The PNC Financial Services Group Reports Second Quarter 2001 Earnings
PRNewswire
PITTSBURGH

The PNC Financial Services Group, Inc. (NYSE: PNC) today reported second quarter 2001 earnings of $295 million or $1.00 per diluted share compared with earnings from continuing operations of $299 million or $1.01 per diluted share for the second quarter of 2000. Excluding a $22 million or $0.08 per diluted share net loss from venture capital activities, second quarter 2001 results increased 7 percent to $317 million or $1.08 per diluted share. Reported earnings for the second quarter of 2000, which include the residential mortgage banking business that was sold in January 2001, were $315 million or $1.06 per diluted share. Return on average common shareholders' equity was 18.13 percent and return on average assets was 1.67 percent for the second quarter of 2001 compared with 21.91 percent and 1.68 percent, respectively, for the second quarter of 2000.

"The diversity of PNC's businesses helped to mitigate the impact of a weaker economic environment. BlackRock and PFPC had a particularly strong quarter and the Regional Community Bank continued to grow its transaction deposit base," said James E. Rohr, chairman, president and chief executive officer of The PNC Financial Services Group. "Corporate Banking and other businesses that have greater exposure to equity and capital markets were negatively impacted. However, we are pleased that asset quality remained relatively stable as a result of continued actions to downsize our institutional lending business," said Rohr.

   SECOND QUARTER 2001 HIGHLIGHTS

   --  Excluding venture capital activities, noninterest income grew
       10 percent in the second quarter of 2001 compared with the prior-
       year quarter.

   --  BlackRock's and PFPC's earnings grew 26 percent and 50 percent,
       respectively, compared with the second quarter of 2000.

   --  Regional Community Banking's core earnings grew 10% compared with
       the prior-year quarter, primarily driven by a 10% increase in
       transaction deposits.

   --  Loans declined $6.4 billion from December 31, 2000 to $44.2 billion
       at June 30, 2001, as a result of ongoing efforts to reduce balance
       sheet leverage, and lending revenue was 23 percent of total revenue
       in the second quarter of 2001.

   --  The loan to deposit ratio improved to 96 percent at June 30, 2001
       compared with 108 percent at June 30, 2000 and 121 percent at
       September 30, 1998 prior to the implementation of balance sheet
       downsizing initiatives.

   --  Nonperforming assets remained relatively stable, increasing
       $4 million during the quarter to $390 million at June 30, 2001.  Net
       charge-offs were $45 million or 0.40 percent of average loans for
       the second quarter of 2001.

   SECOND QUARTER 2001 INCOME STATEMENT REVIEW

Taxable-equivalent net interest income of $569 million for the second quarter of 2001 increased $19 million or 3 percent compared with the second quarter of 2000 and the net interest margin widened 13 basis points to 3.76 percent for the second quarter of 2001. The increases were primarily due to the positive impact of transaction deposit growth and a lower rate environment that was partially offset by the impact of continued downsizing of the loan portfolio.

The provision for credit losses was $45 million for the second quarter of 2001 and equaled net charge-offs compared with $35 million for the second quarter of 2000.

Noninterest income was $720 million for the second quarter of 2001 and included $30 million of venture capital losses. Excluding venture capital gains and losses in both years, noninterest income increased 10 percent compared with the second quarter of 2000 primarily due to growth in asset management and processing revenue.

Asset management fees of $214 million for the second quarter of 2001 increased $18 million or 9 percent compared with the second quarter of 2000. The increase was primarily driven by new institutional business at BlackRock, partially offset by the impact of weak equity markets on investment management and trust revenue in PNC Advisors. Assets under management were $260 billion at June 30, 2001, a 16 percent increase compared with June 30, 2000. Fund servicing fees of $182 million for the second quarter of 2001 increased $18 million or 11 percent compared with the second quarter of 2000 primarily due to existing and new client growth. At June 30, 2001, PFPC provided accounting/administration services for $502 billion of pooled investment assets and provided custody services for $442 billion of customer assets. The comparable amounts were $449 billion and $416 billion, respectively, at June 30, 2000. PFPC serviced in excess of 45 million shareholder accounts at June 30, 2001 compared with 41 million a year ago.

Service charges on deposits were $54 million for the second quarter of 2001, up 8 percent compared with the same period last year primarily due to an increase in transaction deposit accounts. Brokerage fees were $55 million for the second quarter of 2001 compared with $60 million for the second quarter of 2000. The decrease was primarily due to a decline in equity markets activity. Consumer services revenue of $58 million for the second quarter of 2001 increased $7 million or 14 percent compared with the prior-year quarter primarily due to the expansion of PNC's ATM network and the increase in transaction deposit accounts.

Corporate services revenue was $76 million for the second quarter of 2001 compared with $80 million for the second quarter of 2000. Higher commercial mortgage servicing and treasury management revenue was more than offset by valuation adjustments of other assets and lower commercial mortgage-backed securitization gains.

Equity management, which is comprised of venture capital activities, reflected net losses of $30 million for the second quarter of 2001 compared with $48 million of net gains for the second quarter of 2000. The decrease primarily resulted from a decline in the estimated fair value of partnership and direct investments. At June 30, 2001, equity management had venture capital investments totaling approximately $700 million with net unrealized appreciation of $38 million.

Net securities gains were $17 million for the second quarter of 2001. The gains were mostly offset by $10 million of valuation adjustments that are reflected in corporate services revenue. Other noninterest income was $94 million for the second quarter of 2001 compared with $79 million for the second quarter of 2000. The increase was primarily due to residential mortgage loan securitizations.

Noninterest expense was $789 million and the efficiency ratio was 58 percent in the second quarter of 2001 compared with $780 million and 57 percent, respectively, during the second quarter of 2000. The increases were primarily related to the expansion of asset management and processing businesses.

SECOND QUARTER 2001 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 institutional lending businesses and the continued downsizing of the indirect automobile lending portfolio. These actions have resulted in a reduction of the loan to deposit ratio to 96 percent at June 30, 2001, down from 121 percent at September 30, 1998 prior to the implementation of balance sheet downsizing initiatives.

Total assets were $70.0 billion at June 30, 2001 compared with $75.7 billion at June 30, 2000 prior to the sale of PNC's residential mortgage banking business. On the same basis, average interest-earning assets were $60.0 billion for the second quarter of 2001 compared with $64.8 billion for the second quarter of 2000. The decrease was primarily due to an $8.7 billion reduction in loans and loans held for sale that resulted from the sale of the residential mortgage banking business and other balance sheet downsizing initiatives, partially offset by a $3.7 billion increase in securities available for sale that primarily resulted from the securitization of certain residential mortgage loans.

Average deposits from continuing operations were $45.4 billion and represented 64 percent of total sources of funds for the second quarter of 2001 compared with $45.5 billion and 66 percent, respectively, in the second quarter of 2000. While total deposits remained essentially unchanged, an increase in transaction deposits of $2.3 billion or 8% was mostly offset by a $2.2 billion decrease in higher-cost retail certificates and wholesale deposits.

Average borrowed funds declined to $14.0 billion for the second quarter of 2001 compared with $19.4 billion for the second quarter of 2000 prior to the sale of PNC's residential mortgage banking business.

Shareholders' equity totaled $6.7 billion at June 30, 2001. The regulatory capital ratios are estimated to be 8.1 percent for leverage, 8.9 percent for tier I and 12.7 percent for total risk-based capital. During the second quarter of 2001, PNC repurchased 1.1 million shares of common stock. Common shares outstanding at June 30, 2001 were 288.5 million.

ASSET QUALITY REVIEW

Nonperforming assets were $390 million at June 30, 2001 compared with $386 million and $353 million at March 31, 2001 and June 30, 2000, respectively. The ratio of nonperforming assets to total loans, loans held for sale and foreclosed assets was .85 percent at June 30, 2001 compared with .81 percent at March 31, 2001 and .67 percent at June 30, 2000. The increase primarily resulted from the downsizing of the loan portfolio.

The allowance for credit losses was $675 million and represented 1.53 percent of period-end loans and 180 percent of nonperforming loans at June 30, 2001. The comparable ratios were 1.48 percent and 201 percent, respectively, at March 31, 2001 and 1.34 percent and 217 percent, respectively, at June 30, 2000. Net charge-offs were $45 million or .40 percent of average loans in the second quarter of 2001. The comparable amounts were $80 million or .65 percent, respectively, in the first quarter of 2001 and $34 million or .27 percent, respectively, in the second quarter of 2000.

  BUSINESS RESULTS

                                           Revenue          Return on
                          Earnings    (taxable-equivalent Assigned Capital
                                             basis)
  Quarter ended June 30
    - dollars in
      millions         2001      2000   2001      2000    2001      2000
  PNC Bank
    Regional Community
     Banking           $177      $152   $558      $514      26%       23%
    Corporate Banking    42        56    192       206      14        18
     Total PNC Bank     219       208    750       720      22        22

  Secured Finance
   PNC Real Estate
    Finance              18        20     53        57      18        21
   PNC Business Credit   14        13     33        29      34        34
    Total Secured
     Finance             32        33     86        86      23        25
      Total Banking     251       241    836       806      22        22

  Asset Management
   and Processing
   PNC Advisors          39        45    190       194      29        32
   BlackRock             26        21    135       113      25        27
   PFPC                  15        10    186       170      29        19
    Total Asset Management
     and Processing      80        76    511       477      27        27
     Total business
      results           331       317  1,347     1,283      23        23
  Other                 (36)      (18)   (58)       (5)
  Results from
   continuing
   operations           295       299  1,289     1,278      18        21
  Discontinued
   operations                      16
      Total
       Consolidated    $295      $315 $1,289    $1,278      18        22

PNC Bank - Regional Community Banking earned $177 million for the second quarter of 2001, an increase of 16 percent compared with the same quarter in 2000 primarily due to strong business growth and net securities gains. Excluding net securities gains in 2001, earnings increased 10 percent primarily driven by growth in transaction deposits, higher noninterest income and aggressive expense management. Corporate Banking's earnings declined to $42 million for the second quarter of 2001 compared with $56 million for the second quarter of 2000. The decrease was primarily attributable to higher credit costs, the impact of continued downsizing and valuation adjustments of other assets.

Secured Finance - PNC Real Estate Finance earned $18 million for the second quarter of 2001 compared with $20 million for the second quarter of 2000. The prior-year quarter benefited from commercial mortgage-backed securitization gains that were not repeated due to weakness in the capital markets. Excluding these gains from the prior year, earnings increased 20 percent primarily due to higher commercial mortgage loan servicing income. PNC Business Credit earned $14 million for the second quarter of 2001, a 10 percent increase compared with the second quarter of 2000 primarily due to an increase in revenue associated with loan growth.

Asset Management and Processing - PNC Advisors earned $39 million for the second quarter of 2001 compared with $45 million during the same period last year. The decrease was primarily due to lower revenue that resulted from weak equity markets. BlackRock earned $26 million for the second quarter of 2001, a 26 percent increase compared with the same period in 2000 primarily resulting from new institutional business. PFPC's earnings were $15 million for the second quarter of 2001 compared with $10 million during the same period in 2000. The increase was primarily due to new and existing client growth. Cash earnings for PFPC, which exclude goodwill amortization, increased 25 percent in the period-to-period comparison to $25 million for the second quarter of 2001.

Total business financial results differ from consolidated results from continuing operations primarily due to differences between management accounting practices and generally accepted accounting principles, divested and exited businesses in the prior year, 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.

RECORDED COMMENTS ON SECOND QUARTER 2001 RESULTS

Recorded comments providing further information regarding the topics addressed in this earnings release will be available for one week, beginning on July 19, by calling 1-888-567-0671. The recorded comments may include our earnings outlook and other forward-looking information and are subject to the cautionary statements set forth below in this press release.

FORWARD-LOOKING STATEMENTS

This press release and other statements by the Corporation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act with respect to the outlook for earnings, revenues and asset quality, other future financial or business performance, strategies and expectations. Forward-looking statements are typically identified by words such as "believe," "expect," "anticipate," "intend," "outlook," "position" and similar expressions, or future or conditional verbs such as "will," "should," "would," and "could." Forward-looking statements are subject to numerous assumptions, risks and uncertainties. Forward-looking statements speak only as of today and PNC assumes no duty to update them.

In addition to factors previously disclosed in PNC's SEC reports (accessible on the SEC's website at http://www.sec.gov/ and on PNC's website at http://www.pnc.com/), the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: (1) adjustments to recorded results of the sale of the residential mortgage banking business after final settlement is completed; (2) changes in economic or industry conditions, the interest rate environment or financial and capital markets, which could result in: a deterioration in credit quality and increased credit losses; an adverse effect on the allowance for loan losses; reduced demand for credit or fee-based products and services, net interest income, value of assets under management and assets serviced, value of debt and equity investments, or value of on-balance sheet and off- balance-sheet assets; or changes in the availability and terms of funding necessary to meet PNC's liquidity needs; (3) relative investment performance of assets under management; (4) the introduction, withdrawal, success and timing of business initiatives and strategies, decisions regarding further reductions in balance sheet leverage, and PNC's inability to realize cost savings or revenue enhancements, implement integration plans and other consequences of mergers, acquisitions, restructurings and divestitures; (5) customer borrowing, repayment, investment and deposit practices and their acceptance of PNC's products and services; (6) the impact of increased competition; (7) the means PNC chooses to redeploy available capital, including the extent and timing of any share repurchases and investments in PNC businesses; (8) the inability to manage risks inherent in PNC's business; (9) the unfavorable resolution of legal proceedings; (10) the denial of insurance coverage for claims made by PNC; (11) an increase in the number of customer or counterparty delinquencies, bankruptcies or defaults that could result in, among other things, increased credit and asset quality risk, a higher loan loss provision and reduced profitability; (12) the impact, extent and timing of technological changes; and (13) actions of the Federal Reserve Board and legislative and regulatory actions and reforms.

The PNC Financial Services Group, Inc., headquartered in Pittsburgh, is one of the nation's largest diversified financial services organizations, providing regional community banking, corporate banking, real estate finance, asset-based lending, wealth management, asset management and global fund services.

                           [TABULAR MATERIAL FOLLOWS]

  Consolidated Financial Highlights

  The PNC Financial Services Group, Inc.

                                   Three months ended    Six months ended
  Dollars in millions, except per           June 30           June 30
   share data                           2001     2000      2001      2000

  FINANCIAL PERFORMANCE
  Revenue
    Net interest income (taxable-
     equivalent basis)                  $569     $550    $1,128    $1,110
    Noninterest income                   720      728     1,421     1,456
    Total revenue                      1,289    1,278     2,549     2,566
  Income from continuing operations      295      299       560       601
  Discontinued operations                          16        40        22
  Income before cumulative effect of
   accounting change                     295      315       600       623
  Cumulative effect of accounting
   change                                                    (5)
    Net income                          $295     $315      $595      $623

  Cash Earnings (a)
   Continuing operations                $324     $328      $619      $659
   Discontinued operations                         16        40        22
   Before cumulative effect of
    accounting change                    324      344       659       681
   Cumulative effect of accounting
    change                                                   (5)
    Net income from cash earnings       $324     $344      $654      $681

  Per common share
   Diluted earnings
    Continuing operations              $1.00    $1.01     $1.89     $2.02
    Discontinued operations                       .05       .14       .07
    Before cumulative effect of
     accounting change                  1.00     1.06      2.03      2.09
    Cumulative effect of accounting
     change                                                (.02)
     Net income                        $1.00    $1.06     $2.01     $2.09
   Diluted cash earnings (a)
    Continuing operations              $1.10    $1.10     $2.10     $2.21
    Discontinued operations                       .06       .14       .08
    Before cumulative effect of
     accounting change                  1.10     1.16      2.24      2.29
    Cumulative effect of accounting
     change                                                (.02)
     Net income from cash earnings     $1.10    $1.16     $2.22     $2.29

  Cash dividends declared              $0.48    $0.45     $0.96     $0.90

  SELECTED RATIOS
  From continuing operations
  Return on
     Average common shareholders'
      equity                           18.13 %  20.77 %   17.36 %   21.03 %
     Average assets                     1.67     1.74      1.58      1.75
  Net interest margin                   3.76     3.63      3.70      3.65
  Noninterest income to total revenue  55.86    56.96     55.75     56.74
  Efficiency (b)                       57.65    57.29     57.78     57.57
  From net income
  Return on
     Average common shareholders'
      equity                           18.13 %  21.91 %   18.47 %   21.81 %
     Average assets                     1.67     1.68      1.65      1.67
  Net interest margin                   3.76     3.41      3.64      3.43
  Noninterest income to total revenue  55.86    58.92     56.51     58.60
  Efficiency (c)                       57.65    55.70     56.87     56.53

   (a) Excludes amortization of goodwill.
   (b) Excludes amortization and distributions on capital securities.
   (c) Excludes amortization, distributions on capital securities and
       residential mortgage banking risk management activities.


  Consolidated Financial Highlights

  The PNC Financial Services Group, Inc.



  Dollars in millions,    June 30  March 31   Dec. 31   Sept. 30   June 30
  except per share data      2001      2001      2000       2000      2000

  BALANCE SHEET DATA
  Assets                  $70,013   $70,966   $69,844    $69,884   $68,885
  Earning assets           58,326    60,548    59,373     60,142    59,334
  Loans, net of unearned
   income                  44,167    45,626    50,601     49,791    50,281
  Securities available for
   sale                    11,258    11,976     5,902      6,490     5,315
  Loans held for sale       1,613     1,765     1,655      2,127     2,305
  Investment in
   discontinued operations                       356        347       292
  Deposits                 45,826    47,189    47,664     47,494    46,381
  Borrowed funds           12,119    12,279    11,718     12,299    13,028
  Shareholders' equity      6,748     6,781     6,656      6,383     6,157
  Common shareholders'
   equity                   6,532     6,470     6,344      6,071     5,844
  Book value per common
   share                    22.60     22.39     21.88      21.01     20.22
  Loans to deposits           96 %      97 %     106 %      105 %     108 %

  CAPITAL RATIOS
  Leverage                   8.1 %     7.8 %     8.0 %      6.9 %     6.7 %
  Common shareholders'
   equity to total assets    9.33      9.12      9.08       8.69      8.48

  ASSET QUALITY RATIOS
  Nonperforming assets to
   total loans, loans held
   for sale and foreclosed
   assets                    .85 %     .81 %     .71 %      .68 %     .67 %
  Allowance for credit
   losses to total loans     1.53      1.48      1.33       1.36      1.34
  Allowance for credit
   losses to nonperforming
   loans                   180.48    200.89    208.98     219.16    217.04
  Net charge-offs to
   average loans  (For the
   three months ended)        .40       .65       .32        .24       .27



                                    Three months ended  Six months ended
  ANALYSIS OF 2001 RESULTS               June 30            June 30
                                                 Per              Per
  In millions, except per               Net  Diluted     Net  Diluted
   share data                        Income    Share  Income    Share

  Net income                           $295    $1.00    $595    $2.01
  Cumulative effect of
   accounting change                                       5      .02
  Results before cumulative
   effect of accounting
   change                               295     1.00     600     2.03
  Venture capital activities             22      .08      49      .17
                                        317     1.08     649     2.20
  Discontinued operations                                (40)    (.14)
  Loans designated for exit                               27      .09
  Severance costs                                          5      .02
  Adjusted results                     $317    $1.08    $641    $2.17


  Consolidated Statement of Income

  The PNC Financial Services Group, Inc.

                              Three months ended       Six months ended
  Dollars in millions,               June 30                June 30
   except per share data           2001     2000          2001     2000
  Interest Income
  Loans and fees on loans          $839   $1,009        $1,820   $1,993
  Securities available for sale     177       97           299      191
  Loans held for sale                31       52            68      116
  Other                              32       22            64       41
     Total interest income        1,079    1,180         2,251    2,341
  Interest Expense
  Deposits                          334      397           731      766
  Borrowed funds                    180      238           401      475
     Total interest expense         514      635         1,132    1,241
     Net interest income            565      545         1,119    1,100
  Provision for credit losses        45       35           125       66
     Net interest income
      less provision
      for credit losses             520      510           994    1,034
  Noninterest Income
  Asset management                  214      196           437      382
  Fund servicing                    182      164           363      319
  Service charges on deposits        54       50           104      100
  Brokerage                          55       60           109      131
  Consumer services                  58       51           113       98
  Corporate services                 76       80           152      162
  Equity management                 (30)      48           (69)     135
  Net securities gains (losses)      17                     46       (3)
  Other                              94       79           166      132
     Total noninterest income       720      728         1,421    1,456
  Noninterest Expense
  Staff expense                     418      396           839      807
  Net occupancy                      54       48           107      101
  Equipment                          60       55           117      111
  Amortization                       27       28            53       56
  Marketing                          16       19            25       32
  Distributions on
   capital securities                16       17            33       33
  Other                             198      217           390      432
     Total noninterest expense      789      780         1,564    1,572
  Income from continuing
   operations before income taxes   451      458           851      918
  Income taxes                      156      159           291      317
     Income from continuing
      operations                    295      299           560      601
  Income from discontinued operations
   (less applicable income
     taxes of $10, $0, and $15)               16            40       22
  Net income before cumulative effect
   of accounting change             295      315           600      623
  Cumulative effect of accounting
   change (less applicable income taxes
   of $2)                                                   (5)
     Net income                    $295     $315          $595     $623

  Earnings Per Common Share
  Continuing operations
    Basic                         $1.01    $1.01         $1.91    $2.03
    Diluted                        1.00     1.01          1.89     2.02
  Net income
    Basic                         $1.01    $1.07         $2.03    $2.11
    Diluted                        1.00     1.06          2.01     2.09
  Cash Dividends Declared Per Common
   Share                            .48      .45           .96      .90
  Average Common Shares Outstanding
    Basic                           288      290           289      291
    Diluted                         291      292           292      293


  Details of Net Interest Income

  The PNC Financial Services Group, Inc.

  Net Interest Income
                                    Three months ended   Six months ended
  Taxable-equivalent basis                June 30            June 30
  In millions                          2001      2000      2001      2000
  Interest income
     Loans and fees on loans           $844    $1,013    $1,829    $2,001
     Securities available for sale      178        98       300       193
     Loans held for sale                 31        52        68       116
     Other                               30        22        63        41
        Total interest income         1,083     1,185     2,260     2,351
  Interest expense
     Deposits                           334       397       731       766
     Borrowed funds                     180       238       401       475
        Total interest expense          514       635     1,132     1,241
          Net interest income          $569      $550    $1,128    $1,110

  Lending revenue to total revenue       23 %      23 %      23 %      23 %

  Net Interest Income by Quarter

  Taxable-equivalent basis
  Three months ended - in  June 30 March 31   Dec. 31  Sept. 30   June 30
   millions                   2001     2001      2000      2000      2000
  Interest income
     Loans and fees on loans  $844     $985    $1,031    $1,028    $1,013
     Securities available
      for sale                 178      122        97        99        98
     Loans held for sale        31       37        41        47        52
     Other                      30       33        26        30        22
        Total interest
         income              1,083    1,177     1,195     1,204     1,185
  Interest expense
     Deposits                  334      397       453       434       397
     Borrowed funds            180      221       204       236       238
        Total interest
         expense               514      618       657       670       635
          Net interest
           income             $569     $559      $538      $534      $550

  Lending revenue to total
   revenue                      23 %     22 %      24 %      24 %      23 %


  Details of Net Interest Margin

  The PNC Financial Services Group, Inc.

  Net Interest Margin
                              Three months ended       Six months ended
                                      June 30                June 30
  Taxable-equivalent basis         2001     2000          2001     2000
  Average yields/rates
     Yield on earning assets
        Loans and fees on loans    7.46 %   8.03 %        7.72 %   7.95 %
        Securities available
         for sale                  6.07     6.50          6.06     6.35
        Loans held for sale        7.06     8.11          7.19     7.76
        Other                      7.94     7.01          8.03     6.99
           Total yield on earning
            assets                 7.19     7.86          7.44     7.76
     Rate on interest-bearing
      liabilities
        Deposits                   3.60     4.30          3.92     4.17
        Borrowed funds             5.09     6.54          5.63     6.33
           Total rate on interest-
            bearing liabilities    4.01     4.92          4.38     4.79
           Interest rate spread    3.18     2.94          3.06     2.97
     Impact of noninterest-bearing
      sources                       .58      .69           .64      .68
           Net interest margin     3.76 %   3.63 %        3.70 %   3.65 %

  Net Interest Margin by Quarter

  Taxable-equivalent basis      June 30 March 31 Dec. 31 Sept. 30 June 30
  Three months ended               2001     2001    2000     2000    2000
  Average yields/rates
     Yield on earning assets
        Loans and fees on loans    7.46 %   7.96 %  8.16 %   8.13 %  8.03 %
        Securities available for
         sale                      6.07     6.08    6.53     6.41    6.50
        Loans held for sale        7.06     7.31    8.32     8.77    8.11
        Other                      7.94     7.20    7.80     8.05    7.01
           Total yield on earning
            assets                 7.19     7.67    7.99     7.98    7.86
     Rate on interest-bearing
      liabilities
        Deposits                   3.60     4.22    4.66     4.58    4.30
        Borrowed funds             5.09     6.15    6.83     6.85    6.54
           Total rate on interest-
            bearing liabilities    4.01     4.75    5.16     5.18    4.92
           Interest rate spread    3.18     2.92    2.83     2.80    2.94
     Impact of noninterest-bearing
      sources                       .58      .70     .77      .74     .69
           Net interest margin     3.76 %   3.62 %  3.60 %   3.54 %  3.63 %


  Noninterest Income and Expense by Quarter

  The PNC Financial Services Group, Inc.

  Noninterest Income by Quarter

  Three months ended           June 30 March 31  Dec. 31 Sept. 30  June 30
   - in millions                  2001     2001     2000     2000     2000
  Asset management                $214     $223     $219     $208     $196
  Fund servicing                   182      181      167      168      164
  Service charges on deposits       54       50       56       50       50
  Brokerage                         55       54       57       61       60
  Consumer services                 58       55       56       55       51
  Corporate services                76       76       94       86       80
  Equity management                (30)     (39)       1       (3)      48
  Net securities gains              17       29       16        7
  Other                             94       72       69       68       79
     Total noninterest income     $720     $701     $735     $700     $728

  Noninterest income to total
   revenue                        55.86 % 55.63 %  57.74 %  56.73 %  56.96 %


  Noninterest Expense by Quarter

  Three months ended            June 30 March 31  Dec. 31 Sept. 30 June 30
   - in millions                   2001     2001     2000     2000    2000
  Staff expense                    $418     $421     $410     $399    $396
  Net occupancy                      54       53       52       50      48
  Equipment                          60       57       59       54      55
  Amortization                       27       26       27       27      28
  Marketing                          16        9       22       16      19
  Distributions on capital
   securities                        16       17       17       17      17
  Other                             198      192      165      184     217
     Total noninterest expense     $789     $775     $752     $747    $780

  Efficiency (a)                  57.65 %  57.91 %  55.44 %  56.79 % 57.29 %



   (a) Excludes amortization and distributions on capital securities.

  Consolidated Balance Sheet

  The PNC Financial Services Group, Inc.


                                           June 30 December 31     June 30
  In millions, except par value               2001        2000        2000
  Assets
  Cash and due from banks                   $3,659      $3,662      $3,119
  Short-term investments                       793       1,151       1,377
  Loans held for sale                        1,613       1,655       2,305
  Securities available for sale             11,258       5,902       5,315
  Loans, net of unearned income of
   $1,073, $999 and $732                    44,167      50,601      50,281
     Allowance for credit losses              (675)       (675)       (675)
     Net loans                              43,492      49,926      49,606
  Goodwill and other amortizable assets      2,405       2,468       2,497
  Investment in discontinued operations                    356         292
  Other                                      6,793       4,724       4,374
     Total assets                          $70,013     $69,844     $68,885

  Liabilities
  Deposits
     Noninterest-bearing                    $9,009      $8,490      $8,866
     Interest-bearing                       36,817      39,174      37,515
        Total deposits                      45,826      47,664      46,381
  Borrowed funds
     Federal funds purchased                 1,444       1,445         882
     Repurchase agreements                     569         607         504
     Bank notes and senior debt              4,496       6,110       6,878
     Federal Home Loan Bank borrowings       2,464         500       1,339
     Subordinated debt                       2,349       2,407       2,426
     Other borrowed funds                      797         649         999
        Total borrowed funds                12,119      11,718      13,028
  Other                                      4,472       2,958       2,471
     Total liabilities                      62,417      62,340      61,880

  Mandatorily redeemable capital
   securities of subsidiary trusts             848         848         848

  Shareholders' Equity
  Preferred stock                                5           7           7
  Common stock - $5 par value
     Authorized 800, 450 and 450 shares
     Issued 353 shares                       1,764       1,764       1,764
  Capital surplus                            1,257       1,303       1,287
  Retained earnings                          7,010       6,736       6,358
  Deferred benefit expense                     (25)        (25)        (18)
  Accumulated other comprehensive loss
   from continuing operations                  (60)        (43)       (138)
  Accumulated other comprehensive loss
   from discontinued operations                            (45)       (116)
  Common stock held in treasury at
   cost: 64, 63 and 64 shares               (3,203)     (3,041)     (2,987)
     Total shareholders' equity              6,748       6,656       6,157
     Total liabilities, capital
      securities and shareholders'
      equity                               $70,013     $69,844     $68,885


  Consolidated Average Balance Sheet Data

  The PNC Financial Services Group, Inc.


                                     Three months ended  Six months ended
                                             June 30           June 30
  In millions                             2001     2000     2001     2000
  Assets
  Interest-earning assets
     Loans held for sale                $1,720   $2,577   $1,862   $2,948
     Securities available for sale      11,710    6,009    9,895    6,068
     Loans, net of unearned income
        Consumer                         9,096    9,209    9,090    9,228
        Residential mortgage             8,459   12,571   10,554   12,577
        Commercial                      20,271   22,042   20,575   21,917
        Commercial real estate           2,572    2,682    2,576    2,690
        Lease financing                  4,149    3,049    4,024    3,004
        Other                              459      676      490      682
        Total loans, net of unearned
         income                         45,006   50,229   47,309   50,098
     Other                               1,562    1,276    1,592    1,194
        Total interest-earning assets   59,998   60,091   60,658   60,308
  Noninterest-earning assets            10,718    8,566   10,589    8,192
  Investment in discontinued
   operations                                       448      103      430
        Total assets                   $70,716  $69,105  $71,350  $68,930

  Liabilities
  Interest-bearing liabilities
     Deposits
        Demand and money market        $20,944  $18,549  $20,707  $18,125
        Savings                          1,936    2,107    1,928    2,123
        Retail certificates of deposit  12,662   14,403   13,190   14,497
        Other time                         537      641      551      639
        Deposits in foreign offices      1,096    1,483    1,248    1,486
        Total interest-bearing
         deposits                       37,175   37,183   37,624   36,870
     Borrowed funds                     14,030   14,422   14,201   14,877
        Total interest-bearing
         liabilities                    51,205   51,605   51,825   51,747
  Noninterest-bearing deposits           8,229    8,357    8,210    8,028
  Other                                  3,777    2,290    3,803    2,341
        Total liabilities               63,211   62,252   63,838   62,116

  Mandatorily redeemable capital
   securities of subsidiary trusts         848      848      848      848

  Shareholders' Equity                   6,657    6,005    6,664    5,966
        Total liabilities, capital
         securities and shareholders'
         equity                        $70,716  $69,105  $71,350  $68,930
  Common Shareholders' Equity           $6,437   $5,692   $6,398   $5,653


  Consolidated Average Balance Sheet Data by Quarter

  The PNC Financial Services Group, Inc.

  Three months ended - in      June 30 March 31  Dec. 31 Sept. 30  June 30
   millions                       2001     2001     2000     2000     2000
  Assets
  Interest-earning assets
     Loans held for sale        $1,720   $2,005   $1,991   $2,151   $2,577
     Securities available for
      sale                      11,710    8,061    5,928    6,179    6,009
     Loans, net of unearned
      income
        Consumer                 9,096    9,085    9,081    9,174    9,209
        Residential mortgage     8,459   12,673   12,838   12,405   12,571
        Commercial              20,271   20,882   21,109   21,800   22,042
        Commercial real estate   2,572    2,580    2,670    2,688    2,682
        Lease financing          4,149    3,897    3,639    3,238    3,049
        Other                      459      520      591      646      676
        Total loans, net of
         unearned income        45,006   49,637   49,928   49,951   50,229
     Other                       1,562    1,831    1,322    1,445    1,276
        Total interest-earning
         assets                 59,998   61,534   59,169   59,726   60,091
  Noninterest-earning assets    10,718   10,251    9,214    8,857    8,566
  Investment in discontinued
   operations                               207      570      515      448
        Total assets           $70,716  $71,992  $68,953  $69,098  $69,105

  Liabilities
  Interest-bearing liabilities
     Deposits
        Demand and money
         market                $20,944  $20,468  $19,762  $18,914  $18,549
        Savings                  1,936    1,919    1,937    2,020    2,107
        Retail certificates of
         deposit                12,662   13,724   14,795   14,776   14,403
        Other time                 537      565      587      619      641
        Deposits in foreign
         offices                 1,096    1,402    1,579    1,342    1,483
        Total interest-bearing
         deposits               37,175   38,078   38,660   37,671   37,183
     Borrowed funds             14,030   14,375   11,738   13,518   14,422
        Total interest-bearing
         liabilities            51,205   52,453   50,398   51,189   51,605
  Noninterest-bearing deposits   8,229    8,190    8,304    8,239    8,357
  Other                          3,777    3,830    2,978    2,637    2,290
        Total liabilities       63,211   64,473   61,680   62,065   62,252

  Mandatorily redeemable
   capital securities of
   subsidiary trusts               848      848      848      848      848

  Shareholders' Equity           6,657    6,671    6,425    6,185    6,005
        Total liabilities,
         capital securities
         and shareholders'
         equity                $70,716  $71,992  $68,953  $69,098  $69,105
  Common Shareholders' Equity   $6,437   $6,360   $6,113   $5,873   $5,692

  Loan Portfolio and Allowance For Credit Losses by Quarter

  The PNC Financial Services Group, Inc.

  Loan Portfolio
                               June 30 March 31  Dec. 31 Sept. 30  June 30
  Period ended - in millions      2001     2001     2000     2000     2000
  Consumer                      $9,114   $9,049   $9,133   $9,174   $9,213
  Residential mortgage           8,219    8,806   13,264   12,563   12,470
  Commercial                    19,552   20,676   21,207   21,198   22,140
  Commercial real estate         2,557    2,590    2,583    2,676    2,687
  Lease financing                5,354    5,080    4,845    4,498    3,834
  Other                            444      487      568      646      669
     Total loans                45,240   46,688   51,600   50,755   51,013
     Unearned income            (1,073)  (1,062)    (999)    (964)    (732)
     Total loans, net of
      unearned income          $44,167  $45,626  $50,601  $49,791  $50,281


  Allowance For Credit Losses

  Three months ended -         June 30 March 31  Dec. 31 Sept. 30 June 30
   in millions                    2001     2001     2000     2000    2000
  Beginning balance               $675     $675     $675     $675    $674
  Charge-offs
     Consumer                      (10)     (10)     (12)     (11)    (11)
     Residential mortgage           (1)               (4)      (1)     (1)
     Commercial                    (41)     (78)     (35)     (27)    (30)
     Commercial real estate                           (1)      (2)
     Lease financing                (5)      (3)      (3)      (2)     (1)
        Total charge-offs          (57)     (91)     (55)     (43)    (43)

  Recoveries
     Consumer                        4        5        6        5       5
     Residential mortgage                              1                1
     Commercial                      6        6        7        4       3
     Commercial real estate                                     4
     Lease financing                 2                 1
        Total recoveries            12       11       15       13       9

  Net charge-offs
     Consumer                       (6)      (5)      (6)     (6)      (6)
     Residential mortgage           (1)               (3)     (1)
     Commercial                    (35)     (72)     (28)    (23)     (27)
     Commercial real estate                           (1)      2
     Lease financing                (3)      (3)      (2)     (2)      (1)
        Total net charge-offs      (45)     (80)     (40)    (30)     (34)

  Provision for credit losses       45       80       40      30       35

     Ending balance               $675     $675     $675    $675     $675


  Nonperforming Assets by Quarter

  The PNC Financial Services Group, Inc.

  Nonperforming Assets by Type

                               June 30 March 31  Dec. 31 Sept. 30  June 30
  Period ended - in millions      2001     2001     2000     2000     2000
  Nonaccrual loans
     Commercial                   $334     $296     $312     $261     $259
     Commercial real estate         20       21        3       16       12
     Residential mortgage            4        4        4       26       34
     Consumer                        4        3        2        3        3
     Lease financing                12        6        2        2        3
        Total nonaccrual loans     374      330      323      308      311
        Troubled debt restructured
         loans                                6
     Total nonperforming loans     374      336      323      308      311

  Foreclosed and other assets
     Commercial real estate          2        2        3        4        4
     Residential mortgage            3        7        8        8        9
     Other                          11       41       38       34       29
        Total foreclosed and other
         assets                     16       50       49       46       42
           Total nonperforming
            assets                $390     $386     $372     $354     $353


  Nonperforming Assets by Business

                               June 30 March 31  Dec. 31 Sept. 30 June 30
  Period ended - in millions      2001     2001     2000     2000    2000
  PNC Bank
       Regional Community Banking  $51      $61      $47      $82     $96
       Corporate Banking           258      210      219      156     153
  Secured Finance
       PNC Real Estate Finance      23       25        9       22      19
       PNC Business Credit          38       33       36       32      22
  PNC Advisors                       3        4        2        6       8
  Other                             17       53       59       56      55
           Total nonperforming
            assets                $390     $386     $372     $354    $353


  Change in Nonperforming Assets

  In millions                                                2001
  March 31                                                   $386
  Transferred from accrual                                    200
  Principal reductions                                        (58)
  Sales                                                       (93)
  Charge-offs and other                                       (45)
      June 30                                                $390

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SOURCE: The PNC Financial Services Group, Inc.

Contact: MEDIA: R. Jeep Bryant, 412-762-4550,
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Group

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