Fee-Based Revenue from Contracts with Customers

9 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

Fee-Based Revenue from Contracts with Customers

NOTE 15 FEE-BASED REVENUE FROM CONTRACTS WITH CUSTOMERS

A subset of our noninterest income relates to certain fee-based revenue within the scope of ASC Topic 606 - Revenue from Contracts with Customers (Topic 606). The objective of the standard is to clarify the principles for recognizing revenue from contracts with customers across all industries and to develop a common revenue standard under GAAP. The standard requires the application of a five-step recognition model to contracts, allocating the amount of consideration we expect to be entitled to across distinct promises in the contract, called performance obligations, and recognizing revenue when or as those services are transferred to the customer.

Fee-based revenue within the scope of Topic 606 is recognized within three of our reportable business segments, Retail Banking, Corporate & Institutional Banking (C&IB) and Asset Management Group. Income recognized from our investment in BlackRock, also a reportable segment, is outside of the scope of the standard. Topic 606 also excludes interest income, income from lease contracts, fair value gains from financial instruments (including derivatives), income from mortgage servicing rights and guarantee products, letter of credit fees, non-refundable fees associated with acquiring or originating a loan and gains from the sale of financial assets.

The following tables present noninterest income within the scope of Topic 606 disaggregated by segment. A description of the fee-based revenue and how it is recognized for each segment’s principal services and products follows each table.

Table 74: Retail Banking Noninterest Income Disaggregation



In millions	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018
Product
Deposit account fees	$	162	$	451
Debit card fees	130		374
Brokerage fees	86		260
Merchant services	54		156
Net credit card fees (a)	45		139
Other	71		214
Total in-scope noninterest income by product	$	548	$	1,594
Reconciliation to total Retail Banking noninterest income
Total in-scope noninterest income	$	548	$	1,594
Total out-of-scope noninterest income (b)	74		341
Total Retail Banking noninterest income	$	622	$	1,935


(a)	Net credit card fees consists of interchange fees of $115 million and $332 million and credit card reward costs of $70 million and $193 million for the three and nine months ended September 30, 2018, respectively.


(b)	Out-of-scope noninterest income includes revenue streams that fall under the scope of other accounting and disclosure requirements outside of Topic 606.

Deposit Account Fees

Retail Banking provides demand deposit, money market and savings account products for consumer and small business customers. Services include online and branch banking, overdraft and wire transfer services, imaging services and cash alternative services such as money orders and cashier's checks. We recognize fee income at the time these services are performed for the customer.

Debit Card and Net Credit Card Fees

As an issuing bank, Retail Banking earns interchange fee revenue from debit and credit card transactions. By offering card products, we maintain and administer card-related services such as credit card reward programs, account data and statement information, card activation, renewals, and card suspension and blockage. Interchange fees are earned when cardholders make purchases and are presented net of credit card reward costs.

Brokerage Fees

Retail Banking earns fee revenue by providing its customers a wide range of investment options through its brokerage services including mutual funds, annuities, stocks, bonds, long-term care and insurance products, and managed accounts. We earn fee revenue for transaction-based brokerage services, such as the execution of market trades, once the transaction has been completed as of the trade date. In other cases, such as investment management services, we earn fee revenue over the term of the customer contract.

Merchant Services

Retail Banking earns fee revenue for debit and credit card processing services. We provide these services to merchant businesses including point-of-sale payment acceptance capabilities and customized payment processing built around the merchant’s specific requirements. We earn fee revenue as the merchant's customers make purchases.

Other

Other noninterest income primarily includes ATM fees earned from our customers and non-PNC customers. These fees are recognized as transactions occur.

Table 75: Corporate & Institutional Banking Noninterest Income Disaggregation



In millions	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018
Product
Treasury management fees	$	196	$	578
Capital markets fees	147		397
Commercial mortgage banking activities	23		65
Other	16		51
Total in-scope noninterest income by product	$	382	$	1,091
Reconciliation to total Corporate & Institutional Banking noninterest income
Total in-scope noninterest income	$	382	$	1,091
Total out-of-scope noninterest income (a)	210		683
Total Corporate & Institutional Banking noninterest income	$	592	$	1,774


(a)	Out-of-scope noninterest income includes revenue streams that fall under the scope of other accounting and disclosure requirements outside of Topic 606.

Treasury Management Fees

C&IB provides corporations with cash and investment management services, receivables and disbursement management services, funds transfer services and access to online/mobile information management and reporting services. Treasury management fees are recognized over time as we perform these services.

Capital Markets Fees

Capital markets fees include securities underwriting fees, merger and acquisition advisory fees and other advisory related fees. We recognize these fees when the related transaction closes.

Commercial Mortgage Banking Activities

Commercial mortgage banking activities include servicing responsibilities where we do not own the servicing rights. Servicing responsibilities typically consist of collecting and remitting monthly borrower principal and interest payments, maintaining escrow deposits, performing loss mitigation and foreclosure activities, and, in certain instances, funding of servicing advances. We recognize servicing fees over time as we perform these activities.

Other

Other noninterest income within C&IB primarily comprised fees from collateral management and asset management services. We earn these fees over time as we perform these services.

Table 76: Asset Management Group Noninterest Income Disaggregation



In millions	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018
Customer Type
Personal	$	156	$	462
Institutional	70		206
Total in-scope noninterest income by customer type	$	226	$	668
Reconciliation to Asset Management Group noninterest income
Total in-scope noninterest income	$	226	$	668
Total out-of-scope noninterest income (a)	2		8
Total Asset Management Group noninterest income	$	228	$	676


(a)	Out-of-scope noninterest income includes revenue streams that fall under the scope of other accounting and disclosure requirements outside of Topic 606.

Asset Management Services

Asset Management Group provides both personal wealth and institutional asset management services including investment management, custody services, retirement planning, family planning, trust management and retirement administration services. We recognize fee revenue over the term of the customer contract based on the value of assets under management at a point in time.