0000713676us-gaap:~~ServicingContractsMemberpnc:CommercialMortgagesMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-03-31~~FairValueInputsLevel3Memberpnc:SpreadOverTheBenchmarkCurveMembersrt:WeightedAverageMemberus-gaap:ValuationTechniqueDiscountedCashFlowMemberpnc:LoansHeldForSaleMember2024-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2023~~March 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-09718

The PNC Financial Services Group, Inc.

(Exact name of registrant as specified in its charter)


Pennsylvania						25-1435979
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

The Tower at PNC Plaza, 300 Fifth Avenue, Pittsburgh, Pennsylvania 15222-2401

(Address of principal executive offices, including zip code)

(888) 762-2265

(Registrant’s telephone number including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $5.00	PNC	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of ~~July 17, 2023,~~April 15, 2024, there were ~~398,254,594~~397,907,180 shares of the registrant’s common stock ($5 par value) outstanding.

THE PNC FINANCIAL SERVICES GROUP, INC.

Cross-Reference Index to ~~Second~~First Quarter ~~2023~~2024 Form 10-Q


			Pages
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited).
Consolidated Income Statement			4340
Consolidated Statement of Comprehensive Income			4441
Consolidated Balance Sheet			4542
Consolidated Statement of Cash Flows			4643
Notes To Consolidated Financial Statements (Unaudited)
Note 1 Accounting Policies			4845
Note 2 Investment Securities			5646
Note 3 Loans and Related Allowance for Credit Losses			5949
Note 4 Loan Sale and Servicing Activities and Variable Interest Entities			7160
Note 5 Goodwill and Mortgage Servicing Rights			7362
Note 6 Leases			7464
Note 7 Borrowed Funds			7564
Note 8 Commitments			7665
Note 9 Total Equity and Other Comprehensive Income			7766
Note 10 Earnings Per Share			8068
Note 11 Fair Value			8169
Note 12 Financial Derivatives			9076
Note 13 Legal Proceedings			9682
Note 14 Segment Reporting			9883
Note 15 Fee-based Revenue from Contracts with Customers			~~101~~85

Note 16 ~~Regulatory Matters~~Subsequent Events			~~103~~87

Statistical Information (Unaudited)
Average Consolidated Balance Sheet And Net Interest Analysis			~~105~~88
Reconciliation of Taxable-Equivalent Net Interest Income (non-GAAP)			~~107~~90
Reconciliation of Core Noninterest Expense Guidance (non-GAAP)			90
Glossary			~~107~~90
Defined Terms			~~107~~90
Acronyms			~~107~~91
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A).
Financial Review			1
Executive Summary			1
Consolidated Income Statement Review			56
Consolidated Balance Sheet Review			9
Business Segments Review			1312
Risk Management			2119
Recent Regulatory Developments			3734
Critical Accounting Estimates and Judgments			3835
Internal Controls and Disclosure Controls and Procedures			4037
Cautionary Statement Regarding Forward-Looking Information			4038
Item 3. Quantitative and Qualitative Disclosures about Market Risk.			21-38, 49-50, 83-89
Item 4. Controls and Procedures.			4037
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.			~~107~~91
Item 1A. Risk Factors.			~~108~~91
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.			~~108~~92
Item 5. Other Information			~~108~~92
Item 6. Exhibits.			~~109~~93
Exhibit Index			~~109~~93
Corporate Information			~~109~~93
Signature			~~111~~95


MD&A TABLE REFERENCE	MD&A TABLE REFERENCE
Table
Table
Table	Table	Description	Page	Description		Page
1	1	Summary of Operations, Per Common Share Data and Performance Ratios	2	1	Summary of Operations, Per Common Share Data and Performance Ratios		2
2	2	Balance Sheet Highlights and Other Selected Ratios	2	2	Balance Sheet Highlights and Other Selected Ratios		3
3	3	Summarized Average Balances and Net Interest Income	6	3	Summarized Average Balances and Net Interest Income		6
4	4	Noninterest Income	7	4	Noninterest Income		7
5	5	Noninterest Expense	8	5	Noninterest Expense		8
6	6	Provision for (Recapture of) Credit Losses	8	6	Provision for Credit Losses		8
7	7	Summarized Balance Sheet Data	9	7	Summarized Balance Sheet Data		9
8	8	Loans	10	8	Loans		10
9	9	Investment Securities	11	9	Investment Securities		10
10	10	Weighted-Average Expected Maturities of Mortgage and Asset-Backed Debt Securities	11	10	Weighted-Average Expected Maturities of Mortgage and Asset-Backed Debt Securities		11
11	11	Details of Funding Sources	12	11	Details of Funding Sources		11
12	12	Retail Banking Table	14	12	Retail Banking Table		13
13	13	Corporate & Institutional Banking Table	17	13	Corporate & Institutional Banking Table		15
14	14	Asset Management Group Table	20	14	Asset Management Group Table		18
15	15	Details of Loans	21	15	Details of Loans		19
16	16	Commercial and Industrial Loans by Industry	22	16	Commercial and Industrial Loans by Industry		20
17	17	Commercial Real Estate Loans by Geography and Property Type	23	17	Commercial Real Estate Loans by Geography and Property Type		21
18	18	Residential Real Estate Loan Statistics	24	18	Residential Real Estate Loan Statistics		22
19	19	Home Equity Loan Statistics	25	19	Home Equity Loan Statistics		23
20	20	Auto Loan Statistics	25	20	Auto Loan Statistics		23
21	21	Nonperforming Assets by Type	26	21	Nonperforming Assets by Type		24
22	22	Change in Nonperforming Assets	26	22	Change in Nonperforming Assets		24
23	23	Accruing Loans Past Due	27	23	Accruing Loans Past Due		25
24	24	Allowance for Credit Losses by Loan Class	28	24	Allowance for Credit Losses by Loan Class		26
25	25	Loan Charge-Offs and Recoveries	29	25	Loan Charge-Offs and Recoveries		27
26	26	Senior and Subordinated Debt	30	26	Senior and Subordinated Debt		28
27	27	Contingent Liquidity Sources	30	27	Primary Contingent Liquidity Sources		28
28	28	Parent Company Notes Issued	31	28	Parent Company Notes Issued		29
29	29	Credit Ratings for PNC and PNC Bank	32	29	Credit Ratings and Outlook		30
30	30	Basel III Capital	33	30	Basel III Capital		31
31	31	Interest Sensitivity Analysis	34	31	Net Interest Income Sensitivity Analysis		32
32	32	Net Interest Income Sensitivity to Alternative Rate Scenarios	34	32	Economic Value of Equity Sensitivity Analysis		33
33	33	Alternate Interest Rate Scenarios: One Year Forward	35	33	Equity Investments Summary		33
34	34	Equity Investments Summary	36	34	Key Macroeconomic Variables in CECL Weighted-Average Scenarios		36
35		Key Macroeconomic Variables in CECL Weighted-Average Scenarios	39


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TABLE REFERENCE	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TABLE REFERENCE
Table	Table	Description	Page
Table
Table					Description		Page
35				35	Investment Securities Summary		46
36	36	Investment Securities Summary	56	36	Gross Unrealized Loss and Fair Value of Securities Available for Sale Without an Allowance for Credit Losses		47

37
37
37	37	Gross Unrealized Loss and Fair Value of Securities Available for Sale Without an Allowance for Credit Losses	57	Contractual Maturity of Debt Securities		48
38	38	Gains (Losses) on Sales of Securities Available for Sale	57	38	Fair Value of Securities Pledged and Accepted as Collateral		48
39	39	Contractual Maturity of Debt Securities	58	39	Analysis of Loan Portfolio		50
40	40	Fair Value of Securities Pledged and Accepted as Collateral	58	40	Nonperforming Assets		51
41	41	Analysis of Loan Portfolio	60	41	Commercial Credit Quality Indicators		52
42	42	Nonperforming Assets	61	42	Credit Quality Indicators for Residential Real Estate and Home Equity Loan Classes		53
43	43	Commercial Credit Quality Indicators	62	43	Credit Quality Indicators for Automobile, Credit Card, Education and Other Consumer Loan Classes		55
44	44	Credit Quality Indicators for Residential Real Estate and Home Equity Loan Classes	63	44	Loan Modifications Granted to Borrowers Experiencing Financial Difficulty		57
45	45	Credit Quality Indicators for Automobile, Credit Card, Education and Other Consumer Loan Classes	65	45	Financial Effect of FDMs		58
46	46	Loan Modifications Granted to Borrowers Experiencing Financial Difficulty	67	46	Payment Performance of FDMs Modified in the Last 12 Months		59
47	47	Financial Effect of Modifications to Borrowers Experiencing Financial Difficulty	69	47	Payment Performance of FDMs Table		59
48	48	Delinquency Status of Loans Modified to Borrowers Experiencing Financial Difficulty	69	48	Rollforward of Allowance for Credit Losses		60
49	49	Financial Impact and TDRs by Concession Type	70	49	Loan Sale and Servicing Activities		61
50	50	Rollforward of Allowance for Credit Losses	70	50	Principal Balance, Delinquent Loans and Net Charge-offs Related to Serviced Loans For Others		61
51	51	Loan Sale and Servicing Activities	71	51	Non-Consolidated VIEs		62
52	52	Principal Balance, Delinquent Loans and Net Charge-offs Related to Serviced Loans For Others	72	52	Mortgage Servicing Rights		63
53	53	Non-Consolidated VIEs	72	53	Commercial Mortgage Servicing Rights – Key Valuation Assumptions		63
54	54	Mortgage Servicing Rights	73	54	Residential Mortgage Servicing Rights – Key Valuation Assumptions		64
55	55	Commercial Mortgage Servicing Rights – Key Valuation Assumptions	74	55	Lessor Income		64
56	56	Residential Mortgage Servicing Rights – Key Valuation Assumptions	74	56	Borrowed Funds		64
57	57	Lessor Income	74	57	FHLB Borrowings, Senior Debt and Subordinated Debt		65
58	58	Borrowed Funds	75	58	Commitments to Extend Credit and Other Commitments		65
59	59	FHLB Borrowings, Senior Debt and Subordinated Debt	75	59	Rollforward of Total Equity		66
60	60	Commitments to Extend Credit and Other Commitments	76	60	Other Comprehensive Income (Loss)		67
61	61	Rollforward of Total Equity	77	61	Accumulated Other Comprehensive Income (Loss) Components		67
62	62	Other Comprehensive Income (Loss)	78	62	Dividends Per Share		67
63	63	Accumulated Other Comprehensive Income (Loss) Components	78	63	Basic and Diluted Earnings Per Common Share		68
64	64	Dividends Per Share	79	64	Fair Value Measurements – Recurring Basis Summary		69
65	65	Basic and Diluted Earnings Per Common Share	80	65	Reconciliation of Level 3 Assets and Liabilities		70
66	66	Fair Value Measurements – Recurring Basis Summary	81	66	Fair Value Measurements – Recurring Quantitative Information		72
67	67	Reconciliation of Level 3 Assets and Liabilities	82	67	Fair Value Measurements – Nonrecurring		74
68	68	Fair Value Measurements – Recurring Quantitative Information	86	68	Fair Value Option – Fair Value and Principal Balances		74
69	69	Fair Value Measurements – Nonrecurring	88	69	Fair Value Option – Changes in Fair Value		75
70	70	Fair Value Option – Fair Value and Principal Balances	88	70	Additional Fair Value Information Related to Other Financial Instruments		75
71	71	Fair Value Option – Changes in Fair Value	89	71	Total Gross Derivatives		77
72	72	Additional Fair Value Information Related to Other Financial Instruments	89	72	Gains (Losses) Recognized on Fair Value and Cash Flow Hedges in the Consolidated Income Statement		79
73	73	Total Gross Derivatives	91	73	Hedged Items - Fair Value Hedges		79
74	74	Gains (Losses) Recognized on Fair Value and Cash Flow Hedges in the Consolidated Income Statement	93	74	Gains (Losses) on Derivatives Not Designated for Hedging		80
75	75	Hedged Items - Fair Value Hedges	94	75	Derivative Assets and Liabilities Offsetting		81
76	76	Gains (Losses) on Derivatives Not Designated for Hedging	94	76	Credit-Risk Contingent Features		82
77	77	Derivative Assets and Liabilities Offsetting	95	77	Results of Businesses		85
78	78	Credit-Risk Contingent Features	96	78	Noninterest Income by Business Segment and Reconciliation to Consolidated Noninterest Income		86
79		Results of Businesses	99
80		Noninterest Income by Business Segment and Reconciliation to Consolidated Noninterest Income	102

FINANCIAL REVIEW

THE PNC FINANCIAL SERVICES GROUP, INC.

This Financial Review, including the Consolidated Financial Highlights, should be read together with our unaudited Consolidated Financial Statements and unaudited Statistical Information included elsewhere in this Quarterly Report on Form 10-Q (the “Report” or “Form 10-Q”) and with Items 6, 7, 8 and 9A of our ~~2022~~2023 Annual Report on Form 10-K (our ~~“2022~~“2023 Form 10-K”). For information regarding certain business, regulatory and legal risks, see the following: the Risk Management section of this Financial Review and of Item 7 in our ~~2022~~2023 Form 10-K; Item 1A Risk Factors included in our ~~first quarter~~ 2023 ~~Form 10-Q and our 2022~~ Form 10-K; and the Commitments and Legal Proceedings Notes included in this Report and Item 8 of our ~~2022~~2023 Form 10-K. Also, see the Cautionary Statement Regarding Forward-Looking Information section in this Financial Review and the Critical Accounting Estimates and Judgments section in this Financial Review and in our ~~2022~~2023 Form 10-K for certain other factors that could cause actual results or future events to differ, perhaps materially, from historical performance and from those anticipated in the forward-looking statements included in this Report. See Note 14 Segment Reporting for a reconciliation of total business segment earnings to total PNC consolidated net income as reported on a GAAP basis. In this Report, “PNC,” “we” or “us” refers to The PNC Financial Services Group, Inc. and its subsidiaries on a consolidated basis (except when referring to PNC as a public company, its common stock or other securities issued by PNC, which just refer to The PNC Financial Services Group, Inc.). References to The PNC Financial Services Group, Inc. or to any of its subsidiaries are specifically made where applicable.

See page ~~107~~90 for a glossary of certain terms and acronyms used in this Report.

EXECUTIVE SUMMARY

Headquartered in Pittsburgh, Pennsylvania, we are one of the largest diversified financial institutions in the U.S. We have businesses engaged in retail banking, including residential mortgage, corporate and institutional banking and asset management, providing many of our products and services nationally. Our retail branch network is located coast-to-coast. We also have strategic international offices in four countries outside the U.S.

Key Strategic Goals

At PNC we manage our company for the long term. We are focused on the fundamentals of growing customers, loans, deposits and revenue and improving profitability, while investing for the future and managing risk, expenses and capital. We continue to invest in our products, markets and brand, and embrace our commitments to our customers, shareholders, employees and the communities where we do business.

We strive to serve our customers and expand and deepen relationships by offering a broad range of deposit, credit and fee-based products and services. We are focused on delivering those products and services to our customers with the goal of addressing their financial objectives and needs. Our business model is built on customer loyalty and engagement, understanding our customers’ financial goals and offering our diverse products and services to help them achieve financial well-being. Our approach is concentrated on organically growing and deepening client relationships across our businesses that meet our risk/return measures.

We are focused on our strategic priorities, which are designed to enhance value over the long term, and consist of:

•Expanding our leading banking franchise to new markets and digital platforms,

•Deepening customer relationships by delivering a superior banking experience and financial solutions, and

•Leveraging technology to create efficiencies that help us better serve customers.

Our capital and liquidity priorities are to support customers, fund business investments and return excess capital to shareholders, while maintaining appropriate capital and liquidity in light of economic conditions, the Basel III framework and other regulatory expectations. For more detail, see the Capital Highlights portion of this Executive Summary, the Liquidity and Capital Management portion of the Risk Management section of this Financial Review and the Supervision and Regulation section in Item 1 Business of our ~~2022~~2023 Form 10-K.

~~Presentation~~Signature Bank Portfolio Acquisition

On October 2, 2023, PNC acquired a portfolio of ~~Noninterest Income~~capital commitments facilities from Signature Bridge Bank, N.A. through an agreement with the FDIC as receiver of the former Signature Bank, New York. The acquired portfolio represented approximately $16.0 billion in total commitments, including approximately $9.0 billion of funded loans, at the time of acquisition.

Workforce Reduction

During the fourth quarter of 2023, PNC implemented a workforce reduction that is expected to reduce 2024 personnel expense by approximately $325 million, on a pre-tax basis. PNC incurred expenses of $150 million in the fourth quarter of 2023 in connection with this workforce reduction.

1 The PNC Financial Services Group, Inc. – Form 10-Q

FDIC Special Assessment

In November 2023, the FDIC approved a final rule to implement a special assessment to recover the loss to the Deposit Insurance Fund associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank. In the first quarter of 2024, PNC incurred an additional pre-tax expense of $130 million related to the increase in the FDIC’s expected losses. PNC incurred a pre-tax expense of $515 million during the fourth quarter of 2022, PNC updated the name of the noninterest income line item “Capital markets related” to “Capital markets and advisory.” This update did not impact the components of the category. All periods presented herein reflect these changes. For a description of each updated noninterest income revenue stream, see Note 1 Accounting Policies in our 2022 Form 10-K.2023.

Selected Financial Data

The following tables include selected financial data, which should be reviewed in conjunction with the Consolidated Financial Statements and Notes included in Item 1 of this Report as well as the other disclosures in this Report concerning our historical financial performance, our future prospects and the risks associated with our business and financial performance.

1 ~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~

Table 1: Summary of Operations, Per Common Share Data and Performance Ratios


Dollars in millions, except per share data Unaudited	Dollars in millions, except per share data Unaudited	Three months ended									Six months ended
		June 30			March 31			June 30			June 30			June 30
		2023			2023			2022			2023			2022
March 31
March 31
March 31
2024
2024
2024
Summary of Operations (a)
Summary of Operations (a)
Summary of Operations (a)	Summary of Operations (a)

Net interest income	Net interest income	$	3,510		$	3,585		$	3,051		$	7,095		$	5,855

Net interest income

Net interest income
Noninterest income
Noninterest income
Noninterest income	Noninterest income	1,783			2,018			2,065			3,801			3,953
Total revenue	Total revenue	5,293			5,603			5,116			10,896			9,808
Provision for (recapture of) credit losses		146			235			36			381			(172)
Total revenue
Total revenue
Provision for credit losses
Provision for credit losses
Provision for credit losses
Noninterest expense
Noninterest expense
Noninterest expense	Noninterest expense	3,372			3,321			3,244			6,693			6,416
Income before income taxes and noncontrolling interests	Income before income taxes and noncontrolling interests	$	1,775		$	2,047		$	1,836		$	3,822		$	3,564
Income before income taxes and noncontrolling interests
Income before income taxes and noncontrolling interests
Income taxes
Income taxes
Income taxes	Income taxes	275			353			340			628			639

Net income	Net income	$	1,500		$	1,694		$	1,496		$	3,194		$	2,925

Net income

Net income

Net income attributable to common shareholders

Net income attributable to common shareholders

Net income attributable to common shareholders	Net income attributable to common shareholders	$	1,354		$	1,607		$	1,409		$	2,961		$	2,770
Per Common Share	Per Common Share
Per Common Share
Per Common Share
Basic	Basic	$	3.36		$	3.98		$	3.39		$	7.35		$	6.62
Basic
Basic

Diluted

Diluted

Diluted	Diluted	$	3.36		$	3.98		$	3.39		$	7.34		$	6.61

Book value per common share	Book value per common share	$	105.67		$	104.76		$	101.39

Book value per common share

Book value per common share
Performance Ratios
Performance Ratios
Performance Ratios	Performance Ratios
Net interest margin (b)	Net interest margin (b)	2.79		%	2.84		%	2.50		%	2.81		%	2.39		%
Net interest margin (b)
Net interest margin (b)
Noninterest income to total revenue
Noninterest income to total revenue
Noninterest income to total revenue	Noninterest income to total revenue	34		%	36		%	40		%	35		%	40		%
Efficiency	Efficiency	64		%	59		%	63		%	61		%	65		%
Efficiency
Efficiency
Return on:
Return on:
Return on:	Return on:
Average common shareholders’ equity	Average common shareholders’ equity	13.01		%	16.11		%	13.52		%	14.53		%	12.53		%
Average common shareholders’ equity
Average common shareholders’ equity
Average assets	Average assets	1.08		%	1.22		%	1.10		%	1.15		%	1.07		%
Average assets
Average assets

(a)The Executive Summary and Consolidated Income Statement Review portions of this Financial Review section provide information regarding items impacting the comparability of the periods presented.

(b)See explanation and reconciliation of this non-GAAP measure in the Average Consolidated Balance Sheet and Net Interest Analysis and Reconciliation of Taxable-Equivalent Net Interest Income (non-GAAP) ~~in the~~ Statistical Information (Unaudited) section in Item 1 of this Report.

2 The PNC Financial Services Group, Inc. – Form 10-Q

Table 2: Balance Sheet Highlights and Other Selected Ratios


Dollars in millions, except as noted Unaudited	Dollars in millions, except as noted Unaudited	June 30 2023			December 31 2022			June 30 2022
Balance Sheet Highlights (a)	Balance Sheet Highlights (a)
Balance Sheet Highlights (a)
Balance Sheet Highlights (a)
Assets
Assets
Assets	Assets	$	558,207		$	557,263		$	540,786
Loans	Loans	$	321,761		$	326,025		$	310,800
Loans
Loans
Allowance for loan and lease losses
Allowance for loan and lease losses
Allowance for loan and lease losses	Allowance for loan and lease losses	$	4,737		$	4,741		$	4,462
Interest-earning deposits with banks	Interest-earning deposits with banks	$	38,259		$	27,320		$	28,404
Interest-earning deposits with banks
Interest-earning deposits with banks
Investment securities
Investment securities
Investment securities	Investment securities	$	135,661		$	139,334		$	132,732

Total deposits	Total deposits	$	427,489		$	436,282		$	440,811

Total deposits

Total deposits
Borrowed funds
Borrowed funds
Borrowed funds	Borrowed funds	$	65,384		$	58,713		$	35,984

Total shareholders’ equity	Total shareholders’ equity	$	49,320		$	45,774		$	47,652

Total shareholders’ equity

Total shareholders’ equity
Common shareholders’ equity
Common shareholders’ equity
Common shareholders’ equity	Common shareholders’ equity	$	42,083		$	40,028		$	41,648

Other Selected Ratios	Other Selected Ratios

Other Selected Ratios

Other Selected Ratios
Common equity Tier 1
Common equity Tier 1
Common equity Tier 1	Common equity Tier 1	9.5		%	9.1		%	9.6		%

Loans to deposits	Loans to deposits	75		%	75		%	71		%

Loans to deposits

Loans to deposits
Common shareholders’ equity to total assets
Common shareholders’ equity to total assets
Common shareholders’ equity to total assets	Common shareholders’ equity to total assets	7.5		%	7.2		%	7.7		%

(a)The Executive Summary and Consolidated Balance Sheet Review portions of this Financial Review provide information regarding items impacting the comparability of the periods presented.

Income Statement Highlights

•For the three months ended March 31, 2024 compared to the three months ended December 31, 2023:

•Total revenue decreased ~~$194~~$216 million, or ~~11%~~4%, to $5.1 billion.

•Net interest income of $3.3 billion decreased $139 million, or 4%, primarily due to increased funding costs, lower loan balances and one fewer day in the quarter.

•Net interest margin declined 9 basis points to 2.57%, primarily as a result of higher funding costs.

•Noninterest income decreased $77 million, or 4%, primarily due to lower capital markets and advisory activity and seasonal declines in card and cash management fees. The first quarter also included negative Visa Class B-1 derivative fair value adjustments of $7 million. Visa Class B-1 derivative fair value adjustments were negative $100 million in the fourth quarter of 2023.

•Provision for credit losses of $155 million in the first quarter of 2024 reflected portfolio activity and improved macroeconomic factors. The fourth quarter of 2023 included a provision for credit losses of $232 million.

•Noninterest expense decreased $740 million, or 18%, to $3.3 billion, driven by lower or stable expenses across all categories, reflecting a continued focus on expense management. The first quarter of 2024 included an additional pre-tax expense of $130 million related to the increase in the FDIC’s expected losses. The fourth quarter of 2023 included $515 million pertaining to the FDIC special assessment as well as $150 million of workforce reduction charges.

Net income decreased $350 million, or 21%, compared to $1.7 billion, or $3.98 per diluted common share, for the first quarter of 2023 ~~primarily due to~~driven by lower ~~noninterest income,~~ net interest ~~income~~ and ~~increased expenses,~~noninterest income, partially offset by a lower provision for credit losses.

•For the three months ended ~~June 30, 2023~~March 31, 2024 compared to the three months ended March 31, 2023:

•Total revenue decreased ~~$310~~$458 million, or 6%8%, to ~~$5.3~~$5.1 billion.

•Net interest income ~~of $3.5 billion~~ decreased ~~$75~~$321 million, or 2%9%, as the benefit of higher interest-earning asset yields ~~on interest-earning assets were~~was more than offset by increased funding ~~costs as well as lower loan and securities balances.~~costs.

2 ~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~

•Net interest margin decreased 527 basis points, ~~to 2.79%~~primarily as ~~the change in yields on interest-earning assets was more than offset by the change in rates on~~a result of higher funding costs.

•Noninterest income decreased ~~$235~~$137 million, or ~~12%~~7%, ~~due to lower~~and included a decline in private equity revenue ~~a decrease in~~and residential and commercial mortgage ~~servicing rights valuation, net of economic hedge and lower~~ revenue, ~~from market sensitive businesses,~~ partially offset by ~~seasonally higher consumer transaction volumes~~growth in card and ~~increased treasury~~cash management ~~product revenue. The decrease also included negative~~and asset management and brokerage fees. Visa Class BB-1 derivative fair value adjustments ~~of $83~~were negative $45 million ~~related to litigation escrow funding and other valuation changes. The~~in the first quarter of ~~2023 included negative Visa Class B derivative fair value adjustments of $45 million.~~2023.

•Provision for credit losses of ~~$146~~$155 million infor the ~~second quarter~~first three months of ~~2023~~2024 reflected portfolio activity and ~~changes in~~improved macroeconomic ~~variables.~~factors. The first ~~quarter~~three months of 2023 included a provision for credit losses of $235 million.

•Noninterest expense ~~increased $51 million, or 2%, to $3.4 billion, primarily due to seasonally higher marketing spend and the full quarter impact of annual employee merit increases.~~

Net income of $3.2 billion, or $7.34 per diluted common share, for the first six months of 2023 increased $269 million, or 9%, compared to $2.9 billion, or $6.61 per diluted common share, for the six months ended 2022, primarily as a result of higher net interest income, partially offset by a higher provision for credit losses and increased expenses.

•~~For the six months ended June 30, 2023~~was stable compared to the ~~six months ended June 30, 2022:~~

•~~Total revenue increased $1.1 billion, or 11%, to $10.9 billion.~~

•~~Net interest income increased $1.2 billion, or 21%, as a result of higher interest-earning asset yields and balances, partially offset by higher funding costs.~~

•~~Net interest margin increased 42 basis points reflecting the benefit of higher yields on interest-earning assets.~~

•~~Noninterest income decreased $152 million, or 4%, and included lower merger and acquisition advisory activity.~~

•~~Provision for credit losses of $381 million for the~~ first ~~six~~three months of ~~2023 included the impact of our updated economic outlook and changes in portfolio composition and quality.~~2023. The first ~~six months~~quarter of ~~2022~~2024 included ~~a recapture~~an additional pre-tax expense of ~~credit losses of $172 million.~~

•~~Noninterest expense increased $277~~$130 million ~~or 4%, due~~related to ~~higher personnel costs, an increased FDIC assessment rate and higher marketing and technology costs to support business growth.~~the increase in the FDIC’s expected losses.

For additional detail, see the Consolidated Income Statement Review section of this Financial Review.

The PNC Financial Services Group, Inc. – Form 10-Q 3

Balance Sheet Highlights

Our balance sheet was strong and well positioned at ~~June 30, 2023.~~March 31, 2024. In comparison to December 31, ~~2022:~~2023:

•Total assets of ~~$558.2~~$566.2 billion ~~were stable.~~increased modestly primarily due to higher balances held with the Federal Reserve Bank, partially offset by lower securities and loan balances.

•Total loans decreased ~~$4.3~~$1.7 billion, or 1%, to ~~$321.8~~$319.8 billion.

•Total commercial loans decreased ~~$5.1~~$0.7 billion, ~~or 2%,~~ to ~~$220.0~~$218.8 billion, driven by apaydowns outpacing new production and lower utilization of loan ~~commitments in addition to paydowns outpacing new production.~~commitments.

•Total consumer loans ~~increased $828 million~~declined $1.0 billion to ~~$101.8~~$100.9 billion, ~~as growth in residential mortgages, automobile, home equity and credit card loans were partially offset by declines in the remaining portfolios~~ as paydowns outpaced new ~~originations.~~originations and draws on existing accounts.

•Investment securities decreased ~~$3.7~~$2.1 billion, or 3%2%, to ~~$135.7~~$130.5 billion, primarily due to prepayments and maturities outpacing purchases.

•Interest-earning deposits with banks, primarily with the Federal Reserve Bank, increased ~~$10.9~~$9.8 billion, or ~~40%~~22%, to ~~$38.3~~$53.6 billion, primarily due to ~~higher borrowed funds~~an increase in deposits and a decrease in securities and loans ~~partially offset by lower deposits.~~balances.

•Total deposits ~~decreased $8.8~~increased $4.2 billion, ~~or 2%,~~ to ~~$427.5~~$425.6 billion, ~~as a result of lower~~reflecting higher commercial and consumer ~~and commercial deposits, reflecting seasonal declines and the impact of quantitative tightening by the Federal Reserve. In addition, noninterest-bearing~~deposits. Noninterest-bearing deposit balances decreased ~~due to the continued shift into~~driven by a decline in commercial noninterest-bearing balances. Interest-bearing deposits increased reflecting higher commercial and consumer interest-bearing ~~deposit products as interest rates have risen.~~balances.

•Borrowed funds ~~increased $6.7~~were largely stable at $72.7 billion, ~~or 11%, to $65.4 billion due to~~as parent company senior debt issuances ~~and higher~~were offset by lower FHLB borrowings.

For additional detail, see the Consolidated Balance Sheet Review section of this Financial Review.

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ 3

Credit Quality Highlights

The ~~second~~first quarter of ~~2023~~2024 reflected ~~strong~~stable credit quality performance.

•At ~~June 30, 2023~~March 31, 2024 compared to December 31, ~~2022:~~

•~~Nonperforming assets decreased $70 million, or 3%, to $1.9 billion.~~2023:

•Overall loan delinquencies of ~~$1.2~~$1.3 billion decreased ~~$278~~$109 million, or ~~19%~~8%, driven by lower consumer and commercial loan delinquencies.

•The ACL related to loans, which consists of the ALLL and the allowance for unfunded lending related commitments, totaled $5.4 billion and $5.5 billion at ~~both June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023, respectively. During the ~~six~~three months ended ~~June 30, 2023, reserves reflected our updated economic outlook and changes in~~March 31, 2024, this reserve was driven by improved macroeconomic factors as well as portfolio ~~composition and quality.~~activity. ACL to total loans was 1.68% and ~~1.67%~~1.70% at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

•Nonperforming assets increased $199 million, or 9%, to $2.4 billion, primarily due to higher commercial real estate nonperforming loans.

•Net charge-offs of ~~$194~~$243 million, or ~~0.24%~~0.30% of average loans, in the ~~second~~first quarter of 2024 increased $43 million compared to the fourth quarter of 2023 ~~were stable compared~~primarily due to ~~the first quarter of 2023.~~higher commercial net loan charge-offs.

For additional detail see the Credit Risk Management portion of the Risk Management section of this Financial Review.

Capital and Liquidity Highlights

We maintained our strong capital and liquidity positions.

•Common shareholders’ equity of ~~$42.1~~$45.1 billion at ~~June 30, 2023,~~March 31, 2024, increased ~~$2.1~~$0.2 billion, ~~or 5%,~~ compared to December 31, ~~2022, increased~~2023 due to the benefit of net income, ~~and an improvement in AOCI,~~ partially offset by common dividends paid, a decline in AOCI and common share repurchases.

•In the ~~second~~first quarter of ~~2023,~~2024, PNC returned ~~$0.7~~$0.8 billion of capital to shareholders, ~~as a result of~~reflecting more than $0.6 billion of dividends on common shares and more than $0.1 billion of common share repurchases, representing ~~1.1~~0.9 million shares.

•Consistent with the SCB framework, which allows for capital return in amounts in excess of the SCB minimum levels, our Board of Directors has authorized a repurchase framework under the previously approved repurchase program of up to 100 million common shares, of which approximately ~~46%~~44% were still available for repurchase at ~~June 30, 2023. PNC’s SCB through September 30, 2023 is 2.9%. Based on the results~~March 31, 2024. In light of the Federal ~~Reserve’s 2023 annual stress test,~~banking agencies proposed rules to adjust the Basel III capital framework, second quarter 2024 share repurchase activity is expected to approximate recent quarterly average share repurchase levels. PNC continues to evaluate the potential impact of the proposed rules and may adjust share repurchase activity depending on market and economic conditions, as well as other factors. PNC’s SCB for the four-quarter period beginning October 1, 2023 ~~will improve to~~is the regulatory minimum of 2.5%.

•On ~~July~~April 3, ~~2023,~~2024, the PNC Board of Directors ~~raised the~~declared a quarterly cash dividend on common stock toof $1.55 per share ~~an increase~~to be paid on May 6, 2024 to shareholders of ~~5 cents per share. The dividend, with a payment date~~record at the close of ~~August 5, 2023, will be payable the next~~ business ~~day.~~April 15, 2024.

•Our CET1 ratio increased to ~~9.5%~~10.1% at ~~June 30, 2023~~March 31, 2024 from ~~9.1%~~9.9% at December 31, ~~2022.~~2023.

•PNC elected a five-year transition provision effective March 31, 2020 to delay ~~until~~through December 31, 2021 the full impact of the CECL standard on regulatory capital, followed by a three-year transition period. Effective for the first quarter of 2022, PNC is now in the three-year transition period, and the full impact of the CECL standard is being

4 The PNC Financial Services Group, Inc. – Form 10-Q

phased-in to regulatory capital through December 31, 2024. The fully implemented ratios reflect the full impact of CECL and exclude the benefits of this transition provision. The estimated CET1 fully implemented ratio was ~~9.4%~~10.0% at ~~June 30, 2023~~March 31, 2024 compared to ~~8.9%~~9.8% at December 31, ~~2022.~~

•~~PNC’s average LCR for the three months ended June 30, 2023 was 109% and exceeded the regulatory minimum requirement throughout the quarter.~~2023.

See the Liquidity and Capital Management portion of the Risk Management section of this Financial Review for more detail on our ~~2023~~ liquidity and capital actions as well as our capital ratios.

PNC’s ability to take certain capital actions, including returning capital to shareholders, is subject to PNC meeting or exceeding an SCB established by the Federal Reserve Board in connection with the Federal Reserve Board’s CCAR process. For additional information, see Capital Management in the Risk Management section in this Financial Review and the Supervision and Regulation section in our ~~2022~~2023 Form 10-K.

Business Outlook

Statements regarding our business outlook are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Our forward-looking financial statements are subject to the risk that economic and financial market conditions will be substantially different than those we are currently ~~expecting and do not take into account the potential impact of legal and regulatory contingencies.~~expecting. These statements are based on our views that:

•~~The economy continued to expand in the first half of 2023, but~~PNC’s baseline forecast is for slower economic growth in 2024 as consumer spending growth slows and higher interest rates remain a drag on the economy. The ongoing strength of the labor market will continue to support consumer spending. The FOMC is ~~slowing in response~~indicating that it will start to cut the ongoing Federal Reserve monetary policy tightening to slow inflation. This has led to large increases in both short- and long-term interest rates. The housing market stabilized in the first half of 2023 as the Federal Reserve signaled a potential end to its federal funds rate ~~hiking cycle. However, given~~later this year, with rate cuts supporting economic growth toward the ~~upward trajectory in mortgage rates and declining affordability, PNC continues to expect slower activity in the housing market in the second half~~end of ~~2023 with a recovery in early 2024 as the~~2024.

4 ~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~

~~Federal Reserve starts cutting the federal funds rate.~~

•~~PNC’s baseline outlook is for a mild recession starting in late 2023 or early 2024, with a smaller contraction in real~~Real GDP growth this year will be close to its trend of ~~less than 1%, lasting into mid-2024. The~~2% and the unemployment rate will increase inmodestly to just above 4% by the ~~second half~~end of ~~this year, ending 2023 at above 4%, and then peak slightly above 5% in early 2025.~~2024. Inflation will continue to slow ~~with weaker demand,~~as wage pressures abate, moving back to the Federal Reserve’s 2% long-term objective by ~~this time next year.~~the end of 2025.

•PNC expects the federal funds rate to remain unchanged between 5.25% and 5.50% through ~~March~~at least the first half of 2024, ~~when it is expected that~~with federal funds rate cuts starting in the ~~Federal Reserve will cut rates~~third quarter as inflationary pressures ease further. PNC expects two federal funds rate cuts in ~~response to~~2024, with the ~~recession.~~rate ending this year in a range between 4.75% and 5.00%.

For the ~~third~~second quarter of ~~2023,~~2024, compared to the ~~second~~first quarter of 2024, we expect:

•Average loans to be stable,

•Net interest income to be down approximately 1%,

•Fee income to be up 1% to 2%,

•Other noninterest income to be $150 million to $200 million,

•Revenue to be stable,

•Core noninterest expense to be up 2% to 4%, and

•Net loan charge-offs to be $225 million to $275 million.

For the full year 2024, compared to the full year of 2023, we expect:

•Average loans to be ~~down~~up approximately 1%,

•Net interest income to be down 3%4% to 4%5%,

•Noninterest income ~~excluding net securities gains and Visa activity,~~ to be up ~~10%~~4% to ~~11%~~6%,

•Revenue to be ~~up approximately 1%~~stable to down 2%,

•~~Noninterest~~Core noninterest expense ~~excluding the proposed FDIC special assessment,~~ to be stable, ~~and~~

•~~Net loan charge-offs to be $200 million to $250 million.~~

~~For the full year 2023, compared to the full year of 2022, we expect:~~

•~~Period-end loans to be stable,~~

•~~Average loans to be up 5% to 6%,~~

•~~Net interest income to be up 5% to 6%,~~

•~~Noninterest income, excluding net securities gains and Visa activity, to be down 2% to 4%,~~

•~~Revenue to be up 2% to 2.5%,~~

•~~Noninterest expense, excluding the proposed FDIC special assessment, to be up approximately 2%,~~ and

•The effective tax rate to be approximately ~~18%~~18.5%.

Core noninterest expense guidance excludes an additional pre-tax expense of $130 million related to the increase in the FDIC’s expected losses in the first quarter of 2024, and $515 million pertaining to the FDIC special assessment as well as $150 million of workforce reduction charges incurred in the fourth quarter of 2023. See the Statistical Information (Unaudited) – Reconciliation of Core Noninterest Expense (non-GAAP) section of this Report. Other noninterest income, noninterest income and revenue guidance excludes net securities gains and Visa activity.

We ~~cannot~~are unable to provide ~~without unreasonable effort,~~ a meaningful or accurate reconciliation of forward-looking non-GAAP measures, without unreasonable effort, to their most directly comparable GAAP financial measures. This is due to the inherent difficulty of forecasting the timing and amounts necessary for the reconciliation when such amounts are subject to events that cannot be reasonably predicted, as noted in our Cautionary Statement. Accordingly, we cannot address the probable significance of unavailable information.

See the Cautionary Statement Regarding Forward-Looking Information section in this Financial Review and Item 1A Risk Factors included in our ~~first quarter~~ 2023 ~~Form 10-Q and 2022~~ Form 10-K for other factors that could cause future events to differ, perhaps materially, from those anticipated in these forward-looking statements.

The PNC Financial Services Group, Inc. – Form 10-Q 5

CONSOLIDATED INCOME STATEMENT REVIEW

Our Consolidated Income Statement is presented in Item 1 of this Report.

Net income of ~~$1.5~~$1.3 billion, or ~~$3.36~~$3.10 per diluted common share, for the ~~second~~first quarter of 2024 increased $461 million, or 52%, compared to $0.9 billion, or $1.85 per diluted common share, for the fourth quarter of 2023, due to lower noninterest expense and a lower provision for credit losses, partially offset by lower net interest and noninterest income. Net income decreased ~~$194~~$350 million, or ~~11%~~21%, compared to $1.7 billion, or $3.98 per diluted common share for the ~~first quarter of~~same period in 2023, ~~primarily due to~~driven by lower ~~noninterest income,~~ net interest ~~income~~ and ~~increased expenses,~~noninterest income, partially offset by a lower provision for credit losses. Net income of $3.2 billion, or $7.34 per diluted common share for the first six months of 2023 increased $269 million, or 9%, compared to $2.9 billion, or $6.61 per diluted common share for the same period in 2022, primarily as a result of higher net interest income, partially offset by a higher provision for credit losses and increased expenses.

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ 5

Net Interest Income

Table 3: Summarized Average Balances and Net Interest Income (a)

June 30, 2023 March 31, 2023
Three months ended
Dollars in millions Average
Balances Average
Yields/
Rates Interest
Income/
Expense Average
Balances Average
Yields/
Rates Interest
Income/
Expense
Assets
Interest-earning assets
Investment securities $ 141,038 2.52 % $ 889 $ 143,391 2.49 % $ 891
Loans 324,534 5.57 % 4,554 325,526 5.29 % 4,290
Interest-earning deposits with banks 31,433 5.10 % 400 34,054 4.58 % 390
Other 9,215 5.96 % 138 8,806 5.75 % 126
Total interest-earning assets/interest income $ 506,220 4.70 % 5,981 $ 511,777 4.46 % 5,697
Liabilities
Interest-bearing liabilities
Interest-bearing deposits $ 312,559 1.96 % 1,531 $ 315,056 1.66 % 1,291
Borrowed funds 65,692 5.44 % 903 62,968 4.98 % 783
Total interest-bearing liabilities/interest expense $ 378,251 2.56 % 2,434 $ 378,024 2.20 % 2,074
Net interest margin/income (non-GAAP) 2.79 % 3,547 2.84 % 3,623
Taxable-equivalent adjustments (37) (38)
Net interest income (GAAP) $ 3,510 $ 3,585


		June 30, 2023						June 30, 2022
Six months ended Dollars in millions		Average Balances		Average Yields/ Rates		Interest Income/ Expense		Average Balances		Average Yields/ Rates		Interest Income/ Expense
Three months ended Dollars in millions
Three months ended Dollars in millions
Three months ended Dollars in millions
Assets
Assets
Assets	Assets
Interest-earning assets	Interest-earning assets
Interest-earning assets
Interest-earning assets
Investment securities
Investment securities
Investment securities	Investment securities	$	142,208	2.50	%	$	1,780	$	134,313	1.76	%	$	1,184
Loans	Loans	325,027		5.43	%	8,844		297,785		3.24	%	4,835
Interest-earning deposits with banks		32,736		4.83	%	790		51,120		0.42	%	107
Loans
Loans
Interest-earning deposits with banks (b)
Interest-earning deposits with banks (b)
Interest-earning deposits with banks (b)
Other
Other
Other	Other	9,012		5.86	%	264		9,677		2.42	%	116
Total interest-earning assets/interest income	Total interest-earning assets/interest income	$	508,983	4.58	%	11,678		$	492,895	2.53	%	6,242
Total interest-earning assets/interest income
Total interest-earning assets/interest income
Liabilities
Liabilities
Liabilities	Liabilities
Interest-bearing liabilities	Interest-bearing liabilities
Interest-bearing liabilities
Interest-bearing liabilities
Interest-bearing deposits
Interest-bearing deposits
Interest-bearing deposits	Interest-bearing deposits	$	313,801	1.81	%	2,822		$	298,313	0.08	%	115
Borrowed funds	Borrowed funds	64,337		5.22	%	1,686		32,998		1.36	%	225
Borrowed funds
Borrowed funds
Total interest-bearing liabilities/interest expense
Total interest-bearing liabilities/interest expense
Total interest-bearing liabilities/interest expense	Total interest-bearing liabilities/interest expense	$	378,138	2.38	%	4,508		$	331,311	0.20	%	340
Net interest margin/income (non-GAAP)	Net interest margin/income (non-GAAP)			2.81	%	7,170				2.39	%	5,902
Net interest margin/income (non-GAAP)
Net interest margin/income (non-GAAP)
Taxable-equivalent adjustments
Taxable-equivalent adjustments
Taxable-equivalent adjustments	Taxable-equivalent adjustments					(75)						(47)
Net interest income (GAAP)	Net interest income (GAAP)					$	7,095					$	5,855
Net interest income (GAAP)
Net interest income (GAAP)

(a)Interest income calculated as taxable-equivalent interest income. To provide more meaningful comparisons of interest income and yields for all interest-earning assets, as well as net interest margins, we use interest income on a taxable-equivalent basis in calculating average yields and net interest margins 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 GAAP on the Consolidated Income Statement. For more information, see Reconciliation of Taxable-Equivalent Net Interest Income (non-GAAP) in the Statistical Information (Unaudited) section in Item 1 of this Report.

(b)Interest income from Interest-earning deposits with banks primarily includes interest earned on our balances held with the Federal Reserve Bank and is reported as Other interest income on our Consolidated Income Statement.

Changes in net interest income and margin result from the interaction of the volume and composition of interest-earning assets and related yields, interest-bearing liabilities and related rates paid, and noninterest-bearing sources of funding. See the Statistical Information (Unaudited) – Average Consolidated Balance Sheet And Net Interest Analysis section of this Report for additional information.

Net interest income decreased ~~$75~~$139 million, or 2%4%, for ~~the second quarter of 2023 compared to~~ the first quarter of 2024 compared to the fourth quarter of 2023, primarily due to increased funding costs, lower loan balances and one fewer day in the quarter. Net interest income decreased $321 million, or 9%, for the first three months of 2024 compared to the same period in 2023, as the benefit of higher interest-earning asset yields ~~on interest-earning assets were~~was more than offset by increased funding costs as well as lower loan and securities balances. Net interest income increased $1.2 billion, or 21%, for the first six months of 2023 compared to the same period in 2022, as a result of higher interest-earning asset yields and balances, partially offset by higher funding costs. Net interest margin ~~decreased 5~~declined 9 basis points compared to the fourth quarter of 2023 and 27 basis points compared to the first quarter of 2023, primarily as a result of higher funding costs.

Average investment securities of $135.4 billion in the ~~change in yields on interest-earning assets~~first quarter of 2024 declined $2.0 billion, or 1%, and $8.0 billion, or 6%, from the fourth quarter of 2023 and the first quarter of 2023, respectively. In both comparisons, limited purchase activity was more than offset by portfolio paydowns and maturities. Average investment securities represented 26% of average interest-earning assets for the ~~change in rates on funding costs. Net interest margin increased 42 basis points in~~first quarter of 2024 compared to 27% for the ~~year-to-date comparison reflecting~~fourth quarter of 2023, and 28% for the ~~benefit~~first quarter of ~~higher yields on interest-earning assets.~~2023.

Average loans for the first quarter of 2024 decreased $4.0 billion, compared to the fourth quarter of 2023, due to lower commercial and consumer loans. Compared to the first quarter of 2023, average loans decreased $4.9 billion, or 2%, primarily due to lower commercial loans. Average loans represented 63% of average interest-earning assets for both the first quarter of 2024 and the fourth quarter of 2023, compared to 64% for the first quarter of 2023.

6 The PNC Financial Services Group, Inc. – Form 10-Q

Average investment securities for the second quarter of 2023 decreased $2.4 billion, or 2% compared to the first quarter of 2023 primarily due to prepayments and maturities outpacing purchases. Average investment securities increased $7.9 billion, or 6% in the year-to-date comparison, due to net securities purchases, primarily of agency residential mortgage-backed securities. Average investment securities represented 28% of average interest-earning assets for both the second and first quarters of 2023, and 28% for the first six months of 2023 compared to 27% for the first six months of 2022.

Average loans for the second quarter of 2023 were stable compared to the first quarter of 2023. Average loans increased $27.2 billion, or 9% in the year-to-date comparison, reflecting growth in both commercial and consumer loans. Average loans represented 64% of average interest-earning assets for both the second and first quarters of 2023, and 64% for the first six months of 2023 compared to 60% for the first six months of 2022.

Average interest-earning deposits with banks for the ~~second~~first quarter of 2024 increased $5.6 billion, or 13%, compared to the fourth quarter of 2023 ~~decreased $2.6~~driven by lower loan balances and higher borrowed funds, partially offset by lower deposits. Compared to the first quarter of 2023, average interest-earning deposits with banks increased $14.2 billion, or 8%42%, primarily due to higher borrowed funds and lower securities and loan balances, partially offset by lower deposits.

Average interest-bearing deposits increased $1.9 billion and $6.2 billion, compared to the fourth quarter of 2023 and the first quarter of 2023, respectively. The increase in both comparisons reflected the impact of the higher interest rate environment. In total, average interest-bearing deposits represented 81% of average interest-bearing liabilities for both the first quarter of 2024 and the fourth quarter of 2023, compared to 83% for the first quarter of 2023.

Average borrowed funds of $75.6 billion in the first quarter of 2024 increased $2.7, billion, or 4%, compared to the fourth quarter of 2023 and $12.6 billion, or 20%, compared to the first quarter of ~~2023, reflecting lower deposit balances.~~2023. In the year-to-date comparison, average interest-earning deposits with banks decreased $18.4 billion, or 36%, primarily due to higher loan balances and lower deposits, partially offset by higher borrowed funds.

Average interest-bearing deposits for the second quarter of 2023 decreased $2.5 billion, or 1%, compared to the first quarter of 2023, reflecting increased consumer spending, the impact of quantitative tightening by the Federal Reserve and consumer tax payments. Average interest-bearing deposits increased $15.5 billion, or 5%, in the year-to-date comparison, reflecting the continued shift from noninterest-bearing to interest-bearing as deposit rates have risen. In total, average interest-bearing deposits represented 83% of average interest-bearing liabilities for both the second and first quarters of 2023 and 83% for the first six months of 2023 compared to 90%, for the first six months of 2022.

~~Average borrowed funds increased $2.7 billion, or 4%, and $31.3 billion, or 95% in the quarterly and year-to-date comparisons, respectively. The increase in~~ both comparisons, the increase was ~~due to higher FHLB borrowings and~~driven primarily by parent company senior debt issuances.

Further details regarding average loans and deposits are included in the Business Segments Review section of this Financial Review.

Noninterest Income

Table 4: Noninterest Income






		Three months ended								Six months ended
		June 30		March 31		Change				June 30		June 30		Change
Dollars in millions	Dollars in millions	2023		2023		$		%		2023		2022		$		%
Dollars in millions
Dollars in millions
Noninterest income
Noninterest income
Noninterest income	Noninterest income
Asset management and brokerage	Asset management and brokerage	$	348	$	356	$	(8)	(2)	%	$	704	$	742	$	(38)	(5)	%
Asset management and brokerage
Asset management and brokerage
Capital markets and advisory
Capital markets and advisory
Capital markets and advisory	Capital markets and advisory	213		262		(49)		(19)	%	475		661		(186)		(28)	%
Card and cash management	Card and cash management	697		659		38		6	%	1,356		1,291		65		5	%
Card and cash management
Card and cash management
Lending and deposit services
Lending and deposit services
Lending and deposit services	Lending and deposit services	298		306		(8)		(3)	%	604		551		53		10	%
Residential and commercial mortgage	Residential and commercial mortgage	98		177		(79)		(45)	%	275		320		(45)		(14)	%
Residential and commercial mortgage
Residential and commercial mortgage
Other
Other
Other	Other	129		258		(129)		(50)	%	387		388		(1)		—
Total noninterest income	Total noninterest income	$	1,783	$	2,018	$	(235)	(12)	%	$	3,801	$	3,953	$	(152)	(4)	%
Total noninterest income
Total noninterest income

Noninterest income as a percentage of total revenue was ~~34%~~37% for both the ~~second~~first quarter of 2024 and the fourth quarter of 2023, compared to 36% for the first quarter of ~~2023, and 35% for the first six months of 2023 compared to 40% for the same period in 2022.~~2023.

Asset management and brokerage fees ~~decreased~~increased compared to the fourth quarter of 2023 and the first quarter of 2023, ~~and included lower annuity sales. The decrease in the year-to-date comparison reflected~~primarily driven by the impact of ~~lower~~higher average equity markets and annuity sales. PNC’s discretionary client assets under management of $176 billion at June 30, 2023 decreased from $177 billion at March 31, 2023, and included the impact of client activity, partially offset by higher spot equity markets. PNC’s discretionary client assets under management increased ~~from $167~~$6 billion ~~at June 30, 2022,~~and $18 billion compared to December 31, 2023 and March 31, 2023, respectively. In both comparisons, the increase was primarily driven by higher spot equity ~~markets, partially offset by client activity.~~markets.

Capital markets and advisory fees ~~decreased~~declined compared to the ~~first~~fourth quarter of 2023, driven by lower merger and acquisition advisory ~~fees and a decline in loan syndication revenue.~~activity, partially offset by higher underwriting fees. The decrease incompared to the ~~year-to-date comparison~~first quarter of 2023 was primarily due to lower ~~merger and acquisition advisory~~trading revenue, partially offset by higher underwriting fees.

Card and cash management revenue ~~increased~~decreased compared to the ~~first~~fourth quarter of 2023, ~~reflecting~~as seasonally ~~higher~~lower consumer transaction volumes ~~and increased~~were partially offset by higher treasury management ~~product revenue.~~fees. The increase compared to the first ~~six~~three months of ~~2022~~2023 was primarily due to ~~increased~~higher treasury management product ~~revenue and higher customer transaction volumes.~~revenue.

Lending and deposit services decreased compared to the fourth quarter of 2023, reflecting the reduction of certain checking product fees. Lending and deposit services were stable compared to the first quarter of 2023.

Residential and commercial mortgage decreased compared to the fourth quarter of 2023, and included lower residential mortgage activity. The decrease compared to the first quarter of 2023 was driven by lower revenue from commercial mortgage loans held for sale.

Other noninterest income decreased compared to the fourth quarter of 2023, and ~~increased in the year-to-date comparison, reflecting client-related activity. In comparison~~included lower gains on sales. The decrease compared to the first ~~six months~~quarter of ~~2022, the increase~~2023 was ~~also~~primarily driven by ~~growth~~a decline in ~~loan commitment fees.~~private equity revenue. In both comparisons, the decrease was offset by lower negative Visa Class B-1 derivative fair value adjustments. Visa Class B-1 fair value adjustments were negative $7 million for the first quarter of 2024 compared to negative $100 million for the fourth quarter of 2023 and negative $45 million for the first quarter of 2023.

The PNC Financial Services Group, Inc. – Form 10-Q 7

Residential and commercial mortgage decreased compared to the first quarter of 2023 primarily due to a $58 million decrease in mortgage servicing rights valuation, net of economic hedge. The decrease compared to the first six months of 2022 was driven by lower commercial mortgage banking activities.

Other noninterest income decreased in the quarterly comparison and was stable in the year-to-date comparison. Both comparisons included lower private equity revenue and the impact of negative Visa Class B derivative fair value adjustments related to litigation escrow funding and other valuation changes. Negative Visa Class B fair value adjustments were $83 million for the second quarter of 2023 compared to $45 million for the first quarter of 2023, and $128 million for the first six months of 2023 compared to $12 million for the same period in 2022.

Noninterest Expense

Table 5: Noninterest Expense




		Three months ended								Six months ended
		June 30		March 31		Change				June 30		June 30		Change
Dollars in millions	Dollars in millions	2023		2023		$		%		2023		2022		$		%
Dollars in millions
Dollars in millions
Noninterest expense
Noninterest expense
Noninterest expense	Noninterest expense
Personnel	Personnel	$	1,846	$	1,826	$	20	1	%	$	3,672	$	3,496	$	176	5	%
Personnel
Personnel
Occupancy
Occupancy
Occupancy	Occupancy	244		251		(7)		(3)	%	495		504		(9)		(2)	%
Equipment	Equipment	349		350		(1)		—		699		682		17		2	%
Equipment
Equipment
Marketing
Marketing
Marketing	Marketing	109		74		35		47	%	183		156		27		17	%
Other	Other	824		820		4		—		1,644		1,578		66		4	%
Other
Other
Total noninterest expense	Total noninterest expense	$	3,372	$	3,321	$	51	2	%	$	6,693	$	6,416	$	277	4	%
Total noninterest expense
Total noninterest expense

Noninterest expense ~~increased~~decreased compared to the fourth quarter of 2023, driven by lower or stable expenses across all categories, reflecting a continued focus on expense management. Noninterest expense was stable compared to the first three months of 2023. The first quarter of 2024 included an additional pre-tax expense of $130 million related to the increase in the FDIC’s expected losses. The fourth quarter of 2023 ~~primarily due to seasonally higher marketing spend and the full quarter impact of annual employee merit increases. The increase compared~~included $515 million pertaining to the ~~first six months~~FDIC special assessment as well as $150 million of ~~2022 was due to higher personnel costs, an increased FDIC assessment rate and higher marketing and technology costs to support business growth.~~workforce reduction charges.

~~In July 2023, we raised our continuous improvement program savings goal from $400 million to $450 million for 2023.~~

We expect the FDIC will enact a special deposit insurance assessment in the second half of 2023 that will significantly increase our FDIC deposit insurance costs. Based on the current proposal, PNC estimates our total cost to be approximately $468 million pre-tax, or $370 million after-tax, which would be incurred in the quarter the FDIC finalizes the rule. The total cost and timing is subject to change pending the assessment’s finalization. See the Recent Regulatory Developments section in this Financial Review and Note 16 Regulatory Matters for additional details on this FDIC special deposit insurance assessment.

Effective Income Tax Rate

The effective income tax rate was ~~15.5%~~18.8% in the ~~second~~first quarter of 2024, 16.3% in the fourth quarter of 2023 ~~compared to~~and 17.2% in the first quarter of ~~2023, and 16.4%~~2023. The effective income tax rate in the ~~first six months of 2023 compared to 17.9% for the same period in 2022. The second~~fourth quarter of 2023 ~~included the favorable impact of~~reflected certain tax ~~matters.~~credit benefits.

Provision For ~~(Recapture of)~~ Credit Losses

Table 6: Provision for ~~(Recapture of)~~ Credit Losses


		Three months ended						Six months ended
		June 30		March 31		Change		June 30				Change

		March 31
		March 31
		March 31
Dollars in millions
Dollars in millions
Dollars in millions	Dollars in millions	2023		2023		$		2023		2022		$
Provision for (recapture of) credit losses	Provision for (recapture of) credit losses
Provision for (recapture of) credit losses
Provision for (recapture of) credit losses
Loans and leases
Loans and leases
Loans and leases	Loans and leases	$	189	$	229	$	(40)	$	418	$	(182)	$	600
Unfunded lending related commitments	Unfunded lending related commitments	(9)		(22)		13		(31)		19		(50)
Unfunded lending related commitments
Unfunded lending related commitments
Investment securities
Investment securities
Investment securities	Investment securities			(1)		1		(1)		4		(5)
Other financial assets	Other financial assets	(34)		29		(63)		(5)		(13)		8
Total provision for (recapture of) credit losses		$	146	$	235	$	(89)	$	381	$	(172)	$	553
Other financial assets
Other financial assets
Total provision for credit losses
Total provision for credit losses
Total provision for credit losses

Provision for credit losses of ~~$146~~$155 million in the ~~second~~first quarter of ~~2023~~2024 reflected portfolio activity and ~~changes in~~improved macroeconomic variables. The first quarter of 2023 included a provision for credit losses of $235 million. Provision for credit losses of $381 million for the first six months of 2023 included the impact of our updated economic outlook and changes in portfolio composition and quality. The first six months of 2022 included a recapture of credit losses of $172 million.

factors.

8 The PNC Financial Services Group, Inc. – Form 10-Q

CONSOLIDATED BALANCE SHEET REVIEW

The summarized balance sheet data in Table 7 is based upon our Consolidated Balance Sheet in Item 1 of this Report.

Table 7: Summarized Balance Sheet Data


		June 30		December 31		Change
Dollars in millions	Dollars in millions	2023		2022		$		%
Dollars in millions
Dollars in millions
Assets
Assets
Assets	Assets
Interest-earning deposits with banks	Interest-earning deposits with banks	$	38,259	$	27,320	$	10,939	40	%
Interest-earning deposits with banks
Interest-earning deposits with banks
Loans held for sale
Loans held for sale
Loans held for sale	Loans held for sale	835		1,010		(175)		(17)	%
Investment securities	Investment securities	135,661		139,334		(3,673)		(3)	%
Investment securities
Investment securities
Loans
Loans
Loans	Loans	321,761		326,025		(4,264)		(1)	%
Allowance for loan and lease losses	Allowance for loan and lease losses	(4,737)		(4,741)		4		—
Allowance for loan and lease losses
Allowance for loan and lease losses
Mortgage servicing rights
Mortgage servicing rights
Mortgage servicing rights	Mortgage servicing rights	3,455		3,423		32		1	%
Goodwill	Goodwill	10,987		10,987				—
Goodwill
Goodwill
Other
Other
Other	Other	51,986		53,905		(1,919)		(4)	%
Total assets	Total assets	$	558,207	$	557,263	$	944	—
Total assets
Total assets
Liabilities
Liabilities
Liabilities	Liabilities
Deposits	Deposits	$	427,489	$	436,282	$	(8,793)	(2)	%
Deposits
Deposits
Borrowed funds
Borrowed funds
Borrowed funds	Borrowed funds	65,384		58,713		6,671		11	%
Allowance for unfunded lending related commitments	Allowance for unfunded lending related commitments	663		694		(31)		(4)	%
Allowance for unfunded lending related commitments
Allowance for unfunded lending related commitments
Other
Other
Other	Other	15,325		15,762		(437)		(3)	%
Total liabilities	Total liabilities	508,861		511,451		(2,590)		(1)	%
Total liabilities
Total liabilities
Equity
Equity
Equity	Equity
Total shareholders’ equity	Total shareholders’ equity	49,320		45,774		3,546		8	%
Total shareholders’ equity
Total shareholders’ equity
Noncontrolling interests
Noncontrolling interests
Noncontrolling interests	Noncontrolling interests	26		38		(12)		(32)	%
Total equity	Total equity	49,346		45,812		3,534		8	%
Total equity
Total equity
Total liabilities and equity	Total liabilities and equity	$	558,207	$	557,263	$	944	—
Total liabilities and equity
Total liabilities and equity

Our balance sheet was strong and well positioned at ~~June 30, 2023.~~March 31, 2024. In comparison to December 31, ~~2022:~~2023:

•Total assets ~~were stable.~~increased modestly due to higher balances held with the Federal Reserve Bank, partially offset by lower securities and loan balances.

•Total liabilities ~~decreased~~increased modestly primarily due to ~~lower deposits, partially offset by increased borrowed funds.~~higher deposits.

•Total equity increased due to the benefit of net income, ~~a preferred stock issuance and an improvement in AOCI,~~ partially offset by dividends paid, a decline in AOCI and common share repurchases.

The ACL related to loans totaled $5.4 billion and $5.5 billion at ~~both June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023, respectively. During the ~~six~~three months ended ~~June 30, 2023, reserves reflected our updated economic outlook and changes in~~March 31, 2024, this reserve was driven by improved macroeconomic factors as well as portfolio ~~composition and quality.~~activity. See the following for additional information regarding our ACL related to loans:

•Allowance for Credit Losses in the Credit Risk Management section of this Financial Review,

•Critical Accounting Estimates and Judgments section of this Financial Review, and

•Note 3 Loans and Related Allowance for Credit Losses.

The following discussion provides additional information about the major components of our balance sheet. Information regarding our capital and regulatory compliance is included in the Liquidity and Capital Management portion of the Risk Management section in this Financial Review and in Note 2019 Regulatory Matters in our ~~2022~~2023 Form 10-K.

The PNC Financial Services Group, Inc. – Form 10-Q 9

Loans

Table 8: Loans


		June 30		December 31		Change
Dollars in millions	Dollars in millions	2023		2022		$		%
Dollars in millions
Dollars in millions
Commercial
Commercial
Commercial	Commercial
Commercial and industrial	Commercial and industrial	$	177,629	$	182,219	$	(4,590)	(3)	%
Commercial and industrial
Commercial and industrial
Commercial real estate
Commercial real estate
Commercial real estate	Commercial real estate	35,928		36,316		(388)		(1)	%
Equipment lease financing	Equipment lease financing	6,400		6,514		(114)		(2)	%
Equipment lease financing
Equipment lease financing
Total commercial
Total commercial
Total commercial	Total commercial	219,957		225,049		(5,092)		(2)	%
Consumer	Consumer
Consumer
Consumer
Residential real estate
Residential real estate
Residential real estate	Residential real estate	46,834		45,889		945		2	%
Home equity	Home equity	26,200		25,983		217		1	%
Home equity
Home equity
Automobile
Automobile
Automobile	Automobile	15,065		14,836		229		2	%
Credit card	Credit card	7,092		7,069		23		—
Credit card
Credit card
Education
Education
Education	Education	2,058		2,173		(115)		(5)	%
Other consumer	Other consumer	4,555		5,026		(471)		(9)	%
Other consumer
Other consumer
Total consumer
Total consumer
Total consumer	Total consumer	101,804		100,976		828		1	%
Total loans	Total loans	$	321,761	$	326,025	$	(4,264)	(1)	%
Total loans
Total loans

Commercial and consumer loans ~~decreased driven by a lower utilization of loan commitments in addition to paydowns outpacing new production.~~

~~Consumer loans increased as growth in residential mortgages, automobile, home equity and credit card loans were partially offset by declines in the remaining portfolios~~declined as paydowns outpaced ~~new originations.~~originations and utilization.

For additional information regarding our loan portfolio see the Credit Risk Management portion of the Risk Management section in this Financial Review and Note 3 Loans and Related Allowance for Credit Losses.

10 ~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~

Investment Securities

Investment securities of ~~$135.7~~$130.5 billion at ~~June 30, 2023~~March 31, 2024 decreased ~~$3.7~~$2.1 billion, or 3%2%, compared to December 31, ~~2022,~~2023, primarily due to prepayments and maturities outpacing purchases.

The level and composition of the investment securities portfolio fluctuates over time based on many factors, including market conditions, loan and deposit growth and balance sheet management activities. We manage our investment securities portfolio to optimize returns, while providing a reliable source of liquidity for our banking and other activities, considering the LCR, NSFR and other internal and external guidelines and constraints.

Table 9: Investment Securities (a)




		June 30, 2023				December 31, 2022
Dollars in millions	Dollars in millions	Amortized Cost (b)		Fair Value		Amortized Cost (b)		Fair Value
Dollars in millions
Dollars in millions
U.S. Treasury and government agencies
U.S. Treasury and government agencies
U.S. Treasury and government agencies	U.S. Treasury and government agencies	$	44,848	$	42,403	$	45,767	$	43,330
Agency residential mortgage-backed	Agency residential mortgage-backed	75,145		68,874		77,385		71,073
Agency residential mortgage-backed
Agency residential mortgage-backed
Non-agency residential mortgage-backed
Non-agency residential mortgage-backed
Non-agency residential mortgage-backed	Non-agency residential mortgage-backed	911		1,015		973		1,074
Agency commercial mortgage-backed	Agency commercial mortgage-backed	2,598		2,405		2,693		2,501
Agency commercial mortgage-backed
Agency commercial mortgage-backed
Non-agency commercial mortgage-backed (c)
Non-agency commercial mortgage-backed (c)
Non-agency commercial mortgage-backed (c)	Non-agency commercial mortgage-backed (c)	2,563		2,458		2,992		2,883
Asset-backed (d)	Asset-backed (d)	7,555		7,472		7,291		7,183
Asset-backed (d)
Asset-backed (d)
Other (e)
Other (e)
Other (e)	Other (e)	6,271		6,056		6,642		6,394
Total investment securities (f)	Total investment securities (f)	$	139,891	$	130,683	$	143,743	$	134,438
Total investment securities (f)
Total investment securities (f)

(a)Of our total securities portfolio, 97% were rated AAA/AA at both ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

(b)Amortized cost is presented net of the allowance for investment securities, which totaled ~~$148~~$93 million at ~~June 30, 2023~~March 31, 2024 and primarily related to non-agency commercial mortgage-backed securities. The comparable amount at December 31, ~~2022~~2023 was ~~$149~~$92 million.

(c)Collateralized primarily by multifamily housing, office buildings, ~~multifamily housing,~~ retail properties, lodging properties and industrial properties.

(d)Collateralized primarily by consumer credit products, corporate debt and government guaranteed education ~~loans and other consumer credit products.~~loans.

(e)Includes state and municipal ~~securities.~~securities and corporate bonds.

(f)Includes available for sale and held to maturity securities, which are recorded on our balance sheet at fair value and amortized cost, respectively.

Table 9 presents our investment securities portfolio by amortized cost and fair value. The relationship of fair value to amortized cost at ~~June 30, 2023~~March 31, 2024 was comparable to December 31, ~~2022 due~~2023 and primarily toreflected the impact of higher interest rates on the valuation of fixed-rate ~~securities offset by the passage of time.~~securities. We continually monitor the credit risk in our portfolio and maintain the allowance for investment securities at an appropriate level to absorb expected credit losses on our investment securities portfolio for the remaining contractual term of the securities adjusted for expected prepayments. See Note 2 Investment Securities for additional details regarding the allowance for investment securities.

10 The PNC Financial Services Group, Inc. – Form 10-Q

The duration of investment securities was ~~4.3~~4.1 years and ~~4.5~~4.2 years at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively. We estimate that at ~~June 30, 2023~~March 31, 2024 the effective duration of investment securities was ~~4.3~~4.0 years for an immediate 50 basis points parallel increase in interest rates and ~~4.3~~4.1 years for an immediate 50 basis points parallel decrease in interest rates. Comparable amounts at December 31, ~~2022~~2023 for the effective duration of investment securities were ~~4.4~~4.1 years and ~~4.5~~4.2 years, respectively.

Based on expected prepayment speeds, the weighted-average expected maturity of the investment securities portfolio was ~~5.7~~5.2 years at ~~June 30, 2023~~March 31, 2024 compared to ~~6.0~~5.5 years at December 31, ~~2022.~~2023.

Table 10: Weighted-Average Expected Maturities of Mortgage and Asset-Backed Debt Securities


~~June 30, 2023~~March 31, 2024			Years
Agency residential mortgage-backed			~~7.7~~7.0
Non-agency residential mortgage-backed			~~9.9~~9.8
Agency commercial mortgage-backed			~~5.2~~4.9
Non-agency commercial mortgage-backed			~~1.3~~1.0
Asset-backed			2.3

Additional information regarding our investment securities portfolio is included in Note 2 Investment Securities and Note 11 Fair Value.

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ 11

Funding Sources

Table 11: Details of Funding Sources


		June 30		December 31		Change
	March 31
Dollars in millions
Dollars in millions
Dollars in millions	Dollars in millions	2023		2022		$		%
Deposits	Deposits
Deposits
Deposits
Noninterest-bearing
Noninterest-bearing
Noninterest-bearing	Noninterest-bearing	$	110,527	$	124,486	$	(13,959)	(11)	%
Interest-bearing	Interest-bearing
Interest-bearing
Interest-bearing
Money market
Money market
Money market	Money market	63,607		64,150		(543)		(1)	%
Demand	Demand	128,942		126,143		2,799		2	%
Demand
Demand
Savings
Savings
Savings	Savings	101,549		103,033		(1,484)		(1)	%
Time deposits	Time deposits	22,864		18,470		4,394		24	%
Time deposits
Time deposits
Total interest-bearing deposits
Total interest-bearing deposits
Total interest-bearing deposits	Total interest-bearing deposits	316,962		311,796		5,166		2	%
Total deposits	Total deposits	427,489		436,282		(8,793)		(2)	%
Total deposits
Total deposits
Borrowed funds
Borrowed funds
Borrowed funds	Borrowed funds
Federal Home Loan Bank borrowings	Federal Home Loan Bank borrowings	34,000		32,075		1,925		6	%
Federal Home Loan Bank borrowings
Federal Home Loan Bank borrowings
Senior debt
Senior debt
Senior debt	Senior debt	22,005		16,657		5,348		32	%
Subordinated debt	Subordinated debt	5,548		6,307		(759)		(12)	%
Subordinated debt
Subordinated debt
Other
Other
Other	Other	3,831		3,674		157		4	%
Total borrowed funds	Total borrowed funds	65,384		58,713		6,671		11	%
Total borrowed funds
Total borrowed funds
Total funding sources	Total funding sources	$	492,873	$	494,995	$	(2,122)	—
Total funding sources
Total funding sources

Deposits are considered an attractive source of funding due to their stability and relatively low cost to fund. Compared to December 31, 2023, our funding source composition included higher deposit balances and relatively stable borrowed funds.

Total deposits ~~decreased as a result of lower~~increased reflecting higher commercial and consumer ~~and commercial deposits, reflecting seasonal declines and the impact of quantitative tightening by the Federal Reserve. In addition, noninterest-bearing~~deposits. Noninterest-bearing deposit balances decreased ~~due~~driven by a decline in commercial noninterest-bearing balances. Interest-bearing deposits increased reflecting higher commercial and consumer interest-bearing balances. This shift in deposit composition, as well as higher deposit rates, contributed to an increase in funding costs compared to the ~~continued shift into interest-bearing~~fourth quarter of 2023. Our total brokered deposit ~~products as interest rates have risen.~~balances of $10.6 billion at March 31, 2024 decreased compared to $11.0 billion at December 31, 2023, and were significantly below both our internal and regulatory guidelines and limits.

Borrowed funds ~~increased due to~~were largely stable as parent company senior debt issuances ~~and higher~~were offset by lower FHLB borrowings.

The level and composition of borrowed funds fluctuates over time based on many factors, including market conditions, capital considerations, and funding needs, which are primarily driven by changes in loan, deposit and investment securities ~~and~~balances. While our largest source of liquidity on a consolidated basis is the customer deposit ~~growth and capital considerations. We~~base generated by our banking businesses, we also manage our borrowed funds to provide a reliable source of liquidity for our banking and other activities, considering our LCR and NSFR requirements and other internal and external guidelines and constraints. See the Liquidity and Capital Management portion of the Risk Management section in this Financial Review for additional information regarding our liquidity and capital activities. See Note 7 Borrowed Funds in this Report and Note 109 Borrowed Funds in our ~~2022~~2023 Form 10-K for additional information related to our

The PNC Financial Services Group, Inc. – Form 10-Q 11

borrowings.See Average Consolidated Balance Sheet and Net Interest Analysis in the Statistical Information section of this Report for additional information on volume and related funding cost changes.

Shareholders’ Equity

Total shareholders’ equity was ~~$49.3~~$51.3 billion at ~~June 30, 2023,~~March 31, 2024, an increase of ~~$3.5~~$0.2 billion compared to December 31, ~~2022,~~2023, as increases related to net income of ~~$3.2 billion, a preferred stock issuance of $1.5 billion and an improvement in AOCI of $0.6~~$1.3 billion were partially offset by dividends paid of ~~$1.4~~$0.7 billion, a decline in AOCI of $0.3 billion and more than $0.1 billion of common share ~~repurchases of $0.5 billion.~~repurchases.

12 ~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~

BUSINESS SEGMENTS REVIEW

We have three reportable business segments:

•Retail Banking

•Corporate & Institutional Banking

•Asset Management Group

Business segment results and a description of each business are included in Note 14 Segment Reporting. Certain amounts included in this Business Segments Review differ from those amounts shown in Note 14, primarily due to the presentation in this Financial Review of business net interest income on a taxable-equivalent basis.

Net interest income in business segment results reflects our internal funds transfer pricing methodology. Assets receive a funding charge and liabilities and capital receive a funding credit based on a transfer pricing methodology that incorporates product repricing characteristics, tenor and other factors.

Total business segment financial results differ from total consolidated net income. The impact of these differences is reflected in ~~the “Other” category~~Other, as shown in Table 7977 in Note 14 Segment Reporting. ~~“Other”~~Other includes residual activities that do not meet the criteria for disclosure as a separate reportable business, such as asset and liability management activities including net securities gains or losses, ACL for investment securities, certain trading activities, certain runoff consumer loan portfolios, private equity investments, intercompany eliminations, ~~certain~~ corporate overhead net of allocations, tax adjustments that are not allocated to business segments, exited businesses and ~~differences between business segment performance reporting and financial statement reporting (GAAP).~~the residual impact from funds transfer pricing operations.

Certain amounts included in this Business Segments Review differ from those amounts shown in Note 14, primarily due to the presentation in this Financial Review of business net interest income on a taxable-equivalent basis.

See Note 14 Segment Reporting for additional information on our business segments, including a description of each business.

12The PNC Financial Services Group, Inc. – Form 10-Q

Retail Banking

Retail Banking’s core strategy is to build lifelong, primary relationships by creating a sense of financial well-being and ease for our clients. Over time, we seek to deepen those relationships by meeting the broad range of our clients’ financial needs across savings, liquidity, lending, payments, investment and retirement solutions. We work to deliver these solutions in the most seamless and efficient way possible, meeting our customers where they want to be met –- whether in a branch, through digital channels, at an ATM or through our phone-based customer contact centers –- while continuously optimizing the cost to sell and service. We believe that, over time, we can grow our customer base, enhance the breadth and depth of our client relationships and improve our efficiency through differentiated products and leading digital channels.

Table 12: Retail Banking Table


(Unaudited)	(Unaudited)
Six months ended June 30								Change
Three months ended March 31
Three months ended March 31
Three months ended March 31
Dollars in millions, except as noted
Dollars in millions, except as noted
Dollars in millions, except as noted	Dollars in millions, except as noted	2023			2022			$		%
Income Statement	Income Statement
Income Statement
Income Statement
Net interest income
Net interest income
Net interest income	Net interest income	$	4,729		$	3,193		$	1,536	48	%
Noninterest income	Noninterest income	1,445			1,493			(48)		(3)	%
Noninterest income
Noninterest income
Total revenue	Total revenue	6,174			4,686			1,488		32	%
Provision for (recapture of) credit losses		224			(26)			250		*
Total revenue
Total revenue
Provision for credit losses
Provision for credit losses
Provision for credit losses
Noninterest expense
Noninterest expense
Noninterest expense	Noninterest expense	3,831			3,805			26		1	%
Pretax earnings	Pretax earnings	2,119			907			1,212		134	%
Pretax earnings
Pretax earnings
Income taxes
Income taxes
Income taxes	Income taxes	497			214			283		132	%
Noncontrolling interests	Noncontrolling interests	21			31			(10)		(32)	%
Noncontrolling interests
Noncontrolling interests
Earnings
Earnings
Earnings	Earnings	$	1,601		$	662		$	939	142	%
Average Balance Sheet	Average Balance Sheet
Average Balance Sheet
Average Balance Sheet
Loans held for sale
Loans held for sale
Loans held for sale	Loans held for sale	$	578		$	1,070		$	(492)	(46)	%
Loans	Loans
Loans
Loans
Consumer
Consumer
Consumer	Consumer
Residential real estate	Residential real estate	$	35,285		$	32,389		$	2,896	9	%
Residential real estate
Residential real estate
Home equity
Home equity
Home equity	Home equity	24,617			22,673			1,944		9	%
Automobile	Automobile	14,962			15,918			(956)		(6)	%
Automobile
Automobile
Credit card
Credit card
Credit card	Credit card	6,960			6,455			505		8	%
Education	Education	2,151			2,470			(319)		(13)	%
Education
Education
Other consumer
Other consumer
Other consumer	Other consumer	1,959			2,261			(302)		(13)	%
Total consumer	Total consumer	85,934			82,166			3,768		5	%
Total consumer
Total consumer
Commercial
Commercial
Commercial	Commercial	11,574			11,325			249		2	%
Total loans	Total loans	$	97,508		$	93,491		$	4,017	4	%
Total loans
Total loans
Total assets
Total assets
Total assets	Total assets	$	115,103		$	112,415		$	2,688	2	%
Deposits	Deposits
Deposits
Deposits
Noninterest-bearing
Noninterest-bearing
Noninterest-bearing	Noninterest-bearing	$	60,129		$	64,833		$	(4,704)	(7)	%
Interest-bearing	Interest-bearing	199,776			201,916			(2,140)		(1)	%
Interest-bearing
Interest-bearing
Total deposits
Total deposits
Total deposits	Total deposits	$	259,905		$	266,749		$	(6,844)	(3)	%
Performance Ratios	Performance Ratios
Performance Ratios
Performance Ratios
Return on average assets
Return on average assets
Return on average assets	Return on average assets	2.80		%	1.19		%
Noninterest income to total revenue	Noninterest income to total revenue	23		%	32		%
Noninterest income to total revenue
Noninterest income to total revenue
Efficiency	Efficiency	62		%	81		%
Efficiency
Efficiency
Supplemental Noninterest Income Information
Supplemental Noninterest Income Information
Supplemental Noninterest Income Information
Asset management and brokerage
Asset management and brokerage
Asset management and brokerage
Card and cash management
Card and cash management
Card and cash management
Lending and deposit services
Lending and deposit services
Lending and deposit services
Residential and commercial mortgage
Residential and commercial mortgage
Residential and commercial mortgage

14The PNC Financial Services Group, Inc. – Form 10-Q

At or for six months ended June 30 Change
Dollars in millions, except as noted 2023 2022 $ %
Supplemental Noninterest Income Information
Asset management and brokerage $ 254 $ 269 $ (15) (6) %
Card and cash management $ 668 $ 659 $ 9 1 %
Lending and deposit services $ 357 $ 331 $ 26 8 %
Residential and commercial mortgage $ 179 $ 170 $ 9 5 %
Residential Mortgage Information
Residential mortgage servicing statistics (in billions, except as noted) (a)
Serviced portfolio balance (b) $ 191 $ 145 $ 46 32 %
Serviced portfolio acquisitions $ 9 $ 21 $ (12) (57) %
MSR asset value (b) $ 2.3 $ 1.6 $ 0.7 44 %
MSR capitalization value (in basis points) (b) 123 112 11 10 %
Servicing income: (in millions)
Servicing fees, net (c) $ 145 $ 69 $ 76 110 %
Mortgage servicing rights valuation, net of economic hedge $ 5 $ 15 $ (10) (67) %
Residential mortgage loan statistics
Loan origination volume (in billions) $ 3.8 $ 9.9 $ (6.1) (62) %
Loan sale margin percentage 2.24 % 2.18 %
Percentage of originations represented by:
Purchase volume (d) 88 % 57 %
Refinance volume 12 % 43 %
Other Information (b)
Customer-related statistics (average)
Non-teller deposit transactions (e) 65 % 64 %
Digital consumer customers (f) 74 % 78 %
Credit-related statistics
Nonperforming assets $ 981 $ 1,088 $ (107) (10) %
Net charge-offs - loans and leases $ 221 $ 229 $ (8) (3) %
Other statistics
ATMs 8,566 9,301 (735) (8) %
Branches (g) 2,361 2,535 (174) (7) %
Brokerage account client assets (in billions) (h) $ 75 $ 68 $ 7 10 %


At or for three months ended March 31							Change
Dollars in millions, except as noted	2024			2023			$		%
Residential Mortgage Information
Residential mortgage servicing statistics (in billions, except as noted) (a)
Serviced portfolio balance (b)	$	207		$	188		$	19	10	%
MSR asset value (b)	$	2.7		$	2.2		$	0.5	23	%
Servicing income: (in millions)
Servicing fees, net (c)	$	82		$	78		$	4	5	%
Mortgage servicing rights valuation, net of economic hedge	$	(6)		$	14		$	(20)	*
Residential mortgage loan statistics
Loan origination volume (in billions)	$	1.3		$	1.4		$	(0.1)	(7)	%
Loan sale margin percentage	2.53		%	2.26		%
Other Information
Credit-related statistics
Nonperforming assets (b)	$	841		$	1,009		$	(168)	(17)	%
Net charge-offs - loans and leases	$	139		$	112		$	27	24	%
Other statistics
Branches (b) (d)	2,271			2,450			(179)		(7)	%
Brokerage account client assets (in billions) (b) (e)	$	81		$	73		$	8	11	%

*- Not Meaningful

(a) Represents mortgage loan servicing balances for third parties and the related income.

(b)~~Presented as~~As of ~~period end, except for average customer-related statistics and net charge-offs, which are both shown for the six months ended.~~March 31.

(c)Servicing fees net of impact of decrease in MSR value due to passage of time, including the impact from regularly scheduled loan principal payments, prepayments and loans paid off during the period.

(d)~~Mortgages with borrowers as part of residential real estate purchase transactions.~~

~~(e)Percentage of total consumer and business banking deposit transactions processed at an ATM or through our mobile banking application.~~

~~(f)Represents consumer checking relationships that process the majority of their transactions through non-teller channels.~~

~~(g)~~Reflects all branches ~~and solution centers~~ excluding standalone mortgage offices and satellite offices (e.g., drive-ups, electronic branches and retirement centers) that provide limited products and/or services.

~~(h)~~(e)Includes cash and money market balances.

Retail Banking earnings for the first ~~six~~three months of ~~2023~~2024 increased ~~$939 million~~$0.4 billion compared to the same period in ~~2022~~2023 primarily due to ~~increased net interest income, partially offset by an increased~~higher revenue and a lower provision for credit losses, ~~and~~as well as lower noninterest ~~income.~~expense.

Net interest income increased in the comparison primarily due to wider interest rate spreads on the value of deposits, partially offset by ~~narrower interest rate spreads on the value of loans.~~declines in average deposit balances.

Noninterest income ~~decreased primarily due to~~increased in the ~~impact of higher~~comparison, reflecting lower negative Visa Class BB-1 derivative fair value adjustments, ~~compared to the same period in 2022.~~partially offset by lower card and cash management fees.

Provision for credit losses ~~included~~reflected the impact of ~~our updated economic outlook~~portfolio activity and ~~changes in portfolio composition and quality.~~improved macroeconomic factors.

Noninterest expense ~~increased,~~decreased in the comparison, and included ~~increased technology costs and higher marketing spend, partially offset by~~ lower ~~non-credit losses and personnel.~~personnel expense.

Retail Banking average total loans ~~increased~~remained stable in the first ~~six~~three months of ~~2023~~2024 compared to the same period in ~~2022.~~2023. Average consumer loans ~~increased 5%~~decreased driven by ~~higher~~lower residential real estate ~~and home equity loans~~ as a result of paydowns outpacing new volume, ~~and draws on existing~~

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ 15

~~accounts outpacing liquidations,~~ as well as ~~growth~~continued declines in ~~credit card~~education loans ~~due to new account production and purchase volume increases. The increase was partially offset by a decline~~from runoff in ~~automobile, education and other consumer loans as paydowns outpaced new originations.~~the government guaranteed portfolio. Average commercial loans increased due to growth in automobile dealer segment ~~balances, partially offset by forgiveness of PPP loans.~~balances.

Our focus on growing primary customer relationships is at the core of our deposit strategy in Retail, which is based on attracting and retaining stable, low-cost deposits as a key funding source for PNC. We have taken a disciplined approach to pricing, focused on retaining relationship-based balances and executing on targeted deposit growth and retention strategies aimed at more ~~rate sensitive~~rate-sensitive customers. Our goal with regard to deposits is to optimize balances, economics and long-term customer growth. In the first ~~six~~three months of ~~2023,~~2024, average total deposits decreased compared to the same period in ~~2022,~~2023, reflecting the impact of ~~increased consumer spending and~~ quantitative tightening by the Federal ~~Reserve.~~

~~As part of our strategic focus on growing customers~~Reserve and ~~meeting their financial needs, we have established a coast-to-coast network of retail branches, solution centers and ATMs that operate alongside PNC’s suite of digital capabilities.~~competitive pricing dynamics.

Retail Banking continues to enhance the customer experience with refinements to product and service offerings that drive value for consumers and small businesses.

As part of our strategic focus on growing customers and meeting their financial needs, we operate and continue to optimize a coast-to-coast network of retail branches and ATMs, which are complemented by PNC’s suite of digital capabilities. In February 2024, PNC announced it would be investing nearly $1.0 billion, through 2028, to open more than 100 new branches in key locations, including Austin, Dallas, Denver, Houston, Miami, and San Antonio, and to renovate more than 1,200 existing locations across the country to enhance the customer experience.

1614 The PNC Financial Services Group, Inc. – Form 10-Q

Corporate & Institutional Banking

Corporate & Institutional Banking’s strategy is to be the leading relationship-based provider of traditional banking products and services to its customers through the economic cycles. We aim to grow our market share and drive higher returns by delivering value-added solutions that help our clients better run their organizations, all while maintaining prudent risk and expense management. We continue to focus on building client relationships where the risk-return profile is attractive. We are a coast-to-coast franchise and our full suite of commercial products and services are offered nationally.

Table 13: Corporate & Institutional Banking Table


(Unaudited)	(Unaudited)
Six months ended June 30								Change
Three months ended March 31
Three months ended March 31
Three months ended March 31
Dollars in millions, except as noted
Dollars in millions, except as noted
Dollars in millions, except as noted	Dollars in millions, except as noted	2023			2022			$		%
Income Statement	Income Statement
Income Statement
Income Statement
Net interest income
Net interest income
Net interest income	Net interest income	$	2,795		$	2,413		$	382	16	%
Noninterest income	Noninterest income	1,707			1,772			(65)		(4)	%
Noninterest income
Noninterest income
Total revenue
Total revenue
Total revenue	Total revenue	4,502			4,185			317		8	%
Provision for (recapture of) credit losses	Provision for (recapture of) credit losses	181			(135)			316		*
Provision for (recapture of) credit losses
Provision for (recapture of) credit losses
Noninterest expense
Noninterest expense
Noninterest expense	Noninterest expense	1,860			1,771			89		5	%
Pretax earnings	Pretax earnings	2,461			2,549			(88)		(3)	%
Pretax earnings
Pretax earnings
Income taxes
Income taxes
Income taxes	Income taxes	575			583			(8)		(1)	%
Noncontrolling interests	Noncontrolling interests	10			7			3		43	%
Noncontrolling interests
Noncontrolling interests
Earnings
Earnings
Earnings	Earnings	$	1,876		$	1,959		$	(83)	(4)	%
Average Balance Sheet	Average Balance Sheet
Average Balance Sheet
Average Balance Sheet
Loans held for sale
Loans held for sale
Loans held for sale	Loans held for sale	$	448		$	559		$	(111)	(20)	%
Loans	Loans
Loans
Loans
Commercial
Commercial
Commercial	Commercial
Commercial and industrial	Commercial and industrial	$	168,110		$	147,819		$	20,291	14	%
Commercial and industrial
Commercial and industrial
Commercial real estate
Commercial real estate
Commercial real estate	Commercial real estate	34,507			32,640			1,867		6	%
Equipment lease financing	Equipment lease financing	6,408			6,150			258		4	%
Equipment lease financing
Equipment lease financing
Total commercial
Total commercial
Total commercial	Total commercial	209,025			186,609			22,416		12	%
Consumer	Consumer	7			11			(4)		(36)	%
Consumer
Consumer
Total loans
Total loans
Total loans	Total loans	$	209,032		$	186,620		$	22,412	12	%
Total assets	Total assets	$	234,354		$	210,171		$	24,183	12	%
Total assets
Total assets
Deposits
Deposits
Deposits	Deposits
Noninterest-bearing	Noninterest-bearing	$	55,221		$	83,589		$	(28,368)	(34)	%
Noninterest-bearing
Noninterest-bearing
Interest-bearing
Interest-bearing
Interest-bearing	Interest-bearing	87,956			66,780			21,176		32	%
Total deposits	Total deposits	$	143,177		$	150,369		$	(7,192)	(5)	%
Total deposits
Total deposits
Performance Ratios
Performance Ratios
Performance Ratios	Performance Ratios
Return on average assets	Return on average assets	1.61		%	1.88		%
Return on average assets
Return on average assets
Noninterest income to total revenue
Noninterest income to total revenue
Noninterest income to total revenue	Noninterest income to total revenue	38		%	42		%
Efficiency	Efficiency	41		%	42		%
Efficiency
Efficiency
Other Information
Other Information
Other Information	Other Information
Consolidated revenue from: (a)	Consolidated revenue from: (a)
Consolidated revenue from: (a)
Consolidated revenue from: (a)
Treasury Management (b)
Treasury Management (b)
Treasury Management (b)	Treasury Management (b)	$	1,563		$	1,205		$	358	30	%
Commercial mortgage banking activities:	Commercial mortgage banking activities:
Commercial mortgage banking activities:
Commercial mortgage banking activities:
Commercial mortgage loans held for sale (c)
Commercial mortgage loans held for sale (c)
Commercial mortgage loans held for sale (c)	Commercial mortgage loans held for sale (c)	$	40		$	36		$	4	11	%
Commercial mortgage loan servicing income (d)	Commercial mortgage loan servicing income (d)	83			138			(55)		(40)	%
Commercial mortgage loan servicing income (d)
Commercial mortgage loan servicing income (d)
Commercial mortgage servicing rights valuation, net of economic hedge
Commercial mortgage servicing rights valuation, net of economic hedge
Commercial mortgage servicing rights valuation, net of economic hedge	Commercial mortgage servicing rights valuation, net of economic hedge	45			46			(1)		(2)	%
Total	Total	$	168		$	220		$	(52)	(24)	%
Total
Total
Commercial mortgage servicing statistics	Commercial mortgage servicing statistics
Serviced portfolio balance (in billions) (e)		$	280		$	282		$	(2)	(1)	%
Commercial mortgage servicing statistics
Commercial mortgage servicing statistics
Serviced portfolio balance (in billions) (e) (f)
Serviced portfolio balance (in billions) (e) (f)
Serviced portfolio balance (in billions) (e) (f)
MSR asset value (e)	MSR asset value (e)	$	1,106		$	988		$	118	12	%
Average loans by C&IB business (f)
MSR asset value (e)
MSR asset value (e)
Average loans by C&IB business (g)
Average loans by C&IB business (g)
Average loans by C&IB business (g)
Corporate Banking
Corporate Banking
Corporate Banking	Corporate Banking	$	118,424		$	99,187		$	19,237	19	%
Real Estate	Real Estate	47,495			43,710			3,785		9	%
Real Estate
Real Estate
Business Credit
Business Credit
Business Credit	Business Credit	30,398			27,395			3,003		11	%
Commercial Banking	Commercial Banking	8,327			9,751			(1,424)		(15)	%
Commercial Banking
Commercial Banking
Other
Other
Other	Other	4,388			6,577			(2,189)		(33)	%
Total average loans	Total average loans	$	209,032		$	186,620		$	22,412	12	%
Total average loans
Total average loans
Credit-related statistics
Credit-related statistics
Credit-related statistics	Credit-related statistics
Nonperforming assets (e)	Nonperforming assets (e)	$	738		$	674		$	64	9	%
Nonperforming assets (e)
Nonperforming assets (e)
Net charge-offs - loans and leases	Net charge-offs - loans and leases	$	178		$	10		$	168	*
Net charge-offs - loans and leases
Net charge-offs - loans and leases

*- Not Meaningful

The PNC Financial Services Group, Inc. – Form 10-Q 15

(a)See the additional revenue discussion regarding treasury management and commercial mortgage banking activities in the Product Revenue section of this Corporate & Institutional Banking section.

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ 17

(b)Amounts are reported in net interest income and noninterest income.

(c)Represents commercial mortgage banking income for valuations on commercial mortgage loans held for sale and related commitments, derivative valuations, origination fees, gains on sale of loans held for sale and net interest income on loans held for sale.

(d)Represents net interest income and noninterest income from loan servicing, net of reduction in commercial mortgage servicing rights due to ~~amortization expense~~time and payoffs. Commercial mortgage servicing rights valuation, net of economic hedge is shown separately.

(e)As of ~~June 30.~~March 31.

(f)Represents balances related to capitalized servicing.

(g)As the result of a business realignment within C&IB during the second quarter of 2023, certain loans were reclassified from Other to Corporate Banking in the prior ~~periods~~period to conform to the current period presentation.

Corporate & Institutional Banking earnings in the first ~~six~~three months of ~~2023 decreased $83~~2024 increased $62 million compared to the same period in ~~2022~~2023 driven by higher net interest income and a decline in noninterest expense, partially offset by a higher provision for credit ~~losses, increased noninterest expense and lower noninterest income, partially offset by higher net interest income.~~losses.

Net interest income increased in the comparison primarily due to wider interest rate spreads on the value of deposits, ~~and higher average loan balances,~~ partially offset by narrower interest rate spreads on the value of loans and lower average loan and deposit balances.

Noninterest income ~~decreased in the comparison driven~~remained stable, as higher treasury management product revenue was largely offset by ~~lower capital markets and advisory fees and~~ lower commercial mortgage banking ~~activities, partially offset by growth in treasury management product revenue.~~activities.

Provision for credit losses ~~included the~~reflected portfolio activity and improved macroeconomic factors. ~~impact of our updated economic outlook and changes in portfolio composition and quality.~~

Noninterest expense ~~increased~~decreased in the comparison, ~~due to~~reflecting a continued ~~investments to support business growth and the impact of a higher FDIC assessment rate.~~focus on expense management.

Average loans ~~increased~~decreased compared with the ~~six~~three months ended ~~June 30, 2022 due to increases in Corporate Banking, Real Estate and Business Credit, partially offset by a decrease in Commercial Banking:~~March 31, 2023:

•Corporate Banking provides lending, equipment finance, treasury management and capital markets products and services to

mid-sized and large corporations, and government and not-for-profit entities. Average loans for this business ~~increased~~decreased driven by ~~strong new production throughout 2022 and higher~~lower average utilization of loan ~~commitments.~~commitments and paydowns outpacing new production, partially offset by the acquisition of capital commitment facilities from Signature Bridge Bank in the fourth quarter of 2023.

•Real Estate provides banking, financing and servicing solutions for commercial real estate clients across the country. Average loans for this business ~~increased~~declined largely due to paydowns outpacing new production, ~~throughout 2022,~~ partially offset by a ~~lower~~higher average utilization of loan commitments.

•Business Credit provides asset-based lending and equipment financing solutions. The loan and lease portfolio is ~~relatively high yielding, with acceptable risk as the loans are~~ mainly secured by business assets. Average loans for this business ~~increased~~declined primarily driven by ~~new production, partially offset by~~a lower average utilization of loan commitments.

•Commercial Banking provides lending, treasury management and capital markets related products and services to smaller corporations and businesses. Average loans for this business declined primarily driven by ~~PPP loan forgiveness~~paydowns outpacing new production and a lower average utilization of loan commitments.

The deposit strategy of Corporate & Institutional Banking is to remain disciplined on pricing and focused on growing and retaining relationship-based balances over time, executing on customer and segment-specific deposit growth strategies and continuing to provide funding and liquidity to PNC. Average total deposits decreased compared to the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, reflecting the impact of quantitative tightening by the Federal ~~Reserve.~~Reserve and competitive pricing dynamics. We continue to actively monitor the interest rate environment and make adjustments to our deposit strategy in response to evolving market conditions, bank funding needs and client relationship dynamics.

Following the BBVA acquisition in 2021 and our de novo expansion efforts, we are now a coast-to-coast franchise and have a presence in the largest 30 U.S. metropolitan statistical areas. These expanded locations complement Corporate & Institutional Banking’s existing national businesses with a significant presence in these cities, and our full suite of commercial products and services are offered nationally.

Product Revenue

In addition to credit and deposit products for commercial customers, Corporate & Institutional Banking offers other services, including treasury management, capital markets and advisory products and services and commercial mortgage banking activities, for customers of all business segments. On a consolidated basis, the revenue from these other services is included in net interest income and noninterest income, as appropriate. From a business perspective, the majority of the revenue and expense related to these services is reflected in the Corporate & Institutional Banking segment results, and the remainder is reflected in the results of other businesses where the customer ~~relationship exists.~~relationships exist. The Other Information section in Table 13 includes the consolidated revenue to PNC for treasury management and commercial mortgage banking services. A discussion of the consolidated revenue from these services follows.

The Treasury Management business provides corporations with cash and investment management services, receivables and disbursement management services, funds transfer services ~~international payment services~~ and access to online/mobile information management and reporting services. Treasury management revenue is reported in noninterest income and net interest income. Noninterest income includes treasury management product revenue less earnings credits provided to customers on compensating

18 ~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~

deposit balances used to pay for products and services. Net interest income includes funding credit from all treasury management customer deposit balances. Compared to the first ~~six~~three months of ~~2022,~~2023, treasury management revenue increased due to wider interest rate spreads on the value of deposits and higher product revenue.

16 The PNC Financial Services Group, Inc. – Form 10-Q

Commercial mortgage banking activities include revenue derived from commercial mortgage servicing (both net interest income and

noninterest income), revenue derived from commercial mortgage loans held for sale and hedges related to those activities. Total

revenue from commercial mortgage banking activities ~~decreased~~increased in the comparison primarily due to ~~lower~~higher commercial mortgage

servicing ~~income.~~income, partially offset by lower revenue from commercial mortgage loans held for sale.

Capital markets and advisory includes services and activities primarily related to merger and acquisition advisory, equity capital markets advisory, asset-backed financing, loan syndication, securities underwriting and customer-related trading. The ~~decrease~~increase in capital markets and advisory fees in the comparison was mostly driven by ~~lower~~higher underwriting fees and merger and acquisition advisory fees, partially offset by ~~higher~~lower customer-related trading revenue for ~~derivatives, foreign exchange and fixed income.~~derivatives.

The PNC Financial Services Group, Inc. – Form 10-Q 1917

Asset Management Group

The Asset Management Group strives to be ~~the~~a leading relationship-based provider of investment, planning, credit and cash management solutions and fiduciary services to affluent individuals and institutions by endeavoring to proactively deliver value-added ideas and solutions, and exceptional service. The Asset Management Group’s priorities are to serve our clients’ financial objectives, grow and deepen customer relationships and deliver solid financial performance with prudent risk and expense management.

Table 14: Asset Management Group Table


(Unaudited)	(Unaudited)
Six months ended June 30								Change
Three months ended March 31
Three months ended March 31
Three months ended March 31
Dollars in millions, except as noted
Dollars in millions, except as noted
Dollars in millions, except as noted	Dollars in millions, except as noted	2023			2022			$		%
Income Statement	Income Statement
Income Statement
Income Statement
Net interest income
Net interest income
Net interest income	Net interest income	$	252		$	291		$	(39)	(13)	%
Noninterest income	Noninterest income	458			482			(24)		(5)	%
Noninterest income
Noninterest income
Total revenue
Total revenue
Total revenue	Total revenue	710			773			(63)		(8)	%
Provision for (recapture of) credit losses	Provision for (recapture of) credit losses	(1)			7			(8)		*
Provision for (recapture of) credit losses
Provision for (recapture of) credit losses
Noninterest expense
Noninterest expense
Noninterest expense	Noninterest expense	560			521			39		7	%
Pretax earnings	Pretax earnings	151			245			(94)		(38)	%
Pretax earnings
Pretax earnings
Income taxes
Income taxes
Income taxes	Income taxes	36			57			(21)		(37)	%
Earnings	Earnings	$	115		$	188		$	(73)	(39)	%
Earnings
Earnings
Average Balance Sheet
Average Balance Sheet
Average Balance Sheet	Average Balance Sheet
Loans	Loans
Loans
Loans
Consumer
Consumer
Consumer	Consumer
Residential real estate	Residential real estate	$	9,517		$	7,414		$	2,103	28	%
Residential real estate
Residential real estate
Other consumer
Other consumer
Other consumer	Other consumer	4,110			4,587			(477)		(10)	%
Total consumer	Total consumer	13,627			12,001			1,626		14	%
Total consumer
Total consumer
Commercial
Commercial
Commercial	Commercial	1,237			1,704			(467)		(27)	%
Total loans	Total loans	$	14,864		$	13,705		$	1,159	8	%
Total loans
Total loans
Total assets
Total assets
Total assets	Total assets	$	15,282		$	14,126		$	1,156	8	%
Deposits	Deposits
Deposits
Deposits
Noninterest-bearing
Noninterest-bearing
Noninterest-bearing	Noninterest-bearing	$	1,817		$	3,140		$	(1,323)	(42)	%
Interest-bearing	Interest-bearing	25,907			29,331			(3,424)		(12)	%
Interest-bearing
Interest-bearing
Total deposits
Total deposits
Total deposits	Total deposits	$	27,724		$	32,471		$	(4,747)	(15)	%
Performance Ratios	Performance Ratios
Performance Ratios
Performance Ratios
Return on average assets
Return on average assets
Return on average assets	Return on average assets	1.52		%	2.68		%
Noninterest income to total revenue	Noninterest income to total revenue	65		%	62		%
Noninterest income to total revenue
Noninterest income to total revenue
Efficiency
Efficiency
Efficiency	Efficiency	79		%	67		%
Supplemental Noninterest Income Information	Supplemental Noninterest Income Information
Supplemental Noninterest Income Information
Supplemental Noninterest Income Information
Asset management fees
Asset management fees
Asset management fees	Asset management fees	$	446		$	469		$	(23)	(5)	%
Brokerage fees	Brokerage fees	4			4					—
Brokerage fees
Brokerage fees
Total	Total	$	450		$	473		$	(23)	(5)	%
Other Information
Nonperforming assets (a)		$	41		$	114		$	(73)	(64)	%
Net charge-offs - loans and leases		$	(2)		$	1		$	(3)	*
Brokerage account client assets (in billions) (a)		$	5		$	4		$	1	25	%
Client Assets Under Administration (in billions) (a) (b)
Total
Total
Other Information (a) (b)
Other Information (a) (b)
Other Information (a) (b)
Nonperforming assets
Nonperforming assets
Nonperforming assets

Client Assets Under Administration (in billions) (b) (c)

Client Assets Under Administration (in billions) (b) (c)

Client Assets Under Administration (in billions) (b) (c)
Discretionary client assets under management	Discretionary client assets under management	$	176		$	167		$	9	5	%
Discretionary client assets under management
Discretionary client assets under management
PNC Private Bank
PNC Private Bank
PNC Private Bank
Institutional Asset Management
Institutional Asset Management
Institutional Asset Management
Total discretionary clients assets under management
Total discretionary clients assets under management
Total discretionary clients assets under management
Nondiscretionary client assets under administration
Nondiscretionary client assets under administration
Nondiscretionary client assets under administration	Nondiscretionary client assets under administration	168			153			15		10	%
Total	Total	$	344		$	320		$	24	8	%
Discretionary client assets under management
PNC Private Bank		$	111		$	103		$	8	8	%
Institutional Asset Management		65			64			1		2	%
Total	Total	$	176		$	167		$	9	5	%
Total

*- Not Meaningful

(a)~~As of June 30.~~Net charge-offs - loans and leases were less than $0.5 million for the periods presented.

(b)As of March 31.

(c)Excludes brokerage account client assets.

The Asset Management Group consists of two primary businesses: PNC Private Bank and Institutional Asset Management.

The PNC Private Bank is focused on being a premier private bank in each of the markets it serves. This business seeks to deliver high quality banking, trust and investment management services to our emerging affluent, high net worth and ~~ultra high~~ultra-high net worth clients through a broad array of products and services.

20 ~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~

Institutional Asset Management provides outsourced chief investment officer, custody, cash and fixed income client solutions, and retirement plan fiduciary investment services to institutional clients, including corporations, healthcare systems, insurance companies, municipalities and non-profits.

18 The PNC Financial Services Group, Inc. – Form 10-Q

Asset Management Group earnings in the first ~~six~~three months of ~~2023 decreased $73~~2024 increased $45 million compared to the same period in ~~2022,~~2023, primarily driven by higher ~~noninterest expense, lower~~ net interest income, a decline in noninterest expense and a ~~decrease in noninterest income.~~provision recapture.

Net interest income ~~decreased~~increased in the comparison primarily due to ~~a decline~~wider interest rate spreads on the value of deposits and an increase in average ~~deposits as well as~~loan and deposit balances, partially offset by narrower interest rate spreads on the value of loans.

Noninterest income ~~decreased~~was stable as increases in ~~the comparison and is primarily attributable to the asset management fee impact~~noninterest income from ~~lower~~advances in the average equity markets ~~and~~were offset by the impact of client activity.

Noninterest expense decreased in the comparison, reflecting a continued focus on expense management.

Average loans increased compared with the three months ended March 31, 2023, primarily driven by growth in residential mortgage loans.

Average deposits increased in the comparison reflecting ~~continued investments~~growth in CD and deposit sweep balances, partially offset by the impact of quantitative tightening by the Federal Reserve and redeployment of funds to ~~support business growth.~~assets under management.

Discretionary client assets under management increased in comparison to the prior year, primarily due to higher equity markets as of ~~June 30, 2023.~~March 31, 2024.

RISK MANAGEMENT

The Risk Management section included in Item 7 of our ~~2022~~2023 Form 10-K describes our enterprise risk management framework, including risk culture, enterprise strategy, risk governance and oversight framework, risk identification, risk assessments, risk controls and monitoring, and risk aggregation and reporting. Additionally, our ~~2022~~2023 Form 10-K provides an analysis of the firm’s Capital Management and our key areas of risk, which include, but are not limited to, Credit, Market, Liquidity and Operational (including Compliance and Information Security).

Credit Risk Management

Credit risk, including our credit risk management processes, is described in further detail in the Credit Risk Management section of our ~~2022~~2023 Form 10-K. The following provides additional information around our loan portfolio, which is our most significant concentration of credit risk.

Loan Portfolio Characteristics and Analysis

Table 15: Details of Loans

In billions

We use several credit quality indicators, as further detailed in Note 3 Loans and Related Allowance for Credit Losses, to monitor and measure our exposure to credit risk within our loan portfolio. The following provides additional information about the significant loan classes that comprise our Commercial and Consumer portfolio segments.

The PNC Financial Services Group, Inc. – Form 10-Q 2119

Commercial

Commercial and Industrial

Commercial and industrial loans comprised 55% ~~and 56%~~ of our total loan portfolio at ~~June 30, 2023~~both March 31, 2024 and December 31, ~~2022, respectively.~~2023. The majority of our commercial and industrial loans are secured by collateral that provides a secondary source of repayment ~~for a loan~~ should a borrower experience cash generation difficulties. Examples of this collateral include short-term assets, such as accounts receivable, inventory and securities, and long-lived assets, such as equipment, owner-occupied real estate and other business assets.

We actively manage our commercial and industrial loans to assess any changes (both positive and negative) in the level of credit risk at both the borrower and portfolio level. To evaluate the level of credit risk, we assign internal risk ratings reflecting our estimates of the borrower’s PD and LGD for each related credit facility. This two-dimensional credit risk rating methodology provides granularity in the risk monitoring process and is updated on an ongoing basis through our credit risk management processes. In addition to monitoring the level of credit risk, we also monitor concentrations of credit risk pertaining to both specific industries and geographies that may exist in our portfolio. Our commercial and industrial portfolio is well-diversified across industries as shown in the following table (based on the North American Industry Classification System).

Table 16: Commercial and Industrial Loans by Industry


		June 30, 2023				December 31, 2022
	March 31, 2024
Dollars in millions
Dollars in millions
Dollars in millions	Dollars in millions	Amount		% of Total		Amount		% of Total
Commercial and industrial	Commercial and industrial
Commercial and industrial
Commercial and industrial
Manufacturing
Manufacturing
Manufacturing	Manufacturing	$	30,586	17	%	$	30,845	17	%
Retail/wholesale trade	Retail/wholesale trade	28,751		16		29,176		16
Retail/wholesale trade
Retail/wholesale trade
Financial services
Financial services
Financial services
Service providers	Service providers	22,277		13		23,548		13
Financial services		21,823		12		21,320		12
Service providers
Service providers
Real estate related (a)	Real estate related (a)	17,200		10		17,780		10
Real estate related (a)
Real estate related (a)
Health care
Health care
Health care
Technology, media & telecommunications	Technology, media & telecommunications	11,158		6		11,845		7
Health care		10,186		6		10,649		6
Technology, media & telecommunications
Technology, media & telecommunications
Transportation and warehousing
Transportation and warehousing
Transportation and warehousing	Transportation and warehousing	8,048		5		7,858		4
Other industries	Other industries	27,600		15		29,198		15
Other industries
Other industries
Total commercial and industrial loans	Total commercial and industrial loans	$	177,629	100	%	$	182,219	100	%
Total commercial and industrial loans
Total commercial and industrial loans

(a) Represents loans to customers in the real estate and construction industries.

Owner occupied commercial real estate loans totaled $9.5 billion at March 31, 2024 and are included in commercial and industrial loans as the credit decisioning for servicing these loans is based on the financial conditions of the owner; not the ability of the collateral to generate income. Owner occupied commercial real estate loans are well-diversified across industries. The comparable amount of owner occupied commercial real estate loans at December 31, 2023 was $9.6 billion.

Commercial Real Estate

Commercial real estate loans comprised ~~$22.1~~$20.8 billion related to commercial mortgages on income-producing properties, ~~$7.2~~$8.5 billion of intermediate-term financing loans, and $6.3 billion of real estate construction project loans ~~and $6.6 billion of intermediate-term financing loans~~ as of ~~June 30, 2023.~~March 31, 2024. Comparable amounts as of December 31, ~~2022~~2023 were ~~$22.3~~$21.0 billion, $8.0 billion, and $6.4 billion, ~~and $7.6 billion,~~ respectively. Commercial real estate primarily consists of an investment in land and/or buildings held to generate income, that income serves as the primary source for the repayment of the loan. However, for all commercial real estate assets, the disposition of the assigned collateral serves as a secondary source of repayment for the loan should the borrower experience cash generation difficulties.

We monitor credit risk associated with our commercial real estate loans similar to commercial and industrial loans by analyzing PD and LGD. Additionally, risks associated with commercial real estate loans tend to be correlated to the loan structure, collateral location and quality, project progress and business environment. These attributes are also monitored and utilized in assessing credit risk. The portfolio is geographically diverse due to the nature of our business involving clients throughout the U.S.

2220 The PNC Financial Services Group, Inc. – Form 10-Q

The following table presents our commercial real estate loans by geography and property type:

Table 17: Commercial Real Estate Loans by Geography and Property Type


		June 30, 2023				December 31, 2022
	March 31, 2024
Dollars in millions
Dollars in millions
Dollars in millions	Dollars in millions	Amount		% of Total		Amount		% of Total
Geography (a)	Geography (a)
Geography (a)
Geography (a)
California
California
California	California	$	6,190	17	%	$	6,224	17	%
Texas	Texas	3,686		10		3,871		11
Texas
Texas
Florida	Florida	3,584		10		3,275		9
Florida
Florida
Virginia
Virginia
Virginia
Pennsylvania	Pennsylvania	1,648		5		1,638		5
Virginia		1,550		4		1,638		5
Pennsylvania
Pennsylvania
Maryland	Maryland	1,416		4		1,496		4
Maryland
Maryland
Arizona
Arizona
Arizona
Illinois	Illinois	1,267		4		1,321		4
Colorado		1,218		3		1,336		4
Illinois
Illinois
North Carolina
North Carolina
North Carolina
Ohio	Ohio	1,172		3		1,236		3
North Carolina		1,146		3		1,150		3
Ohio
Ohio
Other
Other
Other	Other	13,051		37		13,131		35
Total commercial real estate loans	Total commercial real estate loans	$	35,928	100	%	$	36,316	100	%
Total commercial real estate loans
Total commercial real estate loans
Property Type (a)
Property Type (a)
Property Type (a)	Property Type (a)
Multifamily	Multifamily	$	14,835	41	%	$	13,738	38	%
Multifamily
Multifamily
Office
Office
Office	Office	8,685		24		9,123		25
Industrial/warehouse	Industrial/warehouse	3,907		11		4,035		11
Industrial/warehouse
Industrial/warehouse
Retail
Retail
Retail	Retail	2,807		8		2,855		8
Seniors housing	Seniors housing	1,835		5		2,228		6
Seniors housing
Seniors housing
Hotel/motel
Hotel/motel
Hotel/motel	Hotel/motel	1,768		5		1,896		5
Mixed use	Mixed use	266		1		701		2
Mixed use
Mixed use
Other
Other
Other	Other	1,825		5		1,740		5
Total commercial real estate loans	Total commercial real estate loans	$	35,928	100	%	$	36,316	100	%
Total commercial real estate loans
Total commercial real estate loans

(a) Presented in descending order based on loan balances at ~~June 30, 2023.~~March 31, 2024.

AsCommercial Real Estate: Office Portfolio

Given the foundational change in office demand driven by the acceptance of remote work, ~~continues to be a feasible alternative and notable portions of leased space remain unoccupied,~~ real estate performance related to the office sector iscontinues to be an area of ~~continuing~~ uncertainty. ~~We continue to closely monitor and manage our office portfolio for elevated levels of credit risk given the ongoing shift in office demand.~~

At ~~June 30, 2023,~~March 31, 2024, our outstanding loan balances in the office portfolio totaled ~~$8.7~~$7.8 billion, or ~~2.7%~~2.4% of total loans, while additional unfunded loan commitments totaled ~~$0.4~~$0.3 billion. Nonperforming loans totaled 3.3% of total office loans outstanding at June 30, 2023, while criticized loans totaled 22.5% of this portfolio. At June 30, 2023, there were no office loans outstanding that were 30 or more days delinquent. We have established reserves against these loans that we believe appropriately reflectAlso, the ~~expected credit losses in the portfolio as of June 30, 2023.~~

~~Our office~~ portfolio is well diversified geographically across our coast-to-coast franchise. ~~From~~Within the office portfolio at March 31, 2024, criticized loans totaled 26.4% and nonperforming loans totaled 10.5%, while delinquencies were zero. As measured at origination, the weighted average LTV for the office portfolio was 58%; however, updated appraisals have increased the weighted average LTV to 69% as of March 31, 2024. While LTV is one consideration, our risk assessment considers a ~~tenancy category perspective,~~number of factors in assessing the changing conditions affecting the portfolio. As of March 31, 2024, we have established reserves of 9.7% against office loans.

The greatest stress in our office portfolio is observed in multi-tenant office loans, which represents 57% of the portfolio at March 31, 2024. Within the multi-tenant classification, criticized levels were 45.1% while nonperforming loans totaled 18.1%, accounting for almost all of the nonperforming office population. The weighted average LTV for multi-tenant is 75% at March 31, 2024. Additionally, commercial real estate charge-offs since the beginning of 2023 have primarily been multi-tenant office loans. Given the higher level of stress, this ~~portfolio represents multi-tenant properties at June 30, 2023, which is an area where we have noted increased stress.~~segment has a proportionally higher reserve rate of 14.4%. The remaining 43% of the office portfolio is primarily comprised of single-tenant, medical and government tenant properties. This subset of the portfolio is performing considerably better, with approximately 1% of the book in the criticized and ~~medical~~nonperforming loan categories. As of March 31, 2024, the weighted average LTV of this book is 59%.

Portfolio management efforts have escalated for the office ~~tenant.~~portfolio, with internal risk ratings completed for each asset quarterly, accelerated reappraisal requirements and elevated approval levels for any credit action. Refreshed appraisals have updated valuations on nearly all of the criticized office exposure since the beginning of 2023. Additionally, active management efforts include ongoing performance assessments as well as the review of property, lending and capital markets. Portfolio updates are distributed to senior management weekly.

Given the ongoing change in this area, we expect additional stress in the office sector, and a portion of this stress will bear itself out as we work through maturities that will approximate 42% over the next twelve months. Upon maturity, and where the balance is not paid in full, an extension may be granted because contractual extension terms are met; alternatively, an extension may be granted based on

The PNC Financial Services Group, Inc. – Form 10-Q 21

negotiated terms, and a portion of these extensions may involve the curtailment or charge off of principal. We continue to actively manage the portfolio, and we believe reserve levels adequately reflect the expected credit losses in the portfolio.

Commercial Real Estate: Multifamily Portfolio

As of March 31, 2024, our outstanding loan balances in the multifamily portfolio totaled $16.1 billion, or 5.0% of total loans, while additional unfunded loan commitments totaled $3.8 billion. Although inflationary pressures and higher interest rates have impacted internal risk assessments and regulatory classification in this portfolio, we have not seen a notable change in loan performance at this time with regards to nonperformance, delinquency or charge-offs. We continue to closely monitor our exposure in this sector.

Consumer

Residential Real Estate

Residential real estate loans primarily consisted of residential mortgage loans at both ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

We obtain loan attributes at origination, including FICO scores and LTVs, and we update these and other credit metrics at least quarterly. We track borrower performance monthly. We also segment the mortgage portfolio into pools based on product type (e.g., nonconforming or conforming). This information is used for internal reporting and risk management. As part of our overall risk analysis and monitoring, we also segment the portfolio based upon loan delinquency, nonperforming status, modification and bankruptcy status, FICO scores, LTV and geographic concentrations.

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ 23

The following table presents certain key statistics related to our residential real estate portfolio:

Table 18: Residential Real Estate Loan Statistics


		June 30, 2023				December 31, 2022
	March 31, 2024
Dollars in millions
Dollars in millions
Dollars in millions	Dollars in millions	Amount		% of Total		Amount		% of Total
Geography (a)	Geography (a)
Geography (a)
Geography (a)
California
California
California	California	$	19,281	41	%	$	18,609	41	%
Texas	Texas	4,112		9		4,194		9
Texas
Texas
Washington
Washington
Washington
Florida	Florida	3,376		7		3,360		7
Washington		3,246		7		3,009		7
Florida
Florida
New Jersey
New Jersey
New Jersey	New Jersey	1,905		4		1,925		4
New York	New York	1,557		3		1,558		3
New York
New York
Arizona
Arizona
Arizona	Arizona	1,449		3		1,436		3
Pennsylvania	Pennsylvania	1,197		3		1,188		3
Pennsylvania
Pennsylvania
Colorado
Colorado
Colorado	Colorado	1,193		3		1,192		3
North Carolina	North Carolina	974		2		965		2
North Carolina
North Carolina
Other
Other
Other	Other	8,544		18		8,453		18
Total residential real estate loans	Total residential real estate loans	$	46,834	100	%	$	45,889	100	%
		June 30, 2023				December 31, 2022
Total residential real estate loans
Total residential real estate loans
		March 31, 2024
		March 31, 2024
		March 31, 2024
Weighted-average loan origination statistics (b)
Weighted-average loan origination statistics (b)
Weighted-average loan origination statistics (b)	Weighted-average loan origination statistics (b)
Loan origination FICO score	Loan origination FICO score			771				770
Loan origination FICO score
Loan origination FICO score
LTV of loan originations	LTV of loan originations			73	%			71	%
LTV of loan originations
LTV of loan originations

(a)Presented in descending order based on loan balances at ~~June 30, 2023.~~March 31, 2024.

(b)Weighted-averages calculated for the twelve months ended ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

We originate residential mortgage loans nationwide through our national mortgage business as well as within our branch network. Residential mortgage loans underwritten to agency standards, including conforming loan amount limits, are typically sold with servicing retained by us. We also originate nonconforming residential mortgage loans that do not meet agency standards, which we retain on our balance sheet. Our portfolio of originated nonconforming residential mortgage loans totaled ~~$41.6~~$42.4 billion at ~~June 30, 2023~~March 31, 2024, with ~~45%~~46% located in California. Comparable amounts at December 31, ~~2022~~2023 were ~~$40.6~~$42.4 billion and ~~44%~~45%, respectively.

Home Equity

Home equity loans comprised ~~$20.2~~$20.6 billion of home equity lines of credit and ~~$6.0~~$5.3 billion of closed-end home equity installment loans at ~~June 30, 2023.~~March 31, 2024. Comparable amounts were ~~$19.5~~$20.6 billion and ~~$6.5~~$5.6 billion as of December 31, ~~2022,~~2023, respectively. Home equity lines of credit are a variable interest rate product with fixed rate conversion options available to certain borrowers.

Similar to residential real estate loans, we track borrower performance of this portfolio on a monthly basis. We also segment the population into pools based on product type (e.g., home equity loans, legacy brokered home equity loans, home equity lines of credit or legacy brokered home equity lines of credit) and track the historical performance of any related mortgage loans regardless of

22 The PNC Financial Services Group, Inc. – Form 10-Q

whether we hold such liens. This information is used for internal reporting and risk management. As part of our overall risk analysis and monitoring, we also segment the portfolio based upon loan delinquency, nonperforming status, modification and bankruptcy status, FICO scores, LTV, lien position and geographic concentration.

The credit performance of the majority of the home equity portfolio where we hold the first lien position is superior to the portion of the portfolio where we hold the second lien position but do not hold the first lien. Lien position information is generally determined at the time of origination and monitored on an ongoing basis for risk management purposes. We use a third-party service provider to obtain updated loan information, including lien and collateral data that is aggregated from public and private sources.

24 ~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~

The following table presents certain key statistics related to our home equity portfolio:

Table 19: Home Equity Loan Statistics


		June 30, 2023				December 31, 2022
	March 31, 2024
Dollars in millions
Dollars in millions
Dollars in millions	Dollars in millions	Amount		% of Total		Amount		% of Total
Geography (a)	Geography (a)
Geography (a)
Geography (a)
Pennsylvania
Pennsylvania
Pennsylvania	Pennsylvania	$	4,876	19	%	$	5,051	19	%
New Jersey	New Jersey	3,237		12		3,266		13
New Jersey
New Jersey
Florida
Florida
Florida
Ohio	Ohio	2,302		9		2,352		9
Florida		2,178		8		2,082		8
Ohio
Ohio
California	California	1,450		6		1,247		5
California
California
Texas
Texas
Texas
Maryland
Maryland
Maryland	Maryland	1,243		5		1,254		5
Michigan	Michigan	1,238		5		1,263		5
Texas		1,195		5		1,144		4
Michigan
Michigan
Illinois
Illinois
Illinois	Illinois	1,095		4		1,126		4
North Carolina	North Carolina	1,010		4		995		4
North Carolina
North Carolina
Other
Other
Other	Other	6,376		23		6,203		24
Total home equity loans	Total home equity loans	$	26,200	100	%	$	25,983	100	%
Total home equity loans
Total home equity loans
Lien type
Lien type
Lien type	Lien type
1st lien	1st lien			55	%			58	%
1st lien
1st lien
2nd lien
2nd lien
2nd lien	2nd lien			45				42
Total	Total			100	%			100	%
Total
Total
		March 31, 2024
		March 31, 2024
		March 31, 2024
Weighted-average loan origination statistics (b)
Weighted-average loan origination statistics (b)
Weighted-average loan origination statistics (b)	Weighted-average loan origination statistics (b)	June 30, 2023				December 31, 2022
Loan origination FICO score	Loan origination FICO score			772				774
Loan origination FICO score
Loan origination FICO score
LTV of loan originations	LTV of loan originations			66	%			67	%
LTV of loan originations
LTV of loan originations

(a)Presented in descending order based on loan balances at ~~June 30, 2023.~~March 31, 2024.

(b)Weighted-averages calculated for the twelve months ended ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

Automobile

Auto loans comprised ~~$14.0~~$13.8 billion in the indirect auto portfolio and ~~$1.1~~$1.0 billion in the direct auto portfolio as of ~~June 30, 2023.~~March 31, 2024. Comparable amounts as of December 31, ~~2022~~2023 were ~~$13.7~~$13.8 billion and $1.1 billion, respectively. The indirect auto portfolio consists of loans originated primarily through independent franchised dealers, including ~~from expansion into~~dealers located in our newer markets. This business is strategically aligned with our core retail banking business.

The following table presents certain key statistics related to our indirect and direct auto portfolios:

Table 20: Auto Loan Statistics


		June 30, 2023	December 31, 2022
	March 31, 2024							March 31, 2024	December 31, 2023
Weighted-average loan origination FICO score (a) (b)	Weighted-average loan origination FICO score (a) (b)
Indirect auto
Indirect auto
Indirect auto	Indirect auto	781	784	788		788
Direct auto	Direct auto	779	776	Direct auto	787		787
Weighted-average term of loan originations - in months (a)	Weighted-average term of loan originations - in months (a)
Indirect auto	Indirect auto	73	73
Indirect auto
Indirect auto					73		73
Direct auto	Direct auto	63	63	Direct auto	65		65

(a)Weighted-averages calculated for the twelve months ended ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

(b)Calculated using the auto enhanced FICO scale.

The PNC Financial Services Group, Inc. – Form 10-Q 23

We continue to focus on borrowers with strong credit profiles as evidenced by the weighted-average loan origination FICO scores noted in Table 20. We offer both new and used auto financing to customers through our various channels. At ~~June 30, 2023,~~March 31, 2024, the portfolio balance was composed of ~~48%~~43% new vehicle loans and ~~52%~~57% used vehicle loans. Comparable amounts at December 31, ~~2022~~2023 were ~~50%~~45% and ~~50%~~55%, respectively.

The auto loan portfolio’s performance is measured monthly, including both updated collateral values ~~that are obtained monthly~~ and ~~updated~~ FICO scores that are obtained at least quarterly. For internal reporting and risk management, we analyze the portfolio by product channel and product type and regularly evaluate default and delinquency experience. As part of our overall risk analysis and monitoring, we segment the portfolio by geography, channel, collateral attributes and credit metrics which include FICO score, LTV and term.

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ 25

Nonperforming Assets and Loan Delinquencies

Nonperforming Assets

Nonperforming assets include nonperforming loans and leases, OREO and foreclosed assets. Nonperforming loans are those loans accounted for ~~which ultimate collectability of~~at amortized cost whose credit quality has deteriorated to the extent full ~~amount~~collection of contractual principal and interest is not ~~probable and include nonperforming loans whose terms were modified as a result of a borrower’s financial difficulty and PCD loans, OREO and foreclosed assets.~~probable. Loans held for sale, certain government insured or guaranteed loans and loans accounted for under the fair value option are excluded from nonperforming loans. See Note 1 Accounting Policies ~~of this Report~~in our 2023 Form 10-K for details on our nonaccrual policies.

The following table presents a summary of nonperforming assets by major category:

Table 21: Nonperforming Assets by Type


		June 30, 2023			December 31, 2022			Change					March 31, 2024			December 31, 2023				Change
Dollars in millions	Dollars in millions							$		%		Dollars in millions								$				%
Nonperforming loans (a)
Nonperforming loans												Nonperforming loans
Commercial	Commercial	$	827		$	858		$	(31)	(4)	%	Commercial	$	1,514		$	1,307		$	$	207	16			16		%
Consumer (b)		1,086			1,127			(41)		(4)	%
Consumer (a)												Consumer (a)	866			873				(7)				(1)		%
Total nonperforming loans	Total nonperforming loans	1,913			1,985			(72)		(4)	%	Total nonperforming loans	2,380			2,180	2,180		200		200		9			9		%
OREO and foreclosed assets	OREO and foreclosed assets	36			34			2		6	%	OREO and foreclosed assets	35			36	36		(1)		(1)		(3)			(3)		%
Total nonperforming assets	Total nonperforming assets	$	1,949		$	2,019		$	(70)	(3)	%	Total nonperforming assets	$	2,415		$	2,216		$	$	199	9			9		%
Nonperforming loans to total loans	Nonperforming loans to total loans	0.59		%	0.61		%
Nonperforming assets to total loans, OREO and foreclosed assets	Nonperforming assets to total loans, OREO and foreclosed assets	0.61		%	0.62		%
Nonperforming assets to total loans, OREO and foreclosed assets
Nonperforming assets to total loans, OREO and foreclosed assets
Nonperforming assets to total assets
Nonperforming assets to total assets
Nonperforming assets to total assets	Nonperforming assets to total assets	0.35		%	0.36		%
Allowance for loan and lease losses to nonperforming loans	Allowance for loan and lease losses to nonperforming loans	248		%	239		%
Allowance for credit losses to nonperforming loans (c)		282		%	274		%
Allowance for loan and lease losses to nonperforming loans
Allowance for loan and lease losses to nonperforming loans													197		%	220		%
Allowance for credit losses to nonperforming loans (b)

(a)~~In connection with the adoption of ASU 2022-02~~ ~~Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures,~~ nonperforming loans as of June 30, 2023 include certain loans where terms were modified as a result of a borrower’s financial difficulty. Prior period amounts included nonperforming TDRs, for which accounting guidance was eliminated effective January 1, 2023. See Note 1 Accounting Policies and the Loan Modifications to Borrowers Experiencing Financial Difficulty section of Note 3 Loans and Related Allowance for more information on our adoption of this ASU.

~~(b)~~Excludes most unsecured consumer loans and lines of credit, which are charged off after 120 to 180 days past due and are not placed on nonperforming status.

~~(c)~~(b)Calculated excluding allowances for investment securities and other financial assets.

Increases in nonperforming assets from December 31, 2023 were primarily driven by higher commercial real estate nonperforming loans.

The following table provides details on the change in nonperforming assets for the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 and ~~2022:~~2023:

Table 22: Change in Nonperforming Assets


In millions	In millions	2023		2022
January 1	January 1	$	2,019	$	2,506
January 1
January 1

New nonperforming assets

New nonperforming assets

New nonperforming assets	New nonperforming assets	862		739
Charge-offs and valuation adjustments	Charge-offs and valuation adjustments	(257)		(117)
Charge-offs and valuation adjustments
Charge-offs and valuation adjustments
Principal activity, including paydowns and payoffs
Principal activity, including paydowns and payoffs
Principal activity, including paydowns and payoffs	Principal activity, including paydowns and payoffs	(469)		(547)
Asset sales and transfers to loans held for sale	Asset sales and transfers to loans held for sale	(58)		(27)
Asset sales and transfers to loans held for sale
Asset sales and transfers to loans held for sale
Returned to performing status	Returned to performing status	(148)		(479)
June 30		$	1,949	$	2,075
Returned to performing status
Returned to performing status
March 31
March 31
March 31

As of ~~June 30, 2023,~~March 31, 2024, approximately ~~98%~~97% of total nonperforming loans were secured by ~~collateral, which lessened reserve requirements and is expected to reduce credit losses.~~collateral.

24 The PNC Financial Services Group, Inc. – Form 10-Q

Loan Delinquencies

We regularly monitor the level of loan delinquencies and believe these levels are a key indicator of credit quality in our loan portfolio. Measurement of delinquency status is based on the contractual terms of each loan. Loans that are 30 days or more past due ~~in terms of payment~~ are considered delinquent. Loan delinquencies include government insured or guaranteed loans, loans accounted for under the fair value option and PCD loans. Amounts exclude loans held for sale.

We manage credit risk based on the risk profile of the borrower, repayment sources, underlying collateral, and other support given current events, economic conditions and expectations. We refine our practices to meet the changing environment, ~~resulting from elevated~~such as inflation levels, ~~labor-related supply chain pressures, higher~~industry specific risks, interest ~~rates~~rate levels, the level of consumer savings and deposit balances, and structural and secular changes fostered by the pandemic. To mitigate losses and enhance customer support, we offer loan modifications and collection programs to assist our

26 ~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~

customers. Under the CARES Act credit reporting rules, certain loans modified due to pandemic related hardships are not being reported as past due as of June 30, 2023 and December 31, 2022 based on the contractual terms of the loan, even where borrowers may not be making payments on their loans during the modification period. The CARES Act credit reporting rules expire in the third quarter of 2023.

The following table presents a summary of accruing loans past due by delinquency status:

Table 23: Accruing Loans Past Due (a)




		Amount								% of Total Loans Outstanding
		June 30 2023		December 31 2022		Change				June 30 2023		December 31 2022
Dollars in millions	Dollars in millions					$		%
Dollars in millions
Dollars in millions
Early stage loan delinquencies
Early stage loan delinquencies
Early stage loan delinquencies	Early stage loan delinquencies
Accruing loans past due 30 to 59 days	Accruing loans past due 30 to 59 days	$	555	$	747	$	(192)	(26)	%	0.17	%	0.23	%
Accruing loans past due 30 to 59 days
Accruing loans past due 30 to 59 days
Accruing loans past due 60 to 89 days
Accruing loans past due 60 to 89 days
Accruing loans past due 60 to 89 days	Accruing loans past due 60 to 89 days	238		261		(23)		(9)	%	0.07	%	0.08	%
Total early stage loan delinquencies	Total early stage loan delinquencies	793		1,008		(215)		(21)	%	0.25	%	0.31	%
Total early stage loan delinquencies
Total early stage loan delinquencies
Late stage loan delinquencies
Late stage loan delinquencies
Late stage loan delinquencies	Late stage loan delinquencies
Accruing loans past due 90 days or more	Accruing loans past due 90 days or more	419		482		(63)		(13)	%	0.13	%	0.15	%
Accruing loans past due 90 days or more
Accruing loans past due 90 days or more
Total accruing loans past due	Total accruing loans past due	$	1,212	$	1,490	$	(278)	(19)	%	0.38	%	0.46	%
Total accruing loans past due
Total accruing loans past due

(a)Past due loan amounts include government insured or guaranteed loans of $0.4 billion at both ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

~~The decrease in accruing loans past due from December 31, 2022 was the result of lower delinquencies in both the consumer and commercial portfolios.~~

Accruing loans past due 90 days or more continue to accrue interest because they are (i) well secured by collateral and are in the process of collection, (ii) managed in homogeneous portfolios with specified charge-off timeframes adhering to regulatory guidelines, or (iii) certain government insured or guaranteed loans. As such, they are excluded from nonperforming loans.

Loan Modifications

We provide relief to our customers experiencing financial hardships through a variety of solutions. Commercial loan and lease modifications are based on each individual borrower’s situation, while consumer loan modifications are evaluated under our hardship relief programs.

~~On January 1, 2023, we adopted ASU 2022-02~~ ~~Financial Instruments~~ - ~~Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures~~, which eliminates the accounting guidance for TDRs and enhances the disclosure requirements for certain loan modifications when a borrower is experiencing financial difficulty. Refer to Note 1 Accounting Policies andSee Note 3 Loans and Related Allowance for Credit Losses for additional information on ~~our adoption of this ASU.~~loan modifications to borrowers experiencing financial difficulty.

Allowance for Credit Losses

Our determination of the ACL is based on historical loss and performance experience, current economic conditions, the reasonable and supportable forecasts of future economic conditions and other relevant factors, including current borrower and/or transaction ~~characteristics.~~characteristics and assessments of the remaining estimated contractual term as of the balance sheet date. We maintain the ACL at an appropriate level for expected losses on our existing investment securities, loans, equipment finance leases, other financial assets and unfunded lending related ~~commitments and determine this allowance based on assessments of the remaining estimated contractual term as of the balance sheet date.~~commitments.

See Note 1 Accounting Policies and the Credit Risk Management section in our 2023 Form 10-K for additional discussion of our ACL, including details of our methodologies. ~~Also see~~See also the Critical Accounting Estimates and Judgments section of this Report for further discussion of the assumptions used in the determination of the ACL as of ~~June 30, 2023.~~March 31, 2024.

The PNC Financial Services Group, Inc. – Form 10-Q 2725

The following table summarizes our ACL related to loans:

Table 24: Allowance for Credit Losses by Loan Class (a)


			June 30, 2023						December 31, 2022
		March 31, 2024
Dollars in millions
Dollars in millions
Dollars in millions	Dollars in millions		Allowance Amount		Total Loans		% of Total Loans		Allowance Amount		Total Loans		% of Total Loans
Allowance for loans and lease losses	Allowance for loans and lease losses
Allowance for loans and lease losses
Allowance for loans and lease losses
Commercial
Commercial
Commercial	Commercial
Commercial and industrial	Commercial and industrial		$	1,836	$	177,629	1.03	%	$	1,957	$	182,219	1.07	%
Commercial and industrial
Commercial and industrial
Commercial real estate
Commercial real estate
Commercial real estate	Commercial real estate		1,206		35,928		3.36	%	1,047		36,316		2.88	%
Equipment lease financing	Equipment lease financing		100		6,400		1.56	%	110		6,514		1.69	%
Equipment lease financing
Equipment lease financing
Total commercial
Total commercial
Total commercial	Total commercial		3,142		219,957		1.43	%	3,114		225,049		1.38	%
Consumer	Consumer
Consumer
Consumer
Residential real estate
Residential real estate
Residential real estate	Residential real estate		72		46,834		0.15	%	92		45,889		0.20	%
Home equity	Home equity		294		26,200		1.12	%	274		25,983		1.05	%
Home equity
Home equity
Automobile
Automobile
Automobile	Automobile		188		15,065		1.25	%	226		14,836		1.52	%
Credit card	Credit card		765		7,092		10.79	%	748		7,069		10.58	%
Credit card
Credit card
Education
Education
Education	Education		61		2,058		2.96	%	63		2,173		2.90	%
Other consumer	Other consumer		215		4,555		4.72	%	224		5,026		4.46	%
Other consumer
Other consumer
Total consumer
Total consumer
Total consumer	Total consumer		1,595		101,804		1.57	%	1,627		100,976		1.61	%
Total	Total		4,737		$	321,761	1.47	%	4,741		$	326,025	1.45	%
Total
Total
Allowance for unfunded lending related commitments
Allowance for unfunded lending related commitments
Allowance for unfunded lending related commitments	Allowance for unfunded lending related commitments		663						694
Allowance for credit losses	Allowance for credit losses		$	5,400					$	5,435
Allowance for credit losses
Allowance for credit losses
Allowance for credit losses to total loans
Allowance for credit losses to total loans
Allowance for credit losses to total loans	Allowance for credit losses to total loans						1.68	%					1.67	%
Commercial	Commercial						1.68	%					1.66	%
Commercial
Commercial
Consumer	Consumer						1.67	%					1.69	%
Consumer
Consumer

(a) Excludes allowances for investment securities and other financial assets, which together totaled ~~$171~~$117 million and ~~$176~~$120 million at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

2826 The PNC Financial Services Group, Inc. – Form 10-Q

The following table summarizes our loan charge-offs and recoveries:

Table 25: Loan Charge-Offs and Recoveries


Six months ended June 30		Gross Charge-offs		Recoveries		Net Charge-offs / (Recoveries)		% of Average Loans (Annualized)
Three months ended March 31
Dollars in millions	Dollars in millions	Gross Charge-offs		Recoveries		Net Charge-offs / (Recoveries)		% of Average Loans (Annualized)
Dollars in millions
Dollars in millions
2024
Commercial
Commercial
Commercial
Commercial and industrial
Commercial and industrial
Commercial and industrial
Commercial real estate
Commercial real estate
Commercial real estate
Equipment lease financing
Equipment lease financing
Equipment lease financing
Total commercial
Total commercial
Total commercial
Consumer
Consumer
Consumer
Residential real estate
Residential real estate
Residential real estate
Home equity
Home equity
Home equity
Automobile
Automobile
Automobile
Credit card
Credit card
Credit card
Education
Education
Education
Other consumer
Other consumer
Other consumer
Total consumer
Total consumer
Total consumer
Total
Total
Total
2023
2023
2023	2023
Commercial	Commercial
Commercial
Commercial
Commercial and industrial
Commercial and industrial
Commercial and industrial	Commercial and industrial	$	149	$	53	$	96	0.11	%
Commercial real estate	Commercial real estate	99		2		97		0.54	%
Commercial real estate
Commercial real estate
Equipment lease financing
Equipment lease financing
Equipment lease financing	Equipment lease financing	7		6		1		0.03	%
Total commercial	Total commercial	255		61		194		0.17	%
Total commercial
Total commercial
Consumer
Consumer
Consumer	Consumer
Residential real estate	Residential real estate	5		7		(2)		(0.01)	%
Residential real estate
Residential real estate
Home equity
Home equity
Home equity	Home equity	11		24		(13)		(0.10)	%
Automobile	Automobile	61		51		10		0.13	%
Automobile
Automobile
Credit card
Credit card
Credit card	Credit card	154		22		132		3.82	%
Education	Education	9		4		5		0.47	%
Education
Education
Other consumer
Other consumer
Other consumer	Other consumer	80		17		63		2.65	%
Total consumer	Total consumer	320		125		195		0.39	%
Total		$	575	$	186	$	389	0.24	%
2022
Commercial
Commercial and industrial		$	71	$	45	$	26	0.03	%
Commercial real estate		15		2		13		0.08	%
Equipment lease financing		3		6		(3)		(0.10)	%
Total commercial		89		53		36		0.04	%
Consumer
Residential real estate		7		11		(4)		(0.02)	%
Home equity		6		39		(33)		(0.27)	%
Automobile		86		70		16		0.20	%
Credit card		135		31		104		3.24	%
Education		8		3		5		0.41	%
Other consumer		115		19		96		3.45	%
Total consumer
Total consumer	Total consumer	357		173		184		0.39	%
Total	Total	$	446	$	226	$	220	0.15	%
Total
Total

Total net charge-offs increased ~~$169~~$48 million, or ~~77%~~25%, for the first ~~six~~three months of ~~2023~~2024 compared to the same period in ~~2022.~~2023. The increase in the comparison was primarily attributable to higher commercial real estate net ~~charge-offs in our commercial portfolio.~~charge-offs.

See Note 1 Accounting Policies in our ~~2022~~2023 Form 10-K and Note 3 Loans and Related Allowance for Credit Losses of this Report for additional information.

Liquidity and Capital Management

~~Liquidity~~Our liquidity risk ~~including our liquidity~~framework and related monitoring measures and tools, isincluding internal liquidity stress testing as well as compliance with internal and regulatory limits and guidelines, are described in further detail in the Liquidity and Capital Management section of our ~~2022~~2023 Form 10-K.

One of the ways we monitor our liquidity is by reference to the LCR, a regulatory minimum liquidity requirement designed to ensure that covered banking organizations maintain an adequate level of liquidity to meet net liquidity needs over the course of a hypothetical 30-day stress scenario. PNC and PNC Bank calculate the LCR daily and are required to maintain a regulatory minimum of 100%. The LCR for ~~each of~~both PNC and PNC Bank exceeded the regulatory minimum requirement throughout the ~~second~~first quarter of ~~2023.~~2024. Fluctuations in our average LCR result from changes to the components of the calculation, including high-quality liquid assets and net cash outflows, as a result of ongoing business activity.

The NSFR is designed to measure the stability of the maturity structure of assets and liabilities of banking organizations over a one-year time horizon. PNC and PNC Bank calculate the NSFR ~~on an ongoing basis~~daily and are required to maintain a regulatory minimum of 100%. The NSFR for ~~each of~~both PNC and PNC Bank exceeded the regulatory minimum requirement throughout the ~~second~~first quarter of ~~2023.~~2024.

The PNC Financial Services Group, Inc. – Form 10-Q 2927

We provide additional information regarding regulatory liquidity requirements and their potential impact on us in the Supervision and Regulation section of Item 1 Business and Item 1A Risk Factors of our ~~2022~~2023 Form 10-K.

Sources of Liquidity

Our largest source of liquidity on a consolidated basis is the customer deposit base generated by our banking businesses. These deposits provide relatively stable and low-cost funding. Total deposits ~~decreased~~increased to ~~$427.5~~$425.6 billion at ~~June 30, 2023~~March 31, 2024 from ~~$436.3~~$421.4 billion at December 31, ~~2022,~~2023. Noninterest-bearing deposit balances decreased driven by a decline in commercial noninterest-bearing balances. Interest-bearing deposits increased reflecting higher commercial and ~~included a continued shift from noninterest-bearing to~~consumer interest-bearing ~~deposit products, as interest rates have risen.~~balances. As of ~~June 30, 2023,~~March 31, 2024, uninsured deposits represented approximately ~~46%~~43% of our total deposit ~~base.~~base, which is estimated based on the regulatory instructions in the Consolidated Reports of Condition and Income - FFIEC 031. The majority of our uninsured deposits are related to commercial operating and relationship accounts, which we define as commercial deposit customers who utilize two or more PNC products. See the Funding Sources portion of the Consolidated Balance Sheet Review and Business Segments Review sections of this Financial Review for additional information on our deposits and related strategies.

We may also obtain liquidity through various forms of funding, including long-term debt (senior notes, subordinated debt and FHLB borrowings) and short-term borrowings (securities sold under repurchase agreements, commercial paper and other short-term borrowings). See the Funding Sources section of the Consolidated Balance Sheet Review in this Financial Review and Note 7 Borrowed Funds ~~included~~ in this Report ~~and Note 10 Borrowed Funds in our 2022 Form 10-K~~ for additional information related to our borrowings.

Total senior and subordinated debt, on a consolidated basis, increased due to the following activity:

Table 26: Senior and Subordinated Debt


In billions	~~2023~~2024
January 1	$	~~23.0~~31.7
Issuances	~~6.2~~2.5
Calls and maturities	~~(1.5)~~(1.1)
Other	~~(0.1)~~(0.4)

~~June 30~~March 31	$	~~27.6~~32.7

Additionally, certain liquid assets and unused borrowing capacity from a number of sources are also available to manage our liquidity position. PNC has a contingency funding plan designed to ensure that liquidity sources are sufficient to meet ongoing obligations and commitments, particularly in the event of liquidity stress. This plan is designed to examine and quantify the organization’s liquidity under various internal liquidity stress scenarios and is periodically tested to assess the plan’s reliability. Additionally, the plan provides the strategies for addressing liquidity needs and responsive actions we would consider during liquidity stress events, which could include the issuance of incremental debt, preferred stock, or additional deposit actions, including the issuance of brokered CDs. The plan also addresses the governance, frequency of reporting and the responsibilities of key departments in the event of liquidity stress.

PNC defines our primary contingent liquidity sources as cash held at the Federal Reserve Bank, investment securities and unused borrowing capacity at the FHLB and Federal Reserve Bank. The following table summarizes our primary contingent liquidity ~~from on-balance sheet~~sources at March 31, 2024 and ~~off-balance sheet funding sources:~~December 31, 2023:

Table 27: Primary Contingent Liquidity Sources

Dollars in billions

June 30, 2023

December 31, 2022

In billions

Cash balance with Federal Reserve Bank

37.8

26.9

Available investment securities (a)

103.1

109.8

Unused borrowing capacity from FHLB and Federal Reserve Bank

86.4

67.2

Available investment securities (a)

Unused borrowing capacity from FHLB (b)

Unused borrowing capacity from Federal Reserve Bank (c)

Total available contingent liquidity

227.3

203.9

(a) ~~Available investment securities represents~~Represents the fair value of investment securities ~~that are available for sale or~~ that can be used for pledging or to secure other sources of funding.

(b)At March 31, 2024, total FHLB borrowing capacity was $74.4 billion and total FHLB borrowings were $37.0 billion. Comparable amounts at December 31, 2023 were $73.4 billion and $38.0 billion, respectively.

(c)Total borrowing capacity with the Federal Reserve Bank was $83.9 billion at March 31, 2024 and $47.2 billion at December 31, 2023. PNC had no outstanding borrowings with the Federal Reserve Bank at March 31, 2024 and December 31, 2023.

As part of PNC’s contingency planning, we prepositioned a portion of our available held to maturity investment securities at the Federal Reserve Bank’s Discount Window during the first quarter of 2024, supporting our resilience and operational readiness.

28 The PNC Financial Services Group, Inc. – Form 10-Q

Bank Liquidity

~~Under~~In addition to our primary contingent liquidity sources, under PNC Bank’s 2014 bank note program, as amended, PNC Bank may from time to time offer up to $40.0 billion aggregate

principal amount outstanding at any one time of its unsecured senior and subordinated notes with maturity dates more than nine months (in the case of senior notes) and five years or more (in the case of subordinated notes) from their date of issue. At ~~June 30, 2023,~~March 31, 2024, PNC ~~Bank had $7.0 billion of notes outstanding~~Bank’s remaining capacity to issue under ~~this~~the program ~~of which $3.9 billion were senior notes and $3.1 billion were subordinated notes.~~was $33.3 billion.

Under PNC Bank’s 2013 commercial paper program, PNC Bank has the ability to offer up to $10.0 billion of its commercial paper to provide additional liquidity. At ~~June 30, 2023,~~March 31, 2024, there were no issuances outstanding under this program.

Additionally, PNC Bank may also access funding from the parent company through deposits placed at the bank or ~~through~~ issuing ~~its~~intercompany senior unsecured notes.

Parent Company Liquidity

In addition to managing liquidity risk at the bank level, we ~~monitor~~manage the parent company’s liquidity. The parent company’s contractual obligations consist primarily of debt service related to parent company borrowings and funding non-bank affiliates. Additionally, the parent company maintains liquidity to fund discretionary activities such as paying dividends to our shareholders, share repurchases and acquisitions.

30 ~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~

At ~~June 30, 2023,~~March 31, 2024, available parent company liquidity totaled ~~$17.2~~$21.7 billion. Parent company liquidity is held in intercompany cash and investments. For investments with longer durations, the related maturities are aligned with scheduled cash needs, such as the maturity of parent company debt obligations.

The principal source of parent company liquidity is the dividends or other capital distributions it receives from PNC Bank, which may be impacted by the following:

•Bank-level capital needs,

•Laws, regulations and the results of supervisory activities,

•Corporate policies,

•Contractual restrictions, and

•Other factors.

There are statutory and regulatory limitations on the ability of a national bank to pay dividends or make other capital distributions or to extend credit to the parent company or its non-bank subsidiaries. The amount available for dividend payments by PNC Bank to the parent company without prior regulatory approval was ~~$5.2~~$5.7 billion at ~~June 30, 2023.~~March 31, 2024. See Note 2019 Regulatory Matters in our ~~2022~~2023 Form 10-K for further discussion of these limitations.

In addition to dividends from PNC Bank, other sources of parent company liquidity include cash and investments, as well as dividends and loan repayments from other subsidiaries and dividends or distributions from equity investments. We can also generate liquidity for the parent company and PNC’s non-bank subsidiaries through the issuance of debt and equity securities, including certain capital instruments, in public or private markets and commercial paper. Under the parent company’s 2014 commercial paper program, the parent company has the ability to offer up to $5.0 billion of commercial paper to provide additional liquidity. At ~~June 30, 2023,~~March 31, 2024, there were no issuances outstanding under this program.

The following table details ~~Parent Company~~parent company note issuances in the ~~second~~first quarter of ~~2023:~~2024:

Table 28: Parent Company Notes Issued


Issuance Date	Amount	Description of Issuance
~~June 12, 2023~~January 22, 2024	$1.0 billion	$1.0 billion of senior fixed-to-floating notes with a maturity date of ~~June 12, 2026.~~January 21, 2028. Interest is payable semi-annually in arrears at a fixed rate of ~~5.812%~~5.300% per annum, on ~~June 12~~January 21 and ~~December 12~~July 21 of each year, beginning on ~~December 12, 2023.~~July 21, 2024. Beginning on ~~June 12, 2025,~~January 21, 2027, interest is payable quarterly in arrears at a floating rate per annum equal to Compounded SOFR (determined with respect to each quarterly interest period using the SOFR Index as described in the Prospectus Supplement), plus ~~1.322%~~1.342%, on ~~September 12, 2025, December 12, 2025, March 12, 2026~~April 21, 2027, July 21, 2027, October 21, 2027 and at the maturity date.
~~June 12, 2023~~January 22, 2024	~~$2.5~~$1.5 billion	$~~2.5~~1.5 billion of senior fixed-to-floating notes with a maturity date of ~~June 12, 2029.~~January 22, 2035. Interest is payable semi-annually in arrears at a fixed rate of ~~5.582%~~5.676% per annum, on ~~June 12~~January 22 and ~~December 12~~July 22 of each year, beginning on ~~December 12, 2023.~~July 22, 2024. Beginning on ~~June 12, 2028,~~January 22, 2034, interest is payable quarterly in arrears at a floating rate per annum equal to Compounded SOFR (determined with respect to each quarterly interest period using the SOFR Index as described in the Prospectus Supplement), plus ~~1.841%~~1.902%, on ~~September 12, 2028, December 12, 2028, March 12, 2029~~April 22, 2034, July 22, 2034, October 22, 2034 and at the maturity date.

Parent company senior and subordinated debt ~~outstanding~~carrying value totaled ~~$19.2~~$25.0 billion and ~~$13.1~~$24.0 billion at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

The PNC Financial Services Group, Inc. – Form 10-Q 29

Contractual Obligations and Commitments

We have contractual obligations representing required future payments on borrowed funds, time deposits, leases, pension and postretirement benefits and purchase obligations. See the Liquidity and Capital Management portion of the Risk Management section of our ~~2022~~2023 Form 10-K for more information on these future cash outflows. Additionally, in the normal course of business, we have various commitments outstanding, certain of which are not included on our Consolidated Balance Sheet. We provide information on our commitments in Note 8 Commitments.

Credit Ratings

PNC’s credit ratings affect the cost and availability of short and long-term funding, collateral requirements for certain derivative instruments and the ability to offer certain products.

In general, rating agencies base their ratings on many quantitative and qualitative factors, including capital adequacy, liquidity, asset quality, business mix, level and quality of earnings, and the current legislative and regulatory environment, including implied government support. A decrease, or potential decrease, in credit ratings could impact access to the capital markets and/or increase the cost of debt, and thereby adversely affect liquidity and financial condition. For additional information on the potential impacts from a downgrade to our credit ratings, see Item 1A Risk Factors in our 2023 Form 10-K.

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ 31

The following table presents credit ratings and outlook for PNC ~~and PNC Bank~~ as of ~~June 30, 2023:~~March 31, 2024:

Table 29: Credit Ratings ~~for PNC~~ and ~~PNC Bank~~Outlook


	~~June 30, 2023~~March 31, 2024
	Moody’s	Standard & Poor’s	Fitch
~~PNC~~Parent Company
Senior debt	A3	A-	A
Subordinated debt	A3	BBB+	A-
Preferred stock	Baa2	BBB-	BBB
PNC Bank
Senior debt	A2	A	A+
Subordinated debt	A3	A-	A
Long-term deposits	Aa3	A	AA-
Short-term deposits	P-1	A-1	F1+
Short-term notes	P-1	A-1	F1
PNC
Agency rating outlook	Negative	Stable	Stable

Capital Management

Detailed information on our capital management processes and activities is included in the Supervision and Regulation section of Item 1 of our ~~2022~~2023 Form 10-K.

We manage our funding and capital positions by making adjustments to our balance sheet size and composition, issuing or redeeming debt, issuing equity or other capital instruments, executing treasury stock transactions and capital redemptions or repurchases, and managing dividend policies and retaining earnings.

In the ~~second~~first quarter of ~~2023,~~2024, PNC returned ~~$0.7~~$0.8 billion of capital to shareholders, ~~as a result of~~reflecting more than $0.6 billion of dividends on common shares and more than $0.1 billion of common share repurchases, representing ~~1.1~~0.9 million shares. Consistent with the SCB framework, which allows for capital return in amounts in excess of the SCB minimum levels, ~~(the regulatory minimum (4.5%) plus our SCB),~~ our Board of Directors has authorized a repurchase framework under the previously approved repurchase program of up to 100 million common shares, of which approximately ~~46%~~44% were still available for repurchase at ~~June 30, 2023. PNC’s SCB through September 30, 2023 is 2.9%. Based on the results~~March 31, 2024. In light of the Federal ~~Reserve’s 2023 annual stress test,~~banking agencies proposed rules to adjust the Basel III capital framework, second quarter of 2024 share repurchase activity is expected to approximate the recent quarterly average share repurchase levels. PNC continues to evaluate the potential impact of the proposed rules and may adjust share repurchase activity depending on market and economic conditions, as well as other factors. PNC’s SCB for the four-quarter period beginning October 1, 2023 ~~will improve to~~is the regulatory minimum of 2.5%.

Due to the proposed rules issued by the Federal banking agencies on July 27, 2023 to adjust the Basel III capital framework, share repurchase activity is expected to be reduced in the third quarter of 2023 compared to recent prior quarters. PNC continues to evaluate and may adjust share repurchase activity, as actual amounts and timing are dependent on market and economic conditions, as well as other factors.

On ~~July~~April 3, ~~2023,~~2024 the PNC Board of Directors ~~raised the~~declared a quarterly cash dividend on common stock toof $1.55 per share ~~an increase~~to be paid on May 6, 2024 to shareholders of ~~5 cents per share. The dividend, with a payment date~~record at the close of ~~August 5, 2023, will be payable the next~~ business ~~day.~~

April 15, 2024.

3230 The PNC Financial Services Group, Inc. – Form 10-Q

The following table summarizes our Basel III ~~Capital~~capital balances and ~~ratios as of June 30, 2023:~~ratios:

Table 30: Basel III Capital


		June 30, 2023
	March 31, 2024												March 31, 2024
Dollars in millions	Dollars in millions	Basel III (a)			Fully Implemented (estimated) (b)			Dollars in millions	Basel III (a)		Fully Implemented (estimated) (b)
Common equity Tier 1 capital	Common equity Tier 1 capital
Common stock plus related surplus, net of treasury stock	Common stock plus related surplus, net of treasury stock	$	(3,738)		$	(3,738)
Common stock plus related surplus, net of treasury stock
Common stock plus related surplus, net of treasury stock
Retained earnings	Retained earnings	55,829			55,346

Goodwill, net of associated deferred tax liabilities

Goodwill, net of associated deferred tax liabilities

Goodwill, net of associated deferred tax liabilities	Goodwill, net of associated deferred tax liabilities	(10,755)			(10,755)
Other disallowed intangibles, net of deferred tax liabilities	Other disallowed intangibles, net of deferred tax liabilities	(346)			(346)
Other adjustments/(deductions)	Other adjustments/(deductions)	(89)			(90)

Common equity Tier 1 capital (c)	Common equity Tier 1 capital (c)	$	40,901		$	40,417

Common equity Tier 1 capital (c)

Common equity Tier 1 capital (c)
Additional Tier 1 capital	Additional Tier 1 capital
Preferred stock plus related surplus
Preferred stock plus related surplus
Preferred stock plus related surplus	Preferred stock plus related surplus	7,237			7,237

Tier 1 capital	Tier 1 capital	$	48,138		$	47,654
Tier 1 capital
Tier 1 capital
Additional Tier 2 capital	Additional Tier 2 capital
Qualifying subordinated debt
Qualifying subordinated debt
Qualifying subordinated debt	Qualifying subordinated debt	3,222			3,222

Eligible credit reserves includable in Tier 2 capital	Eligible credit reserves includable in Tier 2 capital	4,764			5,241
Eligible credit reserves includable in Tier 2 capital
Eligible credit reserves includable in Tier 2 capital
Total Basel III capital	Total Basel III capital	$	56,124		$	56,117
Risk-weighted assets	Risk-weighted assets
Basel III standardized approach risk-weighted assets (d)
Basel III standardized approach risk-weighted assets (d)
Basel III standardized approach risk-weighted assets (d)	Basel III standardized approach risk-weighted assets (d)	$	429,634		$	429,826
Average quarterly adjusted total assets	Average quarterly adjusted total assets	$	549,471		$	548,987
Supplementary leverage exposure (e)	Supplementary leverage exposure (e)	$	651,342		$	651,341
Basel III risk-based capital and leverage ratios (f)	Basel III risk-based capital and leverage ratios (f)
Common equity Tier 1	Common equity Tier 1	9.5		%	9.4		%
Common equity Tier 1
Common equity Tier 1									10.1	%	10.0	%
Tier 1	Tier 1	11.2		%	11.1		%	Tier 1	11.6	%	11.5	%
Total	Total	13.1		%	13.1		%	Total	13.4	%	13.4	%
Leverage (g)	Leverage (g)	8.8		%	8.7		%	Leverage (g)	8.7	%	8.7	%
Supplementary leverage ratio (e)	Supplementary leverage ratio (e)	7.4		%	7.3		%	Supplementary leverage ratio (e)	7.3	%	7.2	%

(a)The ratios are calculated to reflect PNC’s election to adopt the CECL five-year transition provisions. Effective for the first quarter 2022, PNC is now in the three-year transition period and the full impact of the CECL standard is being phased-in to regulatory capital through December 31, 2024.

(b)The ratios are calculated to reflect the full impact of CECL and exclude the benefits of the optional five-year transition.

(c)As permitted, PNC and PNC Bank have elected to exclude AOCI related to both available for sale securities and pension and other post-retirement plans from CET1 capital.

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

(e)The Supplementary leverage ratio is calculated based on Tier 1 capital divided by Supplementary leverage exposure, which takes into account the quarterly average of both on balance sheet assets as well as certain off-balance sheet items, including loan commitments and potential future exposure under derivative contracts.

(f)All ratios are calculated using the regulatory capital methodology applicable to PNC and calculated based on the standardized approach.

(g)Leverage ratio is calculated based on Tier 1 capital divided by Average quarterly adjusted total assets.

PNC’s regulatory risk-based capital ratios are calculated using the standardized approach for determining risk-weighted assets. Under the standardized approach for determining credit risk-weighted assets, exposures are generally assigned a pre-defined risk weight. Exposures to high volatility commercial real estate, nonaccruals, FDMs, past due exposures and equity exposures are generally subject to higher risk weights than other types of exposures.

The regulatory agencies have adopted a rule permitting certain banks, including PNC, to delay the estimated impact on regulatory capital stemming from implementing CECL. CECL’s estimated impact on CET1 capital, as defined by the rule, is the change in retained earnings at adoption plus or minus 25% of the change in CECL ACL at the balance sheet date, excluding the allowance for PCD loans, compared to CECL ACL at adoption. Effective for the first quarter of 2022, PNC is now in the three-year transition period, and the full impact of the CECL standard is being phased-in to regulatory capital through December 31, 2024. See additional discussion of this rule in the Supervision and Regulation section of Item 1 Business and Item 1A Risk Factors of our ~~2022~~2023 Form 10-K.

At ~~June 30, 2023,~~March 31, 2024, PNC and PNC Bank were considered “well capitalized” based on applicable U.S. regulatory capital ratio requirements. To qualify as “well capitalized,” PNC must have Basel III capital ratios of at least 6% for Tier 1 risk-based capital and 10% for Total risk-based capital, and PNC Bank must have Basel III capital ratios of at least 6.5% for Common equity Tier 1 risk-based capital, 8% for Tier 1 risk-based capital, 10% for Total risk-based capital and a Leverage ratio of at least 5%. ~~For more information on the interagency proposed expanded risk-based capital rules, see the Recent Regulatory Developments section.~~

The PNC Financial Services Group, Inc. – Form 10-Q 3331

Federal banking regulators have stated that they expect the largest U.S. BHCs, including PNC, to have a level of regulatory capital well in excess of the regulatory minimum and have required the largest U.S. BHCs, including PNC, to have a capital buffer sufficient to withstand losses and allow them to meet the credit needs of their customers through estimated stress scenarios. We seek to manage our capital consistent with these regulatory principles, and we believe that our ~~June 30, 2023~~March 31, 2024 capital levels were aligned with them.

We provide additional information regarding regulatory capital requirements and some of their potential impacts, ~~on us~~including the proposed rules to adjust the Basel III framework, in the Supervision and Regulation section of Item 1 Business, Item 1A Risk Factors and Note 2019 Regulatory Matters in ~~the Notes To Consolidated Financial Statements in Item 8 of~~ our ~~2022~~2023 Form 10-K.

Market Risk Management

See the Market Risk Management portion of the Risk Management ~~Section~~section in our ~~2022~~2023 Form 10-K for additional discussion regarding market risk.

Market Risk Management – Interest Rate Risk

Interest rate risk results primarily from our traditional banking activities of gathering deposits and extending loans. Many factors, including economic and financial conditions, movements in interest rates and consumer preferences, affect the difference between the interest that we earn on assets and the interest that we pay on liabilities and the level of our noninterest-bearing funding sources. Due to the repricing term mismatches and embedded options inherent in certain of these products, changes in market interest rates not only affect expected near-term earnings, but also the economic values of these assets and liabilities.

Our Asset and Liability Management group centrally manages interest rate risk as prescribed in our market risk-related risk management policies, which are approved by management’s ~~Asset and Liability Committee~~ALCO and the Risk Committee of the Board of Directors.

PNC utilizes sensitivities of NII and EVE to a set of interest rate scenarios to identify and measure its short-term and long-term structural interest rate risks.

NII Sensitivity results ~~and market interest rate benchmarks~~ for the ~~second~~first quarters of ~~2023~~2024 and ~~2022~~2023 follow:

Table 31: ~~Interest Sensitivity Analysis~~

Second Quarter 2023 Second Quarter 2022
Net Interest Income Sensitivity Simulation
Effect on net interest income in first year from gradual parallel interest rate change over the
following 12 months of:
100 basis point increase 0.0 % 3.2 %
100 basis point decrease 0.0 % (3.4) %
Effect on net interest income in second year from gradual parallel interest rate change over the
preceding 12 months of:
100 basis point increase 1.4 % 5.6 %
100 basis point decrease (1.6) % (6.4) %

In addition to measuring the effect on net interest income assuming parallel changes in current interest rates, we routinely simulate the effects of a number of nonparallel interest rate environments. Table 32 reflects the percentage change in net interest income over the next two twelve-month periods, assuming (i) the PNC Economist’s most likely rate forecast, (ii) implied market forward rates, and (iii) yield curve slope flattening (a 100 basis point yield curve slope flattening between one-month and ten-year rates superimposed on current base rates) scenario.

~~All changes in forecasted net interest income are relative to results in a base rate scenario where current market rates are assumed to remain unchanged over the forecast horizon.~~

~~Table 32:~~ Net Interest Income Sensitivity ~~to Alternative Rate Scenarios~~Analysis


	First Quarter 2024		First Quarter 2023
Net Interest Income Sensitivity Simulation (a)
Effect on NII in first year from shocked interest rate:
200 basis point instantaneous increase	(0.2)	%	2.5	%
200 basis point instantaneous decrease	(0.2)	%	(3.3)	%

June 30, 2023
PNC
Economist Market
Forward Slope
Flattening
First year sensitivity (0.9) % 0.0 % (0.5) %
Second year sensitivity 0.2 % (0.7) % (2.4) %

(a) The effect on NII in the first year from a 100 basis point instantaneous increase or decrease is not materially different from the 200 basis point scenarios as disclosed above.

When forecasting net interest income, we make certain key assumptions ~~about interest~~that can materially impact the resulting sensitivities, including the following:

Future Balance Sheet Composition: Our balance sheet composition is dynamic and based on our forecasted expectations. As of the first quarter of 2024, the projected balance sheet composition by the end of year one is generally consistent with the spot composition as of the first quarter of 2024.

Deposit Betas: Deposit pricing changes are primarily driven by changes in the Federal Funds rate, with the relationship between deposit rates and Federal Funds rate defined as deposit beta. We define cumulative deposit beta as the ~~shape~~change in deposit rate paid on interest-bearing non-maturity deposits divided by the change in the upper level of the ~~yield curve,~~stated Federal Funds rate range since the ~~volume~~first quarter of 2022, the start of the current rising rate cycle. As of March 31, 2024 PNC’s cumulative deposit beta was 45%, an increase from 35% at March 31, 2023. For interest rate risk modeling, PNC uses dynamic beta models to adjust assumed repricing sensitivity depending on market rate levels as well as other factors. The dynamic beta assumptions reflect historical experience and ~~characteristics of new business~~future expectations. Our scenario assumes that deposit betas increased slightly from current levels. Actual deposit rates paid may differ from modeled projections due to variables such as competition for deposits and ~~the behavior of existing on-~~customer behavior.

Asset Prepayments: PNC includes prepayment assumptions for both loan and ~~off-balance sheet positions. These assumptions determine~~investment portfolios. Mortgage and home equity portfolios utilize an industry standard model to drive estimated prepayments that increase in lower rate environments. Commercial and consumer loan portfolios assume static constant prepayment rates that are consistent across rate scenarios, as those portfolios historically do not exhibit significantly different prepayment behaviors based upon the ~~future~~ level of ~~simulated net interest income in the base~~market rates.

Impact of Derivatives: PNC uses interest rate ~~scenario~~derivatives to hedge floating rate commercial loans. PNC had $36.5 billion in receive fix / pay float swaps as of March 31, 2024, with a weighted average duration of 2.0 years and ~~the other interest~~an average fixed rate ~~scenarios presented~~of 2.30%. As of March 31, 2024 PNC also had collars in ~~Tables 31~~place, reflecting $12.5 billion of caps and ~~32. These simulations assume~~$12.5 billion of floors, that ~~as assets and liabilities mature, they~~ are ~~replaced or repriced at then-current market rates.~~used to hedge these

3432 The PNC Financial Services Group, Inc. – Form 10-Q

~~The following graph presents the SOFR curves~~commercial loans. Additionally, PNC utilizes receive fix / pay float swaps as a means of hedging fixed rate debt. See Note 12 Financial Derivatives in this report for additional information on how we use derivatives to hedge commercial loans and fixed rate debt.

EVE sensitivity results for the ~~base rate scenario~~first quarter of 2024 and ~~each of the alternate scenarios one year forward:~~2023 follow:

Table ~~33: Alternate Interest Rate Scenarios: One Year Forward~~32: Economic Value of Equity Sensitivity Analysis


	First Quarter 2024		First Quarter 2023
Economic Value of Equity Sensitivity Simulation
200 basis point instantaneous increase	(5.7)	%	(4.3)	%
200 basis point instantaneous decrease	(1.6)	%	(4.9)	%

EVE measures the present value of all projected future cash flows associated with a point-in-time balance sheet and does not include projected new volume. EVE sensitivity to interest rate changes is a complementary metric to NII sensitivity analysis and represents an estimation of long-term interest rate risk. PNC calculates its EVE sensitivity by measuring the changes in the economic value of assets, liabilities and off-balance sheet instruments in response to an instantaneous +/-200 bps parallel shift in interest rates. Similar to the NII sensitivity analysis, we incorporate dynamic deposit repricing and loan prepayment assumptions. These methodologies are largely consistent between the EVE and NII sensitivity analyses. Additionally, deposit attrition is a significant contributor to EVE sensitivity. Deposit attrition is projected based on a dynamic model developed using long-term historical deposit behavior in addition to management assumptions including accelerated attrition for pandemic related excess deposits. PNC performs various sensitivity analyses to understand the impact of faster and slower deposit attrition on our risk metrics, with the results reported to ALCO.

~~The second~~Compared to the first quarter of 2023, ~~interest~~there have been no material changes to our NII sensitivity ~~analyses indicate~~and EVE sensitivity assumptions, including data sources that our Consolidated Balance Sheet is positioned to benefit from an increase in interest rates over the longer term and an upward sloping interest rate yield curve. We believe that we have the deposit funding base and balance sheet flexibility to adjust, where appropriate and permissible, to changing interest rates and market conditions.drive assumptions setting.

Market Risk Management – Customer-Related Trading Risk

We use VaR as the primary means to measure and monitor market risk in customer-related trading activities. VaR is used to estimate the probability of portfolio losses based on the statistical analysis of historical market risk factors. VaR is calculated for each of the portfolios that comprise our customer-related trading activities of which the majority are covered positions as defined by the Market Risk Rule. VaR is computed with positions and market risk factors updated daily to ensure each portfolio is operating within its acceptable limits. See the Market Risk Management – Customer-Related Trading Risk section of our ~~2022~~2023 Form 10-K for more information on our models used to calculate VaR and our backtesting process.

Customer-related trading revenue was ~~$107~~$16 million for the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024, compared to ~~$198~~$84 million for the ~~six~~three months ended ~~June 30, 2022.~~March 31, 2023. The decrease was ~~mainly~~primarily due to ~~higher funding costs on the trading positions inventory and~~ lower derivative client sales revenues, partially offset by ~~improved foreign exchange~~securities underwriting client revenues.

Market Risk Management – Equity And Other Investment Risk

Equity investment risk is the risk of potential losses associated with investing in both private and public equity markets. In addition to extending credit, taking deposits, underwriting securities and trading financial instruments, we make and manage direct investments in a variety of transactions, including management buyouts, recapitalizations and growth financings in a variety of industries. We also have investments in affiliated and non-affiliated funds that make similar investments in private equity, consistent with regulatory limitations. The economic and/or book value of these investments and other assets are directly affected by changes in market factors.

Various PNC business units manage our equity and other investment activities. Our businesses are responsible for making investment decisions within the approved policy limits and associated guidelines.

A summary of our equity investments follows:

Table 33: Equity Investments Summary


	March 31, 2024		December 31, 2023		Change
Dollars in millions					$		%
Tax credit investments	$	4,233	$	4,331	$	(98)	(2)	%
Private equity and other	4,047		3,983		64		2	%
Total	$	8,280	$	8,314	$	(34)	—

The PNC Financial Services Group, Inc. – Form 10-Q 3533

~~A summary of our equity investments follows:~~

~~Table 34: Equity Investments Summary~~

June 30
2023 December 31
2022 Change
Dollars in millions $ %
Tax credit investments $ 4,267 $ 4,308 $ (41) (1) %
Private equity and other 3,748 4,129 (381) (9) %
Total $ 8,015 $ 8,437 $ (422) (5) %

Tax Credit Investments

Included in our equity investments are direct tax credit investments and equity investments held by consolidated entities. These tax credit investment balances included unfunded commitments totaling ~~$2.4~~$2.2 billion and $2.5 billion at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively. These unfunded commitments are included in Other liabilities on our Consolidated Balance Sheet.

Note 54 Loan Sale and Servicing Activities and Variable Interest Entities in our ~~2022~~2023 Form 10-K has further information on tax credit investments.

Private Equity and Other

The largest component of our other equity investments is our private equity portfolio. The private equity portfolio is an illiquid portfolio consisting of mezzanine and equity investments that vary by industry, stage and type of investment. Private equity investments carried at estimated fair value totaled ~~$1.8~~$2.2 billion at both ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022, respectively.~~2023. As of ~~June 30, 2023, $1.6~~March 31, 2024, $2.0 billion was invested directly in a variety of companies and $0.2 billion was invested indirectly through various private equity funds.

Included in our other equity investments are Visa Class BB-1 common shares, which are recorded at cost. Visa Class BB-1 common shares that we own are transferable only under limited circumstances until they can be converted into shares of the publicly-traded Class A common shares, which cannot happen until the resolution of the pending interchange ~~litigation.~~litigation, subject to the exchange offer described in Note 16 Subsequent Events. Based upon the ~~June 30, 2023~~March 31, 2024 per share closing price of ~~$237.48~~$279.08 for a Visa Class A common share, the estimated value of our total investment in the Class BB-1 common shares was approximately ~~$1.3~~$1.6 billion at the current conversion rate of Visa BB-1 shares to Visa A shares, while our cost basis was insignificant. ~~See Note 15 Fair Value and Note 21 Legal Proceedings in our 2022 Form 10-K for additional information regarding our Visa agreements.~~ The estimated value does not represent fair value of the Visa BB-1 common shares given the shares’ limited transferability and the lack of observable transactions in the marketplace. See Note 14 Fair Value and Note 20 Legal Proceedings in our 2023 Form 10-K and Note 13 Legal Proceedings in this Report for additional information regarding our Visa agreements. See Note 16 Subsequent Events for additional details on Visa’s recently announced exchange offer for Visa Class B-1 common stock.

We also have certain other equity investments, the majority of which represent investments in affiliated and non-affiliated funds with both traditional and alternative investment strategies. Net gains (losses) related to these investments were ~~$19~~$(6) million for the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 and ~~$23~~$21 million for the ~~six~~three months ended ~~June 30, 2022.~~March 31, 2023.

Financial Derivatives

We use a variety of financial derivatives as part of the overall asset and liability risk management process to help manage exposure to market (primarily interest rate) and credit risk inherent in our business activities. We also enter into derivatives with customers to facilitate their risk management activities.

Financial derivatives involve, to varying degrees, market and credit risk. Derivatives represent contracts between parties that usually require little or no initial net investment and result in one party delivering cash or another type of asset to the other party based on a notional and an underlying as specified in the contract. Therefore, cash requirements and exposure to credit risk are significantly less than the notional amount on these instruments.

Further information on our financial derivatives is presented in Note 1 Accounting Policies, Note 1514 Fair Value and Note 1615 Financial Derivatives in our ~~2022~~2023 Form 10-K and in Note 11 Fair Value and Note 12 Financial Derivatives in this Report.

Not all elements of market and credit risk are addressed through the use of financial derivatives, and such instruments may be ineffective for their intended purposes due to unanticipated market changes, among other reasons.

~~LIBOR Transition~~

RECENT REGULATORY DEVELOPMENTS

Federal agencies and states, including the federal agencies responsible for the Federal Acquisition Regulations, California, and most recently in March 2024, the SEC, have separately proposed or finalized rules that would require certain companies or government contractors, such as PNC or PNC Bank, to disclose significant amounts of climate-related information. This information includes qualitative and quantitative disclosures of material climate-related risks and their impact, governance and management, targets and goals, and greenhouse gas emissions. The ~~cessation after June 30, 2023~~greenhouse gas emissions disclosures include the company’s direct emissions from owned or controlled sources (Scope 1) and indirect emissions from the company’s consumption of energy purchased from third parties (Scope 2), and in the case of the ~~requirement that banks submit rates~~Federal Acquisition Regulations proposal for a “major contractor” and California laws, disclosures related to indirect emissions from upstream and downstream activities in the ~~calculation~~company’s value chain (Scope 3). If and when all the rules are finalized, PNC and PNC Bank may face potentially differing standards from the agencies or California. Numerous lawsuits have challenged the SEC and California rules, and on April 4, 2024, the SEC voluntarily stayed implementation of ~~LIBOR presents risks to~~its final rules pending resolution of the ~~financial instruments originated, held or serviced by PNC that use LIBOR as a reference rate. For more discussion regarding~~lawsuits challenging the ~~transition from LIBOR, see Item 1 Risk Factors and the Risk Management section in Item 7 of our 2022 Form 10-K.~~SEC rules.

As previously announced, PNC’s Series O, Series R and Series S preferred stock will transition to three-month CME Term SOFR plus a tenor spread adjustment of 0.26161% per annum (“Adjusted three-month CME Term SOFR”) as the replacement reference rate. Adjusted three-month CME Term SOFR will be used with respect to applicable floating-rate dividend periods with dividend

3634 The PNC Financial Services Group, Inc. – Form 10-Q

determination dates occurring after June 30, 2023. The calculation of interest on the junior subordinated debentures issued by The PNC Financial Services Group, Inc. and owned by PNC Capital Trust C, a wholly-owned finance subsidiary of The PNC Financial Services Group, Inc., as well as the calculation of distributions on the trust preferred securities issued by PNC Capital Trust C will transition to a replacement reference rate of Adjusted three-month CME Term SOFR for interest or distribution periods, as applicable, with determination dates occurring after June 30, 2023. Further, two series of debt securities issued by a predecessor banking subsidiary, National City Bank, will also transition the calculation of interest. The National City Bank Notes due April 1, 2043 will use Adjusted three-month CME Term SOFR as the replacement reference rate for interest periods with determination dates occurring after June 30, 2023. The National City Bank Notes due April 1, 2037 will use one-month CME Term SOFR plus a tenor spread adjustment of 0.11448% per annum as the replacement reference rate with respect to interest periods with determination dates occurring after June 30, 2023.

As of June 30, 2023, PNC had approximately $32.1 billion in loans and securities and $347.8 billion notional value in derivatives tied to LIBOR. The vast majority of PNC’s LIBOR exposures have already transitioned or will transition to a non-LIBOR rate on their next reset date. As previously anticipated, a small subset of these exposures will leverage the Adjustable Interest Rate LIBOR Act for its intended purpose to address difficult exposures when necessary or will transition to “synthetic LIBOR,” a substitute version of LIBOR to be published through the end of September 2024 and calculated under an alternative methodology based on CME Term SOFR plus the applicable tenor spread adjustment.

R~~ECENT~~ R~~EGULATORY~~ D~~EVELOPMENTS~~

~~Bank Failures and Resolutions~~

Following the bank failures in March 2023 of Silicon Valley Bank, Santa Clara, California, and Signature Bank, New York, New York, and after recommendations by the boards of the FDIC and Federal Reserve and a determination by the Secretary of the Treasury in consultation with the President, the FDIC invoked the systemic risk exception to certain resolution-related and Deposit Insurance Fund restrictions in order to fully protect all depositors of both institutions, including uninsured deposits. The FDIC currently estimates the cost of protecting the uninsured depositors to the Deposit Insurance Fund at approximately $15.8 billion. By law, any losses to the Deposit Insurance Fund to support uninsured depositors under the systemic risk exception must be recovered by one or more special assessments on insured depository institutions or depository institution holding companies, or both. In May 2023, the FDIC proposed a rule to implement the special assessment. Under the proposal, the FDIC would collect from PNC, along with other BHCs and insured depository institutions, special assessments at an annual rate of 12.5 basis points of PNC’s uninsured deposits reported as of December 31, 2022 (adjusted to exclude the first $5 billion), over eight quarterly assessment periods, beginning after the first quarter 2024. See Note 16 Regulatory Matters for additional information.

~~Capital, Capital Planning, and Liquidity~~

In June 2023, the Federal Reserve announced the results of its supervisory stress tests conducted as part of the 2023 CCAR process. PNC remained well above its risk-based minimum capital requirements in the supervisory stress tests, and PNC’s SCB for the four-quarter period beginning October 1, 2023, will improve to the regulatory minimum of 2.5%. See the Liquidity and Capital Management portion of the Risk Management section in this Financial Review for a discussion of PNC’s capital actions.

~~Proposed Expanded Risk-Based Capital Rules~~

On July 27, 2023, the Federal Reserve, OCC, and FDIC proposed for public comment an interagency rule to implement the final components of the Basel III framework that would significantly revise the capital requirements for large banking organizations, including PNC and PNC Bank. In general, the proposed rule would align the regulatory capital elements and required deductions for Category III banking organizations such as PNC and PNC Bank with those currently applicable to Category I and II banking organizations and apply a new expanded risk-based approach which leverages the Basel rules, including the calculation of risk-weighted assets (the “expanded risk-based approach”) in addition to the current U.S. standardized approach. Our review of the proposal is ongoing. Among other impacts, PNC and PNC Bank would be required to recognize most elements of AOCI in regulatory capital and deduct from CET1 capital, among other items, mortgage servicing assets and deferred tax assets that individually exceed 10 percent of CET1 capital or in the aggregate with other threshold items that exceed 15 percent of CET1 capital. The new expanded risk-based approach to calculating risk-weighted assets would apply more granular and standardized risk-weighting methodologies for credit, operational, market, equity and credit valuation adjustment risks. PNC and PNC Bank would be required to calculate their risk-based capital ratios under the existing standardized approach and the expanded risk-based approach and would be subject to the lower of the two resulting ratios for their risk-based capital minimums and buffer requirements, including the SCB. Based on our initial review of the proposal, we expect the proposal, if finalized in its current form, would result in lower pro forma capital ratios for PNC and PNC Bank that would remain above current minimum capital and buffer requirements. The proposal indicates the effective date of the final rule would be July 1, 2025, with certain provisions—including the recognition of AOCI elements in regulatory capital and the increase in risk-weighted assets due to the expanded risk-based approach—having a three-year phase-in period. Comments on the proposal are due by November 30, 2023.

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ 37

CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

Our consolidated financial statements are prepared by applying certain accounting policies. Note 1 Accounting Policies in our ~~2022~~2023 Form 10-K describes the most significant accounting policies that we use. Certain of these policies require us to make estimates or economic assumptions that may vary under different assumptions or conditions, and such variations may significantly affect our reported results and financial position for the period or in future periods. The policies and judgments related to residential and commercial MSRs and Level 3 fair value measurements are described in Critical Accounting Estimates and Judgments in our ~~2022~~2023 Form 10-K. The following details the critical estimates and judgments around the ACL.

Allowance for Credit Losses

We maintain the ACL at levels that we believe to be appropriate as of the balance sheet date to absorb expected credit losses on our existing investment securities, loans, equipment finance leases, other financial assets and unfunded lending related commitments, for the remaining estimated contractual term of the assets or exposures, taking into consideration expected prepayments and estimated recoveries. Our determination of the ACL is based on historical loss and performance experience, as well as current borrower and transaction characteristics including collateral type and quality, current economic conditions, reasonable and supportable forecasts of future economic conditions and other relevant factors. We use methods sensitive to changes in economic conditions to interpret these factors and to estimate expected credit losses. We evaluate and, when appropriate, enhance the quality of our data and models and other methods used to estimate the ACL on an ongoing basis. We incorporate qualitative factors in the ACL that reflect our best estimate of expected losses that may not be adequately represented in our quantitative methods or economic assumptions. The major drivers of ACL estimates include, but are not limited to:

•Current economic conditions: Our forecast of expected losses depends on economic conditions as of the estimation date. As current economic conditions evolve, forecasted losses could be materially affected.

•Scenario weights and design: Our loss estimates are sensitive to the shape, direction and rate of change of macroeconomic forecasts and thus vary significantly between upside and downside scenarios. Changes to the probability weights assigned to these scenarios and the timing of peak business cycles reflected by the scenarios could materially affect our loss estimates.

•Current borrower quality: Our forecast of expected losses depends on current borrower and transaction characteristics, including credit metrics and collateral type/quality. As borrower quality evolves, forecasted losses could be materially affected.

•Portfolio ~~volume and mix:~~composition: Changes to portfolio volume and mix could materially affect our estimates, as CECL reserves

would be recognized upon origination or acquisition and derecognized upon paydown, maturity or sale.

For all assets and unfunded lending related commitments within the scope of the CECL standard, the applicable ACL is composed of one or a combination of the following components: (i) collectively assessed or pooled reserves, (ii) individually assessed reserves, and

(iii) qualitative (judgmental) reserves. Our methodologies and key assumptions for each of these components are discussed in Note 1

Accounting ~~Policies.~~Policies in our 2023 Form 10-K.

Reasonable and Supportable Economic Forecast

~~Under~~Pursuant to the CECL standard, we are required to consider reasonable and supportable forecasts in estimating expected credit losses. For this purpose, we have established a framework that includes a three-year forecast period and the use of four economic scenarios with associated probability weights, which in combination create a forecast of expected economic outcomes. Credit losses estimated in our reasonable and supportable forecast period are sensitive to the shape and severity of the scenarios used and weights assigned to them.

To forecast the distribution of economic outcomes over the reasonable and supportable forecast period, we generate ~~the~~ four economic forecast scenarios ~~we use~~using a combination of quantitative macroeconomic models, other measures of economic activity and forward-looking expert ~~judgment to forecast the distribution of economic outcomes over the reasonable and supportable forecast period.~~judgment. Each scenario is then given an associated probability (weight) to represent our current expectation within that distribution over the forecast period. This process is informed by current economic conditions, expected business cycle evolution and the expert judgment of PNC’s RAC. This approach seeks to provide a reasonable representation of the forecast of expected economic outcomes and is used to estimate expected credit losses across a variety of loans, securities and ~~securities.~~other financial assets. Each quarter, the scenarios and their respective weights are presented to RAC for ~~approval, and the committee also approves CECL scenarios’ weights for use for the current reporting period.~~approval.

The scenarios used for the period ended ~~June 30, 2023 reflect a slight increase in downside risk compared to December~~March 31, ~~2022.The current outlook considers,~~2024 consider, among other factors, ~~the~~ ongoing inflationary pressures and the corresponding ~~tightening~~tightness of monetary policy and credit availability. ~~Our~~While recession risks remain elevated, our most-likely expectation at ~~June 30, 2023~~March 31, 2024 is that the U.S. economy ~~will be impacted by~~narrowly avoids a ~~mild~~ recession ~~starting~~ in ~~late 2023 or early~~ 2024.

We used a number of economic variables in our scenarios, with two of the most significant drivers being real GDP and the U.S. unemployment rate. The following table presents a comparison of these two economic variables based on the weighted-average scenario forecasts used in determining our ACL at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

38The PNC Financial Services Group, Inc. – Form 10-Q

Table ~~35:~~34: Key Macroeconomic Variables in CECL Weighted-Average Scenarios


		Assumptions as of June 30, 2023
		2023	2024	2025
	Assumptions as of March 31, 2024										Assumptions as of March 31, 2024
	2024							2024		2025	2026
U.S. real GDP (a)	U.S. real GDP (a)	0.9%	(0.1)%	1.9%	U.S. real GDP (a)	0.8%	1.7%		2.1%
U.S. unemployment rate (b)	U.S. unemployment rate (b)	4.0%	4.9%	4.5%	U.S. unemployment rate (b)	4.6%	4.8%		4.3%
		Assumptions as of December 31, 2022
		2023	2024	2025
	Assumptions as of December 31, 2023										Assumptions as of December 31, 2023
	2024							2024		2025	2026
U.S. real GDP (a)	U.S. real GDP (a)	(0.4)%	1.4%	1.9%	U.S. real GDP (a)	0.1%	1.5%		2.0%
U.S. unemployment rate (b)	U.S. unemployment rate (b)	4.9%		4.4%	U.S. unemployment rate (b)	4.5%	4.6%		4.2%

(a)Represents year-over-year growth (loss) rates.

(b)Represents quarterly average rate at December 31, ~~2023,~~ 2024, 2025 and ~~2025,~~2026, respectively.

Real GDP growth is expected to end ~~2023~~2024 at ~~0.9%~~0.8% on a weighted average basis, up from the ~~(0.4%)~~0.1% assumed at December 31, ~~2022~~2023, primarily due to stronger expected economic activity in 2024 than what was expected at the ~~start~~end of 2023. Growth then ~~drops~~rises to ~~(0.1)%~~1.7% in ~~2024,~~2025, before ~~jumping~~growing to ~~1.9%~~2.1% in ~~2025. In line with stronger-than-anticipated job growth at the start of 2023, the~~2026. The weighted-average ~~projection of the~~ unemployment rate is expected to end ~~2023~~2024 at ~~4.0%~~4.6%, ~~down~~up slightly from the ~~4.9%~~4.5% assumed at December 31, ~~2022. In line with~~2023. During the ~~slowing in overall economic activity,~~second half of 2025, the weighted-average unemployment ~~rate is expected~~increases to ~~increase through the end~~a peak of ~~2023 and 2024, reaching 4.9% by year-end 2024, and~~5.0% before gradually improving to ~~4.5%~~4.8% by the fourth quarter of 2025. Further improvement is then expected in 2026 with the rate reaching 4.3% by the fourth quarter of 2026.

The current state of the economy ~~reflects an environment with receding pandemic-related risks and labor-related supply chain pressures. However, heightened~~continues to reflect uncertainty ~~remains~~ due to ~~structural and secular changes fostered by~~ the ~~pandemic for certain sectors~~foundational change in office demand from the acceptance of ~~the economy~~remote work, combined with ~~inflation~~inflationary pressures, interest rate movements, and ~~rising interest rates.~~declining consumer savings and deposit balances. As such, for both our commercial and consumer loan portfolios, PNC identified and performed significant ~~analysis~~analyses around segments impacted by such uncertainties to ensure our reserves are adequate, given our current macroeconomic expectations.

We believe the economic scenarios effectively reflect the distribution of potential economic outcomes. Additionally, through in-depth and granular analysis we have addressed reserve requirements for the specific populations most affected in the current environment. Through this approach, we believe the reserve levels appropriately reflect the expected credit losses in the portfolio as of the balance sheet date.

See the following for additional ~~details on the components of~~information related to our ACL:

•Allowance ~~For~~for Credit Losses in the Credit Risk Management section of this Financial Review, ~~and~~

•Note 2 Investment Securities, and Note 3 Loans and Related Allowance for Credit Losses in this ~~Report.~~Report, and

•Note 1 Accounting Policies in our 2023 Form 10-K.

The PNC Financial Services Group, Inc. – Form 10-Q

Recently Issued Accounting Standards


Accounting Standards Update	Description	Financial Statement Impact
~~Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method~~–Improvements to Reportable Segment Disclosures - ASU ~~2023-02~~2023-07 Issued ~~March~~November 2023	• Required with issuance of 2024 Form 10-K; early adoption is permitted. • Requires that a public entity disclose significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss. • Requires that a public entity disclose an amount for other segment items by reportable segment and a description of its composition. • Requires that a public entity provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by ASC 280 in interim periods. • Clarifies that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit. • Requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. • Requires a retrospective transition approach for all prior periods presented in the financial statements.	• We are currently evaluating the disclosure requirements within this ASU and do not plan to early adopt. • This ASU will not impact our Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Changes in Equity, or Consolidated Statement of Cash Flows. • We expect to provide enhanced disclosures of significant segment level noninterest expenses as a result of this ASU.
Accounting Standards Update	Description	Financial Statement Impact
Improvements to Income Tax Disclosures - ASU 2023-09 Issued December 2023	• Required effective date of January 1, ~~2024;~~2025; early adoption is permitted. • ~~The amendments in this Update must be applied on either a modified retrospective or a retrospective basis.~~ • ~~The amendments in this Update permit reporting~~Requires public business entities to, ~~elect to account~~on an annual basis, (1) disclose specific categories in the rate reconciliation and (2) provide additional information for ~~their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met.~~reconciling items that meet a quantitative threshold. • ~~A reporting entity makes~~Requires that all entities disclose, on an ~~accounting policy election~~annual basis, (1) the amount of income taxes paid (net of refunds received), disaggregated by federal (national), state and foreign taxes, and (2) the amount of income taxes paid (net of refunds received), disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to ~~apply the proportional amortization method on~~or greater than 5 percent of total income taxes paid (net of refunds received). • Requires a ~~tax-credit-program-by-tax-credit-program basis rather than electing to apply the proportional amortization method at the reporting entity level or to individual investments.~~prospective transition approach, with an optional retrospective transition approach.	• We are currently evaluating the disclosure requirements within this ASU. • This ASU will not impact our Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Changes in Equity, or Consolidated Statement of Cash Flows. • We expect to provide additional disaggregated income tax disclosures in accordance with this ASU. • We are evaluating when to adopt the amendments ~~in ASU 2023-02 and the impact~~ of ~~the ASU on our consolidated results of operations and our consolidated financial position.~~this ASU.

Recently Adopted Accounting Pronouncements

See Note 1 Accounting Policies ~~regarding the impact of~~in our 2023 Form 10-K for recently adopted accounting standards. We did not adopt any new accounting ~~pronouncements~~standards during the first quarter of 2024 that ~~we have adopted.~~impacted our financial statements.

INTERNAL CONTROLS AND DISCLOSURE CONTROLS AND PROCEDURES

As of ~~June 30, 2023,~~March 31, 2024, we performed an evaluation under the supervision of and with the participation of our management, including the Chairman ~~President~~ and Chief Executive Officer and the Executive Vice President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures and of changes in our internal control over financial reporting.

Based on that evaluation, our Chairman ~~President~~ and Chief Executive Officer and our Executive Vice President and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) were effective as of ~~June 30, 2023,~~March 31, 2024, and that there has been no change in PNC’s internal control over financial reporting that occurred

The PNC Financial Services Group, Inc. – Form 10-Q 37

during the ~~second~~first quarter of ~~2023~~2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

We make statements in this Report, and we may from time to time make other statements, regarding our outlook for financial performance, such as earnings, revenues, expenses, tax rates, capital and liquidity levels and ratios, asset levels, asset quality, financial position, and other matters regarding or affecting us and our future business and operations, including our sustainability strategy, 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 necessarily subject to numerous assumptions, risks and uncertainties, which change over time. Future events or circumstances may change our outlook and may also affect the nature of the assumptions, risks and uncertainties to which our forward-looking statements are subject. Forward-looking statements speak only as of the date made. We do not assume any duty and do not undertake any obligation 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. As a result, we caution against placing undue reliance on any forward-looking statements.

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:

–Changes in interest rates and valuations in debt, equity and other financial markets,

40 ~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~

–Disruptions in the U.S. and global financial markets,

–Actions by the Federal Reserve Board, U.S. Treasury and other government agencies, including those that impact money supply, market interest rates and inflation,

–Changes in customer behavior due to changing business and economic conditions or legislative or regulatory initiatives,

–Changes in customers’, suppliers’ and other counterparties’ performance and creditworthiness,

–Impacts of sanctions, tariffs and other trade policies of the U.S. and its global trading partners,

–~~A continuation of turmoil in the banking industry, responsive measures to mitigate and manage it and related supervisory and regulatory actions and costs,~~

–Impacts of changes in federal, state and local governmental policy, including on the regulatory landscape, capital markets, taxes, infrastructure spending and social programs,

–~~PNC’s~~Our ability to attract, recruit and retain skilled employees, and

–Commodity price volatility.

•Our forward-looking financial statements are subject to the risk that economic and financial market conditions will be substantially different than those we are currently ~~expecting and do not take into account the potential impact of legal and regulatory contingencies.~~expecting. These statements are based on our views that:

–~~The economy continued to expand in the first half of 2023, but~~PNC’s baseline forecast is for slower economic growth in 2024 as consumer spending growth slows and higher interest rates remain a drag on the economy. The ongoing strength of the labor market will continue to support consumer spending. The FOMC is ~~slowing in response~~indicating that it will start to cut the ongoing Federal Reserve monetary policy tightening to slow inflation. This has led to large increases in both short- and long-term interest rates. The housing market stabilized in the first half of 2023 as the Federal Reserve signaled a potential end to its federal funds rate ~~hiking cycle. However, given~~later this year, with rate cuts supporting economic growth toward the ~~upward trajectory in mortgage rates and declining affordability, PNC continues to expect slower activity in the housing market in the second half~~end of ~~2023 with a recovery in early 2024 as the Federal Reserve starts cutting the federal funds rate.~~2024.

–~~PNC’s baseline outlook is for a mild recession starting in late 2023 or early 2024, with a smaller contraction in real~~Real GDP growth this year will be close to its trend of ~~less than 1%, lasting into mid-2024. The~~2% and the unemployment rate will increase inmodestly to just above 4% by the ~~second half~~end of ~~this year, ending 2023 at above 4%, and then peak slightly above 5% in early 2025.~~2024. Inflation will continue to slow ~~with weaker demand,~~as wage pressures abate, moving back to the Federal Reserve’s 2% long-term objective by ~~this time next year.~~the end of 2025.

–PNC expects the federal funds rate to remain unchanged between 5.25% and 5.50% through ~~March~~at least the first half of 2024, ~~when it is expected that~~with federal funds rate cuts starting in the ~~Federal Reserve will cut rates~~third quarter as inflationary pressures ease further. PNC expects two federal funds rate cuts in ~~response to~~2024, with the ~~recession.~~rate ending this year in a range between 4.75% and 5.00%.

•PNC’s ability to take certain capital actions, including returning capital to shareholders, is subject to PNC meeting or exceeding minimum capital levels, including ~~an SCB~~a stress capital buffer established by the Federal Reserve Board in connection with the Federal Reserve Board’s CCAR process.

•PNC’s regulatory capital ratios in the future will depend on, among other things, ~~the company’s~~PNC’s financial performance, the scope and terms of final capital regulations then in effect 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 at least in part on the development, validation and regulatory review of related models and the reliability of and risks resulting from extensive use of such 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 employees. These developments could include:

–Changes to laws and regulations, including changes affecting oversight of the financial services industry, changes in the enforcement and interpretation of such laws and regulations and changes in accounting and reporting standards.

38 The PNC Financial Services Group, Inc. – Form 10-Q

–Unfavorable resolution of legal proceedings or other claims and regulatory and other governmental investigations or other inquiries resulting in monetary losses, costs, or alterations in our business practices and potentially causing reputational harm to PNC.

–Results of the regulatory examination and supervision process, including our failure to satisfy requirements of agreements with governmental agencies.

–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 systems and controls, third-party insurance, derivatives, and capital management techniques and to meet evolving regulatory capital and liquidity standards.

•Our reputation and business and operating results may be affected by our ability to appropriately meet or address environmental, social or governance targets, goals, commitments or concerns that may arise.

•We grow our business in part through acquisitions and new strategic initiatives. Risks and uncertainties include those presented by the nature of the business acquired ~~and~~or strategic initiative, 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, the integration of the acquired businesses into PNC after closing or any failure to execute strategic or operational plans.

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ 41

•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. 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 manmade, natural and other disasters (including severe weather events), health emergencies, dislocations, geopolitical instabilities or events, terrorist activities, system failures or disruptions, security breaches, cyberattacks, international hostilities, or other extraordinary events beyond PNC’s control through impacts on the economy and financial markets generally or on us or our counterparties, customers or third-party vendors and service providers specifically.

We provide greater detail regarding these as well as other factors in our ~~2022~~2023 Form 10-K ~~and subsequent Form 10-Qs~~ and elsewhere in this Report, including in the Risk Factors and Risk Management sections and the Legal Proceedings and Commitments Notes of the Notes To Consolidated Financial Statements in these reports. Our forward-looking statements may also be subject to other risks and uncertainties, including those discussed elsewhere in this Report or in our other filings with the SEC.

42The PNC Financial Services Group, Inc. – Form 10-Q

CONSOLIDATED INCOME STATEMENT

THE PNC FINANCIAL SERVICES GROUP, INC.

Unaudited Three months ended
June 30 Six months ended
June 30
In millions, except per share data 2023 2022 2023 2022
Interest Income
Loans $ 4,523 $ 2,504 $ 8,781 $ 4,797
Investment securities 883 631 1,768 1,175
Other 538 146 1,054 223
Total interest income 5,944 3,281 11,603 6,195
Interest Expense
Deposits 1,531 88 2,822 115
Borrowed funds 903 142 1,686 225
Total interest expense 2,434 230 4,508 340
Net interest income 3,510 3,051 7,095 5,855
Noninterest Income
Asset management and brokerage 348 365 704 742
Capital markets and advisory 213 409 475 661
Card and cash management 697 671 1,356 1,291
Lending and deposit services 298 282 604 551
Residential and commercial mortgage 98 161 275 320
Other 129 177 387 388
Total noninterest income 1,783 2,065 3,801 3,953
Total revenue 5,293 5,116 10,896 9,808
Provision For (Recapture of) Credit Losses 146 36 381 (172)
Noninterest Expense
Personnel 1,846 1,779 3,672 3,496
Occupancy 244 246 495 504
Equipment 349 351 699 682
Marketing 109 95 183 156
Other 824 773 1,644 1,578
Total noninterest expense 3,372 3,244 6,693 6,416
Income before income taxes and noncontrolling interests 1,775 1,836 3,822 3,564
Income taxes 275 340 628 639
Net income 1,500 1,496 3,194 2,925
Less: Net income attributable to noncontrolling interests 17 15 34 36
Preferred stock dividends 127 71 195 116
Preferred stock discount accretion and redemptions 2 1 4 3
Net income attributable to common shareholders $ 1,354 $ 1,409 $ 2,961 $ 2,770
Earnings Per Common Share
Basic $ 3.36 $ 3.39 $ 7.35 $ 6.62
Diluted $ 3.36 $ 3.39 $ 7.34 $ 6.61
Average Common Shares Outstanding
Basic 401 414 401 417
Diluted 401 414 401 417

~~See accompanying Notes To Consolidated Financial Statements.~~

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ 43

~~CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME~~

~~THE PNC FINANCIAL SERVICES GROUP, INC.~~

Unaudited
In millions Three months ended
June 30 Six Months Ended
June 30
2023 2022 2023 2022
Net income $ 1,500 $ 1,496 $ 3,194 $ 2,925
Other comprehensive income (loss), before tax and net of reclassifications into Net income
Net change in debt securities (241) (2,715) 628 (9,030)
Net change in cash flow hedge derivatives (316) (701) 211 (2,459)
Pension and other postretirement benefit plan adjustments 6 8 (4) 62
Net change in Other 3 (4) 7 (7)
Other comprehensive income (loss), before tax and net of reclassifications into Net income (548) (3,412) 842 (11,434)
Income tax benefit (expense) related to items of other comprehensive income 131 785 (195) 2,667
Other comprehensive income (loss), after tax and net of reclassifications into Net income (417) (2,627) 647 (8,767)
Comprehensive income (loss) 1,083 (1,131) 3,841 (5,842)
Less: Comprehensive income attributable to noncontrolling interests 17 15 34 36
Comprehensive income (loss) attributable to PNC $ 1,066 $ (1,146) $ 3,807 $ (5,878)


Unaudited	Three months ended March 31
In millions, except per share data	2024		2023
Interest Income
Loans	$	4,819	$	4,258
Investment securities	883		885
Other	798		516
Total interest income	6,500		5,659
Interest Expense
Deposits	2,077		1,291
Borrowed funds	1,159		783
Total interest expense	3,236		2,074
Net interest income	3,264		3,585
Noninterest Income
Asset management and brokerage	364		356
Capital markets and advisory	259		262
Card and cash management	671		659
Lending and deposit services	305		306
Residential and commercial mortgage	147		177
Other	135		258
Total noninterest income	1,881		2,018
Total revenue	5,145		5,603
Provision For Credit Losses	155		235
Noninterest Expense
Personnel	1,794		1,826
Occupancy	244		251
Equipment	341		350
Marketing	64		74
Other	891		820
Total noninterest expense	3,334		3,321
Income before income taxes and noncontrolling interests	1,656		2,047
Income taxes	312		353
Net income	1,344		1,694
Less: Net income attributable to noncontrolling interests	14		17
Preferred stock dividends	81		68
Preferred stock discount accretion and redemptions	2		2
Net income attributable to common shareholders	$	1,247	$	1,607
Earnings Per Common Share
Basic	$	3.10	$	3.98
Diluted	$	3.10	$	3.98
Average Common Shares Outstanding
Basic	400		401
Diluted	400		402

See accompanying Notes To Consolidated Financial Statements.

4440 The PNC Financial Services Group, Inc. – Form 10-Q

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

THE PNC FINANCIAL SERVICES GROUP, INC.


Unaudited In millions	Three months ended March 31
	2024		2023
Net income	$	1,344	$	1,694
Other comprehensive income (loss), before tax and net of reclassifications into Net income
Net change in debt securities	(179)		869
Net change in cash flow hedge derivatives	(250)		527
Pension and other postretirement benefit plan adjustments	(2)		(10)
Net change in Other	(2)		4
Other comprehensive income (loss), before tax and net of reclassifications into Net income	(433)		1,390
Income tax benefit (expense) related to items of other comprehensive income	103		(326)
Other comprehensive income (loss), after tax and net of reclassifications into Net income	(330)		1,064





Comprehensive income	1,014		2,758
Less: Comprehensive income attributable to noncontrolling interests	14		17
Comprehensive income attributable to PNC	$	1,000	$	2,741

See accompanying Notes To Consolidated Financial Statements.

The PNC Financial Services Group, Inc. – Form 10-Q 41

CONSOLIDATED BALANCE SHEET

THE PNC FINANCIAL SERVICES GROUP, INC.


Unaudited	Unaudited	June 30 2023		December 31 2022		Unaudited	March 31 2024	December 31 2023
In millions, except par value	In millions, except par value					In millions, except par value
Assets	Assets
Cash and due from banks
Cash and due from banks
Cash and due from banks	Cash and due from banks	$	6,191	$	7,043
Interest-earning deposits with banks	Interest-earning deposits with banks	38,259		27,320
Loans held for sale (a)	Loans held for sale (a)	835		1,010
Investment securities – available for sale	Investment securities – available for sale	41,787		44,159
Investment securities – held to maturity	Investment securities – held to maturity	93,874		95,175
Loans (a)	Loans (a)	321,761		326,025
Allowance for loan and lease losses	Allowance for loan and lease losses	(4,737)		(4,741)
Net loans	Net loans	317,024		321,284
Equity investments	Equity investments	8,015		8,437
Mortgage servicing rights	Mortgage servicing rights	3,455		3,423
Goodwill	Goodwill	10,987		10,987
Other (a)	Other (a)	37,780		38,425
Total assets	Total assets	$	558,207	$	557,263
Liabilities	Liabilities
Deposits	Deposits
Deposits
Deposits
Noninterest-bearing
Noninterest-bearing
Noninterest-bearing	Noninterest-bearing	$	110,527	$	124,486
Interest-bearing	Interest-bearing	316,962		311,796
Total deposits	Total deposits	427,489		436,282
Borrowed funds	Borrowed funds
Federal Home Loan Bank borrowings
Federal Home Loan Bank borrowings
Federal Home Loan Bank borrowings	Federal Home Loan Bank borrowings	34,000		32,075
Senior debt	Senior debt	22,005		16,657
Subordinated debt	Subordinated debt	5,548		6,307
Other (b)	Other (b)	3,831		3,674
Total borrowed funds	Total borrowed funds	65,384		58,713
Allowance for unfunded lending related commitments	Allowance for unfunded lending related commitments	663		694
Accrued expenses and other liabilities (b)	Accrued expenses and other liabilities (b)	15,325		15,762
Total liabilities	Total liabilities	508,861		511,451
Equity	Equity
Preferred stock (c)	Preferred stock (c)
Common stock ($5 par value, Authorized 800 shares, issued 543 shares)		2,715		2,714
Preferred stock (c)
Preferred stock (c)
Common stock ($5 par value, Authorized 800,000,000 shares, issued 543,116,260 and 543,116,271 shares)
Capital surplus	Capital surplus	19,934		18,376
Retained earnings	Retained earnings	55,346		53,572
Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss)	(9,525)		(10,172)
Common stock held in treasury at cost: 145 and 142 shares		(19,150)		(18,716)
Common stock held in treasury at cost: 145,068,954 and 145,087,054 shares
Total shareholders’ equity	Total shareholders’ equity	49,320		45,774
Noncontrolling interests	Noncontrolling interests	26		38
Total equity	Total equity	49,346		45,812
Total liabilities and equity	Total liabilities and equity	$	558,207	$	557,263

(a)Our consolidated assets included the following for which we have elected the fair value option: Loans held for sale of ~~$0.8~~$0.7 billion, Loans held for investment of ~~$1.3~~$1.2 billion and Other assets of $0.1 billion at ~~June 30, 2023.~~March 31, 2024. Comparable amounts at December 31, ~~2022~~2023 were ~~$0.9~~$0.7 billion, ~~$1.3~~$1.2 billion and $0.1 billion, respectively.

(b)Our consolidated liabilities included the following for which we have elected the fair value option: Other borrowed funds of less than $0.1 billion and Other liabilities of $0.1 billion at ~~June 30, 2023.~~March 31, 2024. Comparable amounts at December 31, ~~2022~~2023 were less than $0.1 billion and ~~$0.2~~$0.1 billion, respectively.

(c)Par value less than $0.5 million at each date.

See accompanying Notes To Consolidated Financial Statements.

42The PNC Financial Services Group, Inc. – Form 10-Q

CONSOLIDATED STATEMENT OF CASH FLOWS

THE PNC FINANCIAL SERVICES GROUP, INC.

Unaudited
In millions

Six months ended June 30

2023

2022

2024

Operating Activities

Net income

3,194

2,925

Net income

Adjustments to reconcile net income to net cash provided (used) by operating activities

Provision for (recapture of) credit losses

381

(172)

Adjustments to reconcile net income to net cash provided (used) by operating activities

Provision for credit losses

Depreciation, amortization and accretion

125

529

Deferred income taxes (benefit)

(75)

203

Net losses on sales of securities

Deferred income taxes (benefit)

Changes in fair value of mortgage servicing rights

136

(435)

Net change in

Trading securities and other short-term investments

(601)

(1,325)

Loans held for sale and related securitization activity

522

997

Loans held for sale and related securitization activity

Other assets

1,410

(2,989)

Accrued expenses and other liabilities

(494)

1,491

Other

532

415

Accrued expenses and other liabilities

Other operating activities, net

Net cash provided (used) by operating activities

5,132

1,643

Investing Activities

Sales

Securities available for sale

(70)

2,575

Loans

605

525

Loans

Repayments/maturities

Securities available for sale

4,038

9,403

Securities available for sale

Securities held to maturity

3,076

1,395

Purchases

Securities available for sale

(1,272)

(22,145)

Securities held to maturity

(1,513)

(1,289)

Securities held to maturity

Loans

(416)

(1,298)

Net change in

Federal funds sold and resale agreements

229

(919)

Interest-earning deposits with banks

(10,794)

45,846

Interest-earning deposits with banks

Loans

3,305

(21,929)

Other

(590)

(1,147)

Other investing activities, net

Net cash provided (used) by investing activities

(3,402)

11,017

Net cash provided (used) by investing activities

46The PNC Financial Services Group, Inc. – Form 10-Q

CONSOLIDATED STATEMENT OF CASH FLOWS

THE PNC FINANCIAL SERVICES GROUP, INC.

(Continued from previous page)

Unaudited
In millions

Six months ended June 30

2023

2022

Unaudited
In millions

2024

Financing Activities

Net change in

Noninterest-bearing deposits

(13,982)

(8,717)

Interest-bearing deposits

5,166

(7,730)

Interest-bearing deposits

Federal funds purchased and repurchase agreements

(5)

Federal funds purchased and repurchase agreements

Short-term Federal Home Loan Bank borrowings

Other borrowed funds

(35)

1,098

Sales/issuances

Senior debt

Other borrowed funds

Preferred stock

Common and treasury stock

Repayments/maturities

Federal Home Loan Bank borrowings

2,000

10,000

Senior debt

6,235

Senior debt

Subordinated debt

847

Other borrowed funds

486

435

Preferred stock

1,484

990

Common and treasury stock

Repayments/maturities

Federal Home Loan Bank borrowings

(75)

Senior debt

(750)

(5,250)

Subordinated debt

(750)

Other borrowed funds

(495)

(435)

Acquisition of treasury stock

(588)

(2,076)

Acquisition of treasury stock

Preferred stock cash dividends paid

(195)

(116)

Preferred stock cash dividends paid

Common stock cash dividends paid

(1,213)

(1,157)

Net cash provided (used) by financing activities

(2,582)

(12,082)

Net cash provided (used) by financing activities

Net Increase (Decrease) In Cash And Due From Banks And Restricted Cash

(852)

578

Cash and due from banks and restricted cash at beginning of period

7,043

8,004

Cash and due from banks and restricted cash at beginning of period

Cash and due from banks and restricted cash at end of period

6,191

8,582

Cash And Due From Banks And Restricted Cash

Cash and due from banks at end of period (unrestricted cash)

5,604

7,950

Restricted cash

587

632

Restricted cash

Cash and due from banks and restricted cash at end of period

6,191

8,582

Supplemental Disclosures

Interest paid

2,586

420

Income taxes paid

719

Income taxes paid

Income taxes refunded

824

Income taxes refunded

Leased assets obtained in exchange for new operating lease liabilities

113

103

Non-cash Investing And Financing Items

Transfer from securities available for sale to securities held to maturity

83,419

Non-cash Investing And Financing Items

Transfer from loans to loans held for sale, net

712

330

Transfer from loans to foreclosed assets

See accompanying Notes To Consolidated Financial Statements.

44The PNC Financial Services Group, Inc. – Form 10-Q

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~Allowance for Credit Losses

Our determination of the ACL is based on historical loss and performance experience, current economic conditions, the reasonable and supportable forecasts of future economic conditions and other relevant factors, including current borrower and/or transaction characteristics and assessments of the remaining estimated contractual term as of the balance sheet date. We maintain the ACL at an appropriate level for expected losses on our existing investment securities, loans, equipment finance leases, other financial assets and unfunded lending related commitments.

THE ~~PNC FINANCIAL~~ S~~ERVICES~~ G~~ROUP, I~~NC.

~~Unaudited~~See Note 1 Accounting Policies and the Credit Risk Management section in our 2023 Form 10-K for additional discussion of our ACL, including details of our methodologies. See also the Critical Accounting Estimates and Judgments section of this Report for further discussion of the assumptions used in the determination of the ACL as of March 31, 2024.

~~See page~~ ~~107~~

The PNC Financial Services Group, Inc. – Form 10-Q 25

The following table summarizes our ACL related to loans:

Table 24: Allowance for ~~a glossary of certain terms~~Credit Losses by Loan Class (a)


	March 31, 2024						December 31, 2023
Dollars in millions	Allowance Amount		Total Loans		% of Total Loans		Allowance Amount		Total Loans		% of Total Loans
Allowance for loans and lease losses
Commercial
Commercial and industrial	$	1,673	$	176,792	0.95	%	$	1,806	$	177,580	1.02	%
Commercial real estate	1,468		35,591		4.12	%	1,371		35,436		3.87	%
Equipment lease financing	76		6,462		1.18	%	82		6,542		1.25	%
Total commercial	3,217		218,845		1.47	%	3,259		219,558		1.48	%
Consumer
Residential real estate	39		47,386		0.08	%	61		47,544		0.13	%
Home equity	272		25,896		1.05	%	276		26,150		1.06	%
Automobile	173		14,788		1.17	%	173		14,860		1.16	%
Credit card	749		6,887		10.88	%	766		7,180		10.67	%
Education	56		1,859		3.01	%	56		1,945		2.88	%
Other consumer	187		4,120		4.54	%	200		4,271		4.68	%
Total consumer	1,476		100,936		1.46	%	1,532		101,950		1.50	%
Total	4,693		$	319,781	1.47	%	4,791		$	321,508	1.49	%
Allowance for unfunded lending related commitments	672						663
Allowance for credit losses	$	5,365					$	5,454
Allowance for credit losses to total loans					1.68	%					1.70	%
Commercial					1.71	%					1.73	%
Consumer					1.60	%					1.62	%

(a) Excludes allowances for investment securities and ~~acronyms used in this Report.~~other financial assets, which together totaled $117 million and $120 million at March 31, 2024 and December 31, 2023, respectively.

26 The PNC Financial Services Group, Inc. – Form 10-Q

B
~~USINESS~~

The following table summarizes our loan charge-offs and recoveries:

Table 25: Loan Charge-Offs and Recoveries


Three months ended March 31	Gross Charge-offs		Recoveries		Net Charge-offs / (Recoveries)		% of Average Loans (Annualized)
Dollars in millions
2024
Commercial
Commercial and industrial	$	84	$	19	$	65	0.15	%
Commercial real estate	56		2		54		0.61	%
Equipment lease financing	8		2		6		0.37	%
Total commercial	148		23		125		0.23	%
Consumer
Residential real estate	1		3		(2)		(0.02)	%
Home equity	10		9		1		0.02	%
Automobile	32		25		7		0.19	%
Credit card	92		15		77		4.46	%
Education	4		2		2		0.42	%
Other consumer	43		10		33		3.16	%
Total consumer	182		64		118		0.47	%
Total	$	330	$	87	$	243	0.30	%
2023
Commercial
Commercial and industrial	$	104	$	20	$	84	0.19	%
Commercial real estate	12		2		10		0.11	%
Equipment lease financing	4		3		1		0.06	%
Total commercial	120		25		95		0.17	%
Consumer
Residential real estate	3		3
Home equity	6		11		(5)		(0.08)	%
Automobile	33		24		9		0.24	%
Credit card	74		11		63		3.70	%
Education	4		2		2		0.37	%
Other consumer	42		11		31		2.57	%
Total consumer	162		62		100		0.40	%
Total	$	282	$	87	$	195	0.24	%

~~PNC is one~~Total net charge-offs increased $48 million, or 25%, for the first three months of 2024 compared to the ~~largest diversified financial services companies~~same period in 2023. The increase in the ~~U.S. and is headquartered in Pittsburgh, Pennsylvania.~~comparison was primarily attributable to higher commercial real estate net charge-offs.

We have businesses engaged in retail banking, including residential mortgage, corporate and institutional banking and asset management, providing many of our products and services nationally. Our retail branch network is located coast-to-coast. We also have strategic international offices in four countries outside the U.S.

N~~OTE~~ ~~1 ACCOUNTING~~ P~~OLICIES~~

~~Basis of Financial Statement Presentation~~

~~Our consolidated financial statements include the accounts of the parent company and its subsidiaries, most of which are wholly-owned, certain partnership interests and VIEs.~~

~~We prepared these consolidated financial statements in accordance with GAAP. We have eliminated intercompany accounts and transactions.~~

In our opinion, the unaudited interim consolidated financial statements reflect all normal, recurring adjustments needed to state fairly our results for the interim periods. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the full year or any other interim period.

~~We have also considered the impact of subsequent events on these consolidated financial statements.~~

When preparing these unaudited interim consolidated financial statements, we have assumed that you have read the audited consolidated financial statements included in our 2022 Form 10-K. These interim consolidated financial statements serve to update our 2022 Form 10-K and may not include all information and Notes necessary to constitute a complete set of financial statements. There have been changes to certain of our accounting policies as disclosed in our 2022 Form 10-K due to the adoption of ASU 2022-02 ~~Financial Instruments~~ - ~~Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures~~ ~~(ASU 2022-02) in the first quarter of 2023. The updated policies impacted by this adoption are included in this Note 1. Reference is made to~~See Note 1 Accounting Policies in our ~~2022~~2023 Form 10-K and Note 3 Loans and Related Allowance for Credit Losses of this Report for additional information.

Liquidity and Capital Management

Our liquidity risk framework and related monitoring measures and tools, including internal liquidity stress testing as well as compliance with internal and regulatory limits and guidelines, are described in further detail in the Liquidity and Capital Management section of our 2023 Form 10-K.

One of the ways we monitor our liquidity is by reference to the LCR, a ~~detailed description~~regulatory minimum liquidity requirement designed to ensure that covered banking organizations maintain an adequate level of ~~all~~liquidity to meet net liquidity needs over the course of a hypothetical 30-day stress scenario. PNC and PNC Bank calculate the LCR daily and are required to maintain a regulatory minimum of 100%. The LCR for both PNC and PNC Bank exceeded the regulatory minimum requirement throughout the first quarter of 2024. Fluctuations in our average LCR result from changes to the components of the calculation, including high-quality liquid assets and net cash outflows, as a result of ongoing business activity.

The NSFR is designed to measure the stability of the maturity structure of assets and liabilities of banking organizations over a one-year time horizon. PNC and PNC Bank calculate the NSFR daily and are required to maintain a regulatory minimum of 100%. The NSFR for both PNC and PNC Bank exceeded the regulatory minimum requirement throughout the first quarter of 2024.

The PNC Financial Services Group, Inc. – Form 10-Q 27

Sources of Liquidity

Our largest source of liquidity on a consolidated basis is the customer deposit base generated by our banking businesses. These deposits provide relatively stable and low-cost funding. Total deposits increased to $425.6 billion at March 31, 2024 from $421.4 billion at December 31, 2023. Noninterest-bearing deposit balances decreased driven by a decline in commercial noninterest-bearing balances. Interest-bearing deposits increased reflecting higher commercial and consumer interest-bearing balances. As of March 31, 2024, uninsured deposits represented approximately 43% of our total deposit base, which is estimated based on the regulatory instructions in the Consolidated Reports of Condition and Income - FFIEC 031. The majority of our uninsured deposits are related to commercial operating and relationship accounts, which we define as commercial deposit customers who utilize two or more PNC products. See the Funding Sources portion of the Consolidated Balance Sheet Review and Business Segments Review sections of this Financial Review for additional information on our deposits and related strategies.

We may also obtain liquidity through various forms of funding, including long-term debt (senior notes, subordinated debt and FHLB borrowings) and short-term borrowings (securities sold under repurchase agreements, commercial paper and other ~~significant accounting policies.~~short-term borrowings). See the Funding Sources section of the Consolidated Balance Sheet Review in this Financial Review and Note 7 Borrowed Funds in this Report for additional information related to our borrowings.

Total senior and subordinated debt, on a consolidated basis, increased due to the following activity:

Table 26: Senior and Subordinated Debt


In billions	2024
January 1	$	31.7
Issuances	2.5
Calls and maturities	(1.1)
Other	(0.4)

March 31	$	32.7

Table 27: Primary Contingent Liquidity Sources


In billions	March 31, 2024		December 31, 2023
Cash balance with Federal Reserve Bank	$	53.2	$	43.3
Available investment securities (a)	56.7		98.5
Unused borrowing capacity from FHLB (b)	37.4		35.4
Unused borrowing capacity from Federal Reserve Bank (c)	83.9		47.2
Total available contingent liquidity	$	231.2	$	224.4

(a)Represents the fair value of investment securities that can be used for pledging or to secure other sources of funding.

~~Use~~As part of ~~Estimates~~PNC’s contingency planning, we prepositioned a portion of our available held to maturity investment securities at the Federal Reserve Bank’s Discount Window during the first quarter of 2024, supporting our resilience and operational readiness.

We prepared these consolidated financial statements using financial information available at the time of preparation, which requires us to make estimates and assumptions that affect the amounts reported. Our most significant estimates pertain to the ACL and our fair value measurements. Actual results may differ from the estimates and the differences may be material to the consolidated financial statements.

~~Loans~~

Loans are classified as held for investment when management has both the intent and ability to hold the loan for the foreseeable future, or until maturity or payoff. Management’s intent and view of the foreseeable future may change based on changes in business strategies, the economic environment, market conditions and the availability of government programs.

Measurement of delinquency status is based on the contractual terms of each loan. Loans that are 30 days or more past due in terms of payment are considered delinquent. Under the CARES Act credit reporting rules, certain loans modified due to pandemic related hardships are not being reported as past due based on the contractual terms of the loan, even where borrowers may not be making payments on their loans during the modification period. The CARES Act credit reporting rules expire in the third quarter of 2023.

Loans held for investment, excluding PCD loans, are recorded at amortized cost basis unless we elect to measure these under the fair value option. Amortized cost basis represents principal amounts outstanding, net of unearned income, unamortized deferred fees and costs on originated loans, premiums or discounts on purchased loans and charge-offs. Amortized cost basis does not include accrued interest, as we include accrued interest in Other assets on our Consolidated Balance Sheet. Interest on performing loans is accrued

4828 The PNC Financial Services Group, Inc. – Form 10-Q

~~based on the~~Bank Liquidity

In addition to our primary contingent liquidity sources, under PNC Bank’s 2014 bank note program, as amended, PNC Bank may from time to time offer up to $40.0 billion aggregate principal amount outstanding at any one time of its unsecured senior and ~~recorded in Interest income as earned using~~subordinated notes with maturity dates more than nine months (in the ~~constant effective yield method over~~case of senior notes) and five years or more (in the contractual life. Loan origination fees, direct loan origination costs, and loan premiums and discounts are deferred and accreted or amortized into Net interest income using the constant effective yield method, over the contractual lifecase of ~~the loan. The processing fee received for loans originated through PPP lending~~subordinated notes) from their date of issue. At March 31, 2024, PNC Bank’s remaining capacity to issue under the CARES Act is deferred and accreted into Net interest income using the effective yield method, over the contractual life of the loan. Loans under the fair value option are reported at their fair value, with any changes to fair value reported as Noninterest income on the Consolidated Income Statement, and are excluded from the measurement of ALLL.program was $33.3 billion.

Under PNC Bank’s 2013 commercial paper program, PNC Bank has the ability to offer up to $10.0 billion of its commercial paper to provide additional liquidity. At March 31, 2024, there were no issuances outstanding under this program.

Additionally, PNC Bank may also access funding from the parent company through deposits placed at the bank or issuing intercompany senior unsecured notes.

Parent Company Liquidity

In addition to originating loans, we also acquire loans through the secondary loan market, portfolio purchases or acquisitions of other financial services companies. Certain acquired loans that have experienced a more-than-insignificant deterioration of credit quality since origination (~~i.e., PCD) are recognized at an amortized cost basis equal to their purchase price plus an ALLL measured~~managing liquidity risk at the ~~acquisition date.~~bank level, we manage the parent company’s liquidity. The parent company’s contractual obligations consist primarily of debt service related to parent company borrowings and funding non-bank affiliates. Additionally, the parent company maintains liquidity to fund discretionary activities such as paying dividends to our shareholders, share repurchases and acquisitions.

At March 31, 2024, available parent company liquidity totaled $21.7 billion. Parent company liquidity is held in intercompany cash and investments. For investments with longer durations, the related maturities are aligned with scheduled cash needs, such as the maturity of parent company debt obligations.

The principal source of parent company liquidity is the dividends or other capital distributions it receives from PNC ~~considers a variety~~Bank, which may be impacted by the following:

•Bank-level capital needs,

•Laws, regulations and the results of ~~factors in connection with the identification of more-than-insignificant deterioration in credit quality, including but not limited to nonperforming status, delinquency, risk ratings~~supervisory activities,

•Corporate policies,

•Contractual restrictions, and other qualitative factors that indicate deterioration in credit quality since origination. Subsequent decreases in expected cash flows that are attributable, at least in part, to credit quality are recognized through a charge to the provision for credit losses resulting in an increase in the ALLL. Subsequent increases in expected cash flows are recognized as a provision recapture of previously recorded ALLL

•.Other factors.

~~We consider~~There are statutory and regulatory limitations on the ability of a ~~loan~~national bank to ~~be collateral dependent when we determine that substantially all~~pay dividends or make other capital distributions or to extend credit to the parent company or its non-bank subsidiaries. The amount available for dividend payments by PNC Bank to the parent company without prior regulatory approval was $5.7 billion at March 31, 2024. See Note 19 Regulatory Matters in our 2023 Form 10-K for further discussion of ~~the expected cash flows will be generated~~

from the operation or sale of the collateral underlying the loan, or when the borrower is experiencing financial difficulty and we have elected to measure the loan at the estimated fair value of collateral (less costs to sell if sale or foreclosure of the property is expected).

~~Additionally, we consider a loan to be collateral dependent when foreclosure or liquidation of the underlying collateral is probable.~~these limitations.

~~On January 1, 2023, we adopted ASU 2022-02, which eliminates~~In addition to dividends from PNC Bank, other sources of parent company liquidity include cash and investments, as well as dividends and loan repayments from other subsidiaries and dividends or distributions from equity investments. We can also generate liquidity for the ~~accounting guidance for TDRs. See Note 1 Accounting Policies~~parent company and PNC’s non-bank subsidiaries through the issuance of debt and equity securities, including certain capital instruments, in ~~our 2022 Form 10-K for a description~~public or private markets and commercial paper. Under the parent company’s 2014 commercial paper program, the parent company has the ability to offer up to $5.0 billion of ~~our accounting policies for TDRs that~~commercial paper to provide additional liquidity. At March 31, 2024, there were no issuances outstanding under this program.

The following table details parent company note issuances in ~~effect prior to adoption.~~the first quarter of 2024:

Loan modifications to borrowers experiencing financial difficulty, or FDMs, result from our loss mitigation activities and include principal forgiveness, interest rate reductions, term extensions, payment delays, repayment plans or combinations thereof. FDMs continue to be subject to our existing nonaccrual policies. Expected losses or recoveries on FDMs have been factored into the ALLL estimates for each loan class under the methodologies described in this Note. Refer to Note 3 Loans and Related Allowance for Credit Losses for more information on FDMs.Table 28: Parent Company Notes Issued


Issuance Date	Amount	Description of Issuance
January 22, 2024	$1.0 billion	$1.0 billion of senior fixed-to-floating notes with a maturity date of January 21, 2028. Interest is payable semi-annually in arrears at a fixed rate of 5.300% per annum, on January 21 and July 21 of each year, beginning on July 21, 2024. Beginning on January 21, 2027, interest is payable quarterly in arrears at a floating rate per annum equal to Compounded SOFR (determined with respect to each quarterly interest period using the SOFR Index as described in the Prospectus Supplement), plus 1.342%, on April 21, 2027, July 21, 2027, October 21, 2027 and at the maturity date.
January 22, 2024	$1.5 billion	$1.5 billion of senior fixed-to-floating notes with a maturity date of January 22, 2035. Interest is payable semi-annually in arrears at a fixed rate of 5.676% per annum, on January 22 and July 22 of each year, beginning on July 22, 2024. Beginning on January 22, 2034, interest is payable quarterly in arrears at a floating rate per annum equal to Compounded SOFR (determined with respect to each quarterly interest period using the SOFR Index as described in the Prospectus Supplement), plus 1.902%, on April 22, 2034, July 22, 2034, October 22, 2034 and at the maturity date.

~~See the following for additional information related to loans, including further discussion regarding our policies, the methodologies~~Parent company senior and ~~significant inputs used to determine the ALLL~~subordinated debt carrying value totaled $25.0 billion and ~~additional details on the composition of our loan portfolio:~~

•~~Nonperforming Loans~~$24.0 billion at March 31, 2024 and ~~Leases section of this Note 1,~~

•~~Allowance for Credit Losses section of this Note 1,~~

•~~Note 3 Loans and Related Allowance for Credit Losses in this Report, and~~

•~~Note 4 Loans and Related Allowance for Credit Losses in our 2022 Form 10-K.~~December 31, 2023, respectively.

~~Nonperforming Loans and Leases~~

~~The matrix that follows summarizes our policies for classifying certain loans as nonperforming loans and/or discontinuing the accrual of loan interest income.~~


~~Commercial~~
~~Loans classified as nonperforming and accounted for as nonaccrual~~			~~• Loans accounted for at amortized cost where:~~ –~~The loan is 90 days or more past due.~~ –~~The loan is rated substandard or worse due to the determination that full collection of principal and interest is not probable as demonstrated by the following conditions:~~ •~~The collection of principal or interest is 90 days or more past due,~~ •~~Reasonable doubt exists as to the certainty of the borrower’s future debt service ability, according to the terms of the credit arrangement, regardless of whether 90 days have passed or not,~~ •~~The borrower has filed, or will likely file for bankruptcy, and it is not probable the borrower will be able to repay contractual payments due under the loan,~~ •~~The bank advances additional funds to cover principal or interest,~~ •~~We are in the process of liquidating a commercial borrower, or~~ •~~We are pursuing remedies under a guarantee.~~
~~Loans excluded from nonperforming classification but accounted for as nonaccrual~~			~~• Loans accounted for under the fair value option and full collection of principal and interest is not probable.~~ ~~• Loans accounted for at the lower of cost or market less costs to sell (held for sale) and full collection of~~ ~~principal and interest is not probable.~~
~~Loans excluded from nonperforming classification and nonaccrual accounting~~			~~• Loans that are well secured and in the process of collection.~~ • ~~Certain government insured or guaranteed loans where substantially all principal and interest is insured.~~ • ~~Commercial purchasing card assets that do not accrue interest.~~

The PNC Financial Services Group, Inc. – Form 10-Q 4929

Contractual Obligations and Commitments

We have contractual obligations representing required future payments on borrowed funds, time deposits, leases, pension and postretirement benefits and purchase obligations. See the Liquidity and Capital Management portion of the Risk Management section of our 2023 Form 10-K for more information on these future cash outflows. Additionally, in the normal course of business, we have various commitments outstanding, certain of which are not included on our Consolidated Balance Sheet. We provide information on our commitments in Note 8 Commitments.

Credit Ratings

PNC’s credit ratings affect the cost and availability of short and long-term funding, collateral requirements for certain derivative instruments and the ability to offer certain products.

The following table presents credit ratings and outlook for PNC as of March 31, 2024:

Table 29: Credit Ratings and Outlook


	March 31, 2024
~~Consumer~~	Moody’s	Standard & Poor’s	Fitch
Parent Company
Senior debt	A3	A-	A
~~Loans classified as nonperforming and accounted for as nonaccrual~~Subordinated debt	~~• Loans accounted for at amortized cost where full collection of contractual principal and interest is not~~ ~~deemed probable as demonstrated in the policies below:~~ ~~– The loan is 90 days past due for home equity and installment loans, and 180 days past due for well~~ ~~secured residential real estate loans,~~ ~~– The loan has been modified due to a borrower experiencing financial difficulty and is not government~~ ~~insured or guaranteed,~~ ~~– The loan has been modified to defer prior payments in forbearance to the end of the loan term,~~ ~~– Notification of bankruptcy has been received,~~ ~~– The bank holds a subordinate lien position in the loan and the first lien mortgage loan is seriously~~ ~~stressed (~~A3	~~i.e.~~BBB+	~~, 90 days or more past due),~~A- ~~– Other loans within the same borrower relationship have been placed on nonaccrual or charge-offs have~~ ~~been taken on them,~~ ~~– The bank has ordered the repossession of non-real estate collateral securing the loan, or~~ ~~– The bank has charged-off the loan to the value of the collateral.~~
~~Loans excluded from nonperforming classification but accounted for as nonaccrual~~Preferred stock	~~• Loans accounted for under the fair value option and full collection of principal and interest is not probable.~~ ~~• Loans accounted for at the lower of cost or market less costs to sell (held for sale) and full collection of~~ ~~principal and interest is not probable.~~ Baa2	BBB-	BBB
~~Loans excluded from nonperforming classification and nonaccrual accounting~~PNC Bank
•Senior debt	~~Certain government insured or guaranteed loans where substantially all principal and interest is insured.~~A2 ~~• Residential real estate loans that are well secured and in the process of collection.~~ ~~• Consumer loans and lines of credit, not secured by residential real estate or automobiles, as permitted by~~ ~~regulatory guidance.~~	A	A+
Subordinated debt	A3	A-	A
Long-term deposits	Aa3	A	AA-
Short-term deposits	P-1	A-1	F1+
Short-term notes	P-1	A-1	F1
PNC
Agency rating outlook	Negative	Stable	Stable

~~Commercial~~Capital Management

~~We generally charge-off commercial (commercial~~Detailed information on our capital management processes and ~~industrial, commercial real estate~~activities is included in the Supervision and ~~equipment lease financing) nonperforming loans when we determine that a specific loan, or portion thereof, is uncollectible. This determination is based on the specific facts and circumstances~~Regulation section of ~~the individual loans. In making this determination, we consider the viability~~Item 1 of the business or project as a going concern, the past due status when the asset is not well-secured, the expected cash flows to repay the loan, the value of the collateral and the ability and willingness of any guarantors to perform. For commercial loans and leases less than a defined dollar threshold, balances are generally charged-off in full after 180 days for loans and 120 days for leases.our 2023 Form 10-K.

~~Consumer~~

We ~~generally charge-off secured consumer (home~~manage our funding and capital positions by making adjustments to our balance sheet size and composition, issuing or redeeming debt, issuing equity ~~residential real estate~~or other capital instruments, executing treasury stock transactions and ~~automobile) nonperforming loans to the fair~~

~~value of collateral less costs to sell if the fair value is lower than the amortized cost basis of the loan outstanding~~capital redemptions or repurchases, and the delinquency of the loan, combined with other risk factors such as bankruptcy or lien position, indicates that the loan (or a portion thereof) is uncollectible as per our historical experience. These nonperforming loans would also be charged-off when the collateral has been repossessed. We charge-off secured consumer loans no later than 180 days past due. Most consumer loansmanaging dividend policies and ~~lines of credit, not secured by automobiles or residential real estate, are charged-off once they have reached 120-180 days past due.~~retaining earnings.

~~For secured collateral dependent loans, collateral values are updated~~In the first quarter of 2024, PNC returned $0.8 billion of capital to shareholders, reflecting more than $0.6 billion of dividends on common shares and more than $0.1 billion of common share repurchases, representing 0.9 million shares. Consistent with the SCB framework, which allows for capital return in amounts in excess of the SCB minimum levels, our Board of Directors has authorized a repurchase framework under the previously approved repurchase program of up to 100 million common shares, of which approximately 44% were still available for repurchase at ~~least annually~~March 31, 2024. In light of the Federal banking agencies proposed rules to adjust the Basel III capital framework, second quarter of 2024 share repurchase activity is expected to approximate the recent quarterly average share repurchase levels. PNC continues to evaluate the potential impact of the proposed rules and ~~subsequent declines in collateral values are charged-off resulting in incremental provision~~may adjust share repurchase activity depending on market and economic conditions, as well as other factors. PNC’s SCB for ~~credit loss. Subsequent increases in collateral values may be reflected as an adjustment to~~ the ~~ALLL to reflect~~four-quarter period beginning October 1, 2023 is the ~~expectation~~regulatory minimum of ~~recoveries in an amount greater than previously expected, limited to amounts previously charged-off.~~2.5%.

~~Accounting for Nonperforming Assets and Leases and Other Nonaccrual Loans~~

~~For nonaccrual loans, interest income accrual and deferred fee/cost recognition is discontinued. Additionally, depending~~On April 3, 2024 the PNC Board of Directors declared a quarterly cash dividend on ~~whether the accrued interest has been incorporated into the ACL estimates, as discussed in the Accrued Interest section~~common stock of this Note 1, the accrued and uncollected interest is either reversed through Net interest income (if a CECL reserve is not maintained for accrued interest) or charged-off against the allowance (if a CECL reserve is maintained for accrued interest), except for credit cards, where we reverse any accrued interest through Net interest income$1.55 per share to be paid on May 6, 2024 to shareholders of record at the ~~time~~close of ~~charge-off, as per industry standard practice. Nonaccrual loans that are also collateral dependent may be charged-off to reduce the basis to the fair value of collateral less costs to sell.~~business April 15, 2024.

If payment is received on a nonaccrual loan, generally the payment is first applied to the remaining principal balance. Payments are then applied to recover any charged-off amounts related to the loan. Finally, if both principal balance and any charge-offs have been recovered, then the payment will be recorded as fee and interest income. For certain consumer loans, the receipt of interest payments is recognized as interest income on a cash basis. Cash basis income recognition is applied if a loan’s amortized cost basis is deemed fully collectible and the loan has performed for at least six months. For loans modified due to a borrower experiencing financial difficulty, payments are applied based upon their contractual terms unless the related loan is deemed nonperforming. Loans modified due to a borrower experiencing financial difficulty are generally included in nonperforming and nonaccrual loans if they are not government insured or guaranteed. However, after a reasonable period of time, generally six months, in which the loan performs under modified terms and meets other performance indicators, it is returned to performing/accruing status. This return to performing/accruing status demonstrates that the bank expects to collect all of the loan’s remaining contractual principal and interest. Loan modifications granted

5030 The PNC Financial Services Group, Inc. – Form 10-Q

The following table summarizes our Basel III capital balances and ratios:

Table 30: Basel III Capital


	March 31, 2024
Dollars in millions	Basel III (a)			Fully Implemented (estimated) (b)
Common equity Tier 1 capital
Common stock plus related surplus, net of treasury stock	$	(3,774)		$	(3,774)
Retained earnings	57,154			56,913


Goodwill, net of associated deferred tax liabilities	(10,700)			(10,700)
Other disallowed intangibles, net of deferred tax liabilities	(282)			(282)
Other adjustments/(deductions)	(88)			(90)


Common equity Tier 1 capital (c)	$	42,310		$	42,067
Additional Tier 1 capital
Preferred stock plus related surplus	6,242			6,242

Tier 1 capital	$	48,552		$	48,309
Additional Tier 2 capital
Qualifying subordinated debt	2,874			2,874

Eligible credit reserves includable in Tier 2 capital	5,018			5,220
Total Basel III capital	$	56,444		$	56,403
Risk-weighted assets
Basel III standardized approach risk-weighted assets (d)	$	420,342		$	420,397
Average quarterly adjusted total assets	$	556,568		$	556,326
Supplementary leverage exposure (e)	$	667,048		$	667,047
Basel III risk-based capital and leverage ratios (f)
Common equity Tier 1	10.1		%	10.0		%
Tier 1	11.6		%	11.5		%
Total	13.4		%	13.4		%
Leverage (g)	8.7		%	8.7		%
Supplementary leverage ratio (e)	7.3		%	7.2		%

(b)The ratios are calculated to reflect the full impact of CECL and exclude the benefits of the optional five-year transition.

(c)As permitted, PNC and PNC Bank have elected to exclude AOCI related to both available for sale securities and pension and other post-retirement plans from CET1 capital.

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

(f)All ratios are calculated using the regulatory capital methodology applicable to PNC and calculated based on the standardized approach.

(g)Leverage ratio is calculated based on Tier 1 capital divided by Average quarterly adjusted total assets.

At March 31, 2024, PNC and PNC Bank were considered “well capitalized” based on applicable U.S. regulatory capital ratio requirements. To qualify as “well capitalized,” PNC must have Basel III capital ratios of at least 6% for Tier 1 risk-based capital and 10% for Total risk-based capital, and PNC Bank must have Basel III capital ratios of at least 6.5% for Common equity Tier 1 risk-based capital, 8% for Tier 1 risk-based capital, 10% for Total risk-based capital and a Leverage ratio of at least 5%.

The PNC Financial Services Group, Inc. – Form 10-Q 31

Federal banking regulators have stated that they expect the largest U.S. BHCs, including PNC, to have a level of regulatory capital well in excess of the regulatory minimum and have required the largest U.S. BHCs, including PNC, to have a capital buffer sufficient to withstand losses and allow them to meet the credit needs of their customers through estimated stress scenarios. We seek to manage our capital consistent with these regulatory principles, and we believe that our March 31, 2024 capital levels were aligned with them.

We provide additional information regarding regulatory capital requirements and some of their potential impacts, including the proposed rules to adjust the Basel III framework, in the Supervision and Regulation section of Item 1 Business, Item 1A Risk Factors and Note 19 Regulatory Matters in our 2023 Form 10-K.

Market Risk Management

See the Market Risk Management portion of the Risk Management section in our 2023 Form 10-K for additional discussion regarding market risk.

Market Risk Management – Interest Rate Risk

Our Asset and Liability Management group centrally manages interest rate risk as prescribed in our market risk-related risk management policies, which are approved by management’s ALCO and the Risk Committee of the Board of Directors.

PNC utilizes sensitivities of NII and EVE to a set of interest rate scenarios to identify and measure its short-term and long-term structural interest rate risks.

NII Sensitivity results for the first quarters of 2024 and 2023 follow:

Table 31: Net Interest Income Sensitivity Analysis


	First Quarter 2024		First Quarter 2023
Net Interest Income Sensitivity Simulation (a)
Effect on NII in first year from shocked interest rate:
200 basis point instantaneous increase	(0.2)	%	2.5	%
200 basis point instantaneous decrease	(0.2)	%	(3.3)	%

(a) The effect on NII in the first year from a 100 basis point instantaneous increase or decrease is not materially different from the 200 basis point scenarios as disclosed above.

When forecasting net interest income, we make certain key assumptions that can materially impact the resulting sensitivities, including the following:

Deposit Betas: Deposit pricing changes are primarily driven by changes in the Federal Funds rate, with the relationship between deposit rates and Federal Funds rate defined as deposit beta. We define cumulative deposit beta as the change in deposit rate paid on interest-bearing non-maturity deposits divided by the change in the upper level of the stated Federal Funds rate range since the first quarter of 2022, the start of the current rising rate cycle. As of March 31, 2024 PNC’s cumulative deposit beta was 45%, an increase from 35% at March 31, 2023. For interest rate risk modeling, PNC uses dynamic beta models to adjust assumed repricing sensitivity depending on market rate levels as well as other factors. The dynamic beta assumptions reflect historical experience and future expectations. Our scenario assumes that deposit betas increased slightly from current levels. Actual deposit rates paid may differ from modeled projections due to variables such as competition for deposits and customer behavior.

Asset Prepayments: PNC includes prepayment assumptions for both loan and investment portfolios. Mortgage and home equity portfolios utilize an industry standard model to drive estimated prepayments that increase in lower rate environments. Commercial and consumer loan portfolios assume static constant prepayment rates that are consistent across rate scenarios, as those portfolios historically do not exhibit significantly different prepayment behaviors based upon the level of market rates.

Impact of Derivatives: PNC uses interest rate derivatives to hedge floating rate commercial loans. PNC had $36.5 billion in receive fix / pay float swaps as of March 31, 2024, with a weighted average duration of 2.0 years and an average fixed rate of 2.30%. As of March 31, 2024 PNC also had collars in place, reflecting $12.5 billion of caps and $12.5 billion of floors, that are used to hedge these

32 The PNC Financial Services Group, Inc. – Form 10-Q

commercial loans. Additionally, PNC utilizes receive fix / pay float swaps as a means of hedging fixed rate debt. See Note 12 Financial Derivatives in this report for additional information on how we use derivatives to ~~borrowers experiencing financial difficulty resulting from (i) borrowers that~~hedge commercial loans and fixed rate debt.

EVE sensitivity results for the first quarter of 2024 and 2023 follow:

Table 32: Economic Value of Equity Sensitivity Analysis


	First Quarter 2024		First Quarter 2023
Economic Value of Equity Sensitivity Simulation
200 basis point instantaneous increase	(5.7)	%	(4.3)	%
200 basis point instantaneous decrease	(1.6)	%	(4.9)	%

Compared to the first quarter of 2023, there have been ~~discharged from personal liability through Chapter 7 bankruptcy~~no material changes to our NII sensitivity and EVE sensitivity assumptions, including data sources that drive assumptions setting.

Market Risk Management – Customer-Related Trading Risk

We use VaR as the primary means to measure and monitor market risk in customer-related trading activities. VaR is used to estimate the probability of portfolio losses based on the statistical analysis of historical market risk factors. VaR is calculated for each of the portfolios that comprise our customer-related trading activities of which the majority are covered positions as defined by the Market Risk Rule. VaR is computed with positions and market risk factors updated daily to ensure each portfolio is operating within its acceptable limits. See the Market Risk Management – Customer-Related Trading Risk section of our 2023 Form 10-K for more information on our models used to calculate VaR and our backtesting process.

Customer-related trading revenue was $16 million for the three months ended March 31, 2024, compared to $84 million for the three months ended March 31, 2023. The decrease was primarily due to lower derivative client sales revenues, partially offset by securities underwriting client revenues.

Market Risk Management – Equity And Other Investment Risk

Equity investment risk is the risk of potential losses associated with investing in both private and public equity markets. In addition to extending credit, taking deposits, underwriting securities and trading financial instruments, we make and manage direct investments in a variety of transactions, including management buyouts, recapitalizations and growth financings in a variety of industries. We also have ~~not formally reaffirmed their loan obligations to us,~~investments in affiliated and ~~(ii) borrowers~~non-affiliated funds that ~~are not currently obligated to~~ make ~~both principal and interest payments under the modified terms are not returned to accrual status.~~

~~Other nonaccrual loans are generally not returned to accrual status until the borrower has performed~~similar investments in ~~accordance~~private equity, consistent with ~~the contractual terms~~regulatory limitations. The economic and/or book value of these investments and other ~~performance indicators~~assets are directly affected by changes in market factors.

A summary of our equity investments follows:

Table 33: Equity Investments Summary


	March 31, 2024		December 31, 2023		Change
Dollars in millions					$		%
Tax credit investments	$	4,233	$	4,331	$	(98)	(2)	%
Private equity and other	4,047		3,983		64		2	%
Total	$	8,280	$	8,314	$	(34)	—

The PNC Financial Services Group, Inc. – Form 10-Q 33

Tax Credit Investments

Included in our equity investments are direct tax credit investments and equity investments held by consolidated entities. These tax credit investment balances included unfunded commitments totaling $2.2 billion and $2.5 billion at ~~least six months, the period of time which was determined to demonstrate the expected collection of the loan’s remaining contractual principal~~March 31, 2024 and ~~interest. Nonaccrual loans with partially charged-off principal~~December 31, 2023, respectively. These unfunded commitments are ~~not returned to accrual. When a nonperforming loan is returned to accrual status, it is then considered a performing loan.~~

Foreclosed assets consist of any asset seized or property acquired through a foreclosure proceeding or acceptance of a deed-in-lieu of foreclosure. OREO comprises principally residential and commercial real estate properties obtained in partial or total satisfaction of loan obligations. After obtaining a foreclosure judgment, or in some jurisdictions the initiation of proceedings under a power of sale in the loan instruments, the property will be sold. When we are awarded title or completion of deed-in-lieu of foreclosure, we transfer the loan to foreclosed assets included in Other ~~assets~~liabilities on our Consolidated Balance Sheet. ~~Property obtained~~

Note 4 Loan Sale and Servicing Activities and Variable Interest Entities in ~~satisfaction~~our 2023 Form 10-K has further information on tax credit investments.

Private Equity and Other

The largest component of ~~a loan~~our other equity investments is ~~initially recorded~~our private equity portfolio. The private equity portfolio is an illiquid portfolio consisting of mezzanine and equity investments that vary by industry, stage and type of investment. Private equity investments carried at estimated fair value ~~less cost~~totaled $2.2 billion at both March 31, 2024 and December 31, 2023. As of March 31, 2024, $2.0 billion was invested directly in a variety of companies and $0.2 billion was invested indirectly through various private equity funds.

Included in our other equity investments are Visa Class B-1 common shares, which are recorded at cost. Visa Class B-1 common shares that we own are transferable only under limited circumstances until they can be converted into shares of the publicly-traded Class A common shares, which cannot happen until the resolution of the pending interchange litigation, subject to ~~sell.~~the exchange offer described in Note 16 Subsequent Events. Based upon the March 31, 2024 per share closing price of $279.08for a Visa Class A common share, the estimated value of our total investment in the Class B-1 common shares was approximately $1.6 billion at the current conversion rate of Visa B-1 shares to Visa A shares, while our cost basis was insignificant. The estimated value does not represent fair value ~~less cost to sell, the amortized cost basis~~ of the ~~loan is adjusted~~Visa B-1 common shares given the shares’ limited transferability and the lack of observable transactions in the marketplace. See Note 14 Fair Value and Note 20 Legal Proceedings in our 2023 Form 10-K and Note 13 Legal Proceedings in this Report for additional information regarding our Visa agreements. See Note 16 Subsequent Events for additional details on Visa’s recently announced exchange offer for Visa Class B-1 common stock.

We also have certain other equity investments, the majority of which represent investments in affiliated and non-affiliated funds with both traditional and alternative investment strategies. Net gains (losses) related to these investments were $(6) million for the three months ended March 31, 2024 and $21 million for the three months ended March 31, 2023.

Financial Derivatives

We use a ~~charge-off/recovery is recognized~~variety of financial derivatives as part of the overall asset and liability risk management process to help manage exposure to market (primarily interest rate) and credit risk inherent in our business activities. We also enter into derivatives with customers to facilitate their risk management activities.

Financial derivatives involve, to varying degrees, market and credit risk. Derivatives represent contracts between parties that usually require little or no initial net investment and result in one party delivering cash or another type of asset to the ~~ALLL. We estimate fair values primarily~~other party based on ~~appraisals,~~a notional and an underlying as specified in the contract. Therefore, cash requirements and exposure to credit risk are significantly less than the notional amount on these instruments.

Further information on our financial derivatives is presented in Note 1 Accounting Policies, Note 14 Fair Value and Note 15 Financial Derivatives in our 2023 Form 10-K and in Note 11 Fair Value and Note 12 Financial Derivatives in this Report.

RECENT REGULATORY DEVELOPMENTS

Federal agencies and states, including the federal agencies responsible for the Federal Acquisition Regulations, California, and most recently in March 2024, the SEC, have separately proposed or ~~sales agreements with~~finalized rules that would require certain companies or government contractors, such as PNC or PNC Bank, to disclose significant amounts of climate-related information. This information includes qualitative and quantitative disclosures of material climate-related risks and their impact, governance and management, targets and goals, and greenhouse gas emissions. The greenhouse gas emissions disclosures include the company’s direct emissions from owned or controlled sources (Scope 1) and indirect emissions from the company’s consumption of energy purchased from third ~~parties. Subsequently, foreclosed assets are valued at~~parties (Scope 2), and in the ~~lower~~case of the ~~amount recorded at acquisition date~~Federal Acquisition Regulations proposal for a “major contractor” and California laws, disclosures related to indirect emissions from upstream and downstream activities in the company’s value chain (Scope 3). If and when all the rules are finalized, PNC and PNC Bank may face potentially differing standards from the agencies or ~~estimated~~California. Numerous lawsuits have challenged the SEC and California rules, and on April 4, 2024, the SEC voluntarily stayed implementation of its final rules pending resolution of the lawsuits challenging the SEC rules.

34 The PNC Financial Services Group, Inc. – Form 10-Q

CRITICAL ACCOUNTING ESTIMATESAND JUDGMENTS

Our consolidated financial statements are prepared by applying certain accounting policies. Note 1 Accounting Policies in our 2023 Form 10-K describes the most significant accounting policies that we use. Certain of these policies require us to make estimates or economic assumptions that may vary under different assumptions or conditions, and such variations may significantly affect our reported results and financial position for the period or in future periods. The policies and judgments related to residential and commercial MSRs and Level 3 fair value ~~less cost~~measurements are described in Critical Accounting Estimates and Judgments in our 2023 Form 10-K. The following details the critical estimates and judgments around the ACL.

Allowance for Credit Losses

We maintain the ACL at levels that we believe to ~~sell. Valuation adjustments~~be appropriate as of the balance sheet date to absorb expected credit losses on ~~these~~our existing investment securities, loans, equipment finance leases, other financial assets and ~~gains~~unfunded lending related commitments, for the remaining estimated contractual term of the assets or exposures, taking into consideration expected prepayments and estimated recoveries. Our determination of the ACL is based on historical loss and performance experience, as well as current borrower and transaction characteristics including collateral type and quality, current economic conditions, reasonable and supportable forecasts of future economic conditions and other relevant factors. We use methods sensitive to changes in economic conditions to interpret these factors and to estimate expected credit losses. We evaluate and, when appropriate, enhance the quality of our data and models and other methods used to estimate the ACL on an ongoing basis. We incorporate qualitative factors in the ACL that reflect our best estimate of expected losses ~~realized from disposition~~that may not be adequately represented in our quantitative methods or economic assumptions. The major drivers of ~~such property~~ACL estimates include, but are not limited to:

•Scenario weights and design: Our loss estimates are sensitive to the shape, direction and rate of change of macroeconomic forecasts and thus vary significantly between upside and downside scenarios. Changes to the probability weights assigned to these scenarios and the timing of peak business cycles reflected ~~in Other noninterest expense.~~by the scenarios could materially affect our loss estimates.

•Portfolio composition: Changes to portfolio volume and mix could materially affect our estimates, as CECL reserves

would be recognized upon origination or acquisition and derecognized upon paydown, maturity or sale.

For ~~certain mortgage~~all assets and unfunded lending related commitments within the scope of the CECL standard, the applicable ACL is composed of one or a combination of the following components: (i) collectively assessed or pooled reserves, (ii) individually assessed reserves, and

(iii) qualitative (judgmental) reserves. Our methodologies and key assumptions for each of these components are discussed in Note 1

Accounting Policies in our 2023 Form 10-K.

Reasonable and Supportable Economic Forecast

Pursuant to the CECL standard, we are required to consider reasonable and supportable forecasts in estimating expected credit losses. For this purpose, we have established a framework that includes a three-year forecast period and the use of four economic scenarios with associated probability weights, which in combination create a forecast of expected economic outcomes. Credit losses estimated in our reasonable and supportable forecast period are sensitive to the shape and severity of the scenarios used and weights assigned to them.

To forecast the distribution of economic outcomes over the reasonable and supportable forecast period, we generate four economic forecast scenarios using a combination of quantitative macroeconomic models, other measures of economic activity and forward-looking expert judgment. Each scenario is then given an associated probability (weight) to represent our current expectation within that distribution over the forecast period. This process is informed by current economic conditions, expected business cycle evolution and the expert judgment of PNC’s RAC. This approach seeks to provide a reasonable representation of the forecast of expected economic outcomes and is used to estimate expected credit losses across a variety of loans, securities and other financial assets. Each quarter, the scenarios and their respective weights are presented to RAC for approval.

The scenarios used for the period ended March 31, 2024 consider, among other factors, ongoing inflationary pressures and the corresponding tightness of monetary policy and credit availability. While recession risks remain elevated, our most-likely expectation at March 31, 2024 is that ~~have~~the U.S. economy narrowly avoids a ~~government guarantee, we establish~~recession in 2024.

We used a ~~separate other receivable upon foreclosure.~~number of economic variables in our scenarios, with two of the most significant drivers being real GDP and the U.S. unemployment rate. The ~~receivable is measured~~following table presents a comparison of these two economic variables based on the ~~loan balance (inclusive of principal~~weighted-average scenario forecasts used in determining our ACL at March 31, 2024 and ~~interest) that~~December 31, 2023.

The PNC Financial Services Group, Inc. – Form 10-Q 35

Table 34: Key Macroeconomic Variables in CECL Weighted-Average Scenarios


	Assumptions as of March 31, 2024
	2024	2025	2026
U.S. real GDP (a)	0.8%	1.7%	2.1%
U.S. unemployment rate (b)	4.6%	4.8%	4.3%
	Assumptions as of December 31, 2023
	2024	2025	2026
U.S. real GDP (a)	0.1%	1.5%	2.0%
U.S. unemployment rate (b)	4.5%	4.6%	4.2%

(a)Represents year-over-year growth (loss) rates.

(b)Represents quarterly average rate at December 31, 2024, 2025 and 2026, respectively.

Real GDP growth is expected to ~~be recovered~~end 2024 at 0.8% on a weighted average basis, up from the ~~guarantor.~~0.1% assumed at December 31, 2023, primarily due to stronger expected economic activity in 2024 than what was expected at the end of 2023. Growth then rises to 1.7% in 2025, before growing to 2.1% in 2026. The weighted-average unemployment rate is expected to end 2024 at 4.6%, up slightly from the 4.5% assumed at December 31, 2023. During the second half of 2025, the weighted-average unemployment increases to a peak of 5.0% before gradually improving to 4.8% by the fourth quarter of 2025. Further improvement is then expected in 2026 with the rate reaching 4.3% by the fourth quarter of 2026.

The current state of the economy continues to reflect uncertainty due to the foundational change in office demand from the acceptance of remote work, combined with inflationary pressures, interest rate movements, and declining consumer savings and deposit balances. As such, for both our commercial and consumer loan portfolios, PNC identified and performed significant analyses around segments impacted by such uncertainties to ensure our reserves are adequate, given our current macroeconomic expectations.

See the following for additional information related to our ACL:

•Allowance for Credit Losses in the Credit Risk Management section of this Financial Review,

•Note 2 Investment Securities, and Note 3 Loans and Related Allowance for Credit Losses in this Report, and

•Note 1 Accounting Policies in our 2023 Form 10-K.

36 The PNC Financial Services Group, Inc. – Form 10-Q

Recently Issued Accounting Standards


Accounting Standards Update	Description	Financial Statement Impact
Improvements to Reportable Segment Disclosures - ASU 2023-07 Issued November 2023	• Required with issuance of 2024 Form 10-K; early adoption is permitted. • Requires that a public entity disclose significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss. • Requires that a public entity disclose an amount for other segment items by reportable segment and a description of its composition. • Requires that a public entity provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by ASC 280 in interim periods. • Clarifies that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit. • Requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. • Requires a retrospective transition approach for all prior periods presented in the financial statements.	• We are currently evaluating the disclosure requirements within this ASU and do not plan to early adopt. • This ASU will not impact our Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Changes in Equity, or Consolidated Statement of Cash Flows. • We expect to provide enhanced disclosures of significant segment level noninterest expenses as a result of this ASU.
Accounting Standards Update	Description	Financial Statement Impact
Improvements to Income Tax Disclosures - ASU 2023-09 Issued December 2023	• Required effective date of January 1, 2025; early adoption is permitted. • Requires public business entities to, on an annual basis, (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold. • Requires that all entities disclose, on an annual basis, (1) the amount of income taxes paid (net of refunds received), disaggregated by federal (national), state and foreign taxes, and (2) the amount of income taxes paid (net of refunds received), disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received). • Requires a prospective transition approach, with an optional retrospective transition approach.	• We are currently evaluating the disclosure requirements within this ASU. • This ASU will not impact our Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Changes in Equity, or Consolidated Statement of Cash Flows. • We expect to provide additional disaggregated income tax disclosures in accordance with this ASU. • We are evaluating when to adopt the amendments of this ASU.

Recently Adopted Accounting Pronouncements

See Note 1 Accounting Policies in our 2023 Form 10-K for ~~additional information~~recently adopted accounting standards. We did not adopt any new accounting standards during the first quarter of 2024 that impacted our financial statements.

INTERNAL CONTROLS AND DISCLOSURE CONTROLS AND PROCEDURES

As of March 31, 2024, we performed an evaluation under the supervision of and with the participation of our management, including the Chairman and Chief Executive Officer and the Executive Vice President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures and of changes in our internal control over financial reporting.

Based on ~~FDMs, nonperforming assets~~that evaluation, our Chairman and ~~credit~~Chief Executive Officer and our Executive Vice President and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) were effective as of March 31, 2024, and that there has been no change in PNC’s internal control over financial reporting that occurred

The PNC Financial Services Group, Inc. – Form 10-Q 37

during the first quarter of 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

We make statements in this Report, and we may from time to time make other statements, regarding our outlook for financial performance, such as earnings, revenues, expenses, tax rates, capital and liquidity levels and ratios, asset levels, asset quality, ~~indicators~~financial position, and other matters regarding or affecting us and our future business and operations, including our sustainability strategy, 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.

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:

–Changes in interest rates and valuations in debt, equity and other financial markets,

–Disruptions in the U.S. and global financial markets,

–Actions by the Federal Reserve Board, U.S. Treasury and other government agencies, including those that impact money supply, market interest rates and inflation,

–Changes in customer behavior due to changing business and economic conditions or legislative or regulatory initiatives,

–Changes in customers’, suppliers’ and other counterparties’ performance and creditworthiness,

–Impacts of sanctions, tariffs and other trade policies of the U.S. and its global trading partners,

–Impacts of changes in federal, state and local governmental policy, including on the regulatory landscape, capital markets, taxes, infrastructure spending and social programs,

–Our ability to attract, recruit and retain skilled employees, and

–Commodity price volatility.

•Our forward-looking financial statements are subject to the risk that economic and financial market conditions will be substantially different than those we are currently expecting. These statements are based on our views that:

–PNC’s baseline forecast is for slower economic growth in 2024 as consumer spending growth slows and higher interest rates remain a drag on the economy. The ongoing strength of the labor market will continue to support consumer spending. The FOMC is indicating that it will start to cut the federal funds rate later this year, with rate cuts supporting economic growth toward the end of 2024.

–Real GDP growth this year will be close to its trend of 2% and the unemployment rate will increase modestly to just above 4% by the end of 2024. Inflation will continue to slow as wage pressures abate, moving back to the Federal Reserve’s 2% long-term objective by the end of 2025.

–PNC expects the federal funds rate to remain unchanged between 5.25% and 5.50% through at least the first half of 2024, with federal funds rate cuts starting in the third quarter as inflationary pressures ease further. PNC expects two federal funds rate cuts in 2024, with the rate ending this year in a range between 4.75% and 5.00%.

•PNC’s ability to take certain capital actions, including returning capital to shareholders, is subject to PNC meeting or exceeding minimum capital levels, including a stress capital buffer established by the Federal Reserve Board in connection with the Federal Reserve Board’s CCAR process.

•PNC’s regulatory capital ratios in the future will depend on, among other things, PNC’s financial performance, the scope and terms of final capital regulations then in effect 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 at least in part on the development, validation and regulatory review of related models and the reliability of and risks resulting from extensive use of such models.

38 The PNC Financial Services Group, Inc. – Form 10-Q

–Results of the regulatory examination and supervision process, including our failure to satisfy requirements of agreements with governmental agencies.

–Costs associated with obtaining rights in intellectual property claimed by others and of adequacy of our intellectual property protection in general.

•We grow our business in part through acquisitions and new strategic initiatives. Risks and uncertainties include those presented by the nature of the business acquired or strategic initiative, 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, the integration of the acquired businesses into PNC after closing or any failure to execute strategic or operational plans.

•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. Our ability to anticipate and respond to technological changes can also impact our ~~loan portfolio.~~ability to respond to customer needs and meet competitive demands.

We provide greater detail regarding these as well as other factors in our 2023 Form 10-K and elsewhere in this Report, including in the Risk Factors and Risk Management sections and the Legal Proceedings and Commitments Notes of the Notes To Consolidated Financial Statements in these reports. Our forward-looking statements may also be subject to other risks and uncertainties, including those discussed elsewhere in this Report or in our other filings with the SEC.

The PNC Financial Services Group, Inc. – Form 10-Q 39

CONSOLIDATED INCOME STATEMENT

THE PNC FINANCIAL SERVICES GROUP, INC.


Unaudited	Three months ended March 31
In millions, except per share data	2024		2023
Interest Income
Loans	$	4,819	$	4,258
Investment securities	883		885
Other	798		516
Total interest income	6,500		5,659
Interest Expense
Deposits	2,077		1,291
Borrowed funds	1,159		783
Total interest expense	3,236		2,074
Net interest income	3,264		3,585
Noninterest Income
Asset management and brokerage	364		356
Capital markets and advisory	259		262
Card and cash management	671		659
Lending and deposit services	305		306
Residential and commercial mortgage	147		177
Other	135		258
Total noninterest income	1,881		2,018
Total revenue	5,145		5,603
Provision For Credit Losses	155		235
Noninterest Expense
Personnel	1,794		1,826
Occupancy	244		251
Equipment	341		350
Marketing	64		74
Other	891		820
Total noninterest expense	3,334		3,321
Income before income taxes and noncontrolling interests	1,656		2,047
Income taxes	312		353
Net income	1,344		1,694
Less: Net income attributable to noncontrolling interests	14		17
Preferred stock dividends	81		68
Preferred stock discount accretion and redemptions	2		2
Net income attributable to common shareholders	$	1,247	$	1,607
Earnings Per Common Share
Basic	$	3.10	$	3.98
Diluted	$	3.10	$	3.98
Average Common Shares Outstanding
Basic	400		401
Diluted	400		402

See accompanying Notes To Consolidated Financial Statements.

40 The PNC Financial Services Group, Inc. – Form 10-Q

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

THE PNC FINANCIAL SERVICES GROUP, INC.


Unaudited In millions	Three months ended March 31
	2024		2023
Net income	$	1,344	$	1,694
Other comprehensive income (loss), before tax and net of reclassifications into Net income
Net change in debt securities	(179)		869
Net change in cash flow hedge derivatives	(250)		527
Pension and other postretirement benefit plan adjustments	(2)		(10)
Net change in Other	(2)		4
Other comprehensive income (loss), before tax and net of reclassifications into Net income	(433)		1,390
Income tax benefit (expense) related to items of other comprehensive income	103		(326)
Other comprehensive income (loss), after tax and net of reclassifications into Net income	(330)		1,064





Comprehensive income	1,014		2,758
Less: Comprehensive income attributable to noncontrolling interests	14		17
Comprehensive income attributable to PNC	$	1,000	$	2,741

See accompanying Notes To Consolidated Financial Statements.

The PNC Financial Services Group, Inc. – Form 10-Q 41

CONSOLIDATED BALANCE SHEET

THE PNC FINANCIAL SERVICES GROUP, INC.


Unaudited	March 31 2024		December 31 2023
In millions, except par value
Assets
Cash and due from banks	$	5,933	$	6,921
Interest-earning deposits with banks	53,612		43,804
Loans held for sale (a)	743		734
Investment securities – available for sale	42,280		41,785
Investment securities – held to maturity	88,180		90,784
Loans (a)	319,781		321,508
Allowance for loan and lease losses	(4,693)		(4,791)
Net loans	315,088		316,717
Equity investments	8,280		8,314
Mortgage servicing rights	3,762		3,686
Goodwill	10,932		10,932
Other (a)	37,352		37,903
Total assets	$	566,162	$	561,580
Liabilities
Deposits
Noninterest-bearing	$	98,061	$	101,285
Interest-bearing	327,563		320,133
Total deposits	425,624		421,418
Borrowed funds
Federal Home Loan Bank borrowings	37,000		38,000
Senior debt	27,907		26,836
Subordinated debt	4,827		4,875
Other (b)	2,973		3,026
Total borrowed funds	72,707		72,737
Allowance for unfunded lending related commitments	672		663
Accrued expenses and other liabilities (b)	15,785		15,621
Total liabilities	514,788		510,439
Equity
Preferred stock (c)
Common stock ($5 par value, Authorized 800,000,000 shares, issued 543,116,260 and 543,116,271 shares)	2,716		2,716
Capital surplus	19,032		19,020
Retained earnings	56,913		56,290
Accumulated other comprehensive income (loss)	(8,042)		(7,712)
Common stock held in treasury at cost: 145,068,954 and 145,087,054 shares	(19,279)		(19,209)
Total shareholders’ equity	51,340		51,105
Noncontrolling interests	34		36
Total equity	51,374		51,141
Total liabilities and equity	$	566,162	$	561,580

(a)Our consolidated assets included the following for which we have elected the fair value option: Loans held for sale of $0.7 billion, Loans held for investment of $1.2 billion and Other assets of $0.1 billion at March 31, 2024. Comparable amounts at December 31, 2023 were $0.7 billion, $1.2 billion and $0.1 billion, respectively.

(b)Our consolidated liabilities included the following for which we have elected the fair value option: Other borrowed funds of less than $0.1 billion and Other liabilities of $0.1 billion at March 31, 2024. Comparable amounts at December 31, 2023 were less than $0.1 billion and $0.1 billion, respectively.

(c)Par value less than $0.5 million at each date.

See accompanying Notes To Consolidated Financial Statements.

42 The PNC Financial Services Group, Inc. – Form 10-Q

CONSOLIDATED STATEMENT OF CASH FLOWS

THE PNC FINANCIAL SERVICES GROUP, INC.


Unaudited In millions	Three months ended March 31
	2024		2023
Operating Activities
Net income	$	1,344	$	1,694
Adjustments to reconcile net income to net cash provided (used) by operating activities
Provision for credit losses	155		235
Depreciation, amortization and accretion	37		65
Deferred income taxes (benefit)	(44)		(30)

Changes in fair value of mortgage servicing rights	(43)		174



Net change in
Trading securities and other short-term investments	434		(385)
Loans held for sale and related securitization activity	11		(11)
Other assets	(300)		1,108
Accrued expenses and other liabilities	(263)		(1,142)
Other operating activities, net	427		168
Net cash provided (used) by operating activities	$	1,758	$	1,876
Investing Activities
Sales
Securities available for sale	$	(63)	$	(73)

Loans	96		215
Repayments/maturities
Securities available for sale	1,056		2,293
Securities held to maturity	2,883		1,502
Purchases
Securities available for sale	(1,766)		(612)
Securities held to maturity	(56)		(1,324)
Loans	(279)		(261)
Net change in
Federal funds sold and resale agreements	(4)		32
Interest-earning deposits with banks	(9,808)		(6,580)
Loans	1,667		(587)

Other investing activities, net	(91)		(317)
Net cash provided (used) by investing activities	$	(6,365)	$	(5,712)

The PNC Financial Services Group, Inc. – Form 10-Q 43

CONSOLIDATED STATEMENT OF CASH FLOWS

THE PNC FINANCIAL SERVICES GROUP, INC.


(Continued from previous page)
Unaudited In millions	Three months ended March 31
	2024		2023
Financing Activities
Net change in
Noninterest-bearing deposits	$	(3,260)	$	(6,462)
Interest-bearing deposits	7,430		7,023
Federal funds purchased and repurchase agreements	(167)		(94)
Short-term Federal Home Loan Bank borrowings			(50)

Other borrowed funds	95		(74)
Sales/issuances

Senior debt	2,490		2,743

Other borrowed funds	181		167
Preferred stock			1,484
Common and treasury stock	24		26
Repayments/maturities
Federal Home Loan Bank borrowings	(1,000)		(5)
Senior debt	(1,050)
Subordinated debt			(750)
Other borrowed funds	(196)		(141)


Acquisition of treasury stock	(223)		(459)
Preferred stock cash dividends paid	(81)		(68)
Common stock cash dividends paid	(624)		(607)

Net cash provided (used) by financing activities	$	3,619	$	2,733
Net Increase (Decrease) In Cash And Due From Banks And Restricted Cash	$	(988)	$	(1,103)


Cash and due from banks and restricted cash at beginning of period	6,921		7,043
Cash and due from banks and restricted cash at end of period	$	5,933	$	5,940

Cash And Due From Banks And Restricted Cash
Cash and due from banks at end of period (unrestricted cash)	$	4,999	$	5,335
Restricted cash	934		605
Cash and due from banks and restricted cash at end of period	$	5,933	$	5,940
Supplemental Disclosures
Interest paid	$	2,861	$	1,691
Income taxes paid	$	35	$	56
Income taxes refunded	$	6	$	3
Leased assets obtained in exchange for new operating lease liabilities	$	75	$	45

Non-cash Investing And Financing Items

Transfer from loans to loans held for sale, net	$	8	$	106

Transfer from loans to foreclosed assets	$	13	$	16

See accompanying Notes To Consolidated Financial Statements.

44 The PNC Financial Services Group, Inc. – Form 10-Q

Allowance for Credit Losses

Our determination of the ACL is based on historical loss and performance experience, ~~current borrower risk characteristics,~~ current economic conditions, the reasonable and supportable forecasts of future economic conditions and other relevant ~~factors.~~factors, including current borrower and/or transaction characteristics and assessments of the remaining estimated contractual term as of the balance sheet date. We maintain the ACL at an appropriate level for expected losses on our existing investment securities, loans, equipment finance leases, other financial assets and unfunded lending related ~~commitments,~~commitments.

See Note 1 Accounting Policies and the Credit Risk Management section in our 2023 Form 10-K for additional discussion of our ACL, including details of our methodologies. See also the Critical Accounting Estimates and Judgments section of this Report for further discussion of the assumptions used in the determination of the ACL as of March 31, 2024.

The PNC Financial Services Group, Inc. – Form 10-Q 25

The following table summarizes our ACL related to loans:

Table 24: Allowance for Credit Losses by Loan Class (a)


	March 31, 2024						December 31, 2023
Dollars in millions	Allowance Amount		Total Loans		% of Total Loans		Allowance Amount		Total Loans		% of Total Loans
Allowance for loans and lease losses
Commercial
Commercial and industrial	$	1,673	$	176,792	0.95	%	$	1,806	$	177,580	1.02	%
Commercial real estate	1,468		35,591		4.12	%	1,371		35,436		3.87	%
Equipment lease financing	76		6,462		1.18	%	82		6,542		1.25	%
Total commercial	3,217		218,845		1.47	%	3,259		219,558		1.48	%
Consumer
Residential real estate	39		47,386		0.08	%	61		47,544		0.13	%
Home equity	272		25,896		1.05	%	276		26,150		1.06	%
Automobile	173		14,788		1.17	%	173		14,860		1.16	%
Credit card	749		6,887		10.88	%	766		7,180		10.67	%
Education	56		1,859		3.01	%	56		1,945		2.88	%
Other consumer	187		4,120		4.54	%	200		4,271		4.68	%
Total consumer	1,476		100,936		1.46	%	1,532		101,950		1.50	%
Total	4,693		$	319,781	1.47	%	4,791		$	321,508	1.49	%
Allowance for unfunded lending related commitments	672						663
Allowance for credit losses	$	5,365					$	5,454
Allowance for credit losses to total loans					1.68	%					1.70	%
Commercial					1.71	%					1.73	%
Consumer					1.60	%					1.62	%

(a) Excludes allowances for investment securities and other financial assets, which together totaled $117 million and $120 million at March 31, 2024 and December 31, 2023, respectively.

26 The PNC Financial Services Group, Inc. – Form 10-Q

The following table summarizes our loan charge-offs and recoveries:

Table 25: Loan Charge-Offs and Recoveries


Three months ended March 31	Gross Charge-offs		Recoveries		Net Charge-offs / (Recoveries)		% of Average Loans (Annualized)
Dollars in millions
2024
Commercial
Commercial and industrial	$	84	$	19	$	65	0.15	%
Commercial real estate	56		2		54		0.61	%
Equipment lease financing	8		2		6		0.37	%
Total commercial	148		23		125		0.23	%
Consumer
Residential real estate	1		3		(2)		(0.02)	%
Home equity	10		9		1		0.02	%
Automobile	32		25		7		0.19	%
Credit card	92		15		77		4.46	%
Education	4		2		2		0.42	%
Other consumer	43		10		33		3.16	%
Total consumer	182		64		118		0.47	%
Total	$	330	$	87	$	243	0.30	%
2023
Commercial
Commercial and industrial	$	104	$	20	$	84	0.19	%
Commercial real estate	12		2		10		0.11	%
Equipment lease financing	4		3		1		0.06	%
Total commercial	120		25		95		0.17	%
Consumer
Residential real estate	3		3
Home equity	6		11		(5)		(0.08)	%
Automobile	33		24		9		0.24	%
Credit card	74		11		63		3.70	%
Education	4		2		2		0.37	%
Other consumer	42		11		31		2.57	%
Total consumer	162		62		100		0.40	%
Total	$	282	$	87	$	195	0.24	%

Total net charge-offs increased $48 million, or 25%, for the ~~estimated contractual term~~first three months of 2024 compared to the same period in 2023. The increase in the comparison was primarily attributable to higher commercial real estate net charge-offs.

See Note 1 Accounting Policies in our 2023 Form 10-K and Note 3 Loans and Related Allowance for Credit Losses of this Report for additional information.

Liquidity and Capital Management

One of the ways we monitor our liquidity is by reference to the LCR, a regulatory minimum liquidity requirement designed to ensure that covered banking organizations maintain an adequate level of liquidity to meet net liquidity needs over the course of a hypothetical 30-day stress scenario. PNC and PNC Bank calculate the LCR daily and are required to maintain a regulatory minimum of 100%. The LCR for both PNC and PNC Bank exceeded the regulatory minimum requirement throughout the first quarter of 2024. Fluctuations in our average LCR result from changes to the components of the calculation, including high-quality liquid assets and net cash outflows, as a result of ongoing business activity.

The NSFR is designed to measure the stability of the maturity structure of assets and liabilities of banking organizations over a one-year time horizon. PNC and PNC Bank calculate the NSFR daily and are required to maintain a regulatory minimum of 100%. The NSFR for both PNC and PNC Bank exceeded the regulatory minimum requirement throughout the first quarter of 2024.

The PNC Financial Services Group, Inc. – Form 10-Q 27

Sources of Liquidity

Our largest source of liquidity on a consolidated basis is the customer deposit base generated by our banking businesses. These deposits provide relatively stable and low-cost funding. Total deposits increased to $425.6 billion at March 31, 2024 from $421.4 billion at December 31, 2023. Noninterest-bearing deposit balances decreased driven by a decline in commercial noninterest-bearing balances. Interest-bearing deposits increased reflecting higher commercial and consumer interest-bearing balances. As of March 31, 2024, uninsured deposits represented approximately 43% of our total deposit base, which is estimated based on the regulatory instructions in the Consolidated Reports of Condition and Income - FFIEC 031. The majority of our uninsured deposits are related to commercial operating and relationship accounts, which we define as commercial deposit customers who utilize two or ~~exposures~~more PNC products. See the Funding Sources portion of the Consolidated Balance Sheet Review and Business Segments Review sections of this Financial Review for additional information on our deposits and related strategies.

We may also obtain liquidity through various forms of funding, including long-term debt (senior notes, subordinated debt and FHLB borrowings) and short-term borrowings (securities sold under repurchase agreements, commercial paper and other short-term borrowings). See the Funding Sources section of the Consolidated Balance Sheet Review in this Financial Review and Note 7 Borrowed Funds in this Report for additional information related to our borrowings.

Total senior and subordinated debt, on a consolidated basis, increased due to the following activity:

Table 26: Senior and Subordinated Debt


In billions	2024
January 1	$	31.7
Issuances	2.5
Calls and maturities	(1.1)
Other	(0.4)

March 31	$	32.7

Table 27: Primary Contingent Liquidity Sources


In billions	March 31, 2024		December 31, 2023
Cash balance with Federal Reserve Bank	$	53.2	$	43.3
Available investment securities (a)	56.7		98.5
Unused borrowing capacity from FHLB (b)	37.4		35.4
Unused borrowing capacity from Federal Reserve Bank (c)	83.9		47.2
Total available contingent liquidity	$	231.2	$	224.4

(a)Represents the fair value of investment securities that can be used for pledging or to secure other sources of funding.

28 The PNC Financial Services Group, Inc. – Form 10-Q

Bank Liquidity

Additionally, PNC Bank may also access funding from the parent company through deposits placed at the bank or issuing intercompany senior unsecured notes.

Parent Company Liquidity

In addition to managing liquidity risk at the bank level, we manage the parent company’s liquidity. The parent company’s contractual obligations consist primarily of debt service related to parent company borrowings and funding non-bank affiliates. Additionally, the parent company maintains liquidity to fund discretionary activities such as paying dividends to our shareholders, share repurchases and acquisitions.

The principal source of parent company liquidity is the dividends or other capital distributions it receives from PNC Bank, which may be impacted by the following:

•Bank-level capital needs,

•Laws, regulations and the results of supervisory activities,

•Corporate policies,

•Contractual restrictions, and

•Other factors.

There are statutory and regulatory limitations on the ability of a national bank to pay dividends or make other capital distributions or to extend credit to the parent company or its non-bank subsidiaries. The amount available for dividend payments by PNC Bank to the parent company without prior regulatory approval was $5.7 billion at March 31, 2024. See Note 19 Regulatory Matters in our 2023 Form 10-K for further discussion of these limitations.

In addition to dividends from PNC Bank, other sources of parent company liquidity include cash and investments, as well as dividends and loan repayments from other subsidiaries and dividends or distributions from equity investments. We can also generate liquidity for the parent company and PNC’s non-bank subsidiaries through the issuance of debt and equity securities, including certain capital instruments, in public or private markets and commercial paper. Under the parent company’s 2014 commercial paper program, the parent company has the ability to offer up to $5.0 billion of commercial paper to provide additional liquidity. At March 31, 2024, there were no issuances outstanding under this program.

The following table details parent company note issuances in the first quarter of 2024:

Table 28: Parent Company Notes Issued


Issuance Date	Amount	Description of Issuance
January 22, 2024	$1.0 billion	$1.0 billion of senior fixed-to-floating notes with a maturity date of January 21, 2028. Interest is payable semi-annually in arrears at a fixed rate of 5.300% per annum, on January 21 and July 21 of each year, beginning on July 21, 2024. Beginning on January 21, 2027, interest is payable quarterly in arrears at a floating rate per annum equal to Compounded SOFR (determined with respect to each quarterly interest period using the SOFR Index as described in the Prospectus Supplement), plus 1.342%, on April 21, 2027, July 21, 2027, October 21, 2027 and at the maturity date.
January 22, 2024	$1.5 billion	$1.5 billion of senior fixed-to-floating notes with a maturity date of January 22, 2035. Interest is payable semi-annually in arrears at a fixed rate of 5.676% per annum, on January 22 and July 22 of each year, beginning on July 22, 2024. Beginning on January 22, 2034, interest is payable quarterly in arrears at a floating rate per annum equal to Compounded SOFR (determined with respect to each quarterly interest period using the SOFR Index as described in the Prospectus Supplement), plus 1.902%, on April 22, 2034, July 22, 2034, October 22, 2034 and at the maturity date.

Parent company senior and subordinated debt carrying value totaled $25.0 billion and $24.0 billion at March 31, 2024 and December 31, 2023, respectively.

The PNC Financial Services Group, Inc. – Form 10-Q 29

Contractual Obligations and Commitments

We have contractual obligations representing required future payments on borrowed funds, time deposits, leases, pension and postretirement benefits and purchase obligations. See the Liquidity and Capital Management portion of the Risk Management section of our 2023 Form 10-K for more information on these future cash outflows. Additionally, in the normal course of business, we have various commitments outstanding, certain of which are not included on our Consolidated Balance Sheet. We provide information on our commitments in Note 8 Commitments.

Credit Ratings

PNC’s credit ratings affect the cost and availability of short and long-term funding, collateral requirements for certain derivative instruments and the ability to offer certain products.

The following table presents credit ratings and outlook for PNC as of March 31, 2024:

Table 29: Credit Ratings and Outlook


	March 31, 2024
	Moody’s	Standard & Poor’s	Fitch
Parent Company
Senior debt	A3	A-	A
Subordinated debt	A3	BBB+	A-
Preferred stock	Baa2	BBB-	BBB
PNC Bank
Senior debt	A2	A	A+
Subordinated debt	A3	A-	A
Long-term deposits	Aa3	A	AA-
Short-term deposits	P-1	A-1	F1+
Short-term notes	P-1	A-1	F1
PNC
Agency rating outlook	Negative	Stable	Stable

Capital Management

Detailed information on our capital management processes and activities is included in the ~~balance sheet date. The remaining contractual term~~Supervision and Regulation section of ~~assets in scope~~Item 1 of CECL is estimated considering contractual maturity dates, prepayment expectations, utilization or draw expectations and any contractually embedded extension options that do not allow us to unilaterally cancel the extension options. For products without a fixed contractual maturity date (~~e.g., credit cards), we rely on historical payment behavior to determine the length of the paydown or default time period.~~our 2023 Form 10-K.

We ~~estimate~~manage our funding and capital positions by making adjustments to our balance sheet size and composition, issuing or redeeming debt, issuing equity or other capital instruments, executing treasury stock transactions and capital redemptions or repurchases, and managing dividend policies and retaining earnings.

In the first quarter of 2024, PNC returned $0.8 billion of capital to shareholders, reflecting more than $0.6 billion of dividends on common shares and more than $0.1 billion of common share repurchases, representing 0.9 million shares. Consistent with the SCB framework, which allows for capital return in amounts in excess of the SCB minimum levels, our Board of Directors has authorized a repurchase framework under the previously approved repurchase program of up to 100 million common shares, of which approximately 44% were still available for repurchase at March 31, 2024. In light of the Federal banking agencies proposed rules to adjust the Basel III capital framework, second quarter of 2024 share repurchase activity is expected to approximate the recent quarterly average share repurchase levels. PNC continues to evaluate the potential impact of the proposed rules and may adjust share repurchase activity depending on market and economic conditions, as well as other factors. PNC’s SCB for the four-quarter period beginning October 1, 2023 is the regulatory minimum of 2.5%.

On April 3, 2024 the PNC Board of Directors declared a quarterly cash dividend on common stock of $1.55 per share to be paid on May 6, 2024 to shareholders of record at the close of business April 15, 2024.

30 The PNC Financial Services Group, Inc. – Form 10-Q

The following table summarizes our Basel III capital balances and ratios:

Table 30: Basel III Capital


	March 31, 2024
Dollars in millions	Basel III (a)			Fully Implemented (estimated) (b)
Common equity Tier 1 capital
Common stock plus related surplus, net of treasury stock	$	(3,774)		$	(3,774)
Retained earnings	57,154			56,913


Goodwill, net of associated deferred tax liabilities	(10,700)			(10,700)
Other disallowed intangibles, net of deferred tax liabilities	(282)			(282)
Other adjustments/(deductions)	(88)			(90)


Common equity Tier 1 capital (c)	$	42,310		$	42,067
Additional Tier 1 capital
Preferred stock plus related surplus	6,242			6,242

Tier 1 capital	$	48,552		$	48,309
Additional Tier 2 capital
Qualifying subordinated debt	2,874			2,874

Eligible credit reserves includable in Tier 2 capital	5,018			5,220
Total Basel III capital	$	56,444		$	56,403
Risk-weighted assets
Basel III standardized approach risk-weighted assets (d)	$	420,342		$	420,397
Average quarterly adjusted total assets	$	556,568		$	556,326
Supplementary leverage exposure (e)	$	667,048		$	667,047
Basel III risk-based capital and leverage ratios (f)
Common equity Tier 1	10.1		%	10.0		%
Tier 1	11.6		%	11.5		%
Total	13.4		%	13.4		%
Leverage (g)	8.7		%	8.7		%
Supplementary leverage ratio (e)	7.3		%	7.2		%

(b)The ratios are calculated to reflect the full impact of CECL and exclude the benefits of the optional five-year transition.

(c)As permitted, PNC and PNC Bank have elected to exclude AOCI related to both available for sale securities and pension and other post-retirement plans from CET1 capital.

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

(f)All ratios are calculated using the regulatory capital methodology applicable to PNC and calculated based on the standardized approach.

(g)Leverage ratio is calculated based on Tier 1 capital divided by Average quarterly adjusted total assets.

The PNC Financial Services Group, Inc. – Form 10-Q 31

Federal banking regulators have stated that they expect the largest U.S. BHCs, including PNC, to have a level of regulatory capital well in excess of the regulatory minimum and have required the largest U.S. BHCs, including PNC, to have a capital buffer sufficient to withstand losses and allow them to meet the credit needs of their customers through estimated stress scenarios. We seek to manage our capital consistent with these regulatory principles, and we believe that our March 31, 2024 capital levels were aligned with them.

Market Risk Management

See the Market Risk Management portion of the Risk Management section in our 2023 Form 10-K for additional discussion regarding market risk.

Market Risk Management – Interest Rate Risk

Our Asset and Liability Management group centrally manages interest rate risk as prescribed in our market risk-related risk management policies, which are approved by management’s ALCO and the Risk Committee of the Board of Directors.

PNC utilizes sensitivities of NII and EVE to a set of interest rate scenarios to identify and measure its short-term and long-term structural interest rate risks.

NII Sensitivity results for the first quarters of 2024 and 2023 follow:

Table 31: Net Interest Income Sensitivity Analysis


	First Quarter 2024		First Quarter 2023
Net Interest Income Sensitivity Simulation (a)
Effect on NII in first year from shocked interest rate:
200 basis point instantaneous increase	(0.2)	%	2.5	%
200 basis point instantaneous decrease	(0.2)	%	(3.3)	%

(a) The effect on NII in the first year from a 100 basis point instantaneous increase or decrease is not materially different from the 200 basis point scenarios as disclosed above.

When forecasting net interest income, we make certain key assumptions that can materially impact the resulting sensitivities, including the following:

Deposit Betas: Deposit pricing changes are primarily driven by changes in the Federal Funds rate, with the relationship between deposit rates and Federal Funds rate defined as deposit beta. We define cumulative deposit beta as the change in deposit rate paid on interest-bearing non-maturity deposits divided by the change in the upper level of the stated Federal Funds rate range since the first quarter of 2022, the start of the current rising rate cycle. As of March 31, 2024 PNC’s cumulative deposit beta was 45%, an increase from 35% at March 31, 2023. For interest rate risk modeling, PNC uses dynamic beta models to adjust assumed repricing sensitivity depending on market rate levels as well as other factors. The dynamic beta assumptions reflect historical experience and future expectations. Our scenario assumes that deposit betas increased slightly from current levels. Actual deposit rates paid may differ from modeled projections due to variables such as competition for deposits and customer behavior.

32 The PNC Financial Services Group, Inc. – Form 10-Q

EVE sensitivity results for the first quarter of 2024 and 2023 follow:

Table 32: Economic Value of Equity Sensitivity Analysis


	First Quarter 2024		First Quarter 2023
Economic Value of Equity Sensitivity Simulation
200 basis point instantaneous increase	(5.7)	%	(4.3)	%
200 basis point instantaneous decrease	(1.6)	%	(4.9)	%

EVE measures the present value of all projected future cash flows associated with a point-in-time balance sheet and does not include projected new volume. EVE sensitivity to interest rate changes is a complementary metric to NII sensitivity analysis and represents an estimation of long-term interest rate risk. PNC calculates its EVE sensitivity by measuring the changes in the economic value of assets, liabilities and off-balance sheet instruments in response to an instantaneous +/-200 bps parallel shift in interest rates. Similar to the NII sensitivity analysis, we incorporate dynamic deposit repricing and loan prepayment assumptions. These methodologies are largely consistent between the EVE and NII sensitivity analyses. Additionally, deposit attrition is a significant contributor to EVE sensitivity. Deposit attrition is projected based on a ~~pooled basis~~dynamic model developed using ~~a combination~~long-term historical deposit behavior in addition to management assumptions including accelerated attrition for pandemic related excess deposits. PNC performs various sensitivity analyses to understand the impact of ~~(i)~~faster and slower deposit attrition on our risk metrics, with the ~~expected losses over a reasonable~~results reported to ALCO.

Compared to the first quarter of 2023, there have been no material changes to our NII sensitivity and ~~supportable forecast period, (ii) a period~~EVE sensitivity assumptions, including data sources that drive assumptions setting.

Market Risk Management – Customer-Related Trading Risk

We engage in fixed income securities, derivatives and foreign exchange transactions to support our customers’ investing and hedging activities. These transactions, related hedges and the credit valuation adjustment related to our customer derivatives portfolio are marked-to-market daily and reported as customer-related trading activities. We do not engage in proprietary trading of reversion to long-run average expected losses, where applicable and (iii) the long-run average expected losses for the remaining estimated contractual term. For all assets and unfunded lending related commitments in the scope of CECL, the ACL also includes individually assessed reserves and qualitative reserves, as applicable.these products.

We use ~~forward-looking~~VaR as the primary means to measure and monitor market risk in customer-related trading activities. VaR is used to estimate the probability of portfolio losses based on the statistical analysis of historical market risk factors. VaR is calculated for each of the portfolios that comprise our customer-related trading activities of which the majority are covered positions as defined by the Market Risk Rule. VaR is computed with positions and market risk factors updated daily to ensure each portfolio is operating within its acceptable limits. See the Market Risk Management – Customer-Related Trading Risk section of our 2023 Form 10-K for more information ~~in estimating expected credit losses for~~on our ~~reasonable~~models used to calculate VaR and supportable forecast period. For this purpose, we use forecasted scenarios produced by PNC’s Economics Team, which are designed to reflect business cycles and their related estimated probabilities. The forecast length that we have currently determined to be reasonable and supportable is three years. As noted in the methodology discussions that follow, forward-looking information is incorporated into the expected credit loss estimates. Such forward looking information includes forecasted relevant macroeconomic variables, which are estimated using quantitative macroeconomic models, analysis from PNC economists and management judgment.our backtesting process.

The reversion period is used to bridge our three-year reasonable and supportable forecast period and the long-run average expected credit losses. We consider a number of factors in determining the duration of the reversion period, such as contractual maturity of the asset, observed historical patterns and the estimated credit loss rates at the end of the forecast period relative to the beginning of the long-run average period. The reversion period is typically one to three years, if not immediate.

~~The long-run average expected credit losses are derived from long-run historical credit loss information adjusted~~Customer-related trading revenue was $16 million for the three months ended March 31, 2024, compared to $84 million for the three months ended March 31, 2023. The decrease was primarily due to lower derivative client sales revenues, partially offset by securities underwriting client revenues.

Market Risk Management – Equity And Other Investment Risk

Equity investment risk is the risk of potential losses associated with investing in both private and public equity markets. In addition to extending credit, ~~quality~~taking deposits, underwriting securities and trading financial instruments, we make and manage direct investments in a variety of transactions, including management buyouts, recapitalizations and growth financings in a variety of industries. We also have investments in affiliated and non-affiliated funds that make similar investments in private equity, consistent with regulatory limitations. The economic and/or book value of these investments and other assets are directly affected by changes in market factors.

Various PNC business units manage our equity and other investment activities. Our businesses are responsible for making investment decisions within the ~~current portfolio~~approved policy limits and ~~therefore, do not consider current and forecasted economic conditions.~~associated guidelines.

A summary of our equity investments follows:

Table 33: Equity Investments Summary


	March 31, 2024		December 31, 2023		Change
Dollars in millions					$		%
Tax credit investments	$	4,233	$	4,331	$	(98)	(2)	%
Private equity and other	4,047		3,983		64		2	%
Total	$	8,280	$	8,314	$	(34)	—

The PNC Financial Services Group, Inc. – Form 10-Q 5133

Tax Credit Investments

Included in our equity investments are direct tax credit investments and equity investments held by consolidated entities. These tax credit investment balances included unfunded commitments totaling $2.2 billion and $2.5 billion at March 31, 2024 and December 31, 2023, respectively. These unfunded commitments are included in Other liabilities on our Consolidated Balance Sheet.

Note 4 Loan Sale and Servicing Activities and Variable Interest Entities in our 2023 Form 10-K has further information on tax credit investments.

Private Equity and Other

The largest component of our other equity investments is our private equity portfolio. The private equity portfolio is an illiquid portfolio consisting of mezzanine and equity investments that vary by industry, stage and type of investment. Private equity investments carried at estimated fair value totaled $2.2 billion at both March 31, 2024 and December 31, 2023. As of March 31, 2024, $2.0 billion was invested directly in a variety of companies and $0.2 billion was invested indirectly through various private equity funds.

Included in our other equity investments are Visa Class B-1 common shares, which are recorded at cost. Visa Class B-1 common shares that we own are transferable only under limited circumstances until they can be converted into shares of the publicly-traded Class A common shares, which cannot happen until the resolution of the pending interchange litigation, subject to the exchange offer described in Note 16 Subsequent Events. Based upon the March 31, 2024 per share closing price of $279.08for a Visa Class A common share, the estimated value of our total investment in the Class B-1 common shares was approximately $1.6 billion at the current conversion rate of Visa B-1 shares to Visa A shares, while our cost basis was insignificant. The estimated value does not represent fair value of the Visa B-1 common shares given the shares’ limited transferability and the lack of observable transactions in the marketplace. See Note 14 Fair Value and Note 20 Legal Proceedings in our 2023 Form 10-K and Note 13 Legal Proceedings in this Report for additional information regarding our Visa agreements. See Note 16 Subsequent Events for additional details on Visa’s recently announced exchange offer for Visa Class B-1 common stock.

We also have certain other equity investments, the ~~following sections~~majority of which represent investments in affiliated and non-affiliated funds with both traditional and alternative investment strategies. Net gains (losses) related to these investments were $(6) million for the three months ended March 31, 2024 and $21 million for the three months ended March 31, 2023.

Financial Derivatives

RECENT REGULATORY DEVELOPMENTS

Federal agencies and states, including the federal agencies responsible for the Federal Acquisition Regulations, California, and most recently in March 2024, the SEC, have separately proposed or finalized rules that would require certain companies or government contractors, such as PNC or PNC Bank, to disclose significant amounts of climate-related information. This information includes qualitative and quantitative disclosures of material climate-related risks and their impact, governance and management, targets and goals, and greenhouse gas emissions. The greenhouse gas emissions disclosures include the company’s direct emissions from owned or controlled sources (Scope 1) and indirect emissions from the company’s consumption of energy purchased from third parties (Scope 2), and in the case of the Federal Acquisition Regulations proposal for a “major contractor” and California laws, disclosures related to indirect emissions from upstream and downstream activities in the company’s value chain (Scope 3). If and when all the rules are finalized, PNC and PNC Bank may face potentially differing standards from the agencies or California. Numerous lawsuits have challenged the SEC and California rules, and on April 4, 2024, the SEC voluntarily stayed implementation of its final rules pending resolution of the lawsuits challenging the SEC rules.

34 The PNC Financial Services Group, Inc. – Form 10-Q

CRITICAL ACCOUNTING ESTIMATESAND JUDGMENTS

Our consolidated financial statements are prepared by applying certain accounting policies. Note 1 Accounting Policies in our 2023 Form 10-K describes the most significant accounting policies that we use. Certain of these policies require us to make estimates or economic assumptions that may vary under different assumptions or conditions, and such variations may significantly affect our reported results and financial position for the period or in future periods. The policies and judgments related to residential and commercial MSRs and Level 3 fair value measurements are described in Critical Accounting Estimates and Judgments in our 2023 Form 10-K. The following details the critical estimates and judgments around the ACL.

Allowance for Credit Losses

We maintain the ACL at levels that we believe to be appropriate as of the balance sheet date to absorb expected credit losses on our existing investment securities, loans, equipment finance leases, other financial assets and unfunded lending related commitments, for ~~details about specific methodologies.~~the remaining estimated contractual term of the assets or exposures, taking into consideration expected prepayments and estimated recoveries. Our determination of the ACL is based on historical loss and performance experience, as well as current borrower and transaction characteristics including collateral type and quality, current economic conditions, reasonable and supportable forecasts of future economic conditions and other relevant factors. We use methods sensitive to changes in economic conditions to interpret these factors and to estimate expected credit losses. We evaluate and, when appropriate, enhance the quality of our data and models and other methods used to estimate the ACL on an ongoing basis. We incorporate qualitative factors in the ACL that reflect our best estimate of expected losses that may not be adequately represented in our quantitative methods or economic assumptions. The major drivers of ACL estimates include, but are not limited to:

•Portfolio composition: Changes to portfolio volume and mix could materially affect our estimates, as CECL reserves

would be recognized upon origination or acquisition and derecognized upon paydown, maturity or sale.

~~Allowance~~For all assets and unfunded lending related commitments within the scope of the CECL standard, the applicable ACL is composed of one or a combination of the following components: (i) collectively assessed or pooled reserves, (ii) individually assessed reserves, and

(iii) qualitative (judgmental) reserves. Our methodologies and key assumptions for ~~Loan and Lease Losses~~each of these components are discussed in Note 1

Our pooled expected loss methodology is based upon the quantification of risk parameters, such as PD, LGD and EAD for a loan, loan segment or lease. We also consider the impact of prepayments and amortization on contractual maturityAccounting Policies in our 2023 Form 10-K.

Reasonable and Supportable Economic Forecast

Pursuant to the CECL standard, we are required to consider reasonable and supportable forecasts in estimating expected ~~loss estimates. We~~credit losses. For this purpose, we have established a framework that includes a three-year forecast period and the use ~~historical credit loss information, current borrower risk characteristics~~of four economic scenarios with associated probability weights, which in combination create a forecast of expected economic outcomes. Credit losses estimated in our reasonable and ~~forecasted~~supportable forecast period are sensitive to the shape and severity of the scenarios used and weights assigned to them.

To forecast the distribution of economic ~~variables for~~outcomes over the reasonable and supportable forecast period, ~~coupled with analytical methods,~~we generate four economic forecast scenarios using a combination of quantitative macroeconomic models, other measures of economic activity and forward-looking expert judgment. Each scenario is then given an associated probability (weight) to represent our current expectation within that distribution over the forecast period. This process is informed by current economic conditions, expected business cycle evolution and the expert judgment of PNC’s RAC. This approach seeks to provide a reasonable representation of the forecast of expected economic outcomes and is used to estimate ~~these risk parameters by loan, loan segment or lease. PD, LGD~~expected credit losses across a variety of loans, securities and ~~EAD parameters~~other financial assets. Each quarter, the scenarios and their respective weights are ~~calculated~~presented to RAC for ~~each forecasted scenario~~approval.

The scenarios used for the period ended March 31, 2024 consider, among other factors, ongoing inflationary pressures and the ~~long-run average period,~~corresponding tightness of monetary policy and ~~combined to generate expected loss estimates by scenario.~~credit availability. While recession risks remain elevated, our most-likely expectation at March 31, 2024 is that the U.S. economy narrowly avoids a recession in 2024.

We used a number of economic variables in our scenarios, with two of the most significant drivers being real GDP and the U.S. unemployment rate. The following ~~matrix provides key~~table presents a comparison of these two economic variables based on the weighted-average scenario forecasts used in determining our ACL at March 31, 2024 and December 31, 2023.

The PNC Financial Services Group, Inc. – Form 10-Q 35

Table 34: Key Macroeconomic Variables in CECL Weighted-Average Scenarios


	Assumptions as of March 31, 2024
	2024	2025	2026
U.S. real GDP (a)	0.8%	1.7%	2.1%
U.S. unemployment rate (b)	4.6%	4.8%	4.3%
	Assumptions as of December 31, 2023
	2024	2025	2026
U.S. real GDP (a)	0.1%	1.5%	2.0%
U.S. unemployment rate (b)	4.5%	4.6%	4.2%

(a)Represents year-over-year growth (loss) rates.

(b)Represents quarterly average rate at December 31, 2024, 2025 and 2026, respectively.

Real GDP growth is expected to end 2024 at 0.8% on a weighted average basis, up from the 0.1% assumed at December 31, 2023, primarily due to stronger expected economic activity in 2024 than what was expected at the end of 2023. Growth then rises to 1.7% in 2025, before growing to 2.1% in 2026. The weighted-average unemployment rate is expected to end 2024 at 4.6%, up slightly from the 4.5% assumed at December 31, 2023. During the second half of 2025, the weighted-average unemployment increases to a peak of 5.0% before gradually improving to 4.8% by the fourth quarter of 2025. Further improvement is then expected in 2026 with the rate reaching 4.3% by the fourth quarter of 2026.

We believe the economic scenarios effectively reflect the distribution of potential economic outcomes. Additionally, through in-depth and granular analysis we have addressed reserve requirements for the specific populations most affected in the current environment. Through this approach, we believe the reserve levels appropriately reflect the expected credit ~~risk characteristics that we use~~losses in the portfolio as of the balance sheet date.

See the following for additional information related to ~~estimate these risk parameters.~~our ACL:

•Allowance for Credit Losses in the Credit Risk Management section of this Financial Review,

•Note 2 Investment Securities, and Note 3 Loans and Related Allowance for Credit Losses in this Report, and

•Note 1 Accounting Policies in our 2023 Form 10-K.

36 The PNC Financial Services Group, Inc. – Form 10-Q

Recently Issued Accounting Standards

~~Loan Class~~

~~Probability of Default~~Accounting Standards Update

~~Loss Given Default~~Description

~~Exposure at Default~~Financial Statement Impact

~~Commercial~~

~~Commercial and industrial / Equipment lease financing~~

•~~For wholesale obligors: internal risk ratings based on borrower characteristics and industry~~

•~~For retail small balance obligors: credit score, delinquency status, and product type~~Improvements to Reportable Segment Disclosures - ASU 2023-07

Issued November 2023

•~~Collateral type, LTV, industry, size~~ Required with issuance of 2024 Form 10-K; early adoption is permitted.

• Requires that a public entity disclose significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and ~~outstanding exposure~~included within each reported measure of segment profit or loss.

• Requires that a public entity disclose an amount for ~~secured loans~~other segment items by reportable segment and a description of its composition.

•~~Capital structure, industry~~ Requires that a public entity provide all annual disclosures about a reportable segment’s profit or loss and ~~size~~assets currently required by ASC 280 in interim periods.

• Clarifies that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit.

• Requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

• Requires a retrospective transition approach for ~~unsecured loans~~

•~~For retail small balance obligors, product type and credit scores~~

all prior periods presented in the financial statements.

•~~Outstanding balances, commitment, contractual maturities~~ We are currently evaluating the disclosure requirements within this ASU and ~~historical prepayment experience for loans~~do not plan to early adopt.

•~~Current utilization and historical pre-default draw experience for lines~~ This ASU will not impact our Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Changes in Equity, or Consolidated Statement of Cash Flows.

• We expect to provide enhanced disclosures of significant segment level noninterest expenses as a result of this ASU.

~~Commercial real estate (CRE)~~Accounting Standards Update

Description

Financial Statement Impact

•~~Property performance metrics, property type, market and risk pool for the forecast period~~

•~~For the long-run average period, internal risk ratings based on borrower characteristics~~Improvements to Income Tax Disclosures - ASU 2023-09

•~~Property type, LTV and costs to sell~~Issued December 2023

•~~Outstanding balances, commitment, contractual maturities~~ Required effective date of January 1, 2025; early adoption is permitted.

• Requires public business entities to, on an annual basis, (1) disclose specific categories in the rate reconciliation and ~~historical prepayment experience~~(2) provide additional information for ~~loans~~reconciling items that meet a quantitative threshold.

~~Consumer~~

~~Home equity / Residential real estate~~

•~~Borrower credit scores, delinquency status, origination vintage, LTV~~ Requires that all entities disclose, on an annual basis, (1) the amount of income taxes paid (net of refunds received), disaggregated by federal (national), state and ~~contractual maturity~~foreign taxes, and (2) the amount of income taxes paid (net of refunds received), disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received).

• Requires a prospective transition approach, with an optional retrospective transition approach.

•~~Collateral characteristics, LTV and costs~~ We are currently evaluating the disclosure requirements within this ASU.

• This ASU will not impact our Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Changes in Equity, or Consolidated Statement of Cash Flows.

• We expect to ~~sell~~

•~~Outstanding balances, contractual maturities and historical prepayment experience for loans~~provide additional disaggregated income tax disclosures in accordance with this ASU.

•~~Current utilization and historical pre-default draw experience for lines~~

~~Automobile~~

•~~Borrower credit scores, delinquency status, borrower income, LTV and contractual maturity~~

•~~New vs. used, LTV and borrower credit scores~~

•~~Outstanding balances, contractual maturities and historical prepayment experience~~

~~Credit card~~

•~~Borrower credit scores, delinquency status, utilization, payment behavior and months on book~~

•~~Borrower credit scores and credit line amount~~

•~~Pay-down curves~~ We are ~~developed using a pro-rata method and estimated using borrower behavior segments, payment ratios and borrower credit scores~~

~~Education / Other consumer~~

•~~Modeled using either discrete risk parameters or net charge-off and pay-down rates~~evaluating when to adopt the amendments of this ASU.

Recently Adopted Accounting Pronouncements

See Note 1 Accounting Policies in our 2023 Form 10-K for recently adopted accounting standards. We did not adopt any new accounting standards during the first quarter of 2024 that impacted our financial statements.

INTERNAL CONTROLS AND DISCLOSURE CONTROLS AND PROCEDURES

Based on that evaluation, our Chairman and Chief Executive Officer and our Executive Vice President and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) were effective as of March 31, 2024, and that there has been no change in PNC’s internal control over financial reporting that occurred

The PNC Financial Services Group, Inc. – Form 10-Q 37

during the first quarter of 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

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:

–Changes in interest rates and valuations in debt, equity and other financial markets,

–Disruptions in the U.S. and global financial markets,

–Actions by the Federal Reserve Board, U.S. Treasury and other government agencies, including those that impact money supply, market interest rates and inflation,

–Changes in customer behavior due to changing business and economic conditions or legislative or regulatory initiatives,

–Changes in customers’, suppliers’ and other counterparties’ performance and creditworthiness,

–Impacts of sanctions, tariffs and other trade policies of the U.S. and its global trading partners,

–Impacts of changes in federal, state and local governmental policy, including on the regulatory landscape, capital markets, taxes, infrastructure spending and social programs,

–Our ability to attract, recruit and retain skilled employees, and

–Commodity price volatility.

38 The PNC Financial Services Group, Inc. – Form 10-Q

–Results of the regulatory examination and supervision process, including our failure to satisfy requirements of agreements with governmental agencies.

–Costs associated with obtaining rights in intellectual property claimed by others and of adequacy of our intellectual property protection in general.

The PNC Financial Services Group, Inc. – Form 10-Q 39

CONSOLIDATED INCOME STATEMENT

THE PNC FINANCIAL SERVICES GROUP, INC.


Unaudited	Three months ended March 31
In millions, except per share data	2024		2023
Interest Income
Loans	$	4,819	$	4,258
Investment securities	883		885
Other	798		516
Total interest income	6,500		5,659
Interest Expense
Deposits	2,077		1,291
Borrowed funds	1,159		783
Total interest expense	3,236		2,074
Net interest income	3,264		3,585
Noninterest Income
Asset management and brokerage	364		356
Capital markets and advisory	259		262
Card and cash management	671		659
Lending and deposit services	305		306
Residential and commercial mortgage	147		177
Other	135		258
Total noninterest income	1,881		2,018
Total revenue	5,145		5,603
Provision For Credit Losses	155		235
Noninterest Expense
Personnel	1,794		1,826
Occupancy	244		251
Equipment	341		350
Marketing	64		74
Other	891		820
Total noninterest expense	3,334		3,321
Income before income taxes and noncontrolling interests	1,656		2,047
Income taxes	312		353
Net income	1,344		1,694
Less: Net income attributable to noncontrolling interests	14		17
Preferred stock dividends	81		68
Preferred stock discount accretion and redemptions	2		2
Net income attributable to common shareholders	$	1,247	$	1,607
Earnings Per Common Share
Basic	$	3.10	$	3.98
Diluted	$	3.10	$	3.98
Average Common Shares Outstanding
Basic	400		401
Diluted	400		402

See accompanying Notes To Consolidated Financial Statements.

40 The PNC Financial Services Group, Inc. – Form 10-Q

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

THE PNC FINANCIAL SERVICES GROUP, INC.


Unaudited In millions	Three months ended March 31
	2024		2023
Net income	$	1,344	$	1,694
Other comprehensive income (loss), before tax and net of reclassifications into Net income
Net change in debt securities	(179)		869
Net change in cash flow hedge derivatives	(250)		527
Pension and other postretirement benefit plan adjustments	(2)		(10)
Net change in Other	(2)		4
Other comprehensive income (loss), before tax and net of reclassifications into Net income	(433)		1,390
Income tax benefit (expense) related to items of other comprehensive income	103		(326)
Other comprehensive income (loss), after tax and net of reclassifications into Net income	(330)		1,064





Comprehensive income	1,014		2,758
Less: Comprehensive income attributable to noncontrolling interests	14		17
Comprehensive income attributable to PNC	$	1,000	$	2,741

See accompanying Notes To Consolidated Financial Statements.

The PNC Financial Services Group, Inc. – Form 10-Q 41

CONSOLIDATED BALANCE SHEET

THE PNC FINANCIAL SERVICES GROUP, INC.


Unaudited	March 31 2024		December 31 2023
In millions, except par value
Assets
Cash and due from banks	$	5,933	$	6,921
Interest-earning deposits with banks	53,612		43,804
Loans held for sale (a)	743		734
Investment securities – available for sale	42,280		41,785
Investment securities – held to maturity	88,180		90,784
Loans (a)	319,781		321,508
Allowance for loan and lease losses	(4,693)		(4,791)
Net loans	315,088		316,717
Equity investments	8,280		8,314
Mortgage servicing rights	3,762		3,686
Goodwill	10,932		10,932
Other (a)	37,352		37,903
Total assets	$	566,162	$	561,580
Liabilities
Deposits
Noninterest-bearing	$	98,061	$	101,285
Interest-bearing	327,563		320,133
Total deposits	425,624		421,418
Borrowed funds
Federal Home Loan Bank borrowings	37,000		38,000
Senior debt	27,907		26,836
Subordinated debt	4,827		4,875
Other (b)	2,973		3,026
Total borrowed funds	72,707		72,737
Allowance for unfunded lending related commitments	672		663
Accrued expenses and other liabilities (b)	15,785		15,621
Total liabilities	514,788		510,439
Equity
Preferred stock (c)
Common stock ($5 par value, Authorized 800,000,000 shares, issued 543,116,260 and 543,116,271 shares)	2,716		2,716
Capital surplus	19,032		19,020
Retained earnings	56,913		56,290
Accumulated other comprehensive income (loss)	(8,042)		(7,712)
Common stock held in treasury at cost: 145,068,954 and 145,087,054 shares	(19,279)		(19,209)
Total shareholders’ equity	51,340		51,105
Noncontrolling interests	34		36
Total equity	51,374		51,141
Total liabilities and equity	$	566,162	$	561,580

(b)Our consolidated liabilities included the following for which we have elected the fair value option: Other borrowed funds of less than $0.1 billion and Other liabilities of $0.1 billion at March 31, 2024. Comparable amounts at December 31, 2023 were less than $0.1 billion and $0.1 billion, respectively.

(c)Par value less than $0.5 million at each date.

See accompanying Notes To Consolidated Financial Statements.

42 The PNC Financial Services Group, Inc. – Form 10-Q

CONSOLIDATED STATEMENT OF CASH FLOWS

THE PNC FINANCIAL SERVICES GROUP, INC.


Unaudited In millions	Three months ended March 31
	2024		2023
Operating Activities
Net income	$	1,344	$	1,694
Adjustments to reconcile net income to net cash provided (used) by operating activities
Provision for credit losses	155		235
Depreciation, amortization and accretion	37		65
Deferred income taxes (benefit)	(44)		(30)

Changes in fair value of mortgage servicing rights	(43)		174



Net change in
Trading securities and other short-term investments	434		(385)
Loans held for sale and related securitization activity	11		(11)
Other assets	(300)		1,108
Accrued expenses and other liabilities	(263)		(1,142)
Other operating activities, net	427		168
Net cash provided (used) by operating activities	$	1,758	$	1,876
Investing Activities
Sales
Securities available for sale	$	(63)	$	(73)

Loans	96		215
Repayments/maturities
Securities available for sale	1,056		2,293
Securities held to maturity	2,883		1,502
Purchases
Securities available for sale	(1,766)		(612)
Securities held to maturity	(56)		(1,324)
Loans	(279)		(261)
Net change in
Federal funds sold and resale agreements	(4)		32
Interest-earning deposits with banks	(9,808)		(6,580)
Loans	1,667		(587)

Other investing activities, net	(91)		(317)
Net cash provided (used) by investing activities	$	(6,365)	$	(5,712)

The PNC Financial Services Group, Inc. – Form 10-Q 43

CONSOLIDATED STATEMENT OF CASH FLOWS

THE PNC FINANCIAL SERVICES GROUP, INC.


(Continued from previous page)
Unaudited In millions	Three months ended March 31
	2024		2023
Financing Activities
Net change in
Noninterest-bearing deposits	$	(3,260)	$	(6,462)
Interest-bearing deposits	7,430		7,023
Federal funds purchased and repurchase agreements	(167)		(94)
Short-term Federal Home Loan Bank borrowings			(50)

Other borrowed funds	95		(74)
Sales/issuances

Senior debt	2,490		2,743

Other borrowed funds	181		167
Preferred stock			1,484
Common and treasury stock	24		26
Repayments/maturities
Federal Home Loan Bank borrowings	(1,000)		(5)
Senior debt	(1,050)
Subordinated debt			(750)
Other borrowed funds	(196)		(141)


Acquisition of treasury stock	(223)		(459)
Preferred stock cash dividends paid	(81)		(68)
Common stock cash dividends paid	(624)		(607)

Net cash provided (used) by financing activities	$	3,619	$	2,733
Net Increase (Decrease) In Cash And Due From Banks And Restricted Cash	$	(988)	$	(1,103)


Cash and due from banks and restricted cash at beginning of period	6,921		7,043
Cash and due from banks and restricted cash at end of period	$	5,933	$	5,940

Cash And Due From Banks And Restricted Cash
Cash and due from banks at end of period (unrestricted cash)	$	4,999	$	5,335
Restricted cash	934		605
Cash and due from banks and restricted cash at end of period	$	5,933	$	5,940
Supplemental Disclosures
Interest paid	$	2,861	$	1,691
Income taxes paid	$	35	$	56
Income taxes refunded	$	6	$	3
Leased assets obtained in exchange for new operating lease liabilities	$	75	$	45

Non-cash Investing And Financing Items

Transfer from loans to loans held for sale, net	$	8	$	106

Transfer from loans to foreclosed assets	$	13	$	16

See accompanying Notes To Consolidated Financial Statements.

5244 The PNC Financial Services Group, Inc. – Form 10-Q

The following matrix describes the key economic variables that are consumed during our forecast period by loan class, as well as other assumptions that are used for our reversion and long-run average approaches.


~~Loan Class~~	~~Forecast Period - Key Economic Variables~~	~~Reversion Method~~	~~Long-Run Average~~
~~Commercial~~
~~Commercial and industrial / Equipment lease financing~~	•~~GDP and Gross Domestic Investment measures, employment related variables and personal income and consumption measures~~	•~~Immediate reversion~~	•~~Average parameters determined based on internal and external historical data~~ •~~Modeled parameters using long-run economic conditions for retail small balance obligors~~
~~Commercial real estate (CRE)~~	~~• CRE Price Index, unemployment rates, GDP, corporate bond yield and interest rates~~	~~• Immediate reversion~~	~~• Average parameters determined based on internal and external historical data~~
~~Consumer~~
~~Home equity / Residential real estate~~	•~~Unemployment rates, HPI and interest rates~~	•~~Straight-line over 3 years~~	•~~Modeled parameters using long-run economic conditions~~
~~Automobile~~	•~~Unemployment rates, HPI, personal consumption expenditure and Manheim used car index~~	•~~Straight-line over 1 year~~	•~~Average parameters determined based on internal and external historical data~~
~~Credit card~~	•~~Unemployment rates, personal consumption expenditure and HPI~~	•~~Straight-line over 2 years~~	•~~Modeled parameters using long-run economic conditions~~
~~Education / Other consumer~~	•~~Modeled using either discrete risk parameters or net charge-off and pay-down rates~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

THE PNC FINANCIAL SERVICES GROUP, INC.

After the forecast period, we revert to the long-run average over the reversion period noted above, which is the period between the end of the forecast period and when losses are estimated to have completely reverted to the long-run average.Unaudited

~~Once~~See page 90 for a glossary of certain terms and acronyms used in this Report.

BUSINESS

PNC is one of the largest diversified financial services companies in the U.S. and is headquartered in Pittsburgh, Pennsylvania.

NOTE 1 ACCOUNTING POLICIES

Basis of Financial Statement Presentation

Our consolidated financial statements include the accounts of the parent company and its subsidiaries, most of which are wholly-owned, certain partnership interests and VIEs.

We prepared these consolidated financial statements in accordance with GAAP. We have eliminated intercompany accounts and transactions. We have also reclassified certain prior-year amounts to conform to the current period presentation, which did not have a

material impact on our consolidated financial condition or results of operations.

We have also considered the impact of subsequent events on these consolidated financial statements.

When preparing these unaudited interim consolidated financial statements, we have ~~developed a combined estimate of credit losses (i.e., for~~assumed that you have read the forecast period, reversion period and long-run average) under each of the forecasted scenarios, we produce a probability-weighted credit loss estimate by loan class. We then add or deduct any qualitative components and other adjustments, such as individually assessed loans,audited consolidated financial statements included in our 2023 Form 10-K. Reference is made to ~~produce the ALLL. See the Individually Assessed Component and Qualitative Component discussions that follow in this Note 1 for additional information about those adjustments.~~

~~Discounted Cash Flow~~

Prior to January 1, 2023, we used a discounted cash flow methodology for our home equity and residential real estate loan classes. Effective January 1, 2023, we discontinued our use of a discounted cash flow methodology, and we now use a pooled expected loss methodology based upon the quantification of risk parameters, such as PD, LGD and EAD for a loan or loan segment. See Note 1 Accounting Policies in our ~~2022~~2023 Form 10-K for a detailed description of significant accounting policies. These interim consolidated financial statements serve to update our ~~use~~2023 Form 10-K and may not include all information and Notes necessary to constitute a complete set of ~~a discounted cash flow methodology prior~~financial statements. There have been no significant changes to ~~January 1, 2023.~~

~~Individually Assessed Component~~

~~Loans and leases that do not share similar risk characteristics with a pool of loans are individually assessed~~our accounting policies as ~~follows:~~

•For commercial nonperforming loans greater than or equal to a defined dollar threshold, reserves are based on an analysis of the present value of the loan’s expected future cash flows or the fair value of the collateral, if appropriate underdisclosed in our ~~policy for collateral dependent loans. Nonperforming commercial loans below the defined threshold are reserved for under a pooled basis.~~

•For consumer nonperforming loans classified as collateral dependent, charge-off and ALLL related to recovery of amounts previously charged-off are evaluated through an analysis of the fair value of the collateral less costs to sell.2023 Form 10-K.

~~Qualitative Component~~

While our reserve methodologies strive to reflect all relevant credit risk factors, there continues to be uncertainty associated with, but not limited to, potential imprecision in the estimation process due to the inherent time lagUse of ~~obtaining information and normal variations between expected and actual outcomes. We may hold additional reserves that are designed to provide coverage for losses~~

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ 53

attributable to such risks. The ACL also takes into account factors that may not be directly measured in the determination of individually assessed or pooled reserves. Such qualitative factors may include, but are not limited to:

•~~Industry concentrations and conditions,~~

•~~Changes in market conditions, including regulatory and legal requirements,~~

•~~Changes in the nature and volume of our portfolio,~~

•~~Recent credit quality trends,~~

•~~Recent loss experience in particular portfolios, including specific and unique events,~~

•~~Recent macroeconomic factors that may not be reflected in the forecast information,~~

•~~Limitations of available input data, including historical loss information and recent data such as collateral values,~~

•~~Model imprecision and limitations,~~

•~~Changes in lending policies and procedures, including changes in loss recognition and mitigation policies and procedures, and~~

•~~Timing of available information.~~Estimates

~~See Note 3 Loans and Related Allowance for Credit Losses for additional~~We prepared these consolidated financial statements using financial information ~~about our loan portfolio and the related allowance.~~

~~Accrued Interest~~

~~When accrued interest is reversed or charged-off in a timely manner, the CECL standard provides a practical expedient to exclude~~

~~accrued interest from ACL measurement. We consider our nonaccrual and charge-off policies to be timely for all of our investment~~

securities, loans and leases, with the exception of consumer credit cards, education loans and certain unsecured consumer lines of credit. We consider the length of time before nonaccrual/charge-off and the use of appropriate other triggering events for nonaccrual and charge-offs in making this determination. Pursuant to these policy elections, we calculate reserves for accrued interest on credit cards, education loans and certain unsecured consumer lines of credit, which are then included within the ALLL. See the Debt Securities section of Note 1 Accounting Policies in our 2022 Form 10-K and the Nonperforming Loans and Leases section of this Note 1 for additional information on our nonaccrual and charge-off policies.

See Note 1 Accounting Policies in our 2022 Form 10-K for a description of the accounting policies related to the applicable reserves on accrued interest for our home equity and residential real estate loan classes prior to January 1, 2023.

~~Purchased Credit Deteriorated Loans or Securities~~

~~The allowance for PCD loans or securities is determined~~available at the time of ~~acquisition, as~~preparation, which requires us to make estimates and assumptions that affect the ~~estimated expected credit loss of the outstanding balance or par value,based on the methodologies described previously for loans and securities. In accordance with CECL, the allowance recognized at acquisition is added~~amounts reported. Our most significant estimates pertain to the ~~acquisition date purchase price to determine~~ACL and our fair value measurements. Actual results may differ from the ~~asset’s amortized cost basis.~~

~~Allowance for Unfunded Lending Related Commitments~~

~~We maintain~~estimates and the ~~allowance for unfunded lending related commitments on off-balance sheet credit exposures that are not unconditionally cancelable (e.g.~~, unfunded loan commitments, letters of credit and certain financial guarantees), at a level we believe is appropriate as of the balance sheet date to absorb expected credit losses on these exposures. Other than the estimation of the probability of funding, this reserve is estimated in a manner similardifferences may be material to the methodology used for determining reserves for loans and leases. See the Allowance for Loan and Lease Losses section of this Note 1 for the key credit risk characteristics for unfunded lending related commitments. The allowance for unfunded lending related commitments is recorded as a liability on the Consolidated Balance Sheet. Net adjustments to this reserve are included in the provision for credit losses.consolidated financial statements.

~~See Note 3 Loans and Related Allowance for Credit Losses for additional information about this allowance.~~

54 ~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~

Recently Adopted Accounting Standards


~~Accounting Standards Update~~	~~Description~~	~~Financial Statement Impact~~
~~Reference Rate Reform - ASU 2020-04~~ ~~Issued March 2020~~ ~~Reference Rate Reform Scope - ASU 2021-01~~ ~~Issued January 2021~~ ~~Reference Rate Reform Deferral of Sunset Date – ASU 2022-06~~ ~~Issued December 2022~~	• Provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform (codified in ASC 848). • Includes optional expedients related to contract modifications that allow an entity to account for modifications (if certain criteria are met) as if the modifications were only minor (assets within the scope of ASC 310, Receivables), were not substantial (assets within the scope of ASC 470, Debt) and/or did not result in remeasurements or reclassifications (assets within the scope of ASC 842, Leases, and other Topics) of the existing contract. • Includes optional expedients related to hedging relationships within the scope of ASC 815, Derivatives & Hedging, whereby changes to the critical terms of a hedging relationship do not require dedesignation if certain criteria are met. In addition, potential sources of ineffectiveness as a result of reference rate reform may be disregarded when performing some effectiveness assessments. ~~• Includes optional expedients and exceptions for contract modifications and hedge accounting that apply to derivative instruments impacted by the market-wide discounting transition.~~ ~~• Guidance in these ASUs is effective as of March 12, 2020 through December 31, 2024.~~	~~• ASU 2020-04 was adopted March 12, 2020. ASU 2021-01 was retrospectively adopted October 1, 2020. ASU 2022-06 was adopted upon issuance.~~ • Refer to Note 1 Accounting Policies in our 2022 Form 10-K for more information on elections of optional expedients that occurred in 2020, 2021 and 2022. We applied these optional expedients consistently to all eligible LIBOR cessation-related contract modifications and hedging relationships since election. • During the second quarter of 2023, we elected and applied certain optional expedients for contract modifications and hedging relationships impacted by the central clearing counterparties conversion processes for LIBOR-indexed derivative instruments. These optional expedients remove the requirement to remeasure contract modifications or dedesignate hedging relationships due to reference rate reform. The elections made apply only to derivatives instruments impacted by the central clearinghouse conversion process. • During the second quarter of 2023, we applied certain optional expedients for investment security, debt and preferred stock instrument contract modifications impacted by LIBOR cessation. These optional expedients remove the requirement to remeasure contract modifications. ~~• We may elect additional optional expedients for contract modifications and hedge relationships affected by reference rate reform through the effective date of this guidance.~~
~~Accounting Standards Update~~	~~Description~~	~~Financial Statement Impact~~
~~Troubled Debt Restructurings and Vintage Disclosures - ASU 2022-02~~ ~~Issued March 2022~~	• Eliminates the accounting guidance for TDRs and requires an entity to apply the loan refinancing and restructuring guidance to determine whether a modification results in a new loan or a continuation of an existing loan. • ~~Eliminates the requirement to use a discounted cash flow approach to measure the allowance for credit losses for TDRs.~~ • ~~Enhances disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty.~~ • ~~Requires disclosure of current-period gross charge-offs by year of origination for financing receivables and net investments in leases within the scope of CECL.~~ • Requires a prospective transition approach to all amendments except those related to the recognition and measurement of TDRs (which allow the option to apply a modified retrospective transition approach through a cumulative-effect adjustment to retained earnings in the period of adoption).	• ~~Adopted January 1, 2023 using a modified retrospective transition approach for the amendments related to the recognition and measurement of TDRs.~~ • ~~The impact of adoption resulted in a decrease to the beginning period ALLL of $35 million, resulting in an increase to Retained Earnings of $26 million, net of tax, as of January 1, 2023.~~ • The presentation of our loan modification disclosures have been updated to reflect information on loan modifications given to borrowers experiencing financial difficulty and can be found within Note 3 Loans and Related Allowance for Credit Losses. TDR disclosures are presented for comparative periods only and are not required to be updated in current periods. Additionally, our vintage disclosure has been updated to reflect gross charge-offs by year of origination.

The PNC Financial Services Group, Inc. – Form 10-Q 5545

NOTE 2 INVESTMENT SECURITIES

The following table summarizes our available for sale and held to maturity portfolios by major security type:

Table ~~36:~~35: Investment Securities Summary (a)(b)


			June 30, 2023											December 31, 2022
		March 31, 2024																															March 31, 2024			December 31, 2023
In millions	In millions		Amortized Cost (c)		Unrealized				Fair Value					Amortized Cost (c)				Unrealized								Fair Value		In millions		Amortized Cost (c)	Unrealized	Fair Value		Amortized Cost (c)	Unrealized		Fair Value
					Gains		Losses						Gains							Losses
Securities Available for Sale	Securities Available for Sale
Securities Available for Sale
Securities Available for Sale
U.S. Treasury and government agencies
U.S. Treasury and government agencies
U.S. Treasury and government agencies	U.S. Treasury and government agencies		$	7,863	$	7	$	(760)			$	7,110				$	9,196			$	10			$	(836)			$	8,370
Residential mortgage-backed	Residential mortgage-backed
Agency	Agency		30,867		6		(3,218)		27,655					32,114				13				(3,304)				28,823
Agency
Agency
Non-agency	Non-agency		642		133		(7)		768					697				131				(9)				819
Commercial mortgage-backed	Commercial mortgage-backed
Agency
Agency
Agency	Agency		1,759		1		(167)		1,593					1,845								(170)				1,675
Non-agency	Non-agency		1,014				(67)		947					1,325								(69)				1,256
Asset-backed	Asset-backed		910		28		(4)		934					103				27				(1)				129
Other	Other		2,962		39		(221)		2,780					3,288				44				(245)				3,087
Total securities available for sale	Total securities available for sale		$	46,017	$	214	$	(4,444)	$	41,787				$	48,568			$	225			$	(4,634)			$	44,159
Securities Held to Maturity	Securities Held to Maturity
U.S. Treasury and government agencies	U.S. Treasury and government agencies		$	36,985	$	3	$	(1,695)	$	35,293				$	36,571			$	6			$	(1,617)			$	34,960
U.S. Treasury and government agencies
U.S. Treasury and government agencies
Residential mortgage-backed	Residential mortgage-backed
Agency
Agency
Agency	Agency		44,278		60		(3,119)		41,219					45,271				74				(3,095)				42,250
Non-agency	Non-agency		269				(22)		247					276								(21)				255
Commercial mortgage-backed	Commercial mortgage-backed
Agency
Agency
Agency	Agency		839		3		(30)		812					848				4				(26)				826
Non-agency	Non-agency		1,549				(38)		1,511					1,667								(40)				1,627
Asset-backed	Asset-backed		6,645		5		(112)		6,538					7,188				6				(140)				7,054
Other	Other		3,309		27		(60)		3,276					3,354				25				(72)				3,307
Total securities held to maturity (d)	Total securities held to maturity (d)		$	93,874	$	98	$	(5,076)	$	88,896				$	95,175			$	115			$	(5,011)			$	90,279

(a) At ~~June 30, 2023,~~March 31, 2024, the accrued interest associated with our held to maturity and available for sale portfolios totaled ~~$288~~$244 million and ~~$143~~$140 million, respectively. The comparable amounts at December 31, ~~2022~~2023 were ~~$282~~$281 million and $144 million, respectively. These amounts are included in Other assets on the Consolidated Balance Sheet.

(b) Credit ratings represent a primary credit quality indicator used to monitor and manage credit risk. Of our total securities portfolio, 97% were rated AAA/AA at both ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

(c) Amortized cost is presented net of allowance of ~~$141~~$87 million for securities available for sale, primarily related to non-agency commercial mortgage-backed securities, and $7$6 million for securities held to maturity at ~~June 30, 2023.~~March 31, 2024. The comparable amounts at December 31, ~~2022~~2023 were ~~$142~~$86 million and $7$6 million, respectively.

(d) Held to maturity securities transferred from available for sale are included in held to maturity at fair value at the time of the transfer. The amortized cost of held to maturity securities included net unrealized losses of ~~$4.7~~$4.0 billion at ~~June 30, 2023~~March 31, 2024 related to securities transferred, which are offset in AOCI, net of tax. The comparable amount at December 31, 2023 was $4.2 billion.

The fair value of investment securities is impacted by interest rates, credit spreads, market volatility and liquidity conditions. Securities available for sale are carried at fair value with net unrealized gains and losses included in Total shareholders’ equity as AOCI, unless credit-related. Net unrealized gains and losses are determined by taking the difference between the fair value of a security and its amortized cost, net of any allowance. Securities held to maturity are carried at amortized cost, net of any allowance. Investment securities at ~~June 30, 2023~~March 31, 2024 included ~~$0.2 billion~~$262 million of net unsettled purchases that represent non-cash investing activity, and accordingly, are not reflected on the Consolidated Statement of Cash Flows. The comparable amount for ~~June 30, 2022~~March 31, 2023 was ~~$0.4 billion~~$30 million of net unsettled ~~purchases.~~sales.

We maintain the allowance for investment securities at levels that we believe to be appropriate as of the balance sheet date to absorb expected credit losses on our portfolio. At ~~June 30, 2023,~~March 31, 2024, the allowance for investment securities was ~~$148~~$93 million and primarily related to non-agency commercial mortgage-backed securities in the available for sale portfolio. The comparable amount at December 31, ~~2022~~2023 was ~~$149~~$92 million. See Note 1 Accounting Policies in our ~~2022~~2023 Form 10-K for a discussion of the methodologies used to determine the allowance for investment securities.

At ~~June 30, 2023,~~March 31, 2024, AOCI included pretax losses of ~~$301~~$289 million from derivatives that hedged the purchase of investment securities classified as held to maturity. The losses will be accreted to interest income as an adjustment of yield on the securities.

Table 3736 presents the gross unrealized losses and fair value of securities available for sale that do not have an associated allowance for investment securities at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023. These securities are segregated between investments that had been in a continuous unrealized loss position for less than twelve months and twelve months or more, based on the point in time that the fair

46 The PNC Financial Services Group, Inc. – Form 10-Q

value declined below the amortized cost basis. All securities included in the table have been evaluated to determine if a credit loss

56 ~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~

exists. As part of that assessment, as of ~~June 30, 2023,~~March 31, 2024, we concluded that we do not intend to sell and believe we will not be required to sell these securities prior to recovery of the amortized cost basis.

Table ~~37:~~36: Gross Unrealized Loss and Fair Value of Securities Available for Sale Without an Allowance for Credit Losses


		Unrealized loss position less than 12 months																Unrealized loss position less than 12 months			Unrealized loss position 12 months or more		Total
In millions															In millions	Unrealized Loss	Fair Value		Unrealized Loss	Fair Value		Unrealized Loss		Fair Value
March 31, 2024
			Unrealized loss position less than 12 months				Unrealized loss position 12 months or more				Total
In millions			Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value
June 30, 2023
U.S. Treasury and government agencies

U.S. Treasury and government agencies

U.S. Treasury and government agencies	U.S. Treasury and government agencies		$	(9)	$	898	$	(751)	$	5,983	$	(760)	$	6,881
Residential mortgage-backed	Residential mortgage-backed
Agency	Agency		(51)		2,309		(3,167)		24,700		(3,218)		27,009
Agency
Agency
Non-agency	Non-agency		(1)		46		(6)		67		(7)		113
Commercial mortgage-backed	Commercial mortgage-backed
Agency
Agency
Agency	Agency		(2)		89		(165)		1,485		(167)		1,574
Non-agency	Non-agency						(57)		808		(57)		808
Asset-backed	Asset-backed		(3)		502		(1)		12		(4)		514
Other	Other		(6)		243		(180)		2,022		(186)		2,265
Total securities available for sale	Total securities available for sale		$	(72)	$	4,087	$	(4,327)	$	35,077	$	(4,399)	$	39,164
December 31, 2022
December 31, 2023
U.S. Treasury and government agencies
U.S. Treasury and government agencies
U.S. Treasury and government agencies	U.S. Treasury and government agencies		$	(601)	$	5,868	$	(235)	$	2,208	$	(836)	$	8,076
Residential mortgage-backed	Residential mortgage-backed
Agency	Agency		(1,744)		19,036		(1,560)		8,971		(3,304)		28,007
Agency
Agency
Non-agency	Non-agency		(6)		112		(2)		17		(8)		129
Commercial mortgage-backed	Commercial mortgage-backed
Agency
Agency
Agency	Agency		(125)		1,283		(45)		372		(170)		1,655
Non-agency	Non-agency		(44)		750		(18)		394		(62)		1,144
Asset-backed	Asset-backed						(1)		5		(1)		5
Other	Other		(96)		1,418		(112)		1,144		(208)		2,562

Total securities available for sale	Total securities available for sale		$	(2,616)	$	28,467	$	(1,973)	$	13,111	$	(4,589)	$	41,578
Total securities available for sale
Total securities available for sale

~~Information related to gross realized securities gains and losses from the sales of securities is set forth in the following table:~~

~~Table 38:~~Gross Gains (Losses) on Sales of Securities Available for Sale

Six months ended June 30
In millions Gross Gains Gross Losses Net Gains (Losses) Tax Expense (Benefit)
2023 $ (2) $ (2)
2022 $ 11 $ (15) $ (4) $ (1)

Gross gains on sales of securities were less than $1 million for both the three months ended March 31, 2024 and March 31, 2023.

The PNC Financial Services Group, Inc. – Form 10-Q 5747

The following table presents, by remaining contractual maturity, the amortized cost, fair value and weighted-average yield of debt securities at ~~June 30, 2023:~~March 31, 2024:

Table ~~39:~~37: Contractual Maturity of Debt Securities


June 30, 2023 Dollars in millions		1 Year or Less			After 1 Year through 5 Years			After 5 Years through 10 Years			After 10 Years			Total
March 31, 2024 Dollars in millions
Securities Available for Sale
Securities Available for Sale
Securities Available for Sale	Securities Available for Sale
U.S. Treasury and government agencies	U.S. Treasury and government agencies	$	1,230		$	2,918		$	1,724		$	1,991		$	7,863
U.S. Treasury and government agencies
U.S. Treasury and government agencies
Residential mortgage-backed
Residential mortgage-backed
Residential mortgage-backed	Residential mortgage-backed
Agency	Agency	1			134			3,675			27,057			30,867
Agency
Agency
Non-agency
Non-agency
Non-agency	Non-agency							8			634			642
Commercial mortgage-backed	Commercial mortgage-backed
Commercial mortgage-backed
Commercial mortgage-backed
Agency
Agency
Agency	Agency	49			409			905			396			1,759
Non-agency	Non-agency				119			100			795			1,014
Non-agency
Non-agency
Asset-backed
Asset-backed
Asset-backed	Asset-backed				249			106			555			910
Other	Other	307			2,008			495			152			2,962
Other
Other
Total securities available for sale at amortized cost
Total securities available for sale at amortized cost
Total securities available for sale at amortized cost	Total securities available for sale at amortized cost	$	1,587		$	5,837		$	7,013		$	31,580		$	46,017
Fair value	Fair value	$	1,550		$	5,460		$	6,385		$	28,392		$	41,787
Fair value
Fair value
Weighted-average yield, GAAP basis (a)
Weighted-average yield, GAAP basis (a)
Weighted-average yield, GAAP basis (a)	Weighted-average yield, GAAP basis (a)	2.01		%	2.17		%	2.39		%	2.98		%	2.75		%
Securities Held to Maturity	Securities Held to Maturity
Securities Held to Maturity
Securities Held to Maturity
U.S. Treasury and government agencies
U.S. Treasury and government agencies
U.S. Treasury and government agencies	U.S. Treasury and government agencies	$	2,075		$	31,522		$	2,477		$	911		$	36,985
Residential mortgage-backed	Residential mortgage-backed
Residential mortgage-backed
Residential mortgage-backed
Agency
Agency
Agency	Agency				7			333			43,938			44,278
Non-agency	Non-agency										269			269
Non-agency
Non-agency
Commercial mortgage-backed
Commercial mortgage-backed
Commercial mortgage-backed	Commercial mortgage-backed
Agency	Agency				133			430			276			839
Agency
Agency
Non-agency
Non-agency
Non-agency	Non-agency	43			49						1,457			1,549
Asset-backed	Asset-backed	11			2,103			1,949			2,582			6,645
Asset-backed
Asset-backed
Other
Other
Other	Other	230			1,116			603			1,360			3,309
Total securities held to maturity at amortized cost	Total securities held to maturity at amortized cost	$	2,359		$	34,930		$	5,792		$	50,793		$	93,874
Total securities held to maturity at amortized cost
Total securities held to maturity at amortized cost
Fair value
Fair value
Fair value	Fair value	$	2,330		$	33,471		$	5,526		$	47,569		$	88,896
Weighted-average yield, GAAP basis (a)	Weighted-average yield, GAAP basis (a)	1.30		%	1.39		%	3.65		%	2.93		%	2.36		%
Weighted-average yield, GAAP basis (a)
Weighted-average yield, GAAP basis (a)

(a)Weighted-average yields are based on amortized cost with effective yields weighted for the contractual maturity of each security. Actual maturities and yields may differ as certain securities may be prepaid.

At ~~June 30, 2023,~~March 31, 2024, there were no securities of a single issuer, other than FNMA and FHLMC, that exceeded 10% of ~~Total~~total shareholders’ equity. The FNMA and FHLMC investments had a total amortized cost of ~~$38.5~~$36.6 billion and ~~$32.4~~$31.7 billion and fair value of ~~$35.3~~$33.3 billion and ~~$30.0~~$29.1 billion, respectively.

The following table presents the fair value of securities that have been either pledged to or accepted from others to collateralize outstanding borrowings:

Table ~~40:~~38: Fair Value of Securities Pledged and Accepted as Collateral


In millions	In millions	June 30, 2023		December 31, 2022		In millions	March 31, 2024	December 31, 2023
Pledged to others	Pledged to others	$	27,347	$	24,708
Accepted from others:	Accepted from others:
Permitted by contract or custom to sell or repledge	Permitted by contract or custom to sell or repledge	$	1,160	$	1,266
Permitted by contract or custom to sell or repledge
Permitted by contract or custom to sell or repledge
Permitted amount repledged to others	Permitted amount repledged to others	$	1,160	$	1,266

The securities pledged to others include positions held in our portfolio of investment securities, trading securities and securities accepted as collateral from others that we are permitted by contract or custom to sell or repledge, and were used to secure public and trust deposits, repurchase agreements and for other purposes. See Note 12 Financial Derivatives for information related to securities pledged and accepted as collateral for derivatives.

5848 The PNC Financial Services Group, Inc. – Form 10-Q

NOTE 3 LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES

Loan Portfolio

Our loan portfolio consists of two portfolio segments – Commercial and Consumer. Each of these segments comprises multiple loan classes. Classes are characterized by similarities in risk attributes and the manner in which we monitor and assess credit risk.


Commercial						Consumer

• Commercial and industrial						• Residential real estate
• Commercial real estate						• Home equity
• Equipment lease financing						• Automobile
						• Credit card
						• Education
						• Other consumer

See Note 1 Accounting Policies in our 2023 Form 10-K for additional information on our loan related policies.

Credit Quality

We closely monitor economic conditions and loan performance trends to manage and evaluate our exposure to credit risk within the loan portfolio based on our defined loan classes. In doing so, we use several credit quality indicators, including, but not limited to, trends in delinquency rates, nonperforming status, ~~analysis~~analyses of PD and LGD ratings, updated credit scores and originated and updated LTV ratios.

We manage credit risk based on the risk profile of the borrower, repayment sources, underlying collateral and other support given current events, economic conditions and expectations. We refine our practices to meet the changing environment ~~resulting from elevated~~such as inflation levels, ~~labor-related supply chain pressures, higher~~industry specific risks, interest ~~rates,~~rate levels, the level of consumer savings and deposit balances, and structural and secular changes fostered by the pandemic. To mitigate losses and enhance customer support, we offer loan modifications and collection programs to assist our customers.

Table 4139 presents the composition and delinquency status of our loan portfolio at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023. Loan delinquencies include government insured or guaranteed loans and loans accounted for under the fair value option.

The PNC Financial Services Group, Inc. – Form 10-Q 5949

Table ~~41:~~39: Analysis of Loan Portfolio (a) (b) ~~(c)~~




		Accruing
Dollars in millions	Dollars in millions	Current or Less Than 30 Days Past Due			30-59 Days Past Due			60-89 Days Past Due			90 Days or More Past Due			Total Past Due (d)				Nonperforming Loans			Fair Value Option Nonaccrual Loans (e)			Total Loans (f)(g)
June 30, 2023
Dollars in millions
Dollars in millions
March 31, 2024
March 31, 2024
March 31, 2024
Commercial
Commercial
Commercial	Commercial
Commercial and industrial	Commercial and industrial	$	176,936		$	64		$	47		$	112		$	223			$	470					$	177,629
Commercial and industrial
Commercial and industrial
Commercial real estate
Commercial real estate
Commercial real estate	Commercial real estate	35,568			10									10				350						35,928
Equipment lease financing	Equipment lease financing	6,374			14			5						19				7						6,400
Equipment lease financing
Equipment lease financing
Total commercial
Total commercial
Total commercial	Total commercial	218,878			88			52			112			252				827						219,957
Consumer	Consumer
Consumer
Consumer
Residential real estate
Residential real estate
Residential real estate	Residential real estate	45,374			228			86			174			488			(d)	429			$	543		46,834
Home equity	Home equity	25,546			56			18						74				506			74			26,200
Home equity
Home equity
Automobile
Automobile
Automobile	Automobile	14,823			84			20			5			109				133						15,065
Credit card	Credit card	6,926			49			36			71			156				10						7,092
Credit card
Credit card
Education
Education
Education	Education	1,960			33			17			48			98			(d)							2,058
Other consumer	Other consumer	4,512			17			9			9			35				8						4,555
Other consumer
Other consumer
Total consumer
Total consumer
Total consumer	Total consumer	99,141			467			186			307			960				1,086			617			101,804
Total	Total	$	318,019		$	555		$	238		$	419		$	1,212			$	1,913		$	617		$	321,761
Total
Total
Percentage of total loans	Percentage of total loans	98.84		%	0.17		%	0.07		%	0.13		%	0.38		%		0.59		%	0.19		%	100.00		%
December 31, 2022
Percentage of total loans
Percentage of total loans
December 31, 2023
December 31, 2023
December 31, 2023
Commercial
Commercial
Commercial	Commercial
Commercial and industrial	Commercial and industrial	$	181,223		$	169		$	27		$	137		$	333			$	663					$	182,219
Commercial and industrial
Commercial and industrial
Commercial real estate
Commercial real estate
Commercial real estate	Commercial real estate	36,104			19			4						23				189						36,316
Equipment lease financing	Equipment lease financing	6,484			20			4						24				6						6,514
Equipment lease financing
Equipment lease financing
Total commercial
Total commercial
Total commercial	Total commercial	223,811			208			35			137			380				858						225,049
Consumer	Consumer
Consumer
Consumer
Residential real estate
Residential real estate
Residential real estate	Residential real estate	44,306			281			112			199			592			(d)	424			$	567		45,889
Home equity	Home equity	25,305			53			20						73				526			79			25,983
Home equity
Home equity
Automobile
Automobile
Automobile	Automobile	14,543			106			25			7			138				155						14,836
Credit card	Credit card	6,906			50			35			70			155				8						7,069
Credit card
Credit card
Education
Education
Education	Education	2,058			34			22			59			115			(d)							2,173
Other consumer	Other consumer	4,975			15			12			10			37				14						5,026
Other consumer
Other consumer
Total consumer
Total consumer
Total consumer	Total consumer	98,093			539			226			345			1,110				1,127			646			100,976
Total	Total	$	321,904		$	747		$	261		$	482		$	1,490			$	1,985		$	646		$	326,025
Total
Total
Percentage of total loans	Percentage of total loans	98.73		%	0.23		%	0.08		%	0.15		%	0.46		%		0.61		%	0.20		%	100.00		%
Percentage of total loans
Percentage of total loans

(a)Amounts in table represent loans held for investment and do not include any associated ALLL.

(b)Under the CARES Act credit reporting rules, certain loans modified due to pandemic related hardships are not being reported as past due as of June 30, 2023 and December 31, 2022 based on the contractual terms of the loan, even where borrowers may not be making payments on their loans during the modification period. The CARES Act credit reporting rules expire in the third quarter of 2023.

~~(c)~~The accrued interest associated with our loan portfolio totaled ~~$1.3 billion and $1.2~~$1.5 billion at ~~June 30, 2023~~both March 31, 2024 and December 31, ~~2022, respectively.~~2023. These amounts are included in Other assets on the Consolidated Balance Sheet.

~~(d)~~(c)Past due loan amounts include government insured or guaranteed ~~Residential~~residential real estate loans and ~~Education~~education loans totaling $0.3 billion and $0.1 billion at both ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

~~(e)~~(d)Consumer loans accounted for under the fair value option for which we do not expect to collect substantially all principal and interest are subject to nonaccrual accounting and classification upon meeting any of our nonaccrual policy criteria. Given that these loans are not accounted for at amortized cost, they have been excluded from the nonperforming loan population.

~~(f)~~(e)Includes unearned income, unamortized deferred fees and costs on originated loans and premiums or discounts on purchased loans totaling ~~$0.8~~$0.9 billion and ~~$0.9~~$1.0 billion at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

~~(g)~~(f)Collateral dependent loans totaled ~~$1.2 billion and $1.3~~$1.4 billion at ~~June 30, 2023~~both March 31, 2024 and December 31, ~~2022,~~2023, respectively.

At ~~June 30, 2023,~~March 31, 2024, we pledged ~~$48.3~~$50.8 billion of commercial and other loans to the Federal Reserve Bank and ~~$92.5~~$90.9 billion of residential real estate and other loans to the FHLB as collateral for the ability to borrow, if necessary. The comparable amounts at December 31, ~~2022~~2023 were ~~$28.1~~$51.3 billion and ~~$90.4~~$89.5 billion, respectively. Amounts pledged reflect the unpaid principal balances.

60 ~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~

Nonperforming Assets

Nonperforming assets include nonperforming loans and leases, OREO and foreclosed assets. Nonperforming loans are those loans accounted for at amortized cost whose credit quality has deteriorated to the extent that full collection of contractual principal and interest is not probable. Interest income is not recognized on these loans. Loans accounted for under the fair value option are reported as performing loans; however, when nonaccrual criteria is met, interest income is not recognized on these loans. Additionally, certain government insured or guaranteed loans for which we expect to collect substantially all principal and interest are not reported as nonperforming loans and continue to accrue interest. See Note 1 Accounting Policies in our 2023 Form 10-K for additional information on our nonperforming loan and lease policies.

50 The PNC Financial Services Group, Inc. – Form 10-Q

The following table presents our nonperforming assets as of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022, respectively:~~2023:

Table ~~42:~~40: Nonperforming Assets

Dollars in millions

June 30, 2023

December 31, 2022

Nonperforming loans (a)

Nonperforming loans

Commercial

827

858

Consumer (b)

1,086

1,127

Total nonperforming loans (c)

1,913

1,985

Commercial

Consumer (a)

Total nonperforming loans (b)

OREO and foreclosed assets

Total nonperforming assets

1,949

2,019

Total nonperforming assets

Nonperforming loans to total loans

0.59

0.61

Nonperforming assets to total loans, OREO and foreclosed assets

0.61

0.62

Nonperforming assets to total loans, OREO and foreclosed assets

Nonperforming assets to total assets

0.35

0.36

Nonperforming assets to total assets

(a)In connection with the adoption of ASU 2022-02, nonperforming loans as of June 30, 2023 include certain loans where terms were modified as a result of a borrower’s financial difficulty. Prior period amounts included nonperforming TDRs, for which accounting guidance was eliminated effective January 1, 2023. See Note 1 Accounting Policies and the Loan Modifications to Borrowers Experiencing Financial Difficulty section of this Note 3 for more information on our adoption of this ASU.

~~(b)~~Excludes most unsecured consumer loans and lines of credit, which are charged off after 120 to 180 days past due and are not placed on nonperforming status.

~~(c)~~(b)Nonperforming loans for which there is no related ALLL totaled ~~$0.8~~$0.5 billion at ~~June 30, 2023~~both March 31, 2024 and December 31, 2023. This primarily ~~include~~includes loans with a fair value of collateral that exceeds the amortized cost basis. ~~The comparable amount at December 31, 2022 was $0.7 billion.~~

Additional Credit Quality Indicators by Loan Class

Commercial Loan Classes

See Note 43 Loans and Related Allowance for Credit Losses in our ~~2022~~2023 Form 10-K for additional information related to these loan classes, including discussion around the credit quality indicators that we use to monitor and manage the credit risk associated with each loan class.

The PNC Financial Services Group, Inc. – Form 10-Q 6151

The following table presents credit quality indicators for our commercial loan classes:

Table ~~43:~~41: Commercial Credit Quality Indicators (a) ~~(b)~~


		Term Loans by Origination Year																				Term Loans by Origination Year
June 30, 2023 In millions		2023			2022		2021		2020		2019		Prior		Revolving Loans		Revolving Loans Converted to Term		Total
March 31, 2024 In millions																					March 31, 2024 In millions	2024	2023	2022	2021	2020	Prior	Revolving Loans	Revolving Loans Converted to Term	Total
Commercial and industrial	Commercial and industrial
Pass Rated
Pass Rated
Pass Rated	Pass Rated	$	15,699		$	32,220	$	8,328	$	6,279	$	4,694	$	14,114	$	88,198	$	61	$	169,593
Criticized	Criticized	102			1,820		556		344		268		819		4,092		35		8,036
Total commercial and industrial loans	Total commercial and industrial loans	$	15,801		$	34,040	$	8,884	$	6,623	$	4,962	$	14,933	$	92,290	$	96	$	177,629
Gross charge-offs		$	10	(c)	$	9	$	27	$	6	$	1	$	14	$	74	$	8	$	149
Gross charge-offs (b)
Commercial real estate	Commercial real estate
Pass Rated
Pass Rated
Pass Rated	Pass Rated	$	2,589		$	9,428	$	3,773	$	2,513	$	5,139	$	8,571	$	339			$	32,352
Criticized	Criticized	59			294		253		321		668		1,963		18				3,576
Total commercial real estate loans	Total commercial real estate loans	$	2,648		$	9,722	$	4,026	$	2,834	$	5,807	$	10,534	$	357			$	35,928
Gross charge-offs											$	12	$	87					$	99
Gross charge-offs (b)
Equipment lease financing	Equipment lease financing
Pass Rated
Pass Rated
Pass Rated	Pass Rated	$	658		$	1,673	$	845	$	819	$	559	$	1,567					$	6,121
Criticized	Criticized	30			64		50		53		37		45						279
Total equipment lease financing loans	Total equipment lease financing loans	$	688		$	1,737	$	895	$	872	$	596	$	1,612					$	6,400
Gross charge-offs					$	1	$	1	$	3	$	1	$	1					$	7
Gross charge-offs (b)
Total commercial loans	Total commercial loans	$	19,137		$	45,499	$	13,805	$	10,329	$	11,365	$	27,079	$	92,647	$	96	$	219,957
Total commercial gross charge-offs	Total commercial gross charge-offs	$	10		$	10	$	28	$	9	$	14	$	102	$	74	$	8	$	255


		Term Loans by Origination Year																			Term Loans by Origination Year
December 31, 2022 In millions		2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
December 31, 2023 In millions																				December 31, 2023 In millions	2023	2022	2021	2020	2019	Prior	Revolving Loans	Revolving Loans Converted to Term	Total
Commercial and industrial	Commercial and industrial
Pass Rated	Pass Rated	$	41,685	$	12,493	$	8,134	$	6,261	$	4,209	$	13,165	$	89,384	$	69	$	175,400
Pass Rated
Pass Rated
Criticized	Criticized	1,259		423		277		299		297		551		3,682		31		6,819
Total commercial and industrial		42,944		12,916		8,411		6,560		4,506		13,716		93,066		100		182,219
Total commercial and industrial loans
Gross charge-offs (b)
Commercial real estate	Commercial real estate
Pass Rated	Pass Rated	8,835		4,153		3,266		5,511		3,005		7,454		450				32,674
Pass Rated
Pass Rated
Criticized	Criticized	348		37		322		758		807		1,367		3				3,642
Total commercial real estate		9,183		4,190		3,588		6,269		3,812		8,821		453				36,316
Total commercial real estate loans
Gross charge-offs (b)
Equipment lease financing	Equipment lease financing
Pass Rated	Pass Rated	1,797		962		942		670		410		1,495						6,276
Pass Rated
Pass Rated
Criticized	Criticized	60		55		56		39		17		11						238
Total equipment lease financing		1,857		1,017		998		709		427		1,506						6,514
Total commercial		$	53,984	$	18,123	$	12,997	$	13,538	$	8,745	$	24,043	$	93,519	$	100	$	225,049
Total equipment lease financing loans
Gross charge-offs (b)
Total commercial loans
Total commercial gross charge-offs

(a)Loans in our commercial portfolio are classified as Pass Rated or Criticized based on the regulatory definitions, which are driven by the PD and LGD ratings that we assign. The Criticized classification includes loans that were rated special mention, substandard or doubtful as of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

(b)Gross charge-offs are presented on a year-to-date basis, as of the ~~reporting~~period end date.

(c)Includes charge-offs of deposit overdrafts.

Consumer Loan Classes

associated with each loan class.

6252 The PNC Financial Services Group, Inc. – Form 10-Q

Residential Real Estate and Home Equity

The following table presents credit quality indicators for our residential real estate and home equity loan classes:

Table ~~44:~~42: Credit Quality Indicators for Residential Real Estate and Home Equity Loan Classes ~~(a)~~


		Term Loans by Origination Year
June 30, 2023 In millions		2023		2022		2021		2020		2019		Prior		Revolving Loans		Revolving Loans Converted to Term		Total
	Term Loans by Origination Year
March 31, 2024 In millions
March 31, 2024 In millions
March 31, 2024 In millions																				2024	2023	2022	2021	2020	Prior	Revolving Loans	Revolving Loans Converted to Term	Total
Residential real estate	Residential real estate
Current estimated LTV ratios	Current estimated LTV ratios
Current estimated LTV ratios
Current estimated LTV ratios
Greater than 100%
Greater than 100%
Greater than 100%	Greater than 100%	$	22	$	129	$	122	$	40	$	11	$	38					$	362
Greater than or equal to 80% to 100%	Greater than or equal to 80% to 100%	1,191		4,612		1,441		249		79		127						7,699
Less than 80%	Less than 80%	1,804		5,571		14,351		6,715		2,232		7,367						38,040
No LTV available	No LTV available	52				13						5						70
Government insured or guaranteed loans	Government insured or guaranteed loans	4		16		17		69		38		519						663
Total residential real estate loans	Total residential real estate loans	$	3,073	$	10,328	$	15,944	$	7,073	$	2,360	$	8,056					$	46,834
Updated FICO scores	Updated FICO scores
Greater than or equal to 780	Greater than or equal to 780	$	1,570	$	7,692	$	12,519	$	5,207	$	1,565	$	4,253					$	32,806
Greater than or equal to 780
Greater than or equal to 780
720 to 779	720 to 779	1,090		2,033		2,508		1,172		446		1,500						8,749
660 to 719	660 to 719	201		511		691		338		162		786						2,689
Less than 660	Less than 660	81		63		114		110		90		710						1,168
No FICO score available	No FICO score available	127		13		95		177		59		288						759
Government insured or guaranteed loans	Government insured or guaranteed loans	4		16		17		69		38		519						663
Total residential real estate loans	Total residential real estate loans	$	3,073	$	10,328	$	15,944	$	7,073	$	2,360	$	8,056					$	46,834
Gross charge-offs				$	1			$	1			$	3					$	5
Gross charge-offs (a)
Home equity	Home equity
Current estimated LTV ratios	Current estimated LTV ratios
Current estimated LTV ratios
Current estimated LTV ratios
Greater than 100%
Greater than 100%
Greater than 100%	Greater than 100%					$	3	$	15	$	8	$	16	$	325	$	292	$	659
Greater than or equal to 80% to 100%	Greater than or equal to 80% to 100%					6		53		26		32		1,315		2,074		3,506
Less than 80%	Less than 80%					163		1,963		895		2,819		6,937		9,258		22,035
Total home equity loans	Total home equity loans					$	172	$	2,031	$	929	$	2,867	$	8,577	$	11,624	$	26,200
Updated FICO scores	Updated FICO scores
Greater than or equal to 780	Greater than or equal to 780					$	110	$	1,319	$	522	$	1,770	$	4,854	$	6,020	$	14,595
Greater than or equal to 780
Greater than or equal to 780
720 to 779	720 to 779					39		467		230		554		2,230		3,109		6,629
660 to 719	660 to 719					18		188		123		295		1,168		1,656		3,448
Less than 660	Less than 660					5		55		53		239		313		780		1,445
No FICO score available	No FICO score available							2		1		9		12		59		83
Total home equity loans	Total home equity loans					$	172	$	2,031	$	929	$	2,867	$	8,577	$	11,624	$	26,200
Gross charge-offs												$	2			$	9	$	11
Gross charge-offs (a)

The PNC Financial Services Group, Inc. – Form 10-Q 6353


(Continued from previous page)	(Continued from previous page)	Term Loans by Origination Year
December 31, 2022 In millions		2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
December 31, 2023 In millions
December 31, 2023 In millions
December 31, 2023 In millions																				2023	2022	2021	2020	2019	Prior	Revolving Loans	Revolving Loans Converted to Term	Total
Residential real estate	Residential real estate
Current estimated LTV ratios	Current estimated LTV ratios
Current estimated LTV ratios
Current estimated LTV ratios
Greater than 100%
Greater than 100%
Greater than 100%	Greater than 100%	$	4	$	52	$	20	$	10	$	4	$	41					$	131
Greater than or equal to 80% to 100%	Greater than or equal to 80% to 100%	1,185		678		232		84		24		92						2,295
Less than 80%	Less than 80%	9,396		15,844		7,074		2,346		822		7,220						42,702
No LTV available	No LTV available			61				3				4						68
Government insured or guaranteed loans	Government insured or guaranteed loans	9		15		66		39		28		536						693
Total residential real estate		$	10,594	$	16,650	$	7,392	$	2,482	$	878	$	7,893					$	45,889
Total residential real estate loans
Updated FICO scores	Updated FICO scores
Greater than or equal to 780
Greater than or equal to 780
Greater than or equal to 780	Greater than or equal to 780	$	6,825	$	12,596	$	5,276	$	1,623	$	463	$	4,027					$	30,810
720 to 779	720 to 779	3,172		3,024		1,369		476		180		1,457						9,678
660 to 719	660 to 719	514		744		378		189		98		796						2,719
Less than 660	Less than 660	63		108		110		88		71		740						1,180
No FICO score available	No FICO score available	11		163		193		67		38		337						809
Government insured or guaranteed loans	Government insured or guaranteed loans	9		15		66		39		28		536						693
Total residential real estate		$	10,594	$	16,650	$	7,392	$	2,482	$	878	$	7,893					$	45,889
Total residential real estate loans
Gross charge-offs (a)
Home equity	Home equity
Current estimated LTV ratios	Current estimated LTV ratios
Current estimated LTV ratios
Current estimated LTV ratios
Greater than 100%
Greater than 100%
Greater than 100%	Greater than 100%			$	4	$	14	$	9	$	2	$	15	$	268	$	137	$	449
Greater than or equal to 80% to 100%	Greater than or equal to 80% to 100%			4		51		27		4		31		854		1,149		2,120
Less than 80%	Less than 80%			172		2,078		961		285		2,851		7,780		9,287		23,414
Total home equity				$	180	$	2,143	$	997	$	291	$	2,897	$	8,902	$	10,573	$	25,983
Total home equity loans
Updated FICO scores	Updated FICO scores
Greater than or equal to 780
Greater than or equal to 780
Greater than or equal to 780	Greater than or equal to 780			$	110	$	1,357	$	554	$	155	$	1,791	$	5,093	$	5,545	$	14,605
720 to 779	720 to 779			47		515		248		64		567		2,305		2,843		6,589
660 to 719	660 to 719			19		211		140		42		288		1,146		1,449		3,295
Less than 660	Less than 660			4		57		54		29		242		342		671		1,399
No FICO score available	No FICO score available					3		1		1		9		16		65		95
Total home equity				$	180	$	2,143	$	997	$	291	$	2,897	$	8,902	$	10,573	$	25,983
Total home equity loans
Gross charge-offs (a)

(a)Gross charge-offs are presented on a year-to-date basis, as of the ~~reporting~~period end date.

6454 The PNC Financial Services Group, Inc. – Form 10-Q

Automobile, Credit Card, Education and Other Consumer

The following table presents credit quality indicators for our automobile, credit card, education and other consumer loan classes:

Table ~~45:~~43: Credit Quality Indicators for Automobile, Credit Card, Education and Other Consumer Loan Classes ~~(a)~~


		Term Loans by Origination Year
June 30, 2023 In millions		2023			2022		2021		2020		2019		Prior		Revolving Loans		Revolving Loans Converted to Term		Total
	Term Loans by Origination Year
March 31, 2024 In millions
March 31, 2024 In millions
March 31, 2024 In millions																					2024	2023	2022	2021	2020	Prior	Revolving Loans	Revolving Loans Converted to Term	Total
Automobile	Automobile
Updated FICO scores	Updated FICO scores
Updated FICO scores
Updated FICO scores
Greater than or equal to 780
Greater than or equal to 780
Greater than or equal to 780	Greater than or equal to 780	$	1,706		$	1,907	$	1,846	$	728	$	554	$	180					$	6,921
720 to 779	720 to 779	1,066			1,426		1,005		411		374		160						4,442
660 to 719	660 to 719	538			766		510		251		275		137						2,477
Less than 660	Less than 660	74			254		260		185		272		180						1,225

Total automobile loans	Total automobile loans	$	3,384		$	4,353	$	3,621	$	1,575	$	1,475	$	657					$	15,065
Gross charge-offs					$	10	$	12	$	9	$	17	$	13					$	61
Total automobile loans
Total automobile loans
Gross charge-offs (a)
Credit card	Credit card
Updated FICO scores	Updated FICO scores
Updated FICO scores
Updated FICO scores
Greater than or equal to 780
Greater than or equal to 780
Greater than or equal to 780	Greater than or equal to 780														$	1,954	$	1	$	1,955
720 to 779	720 to 779														2,022		5		2,027
660 to 719	660 to 719														1,967		13		1,980
Less than 660	Less than 660														983		38		1,021
No FICO score available or required (b)	No FICO score available or required (b)														106		3		109
Total credit card loans	Total credit card loans														$	7,032	$	60	$	7,092
Gross charge-offs															$	141	$	13	$	154
Gross charge-offs (a)
Education	Education
Updated FICO scores	Updated FICO scores
Updated FICO scores
Updated FICO scores
Greater than or equal to 780
Greater than or equal to 780
Greater than or equal to 780	Greater than or equal to 780	$	15		$	94	$	50	$	44	$	56	$	373					$	632
720 to 779	720 to 779	14			51		26		22		27		147						287
660 to 719	660 to 719	6			16		7		7		8		59						103
Less than 660	Less than 660	1			3		1		1		2		23						31
No FICO score available or required (b)	No FICO score available or required (b)	4			6		5		5		2		1						23
Total loans using FICO credit metric	Total loans using FICO credit metric	40			170		89		79		95		603						1,076
Other internal credit metrics	Other internal credit metrics												982						982
Total education loans	Total education loans	$	40		$	170	$	89	$	79	$	95	$	1,585					$	2,058
Gross charge-offs									$	1	$	1	$	7					$	9
Gross charge-offs (a)
Other consumer	Other consumer
Updated FICO scores	Updated FICO scores
Updated FICO scores
Updated FICO scores
Greater than or equal to 780
Greater than or equal to 780
Greater than or equal to 780	Greater than or equal to 780	$	136		$	183	$	69	$	34	$	27	$	19	$	41	$	2	$	511
720 to 779	720 to 779	186			224		85		41		35		19		82		1		673
660 to 719	660 to 719	70			166		80		45		39		19		88		2		509
Less than 660	Less than 660	5			49		39		26		25		14		42		2		202

Total loans using FICO credit metric	Total loans using FICO credit metric	397			622		273		146		126		71		253		7		1,895
Total loans using FICO credit metric
Total loans using FICO credit metric
Other internal credit metrics	Other internal credit metrics	21			116		31		19		74		26		2,358		15		2,660
Total other consumer loans	Total other consumer loans	$	418		$	738	$	304	$	165	$	200	$	97	$	2,611	$	22	$	4,555
Gross charge-offs		$	32	(c)	$	9	$	10	$	8	$	9	$	5	$	6	$	1	$	80
Gross charge-offs (a)

The PNC Financial Services Group, Inc. – Form 10-Q 6555


(Continued from previous page)	(Continued from previous page)	Term Loans by Origination Year
December 31, 2022 In millions		2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
December 31, 2023 In millions
December 31, 2023 In millions
December 31, 2023 In millions																				2023	2022	2021	2020	2019	Prior	Revolving Loans	Revolving Loans Converted to Term	Total
Automobile
Updated FICO Scores	Updated FICO Scores
Automobile
Updated FICO Scores
Updated FICO Scores
Greater than or equal to 780
Greater than or equal to 780
Greater than or equal to 780	Greater than or equal to 780	$	2,390	$	2,162	$	922	$	760	$	241	$	75					$	6,550
720 to 779	720 to 779	1,702		1,312		561		538		222		69						4,404
660 to 719	660 to 719	854		660		341		401		187		56						2,499
Less than 660	Less than 660	193		290		230		368		228		74						1,383
Total automobile		$	5,139	$	4,424	$	2,054	$	2,067	$	878	$	274					$	14,836
Total automobile loans
Gross charge-offs (a)
Credit card	Credit card
Updated FICO scores
Updated FICO scores
Updated FICO scores
Greater than or equal to 780
Greater than or equal to 780
Greater than or equal to 780	Greater than or equal to 780													$	1,954	$	2	$	1,956
720 to 779	720 to 779													1,994		6		2,000
660 to 719	660 to 719													1,957		13		1,970
Less than 660	Less than 660													1,001		35		1,036
No FICO score available or required (b)	No FICO score available or required (b)													104		3		107
Total credit card														$	7,010	$	59	$	7,069
Total credit card loans
Gross charge-offs (a)
Education	Education
Updated FICO scores
Updated FICO scores
Updated FICO scores
Greater than or equal to 780
Greater than or equal to 780
Greater than or equal to 780	Greater than or equal to 780	$	42	$	53	$	48	$	61	$	51	$	357					$	612
720 to 779	720 to 779	39		27		24		30		24		143						287
660 to 719	660 to 719	21		8		8		9		8		59						113
Less than 660	Less than 660	4		1		1		2		2		24						34
No FICO score available or required (b)	No FICO score available or required (b)	20		8		7		3				1						39
Education loans using FICO credit metric		126		97		88		105		85		584						1,085
Total loans using FICO credit metric
Other internal credit metrics	Other internal credit metrics											1,088						1,088
Total education		$	126	$	97	$	88	$	105	$	85	$	1,672					$	2,173
Total education loans
Gross charge-offs (a)
Other consumer	Other consumer
Updated FICO scores
Updated FICO scores
Updated FICO scores
Greater than or equal to 780
Greater than or equal to 780
Greater than or equal to 780	Greater than or equal to 780	$	224	$	97	$	53	$	46	$	14	$	18	$	47	$	2	$	501
720 to 779	720 to 779	302		122		68		62		20		15		89		2		680
660 to 719	660 to 719	229		110		68		66		28		8		95		2		606
Less than 660	Less than 660	32		48		37		40		20		6		44		2		229
Other consumer loans using FICO credit metric		787		377		226		214		82		47		275		8		2,016
Total loans using FICO credit metric
Other internal credit metrics	Other internal credit metrics	125		43		40		34		7		29		2,720		12		3,010
Total other consumer		$	912	$	420	$	266	$	248	$	89	$	76	$	2,995	$	20	$	5,026
Total other consumer loans
Gross charge-offs (a)

(a)Gross charge-offs are presented on a year-to-date basis, as of the ~~reporting~~period end date.

(b)Loans ~~with no~~where FICO ~~score~~scores are not available or required generally refers to new accounts issued to borrowers with limited credit history, accounts for which we cannot obtain an updated FICO score (e.g., recent profile changes), cards issued with a business name and/or cards secured by collateral. Management proactively assesses the risk and size of this loan category and, when necessary, takes actions to mitigate the credit risk.

(c)Includes charge-offs of deposit overdrafts.

6656 The PNC Financial Services Group, Inc. – Form 10-Q

Loan Modifications to Borrowers Experiencing Financial Difficulty

~~On January 1, 2023, we adopted ASU 2022-02, which eliminates the accounting guidance for TDRs and enhances the disclosure requirements for certain loan~~Loan modifications ~~when a borrower is~~to borrowers experiencing financial difficulty (FDMs).

~~FDMs occur as a~~ result offrom our loss mitigation ~~activities. A variety of solutions are offered to borrowers, including loan modifications that may result in~~activities and include principal forgiveness, interest rate reductions, term extensions, payment delays, repayment plans or combinations ~~thereof:~~

•~~Principal forgiveness includes principal and accrued interest forgiveness.~~

•~~Interest rate reductions include modifications where the interest rate is reduced and/or interest is deferred.~~

•~~Term extensions extend the original contractual maturity date of the loan.~~

•Payment delays consist of modifications where we expect to collect contractual amounts due, but that result in a delay in the receipt of payments specified under the original loan terms. We generally consider payment delays to be insignificant when the delay is three months or less.

•~~Repayment plans are offered for some of our credit card and unsecured line of credit products, which provide for a reduced payment and interest rate for a specific period of time.~~

Additionally, modifications to borrowers experiencing financial difficulty also result from borrowers that have been discharged from personal liability through Chapter 7 bankruptcy and have not formally reaffirmed their obligations to us, and those that enter into trial modifications.

FDMs exclude loans held for sale and loans accounted for under the fair value option. Our disclosed FDM population also excludes government insured or guaranteed education loans as loss mitigation activities for these loans are either required by law or they are considered separate from PNC’s loss mitigation treatments. Commercial loans with an appraised value of collateral that exceeds the loan value, loans with guarantor support, and residential mortgage government insured or guaranteed loans are included in our disclosed population of FDMs when those loan modifications are granted to a borrower experiencing financial difficulty.

~~Refer to~~thereof. See Note 1 Accounting Policies in our 2023 Form 10-K for additional information ~~around our adoption of ASU 2022-02.~~on FDMs.

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ 67

The following table presents the amortized cost basis, as of ~~June 30, 2023,~~the period end date, of FDMs granted during the three ~~and six~~ months ended ~~June 30,~~March 31, 2024 and 2023:

Table ~~46:~~44: Loan Modifications Granted to Borrowers Experiencing Financial Difficulty (a) (b)


Three months ended June 30, 2023 Dollars in millions		Principal Forgiveness		Interest Rate Reduction		Term Extension		Payment Delay		Repayment Plan		Interest Rate Reduction and Term Extension		Other (b)		Total		% of Loan Class
Three months ended March 31, 2024 Dollars in millions
Three months ended March 31, 2024 Dollars in millions
Three months ended March 31, 2024 Dollars in millions
Commercial
Commercial
Commercial	Commercial
Commercial and industrial	Commercial and industrial					$	366	$	59					$	87	$	512	0.29	%
Commercial and industrial
Commercial and industrial
Commercial real estate
Commercial real estate
Commercial real estate	Commercial real estate					228								60		288		0.80	%

Total commercial	Total commercial					594		59						147		800		0.36	%

Total commercial

Total commercial
Consumer
Consumer
Consumer	Consumer
Residential real estate	Residential real estate			$	1			35				$	1	2		39		0.08	%
Residential real estate
Residential real estate
Home equity
Home equity
Home equity	Home equity							3				2		5		10		0.04	%

Credit card	Credit card									$	18					18		0.25	%
Education						1										1		0.05	%
Other consumer										1						1		0.02	%
Total consumer				1		1		38		19		3		7		69		0.07	%
Total				$	1	$	595	$	97	$	19	$	3	$	154	$	869	0.27	%
Six months ended June 30, 2023 Dollars in millions
Commercial
Commercial and industrial		$	1			$	432	$	72					$	91	$	596	0.34	%
Commercial real estate						493								60		553		1.54	%

Total commercial		1				925		72						151		1,149		0.52	%
Consumer
Residential real estate				$	1			72				$	2	3		78		0.17	%
Home equity								4				5		6		15		0.06	%
Credit card

Credit card	Credit card									$	30					30		0.42	%
Education	Education					2										2		0.10	%
Other consumer										1						1		0.02	%
Education
Education

Total consumer

Total consumer

Total consumer	Total consumer			1		2		76		31		7		9		126		0.12	%
Total	Total	$	1	$	1	$	927	$	148	$	31	$	7	$	160	$	1,275	0.40	%
Total
Total


Three months ended March 31, 2023 Dollars in millions	Principal Forgiveness		Term Extension		Payment Delay		Repayment Plan		Interest Rate Reduction and Term Extension		Other (c)		Total		% of Loan Class
Commercial
Commercial and industrial	$	1	$	198	$	20					$	5	$	224	0.12	%
Commercial real estate			273										273		0.76	%

Total commercial	1		471		20						5		497		0.22	%
Consumer
Residential real estate					46				$	2	1		49		0.11	%
Home equity					1		$	2			2		5		0.02	%

Credit card							13						13		0.19	%
Education			1										1		0.05	%
Other consumer							1						1		0.02	%
Total consumer			1		47		16		2		3		69		0.07	%
Total	$	1	$	472	$	67	$	16	$	2	$	8	$	566	0.17	%

(a)~~At June 30, 2023, there were $0.1 billion of~~The unfunded lending related commitments ~~associated with FDMs.~~on FDMs granted during the three months ended March 31, 2024 and 2023 were $0.1 billion at both dates.

(b)~~Includes~~Excludes the amortized cost basis of modified loans that were paid off, charged off or otherwise liquidated as of the period end date.

(c)Represents all other modifications, and includes trial modifications and loans where we have received notification that a borrower has filed for Chapter 7 bankruptcy relief, but specific instructions as to the terms of the relief have not been formally ruled upon by the court. ~~Amounts also include trial modifications.~~

68The PNC Financial Services Group, Inc. – Form 10-Q57

Table 4745 presents the financial effect of FDMs granted during the three ~~and six~~ months ended ~~June 30, 2023:~~March 31, 2024 and 2023.

Table ~~47:~~45: Financial Effect of FDMs (a)


Three months ended June 30, 2023 Dollars in millions		Total Principal Forgiveness		Weighted-Average Interest Rate Reduction		Weighted-Average Term Extension (in Months)	Weighted-Average Payment Delay (in Months)
Three months ended March 31, 2024 Dollars in millions
Three months ended March 31, 2024 Dollars in millions
Three months ended March 31, 2024 Dollars in millions										Weighted-Average Interest Rate Reduction			Weighted-Average Term Extension (in Months)		Weighted-Average Payment Delay (in Months)
Commercial	Commercial
Commercial and industrial
Commercial and industrial
Commercial and industrial	Commercial and industrial					9	10		4.06	%	11			5
Commercial real estate	Commercial real estate					20		Commercial real estate					12	12	8

Consumer	Consumer
Consumer
Consumer
Residential real estate	Residential real estate			1.17	%	123	8
Home equity				1.29	%	66	3

Education						19
Six months ended June 30, 2023 Dollars in millions
Commercial
Commercial and industrial		$	2			10	6
Commercial real estate						17

Consumer
Residential real estate
Residential real estate	Residential real estate			1.34	%	111	8					8				8
Home equity	Home equity			1.41	%	58	4	Home equity						4			4

Education	Education					17

Education

Education


Three Months Ended March 31, 2023 Dollars in millions	Total Principal Forgiveness		Weighted-Average Interest Rate Reduction		Weighted-Average Term Extension (in Months)	Weighted-Average Payment Delay (in Months)
Commercial
Commercial and industrial	$	2			5	2
Commercial real estate					13

Consumer
Residential real estate			1.71	%	145	8
Home equity						6


Education					12

(a)Excludes the financial effects of modifications for loans that were paid off, ~~charged-off~~charged off or otherwise liquidated as of the period ~~end.~~end date.

Repayment plans are excluded from Table ~~47.~~45. The terms of these programs, which are offered for certain ~~credit~~consumer products, are as follows:

•Credit card and unsecured ~~line~~lines of credit ~~products, are as follows:~~

•Short-term programs are granted for periods of 6 and 12 months. These programs are structurally similar such that the interest rate is reduced to a standard rate of 4.99% and the minimum payment percentage is adjusted to 1.90% of the outstanding balance. At the end of the 6 or 12 months, the borrower is returned to the original contractual interest rate and minimum payment amount specified in the original lending agreement.

•Fully-amortized repayment plans are also granted, the most common of which being a ~~60-month~~60 month program. In this program, we convert the borrower’s drawn and unpaid balances into a fully-amortized repayment plan consisting of an interest rate of 4.99% and aan adjusted minimum payment ~~amount~~percentage of 1.90%. of the outstanding balance. This fully-amortized program is designed in a manner that allows the drawn and unpaid amounts to be recaptured at the end of the 60 months.

•Home equity loans and lines of credit

•Fixed payment plan programs establish a modified monthly payment that is informed by the borrower’s financial situation and the current market environment at the time of modification, among other factors. As such, we may change the borrower’s interest rate, modify the term of the loan, and/or defer payment to arrive at the modified monthly payment. Each of the aforementioned terms may increase or decrease, and may vary from loan to loan, based on the individual loan and borrower characteristics.

58 The PNC Financial Services Group, Inc. – Form 10-Q

After we modify a loan, we continue to track its performance under its most recent modified terms. The following table presents the performance, as of ~~June 30, 2023,~~the period end date, of FDMs granted during the ~~six~~twelve months ~~ended June 30,~~preceding March 31, 2024.

Table 46: Payment Performance of FDMs Modified in the Last 12 Months (a)


Twelve Months Ended March 31, 2024 Dollars in millions	Current or Less Than 30 Days Past Due		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonperforming Loans		Total
Commercial
Commercial and industrial	$	1,126	$	16	$	2			$	291	$	1,435
Commercial real estate	816								367		1,183

Total commercial	1,942		16		2				658		2,618
Consumer
Residential real estate	8				1		$	1	92		102
Home equity	2								29		31

Credit card	44		4		4		7		1		60
Education	5										5
Other consumer									1		1
Total consumer	59		4		5		8		123		199
Total	$	2,001	$	20	$	7	$	8	$	781	$	2,817

(a)Represents amortized cost basis.

The following table presents the performance as of March 31, 2023 for FDMs granted since January 1, 2023:

Table ~~48: Delinquency Status~~47: Payment Performance of FDMs (a)


Six months ended June 30, 2023 Dollars in millions		Current or Less Than 30 Days Past Due		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonperforming Loans		Total
Three Months Ended March 31, 2023 Dollars in millions														Three Months Ended March 31, 2023 Dollars in millions	Current or Less Than 30 Days Past Due	30-59 Days Past Due	60-89 Days Past Due	90 Days or More Past Due	Nonperforming Loans	Total
Commercial	Commercial
Commercial and industrial
Commercial and industrial
Commercial and industrial	Commercial and industrial	$	494			$	4	$	1	$	97	$	596
Commercial real estate	Commercial real estate	520								33		553

Total commercial
Total commercial
Total commercial	Total commercial	1,014				4		1		130		1,149
Consumer	Consumer
Residential real estate	Residential real estate	1								77		78
Home equity	Home equity									15		15

Credit card	Credit card	20		$	3	3		4				30
Credit card
Credit card
Education	Education	2										2
Other consumer	Other consumer									1		1
Total consumer	Total consumer	23		3		3		4		93		126
Total	Total	$	1,037	$	3	$	7	$	5	$	223	$	1,275

(a)Represents amortized cost basis.

We generally consider FDMs to have subsequently defaulted when they become 60 days past due after the most recent date the loan was modified. ~~Loans~~At March 31, 2024, loans that ~~were~~ both (i) ~~modified due to a financial difficulty during the period, and (ii)~~ subsequently defaulted during the three ~~and six~~ months ended ~~June 30, 2023 were $46 million~~ and ~~$48 million, respectively.~~

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ 69

~~Troubled Debt Restructuring Disclosures Prior to the Adoption of ASU 2022-02~~

~~Table 49 quantifies the number of loans that~~(ii) were classified as ~~TDRs as well as~~FDMs during the ~~change in~~twelve months preceding the ~~loans’ balance as a result of becoming a TDR~~default date were $49 million. Subsequently defaulted loans were not material during the three ~~and six~~ months ended June 30, 2022. Additionally, the table provides information about the types of TDR concessions. See Note 1 Accounting Policies and Note 4 Loans and Related Allowance for Credit Losses in our 2022 Form 10-K for additional discussion of TDRs.March 31, 2023.

~~Table 49: Financial Impact and TDRs by Concession Type (a)~~

Pre-TDR
Amortized Cost Basis (b) Post-TDR Amortized Cost Basis (c)
During the three months ended June 30, 2022
Dollars in millions
Number
of Loans Principal
Forgiveness Rate
Reduction Other Total
Commercial 15 $ 35 $ 9 $ 22 $ 31
Consumer 3,025 50 $ 40 5 45
Total TDRs 3,040 $ 85 $ 9 $ 40 $ 27 $ 76
During the six months ended June 30, 2022
Dollars in millions
Commercial 27 $ 88 $ 9 $ 68 $ 77
Consumer 5,920 86 $ 66 12 78
Total TDRs 5,947 $ 174 $ 9 $ 66 $ 80 $ 155

~~(a) Impact of partial charge-offs at TDR date is included in this table.~~

~~(b) Represents the amortized cost basis of the loans as of the quarter end prior to TDR designation.~~

~~(c) Represents the amortized cost basis of the TDRs as of the end of the quarter in which the TDR occurred.~~

After a loan was determined to be a TDR, we continued to track its performance under its most recent restructured terms. We considered a TDR to have subsequently defaulted when it became 60 days past due after the most recent date the loan was restructured. Loans that were both (i) classified as TDRs within the last twelve months from the balance sheet date, and (ii) subsequently defaulted during the three and six months ended June 30, 2022 totaled $20 million and $27 million, respectively.

Allowance for Credit Losses

We maintain the ACL related to loans at levels that we believe to be appropriate to absorb expected credit losses in the portfolios as of the balance sheet date. See Note 1 Accounting Policies in our 2023 Form 10-K for a discussion of the methodologies used to determine this allowance. A rollforward of the ACL related to loans follows:

The PNC Financial Services Group, Inc. – Form 10-Q 59

Table ~~50:~~48: Rollforward of Allowance for Credit Losses


		Three months ended June 30												Six months ended June 30
		2023						2022						2023						2022
		Three months ended March 31
		Three months ended March 31
		Three months ended March 31
		2024
		2024
		2024
In millions
In millions
In millions	In millions	Commercial		Consumer		Total		Commercial		Consumer		Total		Commercial		Consumer		Total		Commercial		Consumer		Total
Allowance for loan and lease losses	Allowance for loan and lease losses
Allowance for loan and lease losses
Allowance for loan and lease losses
Beginning balance
Beginning balance
Beginning balance	Beginning balance	$	3,046	$	1,695	$	4,741	$	3,003	$	1,555	$	4,558	$	3,114	$	1,627	$	4,741	$	3,185	$	1,683	$	4,868
Adoption of ASU 2022-02 (a)	Adoption of ASU 2022-02 (a)															(35)		(35)
Adoption of ASU 2022-02 (a)
Adoption of ASU 2022-02 (a)
Beginning balance, adjusted
Beginning balance, adjusted
Beginning balance, adjusted	Beginning balance, adjusted	3,046		1,695		4,741		3,003		1,555		4,558		3,114		1,592		4,706		3,185		1,683		4,868
Charge-offs	Charge-offs	(135)		(158)		(293)		(37)		(158)		(195)		(255)		(320)		(575)		(89)		(357)		(446)
Charge-offs
Charge-offs
Recoveries
Recoveries
Recoveries	Recoveries	36		63		99		19		93		112		61		125		186		53		173		226
Net (charge-offs)	Net (charge-offs)	(99)		(95)		(194)		(18)		(65)		(83)		(194)		(195)		(389)		(36)		(184)		(220)
Provision for (recapture of) credit losses		195		(6)		189		(45)		35		(10)		220		198		418		(208)		26		(182)
Net (charge-offs)
Net (charge-offs)
Provision for credit losses
Provision for credit losses
Provision for credit losses
Other
Other
Other	Other			1		1		(3)				(3)		2				2		(4)				(4)
Ending balance	Ending balance	$	3,142	$	1,595	$	4,737	$	2,937	$	1,525	$	4,462	$	3,142	$	1,595	$	4,737	$	2,937	$	1,525	$	4,462
Ending balance
Ending balance
Allowance for unfunded lending related commitments (b)
Allowance for unfunded lending related commitments (b)
Allowance for unfunded lending related commitments (b)	Allowance for unfunded lending related commitments (b)
Beginning balance	Beginning balance	$	560	$	112	$	672	$	587	$	52	$	639	$	613	$	81	$	694	$	564	$	98	$	662
Beginning balance
Beginning balance
Provision for (recapture of) credit losses
Provision for (recapture of) credit losses
Provision for (recapture of) credit losses	Provision for (recapture of) credit losses	(5)		(4)		(9)		43		(1)		42		(58)		27		(31)		66		(47)		19
Ending balance	Ending balance	$	555	$	108	$	663	$	630	$	51	$	681	$	555	$	108	$	663	$	630	$	51	$	681
Allowance for credit losses at June 30 (c)		$	3,697	$	1,703	$	5,400	$	3,567	$	1,576	$	5,143	$	3,697	$	1,703	$	5,400	$	3,567	$	1,576	$	5,143
Ending balance
Ending balance
Allowance for credit losses at March 31 (c)
Allowance for credit losses at March 31 (c)
Allowance for credit losses at March 31 (c)

(a)Represents the impact of adopting ASU 2022-02 Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures on January 1, 2023. As a result of adoption, we eliminated the accounting guidance for TDRs, including the use of a discounted cash flow approach to measure the allowance for TDRs.

(b)See Note 8 Commitments for additional information about the underlying commitments related to this allowance.

(c)Represents the ALLL plus allowance for unfunded lending related commitments and excludes allowances for investment securities and other financial assets, which together totaled ~~$171~~$117 million and ~~$163~~$205 million at ~~June 30,~~March 31, 2024 and 2023, ~~and 2022,~~ respectively.

70 ~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~

The ACL related to loans totaled $5.4 billion at ~~both June 30, 2023~~March 31, 2024 and $5.5 billion at December 31, ~~2022.~~2023. During the ~~six~~three months ended ~~June 30, 2023, reserves reflected our updated economic outlook and changes in~~March 31, 2024, this reserve was driven by improved macroeconomic factors as well as portfolio ~~composition and quality.~~activity.

NOTE 4 LOAN SALE AND SERVICING ACTIVITIES AND VARIABLE INTEREST ENTITIES

Loan Sale and Servicing Activities

As more fully described in Note 54 Loan Sale and Servicing Activities and Variable Interest Entities in our ~~2022~~2023 Form 10-K, we have transferred residential and commercial mortgage loans in securitization or sales transactions in which we have continuing involvement. Our continuing involvement in the FNMA, FHLMC and GNMA securitizations, Non-agency securitizations and loan sale transactions generally consists of servicing, repurchasing previously transferred loans under certain conditions and loss share arrangements, and, in limited circumstances, holding of mortgage-backed securities issued by the securitization SPEs.

We earn servicing and other ancillary fees for our role as servicer and, depending on the contractual terms of the servicing arrangement, we can be terminated as servicer with or without cause. At the consummation date of each type of loan transfer where we retain the servicing, we recognize a servicing right at fair value. See Note 8 Commitments and Note 11 Fair Value for information on our servicing rights, including the carrying value of servicing assets.

60 The PNC Financial Services Group, Inc. – Form 10-Q

The following table provides our loan sale and servicing activities:

Table ~~51:~~49: Loan Sale and Servicing Activities


In millions	In millions	Residential Mortgages		Commercial Mortgages (a)
Cash Flows - Three months ended June 30, 2023
Cash Flows - Three months ended March 31, 2024
Cash Flows - Three months ended March 31, 2024
Cash Flows - Three months ended March 31, 2024
Sales of loans and related securitization activity (b)
Sales of loans and related securitization activity (b)
Sales of loans and related securitization activity (b)	Sales of loans and related securitization activity (b)	$	655		$	1,202
Repurchases of previously transferred loans (c)	Repurchases of previously transferred loans (c)	$	22
Repurchases of previously transferred loans (c)
Repurchases of previously transferred loans (c)
Servicing fees (d)
Servicing fees (d)
Servicing fees (d)	Servicing fees (d)	$	127		$	49
Servicing advances recovered/(funded), net	Servicing advances recovered/(funded), net	$	11		$	(15)
Servicing advances recovered/(funded), net
Servicing advances recovered/(funded), net
Cash flows on mortgage-backed securities held (e)	Cash flows on mortgage-backed securities held (e)	$	695		$	18
Cash Flows - Three months ended June 30, 2022
Cash flows on mortgage-backed securities held (e)
Cash flows on mortgage-backed securities held (e)
Cash Flows - Three months ended March 31, 2023
Cash Flows - Three months ended March 31, 2023
Cash Flows - Three months ended March 31, 2023
Sales of loans and related securitization activity (b)
Sales of loans and related securitization activity (b)
Sales of loans and related securitization activity (b)	Sales of loans and related securitization activity (b)	$	1,454		$	929
Repurchases of previously transferred loans (c)	Repurchases of previously transferred loans (c)	$	57
Repurchases of previously transferred loans (c)
Repurchases of previously transferred loans (c)
Servicing fees (d)
Servicing fees (d)
Servicing fees (d)	Servicing fees (d)	$	91		$	47
Servicing advances recovered/(funded), net	Servicing advances recovered/(funded), net	$	1		$	(17)
Cash flows on mortgage-backed securities held (e)		$	1,029		$	14
Cash Flows - Six months ended June 30, 2023
Sales of loans and related securitization activity (b)		$	1,171		$	2,156
Repurchases of previously transferred loans (c)		$	51		$	9
Servicing fees (d)		$	255		$	95
Servicing advances recovered/(funded), net
Servicing advances recovered/(funded), net	Servicing advances recovered/(funded), net	$	39		$	(64)
Cash flows on mortgage-backed securities held (e)	Cash flows on mortgage-backed securities held (e)	$	1,298		$	30
Cash Flows - Six months ended June 30, 2022
Sales of loans and related securitization activity (b)		$	3,348		$	1,839
Repurchases of previously transferred loans (c)		$	105		$	27
Servicing fees (d)		$	184		$	89
Servicing advances recovered/(funded), net		$	33		$	4
Cash flows on mortgage-backed securities held (e)	Cash flows on mortgage-backed securities held (e)	$	2,325		$	28
Cash flows on mortgage-backed securities held (e)

(a)Represents both commercial mortgage loan transfer and servicing activities.

(b)Gains/losses recognized on sales of loans were insignificant for the periods presented.

(c)Includes both residential and commercial mortgage government insured or guaranteed loans eligible for repurchase through the exercise of our ROAP option, as well as residential mortgage loans repurchased due to alleged breaches of origination covenants or representations and warranties made to purchasers.

(d)Includes contractually specified servicing fees, late charges and ancillary fees.

(e)Represents cash flows on securities where we transferred to and/or service loans for a securitization SPE and we hold securities issued by that SPE. The carrying values of such securities held were ~~$21.2~~$19.8 billion, ~~$21.4~~$20.4 billion and ~~$19.1~~$21.6 billion in residential mortgage-backed securities at March 31, 2024, December 31, 2023 and ~~$0.7 billion, $0.7 billion and $0.8 billion in~~March 31, 2023, respectively. The carrying values of commercial mortgage-backed securities were $0.7 billion at ~~June 30, 2023,~~each March 31, 2024, December 31, ~~2022~~2023 and ~~June 30, 2022, respectively.~~March 31, 2023.

Table 5250 presents information about the principal balances of transferred loans that we service and are not recorded on our Consolidated Balance Sheet. We would only experience a loss on these transferred loans if we were required to repurchase a loan, where the repurchase price exceeded the loan’s fair value, due to a breach in representations and warranties or a loss sharing arrangement associated with our continuing involvement with these loans. The estimate of losses related to breaches in representations and warranties was insignificant at ~~June 30,~~March 31, 2024 and December 31, 2023.

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ 71

Table ~~52:~~50: Principal Balance, Delinquent Loans and Net Charge-offs Related to Serviced Loans For Others

In millions Residential Mortgages Commercial Mortgages (a)
June 30, 2023
Total principal balance $ 39,893 $ 39,306
Delinquent loans (b) $ 317
December 31, 2022
Total principal balance $ 41,031 $ 57,974
Delinquent loans (b) $ 346
Three months ended June 30, 2022 (c)
Net charge-offs (d) $ 1 $ 3
Six months ended June 30, 2023
Net charge-offs (d) $ 2 $ 4
Six months ended June 30, 2022
Net charge-offs (d) $ 2 $ 3


In millions	Residential Mortgages		Commercial Mortgages (a)
March 31, 2024
Total principal balance	$	38,540	$	56,409
Delinquent loans (b)	$	310	$	92
December 31, 2023
Total principal balance	$	39,016	$	57,492
Delinquent loans (b)	$	329	$	89
Three months ended March 31, 2024
Net charge-offs (c)	$	1	$	61








Three months ended March 31, 2023
Net charge-offs (c)	$	2	$	4

(a)Represents information at the securitization level in which we have sold loans and we are the servicer for the securitization.

(b)Serviced delinquent loans are 90 days or more past due or are in process of foreclosure.

(c)~~There were no net charge-offs for Residential or Commercial mortgages for the three months ended June 30, 2023.~~

~~(d)~~Net charge-offs for Residential mortgages represent credit losses less recoveries distributed and as reported to investors during the period. Net charge-offs for commercial mortgages represent credit losses less recoveries distributed and as reported by the trustee for commercial mortgage-backed securitizations. Realized losses for Agency securitizations are not reflected as we do not manage the underlying real estate upon foreclosure and, as such, do not have access to loss information.

Variable Interest Entities (VIEs)

As discussed in Note 54 Loan Sale and Servicing Activities and Variable Interest Entities included in our ~~2022~~2023 Form 10-K, we are involved with various entities in the normal course of business that are deemed to be VIEs.

The following table provides a summary of non-consolidated VIEs with which we have significant continuing involvement but are not the primary beneficiary. We have excluded certain transactions with non-consolidated VIEs from the balances presented in Table 5351 where we have determined that our continuing involvement is insignificant. We do not consider our continuing involvement to be significant when it relates to a VIE where we only invest in securities issued by the VIE and were not involved in the design of the VIE or where no transfers have occurred between us and the VIE. In addition, where we only have lending arrangements in the normal course of business with entities that could be VIEs, we have excluded these transactions with non-consolidated entities from the

The PNC Financial Services Group, Inc. – Form 10-Q 61

balances presented in Table ~~53.~~51. These loans are included as part of the credit quality disclosures that we make in Note 3 Loans and Related Allowance for Credit Losses.

Table ~~53:~~51: Non-Consolidated VIEs


In millions	In millions	PNC Risk of Loss (a)		Carrying Value of Assets Owned by PNC			Carrying Value of Liabilities Owned by PNC			In millions	PNC Risk of Loss (a)			Carrying Value of Assets				Carrying Value of Liabilities
June 30, 2023
March 31, 2024										March 31, 2024
Mortgage-backed securitizations (b)	Mortgage-backed securitizations (b)	$	22,732	$	22,735	(c)	$	1		Mortgage-backed securitizations (b)	$	20,918	$		$	20,922	(c)	(c)
Tax credit investments and other	Tax credit investments and other	4,424		4,263		(d)	2,047		(e)	Tax credit investments and other	4,763		4,683			4,683		(d) (e)	(d) (e)		$	1,960	(f) (g)	(f) (g)
Total	Total	$	27,156	$	26,998		$	2,048		Total	$	25,681	$		$	25,605				$	1,960
December 31, 2022
December 31, 2023										December 31, 2023
Mortgage-backed securitizations (b)	Mortgage-backed securitizations (b)	$	22,666	$	22,670	(c)	$	1		Mortgage-backed securitizations (b)	$	21,451	$		$	21,453	(c)	(c)
Tax credit investments and other	Tax credit investments and other	4,411		4,240		(d)	2,063		(e)	Tax credit investments and other	4,709		4,631			4,631		(d) (e)	(d) (e)		$	2,119	(f) (g)	(f) (g)
Total	Total	$	27,077	$	26,910		$	2,064		Total	$	26,160	$		$	26,084				$	2,119

(a)Represents loans, investments and other assets related to non-consolidated VIEs, net of collateral (if applicable). The risk of loss excludes any potential tax recapture associated with tax credit investments.

(b)Amounts reflect involvement with securitization SPEs where we transferred to and/or service loans for an SPE and we hold securities issued by that SPE. Values disclosed in the PNC Risk of Loss column represent our maximum exposure to loss for those securities’ holdings.

(c)Included in Investment securities, Mortgage servicing rights and Other assets on our Consolidated Balance Sheet.

(d)Included in Investment securities, Loans, Equity investments and Other assets on our Consolidated Balance Sheet.

(e)Amount includes $3.0 billion of LIHTCs and $0.2 billion of NMTCs at March 31, 2024, which are included in Equity investments on our Consolidated Balance Sheet. Comparable amounts at December 31, 2023 were $3.0 billion and $0.2 billion, respectively.

(f)Included in Deposits and Other liabilities on our Consolidated Balance Sheet.

(g)Amount includes $1.6 billion of LIHTCs and less than $0.1 billion of NMTCs at March 31, 2024, which are included in Other liabilities on our Consolidated Balance Sheet. Comparable amounts at December 31, 2023 were $1.6 billion and $0.2 billion, respectively.

We make certain equity investments in various tax credit limited partnerships or LLCs. The purpose of these investments is to achieve a satisfactory return on capital and to assist us in achieving goals associated with the Community Reinvestment Act. Within Income taxes, during the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024, we recognized ~~$0.2~~$0.1 billion of amortization, ~~$0.2~~$0.1 billion of tax credits and less than $0.1 billion of other tax benefits associated with qualified investments in ~~LIHTCs.~~LIHTCs and NMTCs. During the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, we recognized less than $0.1 billion of amortization, tax credits and other tax benefits associated with qualified investments in LIHTCs.

72 ~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~

NOTE 5 GOODWILL AND MORTGAGE SERVICING RIGHTS

Goodwill

See Note 65 Goodwill and Mortgage Servicing Rights in our ~~2022~~2023 Form 10-K for more information regarding our goodwill.

Mortgage Servicing Rights

We recognize the right to service mortgage loans for others as an intangible asset when the benefits of servicing are expected to be more than adequate compensation to a servicer for performing the servicing. MSRs are recognized either when purchased or when originated loans are sold with servicing retained. MSRs totaled ~~$3.5~~$3.8 billion at ~~June 30, 2023~~March 31, 2024 and ~~$3.4~~$3.7 billion at December 31, ~~2022,~~2023, and consisted of loan servicing contracts for commercial and residential mortgages which are measured at fair value.

We recognize gains (losses) on changes in the fair value of MSRs. MSRs are subject to changes in value from actual or expected prepayment of the underlying loans and defaults, as well as market driven changes in interest rates. We manage this risk by economically hedging the fair value of MSRs with securities, derivative instruments and resale agreements, which are expected to increase (or decrease) in value when the value of MSRs decreases (or increases).

See the Sensitivity Analysis section of this Note 5 for more detail on our fair value measurement of MSRs. See Note 65 Goodwill and Mortgage Servicing Rights and Note 1514 Fair Value in our ~~2022~~2023 Form 10-K for more detail on our fair value measurement and our accounting of MSRs.

62 The PNC Financial Services Group, Inc. – Form 10-Q

Changes in the commercial and residential MSRs follow:

Table ~~54:~~52: Mortgage Servicing Rights


		Commercial MSRs				Residential MSRs
In millions	In millions	2023		2022		2023		2022
In millions
In millions
January 1	January 1	$	1,113	$	740	$	2,310	$	1,078
January 1
January 1
Additions:
Additions:
Additions:	Additions:

From loans sold with servicing retained	From loans sold with servicing retained	32		35		10		38

From loans sold with servicing retained

From loans sold with servicing retained
Purchases
Purchases
Purchases	Purchases	17		25		109		257
Changes in fair value due to:	Changes in fair value due to:
Changes in fair value due to:
Changes in fair value due to:
Time and payoffs (a)
Time and payoffs (a)
Time and payoffs (a)	Time and payoffs (a)	(164)		(74)		(113)		(123)
Other (b)	Other (b)	108		262		33		370
June 30		$	1,106	$	988	$	2,349	$	1,620
Related unpaid principal balance of loans serviced at June 30		$	280,023	$	281,671	$	191,274	$	144,533
Servicing advances at June 30		$	485	$	459	$	126	$	143
Other (b)
Other (b)
March 31
March 31
March 31
Related unpaid principal balance of loans serviced at March 31
Related unpaid principal balance of loans serviced at March 31
Related unpaid principal balance of loans serviced at March 31
Servicing advances at March 31
Servicing advances at March 31
Servicing advances at March 31

(a)Represents decrease in MSR value due to passage of time, including the impact from regularly scheduled loan principal payments, prepayments and loans that were paid off during the period.

(b)~~Represents~~Includes MSR value changes resulting ~~primarily~~ from ~~market-driven~~ changes in interest ~~rates.~~rates and other market-driven conditions.

Sensitivity Analysis

The fair value of commercial and residential MSRs and significant inputs to the valuation models as of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 are shown in Tables 5553 and ~~56.~~54. The expected and actual rates of mortgage loan prepayments are significant factors driving the fair value. Management uses both internal proprietary models and a third-party model to estimate future commercial mortgage loan prepayments and a third-party model to estimate future residential mortgage loan prepayments. These models have been refined based on current market conditions and management judgment. Future interest rates are another important factor in the valuation of MSRs. Management utilizes market implied forward interest rates to estimate the future direction of mortgage and discount rates. The forward rates utilized are derived from the current yield curve for U.S. dollar interest rate swaps and are consistent with pricing of capital markets instruments. Changes in the shape and slope of the forward curve in future periods may result in volatility in the fair value estimate.

A sensitivity analysis of the hypothetical effect on the fair value of MSRs to adverse changes in key assumptions is presented in Tables 5553 and ~~56.~~54. These sensitivities do not include the impact of the related hedging activities. Changes in fair value generally cannot be extrapolated because the relationship of the change in the assumption to the change in fair value may not be linear. Also, the effect of a variation in a particular assumption on the fair value of the MSRs is calculated independently without changing any other assumption. ~~In reality, changes~~Changes in one factor may result in changes in another (e.g., changes in mortgage interest rates, which drive changes in prepayment rate estimates, could result in changes in the interest rate spread), which could either magnify or counteract the sensitivities.

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ 73

The following tables set forth the fair value of commercial and residential MSRs and the sensitivity analysis of the hypothetical effect on the fair value of MSRs to immediate adverse changes of 10% and 20% in those assumptions:

Table ~~55:~~53: Commercial Mortgage Servicing Rights – Key Valuation Assumptions


Dollars in millions	Dollars in millions	June 30, 2023			December 31, 2022
Fair value	Fair value	$	1,106		$	1,113
Fair value
Fair value
Weighted-average life (years)
Weighted-average life (years)
Weighted-average life (years)	Weighted-average life (years)	3.9			4.0
Weighted-average constant prepayment rate	Weighted-average constant prepayment rate	4.38		%	4.28		%
Weighted-average constant prepayment rate
Weighted-average constant prepayment rate
Decline in fair value from 10% adverse change
Decline in fair value from 10% adverse change
Decline in fair value from 10% adverse change	Decline in fair value from 10% adverse change	$	7		$	8
Decline in fair value from 20% adverse change	Decline in fair value from 20% adverse change	$	14		$	15
Decline in fair value from 20% adverse change
Decline in fair value from 20% adverse change
Effective discount rate
Effective discount rate
Effective discount rate	Effective discount rate	9.89		%	9.77		%
Decline in fair value from 10% adverse change	Decline in fair value from 10% adverse change	$	33		$	34
Decline in fair value from 10% adverse change
Decline in fair value from 10% adverse change
Decline in fair value from 20% adverse change	Decline in fair value from 20% adverse change	$	65		$	68
Decline in fair value from 20% adverse change
Decline in fair value from 20% adverse change

The PNC Financial Services Group, Inc. – Form 10-Q 63

Table ~~56:~~54: Residential Mortgage Servicing Rights – Key Valuation Assumptions


Dollars in millions	Dollars in millions	June 30, 2023				December 31, 2022				Dollars in millions	March 31, 2024				December 31, 2023
Fair value	Fair value	$	2,349			$	2,310			Fair value	$	2,687		$		$	2,654
Weighted-average life (years)	Weighted-average life (years)	7.8				8.0				Weighted-average life (years)	8.1					8.1
Weighted-average constant prepayment rate	Weighted-average constant prepayment rate	6.91		%		6.72		%
Decline in fair value from 10% adverse change	Decline in fair value from 10% adverse change	$	56			$	55
Decline in fair value from 10% adverse change
Decline in fair value from 10% adverse change											$	58				$	60
Decline in fair value from 20% adverse change	Decline in fair value from 20% adverse change	$	108			$	107			Decline in fair value from 20% adverse change	$	113		$		$	117
Weighted-average option adjusted spread	Weighted-average option adjusted spread	767			bps	766			bps	Weighted-average option adjusted spread	766		bps	bps	765	bps	bps
Decline in fair value from 10% adverse change	Decline in fair value from 10% adverse change	$	69			$	69			Decline in fair value from 10% adverse change	$	83		$		$	83
Decline in fair value from 20% adverse change	Decline in fair value from 20% adverse change	$	135			$	134			Decline in fair value from 20% adverse change	$	162		$		$	161

Fees from mortgage loan servicing, which include contractually specified servicing fees, late fees and ancillary fees were $0.2 billion for both ~~the~~ three months ended ~~June 30, 2023~~March 31, 2024 and ~~2022, and $0.4 billion~~ ~~and $0.3 billion for the six months ended June 30, 2023 and 2022,~~ ~~respectively.~~2023. We also generate servicing fees from ~~fee-based~~ activities provided to others for which we do not have an associated servicing asset. Fees from commercial and residential MSRs are reported within Noninterest income on our Consolidated Income Statement in Residential and commercial mortgage.

NOTE 6 LEASES

PNC’s lessor arrangements primarily consist of direct financing, sales-type and operating leases for equipment. Lease agreements may include options to renew and for the lessee to purchase the leased equipment at the end of the lease term. For more information on lease accounting, see Note 1 Accounting Policies and Note 76 Leases in our ~~2022~~2023 Form 10-K.

Table ~~57:~~55: Lessor Income


		Three months ended June 30				Six months ended June 30
		Three months ended March 31
		Three months ended March 31
		Three months ended March 31
In millions
In millions
In millions	In millions	2023		2022		2023		2022
Sales-type and direct financing leases (a)	Sales-type and direct financing leases (a)	$	73	$	57	$	143	$	116
Sales-type and direct financing leases (a)
Sales-type and direct financing leases (a)
Operating leases (b)
Operating leases (b)
Operating leases (b)	Operating leases (b)	15		16		31		33
Lease income	Lease income	$	88	$	73	$	174	$	149
Lease income
Lease income

(a)Included in Loans interest income on the Consolidated Income Statement.

(b)Included in Lending and deposit services on the Consolidated Income Statement.

74 ~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~

NOTE 7 BORROWED FUNDS

The following table shows the carrying value of total borrowed funds at ~~June 30, 2023~~March 31, 2024 (including adjustments related to accounting hedges, purchase accounting and unamortized original issuance discounts) by remaining contractual maturity:

Table ~~58:~~56: Borrowed Funds


In millions
Less than 1 year	$	~~7,487~~27,205
1 to 2 years	~~26,319~~15,243
2 to 3 years	~~11,611~~6,927
3 to 4 years	~~3,492~~4,572
4 to 5 years	~~1,805~~2,386
Over 5 years	~~14,670~~16,374
Total	$	~~65,384~~72,707

64 The PNC Financial Services Group, Inc. – Form 10-Q

The following table presents the contractual rates and maturity dates of our FHLB borrowings, senior debt and subordinated debt as of ~~June 30, 2023,~~March 31, 2024, and the carrying values as of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

Table ~~59:~~57: FHLB Borrowings, Senior Debt and Subordinated Debt

Stated Rate

Maturity

Carrying Value

Dollars in millions

June 30, 2023

December 31, 2022

Dollars in millions

Parent Company

Senior debt

1.15% - 6.04%

2024-2034

17,480

11,374

Senior debt

Subordinated debt

3.90% - 4.63%

2024-2033

1,526

1,524

Junior subordinated debt

6.07

2028

206

205

Junior subordinated debt

Total Parent Company

19,212

13,103

Bank

Federal Home Loan Bank borrowings (a)

5.25% - 5.48%

2024-2026

34,000

32,075

Senior debt

2.50% - 5.88%

2024-2043

4,525

5,283

Senior debt

Subordinated debt

2.70% - 5.90%

2023-2029

3,816

4,578

Total Bank

42,341

41,936

Total Bank

Total

61,553

55,039

Total

(a)FHLB borrowings are generally collateralized by residential mortgage loans, other mortgage-related loans and investment securities.

In Table ~~59,~~57, the carrying values for ~~Parent Company~~parent company senior and subordinated debt include basis adjustments of ~~$(869)~~$(724) million and ~~$(70)~~$(66) million, respectively, whereas Bank senior and subordinated debt include basis adjustments of ~~$(249)~~$(173) million and ~~$(229)~~$(195) million, respectively, related to fair value accounting hedges as of ~~June 30, 2023.~~March 31, 2024.

Certain borrowings are reported at fair value. Refer to Note 11 Fair Value for more information on those borrowings.

For further information regarding junior subordinated debentures, refer to Note 109 Borrowed Funds in our ~~2022~~2023 Form 10-K.

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ 75

NOTE 8 COMMITMENTS

In the normal course of business, we have various commitments outstanding, certain of which are not included on our Consolidated Balance Sheet. The following table presents our outstanding commitments to extend credit along with other commitments as of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

Table ~~60:~~58: Commitments to Extend Credit and Other Commitments

In millions

June 30, 2023

December 31, 2022

In millions

Commitments to extend credit

Commercial

196,185

198,542

Commercial

Home equity

23,939

22,783

Credit card

33,932

33,066

Credit card

Other

7,849

7,337

Total commitments to extend credit

261,905

261,728

Total commitments to extend credit

Net outstanding standby letters of credit (a)

10,157

10,575

Standby bond purchase agreements (b)

1,184

1,208

Standby bond purchase agreements (b)

Other commitments (c)

3,322

3,661

Total commitments to extend credit and other commitments

276,568

277,172

Total commitments to extend credit and other commitments

(a)Net outstanding standby letters of credit include ~~$3.4~~$3.5 billion and ~~$3.6~~$3.9 billion at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively, which support remarketing programs.

(b)We enter into standby bond purchase agreements to support municipal bond obligations.

(c)Includes $2.1 billion ~~and $2.2 billion~~ related to investments in qualified affordable housing projects at ~~June 30, 2023~~both March 31, 2024 and December 31, ~~2022, respectively.~~2023.

Commitments to Extend Credit

Commitments to extend credit, or net unfunded loan commitments, represent arrangements to lend funds or provide liquidity subject to specified contractual conditions. These commitments generally have fixed expiration dates, may require payment of a fee and generally contain termination clauses in the event the customer’s credit quality deteriorates.

The PNC Financial Services Group, Inc. – Form 10-Q 65

Net Outstanding Standby Letters of Credit

We issue standby letters of credit and share in the risk of standby letters of credit issued by other financial institutions, in each case to support obligations of our customers to third parties, such as insurance requirements and the facilitation of transactions involving capital markets product execution. Approximately ~~98%~~97% of our net outstanding standby letters of credit were rated as Pass at ~~June 30, 2023,~~March 31, 2024, with the remainder rated as Criticized. An internal credit rating of Pass indicates the expected risk of loss is currently low, while a rating of Criticized indicates a higher degree of risk.

If the customer fails to meet its financial or performance obligation to the third party under the terms of the contract or there is a need to support a remarketing program, then upon a draw by a beneficiary, subject to the terms of the letter of credit, we would be obligated to make payment to them. The standby letters of credit outstanding on ~~June 30, 2023~~March 31, 2024 had terms ranging from less than one year to ~~eight~~seven years.

As of ~~June 30, 2023,~~March 31, 2024, assets of ~~$1.2~~$1.1 billion secured certain specifically identified standby letters of credit. In addition, a portion of the remaining standby letters of credit issued on behalf of specific customers is secured by collateral or guarantees that secure the customers’ other obligations to us. The carrying amount of the liability for our obligations related to standby letters of credit and participations in standby letters of credit was $0.2 billion at ~~June 30, 2023~~March 31, 2024 and is included in Other liabilities on our Consolidated Balance Sheet.

76 ~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~

NOTE 9 TOTAL EQUITY AND OTHER COMPREHENSIVE INCOME

Activity in total equity for the three months ended ~~June 30,~~March 31, 2024 and 2023 ~~and 2022~~ is as follows:

Table ~~61:~~59: Rollforward of Total Equity


			Shareholders’ Equity
In millions	In millions	Shares Outstanding Common Stock	Common Stock		Capital Surplus - Preferred Stock		Capital Surplus - Common Stock and Other		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Non- controlling Interests		Total Equity
In millions
In millions
Three months ended	Three months ended
Balance at March 31, 2022 (a)		415	$	2,713	$	5,011	$	12,476	$	51,058	$	(5,731)	$	(16,346)	$	35	$	49,216
Three months ended
Three months ended
Balance at December 31, 2022 (a)
Balance at December 31, 2022 (a)
Balance at December 31, 2022 (a)
Cumulative effect of ASU adoptions (b)
Cumulative effect of ASU adoptions (b)
Cumulative effect of ASU adoptions (b)
Balance at January 1, 2023 (a)
Balance at January 1, 2023 (a)
Balance at January 1, 2023 (a)
Net income	Net income								1,481						15		1,496
Other comprehensive income (loss), net of tax											(2,627)						(2,627)
Net income
Net income
Other comprehensive income, net of tax
Other comprehensive income, net of tax
Other comprehensive income, net of tax
Cash dividends declared - Common
Cash dividends declared - Common
Cash dividends declared - Common	Cash dividends declared - Common								(626)								(626)
Cash dividends declared - Preferred	Cash dividends declared - Preferred								(71)								(71)
Cash dividends declared - Preferred
Cash dividends declared - Preferred
Preferred stock discount accretion	Preferred stock discount accretion				1				(1)
Preferred stock issuance (b)					992												992
Common Stock activity			1				14										15
Preferred stock discount accretion
Preferred stock discount accretion
Preferred stock issuance (c)
Preferred stock issuance (c)
Preferred stock issuance (c)
Treasury stock activity
Treasury stock activity
Treasury stock activity
Other
Other
Other
Balance at March 31, 2023 (a)
Balance at March 31, 2023 (a)
Balance at March 31, 2023 (a)

Balance at December 31, 2023 (a)

Balance at December 31, 2023 (a)

Balance at December 31, 2023 (a)
Net income
Net income
Net income
Other comprehensive loss, net of tax
Other comprehensive loss, net of tax
Other comprehensive loss, net of tax
Cash dividends declared - Common
Cash dividends declared - Common
Cash dividends declared - Common
Cash dividends declared - Preferred
Cash dividends declared - Preferred
Cash dividends declared - Preferred
Preferred stock discount accretion
Preferred stock discount accretion
Preferred stock discount accretion

Treasury stock activity	Treasury stock activity	(4)					5						(730)				(725)

Other							32								(14)		18
Balance at June 30, 2022 (a)		411	$	2,714	$	6,004	$	12,527	$	51,841	$	(8,358)	$	(17,076)	$	36	$	47,688

Balance at March 31, 2023 (a)		399	$	2,714	$	7,235	$	12,629	$	54,598	$	(9,108)	$	(19,024)	$	30	$	49,074
Net income									1,483						17		1,500
Other comprehensive income (loss), net of tax											(417)						(417)
Cash dividends declared - Common									(606)								(606)
Cash dividends declared - Preferred									(127)								(127)
Preferred stock discount accretion					2				(2)
Treasury stock activity

Common stock activity			1				16										17

Treasury stock activity	Treasury stock activity	(1)					3						(126)				(123)

Other	Other						49								(21)		28
Balance at June 30, 2023 (a)		398	$	2,715	$	7,237	$	12,697	$	55,346	$	(9,525)	$	(19,150)	$	26	$	49,346
Six months ended

Other

Other
Balance at March 31, 2024 (a)
Balance at March 31, 2024 (a)
Balance at March 31, 2024 (a)

Balance at December 31, 2021 (a)		420	$	2,713	$	5,009	$	12,448	$	50,228	$	409	$	(15,112)	$	31	$	55,726
Net income									2,889						36		2,925
Other comprehensive income (loss), net of tax											(8,767)						(8,767)
Cash dividends declared - Common									(1,157)								(1,157)
Cash dividends declared - Preferred									(116)								(116)
Preferred stock discount accretion					3				(3)
Preferred stock issuance (b)					992												992
Common stock activity			1				14										15
Treasury stock activity		(9)					50						(1,964)				(1,914)

Other							15								(31)		(16)
Balance at June 30, 2022 (a)		411	$	2,714	$	6,004	$	12,527	$	51,841	$	(8,358)	$	(17,076)	$	36	$	47,688
Balance at December 31, 2022 (a)		401	$	2,714	$	5,746	$	12,630	$	53,572	$	(10,172)	$	(18,716)	$	38	$	45,812
Cumulative effect of ASU adoptions (c)									26								26
Balance at January 1, 2023 (a)		401	$	2,714	$	5,746	$	12,630	$	53,598	$	(10,172)	$	(18,716)	$	38	$	45,838
Net income									3,160						34		3,194
Other comprehensive income (loss), net of tax											647						647
Cash dividends declared - Common									(1,213)								(1,213)
Cash dividends declared - Preferred									(195)								(195)
Preferred stock discount accretion					4				(4)
Preferred stock issuance (d)					1,487												1,487
Common stock activity			1				16										17
Treasury stock activity		(3)					73						(434)				(361)

Other							(22)								(46)		(68)
Balance at June 30, 2023 (a)		398	$	2,715	$	7,237	$	12,697	$	55,346	$	(9,525)	$	(19,150)	$	26	$	49,346

(a)The par value of our preferred stock outstanding was less than $0.5 million at each date and, therefore, is excluded from this presentation.

(b)On April 26, 2022, PNC issued 1,000,000 depositary shares each representing 1/100th ownership in a share of 6.000% fixed-rate reset non-cumulative perpetual preferred stock, Series U, with a par value of $1 per share.

~~(c)~~Represents the cumulative effect of adopting ASU 2022-02.

~~(d)~~(c)On February 7, 2023, PNC issued 1,500,000 depositary shares each representing 1/100th ownership in a share of 6.250% fixed-rate reset non-cumulative perpetual preferred stock, Series W, with a par value of $1 per share.

66The PNC Financial Services Group, Inc. – Form 10-Q

Details of other comprehensive income (loss) are as follows:

Table ~~62:~~60: Other Comprehensive Income (Loss)


		Three months ended June 30												Six months ended June 30
		2023						2022						2023						2022

		2024
		2024
		2024
In millions
In millions
In millions	In millions	Pre-tax		Tax effect		After-tax		Pre-tax		Tax effect		After-tax		Pre-tax		Tax effect		After-tax		Pre-tax		Tax effect		After-tax
Debt securities	Debt securities
Debt securities
Debt securities
Net unrealized gains (losses) on securities	Net unrealized gains (losses) on securities	$	(476)	$	112	$	(364)	$	(2,929)	$	690	$	(2,239)	$	178	$	(42)	$	136	$	(9,247)	$	2,179	$	(7,068)
Less: Net realized gains (losses) reclassified to earnings (a)		(235)		55		(180)		(214)		50		(164)		(450)		106		(344)		(217)		51		(166)
Net unrealized gains (losses) on securities
Net unrealized gains (losses) on securities
Less: Net realized (losses) reclassified to earnings (a)
Less: Net realized (losses) reclassified to earnings (a)
Less: Net realized (losses) reclassified to earnings (a)
Net change
Net change
Net change	Net change	(241)		57		(184)		(2,715)		640		(2,075)		628		(148)		480		(9,030)		2,128		(6,902)
Cash flow hedge derivatives	Cash flow hedge derivatives
Cash flow hedge derivatives
Cash flow hedge derivatives
Net unrealized gains (losses) on cash flow hedge derivatives	Net unrealized gains (losses) on cash flow hedge derivatives	(689)		162		(527)		(676)		159		(517)		(492)		116		(376)		(2,332)		549		(1,783)
Less: Net realized gains (losses) reclassified to earnings (a)		(373)		88		(285)		25		(6)		19		(703)		166		(537)		127		(30)		97
Net unrealized gains (losses) on cash flow hedge derivatives
Net unrealized gains (losses) on cash flow hedge derivatives
Less: Net realized (losses) reclassified to earnings (a)
Less: Net realized (losses) reclassified to earnings (a)
Less: Net realized (losses) reclassified to earnings (a)
Net change
Net change
Net change	Net change	(316)		74		(242)		(701)		165		(536)		211		(50)		161		(2,459)		579		(1,880)
Pension and other postretirement benefit plan adjustments	Pension and other postretirement benefit plan adjustments
Pension and other postretirement benefit plan adjustments
Pension and other postretirement benefit plan adjustments
Net pension and other postretirement benefit plan activity and other reclassified to earnings (b)
Net pension and other postretirement benefit plan activity and other reclassified to earnings (b)
Net pension and other postretirement benefit plan activity and other reclassified to earnings (b)	Net pension and other postretirement benefit plan activity and other reclassified to earnings (b)	6		(1)		5		8		(2)		6		(4)		1		(3)		62		(15)		47
Net change	Net change	6		(1)		5		8		(2)		6		(4)		1		(3)		62		(15)		47
Net change
Net change
Other
Other
Other	Other
Net unrealized gains (losses) on other transactions	Net unrealized gains (losses) on other transactions	3		1		4		(4)		(18)		(22)		7		2		9		(7)		(25)		(32)
Net unrealized gains (losses) on other transactions
Net unrealized gains (losses) on other transactions
Net change
Net change
Net change	Net change	3		1		4		(4)		(18)		(22)		7		2		9		(7)		(25)		(32)

Total other comprehensive income (loss)	Total other comprehensive income (loss)	$	(548)	$	131	$	(417)	$	(3,412)	$	785	$	(2,627)	$	842	$	(195)	$	647	$	(11,434)	$	2,667	$	(8,767)

Total other comprehensive income (loss)

Total other comprehensive income (loss)

(a)Reclassifications for pre-tax debt securities and cash flow hedges are recorded in Interest income and Noninterest income on the Consolidated Income Statement.

(b)Reclassifications include amortization of actuarial losses (gains) and amortization of prior period ~~services~~service costs (credits), which are recorded in Noninterest expense on the Consolidated Income Statement.

Table ~~63:~~61: Accumulated Other Comprehensive Income (Loss) Components

In millions, after-tax Debt securities Cash flow hedge derivatives Pension and other postretirement benefit plan adjustments Other Total
Three months ended
Balance at March 31, 2022 $ (4,238) $ (1,545) $ 68 $ (16) $ (5,731)
Net activity (2,075) (536) 6 (22) (2,627)
Balance at June 30, 2022 (a) $ (6,313) $ (2,081) $ 74 $ (38) $ (8,358)
Balance at March 31, 2023 $ (6,500) $ (2,302) $ (259) $ (47) $ (9,108)
Net activity (184) (242) 5 4 (417)
Balance at June 30, 2023 (a) $ (6,684) $ (2,544) $ (254) $ (43) $ (9,525)
Six months ended
Balance at December 31, 2021 $ 589 $ (201) $ 27 $ (6) $ 409
Net activity (6,902) (1,880) 47 (32) (8,767)
Balance at June 30, 2022 (a) $ (6,313) $ (2,081) $ 74 $ (38) $ (8,358)
Balance at December 31, 2022 $ (7,164) $ (2,705) $ (251) $ (52) $ (10,172)
Net activity 480 161 (3) 9 647
Balance at June 30, 2023 (a) $ (6,684) $ (2,544) $ (254) $ (43) $ (9,525)


In millions, after-tax	Debt securities		Cash flow hedge derivatives		Pension and other postretirement benefit plan adjustments		Other		Total
Three months ended
Balance at December 31, 2022	$	(7,164)	$	(2,705)	$	(251)	$	(52)	$	(10,172)
Net activity	664		403		(8)		5		1,064
Balance at March 31, 2023 (a)	$	(6,500)	$	(2,302)	$	(259)	$	(47)	$	(9,108)
Balance at December 31, 2023	$	(5,830)	$	(1,713)	$	(125)	$	(44)	$	(7,712)
Net activity	(136)		(190)		(2)		(2)		(330)
Balance at March 31, 2024 (a)	$	(5,966)	$	(1,903)	$	(127)	$	(46)	$	(8,042)

(a)AOCI included pretax losses of ~~$301~~$289 million and ~~$141~~$305 million from derivatives that hedged the purchase of investment securities classified as held to maturity at ~~June 30,~~March 31, 2024 and March 31, 2023, ~~and June 30, 2022,~~ respectively.

78 ~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~

The following table provides the dividends per share for PNC’s common and preferred stock:

Table ~~64:~~62: Dividends Per Share (a)


		Three months ended June 30				Six months ended June 30
		2023		2022		2023		2022
		Three months ended March 31
		Three months ended March 31
		Three months ended March 31
		2024
		2024
		2024
Common Stock
Common Stock
Common Stock	Common Stock	$	1.50	$	1.50	$	3.00	$	2.75
Preferred Stock	Preferred Stock
Preferred Stock
Preferred Stock
Series B
Series B
Series B	Series B	$	0.45	$	0.45	$	0.90	$	0.90
Series O	Series O	$	2,100	$	987	$	4,174	$	1,961
Series P				$	1,532			$	3,063
Series O
Series O
Series R	Series R	$	2,425	$	2,425	$	2,425	$	2,425
Series S		$	2,500	$	2,500	$	2,500	$	2,500
Series R
Series R

Series T

Series T

Series T	Series T	$	850	$	850	$	1,700	$	1,700
Series U	Series U	$	1,500			$	3,000
Series U
Series U
Series V
Series V
Series V	Series V	$	1,550			$	3,100
Series W	Series W	$	2,222			$	2,222
Series W
Series W

(a) Dividends are payable ~~quarterly other than Series R and S preferred stock, which are payable semiannually.~~

quarterly.

On ~~July~~April 3, ~~2023,~~2024, the PNC Board of Directors ~~raised the~~declared a quarterly cash dividend on common stock toof $1.55 per share ~~an increase~~to be paid on May 6, 2024 to shareholders of ~~5 cents per share. The dividend, with a payment date~~record at the close of ~~August 5, 2023, will be payable the next~~ business ~~day.~~April 15, 2024.

The PNC Financial Services Group, Inc. – Form 10-Q 7967

NOTE 10 EARNINGS PER SHARE

Table ~~65:~~63: Basic and Diluted Earnings Per Common Share




		Three months ended June 30				Six months ended June 30
In millions, except per share data	In millions, except per share data	2023		2022		2023		2022
In millions, except per share data
In millions, except per share data
Basic
Basic
Basic	Basic
Net income	Net income	$	1,500	$	1,496	$	3,194	$	2,925
Net income
Net income
Less:
Less:
Less:	Less:
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	17		15		34		36
Net income attributable to noncontrolling interests
Net income attributable to noncontrolling interests
Preferred stock dividends
Preferred stock dividends
Preferred stock dividends	Preferred stock dividends	127		71		195		116
Preferred stock discount accretion and redemptions	Preferred stock discount accretion and redemptions	2		1		4		3
Preferred stock discount accretion and redemptions
Preferred stock discount accretion and redemptions
Net income attributable to common shareholders
Net income attributable to common shareholders
Net income attributable to common shareholders	Net income attributable to common shareholders	1,354		1,409		2,961		2,770
Less: Dividends and undistributed earnings allocated to nonvested restricted shares	Less: Dividends and undistributed earnings allocated to nonvested restricted shares	7		7		15		13
Less: Dividends and undistributed earnings allocated to nonvested restricted shares
Less: Dividends and undistributed earnings allocated to nonvested restricted shares
Net income attributable to basic common shareholders
Net income attributable to basic common shareholders
Net income attributable to basic common shareholders	Net income attributable to basic common shareholders	$	1,347	$	1,402	$	2,946	$	2,757

Basic weighted-average common shares outstanding	Basic weighted-average common shares outstanding	401		414		401		417

Basic weighted-average common shares outstanding

Basic weighted-average common shares outstanding
Basic earnings per common share (a)
Basic earnings per common share (a)
Basic earnings per common share (a)	Basic earnings per common share (a)	$	3.36	$	3.39	$	7.35	$	6.62

Diluted	Diluted

Diluted

Diluted
Net income attributable to diluted common shareholders
Net income attributable to diluted common shareholders
Net income attributable to diluted common shareholders	Net income attributable to diluted common shareholders	$	1,347	$	1,402	$	2,946	$	2,757

Basic weighted-average common shares outstanding	Basic weighted-average common shares outstanding	401		414		401		417

Basic weighted-average common shares outstanding

Basic weighted-average common shares outstanding
Dilutive potential common shares
Dilutive potential common shares
Dilutive potential common shares	Dilutive potential common shares
Diluted weighted-average common shares outstanding	Diluted weighted-average common shares outstanding	401		414		401		417
Diluted weighted-average common shares outstanding
Diluted weighted-average common shares outstanding
Diluted earnings per common share (a)
Diluted earnings per common share (a)
Diluted earnings per common share (a)	Diluted earnings per common share (a)	$	3.36	$	3.39	$	7.34	$	6.61

(a)Basic and diluted earnings per share under the two-class method are determined on net income reported on the income statement less earnings allocated to nonvested restricted shares and restricted share units with nonforfeitable dividends and dividend rights (participating securities).

8068 The PNC Financial Services Group, Inc. – Form 10-Q

NOTE 11 FAIR VALUE

Fair Value Measurement

We measure certain financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or the price that would be paid to transfer a liability on the measurement date and is determined using an exit price in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The fair value hierarchy established by GAAP requires us to maximize the use of observable inputs when measuring fair value. For more information regarding the fair value hierarchy, see Note 1514 Fair Value in our ~~2022~~2023 Form 10-K.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

For more information on the valuation methodologies used to measure assets and liabilities at fair value on a recurring basis, see Note 1514 Fair Value in our ~~2022~~2023 Form 10-K. The following table summarizes our assets and liabilities measured at fair value on a recurring basis, including instruments for which we have elected the fair value option.

Table ~~66:~~64: Fair Value Measurements – Recurring Basis Summary


		June 30, 2023								December 31, 2022
In millions	In millions	Level 1		Level 2		Level 3		Total Fair Value		Level 1		Level 2		Level 3		Total Fair Value
In millions
In millions
Assets
Assets
Assets	Assets
Residential mortgage loans held for sale	Residential mortgage loans held for sale			$	495	$	191	$	686			$	411	$	243	$	654
Residential mortgage loans held for sale
Residential mortgage loans held for sale
Commercial mortgage loans held for sale
Commercial mortgage loans held for sale
Commercial mortgage loans held for sale	Commercial mortgage loans held for sale			39		25		64				243		33		276

Securities available for sale	Securities available for sale

Securities available for sale

Securities available for sale
U.S. Treasury and government agencies
U.S. Treasury and government agencies
U.S. Treasury and government agencies	U.S. Treasury and government agencies	$	6,874	236				7,110		$	8,108	262				8,370
Residential mortgage-backed	Residential mortgage-backed
Residential mortgage-backed
Residential mortgage-backed
Agency
Agency
Agency	Agency			27,655				27,655				28,823				28,823
Non-agency	Non-agency					768		768						819		819
Non-agency
Non-agency
Commercial mortgage-backed
Commercial mortgage-backed
Commercial mortgage-backed	Commercial mortgage-backed
Agency	Agency			1,593				1,593				1,675				1,675
Agency
Agency
Non-agency
Non-agency
Non-agency	Non-agency			944		3		947				1,253		3		1,256
Asset-backed	Asset-backed			817		117		934				5		124		129
Asset-backed
Asset-backed
Other
Other
Other	Other			2,726		54		2,780				3,032		55		3,087
Total securities available for sale	Total securities available for sale	6,874		33,971		942		41,787		8,108		35,050		1,001		44,159
Total securities available for sale
Total securities available for sale
Loans
Loans
Loans	Loans			514		745		1,259				541		769		1,310
Equity investments (a)	Equity investments (a)	807				1,623		2,610		1,173				1,778		3,147
Equity investments (a)
Equity investments (a)
Residential mortgage servicing rights
Residential mortgage servicing rights
Residential mortgage servicing rights	Residential mortgage servicing rights					2,349		2,349						2,310		2,310
Commercial mortgage servicing rights	Commercial mortgage servicing rights					1,106		1,106						1,113		1,113
Commercial mortgage servicing rights
Commercial mortgage servicing rights
Trading securities (b)
Trading securities (b)
Trading securities (b)	Trading securities (b)	570		1,999				2,569		798		1,168				1,966
Financial derivatives (b) (c)	Financial derivatives (b) (c)	2		3,212		6		3,220		16		3,747		5		3,768
Financial derivatives (b) (c)
Financial derivatives (b) (c)
Other assets
Other assets
Other assets	Other assets	387		65				452		352		80				432
Total assets (d)	Total assets (d)	$	8,640	$	40,295	$	6,987	$	56,102	$	10,447	$	41,240	$	7,252	$	59,135
Total assets (d)
Total assets (d)
Liabilities
Liabilities
Liabilities	Liabilities
Other borrowed funds	Other borrowed funds	$	1,139	$	100	$	5	$	1,244	$	1,230	$	232	$	4	$	1,466
Other borrowed funds
Other borrowed funds
Financial derivatives (c) (e)
Financial derivatives (c) (e)
Financial derivatives (c) (e)	Financial derivatives (c) (e)	1		6,862		140		7,003		4		7,491		123		7,618
Other liabilities	Other liabilities					239		239						294		294
Other liabilities
Other liabilities
Total liabilities (f)	Total liabilities (f)	$	1,140	$	6,962	$	384	$	8,486	$	1,234	$	7,723	$	421	$	9,378
Total liabilities (f)
Total liabilities (f)

(a)Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

(b)Included in Other assets on the Consolidated Balance Sheet.

(c)Amounts at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 are presented gross and are not reduced by the impact of legally enforceable master netting agreements that allow us to net positive and negative positions and cash collateral held or placed with the same counterparty. See Note 12 Financial Derivatives for additional information related to derivative offsetting.

(d)Total assets at fair value as a percentage of total consolidated assets was 10% ~~and 11% as of June 30, 2023~~at both March 31, 2024 and December 31, ~~2022, respectively.~~2023. Level 3 assets as a percentage of total assets at fair value was ~~12%~~13% at both ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023. Level 3 assets as a percentage of total consolidated assets was 1% at both ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

(e)Included in Other liabilities on the Consolidated Balance Sheet.

(f)Total liabilities at fair value as a percentage of total consolidated liabilities was 2%1% at both ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023. Level 3 liabilities as a percentage of total liabilities at fair value was 5%4% and 4%6% at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively. Level 3 liabilities as a percentage of total consolidated liabilities was less than 1% at both ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

The PNC Financial Services Group, Inc. – Form 10-Q 8169

Reconciliations of assets and liabilities measured at fair value on a recurring basis using Level 3 inputs for the three ~~and six~~ months ended ~~June 30,~~March 31, 2024 and 2023 ~~and 2022~~ are as follows:

Table ~~67:~~65: Reconciliation of Level 3 Assets and Liabilities

Three Months Ended ~~June 30, 2023~~March 31, 2024




				Total realized / unrealized gains or losses for the period (a)																				Unrealized gains / losses for the period on assets and liabilities held on Consolidated Balance Sheet at June 30, 2023 (a) (c)					Total realized / unrealized gains or losses for the period (a)																																												Unrealized gains / losses for the period on assets and liabilities held on Consolidated Balance Sheet at Mar. 31, 2024 (a) (c)
Level 3 Instruments Only In millions	Level 3 Instruments Only In millions	Fair Value Mar. 31, 2023		Included in Earnings		Included in Other comprehensive income (b)			Purchases		Sales		Issuances		Settlements		Transfers into Level 3		Transfers out of Level 3			Fair Value June 30, 2023					Level 3 Instruments Only In millions	Fair Value Dec. 31, 2023			Included in Earnings			Included in Other comprehensive income (b)				Purchases			Sales			Issuances			Settlements			Transfers into Level 3									Transfers out of Level 3													Fair Value Mar. 31, 2024
Assets	Assets																										Assets
Residential mortgage loans held for sale	Residential mortgage loans held for sale	$	242	$	(4)				$	3	$	(41)			$	(2)			$	(7)	(e)	$	191	$	(3)		Residential mortgage loans held for sale	$	103		$	(1)										$	2								$	(2)		$	2			$					$	(6)		(d)	(d)								$	98	$	(1)
Commercial mortgage loans held for sale	Commercial mortgage loans held for sale	32		1											(8)							25					Commercial mortgage loans held for sale	11																																							11															11

Securities available for sale	Securities available for sale
Securities available for sale
Securities available for sale
Residential mortgage- backed non-agency
Residential mortgage- backed non-agency
Residential mortgage- backed non-agency	Residential mortgage- backed non-agency	787		4			$	14							(37)							768					696		3	3			$			$	(6)											(25)	(25)															668																668
Commercial mortgage- backed non-agency	Commercial mortgage- backed non-agency	3																				3					Commercial mortgage- backed non-agency	103																																							103															103
Asset-backed	Asset-backed	121		1			(1)								(4)							117					Asset-backed	102																							(2)	(2)															100															100
Other	Other	53							3						(2)							54					Other	55			(2)	(2)			1				1												(1)	(1)															53															53			(2)	(2)
Total securities available for sale	Total securities available for sale	964		5			13		3						(43)							942					Total securities available for sale	956			1	1			(5)				(5)										(28)											(28)														924													924		(2)	(2)
Loans	Loans	757		3					11		(1)				(28)		$	8	(5)		(e)	745		3
Equity investments	Equity investments	1,835		24					92		(328)											1,623		2
Equity investments
Equity investments																												1,952			(5)										89			$	(6)																														2,030		(5)
Residential mortgage servicing rights	Residential mortgage servicing rights	2,232		81					91				$	5	(60)							2,349		80
Commercial mortgage servicing rights
Commercial mortgage servicing rights
Commercial mortgage servicing rights	Commercial mortgage servicing rights	1,061		99					9				19		(82)							1,106		100			1,032		107	107										12	12					3	3		(79)	(79)															1,075																1,075		107	107

Financial derivatives	Financial derivatives	19		(10)					2						(5)							6		4

Financial derivatives
Financial derivatives																												6			9																			(6)																											9		9
Other assets																											Other assets	8																																																										8
Total assets	Total assets	$	7,142	$	199		$	13	$	211	$	(370)	$	24	$	(228)	$	8	$	(12)		$	6,987	$	186
Liabilities
Liabilities
Liabilities	Liabilities
Other borrowed funds	Other borrowed funds	$	5										$	3	$	(3)						$	5				Other borrowed funds	$	9													$																									$	3	$	(3)											$														$	9
Financial derivatives	Financial derivatives	97		$	79						$	1			(37)							140		$	80		Financial derivatives	152			$	8																													(47)	(47)													113																	113	$	9
Other liabilities	Other liabilities	229		31									89		(110)							239		21			Other liabilities	237			(20)	(20)																					13	13		(41)	(41)														189																	189		2	2
Total liabilities	Total liabilities	$	331	$	110						$	1	$	92	$	(150)						$	384	$	101		Total liabilities	$	398		$	(12)																					$	16		$	(91)														$																$	311	$	11
Net gains (losses)	Net gains (losses)			$	89	(f)																		$	85	(g)	Net gains (losses)				$	199		(e)	(e)																																								$	174	(f)	(f)

8270 The PNC Financial Services Group, Inc. – Form 10-Q

(Continued from previous page)

Three Months Ended ~~June 30, 2022~~March 31, 2023
   Total realized / unrealized
gains or losses for the
period (a)                   Unrealized gains/losses on assets and liabilities held on Consolidated Balance Sheet at June 30, 2022 (a) (c)
Level 3 Instruments Only
In millions Fair Value Mar. 31, 2022 Included in Earnings Included in Other comprehensive income (b) Purchases Sales Issuances Settlements Transfers into Level 3 Transfers out of Level 3 Fair Value June 30, 2022
Assets
Residential mortgage
   loans held for sale $ 108 $ (1) $ 8 $ (30) $ (4) $ 9 $ (7) (e) $ 83 $ (1)
Commercial mortgage
    loans held for sale 45 (7) 38
Securities available for sale
Residential mortgage-
    backed non-agency 1,019 7 $ (43) (58) 925
Commercial mortgage-backed non-agency 3 3
Asset-backed 152 1 (9) (6) 138
Other 66 (1) 2 67
Total securities
    available for sale 1,240 8 (53) 2 (64) 1,133
Loans 851 10 7 (1) (48) (15) (e) 804 9
Equity investments 1,751 92 87 (63) 1,867 94
Residential mortgage
    servicing rights 1,322 163 181 $ 17 (63) 1,620 163
Commercial mortgage
    servicing rights 886 111 17 14 (40) 988 111
Financial derivatives 10 7 2 (6) 13 13
Total assets $ 6,213 $ 390 $ (53) $ 304 $ (94) $ 31 $ (232) $ 9 $ (22) $ 6,546 $ 389
Liabilities
Other borrowed funds $ 3 $ 2 $ (2) $ 3
Financial derivatives 234 $ 18 $ 3 (42) 213 $ 19
Other liabilities 158 14 171 (161) 182 10
Total liabilities $ 395 $ 32 $ 3 $ 173 $ (205) $ 398 $ 29
Net gains (losses) $ 358 (f) $ 360 (g)

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ 83

~~(Continued from previous page)~~

~~Six Months Ended June 30, 2023~~

   Total realized / unrealized
gains or losses for the
period (a)                      Unrealized
gains / losses for the period
on assets and
liabilities held on
Consolidated
Balance Sheet at
June 30, 2023 (a) (c)
Level 3 Instruments Only
In millions Fair
Value
Dec. 31,
2022 Included in
Earnings Included
in Other
comprehensive
income (b) Purchases Sales Issuances Settlements Transfers
into
Level 3 Transfers
out of
Level 3 Fair
Value June 30, 2023
Assets
Residential mortgage
    loans held for sale $ 243 $ 9 $ (42) $ (7) $ 3 $ (15) (e) $ 191 $ 1
Commercial mortgage
    loans held for sale 33 (8) 25
Securities available for sale
Residential mortgage-
   backed non-agency 819 $ 8 $ 4 (63) 768
Commercial mortgage-
    backed non-agency 3 3
Asset-backed 124 1 (8) 117
Other 55 (4) 3 (3) 3 54
Total securities
    available for sale 1,001 9 3 (74) 3 942
Loans 769 6 20 (1) (50) 15 (14) (e) 745 6
Equity investments 1,778 145 232 (398) (134) (d) 1,623 119
Residential mortgage
    servicing rights 2,310 33 109 $ 10 (113) 2,349 33
Commercial mortgage
    servicing rights 1,113 108 17 32 (164) 1,106 108
Financial derivatives 5 7 3 (9) 6 10
Total assets $ 7,252 $ 308 $ 393 $ (441) $ 42 $ (425) $ 21 $ (163) $ 6,987 $ 277
Liabilities
Other borrowed funds $ 4 $ 6 $ (5) $ 5
Financial derivatives 123 $ 118 $ 3 (104) 140 $ 122
Other liabilities 294 55 107 (217) 239 42
Total liabilities $ 421 $ 173 $ 3 $ 113 $ (326) $ 384 $ 164
Net gains (losses) $ 135 (f) $ 113 (g)

84 ~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~

~~(Continued from previous page)~~

~~Six Months Ended June 30, 2022~~


				Total realized / unrealized gains or losses for the period (a)																				Unrealized gains / losses for the period on assets and liabilities held on Consolidated Balance Sheet at June 30, 2022 (a) (c)					Total realized / unrealized gains or losses for the period (a)											Unrealized gains/losses for the period on assets and liabilities held on Consolidated Balance Sheet at Mar. 31, 2023 (a) (c)
Level 3 Instruments Only In millions	Level 3 Instruments Only In millions	Fair Value Dec. 31, 2021		Included in Earnings		Included in Other comprehensive income (b)			Purchases		Sales		Issuances		Settlements		Transfers into Level 3		Transfers out of Level 3			Fair Value June 30, 2022					Level 3 Instruments Only In millions	Fair Value Dec. 31, 2022	Included in Earnings	Included in Other comprehensive income (b)			Purchases	Sales	Issuances	Settlements	Transfers into Level 3	Transfers out of Level 3	Fair Value Mar. 31, 2023
Assets	Assets																										Assets
Residential mortgage loans held for sale	Residential mortgage loans held for sale	$	81	$	(2)				$	45	$	(32)			$	(9)	$	14	$	(14)	(e)	$	83	$	(2)
Commercial mortgage loans held for sale	Commercial mortgage loans held for sale	49		(4)											(7)							38		(4)
Other consumer loans held for sale
Commercial mortgage loans held for sale
Commercial mortgage loans held for sale

Securities available for sale

Securities available for sale

Securities available for sale	Securities available for sale
Residential mortgage- backed non-agency	Residential mortgage- backed non-agency	1,097		15			$	(66)							(121)							925
Commercial mortgage- backed non-agency		3																				3
Residential mortgage- backed non-agency
Residential mortgage- backed non-agency
Commercial mortgage-backed non-agency
Commercial mortgage-backed non-agency
Commercial mortgage-backed non-agency
Asset-backed
Asset-backed
Asset-backed	Asset-backed	163		1			(13)								(13)							138
Other	Other	69					(2)		3						(3)							67
Other
Other
Total securities available for sale
Total securities available for sale
Total securities available for sale	Total securities available for sale	1,332		16			(81)		3						(137)							1,133
Loans	Loans	884		21					20		(8)				(97)				(16)		(e)	804		21
Loans
Loans
Equity investments
Equity investments
Equity investments	Equity investments	1,680		145					116		(74)											1,867		146
Residential mortgage servicing rights	Residential mortgage servicing rights	1,078		370					257				$	38	(123)							1,620		371
Residential mortgage servicing rights
Residential mortgage servicing rights
Commercial mortgage servicing rights
Commercial mortgage servicing rights
Commercial mortgage servicing rights	Commercial mortgage servicing rights	740		262					25				35		(74)							988		262

Financial derivatives	Financial derivatives	38		(6)					3						(22)							13		12

Financial derivatives

Financial derivatives

Total assets

Total assets

Total assets	Total assets	$	5,882	$	802		$	(81)	$	469	$	(114)	$	73	$	(469)	$	14	$	(30)		$	6,546	$	806
Liabilities	Liabilities
Liabilities
Liabilities
Other borrowed funds
Other borrowed funds
Other borrowed funds	Other borrowed funds	$	3										$	4	$	(4)						$	3
Financial derivatives	Financial derivatives	285		$	23						$	6			(101)							213		$	18
Financial derivatives
Financial derivatives
Other liabilities
Other liabilities
Other liabilities	Other liabilities	175		21									242		(256)							182		15
Total liabilities	Total liabilities	$	463	$	44						$	6	$	246	$	(361)						$	398	$	33
Total liabilities
Total liabilities
Net gains (losses)	Net gains (losses)			$	758	(f)																		$	773	(g)
Net gains (losses)
Net gains (losses)																														$	46	(e)									$	40	(f)

(a)Losses for assets are bracketed while losses for liabilities are not.

(b)The difference in unrealized gains and losses for the period included in Other comprehensive income and changes in unrealized gains and losses for the period included in Other comprehensive income for securities available for sale held at the end of the reporting period were insignificant.

(c)The amount of the total gains or losses for the period included in earnings that is attributable to the change in unrealized gains or losses related to those assets and liabilities held at the end of the reporting period.

(d)Transfers out of Level 3 during the current period were due to valuation methodology changes for certain private company investments. See Note 1 Accounting Policies in our 2022 Form 10-K for more information on our accounting for private company investments.

~~(e)~~Residential mortgage loan transfers out of Level 3 are primarily driven by residential mortgage loans transferring to OREO as well as reclassification of mortgage loans held for sale to held for investment.

~~(f)~~(e)Net gains (losses) realized and unrealized included in earnings related to Level 3 assets and liabilities included amortization and accretion. The amortization and accretion amounts were included in Interest income on the Consolidated Income Statement and the remaining net gains (losses) realized and unrealized were included in Noninterest income on the Consolidated Income Statement.

~~(g)~~(f)Net unrealized gains (losses) related to assets and liabilities held at the end of the reporting period were included in Noninterest income on the Consolidated Income Statement.

(g)

~~An instrument’s categorization within~~Transfers out of Level 3 during the ~~hierarchy is based~~prior period were due to valuation methodology changes for certain private company investments. See Note 1 Accounting Policies in our 2023 Form 10-K for more information on the lowest level of input that is significant to the fair value measurement. Changes from one quarter to the next related to the observability of inputs to a fair value measurement may result in a reclassification (transfer) of assets or liabilities between hierarchy levels.

our accounting for private company investments.

The PNC Financial Services Group, Inc. – Form 10-Q 8571

Quantitative information about the significant unobservable inputs within Level 3 recurring assets and liabilities follows:

Table ~~68:~~66: Fair Value Measurements – Recurring Quantitative Information

~~June 30, 2023~~March 31, 2024

Level 3 Instruments Only
Dollars in millions

Fair Value

Valuation Techniques

Unobservable Inputs

Range (Weighted-Average) (a)

Commercial mortgage loans held for sale

2511

Discounted cash flow

Spread over the benchmark curve (b)

~~590bps~~580bps - ~~2,440bps (1,275bps)~~7,155bps (2,649bps)

Residential mortgage-backed
non-agency securities

~~768~~668

Priced by a third-party vendor using a discounted cash flow pricing model

Constant prepayment rate

1.0% - 27.9% ~~(4.7%~~(2.9%)

Constant default rate

0.0% - 12.0% ~~(3.0%~~(1.9%)

Loss severity

~~15.0%~~10.0% - ~~83.3% (45.5%~~70.0% (42.3%)

Spread over the benchmark curve (b)

~~231bps~~268bps weighted-average

Asset-backed securities

~~117~~100

Priced by a third-party vendor using a discounted cash flow pricing model

Constant prepayment rate

1.0% - ~~40.0% (6.1%~~28.0% (4.1%)

Constant default rate

0.0% - ~~7.3% (2.0%~~8.1% (1.6%)

Loss severity

30.0% - 100.0% ~~(50.6%~~(49.7%)

Spread over the benchmark curve (b)

~~285bps~~227bps weighted-average

Loans - Residential real estate - Uninsured

~~556~~539

Consensus pricing (c)

Cumulative default rate

3.6% - 100.0% ~~(61.0%~~(58.2%)

Loss severity

0.0% - 100.0% ~~(5.7%~~(5.3%)

Discount rate

5.5% - 7.5% (5.8%)

Loans - Residential real estate

7673

Discounted cash flow

Loss severity

6.0% weighted-average

Discount rate

~~8.4%~~8.0% weighted-average

Loans - Home equity - First-lien

2117

Consensus pricing (c)

Cumulative default rate

3.6% ~~-100.0% (68.2%~~- 100.0% (60.7%)

Loss severity

0.0% - 100.0% ~~(15.9%~~(13.8%)

Discount rate

5.5% - 7.5% ~~(6.3%~~(6.1%)

Loans - Home equity

9284

Consensus pricing (c)

Credit and liquidity discount

~~0.4%~~0.3% - 100.0% ~~(45.0%~~(43.7%)

Equity investments

~~1,623~~2,030

Multiple of adjusted earnings

Multiple of earnings

~~4.5x~~5.5x - ~~20.0x (9.3x)~~27.0x (10.4x)

Residential mortgage servicing rights

~~2,349~~2,687

Discounted cash flow

Constant prepayment rate

0.0% - ~~41.9% (6.9%~~40.1% (6.3%)

Spread over the benchmark curve (b)

~~254bps~~337bps - ~~1,652bps (767bps)~~1,648bps (766bps)

Commercial mortgage servicing rights

~~1,106~~1,075

Discounted cash flow

Constant prepayment rate

~~4.0%~~5.0% - ~~11.1% (4.4%~~8.6% (5.2%)

Discount rate

~~6.7%~~8.0% - 10.3% (9.9%)

Financial derivatives - Swaps related to
sales of certain Visa Class BB-1
common shares

~~(131)~~(106)

Discounted cash flow

Estimated conversion factor of Visa Class BB-1 shares into Class A shares

~~159.0%~~1.59 weighted-average

Estimated annual growth rate of Visa Class A share price

16.0%

Estimated litigation resolution date

~~Q4 2023~~Q3 2024

Insignificant Level 3 assets, net of
liabilities (d)

166

Total Level 3 assets, net of liabilities (e)

~~6,603~~7,244

8672 The PNC Financial Services Group, Inc. – Form 10-Q

(Continued from previous page)

December 31, ~~2022~~2023

Level 3 Instruments Only
Dollars in millions

Fair Value

Valuation Techniques

Unobservable Inputs

Range (Weighted-Average) (a)

Commercial mortgage loans held for sale

3311

Discounted cash flow

Spread over the benchmark curve (b)

~~585bps~~575bps - ~~2,465bps (959bps)~~3,610bps (1,647bps)

Residential mortgage-backed
non-agency securities

~~819~~696

Priced by a third-party vendor using a discounted cash flow pricing model

Constant prepayment rate

1.0% - 27.9% ~~(9.9%~~(3.7%)

Constant default rate

0.0% - ~~13.0% (4.0%~~12.0% (2.7%)

Loss severity

~~15.0%~~10.0% - ~~80.0% (46.1%~~69.0% (41.2%)

Spread over the benchmark curve (b)

~~289bps~~285bps weighted-average

Asset-backed securities

~~124~~102

Priced by a third-party vendor using a discounted cash flow pricing model

Constant prepayment rate

1.0% - ~~40.0% (7.5%~~28.0% (5.1%)

Constant default rate

0.0% - ~~7.3% (2.1%~~4.3% (1.7%)

Loss severity

20.0% - 100.0% ~~(49.0%~~(49.5%)

Spread over the benchmark curve (b)

~~296bps~~248bps weighted-average

Loans - Residential real estate - Uninsured

~~570~~546

Consensus pricing (c)

Cumulative default rate

3.6% - 100.0% ~~(66.2%~~(59.1%)

Loss severity

0.0% - 100.0% ~~(6.2%~~(5.4%)

Discount rate

5.5% - 7.5% ~~(5.9%~~(5.8%)

Loans - Residential real estate

7675

Discounted cash flow

Loss severity

6.0% weighted-average

Discount rate

~~7.9%~~7.8% weighted-average

Loans - Home equity - First-lien

2518

Consensus pricing (c)

Cumulative default rate

3.6% - 100.0% ~~(72.5%~~(60.9%)

Loss severity

0.0% - 100.0% ~~(15.3%~~(14.4%)

Discount rate

5.5% - 7.5% ~~(6.5%~~(6.2%)

Loans - Home equity

9887

Consensus pricing (c)

Credit and Liquidity discount

~~0.4%~~0.3% - 100.0% ~~(46.2%~~(43.8%)

Equity investments

~~1,778~~1,952

Multiple of adjusted earnings

Multiple of earnings

4.5x - ~~25.0x (9.1x)~~26.7x (10.1x)

Residential mortgage servicing rights

~~2,310~~2,654

Discounted cash flow

Constant prepayment rate

0.0% - ~~34.5% (6.7%~~33.6% (6.4%)

Spread over the benchmark curve (b)

~~254bps~~337bps - ~~1,653bps (766bps)~~1,668bps (765bps)

Commercial mortgage servicing rights

~~1,113~~1,032

Discounted cash flow

Constant prepayment rate

~~3.9%~~5.3% - ~~9.8% (4.3%~~9.7% (5.5%)

Discount rate

~~7.8%~~7.6% - ~~10.1% (9.8%~~10.0% (9.6%)

Financial derivatives - Swaps related to
sales of certain Visa Class BB-1
common shares

~~(107)~~(145)

Discounted cash flow

Estimated conversion factor of Visa Class BB-1 shares into Class A shares

~~160.6%~~1.59 weighted-average

Estimated annual growth rate of Visa Class A share price

16.0%

Estimated litigation resolution date

~~Q2 2023~~Q3 2024

Insignificant Level 3 assets, net of
liabilities (d)

~~(8)~~22

Total Level 3 assets, net of liabilities (e)

~~6,831~~7,050

(a)Unobservable inputs were weighted by the relative fair value of the instruments.

(b)The assumed yield spread over the benchmark curve for each instrument is generally intended to incorporate non-interest rate risks, such as credit and liquidity risks.

(c)Consensus pricing refers to fair value estimates that are generally internally developed using information such as dealer quotes or other third-party provided valuations or comparable asset prices.

(d)Represents the aggregate amount of Level 3 assets and liabilities measured at fair value on a recurring basis that are individually and in the aggregate insignificant. The amount includes certain financial derivative assets and liabilities, trading securities, other securities, residential mortgage loans held for sale, other assets, other borrowed funds and other liabilities.

(e)Consisted of total Level 3 assets of ~~$7.0~~$7.6 billion and total Level 3 liabilities of ~~$0.4~~$0.3 billion as of ~~June 30, 2023~~March 31, 2024 and ~~$7.3~~$7.4 billion and $0.4 billion as of December 31, ~~2022,~~2023, respectively.

Financial Assets Accounted for at Fair Value on a Nonrecurring Basis

We may be required to measure certain financial assets at fair value on a nonrecurring basis. These adjustments to fair value usually result from the application of lower of amortized cost or fair value accounting or write-downs of individual assets due to impairment and are included in Table ~~69.~~67. For more information regarding the valuation methodologies of our financial assets measured at fair value on a nonrecurring basis, see Note 1514 Fair Value in our ~~2022~~2023 Form 10-K.

The PNC Financial Services Group, Inc. – Form 10-Q 8773

Assets measured at fair value on a nonrecurring basis follow:

Table ~~69:~~67: Fair Value Measurements – Nonrecurring (a) (b) (c)




		Fair Value				Gains (Losses) Three months ended				Gains (Losses) Six months ended
In millions	In millions	June 30 2023		December 31 2022		June 30 2023		June 30 2022		June 30 2023		June 30 2022
In millions
In millions
Assets
Assets
Assets	Assets
Nonaccrual loans	Nonaccrual loans	$	373	$	280	$	(99)	$	(19)	$	(174)	$	(28)
Nonaccrual loans
Nonaccrual loans
Equity investments
Equity investments
Equity investments	Equity investments	87		135		(5)		1		(8)

OREO and foreclosed assets	OREO and foreclosed assets	8		10						(1)

OREO and foreclosed assets

OREO and foreclosed assets
Long-lived assets
Long-lived assets
Long-lived assets	Long-lived assets	435		23		(10)		(3)		(15)		(5)
Total assets	Total assets	$	903	$	448	$	(114)	$	(21)	$	(198)	$	(33)
Total assets
Total assets

(a)All Level 3 for the periods presented, except for ~~$22 million and $42~~$30 million included in Equity investments which ~~were~~was categorized as Level 1 as of ~~June 30, 2023 and~~ December 31, ~~2022, respectively.~~2023.

(b)Valuation techniques applied were fair value of property or collateral.

(c)Unobservable inputs used were appraised value/sales price, broker opinions or projected income/required improvement costs. Additional quantitative information was not meaningful for the periods presented.

Financial Instruments Accounted for under Fair Value Option

We elect the fair value option to account for certain financial instruments. For more information on these financial instruments for which the fair value option election has been made, see Note 1514 Fair Value in our ~~2022~~2023 Form 10-K.

Fair values and aggregate unpaid principal balances of items for which we elected the fair value option are as follows:

Table ~~70:~~68: Fair Value Option – Fair Value and Principal Balances


	March 31, 2024
In millions
In millions
In millions
Assets
Assets
Assets
Residential mortgage loans held for sale
Residential mortgage loans held for sale
Residential mortgage loans held for sale
Accruing loans less than 90 days past due
Accruing loans less than 90 days past due
Accruing loans less than 90 days past due
Accruing loans 90 days or more past due
Accruing loans 90 days or more past due
Accruing loans 90 days or more past due
Nonaccrual loans
Nonaccrual loans
Nonaccrual loans
Total
Total
Total
Commercial mortgage loans held for sale (a) (b)
Commercial mortgage loans held for sale (a) (b)
Commercial mortgage loans held for sale (a) (b)
Accruing loans less than 90 days past due
Accruing loans less than 90 days past due
Accruing loans less than 90 days past due

		June 30, 2023						December 31, 2022
In millions		Fair Value		Aggregate Unpaid Principal Balance		Difference		Fair Value		Aggregate Unpaid Principal Balance		Difference
Assets
Residential mortgage loans held for sale
Loans

Loans

Loans
Accruing loans less than 90 days past due
Accruing loans less than 90 days past due
Accruing loans less than 90 days past due	Accruing loans less than 90 days past due	$	651	$	671	$	(20)	$	609	$	633	$	(24)
Accruing loans 90 days or more past due	Accruing loans 90 days or more past due	2		2				5		5
Accruing loans 90 days or more past due
Accruing loans 90 days or more past due
Nonaccrual loans
Nonaccrual loans
Nonaccrual loans	Nonaccrual loans	33		40		(7)		40		49		(9)
Total	Total	$	686	$	713	$	(27)	$	654	$	687	$	(33)
Commercial mortgage loans held for sale (a)
Accruing loans less than 90 days past due		$	49	$	51	$	(2)	$	261	$	256	$	5
Nonaccrual loans		15		44		(29)		15		44		(29)
Total	Total	$	64	$	95	$	(31)	$	276	$	300	$	(24)
Loans
Accruing loans less than 90 days past due		$	510	$	523	$	(13)	$	509	$	521	$	(12)
Accruing loans 90 days or more past due		132		143		(11)		155		167		(12)
Nonaccrual loans		617		841		(224)		646		880		(234)
Total	Total	$	1,259	$	1,507	$	(248)	$	1,310	$	1,568	$	(258)
Other assets	Other assets	$	64	$	65	$	(1)	$	80	$	80
Other assets
Other assets
Liabilities
Liabilities
Liabilities	Liabilities
Other borrowed funds	Other borrowed funds	$	32	$	33	$	(1)	$	31	$	32	$	(1)
Other borrowed funds
Other borrowed funds
Other liabilities	Other liabilities	$	127			$	127	$	196			$	196
Other liabilities
Other liabilities

(a)There were no accruing loans 90 days or more past due within this category at ~~June 30, 2023~~March 31, 2024 or December 31, ~~2022.~~2023.

(b)There were no nonaccrual loans within this category at March 31, 2024 or December 31, 2023.

8874 The PNC Financial Services Group, Inc. – Form 10-Q

The changes in fair value for items for which we elected the fair value option are as follows:

Table ~~71:~~69: Fair Value Option – Changes in Fair Value (a)


		Gains (Losses)
		Gains (Losses)
		Gains (Losses)

		Gains (Losses)				Gains (Losses)
		Three months ended				Six months ended
		June 30		June 30		June 30		June 30
		March 31
		March 31
		March 31
In millions
In millions
In millions	In millions	2023		2022		2023		2022
Assets	Assets
Assets
Assets
Residential mortgage loans held for sale
Residential mortgage loans held for sale
Residential mortgage loans held for sale	Residential mortgage loans held for sale	$	2	$	(23)	$	17	$	(63)
Commercial mortgage loans held for sale	Commercial mortgage loans held for sale	$	22	$	14	$	23	$	20
Commercial mortgage loans held for sale
Commercial mortgage loans held for sale
Loans
Loans
Loans	Loans	$	5	$	15	$	9	$	36
Other assets	Other assets	$	2	$	(11)	$	(12)	$	(18)
Other assets
Other assets
Liabilities
Liabilities
Liabilities	Liabilities
Other liabilities	Other liabilities	$	(21)	$	(10)	$	(41)	$	(16)
Other liabilities
Other liabilities

(a)The impact on earnings of offsetting hedged items or hedging instruments is not reflected in these amounts.

Additional Fair Value Information Related to Financial Instruments Not Recorded at Fair Value

The following table presents the carrying amounts and estimated fair values, as well as the level within the fair value hierarchy, of all other financial instruments that are not recorded on our Consolidated Balance Sheet at fair value as of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023. For more information regarding the methods and assumptions used to estimate the fair values of financial instruments included in Table ~~72,~~70, see Note 1514 Fair Value in our ~~2022~~2023 Form 10-K.

Table ~~72:~~70: Additional Fair Value Information Related to Other Financial Instruments


		Carrying		Fair Value
In millions	In millions	Amount		Total		Level 1		Level 2		Level 3
June 30, 2023
In millions
In millions
March 31, 2024
March 31, 2024
March 31, 2024
Assets
Assets
Assets	Assets
Cash and due from banks	Cash and due from banks	$	6,191	$	6,191	$	6,191
Cash and due from banks
Cash and due from banks
Interest-earning deposits with banks
Interest-earning deposits with banks
Interest-earning deposits with banks	Interest-earning deposits with banks	38,259		38,259				$	38,259
Securities held to maturity	Securities held to maturity	93,879		88,896		30,939		57,808		$	149
Securities held to maturity
Securities held to maturity
Net loans (excludes leases)
Net loans (excludes leases)
Net loans (excludes leases)	Net loans (excludes leases)	309,365		301,597						301,597
Other assets	Other assets	5,971		5,971				5,958		13
Other assets
Other assets
Total assets
Total assets
Total assets	Total assets	$	453,665	$	440,914	$	37,130	$	102,025	$	301,759
Liabilities	Liabilities
Liabilities
Liabilities
Time deposits
Time deposits
Time deposits	Time deposits	$	22,864	$	22,696			$	22,696
Borrowed funds	Borrowed funds	64,060		64,278				62,441		$	1,837
Borrowed funds
Borrowed funds
Unfunded lending related commitments
Unfunded lending related commitments
Unfunded lending related commitments	Unfunded lending related commitments	663		663						663
Other liabilities	Other liabilities	948		948				948
Other liabilities
Other liabilities
Total liabilities	Total liabilities	$	88,535	$	88,585			$	86,085	$	2,500
December 31, 2022
Total liabilities
Total liabilities
December 31, 2023
December 31, 2023
December 31, 2023
Assets
Assets
Assets	Assets
Cash and due from banks	Cash and due from banks	$	7,043	$	7,043	$	7,043
Cash and due from banks
Cash and due from banks
Interest-earning deposits with banks
Interest-earning deposits with banks
Interest-earning deposits with banks	Interest-earning deposits with banks	27,320		27,320				$	27,320
Securities held to maturity	Securities held to maturity	95,183		90,279		30,748		59,377		$	154
Securities held to maturity
Securities held to maturity
Net loans (excludes leases)
Net loans (excludes leases)
Net loans (excludes leases)	Net loans (excludes leases)	313,460		310,864						310,864
Other assets	Other assets	6,022		6,022				6,020		2
Other assets
Other assets
Total assets
Total assets
Total assets	Total assets	$	449,028	$	441,528	$	37,791	$	92,717	$	311,020
Liabilities	Liabilities
Liabilities
Liabilities
Time deposits
Time deposits
Time deposits	Time deposits	$	18,470	$	18,298			$	18,298
Borrowed funds	Borrowed funds	57,182		57,557				55,922		$	1,635
Borrowed funds
Borrowed funds
Unfunded lending related commitments
Unfunded lending related commitments
Unfunded lending related commitments	Unfunded lending related commitments	694		694						694
Other liabilities	Other liabilities	660		660				660
Other liabilities
Other liabilities
Total liabilities	Total liabilities	$	77,006	$	77,209			$	74,880	$	2,329
Total liabilities
Total liabilities

The PNC Financial Services Group, Inc. – Form 10-Q 8975

The aggregate fair values in Table 7270 represent only a portion of the total market value of our assets and liabilities as, in accordance with the guidance related to fair values about financial instruments, we exclude the following:

•financial instruments recorded at fair value on a recurring basis (as they are disclosed in Table ~~66)~~64),

•investments accounted for under the equity method,

•equity securities without a readily determinable fair value that apply for the alternative measurement approach to fair value under ASU 2016-01,

•real and personal property,

•lease financing,

•loan customer relationships,

•deposit customer intangibles,

•MSRs,

•retail branch networks,

•fee-based businesses, such as asset management and brokerage,

•trademarks and brand names,

•trade receivables and payables due in one year or less,

•deposit liabilities with no defined or contractual maturities under ASU 2016-01, and

•insurance contracts.

NOTE 12 FINANCIAL DERIVATIVES

We use a variety of financial derivatives to both mitigate exposure to market (primarily interest rate) and credit risks inherent in our business activities, as well as to facilitate customer risk management activities. We manage these risks as part of our overall asset and liability management process and through our credit policies and procedures. Derivatives represent contracts between parties that usually require little or no initial net investment and result in one party delivering cash or another type of asset to the other party based on a notional amount and an underlying as specified in the contract.

Derivative transactions are often measured in terms of notional amount, but this amount is generally not exchanged and it is not recorded on the balance sheet. The notional amount is the basis to which the underlying is applied to determine required payments under the derivative contract. The underlying is a referenced interest rate, security price, credit spread or other index. Residential and commercial real estate loan commitments associated with loans to be sold also qualify as derivative instruments.

For more information regarding derivatives, see Note 1 Accounting Policies and Note 1615 Financial Derivatives in our ~~2022~~2023 Form 10-K.

9076 The PNC Financial Services Group, Inc. – Form 10-Q

~~Table 73~~

The following tables presents the notional and gross fair value amounts of all derivative assets and liabilities held by ~~us.~~

During the second quarter, in anticipation of LIBOR’s cessation on June 30, 2023, LIBOR-indexed interest-rate swap contracts with central clearing counterparties were subject to a conversion process whereby an individual LIBOR swap contract was exchanged for a SOFR replacement swap contract, along with one or more overlay swap contracts replicating the final LIBOR cash flows on the original swap contract. The swap contracts exchanged were substantially economically equivalent. Conversion-related valuation differences were settled in cash on the conversion dates and were not material. The SOFR replacement and overlay swaps are considered separate contracts, and the overlay swaps will result in a gross-up of the notional amounts presented until those swaps mature upon settlement of the final LIBOR payment. The majority of overlay swaps will mature in the third quarter of 2023.us:

Table ~~73:~~71: Total Gross Derivatives (a)


		June 30, 2023						December 31, 2022							March 31, 2024			December 31, 2023
In millions	In millions	Notional / Contract Amount		Asset Fair Value (b)		Liability Fair Value (c)		Notional / Contract Amount		Asset Fair Value (b)		Liability Fair Value (c)		In millions	Notional / Contract Amount	Asset Fair Value (b)	Liability Fair Value (c)	Notional / Contract Amount	Asset Fair Value (b)	Liability Fair Value (c)
Derivatives used for hedging	Derivatives used for hedging
Interest rate contracts (d):
Fair value hedges (e)		$	48,088					$	24,231
Cash flow hedges (e)		86,922				$	3	40,310				$	1
Interest rate contracts:
Interest rate contracts:
Interest rate contracts:
Fair value hedges (d)
Fair value hedges (d)
Fair value hedges (d)
Cash flow hedges (d)
Cash flow hedges (d)
Cash flow hedges (d)															36,499				33,302
Cash flow hedges - other (e)
Foreign exchange contracts:	Foreign exchange contracts:
Net investment hedges
Net investment hedges
Net investment hedges	Net investment hedges	1,101				22		1,120		$	24
Total derivatives designated for hedging	Total derivatives designated for hedging	$	136,111			$	25	$	65,661	$	24	$	1
Derivatives not used for hedging	Derivatives not used for hedging
Derivatives used for mortgage banking activities (f):	Derivatives used for mortgage banking activities (f):
Derivatives used for mortgage banking activities (f):
Derivatives used for mortgage banking activities (f):
Interest rate contracts:
Interest rate contracts:
Interest rate contracts:	Interest rate contracts:
Swaps ~~(g)~~	Swaps ~~(g)~~	$	73,477			$	1	$	47,908	$	7	$	1
Swaps ~~(g)~~
Swaps ~~(g)~~
Futures ~~(h)~~(g)	Futures ~~(h)~~(g)	8,026						5,537
Mortgage-backed commitments
Mortgage-backed commitments
Mortgage-backed commitments	Mortgage-backed commitments	5,277		$	68	63		4,516		85		89
Other	Other	12,561		65		12		18,017		90		14
Total interest rate contracts	Total interest rate contracts	99,341		133		76		75,978		182		104
Derivatives used for customer-related activities:	Derivatives used for customer-related activities:
Interest rate contracts:	Interest rate contracts:
Swaps (g)		811,705		1,798		5,501		354,150		1,597		5,397
Interest rate contracts:
Interest rate contracts:
Swaps
Swaps
Swaps
Futures ~~(h)~~(g)	Futures ~~(h)~~(g)	72						32
Mortgage-backed commitments
Mortgage-backed commitments
Mortgage-backed commitments	Mortgage-backed commitments	3,531		11		5		2,799		10		6
Other	Other	28,779		314		292		29,071		334		321
Total interest rate contracts	Total interest rate contracts	844,087		2,123		5,798		386,052		1,941		5,724
Commodity contracts:	Commodity contracts:
Swaps
Swaps
Swaps	Swaps	6,084		525		552		5,792		1,003		1,067
Other	Other	3,251		97		97		4,488		205		202
Total commodity contracts	Total commodity contracts	9,335		622		649		10,280		1,208		1,269
Foreign exchange contracts and other	Foreign exchange contracts and other	30,426		308		256		30,512		366		293
Total derivatives for customer-related activities	Total derivatives for customer-related activities	883,848		3,053		6,703		426,844		3,515		7,286
Derivatives used for other risk management activities:	Derivatives used for other risk management activities:
Foreign exchange contracts and other	Foreign exchange contracts and other	21,875		34		199		12,785		47		227
Foreign exchange contracts and other
Foreign exchange contracts and other
Total derivatives not designated for hedging	Total derivatives not designated for hedging	$	1,005,064	$	3,220	$	6,978	$	515,607	$	3,744	$	7,617
Total gross derivatives	Total gross derivatives	$	1,141,175	$	3,220	$	7,003	$	581,268	$	3,768	$	7,618
Less: Impact of legally enforceable master netting agreements	Less: Impact of legally enforceable master netting agreements			1,303		1,303				1,523		1,523
Less: Cash collateral received/paid	Less: Cash collateral received/paid			1,134		1,135				714		1,571
Total derivatives	Total derivatives			$	783	$	4,565			$	1,531	$	4,524

(a)Centrally cleared derivatives are settled in cash daily and result in no derivative asset or derivative liability being recognized on our Consolidated Balance Sheet.

(b)Included in Other assets on our Consolidated Balance Sheet.

(c)Included in Other liabilities on our Consolidated Balance Sheet.

(d)Represents primarily swaps.

(e)~~At June 30, 2023, the gross-up of the notional amounts due to overlay swap contracts for fair value~~Represents caps and ~~cash flow hedges were $18.8 billion and $47.0 billion, respectively.~~floors.

(f)Includes both residential and commercial mortgage banking activities.

(g)~~At June 30, 2023, the gross-up of the notional amounts due to overlay swap contracts used for mortgage banking and customer-related activities were $26.0 billion and $423.0 billion, respectively.~~

~~(h)~~Futures contracts are settled in cash daily and result in no derivative asset or derivative liability being recognized on our Consolidated Balance Sheet.

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ 91

All derivatives are carried on our Consolidated Balance Sheet at fair value. Derivative balances are presented on the Consolidated Balance Sheet on a net basis taking into consideration the effects of legally enforceable master netting agreements and, when appropriate, any related cash collateral exchanged with counterparties. Further discussion regarding the offsetting rights associated with these legally enforceable master netting agreements is included in the Offsetting and Counterparty Credit Risk section of this Note 12. Any nonperformance risk, including credit risk, is included in the determination of the estimated net fair value of the derivatives.

The PNC Financial Services Group, Inc. – Form 10-Q 77

Derivatives Designated As Hedging Instruments

Certain derivatives used to manage interest rate and foreign exchange risk as part of our asset and liability risk management activities are designated as accounting hedges. Derivatives hedging the risks associated with changes in the fair value of assets or liabilities are considered fair value hedges, derivatives hedging the variability of expected future cash flows are considered cash flow hedges and derivatives hedging a net investment in a foreign subsidiary are considered net investment hedges. Designating derivatives as accounting hedges allows for gains and losses on those derivatives to be recognized in the same period and in the same income statement line item as the earnings impact of the hedged items.

Fair Value Hedges

We enter into receive-fixed, pay-variable interest rate swaps to hedge changes in the fair value of outstanding fixed-rate debt caused by fluctuations in market interest rates. We also enter into pay-fixed, receive-variable interest rate swaps and zero-coupon swaps to hedge changes in the fair value of fixed rate and zero-coupon investment securities caused by fluctuations in market interest rates. Gains and losses on the interest rate swaps designated in these hedge relationships, along with the offsetting gains and losses on the hedged items attributable to the hedged risk, are recognized in current earnings within the same income statement line item.

Cash Flow Hedges

We enter into receive-fixed, pay-variable interest rate swaps and interest rate caps and floors to modify the interest rate characteristics of designated commercial loans from variable to fixed in order to reduce the impact of changes in future cash flows due to market interest rate changes. We also periodically enter into forward purchase and sale contracts to hedge the variability of the consideration that will be paid or received related to the purchase or sale of investment securities. The forecasted purchase or sale is consummated upon gross settlement of the forward contract itself. For these cash flow hedges, gains and losses on the hedging instruments are recorded in AOCI and are then reclassified into earnings in the same period the hedged cash flows affect earnings and within the same income statement line as the hedged cash flows.

In the 12 months that follow ~~June 30, 2023,~~March 31, 2024, we expect to reclassify net derivative losses of ~~$1.5~~$1.2 billion pretax, or ~~$1.2~~$0.9 billion after-tax, from AOCI to interest income for these cash flow hedge strategies. This reclassified amount could differ from amounts actually recognized due to changes in interest rates, hedge de-designations and the addition of other hedges subsequent to ~~June 30, 2023.~~March 31, 2024. As of ~~June 30, 2023,~~March 31, 2024, the maximum length of time over which forecasted transactions are hedged is ten years.

9278 The PNC Financial Services Group, Inc. – Form 10-Q

Further detail regarding gains (losses) related to our fair value and cash flow hedge derivatives is presented in the following table:

Table ~~74:~~72: Gains (Losses) Recognized on Fair Value and Cash Flow Hedges in the Consolidated Income Statement (a) (b)


											Location and Amount of Gains (Losses) Recognized in Income
	Interest Income															Interest Income		Interest Expense	Noninterest Income
In millions										In millions	Loans		Investment Securities		Borrowed Funds		Other
For the three months ended March 31, 2024
Total amounts in the Consolidated Income Statement
Total amounts in the Consolidated Income Statement
Total amounts in the Consolidated Income Statement
Gains (losses) on fair value hedges recognized on:
Hedged items (c)
Hedged items (c)
Hedged items (c)
Derivatives
Derivatives
Derivatives
Amounts related to interest settlements on derivatives
Amounts related to interest settlements on derivatives
Amounts related to interest settlements on derivatives
Gains (losses) on cash flow hedges (d):
Gains (losses) on cash flow hedges (d):
Gains (losses) on cash flow hedges (d):
Amount of derivative gains (losses) reclassified from accumulated other comprehensive income
Amount of derivative gains (losses) reclassified from accumulated other comprehensive income
Amount of derivative gains (losses) reclassified from accumulated other comprehensive income
Other amounts related to interest settlements on derivatives
Other amounts related to interest settlements on derivatives
Other amounts related to interest settlements on derivatives
For the three months ended March 31, 2023
For the three months ended March 31, 2023
For the three months ended March 31, 2023
Total amounts in the Consolidated Income Statement
Total amounts in the Consolidated Income Statement
Total amounts in the Consolidated Income Statement
Gains (losses) on fair value hedges recognized on:
Hedged items (c)
Hedged items (c)
Hedged items (c)
Derivatives
Derivatives
Derivatives
Amounts related to interest settlements on derivatives
Amounts related to interest settlements on derivatives
Amounts related to interest settlements on derivatives
Gains (losses) on cash flow hedges (d):
Gains (losses) on cash flow hedges (d):
Gains (losses) on cash flow hedges (d):
Amount of derivative gains (losses) reclassified from accumulated other comprehensive income
Amount of derivative gains (losses) reclassified from accumulated other comprehensive income
Amount of derivative gains (losses) reclassified from accumulated other comprehensive income											$	(325)	$	(5)
Other amounts related to interest settlements on derivatives

		Location and Amount of Gains (Losses) Recognized in Income
		Interest Income				Interest Expense		Noninterest Income
In millions		Loans		Investment Securities		Borrowed Funds		Other
For the three months ended June 30, 2023
Total amounts in the Consolidated Income Statement		$	4,523	$	883	$	903	$	129
Gains (losses) on fair value hedges recognized on:
Hedged items (c)				$	(48)	$	432
Derivatives				$	50	$	(439)
Amounts related to interest settlements on derivatives				$	7	$	(147)
Gains (losses) on cash flow hedges (d):
Amount of derivative gains (losses) reclassified from accumulated other comprehensive income		$	(365)	$	(8)
For the three months ended June 30, 2022
Total amounts in the Consolidated Income Statement		$	2,504	$	631	$	142	$	177
Gains (losses) on fair value hedges recognized on:
Hedged items (c)				$	(28)	$	443
Derivatives				$	30	$	(451)
Amounts related to interest settlements on derivatives				$	(2)	$	74
Gains (losses) on cash flow hedges (d):
Amount of derivative gains (losses) reclassified from accumulated other comprehensive income		$	25
For the six months ended June 30, 2023
Total amounts on the Consolidated Income Statement		$	8,781	$	1,768	$	1,686	$	387
Gains (losses) on fair value hedges recognized on:
Hedged items (c)				$	(1)	$	135
Derivatives				$	5	$	(148)
Amounts related to interest settlements on derivatives				$	12	$	(260)
Gains (losses) on cash flow hedges (d):
Amount of derivative gains (losses) reclassified from accumulated other comprehensive income		$	(690)	$	(13)
For the six months ended June 30, 2022
Total amounts on the Consolidated Income Statement		$	4,797	$	1,175	$	225	$	388
Gains (losses) on fair value hedges recognized on:
Hedged items (c)				$	(46)	$	1,377
Derivatives				$	49	$	(1,395)
Amounts related to interest settlements on derivatives				$	(3)	$	184
Gains (losses) on cash flow hedges (d):
Amount of derivative gains (losses) reclassified from accumulated other comprehensive income		$	117	$	10

(a)For all periods presented, there were no components of derivative gains or losses excluded from the assessment of hedge effectiveness for any of the fair value or cash flow hedge strategies.

(b)All cash flow and fair value hedge derivatives were interest rate contracts for the periods presented.

(c)Includes an insignificant amount of fair value hedge adjustments related to discontinued hedge relationships.

(d)For all periods presented, there were no gains or losses from cash flow hedge derivatives reclassified to income because it became probable that the original forecasted transaction would not occur.

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ 93

Detail regarding the impact of fair value hedge accounting on the carrying value of the hedged items is presented in the following table:

Table ~~75:~~73: Hedged Items - Fair Value Hedges


		June 30, 2023				December 31, 2022				March 31, 2024	December 31, 2023
In millions	In millions	Carrying Value of the Hedged Items		Cumulative Fair Value Hedge Adjustment included in the Carrying Value of Hedged Items (a)		Carrying Value of the Hedged Items		Cumulative Fair Value Hedge Adjustment included in the Carrying Value of Hedged Items (a)
Investment securities - available for sale (b)	Investment securities - available for sale (b)	$	1,915	$	(124)	$	2,376	$	(121)
Investment securities - available for sale (b)
Investment securities - available for sale (b)
Borrowed funds	Borrowed funds	$	26,360	$	(1,417)	$	21,781	$	(1,283)
Borrowed funds
Borrowed funds

(a)Includes less than $(0.1) billion of fair value hedge adjustments primarily related to discontinued borrowed funds hedge relationships at both ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

(b)Carrying value shown represents amortized cost.

Net Investment Hedges

We enter into foreign currency forward contracts to hedge non-U.S. dollar net investments in foreign subsidiaries against adverse changes in foreign exchange rates. We assess whether the hedging relationship is highly effective in achieving offsetting changes in the value of the hedge and hedged item by qualitatively verifying that the critical terms of the hedge and hedged item match at the inception of the hedging relationship and on an ongoing basis. Net investment hedge derivatives are classified as foreign exchange contracts. There were no components of derivative gains or losses excluded from the assessment of the hedge effectiveness for the periods presented. Net gains (losses) on net investment hedge derivatives recognized in OCI were ~~$(28) million and $(46) million for the three and six months ended June 30, 2023, respectively, and~~ insignificant for both the three ~~and six~~ months ended ~~June 30, 2022.~~March 31, 2024 and 2023.

Derivatives Not Designated As Hedging Instruments

For additional information on derivatives not designated as hedging instruments under GAAP, see Note 1615 Financial Derivatives in our ~~2022~~2023 Form 10-K.

The PNC Financial Services Group, Inc. – Form 10-Q 79

Further detail regarding the gains (losses) on derivatives not designated in hedging relationships is presented in the following table:

Table ~~76:~~74: Gains (Losses) on Derivatives Not Designated for Hedging




		Three months ended June 30					Six months ended June 30
In millions	In millions		2023		2022			2023		2022
In millions
In millions
Derivatives used for mortgage banking activities:
Derivatives used for mortgage banking activities:
Derivatives used for mortgage banking activities:	Derivatives used for mortgage banking activities:
Interest rate contracts (a)	Interest rate contracts (a)		$	(184)	$	(190)		$	(77)	$	(455)
Interest rate contracts (a)
Interest rate contracts (a)
Derivatives used for customer-related activities:
Derivatives used for customer-related activities:
Derivatives used for customer-related activities:	Derivatives used for customer-related activities:
Interest rate contracts	Interest rate contracts		33		69			35		166
Interest rate contracts
Interest rate contracts
Foreign exchange contracts and other
Foreign exchange contracts and other
Foreign exchange contracts and other	Foreign exchange contracts and other		58		(20)			114		24
Gains from customer-related activities (b)	Gains from customer-related activities (b)		91		49			149		190
Gains from customer-related activities (b)
Gains from customer-related activities (b)
Derivatives used for other risk management activities:
Derivatives used for other risk management activities:
Derivatives used for other risk management activities:	Derivatives used for other risk management activities:
Foreign exchange contracts and other (b)	Foreign exchange contracts and other (b)		(137)		216			(214)		263
Total gains (losses) from derivatives not designated as hedging instruments			$	(230)	$	75		$	(142)	$	(2)
Foreign exchange contracts and other (b)
Foreign exchange contracts and other (b)
Total gains from derivatives not designated as hedging instruments
Total gains from derivatives not designated as hedging instruments
Total gains from derivatives not designated as hedging instruments

(a)Included in Residential and commercial mortgage noninterest income on our Consolidated Income Statement.

(b)Included in Capital markets and advisory and Other noninterest income on our Consolidated Income Statement.

Offsetting and Counterparty Credit Risk

We generally utilize a net presentation on the Consolidated Balance Sheet for those derivative financial instruments entered into with counterparties under legally enforceable master netting agreements. The master netting agreements reduce credit risk by permitting the closeout netting of all outstanding derivative instruments under the master netting agreement with the same counterparty upon the occurrence of an event of default. The master netting agreement also may require the exchange of cash or marketable securities to collateralize either party’s net position. For additional information on derivative offsetting and counterparty credit risk, see Note 1615 Financial Derivatives in our ~~2022~~2023 Form 10-K.

Table 7775 shows the impact legally enforceable master netting agreements had on our derivative assets and derivative liabilities at ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023. The table includes cash collateral held or pledged under legally enforceable master netting agreements. The table also includes the fair value of any securities collateral held or pledged under legally enforceable master netting agreements. Cash and securities collateral amounts are included in the table only to the extent of the related net derivative fair values.

94 ~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~

Table 7775 includes OTC derivatives not settled through an exchange (“OTC derivatives”) and OTC derivatives cleared through a central clearing house (“OTC cleared derivatives”). OTC derivatives represent contracts executed bilaterally with counterparties that are not settled through an organized exchange or directly cleared through a central clearing house. The majority of OTC derivatives are governed by the ISDA documentation or other legally enforceable master netting agreements. OTC cleared derivatives represent contracts executed bilaterally with counterparties in the OTC market that are novated to a central clearing house that then becomes our counterparty. OTC cleared derivative instruments are typically settled in cash each day based on the prior day value.

80 The PNC Financial Services Group, Inc. – Form 10-Q

Table ~~77:~~75: Derivative Assets and Liabilities Offsetting


In millions	In millions			Amounts Offset on the Consolidated Balance Sheet							Securities Collateral Held/Pledged Under Master Netting Agreements
		Gross Fair Value		Fair Value Offset Amount		Cash Collateral		Net Fair Value					Net Amounts
June 30, 2023
Gross Fair Value
Gross Fair Value
March 31, 2024
March 31, 2024
March 31, 2024
Derivative assets
Derivative assets
Derivative assets	Derivative assets
Interest rate contracts:	Interest rate contracts:
Interest rate contracts:
Interest rate contracts:
Over-the-counter cleared
Over-the-counter cleared
Over-the-counter cleared	Over-the-counter cleared	$	26					$	26				$	26

Over-the-counter	Over-the-counter	2,230		$	846	$	911	473			$	75	398

Over-the-counter

Over-the-counter
Commodity contracts
Commodity contracts
Commodity contracts	Commodity contracts	622		337		104		181					181
Foreign exchange and other contracts	Foreign exchange and other contracts	342		120		119		103					103
Foreign exchange and other contracts
Foreign exchange and other contracts
Total derivative assets
Total derivative assets
Total derivative assets	Total derivative assets	$	3,220	$	1,303	$	1,134	$	783	(a)	$	75	$	708
Derivative liabilities	Derivative liabilities
Derivative liabilities
Derivative liabilities
Interest rate contracts:	Interest rate contracts:
Interest rate contracts:
Interest rate contracts:
Over-the-counter cleared
Over-the-counter cleared
Over-the-counter cleared	Over-the-counter cleared	$	19					$	19				$	19

Over-the-counter	Over-the-counter	5,858		$	633	$	1,104	4,121			$	75	4,046

Over-the-counter

Over-the-counter
Commodity contracts
Commodity contracts
Commodity contracts	Commodity contracts	649		497		23		129					129
Foreign exchange and other contracts	Foreign exchange and other contracts	477		173		8		296					296
Foreign exchange and other contracts
Foreign exchange and other contracts
Total derivative liabilities	Total derivative liabilities	$	7,003	$	1,303	$	1,135	$	4,565	(b)	$	75	$	4,490
December 31, 2022
Total derivative liabilities
Total derivative liabilities
December 31, 2023
December 31, 2023
December 31, 2023
Derivative assets
Derivative assets
Derivative assets	Derivative assets
Interest rate contracts:	Interest rate contracts:
Interest rate contracts:
Interest rate contracts:
Over-the-counter cleared
Over-the-counter cleared
Over-the-counter cleared	Over-the-counter cleared	$	23					$	23				$	23

Over-the-counter	Over-the-counter	2,100		$	974	$	630	496			$	34	462

Over-the-counter

Over-the-counter
Commodity contracts
Commodity contracts
Commodity contracts	Commodity contracts	1,208		335		2		871					871
Foreign exchange and other contracts	Foreign exchange and other contracts	437		214		82		141					141
Foreign exchange and other contracts
Foreign exchange and other contracts
Total derivative assets
Total derivative assets
Total derivative assets	Total derivative assets	$	3,768	$	1,523	$	714	$	1,531	(a)	$	34	$	1,497
Derivative liabilities	Derivative liabilities
Derivative liabilities
Derivative liabilities
Interest rate contracts:	Interest rate contracts:
Interest rate contracts:
Interest rate contracts:
Over-the-counter cleared
Over-the-counter cleared
Over-the-counter cleared	Over-the-counter cleared	$	28					$	28				$	28

Over-the-counter	Over-the-counter	5,801		$	625	$	1,041	4,135			$	78	4,057

Over-the-counter

Over-the-counter
Commodity contracts
Commodity contracts
Commodity contracts	Commodity contracts	1,269		679		520		70			4		66
Foreign exchange and other contracts	Foreign exchange and other contracts	520		219		10		291					291
Foreign exchange and other contracts
Foreign exchange and other contracts
Total derivative liabilities	Total derivative liabilities	$	7,618	$	1,523	$	1,571	$	4,524	(b)	$	82	$	4,442
Total derivative liabilities
Total derivative liabilities

(a)Represents the net amount of derivative assets included in Other assets on our Consolidated Balance Sheet.

(b)Represents the net amount of derivative liabilities included in Other liabilities on our Consolidated Balance Sheet.

In addition to using master netting agreements and other collateral agreements to reduce credit risk associated with derivative instruments, we also seek to manage credit risk by evaluating credit ratings of counterparties and by using internal credit analysis, limits and monitoring procedures.

At ~~June 30, 2023,~~March 31, 2024, cash and debt securities (primarily agency mortgage-backed securities) totaling ~~$2.1~~$2.7 billion were pledged to us under master netting agreements and other collateral agreements to collateralize net derivative assets due from counterparties and to meet initial margin requirements, and we pledged cash and debt securities (primarily agency mortgage-backed securities) totaling ~~$2.1~~$2.3 billion under these agreements to collateralize net derivative liabilities owed to counterparties and to meet initial margin requirements. These totals may differ from the amounts presented in the preceding offsetting table because these totals may include collateral

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ 95

exchanged under an agreement that does not qualify as a master netting agreement or because the total amount of collateral pledged exceeds the net derivative fair values with the counterparty as of the balance sheet date due to timing or other factors, such as initial margin. To the extent not netted against the derivative fair values under a master netting agreement, the receivable for cash pledged is included in Other assets and the obligation for cash held is included in Other liabilities on our Consolidated Balance Sheet. Securities pledged to us by counterparties are not recognized on our balance sheet. Likewise, securities we have pledged to counterparties remain on our balance sheet.

The PNC Financial Services Group, Inc. – Form 10-Q 81

Credit-Risk Contingent Features

Certain derivative agreements contain various credit-risk-related contingent provisions, such as those that require our debt to maintain a specified credit rating from one or more of the major credit rating agencies. If our debt ratings were to fall below such specified ratings, the counterparties to the derivative instruments could request immediate payment or demand immediate and ongoing full collateralization on derivative instruments in net liability positions. The following table presents the aggregate fair value of derivative instruments with credit-risk-related contingent features, the associated collateral posted in the normal course of business and the maximum amount of collateral we would be required to post if the credit-risk-related contingent features underlying these agreements had been triggered on ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

Table ~~78:~~76: Credit-Risk Contingent Features

In billions

June 30, 2023

December 31, 2022

Net derivative liabilities with credit-risk contingent features

5.4

5.8

Collateral posted

1.2

1.7

Net derivative liabilities with credit-risk contingent features

Less: Collateral posted

Maximum additional amount of collateral exposure

4.2

4.1

Maximum additional amount of collateral exposure

NOTE 13 LEGAL PROCEEDINGS

We establish accruals for legal proceedings, including litigation and regulatory and governmental investigations and inquiries, when information related to the loss contingencies represented by those matters indicates both that a loss is probable and that the amount of loss can be reasonably estimated. Any such accruals are adjusted thereafter as appropriate to reflect changed circumstances. When we are able to do so, we also determine estimates of reasonably possible losses or ranges of reasonably possible losses, whether in excess of any related accrued liability or where there is no accrued liability, for disclosed legal proceedings (“Disclosed Matters,” which are those matters disclosed in this Note 13 as well as those matters disclosed in Note 2120 Legal Proceedings in our ~~2022~~2023 Form 10-K ~~and in Note 13 Legal Proceedings in our first quarter 2023 Form 10-Q(such~~(such prior disclosure referred to as “Prior Disclosure”)). For Disclosed Matters where we are able to estimate such possible losses or ranges of possible losses, as of ~~June 30, 2023,~~March 31, 2024, we estimate that it is reasonably possible that we could incur losses in excess of related accrued liabilities, if any, in an aggregate amount less than $300 million. The estimates included in this amount are based on our analysis of currently available information and are subject to significant judgment and a variety of assumptions and uncertainties. As new information is obtained we may change our estimates. Due to the inherent subjectivity of the assessments and unpredictability of outcomes of legal proceedings, any amounts accrued or included in this aggregate amount may not represent the ultimate loss to us from the legal proceedings in question. Thus, our exposure and ultimate losses may be higher, and possibly significantly so, than the amounts accrued or this aggregate amount.

As a result of the types of factors described in Note 2120 Legal Proceedings in our ~~2022~~2023 Form 10-K, we are unable, at this time, to estimate the losses that are reasonably possible to be incurred or ranges of such losses with respect to some of the ~~matters disclosed,~~Disclosed Matters, and the aggregate estimated amount provided above does not include an estimate for every Disclosed Matter. Therefore, as the estimated aggregate amount disclosed above does not include all of the Disclosed Matters, the amount disclosed above does not represent our maximum reasonably possible loss exposure for all of the Disclosed Matters. The estimated aggregate amount also does not reflect any of our exposure to matters not so disclosed, as discussed below under “Other.”

We include in some of the descriptions of individual Disclosed Matters certain quantitative information related to the plaintiff’s claim against us as alleged in the plaintiff’s pleadings or other public filings or otherwise publicly available information. While information of this type may provide insight into the potential magnitude of a matter, it does not necessarily represent our estimate of reasonably possible loss or our judgment as to any currently appropriate accrual.

Some of our exposure in Disclosed Matters may be offset by applicable insurance coverage. We do not consider the possible availability of insurance coverage in determining the amounts of any accruals (although we would record the amount of related insurance recoveries that are deemed probable up to the amount of the accrual) or in determining any estimates of possible losses or ranges of possible losses.

Interchange Litigation

In March 2024, the parties to the class action seeking equitable relief in the proceedings in the U.S. District Court for the Eastern District of New York under the caption In re Payment Card Interchange Fee and Merchant-Discount Antitrust Litigation (Master File No. 1:05-md-1720-MKB-JAM) entered into an agreement for certain rule and rate changes to resolve the matter. The settlement must be preliminarily approved by the district court prior to issuance of notice to the class and proceedings to consider final approval.

See Note 16 Subsequent Events for a discussion of Visa’s recently announced exchange offer for Visa Class B-1 common stock.

9682 The PNC Financial Services Group, Inc. – Form 10-Q

~~USAA Patent Infringement Litigation~~

~~In April 2023, in~~ ~~United Services Automobile Association v. PNC Bank N.A.~~ ~~(Case No. 2:21-cv-246) (the “third Texas case”) and the case for PNC’s patent infringement counterclaims (originally asserted in~~ ~~United Services Automobile Association v. PNC Bank N.A.~~ (Case No. 2:20-cv-319)) (the “first Texas case”) (together, the “second consolidated cases”), USAA noticed a cross-appeal to the U.S. Court of Appeals for the Federal Circuit regarding the final judgment in the second consolidated cases. This appeal was consolidated with PNC’s previously noticed appeal to the U.S. Court of Appeals for the Federal Circuit regarding the final judgment in the second consolidated cases as ~~United Services Automobile Association v. PNC Bank N.A.~~ ~~(Case No. 23-1639).~~

~~In May and June 2023, USAA appealed the Final Written Decisions of the Patent Trial and Appeal Board that concluded that the claims in three of the patents originally at issue in~~ ~~United Services Automobile Association v. PNC Bank N.A. (Case No. 2:21-cv-110) and the first Texas case (together, the “first consolidated cases”) and in~~ ~~United Services Automobile Association v. BBVA USA~~ ~~(Case No. 2:21-cv-311) were unpatentable. Because of USAA’s case narrowing in the first consolidated cases, only one of these three patents was presented to the jury in the first consolidated cases.~~

Also in May 2023, the Patent Trial and Appeal Board entered its Final Written Decision concluding that most of the claims of one of the patents presented to the jury in the third Texas case were unpatentable and other claims were not unpatentable. In June 2023, the Patent Trial and Appeal Board entered its Final Written Decision concluding that all of the claims of the other patent subject to inter partes review, but not ultimately presented to the jury in the third Texas Case, were unpatentable.

Regulatory and Governmental Inquiries

We are the subject of investigations, audits, examinations and other forms of regulatory and governmental inquiry covering a broad

range of issues in our consumer, mortgage, brokerage, securities and other financial services businesses, as well as other aspects of our operations. In some cases, these inquiries are part of reviews of specified activities at multiple industry participants; in others, they are directed at PNC individually. From time to time, these inquiries have involved and may in the future involve or lead to regulatory enforcement actions and other administrative proceedings. These inquiries have also led to and may in the future lead to civil or criminal judicial proceedings. Some of these inquiries result in remedies including fines, penalties, restitution, or alterations in our business practices, and in additional expenses and collateral costs and other consequences. Such remedies and other consequences typically have not been material to us from a financial standpoint, but could be in the future. Even if not financially material, they may result in significant reputational harm or other adverse consequences.

Our practice is to cooperate fully with regulatory and governmental investigations, audits and other inquiries.

Other

In addition to the proceedings or other matters described in Prior Disclosure, PNC and persons to whom we may have indemnification obligations, in the normal course of business, are subject to various other pending and threatened legal proceedings in which claims for monetary damages and other relief are asserted. We do not anticipate, at the present time, that the ultimate aggregate liability, if any, arising out of such other legal proceedings will have a material adverse effect on our financial position. However, we cannot now determine whether or not any claims asserted against us or others to whom we may have indemnification obligations, whether in the proceedings or other matters described above or otherwise, will have a material adverse effect on our results of operations in any future reporting period, which will depend on, among other things, the amount of the loss resulting from the claim and the amount of income otherwise reported for the reporting period.

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ 97

NOTE 14 SEGMENT REPORTING

We have three reportable business segments: Retail Banking, Corporate & Institutional Banking and Asset Management Group:

•

Retail Banking provides deposit, lending, brokerage, insurance services, investment management and cash management products and services to consumer and small business customers who are serviced through our coast-to-coast branch network, digital channels, ATMs, or through our phone-based customer contact centers. Deposit products include checking, savings and money market accounts and time deposits. Lending products include residential mortgages, home equity loans and lines of credit, auto loans, credit cards, education loans and personal and small business loans and lines of credit. The residential mortgage loans are directly originated within our branch network and nationwide, and are typically underwritten to agency and/or third-party standards, and either sold, servicing retained or held on our balance sheet. Brokerage, investment management and cash management products and services include managed, education, retirement and trust accounts.

•

Corporate & Institutional Bankingprovides lending, treasury management, capital markets and advisory products and services to mid-sized and large corporations and government and not-for-profit entities. Lending products include secured and unsecured loans, letters of credit and equipment leases. The Treasury Management business 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. Capital markets and advisory includes services and activities primarily related to merger and acquisitions advisory, equity capital markets advisory, asset-backed financing, loan syndication, securities underwriting and customer-related trading. We also provide commercial loan servicing and technology solutions for the commercial real estate finance industry. Products and services are provided nationally.

Asset Management Groupprovides private banking for high net worth and ultra high net worth clients and institutional asset management. The Asset Management group is composed of two operating units:

•PNC Private Bank provides products and services to emerging affluent, high net worth and ultra high net worth individuals and their families including investment and retirement planning, customized investment management, credit and cash management solutions, trust management and administration. In addition, multi-generational family planning services are also provided to ultra high net worth individuals and their families, which include estate, financial, tax, fiduciary and customized performance reporting through PNC Private Bank Hawthorn.

•Institutional Asset Management provides outsourced chief investment officer, custody, cash and fixed income client solutions and retirement plan fiduciary investment services to institutional clients including corporations, healthcare systems, insurance companies, unions, municipalities and non-profits.

The remaining corporate operations are reflected in Other:

The PNC Financial Services Group, Inc. – Form 10-Q 83

Other includes residual activities that do not meet the criteria for disclosure as a separate reportable business, such as asset and liability management activities including net securities gains or losses, ACL for investment securities, certain trading activities, certain runoff consumer loan portfolios, private equity investments, intercompany eliminations, corporate overhead net of allocations, tax adjustments that are not allocated to business segments, exited businesses and the residual impact from funds transfer pricing operations. The decline in Other earnings for the first three months of 2024 compared to the same period in 2023 was driven by the residual impacts from funds transfer pricing due to the rising interest rate environment, along with the costs for the FDIC special assessment.

Basis of Presentation

Results of individual businesses are presented based on our internal management reporting practices. There is no comprehensive, authoritative body of guidance for management accounting equivalent to GAAP; therefore, the financial results of our individual businesses are not necessarily comparable with similar information for any other company. We periodically refine our internal methodologies as management reporting practices are enhanced. To the extent significant and practicable, retrospective application of new methodologies is made to prior period reportable business segment results and disclosures to create comparability with the current period.

~~Total~~Funds Transfer Pricing

Net interest income in business segment ~~financial~~ results differ from total consolidated net income. These differences are reflected in the “Other” category in Table 79. “Other” includes residual activities that do not meet the criteria for disclosure asreflects our internal funds transfer pricing methodology, which is designed to consider interest rate and liquidity risks. Under our methodology, assets receive a ~~separate reportable business, such as asset~~funding charge while liabilities and liability management activities, including net securities gains or losses, ACL for investment securities, certain trading activities, certain runoff consumer loan portfolios, private equity investments, intercompany eliminations, certain corporate overhead, tax adjustments that are not allocated to business segments, exited businessescapital receive a funding credit based on market interest rates, product characteristics and differences between business segment performance reporting and financial statement reporting (GAAP). Assets, revenue and earnings attributable to foreign activities were not material in the periods presented for comparison.other factors.

Our transfer pricing framework considers the application of funding curves and methodologies consistently across the balance sheet. A residual gain or loss from funds transfer pricing operations is retained within Other. This residual gain or loss is reviewed by management quarterly, in accordance with the interagency guidance of the FDIC, Federal Reserve and OCC.

Segment Allocations

Financial results are presented, to the extent practicable, as if each business operated on a standalone ~~basis. Additionally, we have aggregated the results~~basis, and includes expense allocations for corporate ~~support functions within “Other” for financial reporting purposes.~~overhead services used by the business segments.

~~Net interest income~~Certain costs are retained within Other. These costs are not allocated to our business segments because they (i) are transitory or highly irregular in nature, (ii) exist solely to support corporate activities unrelated to business segment ~~results reflects~~operations, or (iii) reflect residual costs for an exited business. During the first quarter of 2024, Other noninterest expense for the Other category included an additional expense related to the increase in the FDIC’s expected losses. This cost was not allocated to our internal funds transfer pricing methodology. Assets receive a funding charge and liabilities and capital receive a funding credit based on a transfer pricing methodology that incorporates product repricing characteristics, tenor and other factors.business segments due to its irregular nature.

We have allocated the ALLL and the allowance for unfunded lending related commitments based on the loan exposures within each business segment’s portfolio. Key reserve assumptions and estimation processes react to and are influenced by observed changes in loan portfolio performance experience, the financial strength of the borrower and economic conditions. Key reserve assumptions are periodically updated.

9884 The PNC Financial Services Group, Inc. – Form 10-Q

Business Segment Results

Table ~~79:~~77: Results of Businesses
Three months ended June 30
In millions Retail Banking Corporate &
Institutional
Banking Asset
Management
Group Other Consolidated (a)
2023
Income Statement
Net interest income $ 2,448 $ 1,349 $ 125 $ (412) $ 3,510
Noninterest income 702 821 228 32 1,783
Total revenue 3,150 2,170 353 (380) 5,293
Provision for (recapture of) credit losses (14) 209 (10) (39) 146
Depreciation and amortization 81 53 7 143 284
Other noninterest expense 1,823 868 273 124 3,088
Income (loss) before income taxes (benefit) and noncontrolling interests 1,260 1,040 83 (608) 1,775
Income taxes (benefit) 295 218 20 (258) 275
Net income (loss) 965 822 63 (350) 1,500
Less: Net income attributable to noncontrolling interests 11 5 1 17
Net income (loss) excluding noncontrolling interests $ 954 $ 817 $ 63 $ (351) $ 1,483
Average Assets $ 114,826 $ 234,174 $ 15,562 $ 190,945 $ 555,507
2022
Income Statement
Net interest income $ 1,662 $ 1,232 $ 153 $ 4 $ 3,051
Noninterest income 748 968 234 115 2,065
Total revenue 2,410 2,200 387 119 5,116
Provision for (recapture of) credit losses 55 (17) 5 (7) 36
Depreciation and amortization 83 51 8 147 289
Other noninterest expense 1,830 883 262 (20) 2,955
Income (loss) before income taxes (benefit) and noncontrolling interests 442 1,283 112 (1) 1,836
Income taxes (benefit) 105 277 26 (68) 340
Net income 337 1,006 86 67 1,496
Less: Net income (loss) attributable to noncontrolling interests 15 3 (3) 15
Net income excluding noncontrolling interests $ 322 $ 1,003 $ 86 $ 70 $ 1,481
Average Assets $ 113,068 $ 219,513 $ 14,449 $ 199,848 $ 546,878

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ 99


(Continued from previous page)
Six months ended June 30 In millions		Retail Banking		Corporate & Institutional Banking		Asset Management Group		Other		Consolidated (a)
2023
Three months ended March 31 In millions												Three months ended March 31 In millions	Retail Banking	Corporate & Institutional Banking	Asset Management Group	Other	Consolidated (a)
2024
Income Statement	Income Statement
Income Statement
Income Statement
Net interest income
Net interest income
Net interest income	Net interest income	$	4,729	$	2,732	$	252	$	(618)	$	7,095
Noninterest income	Noninterest income	1,445		1,707		458		191		3,801
Total revenue	Total revenue	6,174		4,439		710		(427)		10,896
Provision for (recapture of) credit losses	Provision for (recapture of) credit losses	224		181		(1)		(23)		381
Depreciation and amortization	Depreciation and amortization	159		107		13		286		565
Other noninterest expense	Other noninterest expense	3,672		1,753		547		156		6,128
Income (loss) before income taxes (benefit) and noncontrolling interests	Income (loss) before income taxes (benefit) and noncontrolling interests	2,119		2,398		151		(846)		3,822
Income taxes (benefit)	Income taxes (benefit)	497		512		36		(417)		628
Net income (loss)	Net income (loss)	1,622		1,886		115		(429)		3,194
Less: Net income (loss) attributable to noncontrolling interests		21		10				3		34
Less: Net income attributable to noncontrolling interests
Net income (loss) excluding noncontrolling interests	Net income (loss) excluding noncontrolling interests	$	1,601	$	1,876	$	115	$	(432)	$	3,160
Average Assets	Average Assets	$	115,103	$	234,354	$	15,282	$	194,162	$	558,901
2022
2023
Income Statement	Income Statement
Income Statement
Income Statement
Net interest income
Net interest income
Net interest income	Net interest income	$	3,193	$	2,375	$	291	$	(4)	$	5,855
Noninterest income	Noninterest income	1,493		1,772		482		206		3,953
Total revenue	Total revenue	4,686		4,147		773		202		9,808
Provision for (recapture of) credit losses	Provision for (recapture of) credit losses	(26)		(135)		7		(18)		(172)
Depreciation and amortization	Depreciation and amortization	157		103		14		292		566
Other noninterest expense	Other noninterest expense	3,648		1,668		507		27		5,850
Income (loss) before income taxes (benefit) and noncontrolling interests	Income (loss) before income taxes (benefit) and noncontrolling interests	907		2,511		245		(99)		3,564
Income taxes (benefit)	Income taxes (benefit)	214		545		57		(177)		639
Net income		693		1,966		188		78		2,925
Less: Net income (loss) attributable to noncontrolling interests		31		7				(2)		36
Net income excluding noncontrolling interests		$	662	$	1,959	$	188	$	80	$	2,889
Net income (loss)
Less: Net income attributable to noncontrolling interests
Net income (loss) excluding noncontrolling interests
Average Assets	Average Assets	$	112,415	$	210,171	$	14,126	$	212,415	$	549,127

(a)There were no material intersegment revenues for the three ~~and six~~ months ended ~~June 30, 2023~~March 31, 2024 and ~~2022.~~2023.

~~Business Segment Products and Services~~

~~Retail Banking~~ provides deposit, lending, brokerage, insurance services, investment management and cash management products and services to consumer and small business customers who are serviced through our coast-to-coast branch network, digital channels, ATMs, or through our phone-based customer contact centers. Deposit products include checking, savings and money market accounts and time deposits. Lending products include residential mortgages, home equity loans and lines of credit, auto loans, credit cards, education loans and personal and small business loans and lines of credit. The residential mortgage loans are directly originated within our branch network and nationwide, and are typically underwritten to agency and/or third-party standards, and either sold, servicing retained or held on our balance sheet. Brokerage, investment management and cash management products and services include managed, education, retirement and trust accounts.

~~Corporate & Institutional Banking~~ provides lending, treasury management, capital markets and advisory products and services to mid-sized and large corporations and government and not-for-profit entities. Lending products include secured and unsecured loans, letters of credit and equipment leases. The Treasury Management business provides corporations with cash and investment management services, receivables and disbursement management services, funds transfer services, international payment services and access to online/mobile information management and reporting services. Capital markets and advisory includes services and activities primarily related to merger and acquisitions advisory, equity capital markets advisory, asset-backed financing, loan syndication, securities underwriting and customer-related trading. We also provide commercial loan servicing and technology solutions for the commercial real estate finance industry. Products and services are provided nationally.

~~Asset Management Groupprovides private banking for high net worth and ultra high net worth clients and institutional asset management. The Asset Management group is composed of two operating units:~~

•PNC Private Bank provides products and services to emerging affluent, high net worth and ultra high net worth individuals and their families, including investment and retirement planning, customized investment management, credit and cash management solutions, trust management and administration. In addition, multi-generational family planning services are also provided to ultra high net worth individuals and their families, which include estate, financial, tax, fiduciary and customized performance reporting through PNC Private Bank Hawthorn.

~~100~~ ~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~

•Institutional Asset Management provides outsourced chief investment officer, custody, private real estate, cash and fixed income client solutions, retirement plan fiduciary investment services to institutional clients, including corporations, healthcare systems, insurance companies, unions, municipalities and non-profits.

NOTE 15 FEE-BASED REVENUE FROM CONTRACTS WITH CUSTOMERS

As more fully described in Note 2423 Fee-based Revenue from Contracts with Customers in our ~~2022~~2023 Form 10-K, 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).

Fee-based revenue within the scope of Topic 606 is recognized within our three reportable business segments: Retail Banking, Corporate & Institutional Banking and Asset Management Group. 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 are outside of the scope of Topic 606.

In the fourth quarter of 2022, PNC updated the name of the noninterest income line item “Capital markets related” to “Capital markets and advisory.” This update did not impact the components of the category. All periods presented herein reflect these changes. For a description of each updated noninterest income revenue stream, see Note 1 Accounting Policies.

Table 8078 presents the noninterest income recognized within the scope of Topic 606 for each of our three reportable business segments’ principal products and services, along with the relationship to the noninterest income revenue streams shown on our Consolidated Income Statement. For a description of the fee-based revenue and how it is recognized for each segment’s principal products and services, see Note 2423 Fee-based Revenue from Contracts with Customers in our ~~2022~~2023 Form 10-K.

The PNC Financial Services Group, Inc. – Form 10-Q ~~101~~85

Table ~~80:~~78: Noninterest Income by Business Segment and Reconciliation to Consolidated Noninterest Income

Three Months Ended
June 30, 2023 Three Months Ended
June 30, 2022

In millions Retail Banking Corporate &
Institutional
Banking Asset Management Group Retail Banking Corporate &
Institutional
Banking Asset Management Group
Asset management and brokerage
Asset management fees $ 222 $ 228
Brokerage fees $ 124 2 $ 135 2
Total asset management and brokerage 124 224 135 230
Card and cash management
Treasury management fees 11 $ 345 10 $ 327
Debit card fees 178 177
Net credit card fees (a) 61 63
Merchant services 45 19 52 14
Other 25 27
Total card and cash management 320 364 329 341
Lending and deposit services
Deposit account fees 151 145
Other 18 8 17 9
Total lending and deposit services 169 8 162 9
Residential and commercial mortgage (b) 40 33
Capital markets and advisory 130 272
Other 14 9
Total in-scope noninterest income 613 556 224 626 664 230
Out-of-scope noninterest income (c) 89 265 4 122 304 4
Noninterest income by business segment $ 702 $ 821 $ 228 $ 748 $ 968 $ 234
Reconciliation to consolidated noninterest income
Total in-scope business segment noninterest income $ 1,393 $ 1,520
Out-of-scope business segment noninterest income (c) 358 430
Noninterest income from other segments 32 115
Noninterest income as shown on the Consolidated Income Statement $ 1,783 $ 2,065



Three months ended March 31 In millions	Retail Banking		Corporate & Institutional Banking		Asset Management Group
2024
Asset management and brokerage
Asset management fees					$	227
Brokerage fees	$	137
Total asset management and brokerage	137				227
Card and cash management
Treasury management fees	10		$	357
Debit card fees	167
Net credit card fees (a)	45
Merchant services	37		19
Other	22
Total card and cash management	281		376
Lending and deposit services
Deposit account fees	155
Other	16		9
Total lending and deposit services	171		9
Residential and commercial mortgage (b)			30
Capital markets and advisory			190
Other			17
Total in-scope noninterest income	589		622		227
Out-of-scope noninterest income (c)	175		266		3
Noninterest income by business segment	$	764	$	888	$	230
Reconciliation to consolidated noninterest income	For the three months ended March 31, 2024
Total in-scope business segment noninterest income					$	1,438
Out-of-scope business segment noninterest income (c)					444
Noninterest income from other segments					(1)
Noninterest income as shown on the Consolidated Income Statement					$	1,881

~~102~~86 The PNC Financial Services Group, Inc. – Form 10-Q


(Continued from previous page)	(Continued from previous page)	Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
In millions		Retail Banking		Corporate & Institutional Banking		Asset Management Group		Retail Banking		Corporate & Institutional Banking		Asset Management Group

(Continued from previous page)

(Continued from previous page)
Three months ended March 31 In millions
Three months ended March 31 In millions
Three months ended March 31 In millions
2023
2023
2023
Asset management and brokerage
Asset management and brokerage
Asset management and brokerage	Asset management and brokerage
Asset management fees	Asset management fees					$	446					$	469
Asset management fees
Asset management fees
Brokerage fees
Brokerage fees
Brokerage fees	Brokerage fees	$	254			4		$	269			4
Total asset management and brokerage	Total asset management and brokerage	254				450		269				473
Total asset management and brokerage
Total asset management and brokerage
Card and cash management
Card and cash management
Card and cash management	Card and cash management
Treasury management fees	Treasury management fees	21		$	673			19		$	629
Treasury management fees
Treasury management fees
Debit card fees
Debit card fees
Debit card fees	Debit card fees	343						338
Net credit card fees (a)	Net credit card fees (a)	119						118
Net credit card fees (a)
Net credit card fees (a)
Merchant services
Merchant services
Merchant services	Merchant services	84		38				93		31
Other	Other	49						50
Other
Other
Total card and cash management
Total card and cash management
Total card and cash management	Total card and cash management	616		711				618		660
Lending and deposit services	Lending and deposit services
Lending and deposit services
Lending and deposit services
Deposit account fees
Deposit account fees
Deposit account fees	Deposit account fees	306						287
Other	Other	36		16				34		17
Other
Other
Total lending and deposit services
Total lending and deposit services
Total lending and deposit services	Total lending and deposit services	342		16				321		17
Residential and commercial mortgage (b)	Residential and commercial mortgage (b)			82						64
Residential and commercial mortgage (b)
Residential and commercial mortgage (b)
Capital markets and advisory
Capital markets and advisory
Capital markets and advisory	Capital markets and advisory			286						409
Other	Other			22						22
Other
Other
Total in-scope noninterest income
Total in-scope noninterest income
Total in-scope noninterest income	Total in-scope noninterest income	1,212		1,117		450		1,208		1,172		473
Out-of-scope noninterest income (c)	Out-of-scope noninterest income (c)	233		590		8		285		600		9
Out-of-scope noninterest income (c)
Out-of-scope noninterest income (c)
Noninterest income by business segment
Noninterest income by business segment
Noninterest income by business segment	Noninterest income by business segment	$	1,445	$	1,707	$	458	$	1,493	$	1,772	$	482
Reconciliation to consolidated noninterest income	Reconciliation to consolidated noninterest income
Reconciliation to consolidated noninterest income
Reconciliation to consolidated noninterest income
Total in-scope business segment noninterest income
Total in-scope business segment noninterest income
Total in-scope business segment noninterest income	Total in-scope business segment noninterest income					$	2,779					$	2,853
Out-of-scope business segment noninterest income (c)	Out-of-scope business segment noninterest income (c)					831						894
Out-of-scope business segment noninterest income (c)
Out-of-scope business segment noninterest income (c)
Noninterest income from other segments
Noninterest income from other segments
Noninterest income from other segments	Noninterest income from other segments					191						206
Noninterest income as shown on the Consolidated Income Statement	Noninterest income as shown on the Consolidated Income Statement					$	3,801					$	3,953
Noninterest income as shown on the Consolidated Income Statement
Noninterest income as shown on the Consolidated Income Statement

(a)Net credit card fees consists of interchange fees of ~~$173~~$158 million and ~~$172~~$160 million and credit card reward costs of ~~$112~~$113 million and ~~$109~~$102 million for the three months ended ~~June 30,~~March 31, 2024 and 2023, and 2022, respectively. Net credit card fees consists of interchange fees of $333 million and $320 million and credit card reward costs of $214 million and $202 million for the six months ended June 30, 2023 and 2022, respectively.

(b)Residential mortgage noninterest income falls under the scope of other accounting and disclosure requirements outside of Topic 606 and is included within the out-of-scope noninterest income line for the Retail Banking segment.

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

NOTE 16 RS~~EGULATORY~~UBSEQUENT ME~~ATTERS~~VENTS

~~FDIC Special Assessment Pursuant~~On April 8, 2024, Visa launched the first of its previously announced exchange offers allowing holders of the currently restricted outstanding shares of Visa Class B-1 common stock to ~~Systemic Risk Determination~~

Inexchange all or a portion of such shares for equal parts of Visa Class B-2 common stock and Visa Class C common stock, and cash in lieu of any fractional shares. The exchange period is set to close on or about May ~~2023,~~3, 2024. Following the FDIC proposed a rule to implement a special assessment, in connection with the systemic risk determination announced in March 2023, to recover the cost associated with protecting uninsured depositors following the closuresclosing of ~~Silicon Valley Bank~~this initial exchange offer, and ~~Signature Bank. Under the proposal, the FDIC would collect from PNC, along with other BHCs and insured depository institutions, special assessments at an annual rate of 12.5 basis points~~acceptance by Visa of PNC’s ~~uninsured deposits reported as of December 31, 2022 (adjusted~~request to ~~exclude the first $5 billion), over eight quarterly assessment periods, beginning after the first quarter 2024. We expect the FDIC will enact a special deposit insurance assessment~~fully participate in the exchange program, PNC would be able to liquidate 50 percent of its holdings in Visa during the second ~~half~~and third quarters of ~~2023 that will significantly increase our FDIC deposit insurance costs. Based~~2024 by transferring newly held Visa Class C common stock in certain transactions where such stock would convert into publicly traded Visa Class A common stock, which could then be sold in market transactions, subject to certain timing restrictions. The Visa Class B-2 common stock PNC receives in the initial exchange offer would remain subject to the same restrictions currently imposed on the ~~current proposal, PNC estimates our total cost to be approximately $468 million pre-tax, or $370 million after-tax, which would be incurred~~Visa Class B-1 common stock. Participation in the ~~quarter the FDIC finalizes the rule. The total cost and timing is subject~~exchange requires PNC to ~~change pending the assessment’s finalization.~~

~~Proposed Expanded Risk-Based Capital Rules~~

~~On July 27, 2023, the Federal Reserve, OCC, and FDIC proposed for public comment an interagency rule~~agree to ~~implement the final components of the Basel III framework~~a make-whole agreement that ~~would significantly revise the capital requirements for large banking organizations, including~~subjects PNC ~~and PNC Bank. The proposed rule will apply an expanded risk-based approach which leverages the Basel rules, including the calculation of risk-weighted assets, in addition~~ to the ~~current U.S. standardized approach. In addition, this proposal would align the regulatory capital elements and required deductions for Category III banking organizations such~~same indemnity obligations to Visa as are currently present. PNC ~~and PNC Bank with those currently applicable~~has tendered its Class B-1 common stock to Category I and II banking organizations. PNC and PNC Bank would be required to recognize most elements of AOCI in regulatory capital and deduct from CET1 capital, among other items, mortgage servicing assets and deferred tax assets that individually exceed 10 percent of CET1 capital orfully participate in the ~~aggregate with other threshold items that exceed 15 percent of CET1 capital~~. ~~PNC and PNC Bank would be required to calculate their risk-based capital ratios under the existing~~exchange program.

The PNC Financial Services Group, Inc. – Form 10-Q ~~103~~

standardized approach and the expanded risk-based approach and would be subject to the lower of the two resulting ratios for their risk-based capital minimums and buffer requirements, including the SCB. The proposed effective date is July 1, 2025, with certain provisions—including the recognition of AOCI elements in regulatory capital and the increase in risk-weighted assets due to the expanded risk-based approach—having a three-year phase-in period.

~~104~~ ~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~

~~STATISTICAL INFORMATION (UNAUDITED)~~

~~THE PNC FINANCIAL SERVICES GROUP, INC.~~

~~Average Consolidated Balance Sheet And Net Interest Analysis (a) (b) (c)~~

Six months ended June 30
2023 2022
Taxable-equivalent basis
Dollars in millions Average
Balances Interest Income/Expense Average Yields/Rates Average
Balances Interest Income/
Expense Average Yields/
Rates
Assets
Interest-earning assets:
Investment securities
Securities available for sale
Residential mortgage-backed
Agency $ 31,513 $ 421 2.67 % $ 52,308 $ 495 1.89 %
Non-agency 676 30 8.95 % 954 36 7.55 %
Commercial mortgage-backed 3,025 41 2.72 % 4,793 58 2.40 %
Asset-backed 397 13 6.67 % 4,296 32 1.49 %
U.S. Treasury and government agencies 8,657 92 2.12 % 32,391 210 1.29 %
Other 3,129 40 2.51 % 4,536 60 2.67 %
Total securities available for sale 47,397 637 2.69 % 99,278 891 1.79 %
Securities held to maturity
Residential mortgage-backed 45,323 618 2.73 % 16,687 164 1.96 %
Commercial mortgage-backed 2,424 62 5.15 % 591 7 2.29 %
Asset-backed 6,868 138 4.03 % 2,071 20 1.91 %
U.S. Treasury and government agencies 36,831 245 1.33 % 14,618 80 1.09 %
Other 3,365 80 4.63 % 1,068 22 4.19 %
Total securities held to maturity 94,811 1,143 2.41 % 35,035 293 1.67 %
Total investment securities 142,208 1,780 2.50 % 134,313 1,184 1.76 %
Loans
Commercial and industrial 181,444 5,041 5.52 % 161,256 2,297 2.83 %
Commercial real estate 36,023 1,121 6.19 % 34,237 518 3.01 %
Equipment lease financing 6,408 141 4.40 % 6,150 113 3.68 %
Consumer 55,045 1,762 6.46 % 54,757 1,271 4.68 %
Residential real estate 46,107 779 3.38 % 41,385 636 3.07 %
Total loans 325,027 8,844 5.43 % 297,785 4,835 3.24 %
Interest-earning deposits with banks 32,736 790 4.83 % 51,120 107 0.42 %
Other interest-earning assets 9,012 264 5.86 % 9,677 116 2.42 %
Total interest-earning assets/interest income 508,983 11,678 4.58 % 492,895 6,242 2.53 %
Noninterest-earning assets 49,918 56,232
Total assets $ 558,901 $ 549,127
Liabilities and Equity
Interest-bearing liabilities:
Interest-bearing deposits
Money market $ 64,716 832 2.59 % $ 60,295 31 0.10 %
Demand 124,243 1,069 1.74 % 116,024 51 0.09 %
Savings 103,406 585 1.14 % 108,799 22 0.04 %
Time deposits 21,436 336 3.14 % 13,195 11 0.15 %
Total interest-bearing deposits 313,801 2,822 1.81 % 298,313 115 0.08 %
Borrowed funds
Federal Home Loan Bank borrowings 32,909 835 5.04 % 3,508 22 1.24 %
Bank notes and senior debt 20,298 577 5.66 % 17,089 112 1.30 %
Subordinated debt 5,974 177 5.94 % 6,886 58 1.68 %
Other 5,156 97 3.74 % 5,515 33 1.22 %
Total borrowed funds 64,337 1,686 5.22 % 32,998 225 1.36 %
Total interest-bearing liabilities/interest expense 378,138 4,508 2.38 % 331,311 340 0.20 %
Noninterest-bearing liabilities and equity:
Noninterest-bearing deposits 117,155 151,567
Accrued expenses and other liabilities 15,536 16,245
Equity 48,072 50,004
Total liabilities and equity $ 558,901 $ 549,127
Interest rate spread 2.20 % 2.33 %
Impact of noninterest-bearing sources 0.61 0.06
Net interest income/margin $ 7,170 2.81 % $ 5,902 2.39 %

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ ~~105~~87

STATISTICAL INFORMATION (UNAUDITED)

THE PNC FINANCIAL SERVICES GROUP, INC.

Average Consolidated Balance Sheet And Net Interest Analysis (a) (b) (c)


(Continued from previous page)		Three months ended June 30
														Three months ended March 31
		2023						2022
Taxable-equivalent basis Dollars in millions	Taxable-equivalent basis Dollars in millions	Average Balances		Interest Income/Expense		Average Yields/Rates		Average Balances		Interest Income/ Expense		Average Yields/ Rates
Taxable-equivalent basis Dollars in millions
Taxable-equivalent basis Dollars in millions
Assets
Assets
Assets	Assets
Interest-earning assets:	Interest-earning assets:
Interest-earning assets:
Interest-earning assets:
Investment securities
Investment securities
Investment securities	Investment securities
Securities available for sale	Securities available for sale
Securities available for sale
Securities available for sale
Residential mortgage-backed
Residential mortgage-backed
Residential mortgage-backed	Residential mortgage-backed
Agency	Agency	$	31,180	$	208	2.67	%	$	37,285	$	202	2.17	%
Agency
Agency
Non-agency
Non-agency
Non-agency	Non-agency	663		15		9.39	%	902		17		7.56	%
Commercial mortgage-backed	Commercial mortgage-backed	2,948		21		2.84	%	4,362		27		2.45	%
Commercial mortgage-backed
Commercial mortgage-backed
Asset-backed
Asset-backed
Asset-backed	Asset-backed	575		9		6.56	%	2,388		11		1.84	%
U.S. Treasury and government agencies	U.S. Treasury and government agencies	8,231		45		2.20	%	17,480		70		1.60	%
U.S. Treasury and government agencies
U.S. Treasury and government agencies
Other
Other
Other	Other	2,997		21		2.55	%	4,200		28		2.59	%
Total securities available for sale	Total securities available for sale	46,594		319		2.73	%	66,617		355		2.13	%
Total securities available for sale
Total securities available for sale
Securities held to maturity
Securities held to maturity
Securities held to maturity	Securities held to maturity
Residential mortgage-backed	Residential mortgage-backed	45,033		306		2.72	%	33,086		164		1.98	%
Residential mortgage-backed
Residential mortgage-backed
Commercial mortgage-backed
Commercial mortgage-backed
Commercial mortgage-backed	Commercial mortgage-backed	2,396		32		5.35	%	1,175		7		2.30	%
Asset-backed	Asset-backed	6,712		68		4.10	%	4,119		20		1.92	%
Asset-backed
Asset-backed
U.S. Treasury and government agencies
U.S. Treasury and government agencies
U.S. Treasury and government agencies	U.S. Treasury and government agencies	36,912		123		1.34	%	28,167		74		1.05	%
Other	Other	3,391		41		4.65	%	1,560		16		4.21	%
Other
Other
Total securities held to maturity
Total securities held to maturity
Total securities held to maturity	Total securities held to maturity	94,444		570		2.41	%	68,107		281		1.65	%
Total investment securities	Total investment securities	141,038		889		2.52	%	134,724		636		1.89	%
Total investment securities
Total investment securities
Loans
Loans
Loans	Loans
Commercial and industrial	Commercial and industrial	180,878		2,608		5.70	%	166,968		1,225		2.90	%
Commercial and industrial
Commercial and industrial
Commercial real estate
Commercial real estate
Commercial real estate	Commercial real estate	35,938		578		6.37	%	34,467		276		3.15	%
Equipment lease financing	Equipment lease financing	6,364		72		4.51	%	6,200		56		3.62	%
Equipment lease financing
Equipment lease financing
Consumer
Consumer
Consumer	Consumer	55,070		901		6.57	%	54,551		637		4.68	%
Residential real estate	Residential real estate	46,284		395		3.41	%	42,604		330		3.11	%
Residential real estate
Residential real estate
Total loans
Total loans
Total loans	Total loans	324,534		4,554		5.57	%	304,790		2,524		3.29	%
Interest-earning deposits with banks	Interest-earning deposits with banks	31,433		400		5.10	%	39,689		78		0.79	%
Interest-earning deposits with banks
Interest-earning deposits with banks
Other interest-earning assets
Other interest-earning assets
Other interest-earning assets	Other interest-earning assets	9,215		138		5.96	%	9,935		68		2.76	%
Total interest-earning assets/interest income	Total interest-earning assets/interest income	506,220		5,981		4.70	%	489,138		3,306		2.69	%
Total interest-earning assets/interest income
Total interest-earning assets/interest income
Noninterest-earning assets
Noninterest-earning assets
Noninterest-earning assets	Noninterest-earning assets	49,287						57,740
Total assets	Total assets	$	555,507					$	546,878
Total assets
Total assets
Liabilities and Equity
Liabilities and Equity
Liabilities and Equity	Liabilities and Equity
Interest-bearing liabilities:	Interest-bearing liabilities:
Interest-bearing liabilities:
Interest-bearing liabilities:
Interest-bearing deposits
Interest-bearing deposits
Interest-bearing deposits	Interest-bearing deposits
Money market	Money market	$	63,691	$	443	2.79	%	$	58,019	$	27	0.19	%
Money market
Money market
Demand
Demand
Demand	Demand	124,111		584		1.89	%	119,636		44		0.15	%
Savings	Savings	102,415		321		1.26	%	109,063		12		0.04	%
Savings
Savings
Time deposits
Time deposits
Time deposits	Time deposits	22,342		183		3.26	%	10,378		5		0.18	%
Total interest-bearing deposits	Total interest-bearing deposits	312,559		1,531		1.96	%	297,096		88		0.12	%
Total interest-bearing deposits
Total interest-bearing deposits
Borrowed funds
Borrowed funds
Borrowed funds	Borrowed funds
Federal Home Loan Bank borrowings	Federal Home Loan Bank borrowings	33,752		451		5.28	%	6,978		22		1.24	%
Bank notes and senior debt		20,910		312		5.91	%	16,172		66		1.61	%
Federal Home Loan Bank borrowings
Federal Home Loan Bank borrowings
Senior debt
Senior debt
Senior debt
Subordinated debt
Subordinated debt
Subordinated debt	Subordinated debt	5,850		90		6.19	%	6,998		34		1.94	%
Other	Other	5,180		50		3.79	%	5,508		20		1.46	%
Other
Other
Total borrowed funds
Total borrowed funds
Total borrowed funds	Total borrowed funds	65,692		903		5.44	%	35,656		142		1.58	%
Total interest-bearing liabilities/interest expense	Total interest-bearing liabilities/interest expense	378,251		2,434		2.56	%	332,752		230		0.27	%
Total interest-bearing liabilities/interest expense
Total interest-bearing liabilities/interest expense
Noninterest-bearing liabilities and equity:
Noninterest-bearing liabilities and equity:
Noninterest-bearing liabilities and equity:	Noninterest-bearing liabilities and equity:
Noninterest-bearing deposits	Noninterest-bearing deposits	113,178						149,432
Noninterest-bearing deposits
Noninterest-bearing deposits
Accrued expenses and other liabilities
Accrued expenses and other liabilities
Accrued expenses and other liabilities	Accrued expenses and other liabilities	15,063						17,116
Equity	Equity	49,015						47,578
Equity
Equity
Total liabilities and equity
Total liabilities and equity
Total liabilities and equity	Total liabilities and equity	$	555,507					$	546,878
Interest rate spread	Interest rate spread					2.14	%					2.42	%
Interest rate spread
Interest rate spread
Impact of noninterest-bearing sources
Impact of noninterest-bearing sources
Impact of noninterest-bearing sources	Impact of noninterest-bearing sources					0.65						0.08
Net interest income/margin	Net interest income/margin			$	3,547	2.79	%			$	3,076	2.50	%
Net interest income/margin
Net interest income/margin

(continued on the following page)

88 The PNC Financial Services Group, Inc. – Form 10-Q

Average Consolidated Balance Sheet And Net Interest Analysis (a) (b) (c) (Continued)


	Three months ended December 31
	2023
Taxable-equivalent basis Dollars in millions	Average Balances		Interest Income/ Expense		Average Yields/ Rates
Assets
Interest-earning assets:
Investment securities
Securities available for sale
Residential mortgage-backed
Agency	$	30,980	$	220	2.83	%
Non-agency	599		13		9.15	%
Commercial mortgage-backed	2,727		20		3.00	%
Asset-backed	1,080		17		6.41	%
U.S. Treasury and government agencies	7,788		44		2.22	%
Other	2,899		19		2.61	%
Total securities available for sale	46,073		333		2.89	%
Securities held to maturity
Residential mortgage-backed	43,336		298		2.75	%
Commercial mortgage-backed	2,318		32		5.53	%
Asset-backed	6,040		69		4.57	%
U.S. Treasury and government agencies	36,457		120		1.32	%
Other	3,164		38		4.72	%
Total securities held to maturity	91,315		557		2.44	%
Total investment securities	137,388		890		2.59	%
Loans
Commercial and industrial	180,566		2,828		6.13	%
Commercial real estate	35,617		608		6.68	%
Equipment lease financing	6,430		80		4.98	%
Consumer	54,512		963		7.00	%
Residential real estate	47,444		427		3.60	%
Total loans	324,569		4,906		5.94	%
Interest-earning deposits with banks	42,627		590		5.53	%
Other interest-earning assets	8,738		152		6.96	%
Total interest-earning assets/interest income	513,322		6,538		5.03	%
Noninterest-earning assets	48,997
Total assets	$	562,319
Liabilities and Equity
Interest-bearing liabilities:
Interest-bearing deposits
Money market	$	66,393	556		3.32	%
Demand	124,124		705		2.26	%
Savings	98,490		417		1.68	%
Time deposits	30,357		317		4.11	%
Total interest-bearing deposits	319,364		1,995		2.48	%
Borrowed funds
Federal Home Loan Bank borrowings	37,783		546		5.66	%
Senior debt	26,634		426		6.25	%
Subordinated debt	5,091		84		6.63	%
Other	3,384		48		5.55	%
Total borrowed funds	72,892		1,104		5.94	%
Total interest-bearing liabilities/interest expense	392,256		3,099		3.10	%
Noninterest-bearing liabilities and equity:
Noninterest-bearing deposits	104,567
Accrued expenses and other liabilities	16,328
Equity	49,168
Total liabilities and equity	$	562,319
Interest rate spread					1.93	%
Impact of noninterest-bearing sources					0.73
Net interest income/margin			$	3,439	2.66	%

The PNC Financial Services Group, Inc. – Form 10-Q 89

(a)Nonaccrual loans are included in loans, net of unearned income. The impact of financial derivatives used in interest rate risk management is included in the interest income/expense and average yields/rates of the related assets and liabilities. Basis adjustments related to hedged items are included in noninterest-earning assets and noninterest-bearing liabilities. Average balances of securities are based on amortized historical cost (excluding adjustments to fair value, which are included in other assets). Average balances for certain loans and borrowed funds accounted for at fair value are included in noninterest-earning assets and noninterest-bearing liabilities, with changes in fair value recorded in Noninterest income.

(b)Loan fees for the three months ended ~~June 30,~~March 31, 2024, December 31, 2023 and ~~June 30, 2022~~March 31, 2023 were ~~$44~~$47 million, $46 million and ~~$38 million, respectively. Loan fees for the six months ended June 30, 2023 and June 30, 2022 were $90 million and $98~~$46 million, respectively.

(c)Interest income calculated as taxable-equivalent interest income. To provide more meaningful comparisons of interest income and yields for all interest-earning assets, as well as net interest margins, we use interest income on a taxable-equivalent basis in calculating average yields and 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 GAAP. See Reconciliation of Taxable-Equivalent Net Interest Income in this Statistical Information section for more information.

~~106~~ ~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~

RECONCILIATION OF TAXABLE-EQUIVALENT NET INTEREST INCOME ~~(non-GAAP)~~(non-GAAP) (a)




		Six months ended				Three months ended
In millions	In millions	June 30, 2023		June 30, 2022			June 30, 2023		June 30, 2022
In millions
In millions
Net interest income (GAAP)
Net interest income (GAAP)
Net interest income (GAAP)	Net interest income (GAAP)	$	7,095	$	5,855		$	3,510	$	3,051
Taxable-equivalent adjustments	Taxable-equivalent adjustments	75		47			37		25
Taxable-equivalent adjustments
Taxable-equivalent adjustments
Net interest income (non-GAAP)	Net interest income (non-GAAP)	$	7,170	$	5,902		$	3,547	$	3,076
Net interest income (non-GAAP)
Net interest income (non-GAAP)

(a)The interest income earned on certain interest-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 income, we use interest income on a taxable-equivalent basis 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 GAAP.

RECONCILIATION OF CORE NONINTEREST EXPENSE (non-GAAP) (a)


	Three months ended		Year ended
In millions	March 31, 2024		December 31, 2023
Noninterest expense	$	3,334	$	14,012
Less non-core noninterest expense adjustments:
FDIC special assessment costs	130		515
Workforce reduction charges			150
Total non-core noninterest expense adjustments	$	130	$	665
Core noninterest expense (non-GAAP)	$	3,204	$	13,347

(a)Core noninterest expense is a non-GAAP measure calculated based on Noninterest expense less costs related to the FDIC’s special assessment and the workforce reduction that were incurred outside of our core business operations. We believe this non-GAAP measure to be a useful tool for comparison of operating expenses incurred during the normal course of business.

GLOSSARY

DEFINED TERMS

For a glossary of terms commonly used in our filings, please see the glossary of terms included in our ~~2022~~2023 Form 10-K.

90 The PNC Financial Services Group, Inc. – Form 10-Q

ACRONYMS

ACL

Allowance for credit losses

~~LCR~~LGD

~~Liquidity Coverage Ratio~~Loss given default

ALCO

PNC’s Asset and Liability Committee

LIHTC

Low income housing tax credit

ALLL

Allowance for loan and lease losses

~~LGD~~LLC

~~Loss given default~~Limited liability company

AOCI

Accumulated other comprehensive income

~~LIBOR~~LTV

~~London Interbank Offered Rate~~Loan-to-value ratio

ASC

Accounting Standards Codification

~~LIHTC~~

~~Low income housing tax credit~~

~~ASU~~

~~Accounting Standards Update~~

~~LLC~~

~~Limited liability company~~

~~BHC~~

~~Bank holding company~~

~~LTV~~

~~Loan-to-value ratio~~

~~bps~~

~~Basis points~~

MD&A

Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~BSBY~~ASU

~~Bloomberg Short-Term Bank Yield Index~~Accounting Standards Update

MSR

Mortgage servicing right

~~CARES Act~~BHC

~~Coronavirus Aid, Relief and Economic Security Act~~Bank holding company

NMTC

New market tax credit

bps

Basis points

NSFR

Net Stable Funding Ratio

CCAR

Comprehensive Capital Analysis and Review

OCC

Office of the Comptroller of the Currency

CECL

Current expected credit losses

OREO

Other real estate owned

CET1

Common equity tier 1

OTC

Over-the-counter

~~CFPB~~

~~Consumer Financial Protection Bureau~~

~~PCD~~

~~Purchased credit deteriorated~~

FDIC

Federal Deposit Insurance Corporation

PDPCD

~~Probability of default~~Purchased credit deteriorated

FDM

Financial Difficulty Modification

~~PPP~~PD

~~Paycheck Protection Program~~Probability of default

FHLB

Federal Home Loan Bank

RAC

PNC’s Reserve Adequacy Committee

FHLMC

Federal Home Loan Mortgage Corporation

ROAP

Removal of account provisions

FICO

Fair Isaac Corporation (credit score)

SCB

Stress capital buffer

FNMA

Federal National Mortgage Association

SEC

Securities and Exchange Commission

FOMC

Federal Open Market Committee

SOFR

Secured Overnight Financing Rate

GAAP

Accounting principles generally accepted in the United States of America

SPE

Special purpose entity

GDP

Gross Domestic Product

TDR

Troubled debt restructuring

GNMA

Government National Mortgage Association

U.S.

United States of America

~~GSIB~~

~~Globally systemically important bank~~

~~VaR~~

~~Value-at-risk~~

~~HPI~~

~~Home price index~~

~~VIE~~

~~Variable interest entity~~

ISDA

International Swaps and Derivatives Association

VaR

Value-at-risk

LCR

Liquidity Coverage Ratio

VIE

Variable interest entity

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See the information set forth in Note 13 Legal Proceedings, which is incorporated by reference in response to this item.

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ ~~107~~

ITEM 1A. RISK FACTORS

There are no material changes from any of the risk factors previously disclosed in our ~~first quarter~~ 2023 ~~Form 10-Q and 2022~~ Form 10-K in response to Part ~~II, Item 1A and Part~~ I, Item ~~1A, respectively.~~1A.

The PNC Financial Services Group, Inc. – Form 10-Q 91

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Unregistered Sales of Equity Securities

None.

Equity Security Repurchases

Details of our repurchases of PNC common stock during the ~~second~~first quarter of ~~2023~~2024 are included in the following ~~table.~~table:

2023 period
In thousands, except per share data Total shares purchased (a) Average price paid per share Total shares purchased as part of publicly announced programs (b) Maximum number of shares that may yet be purchased under the programs (b)
April 1 - 30 95 $ 125.31 79 46,524
May 1 - 31 188 $ 117.13 188 46,336
June 1 - 30 836 $ 125.64 836 45,500
Total 1,119 $ 124.18 1,103


2024 period In thousands, except per share data	Total shares purchased (a)	Average price paid per share		Total shares purchased as part of publicly announced programs (b)	Maximum number of shares that may yet be purchased under the programs (b)
January 1 - 31	181	$	150.17	180	44,805
February 1 - 29	860	$	147.55	424	44,381
March 1 - 31	302	$	152.29	302	44,079
Total	1,343	$	148.97	906

(a)Includes PNC common stock purchased in connection with our various employee benefit plans generally related to forfeitures of unvested restricted stock awards and shares used to cover employee payroll tax withholding requirements. See Note 1716 Employee Benefit Plans and Note 1817 Stock Based Compensation Plans in our ~~2022~~2023 Form 10-K, which include additional information regarding our employee benefit and equity compensation plans that use PNC common stock.

(b)Consistent with the SCB framework, which allows for capital ~~returns~~return in amounts in excess of the SCB minimum levels, ~~(the regulatory minimum (4.5%) plus our SCB),~~ our Board of Directors has authorized a repurchase framework under the previously approved repurchase program of up to 100 million common shares, of which approximately ~~46%~~44% were still available for repurchase at ~~June 30, 2023. PNC's SCB through September 30, 2023 is 2.9%. Based on the results~~March 31, 2024. In light of the Federal ~~Reserve's 2023 annual stress test, PNC's~~banking agencies proposed rules to adjust the Basel III capital framework, second quarter of 2024 share repurchase activity is expected to approximate the recent quarterly average share repurchase levels. PNC continues to evaluate the potential impact of the proposed rules and may adjust share repurchase activity depending on market and economic conditions, as well as other factors. PNC’s SCB for the four-quarter period beginning October 1, 2023 ~~will improve to~~is the regulatory minimum of 2.5%.

ITEM 5. OTHER INFORMATION

Director or Executive Officer Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements

The following provides a description of Rule 10b5-1 trading arrangements (as defined in Item 408 of Regulation S-K under the Securities Exchange Act of 1934) adopted during the three months ended March 31, 2024, by any director or executive officer who is subject to the filing requirements of Section 16 of the Securities Exchange Act of 1934:

•On March 15, 2024, William S. Demchak, Chairman and Chief Executive Officer, adopted a trading arrangement intended to satisfy the affirmative defense of Rule 10b5-1(c). The duration of the arrangement is from March 15, 2024 to June 13, 2025, and the maximum aggregate number of shares to be sold under the arrangement is 64,584 of the approximately 570,000 shares currently held by Mr. Demchak. Sales under the trading arrangement will not commence until completion of the required cooling off period under Rule 10b5-1.

During the three months ended ~~June 30, 2023,~~March 31, 2024, none of PNC’s directors or executive officers adopted a non-Rule 10b5-1 trading arrangement (as defined in Item 408 of Regulation S-K under the Securities Exchange Act of 1934). Additionally, during the three months ended March 31, 2024, none of PNC’s directors or executive officers terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement.

~~108~~92 The PNC Financial Services Group, Inc. – Form 10-Q

ITEM 6. EXHIBITS

The following exhibit index lists Exhibits filed or furnished with this Quarterly Report on Form 10-Q:


EXHIBIT INDEX

~~10.33~~						~~2023 Form of Performance Share Units Award Agreement~~

~~10.34~~						~~2023 Form of Restricted Share Units Award Agreement~~

~~10.35~~						~~2023 Form of Restricted Share Units Award Agreement – Senior Leader Program~~

~~10.36~~						~~2023 Form of Five-Year Restricted Share Units Award Agreement~~

22						Subsidiary Issuers of Guaranteed Securities

31.1						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1						Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350

32.2						Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350

101.INS						Inline XBRL Instance Document*

101.SCH						Inline XBRL Taxonomy Extension Schema Document

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document

104						Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

*The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL.

You can obtain copies of these Exhibits electronically at the SEC’s website at www.sec.gov. The Exhibits are also available as part of this Form 10-Q on PNC’s corporate website at www.pnc.com/secfilings. Shareholders and bondholders may also obtain copies of Exhibits, without charge, by contacting Investor Relations at 800-843-2206 or via e-mail at investor.relations@pnc.com. The Interactive Data File (XBRL) exhibit is only available electronically.

CORPORATE INFORMATION

The PNC Financial Services Group, Inc.

Internet Information

The PNC Financial Services Group, Inc.’s financial reports and information about its products and services are available on the internet at www.pnc.com. We provide information for investors on our corporate website under “About Us – Investor Relations.” We use our account with X, formerly known as Twitter, ~~account,~~ @pncnews, as an additional way of disseminating to the public information that may be relevant to investors.

We generally post the following under “About Us – Investor Relations” shortly before or promptly following its first use or release: financially-related press releases, including earnings releases and supplemental financial information, various SEC filings, including annual, quarterly and current reports and proxy statements, presentation materials associated with earnings and other investor conference calls or events, and access to live and recorded audio from earnings and other investor conference calls or events. In some cases, we may post the presentation materials for other investor conference calls or events several days prior to the call or event. For earnings and other conference calls or events, we generally include in our posted materials a cautionary statement regarding forward-looking and non-GAAP financial information and we provide GAAP reconciliations when we include non-GAAP financial information. Such GAAP reconciliations may be in materials for the applicable presentation, in materials for prior presentations or in our annual, quarterly or current reports.

When warranted, we will also use our website to expedite public access to time-critical information regarding PNC instead of using a press release or a filing with the SEC for first disclosure of the information. In some circumstances, the information may be relevant to investors but directed at customers, in which case it may be accessed directly through the home page rather than “About Us – Investor Relations.”

~~The PNC Financial Services Group, Inc. –~~ ~~Form 10-Q~~ ~~109~~

We are required to provide additional public disclosure regarding estimated income, losses and pro forma regulatory capital ratios under supervisory and PNC-developed hypothetical severely adverse economic scenarios, as well as information concerning our capital stress testing processes, pursuant to the stress testing regulations adopted by the Federal Reserve and the OCC. We are also required to make certain additional regulatory capital-related public disclosures about our capital structure, risk exposures, risk assessment processes, risk-weighted assets and overall capital adequacy, including market risk-related disclosures, under the

The PNC Financial Services Group, Inc. – Form 10-Q 93

regulatory capital rules adopted by the Federal banking agencies. Similarly, the Federal Reserve’s rules require quantitative and qualitative disclosures about our LCR and NSFR. Under these regulations, we may satisfy these requirements through postings on our website, and we have done so and expect to continue to do so without also providing disclosure of this information through filings with the SEC.

Other information posted on our corporate website that may not be available in our filings with the SEC includes information relating to our corporate governance and annual communications from our chairman to shareholders.

Where we have included internet addresses in this Report, such as our internet address and the internet address of the SEC, we have included those internet addresses as inactive textual references only. Except as specifically incorporated by reference into this Report, information on those websites is not part hereof.

Financial Information

We are subject to the informational requirements of the Exchange Act and, in accordance with the Exchange Act, we file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC File Number is 001-09718. You can obtain copies of these and other filings, including exhibits, electronically at the SEC’s internet website at www.sec.gov or on our corporate internet website at www.pnc.com/secfilings. Shareholders and bond holders may also obtain copies of these filings without charge by contacting PNC Investor Relations at 800-843-2206, via the information request form at www.pnc.com/investorrelations for copies without exhibits, or via email to investor.relations@pnc.com for copies of exhibits, including financial statements and schedule exhibits where applicable. The interactive date file (XBRL) is only available electronically.

Corporate Governance at PNC

Information about our Board of Directors and its committees and corporate governance, including our PNC Code of Business Conduct and Ethics (as amended from time to time), is available on our website at www.pnc.com/corporategovernance. In addition, any future waivers from a provision of the PNC Code of Business Conduct and Ethics covering any of our directors or executive officers (including our principal executive officer, principal financial officer and principal accounting officer or controller) will be posted at this internet address.

Shareholders who would like to request printed copies of the PNC Code of Business Conduct and Ethics or our Corporate Governance Guidelines or the charters of our Board’s Audit, Nominating and Governance, Human Resources or Risk Committees (all of which are posted on our website at www.pnc.com/corporategovernance) may do so by sending their requests to our Corporate Secretary at The PNC Financial Services Group, Inc. at The Tower at PNC Plaza, 300 Fifth Avenue, Pittsburgh, Pennsylvania 15222-2401. Copies will be provided without charge.

Inquiries

For financial services, call 888-762-2265.

Registered shareholders should contact Shareholder Services at 800-982-7652. Hearing impaired: 800-952-9245.

Analysts and institutional investors should contact Bryan Gill, Executive Vice President, Director of Investor Relations, at 412-768-4143 or via email at investor.relations@pnc.com.

News media representatives should contact PNC Media Relations at 412-762-4550 or via email at media.relations@pnc.com.

Dividend Policy

Holders of PNC common stock are entitled to receive dividends when declared by our Board of Directors out of funds legally available for this purpose. Our Board of Directors may not pay or set apart dividends on the common stock until dividends for all past dividend periods on any series of outstanding preferred stock and certain outstanding capital securities issued by the parent company

have been paid or declared and set apart for payment. The Board of Directors ~~presently~~currently intends to continue the policy of paying quarterly cash dividends. The amount of any future dividends will depend on economic and market conditions, our financial condition and operating results, and other factors, including contractual restrictions and applicable government regulations and policies (such as those relating to the ability of bank and non-bank subsidiaries to pay dividends to the parent company and regulatory capital limitations). The amount of our dividend is also currently subject to the results of the supervisory assessment of capital adequacy and capital planning processes undertaken by the Federal Reserve as part of the CCAR process, which includes setting PNC’s SCB, as described in the Capital Management portion of the Risk Management section of this Financial Review and in the Supervision and Regulation section in Item 1 of our 2023 Form 10-K.

~~110~~94 The PNC Financial Services Group, Inc. – Form 10-Q

~~described in the Capital Management portion of the Risk Management section of the Financial Review of this Report and in the Supervision and Regulation section in Item 1 of our 2022 Form 10-K.~~

Dividend Reinvestment and Stock Purchase Plan

The PNC Financial Services Group, Inc. Dividend Reinvestment and Stock Purchase Plan enables holders of our common stock to conveniently purchase additional shares of common stock. Obtain a prospectus and enroll at www.computershare.com/pnc or contact Computershare at 800-982-7652. Registered shareholders may also contact this phone number regarding dividends and other shareholder services.

Stock Transfer Agent and Registrar

Computershare

150 Royall Steet, Suite 101

Canton, MA 02021

800-982-7652

Hearing impaired: 800-952-9245

www.computershare.com/pnc

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on ~~August~~May 2, ~~2023~~2024 on its behalf by the undersigned thereunto duly authorized.


/s/ Robert Q. Reilly
Robert Q. Reilly
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

The PNC Financial Services Group, Inc. – Form 10-Q ~~111~~95


	June 30, 2023						March 31, 2023
Three months ended Dollars in millions	Average Balances		Average Yields/ Rates		Interest Income/ Expense		Average Balances		Average Yields/ Rates		Interest Income/ Expense
Assets
Interest-earning assets
Investment securities	$	141,038	2.52	%	$	889	$	143,391	2.49	%	$	891
Loans	324,534		5.57	%	4,554		325,526		5.29	%	4,290
Interest-earning deposits with banks	31,433		5.10	%	400		34,054		4.58	%	390
Other	9,215		5.96	%	138		8,806		5.75	%	126
Total interest-earning assets/interest income	$	506,220	4.70	%	5,981		$	511,777	4.46	%	5,697
Liabilities
Interest-bearing liabilities
Interest-bearing deposits	$	312,559	1.96	%	1,531		$	315,056	1.66	%	1,291
Borrowed funds	65,692		5.44	%	903		62,968		4.98	%	783
Total interest-bearing liabilities/interest expense	$	378,251	2.56	%	2,434		$	378,024	2.20	%	2,074
Net interest margin/income (non-GAAP)			2.79	%	3,547				2.84	%	3,623
Taxable-equivalent adjustments					(37)						(38)
Net interest income (GAAP)					$	3,510					$	3,585


At or for six months ended June 30							Change
Dollars in millions, except as noted	2023			2022			$		%
Supplemental Noninterest Income Information
Asset management and brokerage	$	254		$	269		$	(15)	(6)	%
Card and cash management	$	668		$	659		$	9	1	%
Lending and deposit services	$	357		$	331		$	26	8	%
Residential and commercial mortgage	$	179		$	170		$	9	5	%
Residential Mortgage Information
Residential mortgage servicing statistics (in billions, except as noted) (a)
Serviced portfolio balance (b)	$	191		$	145		$	46	32	%
Serviced portfolio acquisitions	$	9		$	21		$	(12)	(57)	%
MSR asset value (b)	$	2.3		$	1.6		$	0.7	44	%
MSR capitalization value (in basis points) (b)	123			112			11		10	%
Servicing income: (in millions)
Servicing fees, net (c)	$	145		$	69		$	76	110	%
Mortgage servicing rights valuation, net of economic hedge	$	5		$	15		$	(10)	(67)	%
Residential mortgage loan statistics
Loan origination volume (in billions)	$	3.8		$	9.9		$	(6.1)	(62)	%
Loan sale margin percentage	2.24		%	2.18		%
Percentage of originations represented by:
Purchase volume (d)	88		%	57		%
Refinance volume	12		%	43		%
Other Information (b)
Customer-related statistics (average)
Non-teller deposit transactions (e)	65		%	64		%
Digital consumer customers (f)	74		%	78		%
Credit-related statistics
Nonperforming assets	$	981		$	1,088		$	(107)	(10)	%
Net charge-offs - loans and leases	$	221		$	229		$	(8)	(3)	%
Other statistics
ATMs	8,566			9,301			(735)		(8)	%
Branches (g)	2,361			2,535			(174)		(7)	%
Brokerage account client assets (in billions) (h)	$	75		$	68		$	7	10	%


	Second Quarter 2023		Second Quarter 2022
Net Interest Income Sensitivity Simulation
Effect on net interest income in first year from gradual parallel interest rate change over the following 12 months of:
100 basis point increase	0.0	%	3.2	%
100 basis point decrease	0.0	%	(3.4)	%
Effect on net interest income in second year from gradual parallel interest rate change over the preceding 12 months of:
100 basis point increase	1.4	%	5.6	%
100 basis point decrease	(1.6)	%	(6.4)	%


	June 30, 2023
	PNC Economist		Market Forward		Slope Flattening
First year sensitivity	(0.9)	%	0.0	%	(0.5)	%
Second year sensitivity	0.2	%	(0.7)	%	(2.4)	%


Six months ended June 30 In millions	Gross Gains		Gross Losses		Net Gains (Losses)		Tax Expense (Benefit)
2023			$	(2)	$	(2)
2022	$	11	$	(15)	$	(4)	$	(1)


			Pre-TDR Amortized Cost Basis (b)		Post-TDR Amortized Cost Basis (c)
During the three months ended June 30, 2022 Dollars in millions	Number of Loans				Principal Forgiveness		Rate Reduction		Other		Total
Commercial		15	$	35	$	9			$	22	$	31
Consumer		3,025	50				$	40	5		45
Total TDRs		3,040	$	85	$	9	$	40	$	27	$	76
During the six months ended June 30, 2022 Dollars in millions
Commercial		27	$	88	$	9			$	68	$	77
Consumer		5,920	86				$	66	12		78
Total TDRs		5,947	$	174	$	9	$	66	$	80	$	155


			Total realized / unrealized gains or losses for the period (a)																				Unrealized gains/losses on assets and liabilities held on Consolidated Balance Sheet at June 30, 2022 (a) (c)
Level 3 Instruments Only In millions	Fair Value Mar. 31, 2022		Included in Earnings		Included in Other comprehensive income (b)			Purchases		Sales		Issuances		Settlements		Transfers into Level 3		Transfers out of Level 3			Fair Value June 30, 2022
Assets
Residential mortgage loans held for sale	$	108	$	(1)				$	8	$	(30)			$	(4)	$	9	$	(7)	(e)	$	83	$	(1)
Commercial mortgage loans held for sale	45													(7)							38

Securities available for sale
Residential mortgage- backed non-agency	1,019		7			$	(43)							(58)							925
Commercial mortgage-backed non-agency	3																				3
Asset-backed	152		1			(9)								(6)							138
Other	66					(1)		2													67
Total securities available for sale	1,240		8			(53)		2						(64)							1,133
Loans	851		10					7		(1)				(48)				(15)		(e)	804		9
Equity investments	1,751		92					87		(63)											1,867		94
Residential mortgage servicing rights	1,322		163					181				$	17	(63)							1,620		163
Commercial mortgage servicing rights	886		111					17				14		(40)							988		111

Financial derivatives	10		7					2						(6)							13		13

Total assets	$	6,213	$	390		$	(53)	$	304	$	(94)	$	31	$	(232)	$	9	$	(22)		$	6,546	$	389
Liabilities
Other borrowed funds	$	3										$	2	$	(2)						$	3
Financial derivatives	234		$	18						$	3			(42)							213		$	19
Other liabilities	158		14									171		(161)							182		10
Total liabilities	$	395	$	32						$	3	$	173	$	(205)						$	398	$	29
Net gains (losses)			$	358	(f)																		$	360	(g)


Three months ended June 30 In millions	Retail Banking		Corporate & Institutional Banking		Asset Management Group		Other		Consolidated (a)
2023
Income Statement
Net interest income	$	2,448	$	1,349	$	125	$	(412)	$	3,510
Noninterest income	702		821		228		32		1,783
Total revenue	3,150		2,170		353		(380)		5,293
Provision for (recapture of) credit losses	(14)		209		(10)		(39)		146
Depreciation and amortization	81		53		7		143		284
Other noninterest expense	1,823		868		273		124		3,088
Income (loss) before income taxes (benefit) and noncontrolling interests	1,260		1,040		83		(608)		1,775
Income taxes (benefit)	295		218		20		(258)		275
Net income (loss)	965		822		63		(350)		1,500
Less: Net income attributable to noncontrolling interests	11		5				1		17
Net income (loss) excluding noncontrolling interests	$	954	$	817	$	63	$	(351)	$	1,483
Average Assets	$	114,826	$	234,174	$	15,562	$	190,945	$	555,507
2022
Income Statement
Net interest income	$	1,662	$	1,232	$	153	$	4	$	3,051
Noninterest income	748		968		234		115		2,065
Total revenue	2,410		2,200		387		119		5,116
Provision for (recapture of) credit losses	55		(17)		5		(7)		36
Depreciation and amortization	83		51		8		147		289
Other noninterest expense	1,830		883		262		(20)		2,955
Income (loss) before income taxes (benefit) and noncontrolling interests	442		1,283		112		(1)		1,836
Income taxes (benefit)	105		277		26		(68)		340
Net income	337		1,006		86		67		1,496
Less: Net income (loss) attributable to noncontrolling interests	15		3				(3)		15
Net income excluding noncontrolling interests	$	322	$	1,003	$	86	$	70	$	1,481
Average Assets	$	113,068	$	219,513	$	14,449	$	199,848	$	546,878


	Three Months Ended June 30, 2023						Three Months Ended June 30, 2022
In millions	Retail Banking		Corporate & Institutional Banking		Asset Management Group		Retail Banking		Corporate & Institutional Banking		Asset Management Group

Asset management and brokerage
Asset management fees					$	222					$	228
Brokerage fees	$	124			2		$	135			2
Total asset management and brokerage	124				224		135				230
Card and cash management
Treasury management fees	11		$	345			10		$	327
Debit card fees	178						177
Net credit card fees (a)	61						63
Merchant services	45		19				52		14
Other	25						27
Total card and cash management	320		364				329		341
Lending and deposit services
Deposit account fees	151						145
Other	18		8				17		9
Total lending and deposit services	169		8				162		9
Residential and commercial mortgage (b)			40						33
Capital markets and advisory			130						272
Other			14						9
Total in-scope noninterest income	613		556		224		626		664		230
Out-of-scope noninterest income (c)	89		265		4		122		304		4
Noninterest income by business segment	$	702	$	821	$	228	$	748	$	968	$	234
Reconciliation to consolidated noninterest income
Total in-scope business segment noninterest income					$	1,393					$	1,520
Out-of-scope business segment noninterest income (c)					358						430
Noninterest income from other segments					32						115
Noninterest income as shown on the Consolidated Income Statement					$	1,783					$	2,065