10 
Residential real estate3 1 (2)2 4 4 6 
Automobile8 (14)(22)(26)(40)(6)(89)
Credit card(48)(57)(63)(65)(67)(105)(137)
Education(1)(3)(1)(1)(2)(4)(6)
Other consumer(26)(32)(38)(30)(31)(58)(66)
Acquired loan net (charge-offs) (248)(248)
Total net (charge-offs)(306)(146)(229)(155)(236)(452)(448)
Provision for (recapture of) credit losses (c)206 (502)(164)(23)2,220 (296)3,172 
Other1 1 3 1 2 (1)
Ending balance$5,730 $4,714 $5,361 $5,751 $5,928 $5,730 $5,928 
Supplemental Information
Net charge-offs
Commercial net charge-offs$(240)$(51)$(109)$(38)$(107)$(291)$(166)
Consumer net charge-offs(66)(95)(120)(117)(129)(161)(282)
Total net charge-offs$(306)$(146)$(229)$(155)$(236)$(452)$(448)
Net charge-offs to average loans (annualized)0.48 %0.25 %0.37 %0.24 %0.35 %0.37 %0.35 %
Commercial0.55 %0.13 %0.25 %0.09 %0.23 %0.34 %0.19 %
Consumer0.33 %0.53 %0.63 %0.60 %0.66 %0.42 %0.72 %
(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)    Primarily represents the charge-off of certain loans previously charged off by BBVA, which were written up upon acquisition to unpaid principal balance as required by purchase accounting.
(c)    See Table 8 for the components of the Provision for (recapture of) credit losses being reported on the Consolidated Income Statement.

THE PNC FINANCIAL SERVICES GROUP, INC.

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Allowance for Credit Losses (Unaudited) (Continued)

Table 8: Components of the Provision for (Recapture of) Credit Losses
Three months endedSix months ended
June 30March 31December 31September 30June 30June 30June 30
In millions2021 (a)20212020202020202021 (a)2020
Provision for (recapture of) credit losses
Loans and leases$206 $(502)$(164)$(23)$2,220 $(296)$3,172 
Unfunded lending related commitments92 (77)(105)27 212 15 165 
Investment securities 26 11 39 30 26 30 
Other financial assets4 2 4 9 1 6 10 
Total provision for (recapture of) credit losses$302 $(551)$(254)$52 $2,463 $(249)$3,377 
(a)     Amounts for the three and six months ended June 30, 2021 include $1.0 billion of provision for credit losses that was recorded as part of the BBVA acquisition on June 1, 2021.

Table 9: Allowance for Credit Losses by Loan Class (a)
June 30, 2021March 31, 2021June 30, 2020

Dollars in millions		Allowance AmountTotal Loans% of Total LoansAllowance AmountTotal Loans% of Total LoansAllowance AmountTotal Loans% of Total Loans
Allowance for loan and lease losses
Commercial
Commercial and industrial$2,282 $155,300 1.47 %$1,815 $129,798 1.40 %$2,834 $144,335 1.96 %
Commercial real estate1,404 37,964 3.70 %1,126 28,319 3.98 %382 28,763 1.33 %
Equipment lease financing126 6,376 1.98 %142 6,389 2.22 %164 7,097 2.31 %
Total commercial3,812 199,640 1.91 %3,083 164,506 1.87 %3,380 180,195 1.88 %
Consumer
Home equity188 25,174 0.75 %239 23,493 1.02 %382 24,879 1.54 %
Residential real estate63 36,846 0.17 %(17)22,418 (0.08)%50 22,469 0.22 %
Automobile421 17,551 2.40 %344 13,584 2.53 %450 16,157 2.79 %
Credit card711 6,528 10.89 %693 5,675 12.21 %1,010 6,575 15.36 %
Education98 2,726 3.60 %112 2,842 3.94 %151 3,132 4.82 %
Other consumer437 6,239 7.00 %260 4,495 5.78 %505 4,829 10.46 %
Total consumer1,918 95,064 2.02 %1,631 72,507 2.25 %2,548 78,041 3.26 %
Total
5,730 $294,704 1.94 %4,714 $237,013 1.99 %5,928 $258,236 2.30 %
Allowance for unfunded lending related commitments
645 507 662 
Allowance for credit losses
$6,375 $5,221 $6,590 
Supplemental Information
Allowance for credit losses to total loans
2.16 %2.20 %2.55 %
Commercial2.18 %2.12 %2.18 %
Consumer2.14 %2.39 %3.41 %

(a)     Excludes allowances for investment securities and other financial assets, which together totaled $138 million, $136 million and $51 million at June 30, 2021, March 31, 2021 and June 30, 2020, respectively.

THE PNC FINANCIAL SERVICES GROUP, INC.

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Details of Nonperforming Assets (Unaudited)

Table 10: Nonperforming Assets by Type
June 30March 31December 31September 30June 30
Dollars in millions20212021202020202020
Nonperforming loans, including TDRs
Commercial
Commercial and industrial
Retail/wholesale trade$25 $66 $61 $90 $117 
Manufacturing37 55 81 80 58 
Service providers87 79 90 69 57 
Real estate related (a)41 48 95 140 158 
Health care17 19 20 20 19 
Transportation and warehousing15 18 20 14 20 
Other industries144 227 299 264 264 
Total commercial and industrial366 512 666 677 693 
Commercial real estate218 221 224 217 43 
Equipment lease financing15 16 33 21 22 
Acquired loans (b)847 
Total commercial1,446 749 923 915 758 
Consumer (c)
Home equity624 656 645 639 636 
Residential real estate502 541 528 339 305 
Automobile172 178 175 171 156 
Credit card5 7 8 13 15 
Other consumer6 7 7 8 6 
Acquired loans (b)24 
Total consumer1,333 1,389 1,363 1,170 1,118 
Total nonperforming loans (d) 2,779 2,138 2,286 2,085 1,876 
OREO and foreclosed assets30 41 51 67 79 
Acquired OREO and foreclosed assets (b)9 
Total nonperforming assets$2,818 $2,179 $2,337 $2,152 $1,955 
Nonperforming loans to total loans0.94 %0.90 %0.94 %0.84 %0.73 %
Acquired nonperforming loans to total acquired loans (b)1.44 %
Nonperforming assets to total loans, OREO and foreclosed assets0.96 %0.92 %0.97 %0.86 %0.76 %
Nonperforming assets to total assets0.51 %0.46 %0.50 %0.47 %0.43 %
Allowance for loan and lease losses to nonperforming loans 206 %220 %235 %276 %316 %
Allowance for acquired loan and lease losses to acquired nonperforming loans (b)193 %
(a)Represents loans related to customers in the real estate and construction industries.
(b)Reflects nonperforming assets acquired as a part of the BBVA acquisition on June 1, 2021. Additional information on this acquired portfolio will be included in our second quarter 2021 Form 10-Q.
(c)Excludes most unsecured consumer loans and lines of credit, which are charged off after 120 to 180 days past due and are not placed on nonperforming status.
(d)Nonperforming loans exclude certain government insured or guaranteed loans, loans held for sale and loans accounted for under the fair value option.





THE PNC FINANCIAL SERVICES GROUP, INC.

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Details of Nonperforming Assets (Unaudited) (Continued)

Table 11: Change in Nonperforming Assets
April 1, 2021 -January 1, 2021 -October 1, 2020 -July 1, 2020 -April 1, 2020 -
In millionsJune 30, 2021March 31, 2021December 31, 2020September 30, 2020June 30, 2020
Beginning balance$2,179 $2,337 $2,152 $1,955 $1,755 
New nonperforming assets207 249 586 512 458 
Charge-offs and valuation adjustments(61)(70)(97)(75)(104)
Principal activity, including paydowns and payoffs(264)(186)(185)(175)(85)
Asset sales and transfers to loans held for sale(15)(86)(14)(20)(28)
Returned to performing status(108)(65)(105)(45)(41)
Acquired nonperforming assets (a)880 
Ending balance$2,818 $2,179 $2,337 $2,152 $1,955 
(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. See our second quarter 2021 Form 10-Q for additional information on this acquired portfolio.


Table 12: Largest Individual Nonperforming Assets (a)
June 30, 2021 - Dollars in millions
RankingOutstandingsIndustry
1$141 Real Estate and Rental and Leasing
256 Real Estate and Rental and Leasing
349 Accommodation and Food Services
446 Professional, Scientific, and Technical Services
536 Accommodation and Food Services
635 Mining, Quarrying, and Oil and Gas Extraction
732 Health Care and Social Assistance
832 Arts, Entertainment, and Recreation
931 Real Estate and Rental and Leasing
1030 Mining, Quarrying, and Oil and Gas Extraction
Total$488 
As a percent of total nonperforming assets17%
(a)    Amounts shown are not net of related allowance for loan and lease losses, if applicable.

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 beca4me 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 first quarter 2021 Form 10-Q included, and our second quarter 2021 Form 10-Q will include, additional information on COVID-19 related loan modifications.

Table 13: Accruing Loans Past Due 30 to 59 Days (a)
Jun. 30Mar. 31Dec. 31Sept. 30Jun. 30
Dollars in millions20212021202020202020
Commercial
Commercial and industrial$46$80$106$56$49
Commercial real estate1126651
Equipment lease financing3213178
Acquired loans (b)30
Total commercial8011314369108
Consumer
Home equity3843504870
Residential real estate
Non government insured77618999135
Government insured87101928963
Automobile7076134116105
Credit card2931434453
Education
Non government insured
56563
Government insured
4143505136
Other consumer1011141717
Acquired loans (b)111
Total consumer468372477470482
Total$548$485$620$539$590
Supplemental Information
Total accruing loans past due 30-59 days to total loans0.19 %0.20 %0.26 %0.22 %0.23 %
Commercial0.04 %0.07 %0.09 %0.04 %0.06 %
Consumer0.49 %0.51 %0.64 %0.61 %0.62 %

THE PNC FINANCIAL SERVICES GROUP, INC.

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Accruing Loans Past Due (Unaudited) (Continued)

Table 14: Accruing Loans Past Due 60 to 89 Days (a)
Jun. 30Mar. 31Dec. 31Sept. 30Jun. 30
Dollars in millions20212021202020202020
Commercial
Commercial and industrial$18$13$26$37$28
Commercial real estate31164
Equipment lease financing31549
Acquired loans (b)10
Total commercial3415324741
Consumer
Home equity1520212227
Residential real estate
Non government insured913162234
Government insured5160625859
Automobile1419343234
Credit card1924303338
Education
Non government insured
23222
Government insured
2022272421
Other consumer5610118
Acquired loans (b)46
Total consumer181167202204223
Total$215$182$234$251$264
Supplemental Information
Total accruing loans past due 60-89 days to total loans0.07 %0.08 %0.10 %0.10 %0.10 %
Commercial0.02 %0.01 %0.02 %0.03 %0.02 %
Consumer0.19 %0.23 %0.27 %0.27 %0.29 %

Table 15: Accruing Loans Past Due 90 Days or More (a)
Jun. 30Mar. 31Dec. 31Sept. 30Jun. 30
Dollars in millions20212021202020202020
Commercial
Commercial and industrial$40$63$30$36$34
Acquired loans (b)7
Total commercial4763303634
Consumer
Residential real estate
Non government insured2017272819
Government insured257258292241245
Automobile36121219
Credit card4152606061
Education
Non government insured
12211
Government insured
6674756265
Other consumer5711812
Acquired loans (b)87
Total consumer480416479412422
Total$527$479$509$448$456
Supplemental Information
Total accruing loans past due 90 days or more to total loans0.18 %0.20 %0.21 %0.18 %0.18 %
Commercial0.02 %0.04 %0.02 %0.02 %0.02 %
Consumer0.50 %0.57 %0.64 %0.54 %0.54 %
(a)Excludes loans held for sale.
(b)Reflects loans acquired as part of the BBVA acquisition on June 1, 2021. Additional information on this acquired loan portfolio will be included in our second quarter 2021 Form 10-Q.

THE PNC FINANCIAL SERVICES GROUP, INC.

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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.


THE PNC FINANCIAL SERVICES GROUP, INC.

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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

THE PNC FINANCIAL SERVICES GROUP, INC.

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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.


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