PITTSBURGH, April 16, 2014 /PRNewswire/ -- The PNC Financial Services Group, Inc. (NYSE: PNC) today reported net income of $1.1 billion, or $1.82 per diluted common share, for the first quarter of 2014 compared with net income of $1.1 billion, or $1.87 per diluted common share, for the fourth quarter of 2013 and $995 million, or $1.74 per diluted common share, for the first quarter of 2013.

"PNC had a successful first quarter - our fourth straight quarter with net income of $1 billion or more," said William S. Demchak, president and chief executive officer. "We grew loans and deposits, and we lowered expenses even as we continue to make investments across our businesses to enhance the customer experience and become more efficient. Based on the strength of our performance and balance sheet, we were pleased to announce plans to return more capital to our shareholders through a 9 percent increase in our quarterly dividend and reinstituted share repurchase programs."

Income Statement Highlights


    --  First quarter results were driven by loan and deposit growth,
        well-controlled expenses and credit quality improvement as well as
        seasonal trends.
    --  Net interest income of $2.2 billion for the first quarter declined $71
        million, or 3 percent, compared with the fourth quarter reflecting fewer
        days in the quarter and lower purchase accounting accretion.
    --  Noninterest income of $1.6 billion decreased $225 million, or 12
        percent, compared with the fourth quarter.
        --  Lower benefit from release of reserves for residential mortgage
            repurchase obligations and first quarter seasonal declines impacted
            fee income.
    --  Noninterest expense of $2.3 billion decreased $250 million, or 10
        percent, from fourth quarter reflecting disciplined expense management
        and seasonality.
    --  Provision for credit losses declined to $94 million for the first
        quarter compared with $113 million for the fourth quarter as overall
        credit quality continued to improve.

Balance Sheet Highlights


    --  Loans grew $2.6 billion, or 1 percent, to $198 billion at March 31, 2014
        compared with December 31, 2013.
        --  Total commercial lending grew $3.6 billion, or 3 percent, primarily
            in real estate, corporate banking and business credit.
        --  Total consumer lending decreased $1.0 billion due to lower home
            equity, residential mortgage and education loans as well as seasonal
            declines in credit card loans partially offset by growth in
            automobile loans.
    --  Overall credit quality continued to improve during the first quarter of
        2014 compared with the fourth quarter.
        --  Nonperforming assets of $3.3 billion at March 31, 2014 declined $153
            million, or 4 percent.
        --  Net charge-offs were stable at $186 million for the first quarter
            and $189 million for fourth quarter 2013.
    --  Deposits grew $1.5 billion, or 1 percent, to $222 billion at March 31,
        2014 compared with December 31, 2013.
    --  PNC continued to enhance its liquidity position in preparation for
        implementation of new short-term liquidity regulatory standards as
        reflected in higher deposit balances maintained with the Federal Reserve
        Bank and investment securities and borrowed funds activity.
    --  PNC's well-positioned balance sheet remained core funded with a loans to
        deposits ratio of 89 percent at March 31, 2014.
    --  PNC took actions reflecting its strong capital position.
        --  In April 2014 the board of directors raised the quarterly cash
            dividend on common stock to 48 cents per share, an increase of 4
            cents per share, or 9 percent, effective with the May dividend.
        --  PNC announced share repurchase programs of up to $1.5 billion for
            the four quarter period beginning in the second quarter of 2014
            under its existing common stock repurchase program authorization.
    --  Transitional Basel III common equity Tier 1 capital ratio, calculated
        using the regulatory capital methodology applicable to PNC during 2014,
        was an estimated 10.8 percent at March 31, 2014.
    --  Pro forma fully phased-in Basel III common equity Tier 1 capital ratio
        increased to an estimated 9.7 percent at March 31, 2014 from 9.4 percent
        at December 31, 2013 based on the standardized approach rules.




    Earnings Summary

              In millions, except per share
              data                           1Q14         4Q13         1Q13


             Net income                           $1,060       $1,074         $995

              Diluted earnings per common
              share                                $1.82        $1.87        $1.74

              Average diluted common shares
              outstanding                            539          535          528

             Return on average assets               1.35%        1.36%        1.33%

              Return on average common
              equity                               10.36%       10.71%       10.58%

              Book value per common share
              Period end                          $73.73       $72.07       $68.10

              Tangible book value per common
              share (non-GAAP)    Period
              end                                 $56.33       $54.57       $50.30

              Cash dividends declared per
              common share                          $.44         $.44         $.40

The Consolidated Financial Highlights accompanying this news release include additional information regarding reconciliations to reported amounts of non-GAAP financial measures, including reconciliations of tangible book value to book value per common share and business segment income to net income. Certain prior period amounts have been updated to reflect first quarter 2014 adoption of Accounting Standards Update 2014-01 related to low income housing tax credits. The impact of adoption was not material to earnings. Reference to core net interest income is to total net interest income less purchase accounting accretion, which consists of scheduled accretion and excess cash recoveries, as detailed in the Consolidated Financial Highlights. Information in this news release including the financial tables is unaudited. See the notes and other information in the Consolidated Financial Highlights.


    CONSOLIDATED REVENUE REVIEW


    Revenue                        Change Change

                                                                                         1Q14 vs   1Q14 vs

               In millions                              1Q14        4Q13            1Q13  4Q13      1Q13


               Net interest income               $2,195      $2,266      $2,389  (3)%         (8)%

               Noninterest income                 1,582       1,807       1,566 (12)%           1%


               Total revenue                     $3,777      $4,073      $3,955  (7)%         (5)%

Total revenue for the first quarter of 2014 decreased $296 million compared with the fourth quarter of 2013 and $178 million compared with the first quarter of 2013. The declines were due to lower noninterest income and net interest income in the linked quarter comparison and lower net interest income compared with first quarter 2013.

Net interest income for the first quarter of 2014 decreased $71 million compared with the fourth quarter and $194 million compared with first quarter 2013 as both core net interest income and purchase accounting accretion declined. Core net interest income decreased compared with the fourth quarter in part due to fewer days in the first quarter and, in both comparisons, was driven by lower yields on loans and securities and higher borrowed funds balances somewhat offset by loan growth and the impact of lower rates paid on deposits and borrowed funds. The decrease in purchase accounting accretion resulted from lower scheduled accretion and, in the comparison with first quarter 2013, lower excess cash recoveries on purchased impaired loans. The net interest margin of 3.26 percent for the first quarter of 2014 decreased 12 basis points compared with the fourth quarter of 2013 and 55 basis points compared with first quarter 2013 primarily due to lower interest-earning asset yields and the decline in purchase accounting accretion. The decrease in the margin also included the impact of higher deposit balances maintained with the Federal Reserve Bank and other balance sheet activity in light of new short-term liquidity regulatory standards.


    Noninterest Income              Change Change

                                                                         1Q14  vs  1Q14  vs

                       In millions                  1Q14    4Q13   1Q13      4Q13      1Q13


                       Asset management             $364    $364   $308         -             18%

                       Consumer services             290     327    296      (11)%           (2)%

                       Corporate services            301     301    277         -              9%

                        Residential
                        mortgage                     161     271    234      (41)%          (31)%

                        Service charges on
                        deposits                     147     158    136       (7)%             8%

                        Net gains on sales
                        of securities                 10       3     14       233%          (29)%

                        Net other-than-
                        temporary
                        impairments                   (2)      -    (10)       NM             80%

                       Other                         311     383    311      (19)%             -


                                                  $1,582  $1,807 $1,566      (12)%             1%

Noninterest income for the first quarter of 2014 decreased $225 million compared with the fourth quarter of 2013 reflecting a lower benefit from release of reserves for residential mortgage repurchase obligations and first quarter seasonal declines in fee income partially offset by a gain on sale of Visa shares in the first quarter.

Asset management revenue was unchanged from the fourth quarter reflecting stable equity markets. Consumer service fees decreased $37 million primarily as a result of seasonally lower volumes of customer-initiated transactions. Corporate service fees were consistent with fourth quarter as higher net commercial mortgage servicing rights valuations were largely offset by seasonal declines in merger and acquisition advisory fees. Residential mortgage banking noninterest income decreased $110 million due to a lower benefit from release of reserves for residential mortgage repurchase obligations of $19 million in first quarter 2014 compared with $124 million in the fourth quarter, which was largely attributable to fourth quarter settlements with FNMA and FHLMC. Service charges on deposits declined $11 million reflecting seasonally lower activity. Other noninterest income decreased $72 million due to lower revenue associated with private equity investments, credit valuations for customer-related derivatives activities and loan sales partially offset by a first quarter pretax gain of $62 million on the sale of 1 million Visa Class B common shares. At March 31, 2014, PNC's remaining investment in Visa Class B common shares was approximately 9 million shares with a carrying value of approximately $.1 billion and fair value of approximately $.9 billion.

Noninterest income for the first quarter of 2014 increased $16 million compared with the first quarter of 2013. Asset management revenue grew $56 million driven by increases in the equity markets and sales production. Consumer service fees declined $6 million as growth in customer-initiated transaction volumes compared with first quarter 2013 was more than offset primarily by lower insurance-related activity. Corporate service fees increased $24 million principally due to higher merger and acquisition advisory fees. Residential mortgage banking revenue decreased $73 million reflecting lower loan sales revenue from lower origination volume and lower net hedging gains on residential mortgage servicing rights partially offset by a benefit from release of reserves for residential mortgage repurchase obligations in first quarter 2014 and higher servicing fees. Service charges on deposits increased $11 million from growth in customer activity. Other noninterest income was unchanged as the gain on sale of Visa Class B common shares in 2014 was substantially offset by lower revenue associated with credit valuations for customer-related derivatives activities and loan sales.


    CONSOLIDATED EXPENSE REVIEW


    Noninterest Expense                                           Change    Change

                                                               1Q14 vs   1Q14 vs

                              In millions   1Q14   4Q13   1Q13    4Q13      1Q13


                              Personnel   $1,080 $1,207 $1,169    (11)%            (8)%

                              Occupancy      218    211    211       3%              3%

                              Equipment      201    197    183       2%             10%

                              Marketing       52     66     45    (21)%             16%

                              Other          713    833    760    (14)%            (6)%


                                          $2,264 $2,514 $2,368    (10)%            (4)%

Noninterest expense for the first quarter of 2014 decreased $250 million compared with the fourth quarter of 2013 reflecting overall disciplined expense management, seasonality and the impact of a fourth quarter contribution to the PNC Foundation partially offset by higher legal accruals associated with the residential mortgage banking business. Personnel expense declined as a result of reduced incentive compensation associated with seasonally lower business activity, and lower pension and benefits costs.

Noninterest expense for the first quarter of 2014 decreased $104 million compared with the first quarter of 2013 reflecting a decline in personnel expense for lower headcount and benefits costs and the impact of a first quarter 2013 contribution to the PNC Foundation. Decreases were partially offset by higher legal accruals associated with the residential mortgage banking business and investments in technology.

The effective tax rate was 25.3 percent for the first quarter of 2014 compared with 25.7 percent for the fourth quarter of 2013 and 26.4 percent for the first quarter of 2013.

CONSOLIDATED BALANCE SHEET REVIEW

Total assets were $323.4 billion at March 31, 2014 compared with $320.2 billion at December 31, 2013 and $300.7 billion at March 31, 2013. In both comparisons, the increase was driven by loan growth and higher deposit balances maintained with the Federal Reserve Bank in light of new short-term liquidity regulatory standards.


    Loans                                                Change           Change

                                                                                                         3/31/14 vs  3/31/14 vs

          In billions        3/31/2014        12/31/2013        3/31/2013        12/31/13        3/31/13


          Commercial lending           $120.8                      $117.2                 $110.3                  3%            10%

          Consumer lending               77.4                        78.4                   76.2                (1)%             2%


          Total loans                  $198.2                      $195.6                 $186.5                  1%             6%


           For the quarter
           ended:

          Average loans                $196.6                      $194.6                 $186.1                  1%             6%

Total loans grew $2.6 billion as of March 31, 2014 compared with December 31, 2013. Commercial lending increased $3.6 billion during the first quarter of 2014 primarily in real estate, corporate banking and business credit. Consumer lending decreased $1.0 billion due to lower home equity, residential mortgage and education loans as well as seasonal declines in credit card loans partially offset by growth in automobile loans. Average loans for the first quarter of 2014 increased $2.0 billion over fourth quarter from growth in average commercial and commercial real estate loans of $2.4 billion somewhat offset by a decrease of $.4 billion in average residential real estate and consumer loans. First quarter 2014 period end and average loans increased $11.7 billion and $10.5 billion, respectively, compared with first quarter 2013 primarily due to commercial, commercial real estate and consumer loan growth.


    Investment Securities          Change           Change

                                                                                                            3/31/14 vs      3/31/14 vs

                          In
                          billions        3/31/2014        12/31/2013 3/31/2013 12/31/13       3/31/13


                          At
                          quarter
                          end                        $58.6                $60.3          $59.4         (3)%            (1)%

                          Average
                          for the
                          quarter
                          ended                      $58.4                $57.4          $58.5           2%              -

Investment securities balances at March 31, 2014 decreased $1.7 billion compared with December 31, 2013 due to net payments and maturities. Average balances for the first quarter increased $1.0 billion compared with the fourth quarter reflecting the full quarter impact of Treasury securities purchased prior to year end to enhance PNC's liquidity position in light of new short-term liquidity regulatory standards.

The available for sale investment securities balance included a net unrealized pretax gain of $.9 billion at March 31, 2014 compared with $.6 billion at December 31, 2013 and $1.6 billion at March 31, 2013, representing the difference between fair value and amortized cost. The decrease in the net unrealized pretax gain compared with first quarter 2013 was attributable to an increase in market interest rates.

Interest-earning deposits with banks were $14.9 billion at March 31, 2014, an increase of $2.7 billion compared with December 31, 2013 and $13.3 billion compared with March 31, 2013 as PNC maintained higher balances on deposit with the Federal Reserve Bank in preparation for implementation of new short-term liquidity regulatory standards.


    Deposits                Change    Change

                                                                                                 3/31/14 vs  3/31/14 vs

             In billions           3/31/2014        12/31/2013 3/31/2013 12/31/13        3/31/13


             Transaction deposits            $188.1               $186.4          $175.4                  1%              7%

             Other deposits                    34.3                 34.5            36.2                (1)%            (5)%


             Total deposits                  $222.4               $220.9          $211.6                  1%              5%


              For the quarter
              ended:

             Average deposits                $218.4               $217.1          $209.7                  1%              4%

Total deposits at March 31, 2014 increased $1.5 billion compared with December 31, 2013 and average deposits increased $1.3 billion in the first quarter compared with the fourth quarter. Growth was driven by consumer transaction deposits, which included higher interest-bearing demand deposits, partially offset by seasonal decreases in noninterest-bearing demand deposits. First quarter 2014 period end and average deposits increased $10.8 billion and $8.7 billion, respectively, compared with first quarter 2013 as growth in both consumer and commercial transaction deposits from higher money market and noninterest-bearing and interest-bearing demand deposits was partially offset by lower retail certificates of deposit due to runoff of maturing accounts.


    Borrowed Funds         Change    Change

                                                                                              3/31/14 vs  3/31/14 vs

                   In billions    3/31/2014       12/31/2013 3/31/2013 12/31/13       3/31/13


                   At quarter end           $46.8                $46.1          $37.6                  2%            24%

                    Average for
                    the quarter
                    ended                   $46.4                $43.1          $39.7                  8%            17%

Borrowed funds at March 31, 2014 increased $.7 billion compared with December 31, 2013 and average borrowed funds increased $3.3 billion in the first quarter compared with fourth quarter 2013. Issuances of senior debt and increased Federal Home Loan Bank borrowings supported an enhanced liquidity position and loan growth. Borrowed funds increased $9.2 billion at March 31, 2014 compared with March 31, 2013 and average borrowed funds increased $6.7 billion in first quarter 2014 compared with first quarter 2013 as higher Federal Home Loan Bank borrowings and bank notes and senior debt were partially offset by a decrease in commercial paper, reflecting the wind down of Market Street Funding LLC, a consolidated commercial paper conduit.


    Capital

                                           3/31/2014*       12/31/2013 3/31/2013
                                           ----------       ---------- ---------

             Common
             shareholders'
             equity    In
             billions                          $39.4                      $38.4       $36.0

             Transitional Basel III common
             equity Tier 1 capital ratio              10.8%                      N/A        N/A

             Pro forma fully phased-in
             Basel III common equity

               Tier 1 capital ratio                    9.7%                      9.4%       8.0%

            * Ratios estimated

PNC continued to increase its capital levels and ratios and took actions reflecting its strong capital position. Common shareholders' equity increased principally due to growth in retained earnings and higher accumulated other comprehensive income related to net unrealized securities gains. The transitional Basel III common equity Tier 1 capital ratio was calculated using the regulatory capital methodology that became effective for PNC on January 1, 2014 with 2014 phase-ins. The increase in the pro forma fully phased-in Basel III common equity Tier 1 capital ratio was primarily due to growth in retained earnings and higher accumulated other comprehensive income partially offset by higher risk-weighted assets. Capital ratios and estimates may be impacted by additional regulatory guidance or analysis of the rules and, in the case of ratios calculated using the advanced approaches, the ongoing evolution, validation and regulatory approval of PNC's capital-related models. See Capital Ratios in the Consolidated Financial Highlights.

On April 3, 2014, the PNC board of directors raised the quarterly cash dividend on common stock to 48 cents per share, an increase of 4 cents per share, or 9 percent, effective with the May 5, 2014 dividend payment. PNC also announced share repurchase programs of up to $1.5 billion for the four quarter period beginning in the second quarter of 2014 under its existing common stock repurchase authorization. These programs include repurchases of up to $200 million related to employee benefit plans. These actions are consistent with PNC's capital plan which was accepted by the Board of Governors of the Federal Reserve System in March 2014. Separately, in the first quarter of 2014, PNC repurchased $50 million of common shares related to employee benefit plan share issuances.


    CREDIT QUALITY REVIEW


    Credit Quality                                                                                                                 Change       Change

                                                           At or for the quarter ended        3/31/14 vs 3/31/14 vs
                                                           ---------------------------

                          In millions              3/31/2014                       12/31/2013 3/31/2013   12/31/13         3/31/13


                          Nonperforming loans                              $2,947                $3,088             $3,422                 (5)%        (14)%

                          Nonperforming assets                             $3,304                $3,457             $3,927                 (4)%        (16)%

                           Accruing loans past due
                           90 days or more                                 $1,310                $1,491             $1,906                (12)%        (31)%

                          Net charge-offs                                    $186                  $189               $456                 (2)%        (59)%

                           Provision for credit
                           losses                                             $94                  $113               $236                (17)%        (60)%

                           Allowance for loan and
                           lease losses                                    $3,530                $3,609             $3,828                 (2)%         (8)%

Overall credit quality continued to improve during the first quarter of 2014. Nonperforming assets at March 31, 2014 decreased $153 million compared with December 31, 2013 as a result of improvements in both consumer and commercial lending. Consumer lending nonperforming loans decreased $84 million, commercial real estate nonperforming loans declined $38 million and commercial nonperforming loans decreased $20 million. Nonperforming assets declined $623 million from first quarter 2013 due to improvements in the commercial and consumer lending portfolios and other real estate owned and foreclosed assets. Nonperforming assets to total assets were 1.02 percent at March 31, 2014 compared with 1.08 percent at December 31, 2013 and 1.31 percent at March 31, 2013.

Overall delinquencies decreased $264 million, or 11 percent, as of March 31, 2014 compared with December 31, 2013. Accruing loans past due 90 days or more declined $181 million primarily from lower past due government insured residential real estate loans, and accruing loans past due 30 to 59 days declined $84 million.

Net charge-offs for the first quarter of 2014 were stable compared with fourth quarter 2013 as lower home equity loan net charge-offs were offset by higher residential real estate and commercial loan net charge-offs. In the comparison with first quarter 2013, net charge-offs decreased $270 million reflecting improving credit quality. Net charge-offs for the first quarter of 2014 were .38 percent of average loans on an annualized basis compared with .39 percent for the fourth quarter and .99 percent for the first quarter of 2013.

Provision for credit losses for first quarter 2014 decreased $19 million compared with fourth quarter 2013 and $142 million compared with first quarter 2013 as overall credit quality has continued to improve. A contributing economic factor is the increasing value of residential real estate.

The allowance for loan and lease losses declined in both comparisons reflecting overall improvement in credit quality. The allowance to total loans was 1.78 percent at March 31, 2014, 1.84 percent at December 31, 2013 and 2.05 percent at March 31, 2013. The allowance to nonperforming loans was 120 percent at March 31, 2014 compared with 117 percent at December 31, 2013, and 112 percent at March 31, 2013.


    BUSINESS SEGMENT RESULTS


    Business Segment Income (Loss)

                               In millions                              1Q14                 4Q13        1Q13


                                Retail
                                Banking                                                $158         $107      $120

                                Corporate &
                                Institutional
                                Banking                                                 523          569       541

                                Asset
                                Management
                                Group                                                    37           36        43

                                Residential
                                Mortgage
                                Banking                                                  (4)          55        45

                                Non-
                                Strategic
                                Assets
                                Portfolio                                               110          118        79

                                Other,
                                including
                                BlackRock                                               236          189       167


                               Net income                                            $1,060       $1,074      $995


                               See accompanying notes in Consolidated Financial Highlights


    Retail Banking                  Change Change

                                                                                      1Q14 vs        1Q14 vs

                   In millions                           1Q14        4Q13        1Q13           4Q13         1Q13


                   Net interest income              $980      $1,012      $1,049              $(32)               $(69)

                   Noninterest income               $514        $488        $434               $26                 $80

                    Provision for credit
                    losses                          $145        $195        $162              $(50)               $(17)

                   Noninterest expense            $1,100      $1,138      $1,131              $(38)               $(31)

                   Earnings                         $158        $107        $120               $51                 $38


                   In billions

                   Average loans                   $67.1       $67.2       $65.5              $(.1)               $1.6

                   Average deposits               $135.5      $134.6      $133.4               $.9                $2.1

Retail Banking earnings for the first quarter of 2014 increased in both comparisons. Higher noninterest income reflected a gain of $62 million on the sale of 1 million Visa Class B common shares in the first quarter of 2014. In the comparison with the fourth quarter, the gain was partially offset by a decline in fee income due to lower customer-initiated transactions primarily driven by seasonality. Fees from higher customer-initiated transaction volumes grew compared with first quarter 2013. Noninterest expense declined in both periods as a result of lower compensation and, compared with the fourth quarter, lower marketing expense.


    --  Retail Banking continued to focus on providing cost effective service
        channel choices that meet customers' evolving preferences for
        convenience.
        --  Approximately 43 percent of consumer customers used non-branch
            channels for the majority of their transactions during the first
            quarter of 2014 compared to 39 percent for the fourth quarter.
        --  Non-branch deposit transactions via ATM and mobile increased to 31
            percent of total deposit transactions in first quarter 2014 compared
            with 30 percent for the fourth quarter and 20 percent for the first
            quarter of 2013.
        --  As part of PNC's retail branch transformation strategy, 45 branches
            were converted to universal branches as of March 31, 2014 in a pilot
            program, and 22 branches were closed or consolidated in the first
            quarter. PNC had a network of 2,703 branches and 8,001 ATMs at March
            31, 2014.
    --  Average transaction deposits grew $1.1 billion, or 1 percent, in the
        first quarter of 2014 over the fourth quarter resulting from higher
        personal demand deposits offset by lower non-personal demand and money
        market balances. In the comparison with first quarter 2013, average
        transaction deposits increased $4.1 billion, or 4 percent, due to higher
        personal and non-personal demand deposit balances. Average certificates
        of deposit decreased $2.8 billion from first quarter 2013 reflecting net
        runoff of maturing accounts.
    --  Average loans declined slightly compared with the fourth quarter as
        growth in automobile and auto dealer floor plan loans was offset by
        lower home equity and education loans. Average loans grew 2 percent over
        first quarter 2013 due to growth in automobile, home equity, auto dealer
        floor plan and credit card loans partially offset by paydowns of
        education loans.
    --  Net charge-offs were $145 million for first quarter 2014 compared with
        $168 million in the fourth quarter and $250 million in the first quarter
        of 2013.


    Corporate & Institutional Banking                  Change Change

                                                                                                          1Q14 vs        1Q14 vs

                                      In millions                            1Q14         4Q13       1Q13           4Q13         1Q13


                                      Net interest income              $934         $960        $956              $(26)               $(22)

                                      Corporate service fees           $268         $277        $246               $(9)                $22

                                       Other noninterest
                                       income                           $96         $152        $139              $(56)               $(43)

                                       Provision for credit
                                       losses (benefit)                $(13)        $(29)        $14               $16                $(27)

                                      Noninterest expense              $488         $525        $480              $(37)                 $8

                                      Earnings                         $523         $569        $541              $(46)               $(18)


                                      In billions

                                      Average loans                  $103.5       $100.9       $94.3              $2.6                $9.2

                                      Average deposits                $71.0        $71.7       $64.6              $(.7)               $6.4

                                       Commercial mortgage
                                       servicing portfolio
                                       Quarter end                     $313         $308        $290                $5                 $23

Corporate & Institutional Banking earnings for the first quarter of 2014 decreased in both comparisons. Corporate service fees declined compared with the fourth quarter primarily due to seasonal declines in merger and acquisition advisory fees and increased compared with first quarter 2013 largely as a result of higher merger and acquisition advisory fees. Other noninterest income declined in both comparisons mainly from lower revenue associated with credit valuations for customer-related derivatives activities and lower commercial mortgage loans held for sale activity. Noninterest expense decreased compared with fourth quarter 2013 and increased compared with first quarter 2013 principally due to incentive compensation costs associated with business activity.


    --  Average loans increased 3 percent over the fourth quarter and 10 percent
        over first quarter 2013 primarily due to growth in real estate,
        corporate banking and business credit.
    --  Average deposits increased 10 percent over the prior year first quarter
        primarily as a result of business growth and inflows into money market
        and noninterest-bearing deposits.
    --  Net charge-offs were $2 million in the first quarter of 2014 compared
        with $10 million in the fourth quarter of 2013 and $58 million in the
        first quarter of 2013.


    Asset Management Group                                      Change   Change

                                                                                     1Q14 vs       1Q14 vs

                           In millions                1Q14          4Q13        1Q13          4Q13         1Q13


                           Net interest income    $71       $71             $73                -                $(2)

                           Noninterest income    $199      $198            $182               $1                $17

                            Provision for credit
                            losses                $12        $8              $5               $4                 $7

                           Noninterest expense   $199      $204            $183              $(5)               $16

                           Earnings               $37       $36             $43               $1                $(6)


                           In billions

                            Assets under
                            administration
                            Quarter end          $255      $247            $236               $8                $19

                           Average loans         $7.1      $7.1            $6.6                -                $.5

                           Average deposits      $9.6      $9.2            $9.2              $.4                $.4

Asset Management Group earnings for the first quarter of 2014 increased compared with the fourth quarter of 2013 and declined compared with first quarter 2013. Noninterest income grew year over year driven by increases in the equity markets and sales production resulting in net positive flows. The increase in noninterest expense compared with first quarter 2013 included higher compensation costs from focused hiring to drive growth.


    --  Assets under administration at March 31, 2014 included discretionary
        assets under management of $130 billion and nondiscretionary assets
        under administration of $125 billion.
        --  Discretionary assets under management increased $3 billion compared
            with December 31, 2013 and $12 billion compared with March 31, 2013
            driven by stronger equity markets and net positive flows net of
            cyclical client activities.
    --  Asset Management Group continued to focus on driving growth through
        increasing sales sourced from other PNC lines of business, maximizing
        front line productivity and optimizing market presence including
        additions to staff in high opportunity markets.


    Residential Mortgage Banking                       Change                        Change

                                                                                                                                             1Q14 vs   1Q14 vs

                                 In millions                                                       1Q14            4Q13           1Q13            4Q13      1Q13


                                 Net interest income                                         $40         $49             $48            $(9)             $(8)

                                 Noninterest income

                                  Benefit (provision) for
                                  residential mortgage

                                                              repurchase obligations              $19         $124           $(4)            $(105)               $23

                                 Other noninterest income                                   $147        $154            $247            $(7)           $(100)

                                  Provision for credit losses
                                  (benefit)                                                  $(1)        $(3)            $20             $2             $(21)

                                 Noninterest expense                                        $213        $243            $200           $(30)             $13

                                 Earnings (loss)                                             $(4)        $55             $45           $(59)            $(49)


                                 In billions

                                  Residential mortgage
                                  servicing portfolio
                                  Quarter end                                               $114        $114            $120                    -                $(6)

                                 Loan origination volume                                    $1.9        $2.5            $4.2           $(.6)           $(2.3)

Residential Mortgage Banking recorded a loss for the first quarter of 2014 compared with earnings in the fourth and first quarters of 2013. Noninterest income for fourth quarter 2013 benefited from the release of reserves for residential mortgage repurchase obligations of $124 million largely attributable to fourth quarter settlements with FNMA and FHLMC compared with a benefit of $19 million in first quarter 2014. Additionally, noninterest income declined in both comparisons due to reduced loan sales revenue from lower origination volume and a net hedging loss compared with gains in the 2013 quarters on residential mortgage servicing rights. Noninterest expense decreased compared with the fourth quarter as a result of lower production expense on reduced origination volume, lower servicing costs and lower foreclosure expenses partially offset by higher legal accruals. In the comparison with first quarter 2013, higher legal accruals more than offset the same declines. Approximately 37 percent of first quarter 2014 loan origination volume was for home purchase transactions compared with 41 percent in the fourth quarter of 2013 and 19 percent for first quarter 2013.


    Non-Strategic Assets Portfolio              Change Change

                                                                                                1Q14 vs        1Q14 vs

                                   In millions                      1Q14        4Q13       1Q13           4Q13         1Q13


                                   Net interest income        $142        $161        $203              $(19)                $(61)

                                   Noninterest income           $6          $6         $16                 -                 $(10)

                                    Provision for
                                    credit losses
                                    (benefit)                 $(52)       $(59)        $42                $7                 $(94)

                                   Noninterest expense         $26         $39         $52              $(13)                $(26)

                                   Earnings                   $110        $118         $79               $(8)                 $31


                                   In billions

                                   Average loans              $9.6       $10.0       $11.3              $(.4)               $(1.7)

The Non-Strategic Assets Portfolio primarily consists of non-strategic assets obtained through acquisitions of other companies and includes a consumer portfolio of mainly residential mortgage and brokered home equity loans and lines of credit, and a small commercial/commercial real estate loan and lease portfolio. The business activity of this segment is to manage the wind-down of the portfolio, including portfolio management activities to reduce underperforming assets, while maximizing value and mitigating risk.


    --  Net charge-offs were $31 million for the first quarter of 2014 compared
        with $9 million for the fourth quarter and $87 million for the first
        quarter of 2013. Lower commercial loan recoveries in the first quarter
        of 2014 contributed to the increase in net charge-offs compared with the
        fourth quarter.

Other, including BlackRock

The "Other, including BlackRock" category, for the purposes of this release, includes earnings and gains or losses related to PNC's equity interest in BlackRock, and residual activities that do not meet the criteria for disclosure as a separate reportable business, such as integration costs, asset and liability management activities including net securities gains or losses, other-than-temporary impairment of investment securities and certain trading activities, noncash charges for unamortized discounts related to redemptions of trust preferred securities, exited businesses, private equity investments, intercompany eliminations, most corporate overhead, tax adjustments that are not allocated to business segments, and differences between business segment performance reporting and financial statement reporting under generally accepted accounting principles.

CONFERENCE CALL AND SUPPLEMENTAL FINANCIAL INFORMATION

PNC President and Chief Executive Officer William S. Demchak and Chief Financial Officer Robert Q. Reilly will hold a conference call for investors today at 10:00 a.m. Eastern Time regarding the topics addressed in this news release and the related financial supplement. Dial-in numbers for the conference call are (800) 272-5460 or (303) 223-2683 (international) and Internet access to the live audio listen-only webcast of the call is available at www.pnc.com/investorevents. PNC's first quarter 2014 earnings release, the related financial supplement, and presentation slides to accompany the conference call remarks will be available at www.pnc.com/investorevents prior to the beginning of the call. A telephone replay of the call will be available for one week at (800) 633-8284 or (402) 977-9140 (international), conference ID 21710011 and a replay of the audio webcast will be available on PNC's website for 30 days.

The PNC Financial Services Group, Inc. (www.pnc.com) is one of the United States' largest diversified financial services organizations providing retail and business banking; residential mortgage banking; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management and asset management.

[TABULAR MATERIAL FOLLOWS]




    The PNC Financial Services Group, Inc.                                                                                                                                                               Consolidated Financial Highlights
                                                                                                                                                                                                                    (Unaudited)


    FINANCIAL RESULTS                                                                                                                                                                                                 Three months ended
                                                                                                                                                                                                                      ------------------

    Dollars in millions, except per share data                                                                                                                                                                  March 31  December 31     March 31

                                                                                                                                                                                                                                 2014         2013      2013
                                                                                                                                                                                                                                 ----         ----      ----

    Revenue

                                         Net interest income                                                                                                                                                      $2,195                    $2,266           $2,389

                                         Noninterest income                                                                                                                                                        1,582                     1,807            1,566


                                                                                            Total revenue                                                                                                                       3,777                  4,073          3,955

    Noninterest expense (c)                                                                                                                                                                                                     2,264                  2,514          2,368
                                                                                                                                                                                                                                -----                  -----          -----

    Pretax, pre-provision earnings (a)                                                                                                                                                                                          1,513                  1,559          1,587

    Provision for credit losses                                                                                                                                                                                                    94                    113            236
                                                                                                                                                                                                                                  ---                    ---            ---


    Income before income taxes and noncontrolling interests                                                                                                                                                                    $1,419                 $1,446         $1,351

    Net income (b) (c)                                                                                                                                                                                                         $1,060                 $1,074           $995

    Less:

                                          Net income (loss) attributable to noncontrolling
                                          interests (c)                                                                                                                                                               (2)                       13               (8)

                                         Preferred stock dividends and discount accretion

                                                                                            and redemptions                                                                                                                        70                     50             75
                                                                                                                                                                                                                                  ---                    ---            ---

    Net income attributable to common shareholders                                                                                                                                                                               $992                 $1,011           $928

    Diluted earnings per common share                                                                                                                                                                                           $1.82                  $1.87          $1.74

    Cash dividends declared per common share                                                                                                                                                                                     $.44                   $.44           $.40
    ----------------------------------------                                                                                                                                                                                     ----                   ----           ----


    Certain prior period amounts included in these Consolidated Financial Highlights have been reclassified to conform with the current period presentation, which we believe is more meaningful to readers of our consolidated financial statements.


             (a)   We believe
                   that pretax,
                   pre-
                   provision
                   earnings, a
                   non-GAAP
                   measure, is
                   useful as a
                   tool to help
                   evaluate the
                   ability to
                   provide for
                   credit costs
                   through
                   operations.


    (b)            See page 16
                   for a
                   reconciliation
                   of business
                   segment
                   income to
                   net income.


    (c)            Prior period
                   amounts have
                   been updated
                   to reflect
                   first
                   quarter 2014
                   adoption of
                   Accounting
                   Standards
                   Update (ASU)
                   2014-01
                   related to
                   low income
                   housing tax
                   credits.





    TOTAL AND CORE NET INTEREST INCOME AND NET INTEREST MARGIN

                                                                                                      Three months ended
                                                                                                      ------------------

                                                                                             March 31      December 31   March 31

    Dollars in millions                                                                                             2014              2013         2013
    -------------------                                                                                             ----              ----         ----

    Net Interest Income


    Core net interest income (a)                                                                                $2,032            $2,075       $2,140

    Total purchase accounting accretion (a)

                                                      Scheduled accretion net of contractual
                                                      interest                                    134                         163          199

                                                     Excess cash recoveries                        29                          28           50
                                                     ----------------------                       ---                         ---          ---

                                                      Total purchase accounting
                                                      accretion                                   163                         191          249
                                                     --------------------------                   ---                         ---          ---

    Total net interest income                                                                                   $2,195            $2,266       $2,389
    -------------------------                                                                                   ------            ------       ------


    Net Interest Margin


    Core net interest margin (b)                                                                                  3.02%             3.10%        3.43%

    Purchase accounting accretion impact on net interest margin                                                    .24               .28          .38
    -----------------------------------------------------------                                                    ---               ---          ---

    Net interest margin                                                                                           3.26%             3.38%        3.81%
    -------------------                                                                                           ----              ----         ----


             (a)   We believe
                   that core
                   net
                   interest
                   income, a
                   non-GAAP
                   measure,
                   and
                   purchase
                   accounting
                   accretion
                   are useful
                   in
                   evaluating
                   the
                   components
                   of net
                   interest
                   income.

             (b)   We believe
                   that core
                   net
                   interest
                   margin, a
                   non-GAAP
                   measure, is
                   useful as a
                   tool to
                   help
                   evaluate
                   the impact
                   of purchase
                   accounting
                   accretion
                   on net
                   interest
                   margin. To
                   calculate
                   core net
                   interest
                   margin, net
                   interest
                   margin has
                   been
                   adjusted by
                   annualized
                   purchase
                   accounting
                   accretion
                   divided by
                   average
                   interest-
                   earning
                   assets.





    The PNC Financial Services Group, Inc.                               Consolidated Financial Highlights (Unaudited)



                                                                                                        Three months ended
                                                                                                        ------------------

                                                                                      March 31                       December 31        March 31

                                                                                                               2014                2013           2013
                                                                                                               ----                ----           ----

    PERFORMANCE RATIOS

    Net interest margin (a)                                                                                    3.26%                        3.38%            3.81%

    Noninterest income to total revenue                                                                          42                           44               40

    Efficiency (b)                                                                                               60                           62               60

    Return on:

                                            Average common shareholders'
                                            equity                                       10.36                                    10.71                10.58

                                           Average assets                                 1.35                                     1.36                 1.33


    BUSINESS SEGMENT INCOME (LOSS) (c) (d)

    In millions


    Retail Banking (e)                                                                                         $158                         $107             $120

    Corporate & Institutional Banking                                                                           523                          569              541

    Asset Management Group (f)                                                                                   37                           36               43

    Residential Mortgage Banking (g)                                                                             (4)                          55               45

    Non-Strategic Assets Portfolio                                                                              110                          118               79

    Other, including BlackRock (d) (h)                                                                          236                          189              167
                                                                                                                ---                          ---              ---

                                           Total net income                             $1,060                                   $1,074                 $995
                                           ----------------                             ------                                   ------                 ----


             (a)   Calculated as annualized taxable-equivalent
                   net interest income divided by average earning
                   assets. The interest income earned on certain
                   earning assets is completely or partially
                   exempt from federal income tax. As such, these
                   tax-exempt instruments typically yield lower
                   returns than taxable investments. To provide
                   more meaningful comparisons of net interest
                   margins for all earning assets, we use net
                   interest income on a taxable-equivalent basis
                   in calculating net interest margin by
                   increasing the interest income earned on tax-
                   exempt assets to make it fully equivalent to
                   interest income earned on taxable investments.
                   This adjustment is not permitted under
                   generally accepted accounting principles
                   (GAAP) in the Consolidated Income Statement.
                   The taxable equivalent adjustments to net
                   interest income for the three months ended
                   March 31, 2014, December 31, 2013 and March
                   31, 2013 were $46 million, $45 million and $40
                   million, respectively.


    (b)            Calculated as noninterest expense divided by
                   total revenue.


    (c)            Our business information is presented based on
                   our internal management reporting practices.
                   We periodically refine our internal
                   methodologies as management reporting
                   practices are enhanced.


    (d)            We consider BlackRock to be a separate
                   reportable business segment but have combined
                   its results with Other for this presentation.
                   Our first quarter 2014 Form 10-Q will include
                   additional information regarding BlackRock.


    (e)            Includes gain on sale of a portion of Visa
                   Class B common shares in the first quarter of
                        2014.


    (f)            We consider a primary client relationship for
                   Asset Management Group to be a client
                   relationship with annual revenue generation of
                   $10,000 or more.


    (g)            Includes benefit/provision for residential
                   mortgage repurchase obligations.


    (h)            Includes earnings and gains or losses related
                   to PNC's equity interest in BlackRock and
                   residual activities that do not meet the
                   criteria for disclosure as a separate
                   reportable business, such as gains or losses
                   related to BlackRock transactions, integration
                   costs, asset and liability management
                   activities including net securities gains or
                   losses, other-than-temporary impairment of
                   investment securities and certain trading
                   activities, exited businesses, private equity
                   investments, intercompany eliminations, most
                   corporate overhead, tax adjustments that are
                   not allocated to business segments, and
                   differences between business segment
                   performance reporting and financial statement
                   reporting (GAAP), including the presentation
                   of net income attributable to noncontrolling
                   interests as the segments' results exclude
                   their portion of net income attributable to
                   noncontrolling interests.





    The PNC Financial Services Group, Inc.                                                                          Consolidated Financial Highlights (Unaudited)


                                                                                                                           March 31                          December 31          March 31

                                                                                                                               2014                                 2013                    2013
                                                                                                                               ----                                 ----                    ----

    BALANCE SHEET DATA

    Dollars in millions, except per share data

    Assets                                                                                                                                         $323,423                       $320,192            $300,718

    Loans (a) (b)                                                                                                                                   198,242                        195,613             186,504

    Allowance for loan and lease losses (a)                                                                                                           3,530                          3,609               3,828

    Interest-earning deposits with banks (a)                                                                                                         14,877                         12,135               1,541

    Investment securities (a)                                                                                                                        58,644                         60,294              59,361

    Loans held for sale (b)                                                                                                                           2,102                          2,255               3,295

    Goodwill and other intangible assets                                                                                                             11,189                         11,290              10,996

    Equity investments (a) (c)                                                                                                                       10,337                         10,560              10,914

    Other assets (a) (b)                                                                                                                             23,315                         22,552              24,470


    Noninterest-bearing deposits                                                                                                                     70,063                         70,306              64,652

    Interest-bearing deposits                                                                                                                       152,319                        150,625             146,968

    Total deposits                                                                                                                                  222,382                        220,931             211,620

    Transaction deposits                                                                                                                            188,105                        186,391             175,407

    Borrowed funds (a)                                                                                                                               46,806                         46,105              37,647

    Shareholders' equity                                                                                                                             43,321                         42,334              39,598

    Common shareholders' equity                                                                                                                      39,378                         38,392              36,006

    Accumulated other comprehensive income                                                                                                              656                            436                 767


    Book value per common share                                                                                                                      $73.73                         $72.07              $68.10

    Tangible book value per common share (Non-GAAP) (d)                                                                                              $56.33                         $54.57              $50.30

    Common shares outstanding (millions)                                                                                                                534                            533                 529

    Loans to deposits                                                                                                                                    89%                            89%                 88%


    CLIENT ASSETS (billions)

    Discretionary assets under management                                                                                                              $130                           $127                $118

    Nondiscretionary assets under administration                                                                                                        125                            120                 118
                                                                                                                                                        ---                            ---                 ---

    Total assets under administration                                                                                                                   255                            247                 236

    Brokerage account assets                                                                                                                             41                             41                  39
                                                                                                                                                        ---                            ---                 ---

    Total client assets                                                                                                                                $296                           $288                $275


    CAPITAL RATIOS

                                                                   Transitional Basel III (e) (f) (g)

                                                                   Common equity Tier 1 (h)                        10.8%                                                  N/A (i)                 N/A

                                                                   Tier 1 risk-based                               12.5                                                   N/A                     N/A

                                                                   Total capital risk-based                        15.7                                                   N/A                     N/A

                                                                   Leverage                                        11.1                                                   N/A                     N/A


                                                                   Pro forma Fully Phased-In Basel III (e) (g) (j)

                                                                   Common equity Tier 1 (h)                         9.7%                                             9.4%                    8.0%


                                                                   Common shareholders' equity to assets           12.2%                                            12.0%                   12.0%


    ASSET QUALITY

    Nonperforming loans to total loans                                                                                                                 1.49%                          1.58%               1.83%

    Nonperforming assets to total loans, OREO and foreclosed assets                                                                                    1.66                           1.76                2.10

    Nonperforming assets to total assets                                                                                                               1.02                           1.08                1.31

    Net charge-offs to average loans (for the three months ended) (annualized) (k)                                                                      .38                            .39                 .99

    Allowance for loan and lease losses to total loans                                                                                                 1.78                           1.84                2.05

    Allowance for loan and lease losses to nonperforming loans (l)                                                                                      120%                           117%                112%

    Accruing loans past due 90 days or more (in millions)                                                                                            $1,310                         $1,491              $1,906
    ----------------------------------------------------                                                                                             ------                         ------              ------


             (a)    Amounts
                            include
                            consolidated
                            variable
                            interest
                            entities. Our
                            2013 Form
                            10-K
                            included, and
                            our first
                            quarter 2014
                            Form 10-Q
                            will include,
                            additional
                            information
                            regarding
                            these
                            Consolidated
                            Balance Sheet
                            line items.

    (b)             Amounts
                            include
                            assets for
                            which we have
                            elected the
                            fair value
                            option. Our
                            2013 Form
                            10-K
                            included, and
                            our first
                            quarter 2014
                            Form 10-Q
                            will include,
                            additional
                            information
                            regarding
                            these
                            Consolidated
                            Balance Sheet
                            line items.

    (c)             Amounts
                            include our
                            equity
                            interest in
                            BlackRock.

    (d)             See the
                            Tangible Book
                            Value per
                            Common Share
                            Ratio table
                            on page 19
                            for
                            additional
                            information.

    (e)                     The ratios as
                            of March 31,
                            2014 are
                            estimated.

                    Calculated
                            using the
                            regulatory
                            capital
                            methodology
                            applicable to
                            PNC during
    (f)                     2014.

    (g)             See Capital
                            Ratios
                            discussion on
                            pages 18-19
                            and in the
                            Banking
                            Regulation
                            and
                            Supervision
                            section of
                            Item 1
                            Business in
                            our 2013 Form
                            10-K.

    (h)             The Basel III
                            common equity
                            Tier 1
                            capital ratio
                            was
                            previously
                            referred to
                            as the Basel
                            III Tier 1
                            common
                            capital
                            ratio.

    (i)             Our 2013 Form
                            10-K
                            included a
                            pro forma
                            illustration
                            of the
                            Transitional
                            Basel III
                            common equity
                            Tier 1
                            capital ratio
                            using
                            December 31,
                            2013 data and
                            the Basel III
                            phase-in
                            schedule in
                            effect for
                            2014.

    (j)             Ratios as of
                            December 31,
                            2013 and
                            March 31,
                            2013 have not
                            been updated
                            to reflect
                            the first
                            quarter 2014
                            adoption of
                            ASU 2014-01
                            related to
                            low income
                            housing tax
                            credits.

    (k)             Pursuant to
                            alignment
                            with
                            interagency
                            guidance on
                            practices for
                            loans and
                            lines of
                            credit
                            related to
                            consumer
                            lending in
                            the first
                            quarter of
                            2013,
                            additional
                            charge-offs
                            of $134
                            million were
                            taken.
                            Excluding the
                            impact of
                            these
                            additional
                            charge-offs,
                            annualized
                            net charge-
                            offs to
                            average loans
                            for the first
                            quarter 2013
                            was 0.70%.

    (l)             The allowance
                            for loan and
                            lease losses
                            includes
                            impairment
                            reserves
                            attributable
                            to purchased
                            impaired
                            loans.
                            Nonperforming
                            loans exclude
                            certain
                            government
                            insured or
                            guaranteed
                            loans, loans
                            held for
                            sale, loans
                            accounted for
                            under the
                            fair value
                            option and
                            purchased
                            impaired
                            loans.



    The PNC Financial Services      Consolidated Financial Highlights
     Group, Inc.                    (Unaudited)


    CAPITAL RATIOS


    As a result of the staggered effective dates of the final U.S.
     capital rules issued in July 2013, as well as the fact that PNC
     remains in the parallel run qualification phase for the advanced
     approaches, PNC's regulatory capital ratios during 2014 are based
     on the definitions of, and deductions from, capital under Basel
     III (as such definitions and deductions are phased-in for 2014)
     and Basel I risk-weighted assets (but subject to certain
     adjustments as defined by the Basel III rules). We refer to the
     capital ratios calculated using these Basel III phased-in
     provisions and Basel I risk-weighted assets as the Transitional
     Basel III ratios.  These capital ratios became effective for PNC


    We provide information below regarding PNC's Transitional Basel
     III common equity Tier 1 ratio and PNC's pro forma fully phased-
     in Basel III common equity Tier 1 ratio. We previously referred
     to the Basel III common equity Tier 1 ratio as the Basel III Tier
     1 common ratio. In addition, on the next page we provide
     information regarding PNC's Basel I Tier 1 common capital ratio
     which was applicable to PNC through 2013 under the U.S.
     regulatory capital rules.


    Common equity Tier 1 capital as defined under the Basel III rules
     differs materially from Basel I.  For example, under Basel III,
     significant common stock investments in unconsolidated financial
     institutions, mortgage servicing rights and deferred tax assets
     must be deducted from capital to the extent they individually
     exceed 10%, or in the aggregate exceed 15%, of the institution's
     adjusted common equity Tier 1 capital. Also, under Basel III
     regulatory capital includes adjustments for accumulated other
     comprehensive income related to securities currently and
     previously held as available for sale, as well as pension and
     other postretirement plans, whereas under Basel I those items




    Estimated Transitional Basel III and Pro forma Fully Phased-In Basel III Common Equity Tier 1 Capital Ratios



                                                                                                                                                                                      Transitional Basel III             Pro forma Fully Phased-In Basel III
                                                                                                                                                                                      ----------------------             -----------------------------------


                                                                                                                                                                                                       March 31                   March 31                    December 31            March 31

    Dollars in millions                                                                                                                                                                                    2014                       2014                       2013 (a)              2013 (a)
    -------------------                                                                                                                                                                                    ----                       ----                        -------               -------


    Common stock, related surplus and retained earnings, net of treasury stock                                                                                                                                  $38,722                            $38,722                $38,031               $35,305


    Less regulatory capital adjustments:

                                                                                                                 Goodwill and disallowed intangibles, net of deferred tax liabilities                            (8,932)                            (9,291)                (9,321)               (9,412)

                                                                                                                 Basel III total threshold deductions                                                              (215)                            (1,193)                (1,386)               (2,076)

                                                                                                                 Accumulated other comprehensive income (b)                                                          82                               (410)                   196                   289

                                                                                                                 All other adjustments (c)                                                                          (17)                              (108)                   (64)                 (580)



    Estimated Common equity Tier 1 capital                                                                                                                                                                      $29,640                            $28,540                $27,456               $23,526


    Estimated Basel I risk-weighted assets calculated in accordance with transition rules for 2014                                                                                                     $275,574                        N/A                            N/A                   N/A

    Estimated Basel III standardized approach risk-weighted assets (d)                                                                                                                                      N/A                   $294,723                       $291,977          $        N/A

    Estimated Basel III advanced approaches risk-weighted assets (e)                                                                                                                                        N/A                   $288,577                       $290,080              $293,810


    Estimated Basel III Common equity Tier 1 capital ratio                                                                                                                                                         10.8%                               9.7%                   9.4%                  8.0%

                                                                                                                 Risk-weighted assets utilized                                                    Basel I (with
                                                                                                                                                                                                    transition
                                                                                                                                                                                                  adjustments)                Standardized                   Standardized            Advanced


    (a) Amounts have not been updated to reflect the first quarter 2014 adoption of ASU 2014-01 related to low income housing tax credits.

    (b)  Represents net adjustments related to accumulated other comprehensive income for securities currently and previously held as available
         for sale, as well as pension

        and other postretirement plans.

    (c) Includes adjustments as required based on whether the standardized approach or advanced approaches is utilized.

    (d)  Basel III standardized approach risk-weighted assets were estimated based on the standardized approach rules and include credit and
         market risk.

    (e)  Basel III advanced approaches risk-weighted assets were estimated based on the advanced approaches rules, and include credit, market
         and operational risk.

PNC utilizes the pro forma fully phased-in capital ratio estimate to assess its Basel III capital position (without the benefit of phase-ins), including comparison to similar estimates made by other financial institutions. Our capital ratios and estimates may be impacted by additional regulatory guidance or analysis of the rules, and, in the case of ratios calculated using the advanced approaches, the ongoing evolution, validation and regulatory approval of PNC's models integral to the calculation of advanced approaches risk-weighted assets.





    2013 Basel I Tier 1 Common Capital Ratio (a)(b)


                                                    December 31          March 31

    Dollars in millions                                            2013              2013
    -------------------                                            ----              ----

    Basel I Tier 1 common capital                               $28,484           $25,680

    Basel I risk-weighted assets                                272,169           261,491
    ----------------------------                                -------           -------

    Basel I Tier 1 common capital ratio                            10.5%              9.8%
    -----------------------------------                            ----               ---


    (a)            Effective
                   January 1,
                   2014, the
                   Basel I
                   Tier 1
                   common
                   capital
                   ratio no
                   longer
                   applies to
                   PNC
                   (except
                   for stress
                   testing
                   purposes).

    (b)            Amounts
                   have not
                   been
                   updated to
                   reflect
                   the first
                   quarter
                   2014
                   adoption
                   of ASU
                   2014-01
                   related to
                   low income
                   housing
                   tax
                   credits.

Tangible book value per common share is a non-GAAP financial measure and is calculated based on tangible common shareholders' equity divided by period-end common shares outstanding. We believe this non-GAAP financial measure serves as a useful tool to help evaluate the strength and discipline of a company's capital management strategies and as an additional, conservative measure of total company value.




    Tangible Book Value per Common Share Ratio (Non-GAAP)


                                                                    March 31           December 31           March 31

    Dollars in millions, except per share data                                    2014                  2013               2013
    ------------------------------------------                                    ----                  ----               ----

    Book value per common share                                                 $73.73                $72.07             $68.10


    Tangible book value per common share

                          Common shareholders' equity                        $39,378               $38,392            $36,006

                          Goodwill and Other Intangible Assets (a)            (9,621)               (9,654)            (9,763)

                           Deferred tax liabilities on Goodwill and
                           Other Intangible Assets (a)                           331                   333                351
                          -----------------------------------------              ---                   ---                ---

                          Tangible common shareholders' equity               $30,088               $29,071            $26,594


                           Period-end common shares outstanding (in
                           millions)                                             534                   533                529


    Tangible book value per common share (Non-GAAP)                           $56.33                $54.57             $50.30
    ----------------------------------------------                            ------                ------             ------


    (a)            Excludes
                   the
                   impact
                   from
                   mortgage
                   servicing
                   rights of
                   $1.6
                   billion
                   at both
                   March 31,
                   2014 and
                   December
                   31, 2013
                   and $1.2
                   billion
                   at March
                   31, 2013.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

We make statements in this news release and related conference call, and we may from time to time make other statements, regarding our outlook for earnings, revenues, expenses, capital and liquidity levels and ratios, asset levels, asset quality, financial position, and other matters regarding or affecting PNC and its future business and operations that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements are typically identified by words such as "believe," "plan," "expect," "anticipate," "see," "look," "intend," "outlook," "project," "forecast," "estimate," "goal," "will," "should" and other similar words and expressions. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time.

Forward-looking statements speak only as of the date made. We do not assume any duty and do not undertake to update forward-looking statements. Actual results or future events could differ, possibly materially, from those anticipated in forward-looking statements, as well as from historical performance.

Our forward-looking statements are subject to the following principal risks and uncertainties.


    --  Our businesses, financial results and balance sheet values are affected
        by business and economic conditions, including the following:
        --  Changes in interest rates and valuations in debt, equity and other
            financial markets.
        --  Disruptions in the liquidity and other functioning of U.S. and
            global financial markets.
        --  The impact on financial markets and the economy of any changes in
            the credit ratings of U.S. Treasury obligations and other U.S.
            government-backed debt, as well as issues surrounding the levels of
            U.S. and European government debt and concerns regarding the
            creditworthiness of certain sovereign governments, supranationals
            and financial institutions in Europe.
        --  Actions by the Federal Reserve, U.S. Treasury and other government
            agencies, including those that impact money supply and market
            interest rates.
        --  Changes in customers', suppliers' and other counterparties'
            performance and creditworthiness.
        --  Slowing or reversal of the current U.S. economic expansion.
        --  Continued residual effects of recessionary conditions and uneven
            spread of positive impacts of recovery on the economy and our
            counterparties, including adverse impacts on levels of unemployment,
            loan utilization rates, delinquencies, defaults and counterparty
            ability to meet credit and other obligations.
        --  Changes in customer preferences and behavior, whether due to
            changing business and economic conditions, legislative and
            regulatory initiatives, or other factors.
    --  Our forward-looking financial statements are subject to the risk that
        economic and financial market conditions will be substantially different
        than we are currently expecting. These statements are based on our
        current view that the U.S. economic expansion will speed up to an above
        trend growth rate near 2.8 percent in 2014 as drags from Federal fiscal
        restraint subside and that short-term interest rates will remain very
        low and bond yields will rise only slowly in 2014. These forward-looking
        statements also do not, unless otherwise indicated, take into account
        the impact of potential legal and regulatory contingencies.
    --  PNC's ability to take certain capital actions, including paying
        dividends and any plans to increase common stock dividends, repurchase
        common stock under current or future programs, or issue or redeem
        preferred stock or other regulatory capital instruments, is subject to
        the review of such proposed actions by the Federal Reserve as part of
        PNC's comprehensive capital plan for the applicable period in connection
        with the regulators' Comprehensive Capital Analysis and Review (CCAR)
        process and to the acceptance of such capital plan and non-objection to
        such capital actions by the Federal Reserve.
    --  PNC's regulatory capital ratios in the future will depend on, among
        other things, the company's financial performance, the scope and terms
        of final capital regulations then in effect (particularly those
        implementing the Basel Capital Accords), and management actions
        affecting the composition of PNC's balance sheet. In addition, PNC's
        ability to determine, evaluate and forecast regulatory capital ratios,
        and to take actions (such as capital distributions) based on actual or
        forecasted capital ratios, will be dependent on the ongoing development,
        validation and regulatory approval of related models.
    --  Legal and regulatory developments could have an impact on our ability to
        operate our businesses, financial condition, results of operations,
        competitive position, reputation, or pursuit of attractive acquisition
        opportunities. Reputational impacts could affect matters such as
        business generation and retention, liquidity, funding, and ability to
        attract and retain management. These developments could include:
        --  Changes resulting from legislative and regulatory reforms, including
            major reform of the regulatory oversight structure of the financial
            services industry and changes to laws and regulations involving tax,
            pension, bankruptcy, consumer protection, and other industry
            aspects, and changes in accounting policies and principles.  We will
            be impacted by extensive reforms provided for in the Dodd-Frank Wall
            Street Reform and Consumer Protection Act (the "Dodd-Frank Act") and
            otherwise growing out of the most recent financial crisis, the
            precise nature, extent and timing of which, and their impact on us,
            remains uncertain.
        --  Changes to regulations governing bank capital and liquidity
            standards, including due to the Dodd-Frank Act and to Basel-related
            initiatives.
        --  Unfavorable resolution of legal proceedings or other claims and
            regulatory and other governmental investigations or other inquiries.
            In addition to matters relating to PNC's business and activities,
            such matters may include proceedings, claims, investigations, or
            inquiries relating to pre-acquisition business and activities of
            acquired companies, such as National City.  These matters may result
            in monetary judgments or settlements or other remedies, including
            fines, penalties, restitution or alterations in our business
            practices, and in additional expenses and collateral costs, and may
            cause reputational harm to PNC.
        --  Results of the regulatory examination and supervision process,
            including our failure to satisfy requirements of agreements with
            governmental agencies.
        --  Impact on business and operating results of any costs associated
            with obtaining rights in intellectual property claimed by others and
            of adequacy of our intellectual property protection in general.
    --  Business and operating results are affected by our ability to identify
        and effectively manage risks inherent in our businesses, including,
        where appropriate, through effective use of third-party insurance,
        derivatives, and capital management techniques, and to meet evolving
        regulatory capital and liquidity standards.  In particular, our results
        currently depend on our ability to manage elevated levels of impaired
        assets.
    --  Business and operating results also include impacts relating to our
        equity interest in BlackRock, Inc. and rely to a significant extent on
        information provided to us by BlackRock.  Risks and uncertainties that
        could affect BlackRock are discussed in more detail by BlackRock in its
        SEC filings.
    --  We grow our business in part by acquiring from time to time other
        financial services companies, financial services assets and related
        deposits and other liabilities.  Acquisition risks and uncertainties
        include those presented by the nature of the business acquired,
        including in some cases those associated with our entry into new
        businesses or new geographic or other markets and risks resulting from
        our inexperience in those new areas, as well as risks and uncertainties
        related to the acquisition transactions themselves, regulatory issues,
        and the integration of the acquired businesses into PNC after closing.
    --  Competition can have an impact on customer acquisition, growth and
        retention and on credit spreads and product pricing, which can affect
        market share, deposits and revenues.  Industry restructuring in the
        current environment could also impact our business and financial
        performance through changes in counterparty creditworthiness and
        performance and in the competitive and regulatory landscape.  Our
        ability to anticipate and respond to technological changes can also
        impact our ability to respond to customer needs and meet competitive
        demands.
    --  Business and operating results can also be affected by widespread
        natural and other disasters, dislocations, terrorist activities,
        cyberattacks or international hostilities through impacts on the economy
        and financial markets generally or on us or our counterparties
        specifically.

We provide greater detail regarding these as well as other factors in our 2013 Form 10-K, including in the Risk Factors and Risk Management sections and the Legal Proceedings and Commitments and Guarantees Notes of the Notes To Consolidated Financial Statements in that report, and in our subsequent SEC filings. Our forward-looking statements may also be subject to other risks and uncertainties, including those we may discuss elsewhere in this news release or in SEC filings, accessible on the SEC's website at www.sec.gov and on our corporate website at www.pnc.com/secfilings. We have included these web addresses as inactive textual references only. Information on these websites is not part of this document.

CONTACTS:

MEDIA:
Fred Solomon
(412) 762-4550
corporate.communications@pnc.com

INVESTORS:
William H. Callihan
(412) 762-8257
investor.relations@pnc.com

SOURCE PNC Financial Services Group, Inc.