PNC Bank 2000 Annual Report Download - page 38

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EF F E C T O F DI S C O N T I N U E D OP E R AT I O N S
Year ended December 31 2000 1999 1999
Dollars in millions, except per share data Reported Core Reported
Income from continuing
operations . . . . . . . . . . . . . . $1,214 $1,137 $1,202
Discontinued operations . . . . . . 65 62 62
Total net income . . . . . . . . . . $1,279 $1,199 $1,264
Diluted EPS – continuing
operations . . . . . . . . . . . . . . $4.09 $3.72 $3.94
Discontinued operations . . . . . . .22 .21 .21
Total diluted EPS . . . . . . . . . $4.31 $3.93 $4.15
Cash diluted EPS – continuing
operations (a) . . . . . . . . . . . . $4.48 $4.00 $4.21
Discontinued operations (a) . . . .22 .21 .21
Total cash diluted EPS (a) . . . $4.70 $4.21 $4.42
(a) Excludes amortization of goodwill
The remainder of the discussion and information in this
Financial Review reflects continuing operations, unless
otherwise noted.
Earnings from continuing operations for 2000 of
$1.214 billion or $4.09 per diluted share increased 10%
compared with core earnings per diluted share for 1999.
Taxable-equivalent net interest income was $2.182 bil-
lion for 2000, a $184 million decrease compared with 1999.
The net interest margin was 3.64% for 2000 compared with
3.86% for 1999. The decreases were primarily due to fund-
ing costs related to the ISG acquisition, changes in balance
sheet composition and a higher interest rate environment
in 2000.
The provision for credit losses was $136 million for
2000 and net charge-offs were $135 million or .27% of
average loans. The provision for credit losses was $163 mil-
lion and net charge-offs were $161 million or .31% of aver-
age loans in 1999. The decreases were primarily due to the
sale of the credit card business in the first quarter of 1999,
partially offset by higher commercial net charge-offs
in 2000.
N o n i n t e rest income of $2.891 billion for 2000 incre a s e d
28% compared with 1999, excluding non-core items fro m
the prior year, and re p resented 57% of total revenue. The
i n c rease was primarily driven by strong growth in cert a i n
fee-based businesses, the impact of the ISG acquisition and
higher equity management income. Excluding ISG, noninter-
est income increased 13% compared with the prior year.
Noninterest expense was $3.071 billion and the effi-
ciency ratio was 57% in 2000 compared with $2.703 billion
and 55%, respectively, in 1999, excluding non-core items.
The increases were primarily due to the ISG acquisition.
Excluding ISG, noninterest expense increased 2% com-
pared with the prior year.
Total assets were $69.8 billion at December 31, 2000
compared with $69.3 billion at December 31, 1999.
Average earning assets were $59.9 billion for 2000 com-
pared with $61.3 billion for 1999. Average earning assets
declined primarily due to a decrease in loans that resulted
from the downsizing and exiting of certain non-strategic
lending businesses.
Shareholders’ equity totaled $6.7 billion at
December 31, 2000. The regulatory capital ratios were
8.03% for leverage, 8.60% for tier I risk-based and
12.57% for total risk-based capital. During 2000, PNC
repurchased 6.7 million shares of common stock.
The ratio of nonperforming assets to total loans, loans
held for sale and foreclosed assets was .71% at December 31,
2000 compared with .61% at December 31, 1999.
Nonperforming assets were $372 million at December 31,
2000 compared with $325 million at December 31, 1999.
The increase was primarily due to higher commercial non-
performing loans partially offset by lower commercial real
estate and residential mortgage nonperforming loans.
The allowance for credit losses was $675 million and
represented 1.33% of total loans and 209% of nonaccrual
loans at December 31, 2000. The comparable ratios were
1.36% and 232% , respectively, at December 31, 1999.
RE V I E W O F BU S I N E S S E S
PNC operates seven major businesses engaged in communi-
ty banking, corporate banking, real estate finance, asset-
based lending, wealth management, asset management and
global fund services: Community Banking, Corporate
Banking, PNC Real Estate Finance, PNC Business Credit,
PNC Advisors, BlackRock and PFPC.
Business results are presented based on PNC’s man-
agement accounting practices and the Corporation’s
management structure. There is no comprehensive, authori-
tative body of guidance for management accounting equiva-
lent to generally accepted accounting principles; therefore,
PNC’s business results are not necessarily comparable with
similar information for any other financial services institu-
tion. Financial results are presented, to the extent practica-
ble, as if each business operated on a stand-alone basis.
35