What is causing the negative impact on PNC's noninterest income?

The negative impact on noninterest income is primarily due to two factors as of August 31, 2008: an increased liability related to its BlackRock LTIP shares obligation driven by BlackRock's stock price rise, and valuation adjustments on certain fair-valued assets like commercial mortgage loans due to widening credit spreads and market illiquidity.

Despite these impacts, what are PNC's full-year revenue and expense growth expectations for 2008?

PNC now expects total revenue growth for the full year 2008 to exceed ten percent compared to 2007. Total noninterest expense growth is expected to remain in the low to mid-single digits, indicating positive operating leverage for the period.

What is the current status of PNC's accumulated other comprehensive loss?

As of August 31, 2008, PNC's accumulated other comprehensive loss increased by $0.8 billion to $2.0 billion. This increase is primarily attributed to the impact of widening credit spreads on the company's available-for-sale securities portfolio, excluding the preferred stock in FHLMC and FNMA.

PNC 8-K: Regulation FD

Q: Will PNC be taking an impairment charge on its FHLMC and FNMA investments?

Yes, PNC expects to record a significant other-than-temporary impairment charge on its perpetual preferred stock investments in FHLMC and FNMA due to recent restructuring at these entities and the resulting impact on market pricing.

Summary

PNC Financial Services Group, Inc. filed an 8-K on September 9, 2008, to disclose significant impacts on its noninterest income due to market conditions as of August 31, 2008. The company reported a negative impact of approximately $120 million on noninterest income due to the increased liability related to its BlackRock LTIP shares obligation, driven by a rise in BlackRock's stock price. Additionally, widening credit spreads on certain fair-valued assets, primarily commercial mortgage loans held for sale, negatively impacted noninterest income by another $120 million, though the company noted these are valuation adjustments and not indicative of credit quality issues. Furthermore, PNC expects to record a significant other-than-temporary impairment charge on its perpetual preferred stock investments in FHLMC and FNMA due to recent restructuring and market pricing impacts. Despite these impacts, PNC anticipates that total revenue growth for the full year 2008 will exceed ten percent compared to 2007, with noninterest expense growth expected to remain in the low to mid-single digits, leading to positive operating leverage. The company also reported an increase in its accumulated other comprehensive loss by $0.8 billion to $2.0 billion, largely due to widening credit spreads on its available-for-sale securities portfolio, excluding the FHLMC and FNMA preferred stock. PNC emphasized that its remaining business operations and credit quality migrations are performing as expected.

Key Highlights

1Negative impact of approximately $120 million on noninterest income due to increased BlackRock LTIP shares obligation liability.
2Additional negative impact of approximately $120 million on noninterest income from widening credit spreads on commercial mortgage loans held for sale.
3Expectation of a significant other-than-temporary impairment charge on FHLMC and FNMA perpetual preferred stock.
4Anticipation of total revenue growth exceeding 10% for full-year 2008 compared to 2007.
5Expectation of low to mid-single-digit growth in total noninterest expense for full-year 2008, resulting in positive operating leverage.
6Increase in accumulated other comprehensive loss to $2.0 billion, primarily driven by widening credit spreads on available-for-sale securities.

PNC FINANCIAL SERVICES GROUP, INC. 8-K Report, Regulation FD Disclosure (Sep 9, 2008)

Summary

Key Highlights

Frequently Asked Questions