Exhibit 99.1
[PNC LOGO]
THE PNC FINANCIAL SERVICES GROUP, INC.
FINANCIAL SUPPLEMENT (UNAUDITED)
THIRD QUARTER 2003
THE PNC FINANCIAL SERVICES GROUP, INC.
FINANCIAL SUPPLEMENT (UNAUDITED)
THIRD QUARTER 2003
Page
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Consolidated Statement of Income 1
Consolidated Balance Sheet 2
Capital and Asset Quality Ratios 2
Results of Businesses
Summary 3
Banking Businesses
Regional Community Banking 4
Wholesale Banking
Corporate Banking 5
PNC Real Estate Finance 6
PNC Business Credit 7
PNC Advisors 8
Asset Management and Processing Businesses
BlackRock 9
PFPC 10
Details of Net Interest Income and Net Interest Margin 11
Details of Noninterest Income and Noninterest Expense 12
Consolidated Average Balance Sheet 13
Details of Loans and Loans Held for Sale 14
Allowances For Credit Losses And Unfunded Loan
Commitments And Letters of Credit 15
Details of Nonperforming Assets 16-17
Glossary of Terms 18
Business Definitions 20
The information contained in this Financial Supplement is preliminary and based
on data available at October 16, 2003. It speaks only as of the particular date
or dates included in the accompanying pages. PNC does not undertake an
obligation to, and disclaims any duty to, correct or update any of the
information provided. The Corporation's future financial performance is subject
to risks and uncertainties as described in its SEC filings.
Certain prior period amounts included in this Financial Supplement have been
reclassified to conform to the current period presentation. In addition, amounts
included in this Financial Supplement are presented on a continuing operations
basis, unless otherwise noted.
Average full-time equivalent employee (FTE) statistics as disclosed in this
Financial Supplement by business reflect staff directly employed by the
respective business and exclude corporate and shared services employees.
THE PNC FINANCIAL SERVICES GROUP, INC. Page 1
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
September 30 June 30 March 31 December 31 September 30
For the three months ended - in millions, except per share data 2003 2003 2003 2002 2002
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INTEREST INCOME
Loans and fees on loans $477 $495 $507 $540 $567
Securities 140 155 143 150 140
Loans held for sale 8 15 12 18 24
Purchased customer receivables 11
Investments held by certain variable interest entities 48
Other 34 27 30 33 38
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Total interest income 718 692 692 741 769
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INTEREST EXPENSE
Deposits 106 117 132 149 162
Borrowed funds 65 54 57 68 79
Commercial paper 7
Liabilities of certain variable interest entities 28
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Total interest expense 206 171 189 217 241
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Net interest income 512 521 503 524 528
Provision for credit losses 50 57 36 65 73
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Net interest income less provision for credit losses 462 464 467 459 455
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NONINTEREST INCOME
Asset management 212 209 207 202 200
Fund servicing 188 188 193 194 193
Service charges on deposits 60 60 57 61 57
Brokerage 46 46 41 44 41
Consumer services 65 64 59 61 62
Corporate services 132 114 116 151 108
Equity management (4) (17) (4) (14) (22)
Net securities gains 19 26 56 1 68
Investments held by certain variable interest entities 96
Other 92 86 70 66 64
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Total noninterest income 906 776 795 766 771
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NONINTEREST EXPENSE
Staff expense 452 446 438 408 422
Net occupancy 63 64 90 62 64
Equipment 67 69 69 68 68
Marketing 16 18 15 11 14
Distributions on capital securities 14 14 14 15
Other 237 324 230 228 207
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Total noninterest expense 835 935 856 791 790
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Income from continuing operations before minority
and other interests and income taxes 533 305 406 434 436
Minority and other interests in income of
consolidated entities 100 13 11 11 4
Income taxes 152 108 133 145 147
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Income from continuing operations 281 184 262 278 285
Income (loss) from discontinued operations (less
applicable income tax benefit of $9) (16)
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Net income $281 $184 $262 $262 $285
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EARNINGS PER COMMON SHARE
From continuing operations
Basic $1.01 $.65 $.93 $.97 $1.00
Diluted $1.00 $.65 $.92 $.97 $1.00
From net income
Basic $1.01 $.65 $.93 $.92 $1.00
Diluted $1.00 $.65 $.92 $.92 $1.00
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AVERAGE COMMON SHARES OUTSTANDING
Basic 278 281 283 284 284
Diluted 280 282 284 286 285
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THE PNC FINANCIAL SERVICES GROUP, INC. Page 2
CONSOLIDATED BALANCE SHEET (Unaudited)
September 30 June 30 March 31 December 31 September 30
In millions, except par value 2003 2003 2003 2002 2002
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ASSETS
Cash and due from banks $3,614 $3,797 $3,626 $3,201 $3,403
Federal funds sold 850 1,913 1,847 3,031
Other short-term investments 2,590 1,554 2,012 1,811 1,730
Loans held for sale 1,531 1,475 1,702 1,607 1,989
Securities 14,889 16,017 14,973 13,763 12,536
Loans, net of unearned income of $1,037, $1,018, $1,018, $1,075,
and $1,108 34,524 34,534 35,245 35,450 35,917
Allowance for credit losses (648) (673) (680) (673) (648)
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Net loans 33,876 33,861 34,565 34,777 35,269
Goodwill 2,385 2,356 2,356 2,313 2,313
Other intangible assets 311 316 330 333 337
Purchased customer receivables 2,481
Investments held by certain variable interest entities 2,318
Other 8,289 7,036 7,142 6,725 7,051
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Total assets $72,284 $67,262 $68,619 $66,377 $67,659
================================================================================================================================
LIABILITIES
Deposits
Noninterest-bearing $12,118 $13,368 $12,460 $10,563 $10,844
Interest-bearing 33,405 33,326 34,621 34,419 34,116
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Total deposits 45,523 46,694 47,081 44,982 44,960
Borrowed funds
Federal funds purchased 881 36 34 38 35
Repurchase agreements 1,048 1,015 1,082 814 988
Bank notes and senior debt 2,839 3,306 3,850 4,400 4,962
Federal Home Loan Bank borrowings 1,127 1,134 1,146 1,256 1,270
Subordinated debt 1,980 2,260 2,234 2,423 2,423
Mandatorily redeemable capital securities of
subsidiary trusts 848
Commercial paper 2,483
Liabilities of certain variable interest entities 2,415
Other borrowed funds 242 152 188 185 269
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Total borrowed funds 13,863 7,903 8,534 9,116 9,947
Allowance for unfunded loan commitments
and letters of credit 89 78 77 84 79
Mandatorily redeemable interest in consolidated entities 1,371
Accrued expenses 2,228 2,269 2,023 2,046 2,077
Other 2,327 2,435 3,020 2,172 2,776
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Total liabilities 65,401 59,379 60,735 58,400 59,839
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Minority interest 246 261 244 270 255
Mandatorily redeemable capital securities of
subsidiary trusts 848 848 848 848
SHAREHOLDERS' EQUITY
Preferred stock
Common stock - $5 par value
Authorized 800 shares, issued 353 shares 1,764 1,764 1,764 1,764 1,764
Capital surplus 1,110 1,100 1,102 1,101 1,103
Retained earnings 7,507 7,360 7,311 7,187 7,062
Deferred benefit expense (24) (27) (28) (9) (11)
Accumulated other comprehensive income 147 304 293 321 325
Common stock held in treasury at cost: 76, 73, 71, 68,
and 69 shares (3,867) (3,727) (3,650) (3,505) (3,526)
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Total shareholders' equity 6,637 6,774 6,792 6,859 6,717
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Total liabilities, minority interest, capital securities
and shareholders' equity $72,284 $67,262 $68,619 $66,377 $67,659
================================================================================================================================
CAPITAL RATIOS
Tier 1 Risk-based (a) 8.2 % 8.9 % 8.7 % 8.8 % 8.8 %
Total Risk-based (a) 11.3 12.3 12.3 12.5 12.5
Leverage (a) 7.4 8.1 8.0 8.1 7.8
Shareholders' equity to total assets 9.18 10.07 9.90 10.33 9.93
Common shareholders' equity to total assets 9.17 10.06 9.89 10.32 9.91
ASSET QUALITY RATIOS
Nonperforming assets to total loans,
loans held for sale and foreclosed assets 1.10 % 1.12 % 1.10 % 1.13 % 1.08 %
Nonperforming loans to total loans .94 .95 .95 .87 .75
Allowance for credit losses to total loans 1.88 1.95 1.93 1.90 1.80
Allowance for credit losses to nonperforming loans 200 206 203 218 239
Net charge-offs to average loans (For the three months ended) .73 .73 .42 .39 .79
================================================================================================================================
(a) Estimated for September 30, 2003.
THE PNC FINANCIAL SERVICES GROUP, INC. Page 3
RESULTS OF BUSINESSES - SUMMARY (Unaudited) (a)
Three months ended - dollars in millions
September 30 June 30 March 31 December 31 September 30
EARNINGS (LOSS) 2003 2003 2003 2002 2002
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Banking businesses
Regional Community Banking $138 $159 $152 $152 $192
Wholesale Banking
Corporate Banking 37 33 42 33 30
PNC Real Estate Finance 34 24 16 23 19
PNC Business Credit 6 6 14 28 8
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Total wholesale banking 77 63 72 84 57
PNC Advisors 20 20 16 13 20
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Total banking businesses 235 242 240 249 269
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Asset management and processing businesses
BlackRock 40 39 35 34 33
PFPC 16 15 12 8 19
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Total asset management and processing
businesses 56 54 47 42 52
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Total business earnings 291 296 287 291 321
Intercompany eliminations (2) (1) (2) (2) (4)
Other (8) (111) (23) (11) (32)
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Results from continuing operations 281 184 262 278 285
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Discontinued operations (16)
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Total consolidated $281 $184 $262 $262 $285
================================================================================================================================
September 30 June 30 March 31 December 31 September 30
REVENUE (b) 2003 2003 2003 2002 2002
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Banking businesses
Regional Community Banking $503 $537 $518 $511 $577
Wholesale Banking
Corporate Banking 165 159 189 198 177
PNC Real Estate Finance 80 62 56 58 55
PNC Business Credit 47 46 44 49 43
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Total wholesale banking 292 267 289 305 275
PNC Advisors 231 154 147 150 150
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Total banking businesses 1,026 958 954 966 1,002
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Asset management and processing businesses
BlackRock 214 152 146 139 138
PFPC 188 187 193 195 192
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Total asset management and processing
businesses 402 339 339 334 330
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Total business revenue 1,428 1,297 1,293 1,300 1,332
Intercompany eliminations (24) (25) (22) (22) (27)
Other 16 27 30 15 (2)
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Total consolidated $1,420 $1,299 $1,301 $1,293 $1,303
================================================================================================================================
(a) See "Review of Businesses" within the Financial Review section of the
Corporation's 2002 Annual Report to Shareholders included as Exhibit 13 in
the Corporation's 2002 Annual Report on Form 10-K for additional information
regarding presentation of results for the Corporation's major businesses.
The Corporation's line of business information is based on management
information systems, assumptions and methodologies that are under review on
an ongoing basis.
(b) Business revenue is presented on a taxable-equivalent basis except for
BlackRock and PFPC, which are presented on a book (GAAP) basis. A
reconciliation of total consolidated revenue on a book basis to total
consolidated revenue on a taxable-equivalent basis is as follows (in
millions):
September 30 June 30 March 31 December 31 September 30
2003 2003 2003 2002 2002
----------------------------------------------------------------------
Total consolidated revenue, book (GAAP) basis $1,418 $1,297 $1,298 $1,290 $1,299
Taxable-equivalent adjustment 2 2 3 3 4
----------------------------------------------------------------------
Total consolidated revenue, taxable-equivalent basis $1,420 $1,299 $1,301 $1,293 $1,303
======================================================================
THE PNC FINANCIAL SERVICES GROUP, INC. Page 4
REGIONAL COMMUNITY BANKING (Unaudited)
Three months ended
Taxable-equivalent basis September 30 June 30 March 31 December 31 September 30
Dollars in millions 2003 2003 2003 2002 2002
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INCOME STATEMENT
Net interest income $309 $334 $317 $331 $337
Other noninterest income 177 181 163 180 174
Net securities gains 17 22 38 66
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Total revenue 503 537 518 511 577
Provision for credit losses 11 13 8 15 14
Noninterest expense 282 282 278 264 268
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Pretax earnings 210 242 232 232 295
Income taxes 72 83 80 80 103
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Earnings $138 $159 $152 $152 $192
============================================================================================================================
AVERAGE BALANCE SHEET
Loans
Consumer
Home equity $8,476 $8,047 $7,675 $7,395 $7,236
Indirect 492 468 438 458 508
Other consumer 504 516 546 582 610
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Total consumer 9,472 9,031 8,659 8,435 8,354
Residential mortgage 2,585 2,970 3,276 3,146 3,801
Commercial 3,911 4,001 3,939 3,857 3,479
Vehicle leasing 980 1,177 1,336 1,464 1,606
Other 114 117 117 115 118
- ----------------------------------------------------------------------------------------------------------------------------
Total loans 17,062 17,296 17,327 17,017 17,358
Securities 14,792 14,211 12,504 11,982 10,216
Education and other loans held for sale 1,105 1,197 1,197 1,215 1,181
Assigned assets and other assets 5,448 5,731 7,961 8,661 10,433
- ----------------------------------------------------------------------------------------------------------------------------
Total assets $38,407 $38,435 $38,989 $38,875 $39,188
============================================================================================================================
Deposits
Noninterest-bearing demand $5,739 $5,471 $5,264 $5,242 $5,063
Interest-bearing demand 6,397 6,136 6,112 6,191 5,990
Money market 12,307 12,407 12,361 12,184 12,293
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Total transaction deposits 24,443 24,014 23,737 23,617 23,346
Savings 2,050 2,046 1,976 1,950 1,978
Certificates 8,234 8,666 9,360 9,653 10,016
- ----------------------------------------------------------------------------------------------------------------------------
Total deposits 34,727 34,726 35,073 35,220 35,340
Other liabilities 1,093 1,112 1,285 1,035 1,204
Assigned capital 2,587 2,597 2,631 2,620 2,644
- ----------------------------------------------------------------------------------------------------------------------------
Total funds $38,407 $38,435 $38,989 $38,875 $39,188
============================================================================================================================
PERFORMANCE RATIOS
Return on assigned capital 21 % 25 % 23 % 23 % 29 %
Noninterest income to total revenue 39 38 39 35 42
Efficiency 56 53 54 52 46
============================================================================================================================
OTHER INFORMATION (a)
Total nonperforming assets $74 $75 $86 $82 $65
Vehicle leasing outstandings, net
of unearned income $872 $1,048 $1,239 $1,386 $1,511
Net charge-offs $12 $13 $13 $15 $17
Gains on sales of education loans (b) $4 $7 $1 $10 $3
Average FTEs 9,524 9,447 9,404 9,610 9,721
ATMs 3,664 3,660 3,594 3,550 3,450
Branches 715 713 713 714 714
Financial consultants 702 693 674 645 626
Business banking centers 208 193 193 193 188
Checking relationships 1,606,000 1,575,000 1,555,000 1,542,000 1,538,000
Online banking users (c) 715,000 684,134 647,287 606,752 563,471
Deposit households using online banking (c) 41.0 % 40.2 % 38.6 % 36.6 % 34.7 %
============================================================================================================================
(a) Presented as of period-end, except for net charge-offs, gains on sales of
education loans and average FTEs.
(b) Included in other noninterest income above.
(c) Estimated for September 30, 2003.
THE PNC FINANCIAL SERVICES GROUP, INC. Page 5
WHOLESALE BANKING - CORPORATE BANKING (Unaudited)
Three months ended
Taxable-equivalent basis September 30 June 30 March 31 December 31 September 30
Dollars in millions 2003 2003 2003 2002 2002
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INCOME STATEMENT
Net interest income $77 $71 $76 $78 $88
Noninterest income 88 88 113 120 89
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Total revenue 165 159 189 198 177
Provision for credit losses 23 25 15 64 44
Noninterest expense 85 84 109 87 89
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Pretax earnings 57 50 65 47 44
Income taxes 20 17 23 14 14
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Earnings $37 $33 $42 $33 $30
===========================================================================================================================
AVERAGE BALANCE SHEET
Loans $8,017 $8,262 $8,604 $8,821 $9,468
Purchased customer receivables 2,496
Loans held for sale 154 196 291 464 804
Other assets 2,891 2,896 2,755 3,133 3,065
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Total assets $13,558 $11,354 $11,650 $12,418 $13,337
===========================================================================================================================
Deposits $5,230 $4,990 $5,097 $4,906 $4,746
Commercial paper 2,502
Assigned funds and other liabilities 4,990 5,512 5,679 6,581 7,589
Assigned capital 836 852 874 931 1,002
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Total funds $13,558 $11,354 $11,650 $12,418 $13,337
===========================================================================================================================
PERFORMANCE RATIOS
Return on assigned capital 18 % 16 % 19 % 14 % 12 %
Noninterest income to total revenue 53 55 60 61 50
Efficiency 52 53 58 44 50
===========================================================================================================================
OTHER INFORMATION (a)
Consolidated revenue from treasury
management (b) $87 $86 $89 $86 $87
Total nonperforming assets $168 $176 $166 $187 $158
Net charge-offs $18 $42 $18 $15 $51
Average FTEs 1,879 1,888 1,971 2,109 2,086
INSTITUTIONAL LENDING REPOSITIONING
Loans held for sale
Credit exposure $126 $173 $315 $564 $964
Outstandings $75 $101 $155 $245 $415
Exit portfolio
Credit exposure $61 $251 $349 $413 $611
Outstandings $10 $11 $4 $12
Net gains on loans held for sale (c) $17 $13 $17 $55 $21
===========================================================================================================================
(a) Presented as of period-end, except for consolidated revenue from treasury
management, net charge-offs, net gains on loans held for sale and average
FTEs.
(b) Treasury management products offered through Corporate Banking are sold by
several businesses across PNC and related revenue net of expense is
included in the results of those businesses.
(c) Included in noninterest income above.
THE PNC FINANCIAL SERVICES GROUP, INC. Page 6
WHOLESALE BANKING - PNC REAL ESTATE FINANCE (Unaudited)
Three months ended
Taxable-equivalent basis September 30 June 30 March 31 December 31 September 30
Dollars in millions except as noted 2003 2003 2003 2002 2002
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INCOME STATEMENT
Net interest income $25 $28 $28 $30 $27
Noninterest income
Net commercial mortgage banking
Net gains on loan sales 15 13 10 12 5
Servicing and other fees, net of amortization 11 8 11 10 10
Other 29 13 7 6 13
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Total noninterest income 55 34 28 28 28
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Total revenue 80 62 56 58 55
Provision for credit losses (8) (1) 8 (3) (2)
Noninterest expense 58 44 38 41 45
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Pretax earnings 30 19 10 20 12
Minority and other interests in income of
consolidated entities (11) (2) (2)
Income tax (benefit) 7 (3) (6) (3) (5)
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Earnings $34 $24 $16 $23 $19
====================================================================================================================================
AVERAGE BALANCE SHEET
Loans
Commercial real estate $1,841 $1,953 $2,052 $2,167 $2,279
Commercial - real estate related 1,431 1,438 1,397 1,463 1,407
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Total loans 3,272 3,391 3,449 3,630 3,686
Commercial mortgages held for sale 228 373 315 327 193
Other loans held for sale 24 37 53 94 106
Other assets 1,159 964 950 970 907
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Total assets $4,683 $4,765 $4,767 $5,021 $4,892
====================================================================================================================================
Deposits $1,226 $1,044 $950 $892 $789
Liabilities of certain variable interest entities 98
Mandatorily redeemable interest
in consolidated entities 39
Assigned funds and other liabilities 2,894 3,368 3,454 3,746 3,714
Assigned capital 426 353 363 383 389
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Total funds $4,683 $4,765 $4,767 $5,021 $4,892
====================================================================================================================================
PERFORMANCE RATIOS
Return on assigned capital 32 % 27 % 18 % 24 % 19 %
Noninterest income to total revenue 69 55 50 48 51
Efficiency 73 71 68 71 82
====================================================================================================================================
OTHER INFORMATION (a)
Total nonperforming assets $3 $3 $12 $2 $3
Net charge-offs (recoveries) $(1) $2 $(1)
Average FTEs 742 747 770 780 788
Commercial mortgage servicing portfolio (b) $80 $79 $75 $74 $74
Net carrying amount of commercial mortgage
servicing rights $200 $199 $201 $201 $201
INSTITUTIONAL LENDING REPOSITIONING
Loans held for sale
Credit exposure $16 $16 $19 $49 $68
Outstandings $16 $16 $19 $44 $55
Exit portfolio
Credit exposure $25 $25 $25
Outstandings $5 $4 $13
Net gains (losses) on loans held for sale (c) $6 $1 $(3)
====================================================================================================================================
(a) Presented as of period-end, except for net charge-offs (recoveries), net
gains (losses) on loans held for sale and average FTEs.
(b) In billions.
(c) Included in noninterest income - other above.
THE PNC FINANCIAL SERVICES GROUP, INC. Page 7
WHOLESALE BANKING - PNC BUSINESS CREDIT (Unaudited)
Three months ended
Taxable-equivalent basis September 30 June 30 March 31 December 31 September 30
Dollars in millions 2003 2003 2003 2002 2002
- ----------------------------------------------------------------------------------------------------------------------------
INCOME STATEMENT
Net interest income $35 $34 $32 $33 $35
Noninterest income 12 12 12 16 8
- ----------------------------------------------------------------------------------------------------------------------------
Total revenue 47 46 44 49 43
Provision for credit losses 23 21 7 (8) 15
Noninterest expense 15 15 14 12 14
- ----------------------------------------------------------------------------------------------------------------------------
Pretax earnings 9 10 23 45 14
Income taxes 3 4 9 17 6
- ----------------------------------------------------------------------------------------------------------------------------
Earnings $6 $6 $14 $28 $8
============================================================================================================================
AVERAGE BALANCE SHEET
Loans $3,633 $3,528 $3,381 $3,490 $3,524
Loans held for sale 30 24 18 23 71
Other assets 263 225 229 225 219
- ----------------------------------------------------------------------------------------------------------------------------
Total assets $3,926 $3,777 $3,628 $3,738 $3,814
============================================================================================================================
Deposits $106 $106 $82 $102 $88
Assigned funds and other liabilities 3,568 3,428 3,309 3,392 3,476
Assigned capital 252 243 237 244 250
- ----------------------------------------------------------------------------------------------------------------------------
Total funds $3,926 $3,777 $3,628 $3,738 $3,814
============================================================================================================================
PERFORMANCE RATIOS
Return on assigned capital 9 % 10 % 24 % 46 % 13 %
Noninterest income to total revenue 26 26 27 33 19
Efficiency 32 33 32 24 33
============================================================================================================================
OTHER INFORMATION (a)
Total nonperforming assets $140 $145 $139 $142 $179
Net charge-offs $34 $6 $5 $6 $4
NBOC put option liability $43 $49 $57 $78
NBOC put option valuation income (b) $1 $1 $6 $9 $4
Marketing locations 24 24 24 23 23
Average FTEs 255 249 250 249 249
INSTITUTIONAL LENDING REPOSITIONING
Loans held for sale
Credit exposure $8 $10 $10 $13 $46
Outstandings $7 $9 $7 $9 $25
Net gains (losses) on loans held for sale (b) $2 $(3) $(4)
============================================================================================================================
(a) Presented as of period-end, except for net charge-offs, NBOC put option
valuation income, net gains (losses) on loans held for sale and average
FTEs.
(b) Included in noninterest income above.
THE PNC FINANCIAL SERVICES GROUP, INC. Page 8
PNC ADVISORS (Unaudited)
Three months ended
Taxable-equivalent basis September 30 June 30 March 31 December 31 September 30
Dollars in millions except as noted 2003 2003 2003 2002 2002
- ---------------------------------------------------------------------------------------------------------------------------
INCOME STATEMENT
Net interest income $23 $21 $21 $24 $24
Noninterest income
Investment management and trust 78 78 76 76 76
Brokerage 30 31 26 29 29
Other 100 24 24 21 21
- ---------------------------------------------------------------------------------------------------------------------------
Total noninterest income 208 133 126 126 126
- ---------------------------------------------------------------------------------------------------------------------------
Total revenue 231 154 147 150 150
Provision for credit losses 1 1 1 2
Noninterest expense 130 121 122 129 116
- ---------------------------------------------------------------------------------------------------------------------------
Pretax earnings 100 32 25 20 32
Minority and other interests in income of
consolidated entities 69
Income taxes 11 12 9 7 12
- ---------------------------------------------------------------------------------------------------------------------------
Earnings $20 $20 $16 $13 $20
===========================================================================================================================
AVERAGE BALANCE SHEET
Loans
Consumer $1,332 $1,284 $1,280 $1,264 $1,251
Residential mortgage 215 263 327 394 464
Commercial 464 435 439 439 433
Other 285 286 284 276 314
- ---------------------------------------------------------------------------------------------------------------------------
Total loans 2,296 2,268 2,330 2,373 2,462
Other assets 1,282 588 540 417 410
- ---------------------------------------------------------------------------------------------------------------------------
Total assets $3,578 $2,856 $2,870 $2,790 $2,872
===========================================================================================================================
Deposits $2,164 $2,077 $2,085 $2,016 $1,955
Mandatorily redeemable interest
in consolidated entities 540
Liabilities of certain variable interest entities 64
Assigned funds and other liabilities 284 255 263 243 406
Assigned capital 526 524 522 531 511
- ---------------------------------------------------------------------------------------------------------------------------
Total funds $3,578 $2,856 $2,870 $2,790 $2,872
===========================================================================================================================
PERFORMANCE RATIOS
Return on assigned capital 15 % 15 % 12 % 10 % 16 %
Noninterest income to total revenue 90 86 86 84 84
Efficiency 56 79 83 86 77
===========================================================================================================================
ASSETS UNDER MANAGEMENT (a)
Personal investment management and trust $42 $42 $40 $41 $40
Institutional trust 9 9 9 9 10
- ---------------------------------------------------------------------------------------------------------------------------
Total $51 $51 $49 $50 $50
- ---------------------------------------------------------------------------------------------------------------------------
Asset Type
Equity $28 $28 $25 $26 $26
Fixed income 16 16 16 17 17
Liquidity 7 7 8 7 7
- ---------------------------------------------------------------------------------------------------------------------------
Total $51 $51 $49 $50 $50
===========================================================================================================================
OTHER INFORMATION (b)
Total nonperforming assets $11 $5 $5 $5 $4
Brokerage assets administered (in billions) $35 $34 $31 $32 $31
Full service brokerage offices 99 99 102 106 108
Financial consultants 561 577 585 615 621
Margin loans $257 $253 $247 $260 $257
Average FTEs 3,081 3,118 3,226 3,326 3,320
===========================================================================================================================
(a) In billions; excludes brokerage assets administered.
(b) Presented as of period-end, except for average FTEs.
THE PNC FINANCIAL SERVICES GROUP, INC. Page 9
BLACKROCK (Unaudited)
Three months ended September 30 June 30 March 31 December 31 September 30
Dollars in millions except as noted 2003 2003 2003 2002 2002
- ---------------------------------------------------------------------------------------------------------------------------
INCOME STATEMENT
Investment advisory and
administration fees $130 $128 $127 $122 $122
Investment income 67 8 4 2 1
Other income 17 16 15 15 15
- ---------------------------------------------------------------------------------------------------------------------------
Total revenue 214 152 146 139 138
Other expense 87 81 81 74 74
Noncontrolling interest in income of
consolidated entities 31
Interest expense 24
Fund administration
and servicing costs 8 8 8 8 8
- ---------------------------------------------------------------------------------------------------------------------------
Total expense 150 89 89 82 82
- ---------------------------------------------------------------------------------------------------------------------------
Pretax earnings 64 63 57 57 56
Income taxes 24 24 22 23 23
- ---------------------------------------------------------------------------------------------------------------------------
Earnings $40 $39 $35 $34 $33
===========================================================================================================================
PERIOD-END BALANCE SHEET
Investments $2,550 $305 $245 $209 $180
Goodwill and other intangible assets 192 192 183 183 181
Other assets 742 404 408 472 429
- ---------------------------------------------------------------------------------------------------------------------------
Total assets $3,484 $901 $836 $864 $790
===========================================================================================================================
Borrowings $2,409
Other liabilities 379 $192 $168 $229 $194
Stockholders' equity 696 709 668 635 596
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $3,484 $901 $836 $864 $790
===========================================================================================================================
PERFORMANCE DATA
Return on equity 23 % 23 % 22 % 22 % 23 %
Net income margin 19 26 24 24 24
Diluted earnings per share $.61 $.58 $.54 $.52 $.51
===========================================================================================================================
ASSETS UNDER MANAGEMENT (in billions)
Separate accounts
Fixed income $178 $175 $168 $157 $146
Liquidity 6 5 6 6 5
Liquidity - securities lending 10 8 6 6 6
Equity 9 9 9 10 8
Alternative investment products 7 6 6 5 6
- ---------------------------------------------------------------------------------------------------------------------------
Total separate accounts 210 203 195 184 171
Mutual funds (a)
Fixed income 23 22 20 19 19
Liquidity 58 58 56 66 52
Equity 3 3 3 4 4
- ---------------------------------------------------------------------------------------------------------------------------
Total mutual funds 84 83 79 89 75
- ---------------------------------------------------------------------------------------------------------------------------
Total assets under management $294 $286 $274 $273 $246
===========================================================================================================================
OTHER INFORMATION
Average FTEs 976 943 944 938 918
===========================================================================================================================
(a) Includes BlackRock Funds, BlackRock Provident Institutional Funds,
BlackRock Closed End Funds, Short Term Investment Fund and BlackRock
Global Series.
THE PNC FINANCIAL SERVICES GROUP, INC. Page 10
PFPC (Unaudited)
Three months ended September 30 June 30 March 31 December 31 September 30
Dollars in millions except as noted 2003 2003 2003 2002 2002
- ----------------------------------------------------------------------------------------------------------------------------
INCOME STATEMENT
Fund servicing revenue $188 $187 $193 $195 $192
Operating expense 150 151 162 168 145
(Accretion)/amortization of
other intangibles, net (6) (4) (4) (5) (4)
- ----------------------------------------------------------------------------------------------------------------------------
Operating income 44 40 35 32 51
Nonoperating income (a) 2 2 2 2 2
Debt financing 18 18 17 21 22
- ----------------------------------------------------------------------------------------------------------------------------
Pretax earnings 28 24 20 13 31
Income taxes 12 9 8 5 12
- ----------------------------------------------------------------------------------------------------------------------------
Earnings $16 $15 $12 $8 $19
============================================================================================================================
AVERAGE BALANCE SHEET
Goodwill and other intangible assets $1,034 $1,055 $1,025 $1,022 $1,025
Other assets 862 836 840 857 868
- ----------------------------------------------------------------------------------------------------------------------------
Total assets $1,896 $1,891 $1,865 $1,879 $1,893
============================================================================================================================
Assigned funds and other liabilities $1,688 $1,683 $1,657 $1,671 $1,685
Assigned capital 208 208 208 208 208
- ----------------------------------------------------------------------------------------------------------------------------
Total funds $1,896 $1,891 $1,865 $1,879 $1,893
============================================================================================================================
PERFORMANCE RATIOS
Return on assigned capital 31 % 29 % 23 % 15 % 36 %
Operating margin (b) 23 21 18 16 27
============================================================================================================================
SERVICING STATISTICS
Accounting/administration net assets (c)
Domestic $593 $583 $542 $481 $464
Foreign (d) 41 35 31 29 25
- ----------------------------------------------------------------------------------------------------------------------------
Total $634 $618 $573 $510 $489
- ----------------------------------------------------------------------------------------------------------------------------
Custody assets (c) $384 $371 $347 $336 $311
- ----------------------------------------------------------------------------------------------------------------------------
Shareholder accounts (in millions)
Transfer agency 21 20 21 26 28
Subaccounting 29 28 27 25 24
- ----------------------------------------------------------------------------------------------------------------------------
Total 50 48 48 51 52
============================================================================================================================
OTHER INFORMATION
Average FTEs 4,760 5,328 5,437 5,538 5,772
============================================================================================================================
(a) Net of nonoperating expense.
(b) Operating income divided by total (fund servicing) revenue. For the quarter
ended September 30, 2002, operating expense included a credit of $19 million
related primarily to a previously reported facilities consolidation charge.
The operating margin for the quarter ended September 30, 2002 without this
item was 17%.
(c) In billions.
(d) Represents net assets serviced offshore.
THE PNC FINANCIAL SERVICES GROUP, INC. Page 11
DETAILS OF NET INTEREST INCOME AND NET INTEREST MARGIN (Unaudited)
Taxable-equivalent basis
Quarter ended
-----------------------------------------------------------------------------
NET INTEREST INCOME September 30 June 30 March 31 December 31 September 30
In millions 2003 2003 2003 2002 2002
- ------------------------------------------------------------------------------------------------------------------------------
Interest income
Loans and fees on loans $479 $497 $509 $542 $570
Securities 140 155 144 150 141
Loans held for sale 8 15 12 18 24
Other 93 27 30 34 38
- ------------------------------------------------------------------------------------------------------------------------------
Total interest income 720 694 695 744 773
- ------------------------------------------------------------------------------------------------------------------------------
Interest expense
Deposits 106 117 132 149 162
Borrowed funds 100 54 57 68 79
- ------------------------------------------------------------------------------------------------------------------------------
Total interest expense 206 171 189 217 241
- ------------------------------------------------------------------------------------------------------------------------------
Net interest income (a) $514 $523 $506 $527 $532
==============================================================================================================================
Lending revenue to total revenue (b) 22 % 23 % 22 % 27 % 22 %
Quarter ended
-----------------------------------------------------------------------------
NET INTEREST MARGIN September 30 June 30 March 31 December 31 September 30
2003 2003 2003 2002 2002
- ------------------------------------------------------------------------------------------------------------------------------
Average yields/rates
Yield on earning assets
Loans and fees on loans 5.50 % 5.67 % 5.82 % 6.03 % 6.13 %
Securities 3.66 4.21 4.41 4.67 5.10
Loans held for sale 2.11 3.45 2.65 3.48 4.43
Other 5.08 5.55 3.05 3.68 3.47
Total yield on earning assets 4.88 5.19 5.17 5.45 5.64
Rate on interest-bearing liabilities
Deposits 1.25 1.40 1.56 1.73 1.88
Borrowed funds 2.81 2.46 2.63 2.93 3.16
Total rate on interest-bearing
liabilities 1.71 1.61 1.77 1.98 2.16
- -------------------------------------------------------------------------------------------------------------------------------
Interest rate spread 3.17 3.58 3.40 3.47 3.48
Impact of noninterest-bearing sources .32 .33 .36 .40 .40
- -------------------------------------------------------------------------------------------------------------------------------
Net interest margin 3.49 % 3.91 % 3.76 % 3.87 % 3.88 %
===============================================================================================================================
(a) A reconciliation of net interest income as reported in the
Consolidated Statement of Income to net interest income on a
taxable-equivalent basis follows:
Quarter ended
--------------------------------------------------------------------------
In millions September 30 June 30 March 31 December 31 September 30
2003 2003 2003 2002 2002
--------------------------------------------------------------------------
Net interest income, GAAP basis $512 $521 $503 $524 $528
Taxable-equivalent adjustment 2 2 3 3 4
--------------------------------------------------------------------------
Net interest income, taxable-equivalent basis $514 $523 $506 $527 $532
==========================================================================
(b) The lending revenue to total revenue ratio is the sum of net interest
income and noninterest income from loans, loans held for sale and related
noninterest-earning assets and noninterest-bearing liabilities attributable
to the lending function divided by the sum of consolidated net interest
income and noninterest income.
THE PNC FINANCIAL SERVICES GROUP, INC. Page 12
DETAILS OF NONINTEREST INCOME AND NONINTEREST EXPENSE (Unaudited)
In millions
Quarter ended
--------------------------------------------------------------------------
NONINTEREST INCOME September 30 June 30 March 31 December 31 September 30
2003 2003 2003 2002 2002
- --------------------------------------------------------------------------------------------------------------------------------
Asset management $212 $209 $207 $202 $200
Fund servicing 188 188 193 194 193
Service charges on deposits 60 60 57 61 57
Brokerage 46 46 41 44 41
Consumer services 65 64 59 61 62
Corporate services 132 114 116 151 108
Equity management (4) (17) (4) (14) (22)
Net securities gains 19 26 56 1 68
Investments held by certain variable interest entities 96
Other 92 86 70 66 64
- --------------------------------------------------------------------------------------------------------------------------------
Total noninterest income $906 $776 $795 $766 $771
================================================================================================================================
Net gains on institutional loans held for
sale (included in "Corporate services" above) $23 $15 $15 $52 $17
Noninterest income to total revenue (a) 64 % 60 % 61 % 59 % 59 %
Quarter ended
------------------------------------------------------------------------
NONINTEREST EXPENSE September 30 June 30 March 31 December 31 September 30
2003 2003 2003 2002 2002
- -------------------------------------------------------------------------------------------------------------------------------
Staff expense $452 $446 $438 $408 $422
Net occupancy 63 64 90 62 64
Equipment 67 69 69 68 68
Marketing 16 18 15 11 14
Distributions on capital securities 14 14 14 15
Other 237 324 230 228 207
- -------------------------------------------------------------------------------------------------------------------------------
Total noninterest expense $835 $935 $856 $791 $790
===============================================================================================================================
Legal and consulting fees related to
regulatory compliance and certain legal
proceedings (included in "Other"
above)(b) $1 $5 $2 $10 $8
Costs incurred under DOJ agreement
(included in "Other" above) (b) $115
Efficiency (c) 59 % 72 % 66 % 61 % 61 %
===============================================================================================================================
(a) Calculated as total noninterest income divided by the sum of net interest
income and noninterest income.
(b) See "Agreement with Department of Justice" in the Corporation's July 21,
2003 second quarter 2003 earnings press release included as Exhibit 99.1
to the Corporation's Form 8-K on that date for further information regarding
amounts for the quarter ended June 30, 2003.
(c) The efficiency ratio for all periods presented is computed as noninterest
expense divided by the sum of net interest income and noninterest income.
THE PNC FINANCIAL SERVICES GROUP, INC. Page 13
CONSOLIDATED AVERAGE BALANCE SHEET (Unaudited)
September 30 June 30 March 31 December 31 September 30
Three months ended - in millions 2003 2003 2003 2002 2002
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
Interest-earning assets
Loans held for sale $1,480 $1,754 $1,782 $1,985 $2,125
Securities 15,287 14,672 13,078 12,852 11,108
Loans, net of unearned income
Commercial 14,712 14,965 15,050 15,426 15,698
Commercial real estate 2,034 2,169 2,265 2,382 2,501
Consumer 10,832 10,346 9,974 9,739 9,649
Residential mortgage 2,807 3,244 3,619 3,554 4,296
Lease financing 3,633 3,767 3,909 4,000 4,124
Other 360 360 363 356 419
- -----------------------------------------------------------------------------------------------------------------------------------
Total loans, net of unearned income 34,378 34,851 35,180 35,457 36,687
Other 7,272 1,979 3,958 3,631 4,322
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 58,417 53,256 53,998 53,925 54,242
Allowance for credit losses (674) (671) (682) (655) (665)
Other noninterest-earning assets 13,541 12,980 12,639 12,572 12,281
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $71,284 $65,565 $65,955 $65,842 $65,858
===================================================================================================================================
LIABILITIES, MINORITY INTEREST, CAPITAL SECURITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
Interest-bearing deposits
Demand and money market $22,475 $22,141 $22,073 $21,713 $21,376
Savings 2,133 2,131 2,058 2,020 2,050
Retail certificates of deposit 8,460 8,892 9,638 9,977 10,347
Other time 264 269 265 269 269
Deposits in foreign offices 238 220 206 192 215
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 33,570 33,653 34,240 34,171 34,257
Borrowed funds 14,015 8,701 8,702 9,045 9,826
- -----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 47,585 42,354 42,942 43,216 44,083
Demand and other noninterest-bearing deposits 11,040 10,278 10,146 9,933 9,405
Allowance for unfunded loan commitments
and letters of credit 77 77 84 79 73
Mandatorily redeemable interest in
consolidated entities 855
Accrued expenses and other liabilities 4,934 4,980 4,928 4,829 4,754
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 64,491 57,689 58,100 58,057 58,315
Minority interest 249 252 251 261 218
Mandatorily redeemable capital securities
of subsidiary trusts 848 848 848 848
Shareholders' equity 6,544 6,776 6,756 6,676 6,477
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities, minority interest, capital
securities and shareholders' equity $71,284 $65,565 $65,955 $65,842 $65,858
===================================================================================================================================
SUPPLEMENTAL AVERAGE BALANCE SHEET INFORMATION
Federal funds sold $46 $116 $1,813 $1,426 $2,212
- -----------------------------------------------------------------------------------------------------------------------------------
Interest-bearing deposits $33,570 $33,653 $34,240 $34,171 $34,257
Demand and other noninterest-bearing deposits 11,040 10,278 10,146 9,933 9,405
- -----------------------------------------------------------------------------------------------------------------------------------
Total deposits $44,610 $43,931 $44,386 $44,104 $43,662
- -----------------------------------------------------------------------------------------------------------------------------------
Interest-bearing demand and money market deposits $22,475 $22,141 $22,073 $21,713 $21,376
Demand and other noninterest-bearing deposits 11,040 10,278 10,146 9,933 9,405
- -----------------------------------------------------------------------------------------------------------------------------------
Total transaction deposits $33,515 $32,419 $32,219 $31,646 $30,781
- -----------------------------------------------------------------------------------------------------------------------------------
Common shareholders' equity $6,535 $6,767 $6,746 $6,666 $6,467
- -----------------------------------------------------------------------------------------------------------------------------------
THE PNC FINANCIAL SERVICES GROUP, INC. Page 14
DETAILS OF LOANS AND LOANS HELD FOR SALE (Unaudited)
LOANS
September 30 June 30 March 31 December 31 September 30
Period ended - in millions 2003 2003 2003 2002 2002
- -----------------------------------------------------------------------------------------------------------------------------------
Commercial
Retail/wholesale $4,093 $4,109 $4,147 $4,161 $4,247
Manufacturing 3,618 3,591 3,685 3,454 3,726
Service providers 1,865 1,936 1,978 1,906 1,986
Real estate related 1,454 1,479 1,441 1,481 1,554
Financial services 1,251 1,274 1,255 1,218 1,252
Communications 68 78 110 124 115
Health care 413 407 422 458 450
Other 1,861 1,919 2,035 2,185 2,042
- -----------------------------------------------------------------------------------------------------------------------------------
Total commercial 14,623 14,793 15,073 14,987 15,372
- -----------------------------------------------------------------------------------------------------------------------------------
Commercial real estate
Real estate project 1,429 1,563 1,749 1,750 1,958
Mortgage 464 464 492 517 516
- -----------------------------------------------------------------------------------------------------------------------------------
Total commercial real estate 1,893 2,027 2,241 2,267 2,474
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer
Home equity 9,486 8,876 8,435 8,108 7,905
Automobile 522 509 476 484 540
Other 1,161 1,166 1,209 1,262 1,283
- -----------------------------------------------------------------------------------------------------------------------------------
Total consumer 11,169 10,551 10,120 9,854 9,728
- -----------------------------------------------------------------------------------------------------------------------------------
Residential mortgage 2,894 3,114 3,627 3,921 3,829
Lease financing
Equipment 3,684 3,580 3,500 3,560 3,537
Vehicles 934 1,130 1,346 1,521 1,676
- ------------------------------------------------------------------------------------------------------------------------------------
Total lease financing 4,618 4,710 4,846 5,081 5,213
- -----------------------------------------------------------------------------------------------------------------------------------
Other 363 357 356 415 409
Unearned income (1,036) (1,018) (1,018) (1,075) (1,108)
- -----------------------------------------------------------------------------------------------------------------------------------
Total, net of unearned income $34,524 $34,534 $35,245 $35,450 $35,917
===================================================================================================================================
WHOLESALE LENDING STATISTICS
Portfolio composition-total exposure
Investment grade equivalent or better 52 % 53 % 51 % 52 %
Non-investment grade-secured lending 25 24 25 24
Non-investment grade 23 23 24 24
- ------------------------------------------------------------------------------------------------------------------
Total 100 % 100 % 100 % 100 %
- ------------------------------------------------------------------------------------------------------------------
Client relationships >$50 million-total exposure $12,662 $12,852 $13,086 $13,392
Client relationships >$50 million-customers 139 143 145 140
===================================================================================================================================
CONSUMER LOAN STATISTICS (a)
Net charge-offs to loans .24 % .27 % .24 % .24 % .31 %
===================================================================================================================================
LOANS HELD FOR SALE
September 30 June 30 March 31 December 31 September 30
Period ended - in millions 2003 2003 2003 2002 2002
- -----------------------------------------------------------------------------------------------------------------------------------
Education loans $1,140 $1,059 $1,243 $1,035 $1,225
Institutional lending repositioning 98 126 181 298 495
Other 293 290 278 274 269
- -----------------------------------------------------------------------------------------------------------------------------------
Total $1,531 $1,475 $1,702 $1,607 $1,989
===================================================================================================================================
INSTITUTIONAL LENDING REPOSITIONING
September 30 June 30 March 31 December 31 September 30
Period ended - in millions 2003 2003 2003 2002 2002
- -----------------------------------------------------------------------------------------------------------------------------------
Loans held for sale
Credit exposure $150 $199 $344 $626 $1,078
Outstandings 98 126 181 298 495
Exit portfolio
Credit exposure 61 251 374 438 636
Outstandings 10 11 9 4 25
===================================================================================================================================
(a) Includes consumer, residential mortgage and vehicle leasing.
THE PNC FINANCIAL SERVICES GROUP, INC. Page 15
ALLOWANCES FOR CREDIT LOSSES, UNFUNDED LOAN COMMITMENTS AND
LETTERS OF CREDIT AND NET UNFUNDED COMMITMENTS (Unaudited)
CHANGE IN ALLOWANCE FOR CREDIT LOSSES
September 30 June 30 March 31 December 31 September 30
Three months ended - in millions 2003 2003 2003 2002 2002
- ------------------------------------------------------------------------------------------------------------------------
Beginning balance $673 $680 $673 $648 $654
Charge-offs
Commercial (56) (27) (32) (27) (62)
Commercial real estate (1) (2) (1)
Consumer (9) (10) (10) (10) (10)
Residential mortgage (1) (1) (3)
Lease financing (5) (29) (8) (5) (10)
- ------------------------------------------------------------------------------------------------------------------------
Total charge-offs (72) (69) (50) (43) (85)
Recoveries
Commercial 5 2 10 3 9
Commercial real estate 1
Consumer 3 3 3 3 3
Residential mortgage 1
Lease financing 1 1 1
- ------------------------------------------------------------------------------------------------------------------------
Total recoveries 9 6 14 8 12
Net charge-offs
Commercial (51) (25) (22) (24) (53)
Commercial real estate (1) (2)
Consumer (6) (7) (7) (7) (7)
Residential mortgage (1) (3)
Lease financing (5) (28) (7) (4) (10)
- ------------------------------------------------------------------------------------------------------------------------
Total net charge-offs (63) (63) (36) (35) (73)
Provision for credit losses 50 57 36 65 73
Transfer of allowance to other assets (1)
Net change in allowance for unfunded loan
commitments and letters of credit (11) (1) 7 (5) (6)
- ------------------------------------------------------------------------------------------------------------------------
Ending balance $648 $673 $680 $673 $648
========================================================================================================================
CHANGE IN ALLOWANCE FOR UNFUNDED LOAN COMMITMENTS AND LETTERS OF CREDIT
September 30 June 30 March 31 December 31 September 30
Three months ended - in millions 2003 2003 2003 2002 2002
- ------------------------------------------------------------------------------------------------------------------------
Beginning balance $78 $77 $84 $79 $73
Net change in allowance for unfunded
loan commitments and letters of credit 11 1 (7) 5 6
- ------------------------------------------------------------------------------------------------------------------------
Ending balance $89 $78 $77 $84 $79
========================================================================================================================
NET UNFUNDED COMMITMENTS
September 30 June 30 March 31 December 31 September 30
In millions 2003 2003 2003 2002 2002
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Net unfunded commitments $26,460 $25,514 $25,652 $26,858 $29,120
- ------------------------------------------------------------------------------------------------------------------------
</Table>
THE PNC FINANCIAL SERVICES GROUP, INC. Page 16
DETAILS OF NONPERFORMING ASSETS (Unaudited)
NONPERFORMING ASSETS BY TYPE
September 30 June 30 March 31 December 31 September 30
Period ended - in millions 2003 2003 2003 2002 2002
- ----------------------------------------------------------------------------------------------------------------------------------
Nonaccrual loans
Commercial $286 $296 $252 $226 $232
Commercial real estate 4 6 13 7 5
Consumer 10 11 11 11 12
Residential mortgage 8 7 7 7 5
Lease financing 15 6 51 57 15
- ----------------------------------------------------------------------------------------------------------------------------------
Total nonaccrual loans 323 326 334 308 269
Troubled debt restructured loan 1 1 1 1 2
- ----------------------------------------------------------------------------------------------------------------------------------
Total nonperforming loans 324 327 335 309 271
Nonperforming loans held for sale (a) 35 45 61 97 125
Foreclosed and other assets
Lease 18 19
Residential mortgage 9 7 6 6 6
Other 10 6 6 6 7
- ----------------------------------------------------------------------------------------------------------------------------------
Total foreclosed and other assets 37 32 12 12 13
- ----------------------------------------------------------------------------------------------------------------------------------
Total nonperforming assets (b) $396 $404 $408 $418 $409
- ----------------------------------------------------------------------------------------------------------------------------------
Nonperforming loans to total loans .94 % .95 % .95 % .87 % .75 %
Nonperforming assets to total loans, loans held
for sale and foreclosed assets 1.10 1.12 1.10 1.13 1.08
Nonperforming assets to total assets .55 .60 .59 .63 .60
==================================================================================================================================
(a) Includes troubled debt restructured loans held
for sale $9 $11 $12 $17 $11
(b) Excludes equity management assets carried at
estimated fair value (September 30, 2003, June 30,
2003, March 31, 2003, December 31, 2002 and
September 30, 2002 amounts include troubled debt
restructured assets of $7 million, $3 million,
$3 million, $12 million and $13 million, respectively) $38 $39 $30 $40 $42
CHANGE IN NONPERFORMING ASSETS
Three months Nine months
September 30, 2003 - in millions ended ended
- -----------------------------------------------------------------------------------
Beginning of period $404 $418
Purchases 42 42
Transferred from accrual 77 356
Returned to performing (1) (4)
Principal reductions and payoffs (63) (221)
Asset sales (2) (34)
Charge-offs and valuation adjustments (61) (161)
- -----------------------------------------------------------------------------------
September 30 $396 $396
===================================================================================
THE PNC FINANCIAL SERVICES GROUP, INC. Page 17
DETAILS OF NONPERFORMING ASSETS (Unaudited)
NONPERFORMING ASSETS BY BUSINESS
September 30 June 30 March 31 December 31 September 30
Period ended - in millions 2003 2003 2003 2002 2002
- --------------------------------------------------------------------------------------------------------------------------
REGIONAL COMMUNITY BANKING
Nonperforming loans $63 $65 $76 $72 $56
Foreclosed and other assets 11 10 10 10 9
----------------------------------------------------------------------------------------
Total $74 $75 $86 $82 $65
----------------------------------------------------------------------------------------
WHOLESALE BANKING-CORPORATE BANKING
Nonperforming loans $118 $121 $114 $104 $57
Nonperforming loans held for sale 28 36 52 83 99
Foreclosed and other assets 22 19 2
----------------------------------------------------------------------------------------
Total $168 $176 $166 $187 $158
----------------------------------------------------------------------------------------
WHOLESALE BANKING-PNC REAL ESTATE FINANCE
Nonperforming loans $1 $1 $10 $2 $3
Nonperforming loans held for sale 2
Foreclosed and other assets 2 2
----------------------------------------------------------------------------------------
Total $3 $3 $12 $2 $3
----------------------------------------------------------------------------------------
WHOLESALE BANKING-PNC BUSINESS CREDIT
Nonperforming loans $132 $135 $130 $126 $151
Nonperforming loans held for sale 7 9 7 14 26
Foreclosed and other assets 1 1 2 2 2
----------------------------------------------------------------------------------------
Total $140 $145 $139 $142 $179
----------------------------------------------------------------------------------------
PNC ADVISORS
Nonperforming loans $10 $5 $5 $5 $4
Foreclosed and other assets 1
----------------------------------------------------------------------------------------
Total $11 $5 $5 $5 $4
----------------------------------------------------------------------------------------
CONSOLIDATED TOTALS
Nonperforming loans $324 $327 $335 $309 $271
Nonperforming loans held for sale 35 45 61 97 125
Foreclosed and other assets 37 32 12 12 13
----------------------------------------------------------------------------------------
Total $396 $404 $408 $418 $409
========================================================================================
LARGEST NONPERFORMING ASSETS AT SEPTEMBER 30, 2003 - IN MILLIONS (a)
PNC Corporate Banking PNC Business Credit
- --------------------------------------------------------------------------------------------------------------------------------
Ranking Outstandings Industry Outstandings Industry Outstandings Industry
- --------------------------------------------------------------------------------------------------------------------------------
1 $46 Manufacturing $46 Manufacturing $37 Retail/Wholesale
2 37 Retail/Wholesale 25 Manufacturing 21 Service Provider
3 25 Manufacturing 17 Service Provider 11 Manufacturing
4 21 Service Provider 9 Manufacturing 7 Manufacturing
5 17 Service Provider 9 Manufacturing 6 Manufacturing
6 11 Manufacturing 7 Finance 6 Manufacturing
7 9 Manufacturing 6 Manufacturing 5 Manufacturing
8 9 Manufacturing 6 Manufacturing 5 Manufacturing
9 7 Service Provider 4 Manufacturing 4 Manufacturing
10 7 Finance 4 Manufacturing 4 Service Provider
- --------------------------------------------------------------------------------------------------------------------------------
Total $189 $133 $106
- --------------------------------------------------------------------------------------------------------------------------------
As a percent of nonperforming assets
48 % 79 % 76 %
================================================================================================================================
(a) Amounts are not net of allowance for credit losses, if applicable.
Page 18
GLOSSARY OF TERMS
Accounting/administration net assets - Net domestic and foreign fund assets for
which PNC provides accounting and administration services. These assets are not
included on PNC's balance sheet.
Adjusted average total assets - Primarily comprised of total average quarterly
assets plus (less) unrealized losses (gains) on available-for-sale debt
securities, less goodwill and certain other intangible assets.
Annualized - Adjusted to reflect a full year of activity.
Assets under management - Assets held by PNC in a fiduciary capacity for
customers/clients. These assets are not included on PNC's balance sheet.
Assigned capital - Capital assignments based on management's assessment of
inherent risks and equity levels at independent companies providing similar
products and services in order to present, to the extent practicable, the
financial results of each business as if the business operated on a stand-alone
basis.
Charge-off - Process of removing a loan or portion of a loan from a bank's
balance sheet because the loan is considered uncollectible. A charge-off also is
recorded when a loan is transferred to held for sale and the loan's market value
is less than its carrying amount. This difference is a charge-off.
Common shareholders' equity to total assets - Common shareholders' equity
divided by total assets. Common shareholders' equity equals total shareholders'
equity less preferred stock and the portion of capital surplus and retained
interest related to the preferred stock.
Custody assets - Assets held on behalf of clients under safekeeping
arrangements. Such assets are not reported on PNC's balance sheet. Assets held
in custody at other institutions on behalf of PNC are included in the
appropriate asset categories as if held physically by PNC.
Earning assets - Assets that generate income, which include: short-term
investments; loans held for sale; loans, net of unearned income; securities;
federal funds sold and certain other assets.
Efficiency ratio - Noninterest expense divided by the sum of net interest income
and noninterest income.
Institutional lending repositioning - A 2001 PNC strategic action taken to build
a more diverse and valuable business mix designed to create shareholder value
over time by reducing lending leverage and improving the risk/return
characteristics of the banking business.
Leverage ratio - Tier 1 risk-based capital divided by adjusted average total
assets.
Net interest margin - Annualized taxable-equivalent net interest income divided
by average earning assets.
Noninterest income to total revenue - Total noninterest income divided by total
revenue. Total noninterest income includes asset management, fund servicing,
service charges on deposits, brokerage, consumer services, corporate services,
equity management, net securities gains (losses) and other noninterest income.
Total revenue includes total noninterest income plus net interest income.
Nonperforming assets - Nonperforming assets include nonaccrual loans, troubled
debt restructured loans, nonaccrual loans held for sale, foreclosed assets and
other assets.
Page 19
Nonperforming loans - Nonperforming loans include loans to commercial, lease
financing, consumer, commercial real estate and residential mortgage customers
as well as troubled debt restructured loans. Nonperforming loans do not include
nonaccrual loans held for sale or foreclosed and other assets.
Operating margin - Operating income divided by total revenue.
Return on assigned capital - Annualized net income divided by assigned capital.
Return on average assets - Annualized earnings divided by average assets.
Earnings can be from net income or continuing operations, as indicated in PNC's
disclosures.
Return on average equity - Annualized earnings divided by average shareholders'
equity. Earnings can be from net income or continuing operations, as indicated
in PNC's disclosures.
Risk-weighted assets - Primarily 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.
Securitization - The process by which financial assets are legally transformed
into securities.
Shareholders' equity to total assets - Total shareholders' equity divided by
total assets.
Taxable-equivalent interest - The interest income earned on certain assets is
completely or partially exempt from federal income tax. As such, these
tax-exempt instruments typically yield lower returns than a taxable investment.
In order to provide accurate comparisons of yields and margins for all earning
assets, the interest income earned on tax-exempt assets is increased to make
them fully equivalent to other taxable interest income investments.
Tier 1 risk-based capital - Tier 1 capital equals: total shareholders' equity,
plus trust preferred capital securities, plus certain minority interests that
are held by others; less goodwill and certain intangible assets, less equity
investments in nonfinancial companies and less net unrealized holding losses on
available-for-sale equity securities. Net unrealized holding gains on
available-for-sale equity securities, net unrealized holding gains (losses) on
available-for-sale debt securities and net unrealized holding gains (losses) on
cash flow hedge derivatives are excluded from total shareholders' equity for
Tier 1 capital purposes.
Tier 1 risk-based capital ratio - Tier 1 risk-based capital divided by
risk-weighted assets.
Total assets serviced - Domestic and foreign assets for which PNC provides
mutual fund related services. These assets are not included on PNC's balance
sheet.
Total deposits - The sum of total transaction deposits, savings accounts,
certificates of deposit, other time deposits and deposits in foreign offices.
Total risk-based capital - Tier 1 risk-based capital plus qualifying senior and
subordinated debt, other minority interest not qualified as Tier 1, and the
allowance for credit losses, subject to certain limitations.
Total risk-based capital ratio - Total risk-based capital divided by
risk-weighted assets.
Total transaction deposits - The sum of noninterest-bearing demand deposits,
interest-bearing demand deposits and money market accounts.
Page 20
Business Definitions
REGIONAL COMMUNITY BANKING provides deposit, lending, cash management and
investment services to two million consumer and small business customers within
PNC's geographic footprint.
WHOLESALE BANKING includes Corporate Banking, PNC Real Estate Finance and PNC
Business Credit.
- CORPORATE BANKING provides credit, equipment leasing, treasury
management and capital markets products and services to mid-sized
corporations, government entities and selectively to large
corporations primarily within PNC's geographic region. Treasury
management activities, which include cash and investment management,
receivables management, disbursement services and global trade
services; capital markets products, which include foreign exchange,
derivatives trading and loan syndications; and equipment leasing
products are offered through Corporate Banking and sold by several
businesses across the Corporation.
- PNC REAL ESTATE FINANCE specializes in financial solutions for the
acquisition, development, permanent financing and operation of
commercial real estate nationally. PNC Real Estate Finance offers
treasury and investment management, access to the capital markets,
commercial mortgage loan servicing and other products and services to
clients that develop, own, manage, or invest in commercial real
estate. PNC's commercial real estate financial services platform
provides processing services through Midland Loan Services, Inc., a
leading third-party provider of loan servicing and technology to the
commercial real estate finance industry. PNC MultiFamily Capital is a
national provider of financial services for the multi-family housing
industry, particularly affordable senior and healthcare housing.
- PNC BUSINESS CREDIT provides asset-based lending, treasury management
and capital markets products and services to middle market customers
nationally. PNC Business Credit's lending services include loans
secured by accounts receivable, inventory, machinery and equipment,
and other collateral, and its customers include manufacturing,
wholesale, distribution, retailing and service industry companies.
PNC ADVISORS provides a full range of tailored investment, trust and banking
products and services to affluent individuals and families, including
full-service brokerage through J.J.B. Hilliard, W.L.Lyons, Inc. and investment
consulting and trust services to the ultra-affluent through Hawthorn. PNC
Advisors also serves as investment manager and trustee for employee benefit
plans and charitable and endowment assets and provides defined contribution plan
services and investment options through its Vested Interest(R) product. PNC
Advisors provides services to individuals and corporations primarily within
PNC's geographic footprint.
BLACKROCK is one of the largest publicly traded investment management firms in
the United States. BlackRock manages assets on behalf of institutions and
individuals worldwide through a variety of fixed income, liquidity and equity
mutual funds, separate accounts and alternative investment products. Mutual
funds include the flagship fund families, BlackRock Funds and BlackRock
Provident Institutional Funds. In addition, BlackRock provides risk management
and investment system services to institutional investors under the BlackRock
Solutions(R) brand name.
PFPC is the largest full-service mutual fund transfer agent and second largest
provider of mutual fund accounting and administration services in the United
States, offering a wide range of fund services to the investment management
industry. PFPC also provides processing solutions to the international
marketplace through its Ireland and Luxembourg operations.