The PNC Financial Services Group, Inc. (NYSE: PNC) today reported record earnings for the fourth quarter of 2000 of $334 million or $1.13 per diluted share, a 12 percent increase compared with the fourth quarter of 1999. Earnings from continuing operations for the fourth quarter of 2000 were $314 million or $1.06 per diluted share and also increased 12 percent compared with the fourth quarter of 1999. Cash earnings per diluted share from continuing operations, which exclude goodwill amortization, were $1.16 for the fourth quarter of 2000, up 13 percent compared with the fourth quarter of 1999.
"Our record earnings in a challenging environment reflect the diversity and collective strength of our businesses," said James E. Rohr, president and chief executive officer of The PNC Financial Services Group. "We delivered strong financial performance -- led by continued growth in our asset management and processing businesses -- as we took significant steps to further strengthen our business mix and risk profile."
Full year 2000 earnings were a record $1.279 billion or $4.31 per diluted share, a 10 percent increase compared with core earnings per diluted share of $3.93 in 1999. Full year 2000 earnings from continuing operations were $1.214 billion or $4.09 per diluted share, also up 10 percent compared with core earnings per diluted share from continuing operations in 1999. Cash earnings per diluted share from continuing operations were $4.48 for 2000, up 12 percent compared with core cash earnings per diluted share from continuing operations in 1999.
Core earnings for the prior year exclude one-time gains that were partially offset by the cost of certain strategic initiatives. Full year 1999 reported earnings were $1.264 billion or $4.15 per diluted share.
HIGHLIGHTS
* Noninterest income grew 14 percent in the fourth quarter of 2000
compared with core noninterest income in the prior-year quarter and
increased to 58 percent of total revenue.
* The loan to deposit ratio was 106 percent at December 31, 2000, down
from 121 percent at September 30, 1998 prior to the implementation of
balance sheet downsizing initiatives. PNC's reliance on wholesale
funding declined more than $8 billion over the same time frame.
* Assets under management increased $40 billion or 19 percent compared
with the prior year to $253 billion at December 31, 2000.
* Asset management businesses grew earnings 22 percent compared with full
year 1999 and increased to 24 percent of total business earnings in
2000.
* Net charge-offs were $40 million or .32 percent of average loans for the
fourth quarter of 2000 and nonperforming assets increased modestly to
$372 million.
* Based on net income, return on average common shareholders' equity for
the fourth quarter of 2000 was 21.41 percent and return on average
assets was 1.72 percent. Return on average common shareholders' equity
for full year 2000 was 21.63 percent and return on average assets was
1.68 percent.
* On Oct. 2, 2000, PNC announced that it reached a definitive agreement to
sell its residential mortgage banking business. The transaction is
expected to be completed in the first quarter of 2001, subject to
regulatory approvals and closing conditions.
* The integration of Investor Services Group ("ISG") continues as planned
and the acquisition was accretive to earnings per diluted share in the
fourth quarter of 2000.
FOURTH QUARTER 2000 INCOME STATEMENT REVIEW
Earnings from continuing operations for the fourth quarter of 2000 of $314 million or $1.06 per diluted share increased 12 percent compared with the fourth quarter of 1999. Comparable fourth quarter 1999 earnings were $287 million or $.95 per diluted share and included an after-tax gain from the initial public offering ("IPO") of BlackRock, Inc. stock that was offset by after-tax valuation adjustments associated with a repositioning of wholesale lending businesses, the buyout of PNC's mall ATM marketing representative and the write-down of an equity investment.
Taxable-equivalent net interest income was $538 million for the fourth quarter of 2000, a $31 million decrease compared with the fourth quarter of 1999. The decrease mainly resulted from funding costs related to the ISG acquisition, a lower level of interest-earning assets and the higher interest rate environment. The net interest margin was 3.60 percent for the fourth quarter of 2000 compared with 3.73 percent for the fourth quarter of 1999. The narrowing of the net interest margin was primarily attributable to the ISG acquisition, a change in balance sheet composition and the higher interest rate environment.
The provision for credit losses was $40 million in the fourth quarter of 2000 and equaled net charge-offs.
Noninterest income was $735 million for the fourth quarter of 2000, a $93 million or 14 percent increase compared with the prior-year quarter, excluding non-core items in 1999.
Asset management fees of $219 million for the fourth quarter of 2000 increased $43 million or 24 percent compared with the fourth quarter of 1999 primarily driven by new business. Assets under management were $253 billion at December 31, 2000, a 19 percent increase compared with December 31, 1999. Fund servicing fees of $167 million for the fourth quarter of 2000 increased $78 million compared with the fourth quarter of 1999 principally due to the ISG acquisition. Excluding ISG, fund servicing fees increased $13 million or 22 percent compared with the prior-year quarter as a decline in revenue associated with the equity markets was more than offset by the benefit of existing and new client growth. At December 31, 2000, PFPC provided accounting/administration services for $463 billion of pooled investment assets and provided custody services for $437 billion of customer assets.
Brokerage fees were $57 million for the fourth quarter of 2000 compared with $58 million for the fourth quarter of 1999 as the benefit of an expanded distribution network was offset by a decline in equity markets activity. Consumer services revenue of $56 million for the fourth quarter of 2000 increased $4 million or 8 percent compared with the prior-year quarter primarily due to an increase in retail transaction volume.
Corporate services revenue of $94 million for the fourth quarter of 2000 increased 6 percent compared with the fourth quarter of 1999, excluding $53 million of valuation adjustments in the prior-year quarter. The increase was primarily driven by higher treasury management fees and commercial mortgage servicing revenue.
Equity management income was $1 million for the fourth quarter of 2000 compared with $52 million for the fourth quarter of 1999. The decrease primarily resulted from a decline in the estimated fair value of investments.
Net securities gains were $16 million for the fourth quarter of 2000 compared with $22 million of net securities losses in the fourth quarter of 1999. The loss in 1999 primarily resulted from the $28 million write-down of an equity investment. Sale of subsidiary stock represents the gain from the IPO of BlackRock stock in the fourth quarter of 1999 and amounted to $64 million. Other noninterest income was $69 million for the fourth quarter of 2000 compared with $67 million for the fourth quarter of 1999.
Noninterest expense was $752 million and the efficiency ratio was 55 percent in the fourth quarter of 2000. The comparable prior-year quarter amounts were $741 million and 58 percent, respectively, excluding non-core items. The increase in noninterest expense was primarily related to the ISG acquisition and higher expenses commensurate with fee-based revenue growth. Excluding ISG, noninterest expense decreased 5 percent compared with the prior-year quarter as a result of aggressive expense management.
FOURTH QUARTER 2000 BALANCE SHEET REVIEW
The Corporation has been pursuing a number of initiatives designed to improve the risk and return characteristics of its lending businesses. These include the sale of the residential mortgage banking and credit card businesses, exiting certain non-strategic wholesale lending businesses and the continued downsizing of the indirect automobile lending portfolio. These actions have resulted in a reduction in the loan to deposit ratio to 106 percent at December 31, 2000, down from 121 percent at September 30, 1998 prior to the implementation of balance sheet downsizing initiatives.
Total assets were $69.8 billion at December 31, 2000 compared with $69.3 billion at December 31, 1999. Average earning assets were $59.2 billion for the fourth quarter of 2000 compared with $60.3 billion for the fourth quarter of 1999. Average earning assets declined primarily due to a decrease in average loans.
Average deposits were $47.0 billion and represented 68 percent of total sources of funds for the fourth quarter of 2000 compared with $43.4 billion and 64 percent, respectively, in the fourth quarter of 1999. The increase in deposits primarily resulted from a number of strategic marketing initiatives to grow more valuable transaction accounts.
Average borrowed funds declined to $11.7 billion for the fourth quarter of 2000 compared with $15.3 billion for the fourth quarter of 1999 reflecting PNC's strategies to reduce the size of its balance sheet and grow the deposit franchise.
Shareholders' equity totaled $6.7 billion at December 31, 2000. The regulatory capital ratios are estimated to be 8.1 percent for leverage, 8.4 percent for tier I and 12.3 percent for total risk-based capital. During the fourth quarter of 2000, PNC repurchased 1 million shares of common stock bringing full year repurchases to approximately 6.7 million shares. Common shares outstanding at December 31, 2000 were 289.6 million.
ASSET QUALITY REVIEW
The ratio of nonperforming assets to total loans, loans held for sale and foreclosed assets was .71 percent at December 31, 2000 compared with .68 percent at September 30, 2000 and .61 percent at December 31, 1999. Nonperforming assets were $372 million at December 31, 2000 compared with $354 million and $325 million at September 30, 2000 and December 31, 1999, respectively. The increase was primarily due to higher commercial nonperforming loans partially offset by lower commercial real estate and residential mortgage nonperforming loans.
The allowance for credit losses was $675 million and represented 1.33 percent of period-end loans and 209 percent of nonaccrual loans at December 31, 2000. The comparable ratios were 1.36 percent and 219 percent, respectively, at September 30, 2000 and 1.36 percent and 232 percent, respectively, at December 31, 1999. Net charge-offs were $40 million or .32 percent of average loans in the fourth quarter of 2000. The comparable amounts were $30 million or .24 percent, respectively, in the third quarter of 2000 and $30 million or .23 percent, respectively, in the fourth quarter of 1999.
FULL YEAR 2000 RESULTS
Full year 2000 earnings from continuing operations were $1.214 billion or $4.09 per diluted share compared with reported earnings from continuing operations of $1.202 billion or $3.94 per diluted share and core earnings from continuing operations of $1.137 billion or $3.72 per diluted share last year.
The following table presents business results and reconciles core to reported earnings for full year 2000 and 1999:
BUSINESS RESULTS
Year ended December 31 - dollars in millions
Revenue
(taxable- Return on
Earnings equivalent basis) Assigned Capital
2000 1999 2000 1999 2000 1999
PNC Bank
Regional Banking $590 $543 $2,033 $1,968 22% 21%
Corporate Banking 244 246 839 745 20 21
Total PNC Bank 834 789 2,872 2,713 22 21
PNC Secured Finance
PNC Real Estate
Finance 82 74 220 212 21 19
PNC Business Credit 49 29 119 82 32 25
Total PNC Secured
Finance 131 103 339 294 24 20
Asset Management
PNC Advisors 173 147 792 738 32 27
BlackRock 87 59 477 381 27 36
PFPC 47 45 690 264 22 40
Total Asset
Management 307 251 1,959 1,383 28 30
Total businesses 1,272 1,143 5,170 4,390 23 23
Other (58) (6) (97) 227
Results from
continuing
operations
- core 1,214 1,137 5,073 4,617 21 20
Gain on sale of
credit card
business 125 193
Gain on sale of
equity interest
in EPS 63 97
BlackRock IPO gain 59 64
Branch gains 17 27
Gain on sale of
Concord stock,
net of PNC
Foundation
contribution 16 41
Wholesale lending
repositioning (126) (195)
Write-down of an
equity investment (18) (28)
Costs related to
efficiency
initiatives (64)
Mall ATM buyout (7)
Results from
continuing
operations
- reported 1,214 1,202 5,073 4,816 21 21
Results from
discontinued
operations 65 62 307 384 13 14
Total
consolidated
- reported $1,279 $1,264 $5,380 $5,200 22 22
PNC Bank - Regional Banking contributed 46 percent of total business earnings in 2000 compared with 48 percent in 1999. Earnings of $590 million for 2000 increased 9 percent compared with the prior year primarily driven by growth in deposits as well as higher noninterest income and improved efficiency. Corporate Banking earnings declined to 19 percent of total business earnings in 2000 compared with 21 percent in 1999. Earnings of $244 million for 2000 were comparable with earnings of $246 million for 1999 as higher revenue was offset by a higher provision for credit losses.
PNC Secured Finance - PNC Real Estate Finance contributed 6 percent of total business earnings in 2000 and 1999. Earnings of $82 million increased 11 percent compared with the prior year primarily due to growth in the affordable housing business. PNC Business Credit contributed 4 percent of total business earnings in 2000 compared with 3 percent a year ago. Earnings of $49 million increased 69 percent compared with the prior year primarily due to growth in loans associated with the strategic expansion of this business and improved efficiency.
Asset Management - PNC Advisors contributed 14 percent of total business earnings in 2000 compared with 13 percent in 1999. Earnings of $173 million for 2000 increased 18 percent compared with the prior year primarily driven by revenue growth attributable to new asset management and brokerage business. BlackRock earned $87 million in 2000, a 47 percent increase compared with the prior year primarily resulting from significant new asset and risk management business. BlackRock contributed 7 percent of total business earnings in 2000 compared with 5 percent a year ago. PFPC contributed 4 percent of total business earnings in 2000 and 1999. Earnings were $47 million for 2000 compared with $45 million last year. Cash earnings, which exclude goodwill amortization, increased $39 million to $87 million for full year 2000 primarily due to ISG. Excluding the impact of ISG, earnings increased 21 percent compared with the prior year primarily as a result of new and existing client growth.
Total business financial results differ from results from continuing operations primarily due to differences between management accounting practices and generally accepted accounting principles, divested and exited businesses, equity management activities, minority interests, residual asset and liability management activities, eliminations and unassigned items, the impact of which is reflected in the "Other" category.
FULL YEAR 2001 OUTLOOK
Management is currently optimistic about PNC's earnings potential for 2001, although the environment is becoming more challenging. At the present time, growth in diluted earnings per share from continuing operations for 2001 is expected to range from 11 percent to 13 percent including the estimated impact of redeploying the capital made available by the sale of the residential mortgage banking business. Capital made available will be redeployed in a number of ways, which may include repurchasing common stock, continuing to reduce balance sheet leverage, reducing debt and making targeted investments in high-growth businesses. The amount of capital available for redeployment and the income statement impact of the sale will depend on fair market values, closing adjustments and other factors, including the closing date impact of a decline in interest rates on the value of the servicing portfolio, net of hedges, and the book value of the legal entities being sold. Based on current market conditions, management presently expects that any reported gain on the sale will be less than previously anticipated. The ultimate outcome cannot be determined until final settlement occurs.
FORWARD-LOOKING STATEMENTS
The statements in the FULL YEAR 2001 OUTLOOK section of this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements with respect to PNC's future financial or business performance, conditions or strategies and other financial and business matters, including expectations regarding the sale of the residential mortgage banking business, are also included in other portions of this press release and may be included in other statements the Corporation makes. Forward-looking statements are typically identified by words or phrases such as "believe," "expect," "anticipate," "intend," "estimate," "position," "target," "assume," "achievable," "potential," "strategy," "goal," "plan," "aspiration," "outlook," "outcome," "continue," "remain," "maintain," "trend," and variations of such words and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "may," or similar expressions. The Corporation cautions that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. These forward-looking statements speak only as of the date of this press release, and the Corporation assumes no duty to update forward-looking statements. Actual results could differ materially from those anticipated in these forward-looking statements and future results could differ materially from historical performance.
These forward-looking statements assume that the closing of the sale of PNC's residential mortgage banking business will occur as anticipated. In addition to the factors mentioned in the Full Year 2001 Outlook section of this press release, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: decisions PNC makes with respect to the redeployment of available capital; changes in asset quality and credit risk; economic conditions; changes in financial and capital markets; the inability to sustain revenue and earnings growth; changes in interest rates; inflation; changes in values of assets under management and assets serviced; relative investment performance of assets under management; customer acceptance of PNC products and services; customer borrowing, repayment, investment, and deposit practices; customer disintermediation; valuation of debt and equity investments; the introduction, withdrawal, success and timing of business initiatives and strategies; the extent and cost of any share repurchases; competitive conditions; the inability to realize cost savings or revenue enhancements, implement integration plans and other consequences associated with mergers, acquisitions, restructurings and divestitures; and the impact, extent and timing of technological changes, capital management activities, and actions of the Federal Reserve Board and legislative and regulatory actions and reforms. Further, an increase in the number of customer or counterparty delinquencies, bankruptcies, or defaults could result, among other things, in a higher loan loss provision and reduced profitability.
The Corporation's SEC reports, accessible on PNC's website at http://www.pnc.com/ , identify additional factors that can affect forward-looking statements.
Recorded comments from James E. Rohr, president and chief executive officer, Walter E. Gregg, Jr., vice chairman, and Robert L. Haunschild, chief financial officer, providing further information regarding the topics addressed in this earnings release will be available for one week, beginning at approximately 11:00 a.m. on Jan. 18, by calling 1-800-633-8284, reservation number 17716349. The recorded comments may include forward-looking information and are subject to the cautionary statements set forth above.
The PNC Financial Services Group, Inc., headquartered in Pittsburgh, is one of the nation's largest diversified financial services organizations, providing regional banking, corporate banking, real estate finance, asset-based lending, wealth management, asset management and global fund services.
The PNC Financial Services Group, Inc.
Consolidated Financial Highlights
Three months ended
December 31 Year ended December 31
2000 1999 1999 2000 1999 1999
Dollars in millions, Core Reported Core Reported
except per share data
FINANCIAL PERFORMANCE
Revenue from continuing
operations
Net interest income
(taxable-equivalent
basis) $538 $569 $569 $2,182 $2,366 $2,366
Noninterest income 735 642 625 2,891 2,251 2,450
Total revenue from
continuing
operations 1,273 1,211 1,194 5,073 4,617 4,816
Income from continuing
operations 314 287 287 1,214 1,137 1,202
Discontinued operations 20 17 17 65 62 62
Net income 334 304 304 1,279 1,199 1,264
Cash earnings from
continuing
operations (a) 344 310 310 1,330 1,216 1,281
Cash earnings from
discontinued
operations (a) 20 17 17 66 63 63
Cash earnings
from net
income (a) 364 327 327 1,396 1,279 1,344
Per common share
Diluted earnings
Continuing
operations 1.06 .95 .95 4.09 3.72 3.94
Discontinued
operations .07 .06 .06 .22 .21 .21
Net income 1.13 1.01 1.01 4.31 3.93 4.15
Diluted cash earnings (a)
Continuing
operations 1.16 1.03 1.03 4.48 3.99 4.21
Discontinued
operations .06 .06 .06 .22 .21 .21
Net income 1.22 1.09 1.09 4.70 4.20 4.42
Cash dividends
declared .48 .45 .45 1.83 1.68 1.68
SELECTED RATIOS
From continuing
operations
Return on
Average common
shareholders'
equity 20.10 % 20.01 % 20.01 % 20.52 % 20.12 % 21.29 %
Average assets 1.81 1.68 1.68 1.76 1.66 1.76
Net interest margin 3.60 3.73 3.73 3.64 3.86 3.86
Noninterest income to
total revenue 57.74 53.01 52.35 56.99 48.75 50.87
Efficiency (b) 55.44 57.60 59.42 56.85 54.91 55.54
From net income
Return on
Average common
shareholders'
equity 21.41 % 21.21 % 21.21 % 21.63 % 21.24 % 22.41 %
Average assets (c) 1.72 1.64 1.64 1.68 1.60 1.69
Net interest margin 3.24 3.54 3.54 3.37 3.68 3.68
Noninterest income to
total revenue 60.64 55.25 54.65 59.28 50.91 52.79
Efficiency (b) 53.09 56.44 58.07 55.17 54.23 54.82
(a) Excluding amortization of goodwill
(b) Excluding amortization and distributions on capital securities
(c) Calculated on asset basis including discontinued operations
Dec. 31 Sept. 30 June 30 March 31 Dec. 31
2000 2000 2000 2000 1999
BALANCE SHEET DATA
Assets $69,844 $69,884 $68,885 $68,474 $69,286
Loans, net of unearned
income 50,601 49,791 50,281 50,259 49,673
Deposits 47,664 47,494 46,381 45,767 45,802
Common shareholders'
equity 6,344 6,071 5,844 5,726 5,633
Book value per common
share 21.88 21.01 20.22 19.68 19.23
CAPITAL RATIOS
Leverage 8.07 % 6.87 % 6.72 % 6.67 % 6.61 %
Common shareholders'
equity to total assets 9.08 8.69 8.48 8.36 8.13
ASSET QUALITY RATIOS
Nonperforming assets to
total loans,
loans held for sale
and foreclosed
assets .71 % .68 % .67 % .65 % .61 %
Allowance for credit
losses to total loans 1.33 1.36 1.34 1.34 1.36
Allowance for credit
losses to nonaccrual
loans 208.98 219.16 217.04 224.67 231.62
Net charge-offs to
average loans .32 .24 .27 .25 .23
The PNC Financial Services Group, Inc.
Consolidated Statement of Income
Three months Year ended
Dollars in millions, ended December 31 December 31
except per share data 2000 1999 2000 1999
Interest Income
Loans and fees on loans $1,027 $984 $4,045 $4,064
Securities available for sale 96 96 386 362
Loans held for sale 41 43 204 104
Other 26 14 97 53
Total interest income 1,190 1,137 4,732 4,583
Interest Expense
Deposits 453 345 1,653 1,369
Borrowed funds 204 230 915 870
Total interest expense 657 575 2,568 2,239
Net interest income 533 562 2,164 2,344
Provision for credit losses 40 30 136 163
Net interest income less provision
for credit losses 493 532 2,028 2,181
Noninterest Income
Asset management 219 176 809 681
Fund servicing 167 89 654 251
Service charges on deposits 56 53 206 207
Brokerage 57 58 249 219
Consumer services 56 52 209 218
Corporate services 94 36 342 133
Equity management 1 52 133 100
Net securities gains (losses) 16 (22) 20 22
Sale of subsidiary stock 64 64
Other 69 67 269 555
Total noninterest income 735 625 2,891 2,450
Noninterest Expense
Staff expense 410 364 1,616 1,380
Net occupancy 52 48 203 224
Equipment 59 52 224 232
Amortization 27 23 110 92
Marketing 22 24 70 70
Distributions on capital securities 17 17 67 65
Other 165 225 781 780
Total noninterest expense 752 753 3,071 2,843
Income from continuing operations
before income taxes 476 404 1,848 1,788
Income taxes 162 117 634 586
Income from continuing operations $314 $287 $1,214 $1,202
Income from discontinued operations
(less applicable
income taxes of $14, $12, $44 and $41) 20 17 65 62
Net income $334 $304 $1,279 $1,264
Income from continuing operations
applicable to diluted earnings $310 $282 $1,196 $1,184
Net income applicable to diluted
earnings 330 299 1,261 1,246
Earnings Per Common Share
Continuing operations
Basic $1.07 $.96 $4.12 $3.98
Diluted 1.06 .95 4.09 3.94
Net income
Basic $1.14 $1.02 $4.35 $4.19
Diluted 1.13 1.01 4.31 4.15
Cash Dividends Declared Per Common
Share .48 .45 1.83 1.68
Average Common Shares Outstanding
Basic 289.2 293.4 290.0 296.9
Diluted 292.9 296.3 292.8 300.0
The PNC Financial Services Group, Inc.
Details of Net Interest Income
Net Interest Income
Three months Year ended
Taxable-equivalent basis ended December 31 December 31
In millions 2000 1999 2000 1999
Interest income
Loans and fees on loans $1,031 $990 $4,060 $4,082
Securities available for sale 97 97 389 366
Loans held for sale 41 43 204 104
Other 26 14 97 53
Total interest income 1,195 1,144 4,750 4,605
Interest expense
Deposits 453 345 1,653 1,369
Borrowed funds 204 230 915 870
Total interest expense 657 575 2,568 2,239
Net interest income $538 $569 $2,182 $2,366
Net Interest Income by Quarter
Taxable-equivalent basis
Three months ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31
- in millions 2000 2000 2000 2000 1999
Interest income
Loans and fees
on loans $1,031 $1,028 $1,013 $988 $990
Securities
available
for sale 97 99 98 95 97
Loans held
for sale 41 47 52 64 43
Other 26 30 22 19 14
Total interest
income 1,195 1,204 1,185 1,166 1,144
Interest expense
Deposits 453 434 397 369 345
Borrowed funds 204 236 238 237 230
Total interest
expense 657 670 635 606 575
Net interest
income $538 $534 $550 $560 $569
The PNC Financial Services Group, Inc.
Details of Net Interest Margin
Net Interest Margin
Three months ended Year ended
December 31 December 31
Taxable-equivalent basis 2000 1999 2000 1999
Average yields/rates
Yield on earning assets
Loans and fees on loans 8.16 % 7.70 % 8.12 % 7.73 %
Securities available for sale 6.53 6.12 6.42 6.02
Loans held for sale 8.32 7.65 8.14 7.47
Other 7.80 5.31 7.53 5.07
Total yield on earning
assets 7.99 7.49 7.93 7.51
Rate on interest-bearing
liabilities
Deposits 4.66 3.86 4.41 3.81
Borrowed funds 6.83 5.85 6.66 5.63
Total rate on interest-
bearing liabilities 5.16 4.47 5.01 4.36
Interest rate spread 2.83 3.02 2.92 3.15
Impact of noninterest-bearing
sources .77 .71 .72 .71
Net interest margin 3.60 % 3.73 % 3.64 % 3.86 %
Net Interest Margin by Quarter
Taxable-equivalent basis
Dec. 31 Sept. 30 June 30 March 31 Dec. 31
Three months ended 2000 2000 2000 2000 1999
Average yields/rates
Yield on earning assets
Loans and fees
on loans 8.16 % 8.13 % 8.03 % 7.88 % 7.70 %
Securities
available
for sale 6.53 6.41 6.50 6.22 6.12
Loans held
for sale 8.32 8.77 8.11 7.64 7.65
Other 7.80 8.05 7.01 6.92 5.31
Total yield
on earning
assets 7.99 7.98 7.86 7.68 7.49
Rate on interest-
bearing liabilities
Deposits 4.66 4.58 4.30 4.05 3.86
Borrowed funds 6.83 6.85 6.54 6.14 5.85
Total rate on
interest-bearing
liabilities 5.16 5.18 4.92 4.67 4.47
Interest rate
spread 2.83 2.80 2.94 3.01 3.02
Impact of noninterest-
bearing sources .77 .74 .69 .67 .71
Net interest
margin 3.60 % 3.54 % 3.63 % 3.68 % 3.73 %
The PNC Financial Services Group, Inc.
Noninterest Income and Expense by Quarter
Noninterest Income by Quarter
Three months ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31
- in millions 2000 2000 2000 2000 1999
Asset management $219 $208 $196 $186 $176
Fund servicing 167 168 164 155 89
Service charges on deposits 56 50 50 50 53
Brokerage 57 61 60 71 58
Consumer services 56 55 51 47 52
Corporate services 94 86 80 82 36
Equity management 1 (3) 48 87 52
Net securities gains
(losses) 16 7 (3) (22)
Sale of subsidiary stock 64
Other 69 68 79 53 67
Total noninterest
income $735 $700 $728 $728 $625
Noninterest Expense by Quarter
Three months ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31
- in millions 2000 2000 2000 2000 1999
Staff expense $410 $399 $396 $411 $364
Net occupancy 52 50 48 53 48
Equipment 59 54 55 56 52
Amortization 27 27 28 28 23
Marketing 22 16 19 13 24
Distributions on capital
securities 17 17 17 16 17
Other 165 184 217 215 225
Total noninterest
expense $752 $747 $780 $792 $753
The PNC Financial Services Group, Inc.
Consolidated Balance Sheet
December 31 December 31
In millions, except par value 2000 1999
Assets
Cash and due from banks $3,662 $3,080
Short-term investments 1,151 1,100
Loans held for sale 1,655 3,477
Securities available for sale 5,902 5,960
Loans, net of unearned income of
$999 and $724 50,601 49,673
Allowance for credit losses (675) (674)
Net loans 49,926 48,999
Goodwill and other amortizable
assets 2,468 2,512
Investment in discontinued
operations 356 263
Other 4,724 3,895
Total assets $69,844 $69,286
Liabilities
Deposits
Noninterest-bearing $8,490 $8,161
Interest-bearing 39,174 37,641
Total deposits 47,664 45,802
Borrowed funds
Federal funds purchased 1,445 1,281
Repurchase agreements 607 402
Bank notes and senior debt 6,110 6,975
Federal Home Loan Bank borrowings 500 2,258
Subordinated debt 2,407 2,327
Other borrowed funds 649 986
Total borrowed funds 11,718 14,229
Other 2,958 2,461
Total liabilities 62,340 62,492
Mandatorily redeemable capital
securities of subsidiary trusts 848 848
Shareholders' Equity
Preferred stock 7 7
Common stock - $5 par value
Authorized 450 shares
Issued 353 shares 1,764 1,764
Capital surplus 1,303 1,276
Retained earnings 6,736 6,006
Deferred benefit expense (25) (17)
Accumulated other comprehensive loss
from continuing operations (43) (132)
Accumulated other comprehensive loss
from discontinued operations (45) (135)
Common stock held in treasury at
cost: 63 and 60 shares (3,041) (2,823)
Total shareholders' equity 6,656 5,946
Total liabilities, capital
securities and shareholders'
equity $69,844 $69,286
The PNC Financial Services Group, Inc.
Consolidated Average Balance Sheet Data
Three months ended Year ended
December 31 December 31
In millions 2000 1999 2000 1999
Assets
Interest-earning assets
Loans held for sale $1,991 $2,209 $2,507 $1,392
Securities available for sale 5,928 6,351 6,061 6,084
Loans, net of unearned income
Consumer 9,081 9,413 9,177 10,310
Credit card 672
Residential mortgage 12,838 12,322 12,599 12,258
Commercial 21,109 22,317 21,685 23,082
Commercial real estate 2,670 3,265 2,685 3,362
Lease financing 3,639 2,786 3,222 2,564
Other 591 613 650 532
Total loans, net of unearned
income 49,928 50,716 50,018 52,780
Other 1,322 1,068 1,289 1,045
Total interest-earning assets 59,169 60,344 59,875 61,301
Noninterest-earning assets 9,214 6,852 8,616 6,613
Investment in discontinued
operations 570 413 487 449
Total assets $68,953 $67,609 $68,978 $68,363
Liabilities
Interest-bearing liabilities
Deposits
Demand and money market $19,762 $17,547 $18,735 $16,921
Savings 1,937 2,212 2,050 2,390
Retail certificates
of deposit 14,795 14,007 14,642 14,220
Other time 587 621 621 1,515
Deposits in foreign offices 1,579 976 1,473 872
Total interest-bearing
deposits 38,660 35,363 37,521 35,918
Borrowed funds 11,738 15,341 13,746 15,466
Total interest-bearing
liabilities 50,398 50,704 51,267 51,384
Noninterest-bearing deposits 8,304 8,062 8,151 8,234
Other 2,978 2,091 2,575 2,027
Total liabilities 61,680 60,857 61,993 61,645
Mandatorily redeemable capital
securities of subsidiary trusts 848 848 848 848
Shareholders' Equity 6,425 5,904 6,137 5,870
Total liabilities, capital
securities and shareholders'
equity $68,953 $67,609 $68,978 $68,363
Common Shareholders' Equity $6,113 $5,591 $5,825 $5,556
The PNC Financial Services Group, Inc.
Consolidated Average Balance Sheet Data by Quarter
Three months ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31
- in millions 2000 2000 2000 2000 1999
Assets
Interest-earning assets
Loans held for sale $1,991 $2,151 $2,577 $3,319 $2,209
Securities available for
sale 5,928 6,179 6,009 6,128 6,351
Loans, net of unearned
income
Consumer 9,081 9,174 9,209 9,247 9,413
Residential mortgage 12,838 12,405 12,571 12,584 12,322
Commercial 21,109 21,800 22,042 21,791 22,317
Commercial real estate 2,670 2,688 2,682 2,698 3,265
Lease financing 3,639 3,238 3,049 2,958 2,786
Other 591 646 676 688 613
Total loans, net of
unearned income 49,928 49,951 50,229 49,966 50,716
Other 1,322 1,445 1,276 1,113 1,068
Total interest-earning
assets 59,169 59,726 60,091 60,526 60,344
Noninterest-earning assets 9,214 8,857 8,566 7,818 6,852
Investment in discontinued
operations 570 515 448 412 413
Total assets $68,953 $69,098 $69,105 $68,756 $67,609
Liabilities
Interest-bearing liabilities
Deposits
Demand and money
market $19,762 $18,914 $18,549 $17,700 $17,547
Savings 1,937 2,020 2,107 2,138 2,212
Retail certificates of
deposit 14,795 14,776 14,403 14,591 14,007
Other time 587 619 641 637 621
Deposits in foreign
offices 1,579 1,342 1,483 1,489 976
Total interest-bearing
deposits 38,660 37,671 37,183 36,555 35,363
Borrowed funds 11,738 13,518 14,422 15,333 15,341
Total interest-bearing
liabilities 50,398 51,189 51,605 51,888 50,704
Noninterest-bearing deposits 8,304 8,239 8,357 7,700 8,062
Other 2,978 2,637 2,290 2,393 2,091
Total liabilities 61,680 62,065 62,252 61,981 60,857
Mandatorily redeemable
capital securities of
subsidiary trusts 848 848 848 848 848
Shareholders' Equity 6,425 6,185 6,005 5,927 5,904
Total liabilities,
capital securities and
shareholders' equity $68,953 $69,098 $69,105 $68,756 $67,609
Common Shareholders' Equity $6,113 $5,873 $5,692 $5,614 $5,591
The PNC Financial Services Group, Inc.
Loan Portfolio and Nonperforming Assets by Quarter
Loan Portfolio by Quarter
Period ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31
- in millions 2000 2000 2000 2000 1999
Consumer $9,133 $9,174 $9,213 $9,173 $9,348
Residential mortgage 13,264 12,563 12,470 12,711 12,506
Commercial 21,207 21,198 22,140 22,033 21,468
Commercial real estate 2,583 2,676 2,687 2,665 2,730
Lease financing 4,845 4,498 3,834 3,701 3,663
Other 568 646 669 700 682
Total loans 51,600 50,755 51,013 50,983 50,397
Unearned income (999) (964) (732) (724) (724)
Total loans, net of
unearned income $50,601 $49,791 $50,281 $50,259 $49,673
Nonperforming Assets by Type
Period ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31
- in millions 2000 2000 2000 2000 1999
Nonaccrual loans
Commercial $312 $261 $259 $240 $219
Commercial real estate 3 16 12 13 21
Residential mortgage 4 26 34 42 48
Consumer 2 3 3 3 2
Lease financing 2 2 3 2 1
Total nonaccrual loans 323 308 311 300 291
Foreclosed and other assets
Commercial real estate 3 4 4 5 5
Residential mortgage 8 8 9 8 7
Other 38 34 29 31 22
Total foreclosed and
other assets 49 46 42 44 34
Total nonperforming
assets $372 $354 $353 $344 $325
Nonperforming Assets by Business
Period ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31
- in millions 2000 2000 2000 2000 1999
PNC Bank
Regional Banking $47 $82 $96 $104 $114
Corporate Banking 219 156 153 160 116
PNC Secured Finance
PNC Real Estate Finance 9 22 19 22 32
PNC Business Credit 36 32 22 2 8
PNC Advisors 2 6 8 8 16
Other 59 56 55 48 39
Total nonperforming
assets $372 $354 $353 $344 $325
The PNC Financial Services Group, Inc.
Asset Quality Data
Allowance For Credit Losses
Three months ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31
- in millions 2000 2000 2000 2000 1999
Beginning balance $675 $675 $674 $674 $674
Charge-offs
Consumer (12) (11) (11) (12) (14)
Residential mortgage (4) (1) (1) (2) (1)
Commercial (35) (27) (30) (29) (24)
Commercial real estate (1) (2)
Lease financing (3) (2) (1) (2) (4)
Total charge-offs (55) (43) (43) (45) (43)
Recoveries
Consumer 6 5 5 6 5
Residential mortgage 1 1
Commercial 7 4 3 7 5
Commercial real estate 4 3
Lease financing 1 1
Total recoveries 15 13 9 14 13
Net charge-offs
Consumer (6) (6) (6) (6) (9)
Residential mortgage (3) (1) (2) (1)
Commercial (28) (23) (27) (22) (19)
Commercial real estate (1) 2 3
Lease financing (2) (2) (1) (1) (4)
Total net charge-offs (40) (30) (34) (31) (30)
Provision for credit losses 40 30 35 31 30
Ending balance $675 $675 $675 $674 $674
NewsCom: http://www.newscom.com/cgi-bin/prnh/20000307/PHTU015
AP Archive: http://photoarchive.ap.org/
PRN Photo Desk, 888-776-6555 or 201-369-3467
SOURCE: PNC Financial Services Group, Inc.
Contact: Media, R. Jeep Bryant, 412-762-4550, or
corporate.communications@pnc.com, or Investors, William H. Callihan,
412-762-8257, or investor.relations@pnc.com
Website: http://www.pnc.com/
Company News On-Call: http://www.prnewswire.com/comp/701257.html or fax,
800-758-5804, ext. 701257
