Form: 8-K

Current report filing

April 14, 2023

Documents



Exhibit 99.2

pncbanklogoa18a.jpg



THE PNC FINANCIAL SERVICES GROUP, INC.

FINANCIAL SUPPLEMENT
FIRST QUARTER 2023
(Unaudited)



THE PNC FINANCIAL SERVICES GROUP, INC.
FINANCIAL SUPPLEMENT
FIRST QUARTER 2023
(UNAUDITED)
Consolidated Results:
Page
6-7
9-11
Business Segment Results:
14-15
18-20

The information contained in this Financial Supplement is preliminary, unaudited and based on data available on April 14, 2023. This information speaks only as of the particular date or dates included in the schedules. We do not undertake any obligation to, and disclaim any duty to, correct or update any of the information provided in this Financial Supplement. Our future financial performance is subject to risks and uncertainties as described in our United States Securities and Exchange Commission (SEC) filings.

BUSINESS
PNC is one of the largest diversified financial services companies in the United States (U.S.) and is headquartered in Pittsburgh, Pennsylvania. PNC has businesses engaged in retail banking, including residential mortgage, corporate and institutional banking and asset management, providing many of its products and services nationally. PNC's retail branch network is located coast-to-coast. PNC also has strategic international offices in four countries outside the U.S.





THE PNC FINANCIAL SERVICES GROUP, INC.
Cross Reference Index to First Quarter 2023 Financial Supplement (Unaudited)
Financial Supplement Table Reference
Table Description Page
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THE PNC FINANCIAL SERVICES GROUP, INC.
Page 1

Table 1: Consolidated Income Statement (Unaudited)
Three months ended
March 31 December 31 September 30 June 30 March 31
In millions, except per share data 2023 2022 2022 2022 2022
Interest Income
Loans $ 4,258  $ 3,860  $ 3,138  $ 2,504  $ 2,293 
Investment securities 885  836  715  631  544 
Other 516  413  279  146  77 
Total interest income 5,659  5,109  4,132  3,281  2,914 
Interest Expense
Deposits 1,291  812  340  88  27 
Borrowed funds 783  613  317  142  83 
Total interest expense 2,074  1,425  657  230  110 
Net interest income 3,585  3,684  3,475  3,051  2,804 
Noninterest Income
Asset management and brokerage 356  345  357  365  377 
Capital markets and advisory 262  336  299  409  252 
Card and cash management 659  671  671  671  620 
Lending and deposit services 306  296  287  282  269 
Residential and commercial mortgage 177  184  143  161  159 
Other (a) (b) 258  247  317  177  211 
Total noninterest income 2,018  2,079  2,074  2,065  1,888 
Total revenue 5,603  5,763  5,549  5,116  4,692 
Provision For (Recapture of) Credit Losses 235  408  241  36  (208)
Noninterest Expense
Personnel 1,826  1,943  1,805  1,779  1,717 
Occupancy 251  247  241  246  258 
Equipment 350  369  344  351  331 
Marketing 74  106  93  95  61 
Other 820  809  797  773  805 
Total noninterest expense 3,321  3,474  3,280  3,244  3,172 
Income before income taxes and noncontrolling interests 2,047  1,881  2,028  1,836  1,728 
Income taxes 353  333  388  340  299 
Net income 1,694  1,548  1,640  1,496  1,429 
Less: Net income attributable to noncontrolling interests 17  20  16  15  21 
Preferred stock dividends (c) 68  120  65  71  45 
Preferred stock discount accretion and redemptions 2  1  1  1  2 
Net income attributable to common shareholders $ 1,607  $ 1,407  $ 1,558  $ 1,409  $ 1,361 
Earnings Per Common Share
Basic $ 3.98  $ 3.47  $ 3.78  $ 3.39  $ 3.23 
Diluted $ 3.98  $ 3.47  $ 3.78  $ 3.39  $ 3.23 
Average Common Shares Outstanding
Basic 401  404  410  414  420 
Diluted 402  404  410  414  420 
Efficiency 59  % 60  % 59  % 63  % 68  %
Noninterest income to total revenue 36  % 36  % 37  % 40  % 40  %
Effective tax rate (d) 17.2  % 17.7  % 19.1  % 18.5  % 17.3  %
(a)Includes net gains (losses) on sales of securities of less than $1 million, $(3) million, less than $1 million, less than $(1) million and $(4) million for the quarters ended March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022, respectively.
(b)Includes Visa Class B derivative fair value adjustments of $(45) million, $(41) million, $13 million, $(16) million and $4 million for the quarters ended March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022, respectively.
(c)Dividends are payable quarterly other than Series R and Series S preferred stock, which are payable semiannually.
(d)The effective income tax rates are generally lower than the statutory rate due to the relationship of pretax income to tax credits and earnings that are not subject to tax.












THE PNC FINANCIAL SERVICES GROUP, INC.
Page 2

Table 2: Consolidated Balance Sheet (Unaudited)
March 31 December 31 September 30 June 30 March 31
In millions, except par value 2023 2022 2022 2022 2022
Assets
Cash and due from banks $ 5,940  $ 7,043  $ 6,548  $ 8,582  $ 7,572 
Interest-earning deposits with banks (a) 33,865  27,320  40,278  28,404  48,776 
Loans held for sale (b) 998  1,010  1,126  1,191  1,506 
Investment securities – available for sale 43,220  44,159  45,798  52,984  112,313 
Investment securities – held to maturity 95,019  95,175  90,653  79,748  20,098 
Loans (b) 326,475  326,025  315,400  310,800  294,457 
Allowance for loan and lease losses (4,741) (4,741) (4,581) (4,462) (4,558)
Net loans 321,734  321,284  310,819  306,338  289,899 
Equity investments 8,323  8,437  8,130  8,441  7,798 
Mortgage servicing rights 3,293  3,423  3,206  2,608  2,208 
Goodwill 10,987  10,987  10,987  10,916  10,916 
Other (b) 38,398  38,425  41,932  41,574  40,160 
Total assets $ 561,777  $ 557,263  $ 559,477  $ 540,786  $ 541,246 
Liabilities
Deposits
Noninterest-bearing $ 118,014  $ 124,486  $ 138,423  $ 146,438  $ 150,798 
Interest-bearing 318,819  311,796  299,771  294,373  299,399 
Total deposits 436,833  436,282  438,194  440,811  450,197 
Borrowed funds
Federal Home Loan Bank borrowings 32,020  32,075  30,075  10,000 
Senior debt 19,622  16,657  13,357  14,358  16,206 
Subordinated debt 5,630  6,307  7,286  7,487  6,766 
Other (b) 3,550  3,674  3,915  4,139  3,599 
Total borrowed funds 60,822  58,713  54,633  35,984  26,571 
Allowance for unfunded lending related commitments 672  694  682  681  639 
Accrued expenses and other liabilities 14,376  15,762  19,245  15,622  14,623 
Total liabilities 512,703  511,451  512,754  493,098  492,030 
Equity
Preferred stock (c)
Common stock - $5 par value
Authorized 800 shares, issued 543 shares 2,714  2,714  2,714  2,714  2,713 
Capital surplus 19,864  18,376  19,810  18,531  17,487 
Retained earnings 54,598  53,572  52,777  51,841  51,058 
Accumulated other comprehensive income (loss) (9,108) (10,172) (10,486) (8,358) (5,731)
Common stock held in treasury at cost: 144, 142, 139, 132, and 128 shares (19,024) (18,716) (18,127) (17,076) (16,346)
Total shareholders’ equity 49,044  45,774  46,688  47,652  49,181 
Noncontrolling interests 30  38  35  36  35 
Total equity 49,074  45,812  46,723  47,688  49,216 
Total liabilities and equity $ 561,777  $ 557,263  $ 559,477  $ 540,786  $ 541,246 
(a)Amounts include balances held with the Federal Reserve Bank of $32.5 billion, $26.9 billion, $39.8 billion, $28.0 billion and $48.4 billion as of March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022, respectively.
(b)Amounts include assets and liabilities for which PNC has elected the fair value option. Our 2022 Form 10-K included, and our first quarter 2023 Form 10-Q will include, additional information regarding these items.
(c)Par value less than $0.5 million at each date.




THE PNC FINANCIAL SERVICES GROUP, INC.
Page 3
Table 3: Average Consolidated Balance Sheet (Unaudited) (a) (b)
Three months ended
March 31 December 31 September 30 June 30 March 31
In millions 2023 2022 2022 2022 2022
Assets
Interest-earning assets:
Investment securities
Securities available for sale
Residential mortgage-backed
Agency $ 31,850  $ 31,818  $ 32,500  $ 37,285  $ 67,498 
Non-agency 689  714 748 902 1,007
Commercial mortgage-backed 3,102  3,377 3,489 4,362 5,229
Asset-backed 218 105 110 2,388 6,225
U.S. Treasury and government agencies 9,088 10,345 11,789 17,480 47,468
Other 3,263 3,370 3,506 4,200 4,876
Total securities available for sale 48,210 49,729 52,142 66,617 132,303
Securities held to maturity
Residential mortgage-backed 45,616  44,184  39,329  33,086  106 
Commercial mortgage-backed 2,453  2,323  2,069  1,175 
Asset-backed 7,026  6,995  6,571  4,119 
U.S. Treasury and government agencies 36,748 36,441  34,279 28,167  919
Other 3,338 3,218 2,600 1,560 569
Total securities held to maturity 95,181 93,161 84,848 68,107 1,594
Total investment securities 143,391 142,890 136,990 134,724 133,897
Loans
Commercial and industrial 182,017 179,111 172,788 166,968 155,481
Commercial real estate 36,110 36,181 35,140 34,467 34,004
Equipment lease financing 6,452 6,275 6,202 6,200 6,099
Consumer 55,020 54,809 54,563 54,551 54,965
Residential real estate 45,927 45,499 44,333 42,604 40,152
Total loans 325,526 321,875 313,026 304,790 290,701
Interest-earning deposits with banks (c) 34,054 30,395 31,892 39,689 62,540
Other interest-earning assets 8,806 9,690 9,560 9,935 9,417
Total interest-earning assets 511,777 504,850 491,468 489,138 496,555
Noninterest-earning assets 50,555 52,356 55,629 57,740 53,541
Total assets $ 562,332  $ 557,206  $ 547,097  $ 546,878  $ 550,096 
Liabilities and Equity
Interest-bearing liabilities:
Interest-bearing deposits
Money market $ 65,753  $ 63,944  $ 60,934  $ 58,019  $ 62,596 
Demand 124,376 122,501 120,358 119,636 112,372
Savings 104,408 102,020 106,761 109,063 108,532
Time deposits 20,519 12,982 10,020 10,378 16,043
Total interest-bearing deposits 315,056 301,447 298,073 297,096 299,543
Borrowed funds
Federal Home Loan Bank borrowings 32,056 30,640 16,708  6,978
Senior debt 19,679 16,312 14,597 16,172 18,015
Subordinated debt 6,100 6,933 7,614 6,998 6,773
Other 5,133 5,346 5,342 5,508 5,524
Total borrowed funds 62,968 59,231 44,261 35,656 30,312
Total interest-bearing liabilities 378,024 360,678 342,334 332,752 329,855
Noninterest-bearing liabilities and equity:
Noninterest-bearing deposits 121,176 133,461 141,167 149,432 153,726
Accrued expenses and other liabilities 16,014 17,461 15,699 17,116 14,058
Equity 47,118 45,606 47,897 47,578 52,457
Total liabilities and equity $ 562,332  $ 557,206  $ 547,097  $ 546,878  $ 550,096 
(a)Calculated using average daily balances.
(b)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.
(c)Amounts include average balances held with the Federal Reserve Bank of $33.5 billion, $30.0 billion, $31.5 billion, $39.3 billion and $62.3 billion for the three months ended March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022, respectively.

THE PNC FINANCIAL SERVICES GROUP, INC.
Page 4
Table 4: Details of Net Interest Margin (Unaudited)
Three months ended
March 31 December 31 September 30 June 30 March 31
2023 2022 2022 2022 2022
Average yields/rates (a)
Yield on interest-earning assets
Investment securities
Securities available for sale
Residential mortgage-backed
Agency 2.67  % 2.54  % 2.36  % 2.17  % 1.73  %
Non-agency 8.53  % 7.85  % 7.62  % 7.56  % 7.53  %
Commercial mortgage-backed 2.62  % 2.75  % 2.70  % 2.45  % 2.36  %
Asset-backed 7.04  % 11.98  % 6.31  % 1.84  % 1.35  %
U.S. Treasury and government agencies 2.05  % 1.96  % 1.73  % 1.60  % 1.18  %
Other 2.47  % 2.39  % 2.47  % 2.59  % 2.73  %
Total securities available for sale 2.64  % 2.52  % 2.33  % 2.13  % 1.62  %
Securities held to maturity
Residential mortgage-backed 2.74  % 2.60  % 2.30  % 1.98  %
Commercial mortgage-backed 4.95  % 4.57  % 3.50  % 2.30  %
Asset-backed 3.97  % 3.44  % 2.58  % 1.92  %
U.S. Treasury and government agencies 1.33  % 1.30  % 1.19  % 1.05  % 2.61  %
Other 4.62  % 4.47  % 4.10  % 4.21  % 4.17  %
Total securities held to maturity 2.41  % 2.27  % 1.96  % 1.65  % 2.99  %
Total investment securities 2.49  % 2.36  % 2.10  % 1.89  % 1.64  %
Loans
Commercial and industrial 5.34  % 4.70  % 3.69  % 2.90  % 2.75  %
Commercial real estate 6.02  % 5.28  % 4.27  % 3.15  % 2.79  %
Equipment lease financing 4.28  % 4.18  % 3.85  % 3.62  % 3.74  %
Consumer 6.34  % 5.88  % 5.32  % 4.68  % 4.69  %
Residential real estate 3.35  % 3.28  % 3.21  % 3.11  % 3.10  %
Total loans 5.29  % 4.75  % 3.98  % 3.29  % 3.19  %
Interest-earning deposits with banks 4.58  % 3.76  % 2.32  % 0.79  % 0.19  %
Other interest-earning assets 5.75  % 5.20  % 3.94  % 2.76  % 2.07  %
Total yield on interest-earning assets 4.46  % 4.02  % 3.35  % 2.69  % 2.37  %
Rate on interest-bearing liabilities
Interest-bearing deposits
Money market 2.40  % 1.75  % 0.85  % 0.19  % 0.03  %
Demand 1.58  % 1.14  % 0.59  % 0.15  % 0.02  %
Savings 1.03  % 0.50  % 0.09  % 0.04  % 0.04  %
Time deposits 3.00  % 1.45  % 0.26  % 0.18  % 0.13  %
Total interest-bearing deposits 1.66  % 1.07  % 0.45  % 0.12  % 0.04  %
Borrowed funds
Federal Home Loan Bank borrowings 4.80  % 3.92  % 2.60  % 1.24  %
Senior debt 5.39  % 4.30  % 2.96  % 1.61  % 1.02  %
Subordinated debt 5.69  % 4.79  % 3.43  % 1.94  % 1.40  %
Other
3.70  % 3.24  % 2.20  % 1.46  % 0.97  %
Total borrowed funds 4.98  % 4.07  % 2.81  % 1.58  % 1.10  %
Total rate on interest-bearing liabilities 2.20  % 1.55  % 0.75  % 0.27  % 0.13  %
Interest rate spread 2.26  % 2.47  % 2.60  % 2.42  % 2.24  %
Benefit from use of noninterest-bearing sources (b) 0.58  % 0.45  % 0.22  % 0.08  % 0.04  %
Net interest margin 2.84  % 2.92  % 2.82  % 2.50  % 2.28  %
(a)Yields and rates are calculated using the applicable annualized interest income or interest expense divided by the applicable average earning assets or interest-bearing liabilities. Net interest margin is the total yield on interest-earning assets minus the total rate on interest-bearing liabilities and includes the benefit from use of noninterest-bearing sources. To provide more meaningful comparisons of net interest margins, we use net interest income on a taxable-equivalent basis in calculating average yields used in the calculation of 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 in the Consolidated Income Statement. The taxable-equivalent adjustments to net interest income for the three months ended March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022 were $38 million, $36 million, $29 million, $25 million and $22 million, respectively.
(b)Represents the positive effects of investing noninterest-bearing sources in interest-earning assets.

THE PNC FINANCIAL SERVICES GROUP, INC.
Page 5
Table 5: Details of Loans (Unaudited)
March 31 December 31 September 30 June 30 March 31
In millions 2023 2022 2022 2022 2022
Commercial
Commercial and industrial
Manufacturing $ 32,132  $ 30,845  $ 28,629  $ 27,179  $ 25,035 
Retail/wholesale trade 29,172 29,176 27,532 26,475 25,027
Service providers 23,186 23,548 22,043 21,184 20,584
Financial services 22,534 21,320 21,590 19,594 17,674
Real estate related (a) 17,548 17,780 17,513 16,179 15,459
Technology, media & telecommunications 11,338 11,845 11,366 16,249 10,684
Health care 10,537 10,649 10,420 10,153 9,810
Transportation and warehousing 7,824 7,858 7,977 7,604 7,209
Other industries 28,726 29,198 26,743 27,214 26,392
Total commercial and industrial 182,997  182,219  173,813  171,831  157,874 
Commercial real estate 35,991  36,316  35,592  34,452  34,171 
Equipment lease financing 6,424  6,514  6,192  6,240  6,216 
Total commercial 225,412 225,049 215,597 212,523 198,261
Consumer
Residential real estate 46,067  45,889  45,057  43,717  41,566 
Home equity 26,203  25,983  25,367  24,693  24,185 
Automobile 14,923  14,836  15,025  15,323  16,001 
Credit card 6,961  7,069  6,774  6,650  6,464 
Education 2,131  2,173  2,287  2,332  2,441 
Other consumer 4,778  5,026  5,293  5,562  5,539 
Total consumer 101,063  100,976  99,803  98,277  96,196 
Total loans $ 326,475  $ 326,025  $ 315,400  $ 310,800  $ 294,457 
(a)Represents loans to customers in the real estate and construction industries.


THE PNC FINANCIAL SERVICES GROUP, INC.
Page 6
Allowance for Credit Losses (Unaudited)

Table 6: Change in Allowance for Loan and Lease Losses
Three months ended
March 31 December 31 September 30 June 30 March 31
Dollars in millions 2023 2022 2022 2022 2022
Allowance for loan and lease losses
Beginning balance $ 4,741  $ 4,581  $ 4,462  $ 4,558  $ 4,868 
Adoption of ASU 2022-02 (a) (35)
Beginning balance, adjusted 4,706  4,581  4,462  4,558  4,868 
Gross charge-offs:
Commercial and industrial (104) (121) (65) (30) (41)
Commercial real estate (12) (22) (7) (5) (10)
Equipment lease financing (4) (2) (1) (2) (1)
Residential real estate (3) (2) (2)   (7)
Home equity (6) (6) (3) (2) (4)
Automobile (33) (34) (32) (34) (52)
Credit card (74) (62) (59) (67) (68)
Education (4) (4) (4) (4) (4)
Other consumer (42) (64) (49) (51) (64)
Total gross charge-offs (282) (317) (222) (195) (251)
Recoveries:
Commercial and industrial 20  33  23  15  30 
Commercial real estate 2  2  1  1  1 
Equipment lease financing 3  1  1  3  3 
Residential real estate 3  2  4  6  5 
Home equity 11  13  19  18  21 
Automobile 24  24  30  39  31 
Credit card 11  8  12  19  12 
Education 2  1  1  2  1 
Other consumer 11  9  12  9  10 
Total recoveries 87  93  103  112  114 
Net (charge-offs) / recoveries:
Commercial and industrial (84) (88) (42) (15) (11)
Commercial real estate (10) (20) (6) (4) (9)
Equipment lease financing (1) (1) 1  2 
Residential real estate 2  6  (2)
Home equity 5  7  16  16  17 
Automobile (9) (10) (2) 5  (21)
Credit card (63) (54) (47) (48) (56)
Education (2) (3) (3) (2) (3)
Other consumer (31) (55) (37) (42) (54)
Total net (charge-offs) (195) (224) (119) (83) (137)
Provision for (recapture of) credit losses (b) 229  380  241  (10) (172)
Other 1  4  (3) (3) (1)
Ending balance $ 4,741  $ 4,741  $ 4,581  $ 4,462  $ 4,558 
Supplemental Information
Net charge-offs
Commercial net charge-offs $ (95) $ (109) $ (48) $ (18) $ (18)
Consumer net charge-offs (100) (115) (71) (65) (119)
Total net charge-offs $ (195) $ (224) $ (119) $ (83) $ (137)
Net charge-offs to average loans 0.24  % 0.28  % 0.15  % 0.11  % 0.19  %
Commercial 0.17  % 0.20  % 0.09  % 0.03  % 0.04  %
Consumer 0.40  % 0.45  % 0.28  % 0.27  % 0.51  %
(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. Our first quarter 2023 Form 10-Q will include additional information related to our adoption of this ASU.
(b)See Table 7 for the components of the Provision for (recapture of) credit losses being reported on the Consolidated Income Statement.


THE PNC FINANCIAL SERVICES GROUP, INC.
Page 7
Allowance for Credit Losses (Unaudited) (Continued)

Table 7: Components of the Provision for (Recapture of) Credit Losses
Three months ended
March 31 December 31 September 30 June 30 March 31
In millions 2023 2022 2022 2022 2022
Provision for (recapture of) credit losses
Loans and leases $ 229  $ 380  $ 241  $ (10) $ (172)
Unfunded lending related commitments (22) 12  1  42  (23)
Investment securities (1) 10  3  3  1 
Other financial assets 29  6  (4) 1  (14)
Total provision for (recapture of) credit losses $ 235  $ 408  $ 241  $ 36  $ (208)


Table 8: Allowance for Credit Losses by Loan Class (a)
March 31, 2023 December 31, 2022 March 31, 2022

Dollars in millions 		Allowance Amount Total Loans % of Total Loans Allowance Amount Total Loans % of Total Loans Allowance Amount Total Loans % of Total Loans
Allowance for loan and lease losses
Commercial
Commercial and industrial $ 1,771  $ 182,997  0.97  % $ 1,957  $ 182,219  1.07  % $ 1,884  $ 157,874  1.19  %
Commercial real estate 1,171  35,991  3.25  % 1,047  36,316  2.88  % 1,034  34,171  3.03  %
Equipment lease financing 104  6,424  1.62  % 110  6,514  1.69  % 85  6,216  1.37  %
Total commercial 3,046  225,412  1.35  % 3,114  225,049  1.38  % 3,003  198,261  1.51  %
Consumer
Residential real estate 95  46,067  0.21  % 92  45,889  0.20  % 25  41,566  0.06  %
Home equity 316  26,203  1.21  % 274  25,983  1.05  % 170  24,185  0.70  %
Automobile 199  14,923  1.33  % 226  14,836  1.52  % 276  16,001  1.72  %
Credit card 782  6,961  11.23  % 748  7,069  10.58  % 708  6,464  10.95  %
Education 64  2,131  3.00  % 63  2,173  2.90  % 66  2,441  2.70  %
Other consumer 239  4,778  5.00  % 224  5,026  4.46  % 310  5,539  5.60  %
Total consumer 1,695  101,063  1.68  % 1,627  100,976  1.61  % 1,555  96,196  1.62  %
Total
 4,741  $ 326,475  1.45  % 4,741  $ 326,025  1.45  % 4,558  $ 294,457  1.55  %
Allowance for unfunded lending related commitments
 672  694  639 
Allowance for credit losses
 $ 5,413  $ 5,435  $ 5,197 
Supplemental Information
Allowance for credit losses to total loans
 1.66  % 1.67  % 1.76  %
Commercial 1.60  % 1.66  % 1.81  %
Consumer 1.79  % 1.69  % 1.67  %
(a)    Excludes allowances for investment securities and other financial assets, which together totaled $205 million, $176 million and $158 million at March 31, 2023, December 31, 2022 and March 31, 2022, respectively.

THE PNC FINANCIAL SERVICES GROUP, INC.
Page 8
Details of Nonperforming Assets (Unaudited)

Table 9: Nonperforming Assets by Type
March 31 December 31 September 30 June 30 March 31
Dollars in millions 2023 2022 2022 2022 2022
Nonperforming loans (a)
Commercial
Commercial and industrial
Service providers $ 128  $ 174  $ 223  $ 151  $ 173 
Manufacturing 105  85  88  101  70 
Retail/wholesale trade 82  151  158  87  59 
Health care 57  50  45  54  37 
Real estate related (b) 43  50  47  59  39 
Transportation and warehousing 24  27  29  30  28 
Technology, media & telecommunications 22  20  20  21  36 
Other industries 87  106  138  146  218 
Total commercial and industrial 548  663  748  649  660 
Commercial real estate 337  189  148  161  332 
Equipment lease financing 6  6  7  5  6 
Total commercial 891  858  903  815  998 
Consumer (c)
Residential real estate 432  424  429  457  526 
Home equity 523  526  530  556  576 
Automobile 145  155  167  175  181 
Credit card 9  8  6  6  8 
Other consumer 10  14  33  37  9 
Total consumer 1,119  1,127  1,165  1,231  1,300 
Total nonperforming loans (d) 2,010  1,985  2,068  2,046  2,298 
OREO and foreclosed assets 38  34  33  29  26 
Total nonperforming assets $ 2,048  $ 2,019  $ 2,101  $ 2,075  $ 2,324 
Nonperforming loans to total loans 0.62  % 0.61  % 0.66  % 0.66  % 0.78  %
Nonperforming assets to total loans, OREO and foreclosed assets 0.63  % 0.62  % 0.67  % 0.67  % 0.79  %
Nonperforming assets to total assets 0.36  % 0.36  % 0.38  % 0.38  % 0.43  %
Allowance for loan and lease losses to nonperforming loans 236  % 239  % 222  % 218  % 198  %
(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 March 31, 2023 include certain loans whose 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. Our first quarter 2023 Form 10-Q will include additional information related to our adoption of this ASU.
(b)Represents loans related to customers in the real estate and construction industries.
(c)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.
(d)Nonperforming loans exclude certain government insured or guaranteed loans, loans held for sale and loans accounted for under the fair value option.


Table 10: Change in Nonperforming Assets
January 1, 2023 - October 1, 2022 - July 1, 2022 - April 1, 2022 - January 1, 2022 -
In millions March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022
Beginning balance $ 2,019  $ 2,101  $ 2,075  $ 2,324  $ 2,506 
New nonperforming assets 452  346  438  393  346 
Charge-offs and valuation adjustments (122) (174) (79) (55) (62)
Principal activity, including paydowns and payoffs (172) (139) (182) (273) (274)
Asset sales and transfers to loans held for sale (46) (22) (3) (6) (21)
Returned to performing status (83) (93) (148) (308) (171)
Ending balance $ 2,048  $ 2,019  $ 2,101  $ 2,075  $ 2,324 




THE PNC FINANCIAL SERVICES GROUP, INC.
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Accruing Loans Past Due (Unaudited)                  

Under the CARES Act credit reporting rules, certain loans modified due to COVID-19 related hardships are not being reported as past due
for the periods presented based on the contractual terms of the loan, even where borrowers may not be making payments on their loans during the modification period.

Table 11: Accruing Loans Past Due 30 to 59 Days (a)
March 31 December 31 September 30 June 30 March 31
Dollars in millions 2023 2022 2022 2022 2022
Commercial
Commercial and industrial $ 119 $ 169 $ 321 $ 99 $ 185
Commercial real estate 25 19 11 28 68
Equipment lease financing 33 20 6 7 20
Total commercial 177 208 338 134 273
Consumer
Residential real estate
Non government insured 167 190 223 230 239
Government insured 78 91 75 68 66
Home equity 48 53 46 43 41
Automobile 79 106 96 102 109
Credit card 48 50 44 37 39
Education
Non government insured 6 5 6 5 5
Government insured
 29 29 30 39 36
Other consumer 13 15 21 38 47
Total consumer 468 539 541 562 582
Total $ 645 $ 747 $ 879 $ 696 $ 855
Supplemental Information
Total accruing loans past due 30-59 days to total loans 0.20  % 0.23  % 0.28  % 0.22  % 0.29  %
Commercial 0.08  % 0.09  % 0.16  % 0.06  % 0.14  %
Consumer 0.46  % 0.53  % 0.54  % 0.57  % 0.61  %
(a)Excludes loans held for sale.



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Accruing Loans Past Due (Unaudited) (Continued)

Table 12: Accruing Loans Past Due 60 to 89 Days (a)
March 31 December 31 September 30 June 30 March 31
Dollars in millions 2023 2022 2022 2022 2022
Commercial
Commercial and industrial $ 21 $ 27 $ 55 $ 128 $ 64
Commercial real estate 1 4 4 11 41
Equipment lease financing 5 4 6 4 1
Total commercial 27 35 65 143 106
Consumer
Residential real estate
Non government insured 43 54 49 53 47
Government insured 55 58 46 42 37
Home equity 18 20 16 14 16
Automobile 18 25 21 24 26
Credit card 35 35 30 25 28
Education
Non government insured
 4 2 4 2 3
Government insured
 17 20 22 21 21
Other consumer 8 12 15 21 26
Total consumer 198 226 203 202 204
Total $ 225 $ 261 $ 268 $ 345 $ 310
Supplemental Information
Total accruing loans past due 60-89 days to total loans 0.07  % 0.08  % 0.08  % 0.11  % 0.11  %
Commercial 0.01  % 0.02  % 0.03  % 0.07  % 0.05  %
Consumer 0.20  % 0.22  % 0.20  % 0.21  % 0.21  %
(a)Excludes loans held for sale.




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Accruing Loans Past Due (Unaudited) (Continued)

Table 13: Accruing Loans Past Due 90 Days or More (a)
March 31 December 31 September 30 June 30 March 31
Dollars in millions 2023 2022 2022 2022 2022
Commercial
Commercial and industrial $ 134 $ 137 $ 139 $ 138 $ 105
Commercial real estate 5 7
Total commercial 134 137 144 138 112
Consumer
Residential real estate
Non government insured 26 32 30 20 41
Government insured 152 167 166 182 232
Automobile 5 7 6 6 8
Credit card 74 70 58 54 62
Education
Non government insured 2 2 2 2 2
Government insured
 54 57 61 56 62
Other consumer 9 10 12 12 15
Total consumer 322 345 335 332 422
Total $ 456 $ 482 $ 479 $ 470 $ 534
Supplemental Information
Total accruing loans past due 90 days or more to total loans 0.14  % 0.15  % 0.15  % 0.15  % 0.18  %
Commercial 0.06  % 0.06  % 0.07  % 0.06  % 0.06  %
Consumer 0.32  % 0.34  % 0.34  % 0.34  % 0.44  %
Total accruing loans past due $ 1,326 $ 1,490 $ 1,626 $ 1,511 $ 1,699
Commercial $ 338 $ 380 $ 547 $ 415 $ 491
Consumer $ 988 $ 1,110 $ 1,079 $ 1,096 $ 1,208
Total accruing loans past due to total loans 0.41  % 0.46  % 0.52  % 0.49  % 0.58  %
Commercial 0.15  % 0.17  % 0.25  % 0.20  % 0.25  %
Consumer 0.98  % 1.10  % 1.08  % 1.12  % 1.26  %
(a)Excludes loans held for sale.





































THE PNC FINANCIAL SERVICES GROUP, INC.
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Business Segment Descriptions (Unaudited)

Retail Banking provides deposit, lending, brokerage, insurance services, investment management and cash management products and services to consumer and small business customers. Our customers are serviced through our coast-to-cost branch network, ATMs, call centers, online banking and mobile channels. Deposit products include checking, savings and money market accounts and certificates of deposit. 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 Group provides 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, 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.

Table 14: Period End Employees
March 31 December 31 September 30 June 30 March 31
2023 2022 2022 2022 2022
Full-time employees
Retail Banking 31,583  32,467  33,288  33,565  33,293 
Other full-time employees 27,874  27,427  26,328  25,390  25,037 
Total full-time employees 59,457  59,894  59,616  58,955  58,330 
Part-time employees
Retail Banking 1,537  1,577  1,520  1,712  1,670 
Other part-time employees 79  74  77  460  82 
Total part-time employees 1,616  1,651  1,597  2,172  1,752 
Total 61,073  61,545  61,213  61,127  60,082 


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Table 15: Summary of Business Segment Net Income and Revenue (Unaudited) (a)
Three months ended
March 31 December 31 September 30 June 30 March 31
In millions 2023 2022 2022 2022 2022
Net Income
Retail Banking $ 647  $ 752  $ 560  $ 322  $ 340 
Corporate & Institutional Banking 1,059  982  929  1,003  956 
Asset Management Group 52  52  90  86  102 
Other (81) (258) 45  70  10 
Net income excluding noncontrolling interests $ 1,677  $ 1,528  $ 1,624  $ 1,481  $ 1,408 
  
Revenue
Retail Banking $ 3,024  $ 3,079  $ 2,742  $ 2,410  $ 2,276 
Corporate & Institutional Banking 2,300  2,451  2,255  2,221  1,964 
Asset Management Group 357  375  396  387  386 
Other (78) (142) 156  98  66 
Total revenue $ 5,603  $ 5,763  $ 5,549  $ 5,116  $ 4,692 
(a)Our business information is presented based on our internal management reporting practices. Net interest income in business segment results reflects PNC’s 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.


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Table 16: Retail Banking (Unaudited) (a)
Three months ended
March 31 December 31 September 30 June 30 March 31
Dollars in millions 2023 2022 2022 2022 2022
Income Statement
Net interest income $ 2,281  $ 2,330  $ 2,017  $ 1,662  $ 1,531 
Noninterest income 743  749  725  748  745 
Total revenue 3,024  3,079  2,742  2,410  2,276 
Provision for (recapture of) credit losses 238  193  92  55  (81)
Noninterest expense 1,927  1,892  1,901  1,913  1,892 
Pretax earnings 859  994  749  442  465 
Income taxes 202  232  175  105  109 
Noncontrolling interests 10  10  14  15  16 
Earnings $ 647  $ 752  $ 560  $ 322  $ 340 
Average Balance Sheet
Loans held for sale $ 542  $ 737  $ 837  $ 957  $ 1,183 
Loans
Consumer
Residential real estate $ 35,421  $ 35,286  $ 34,465  $ 33,240  $ 31,528 
Home equity 24,571  24,126  23,393  22,886  22,458 
Automobile 14,918  14,793  15,088  15,566  16,274 
Credit card 6,904  6,882  6,684  6,508  6,401 
Education 2,188  2,257  2,327  2,410  2,532 
Other consumer 1,990  2,049  2,092  2,173  2,348 
Total consumer 85,992  85,393  84,049  82,783  81,541 
Commercial 11,438  11,181  10,881  11,044  11,610 
Total loans $ 97,430  $ 96,574  $ 94,930  $ 93,827  $ 93,151 
Total assets $ 115,384  $ 115,827  $ 114,619  $ 113,068  $ 111,754 
Deposits
Noninterest-bearing $ 60,801  $ 64,031  $ 65,405  $ 65,599  $ 64,058 
Interest-bearing 201,720  195,743  198,956  202,801  201,021 
Total deposits $ 262,521  $ 259,774  $ 264,361  $ 268,400  $ 265,079 
Performance Ratios
Return on average assets 2.27  % 2.58  % 1.94  % 1.14  % 1.23  %
Noninterest income to total revenue 25  % 24  % 26  % 31  % 33  %
Efficiency 64  % 61  % 69  % 79  % 83  %
(a)See note (a) on page 13.

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Retail Banking (Unaudited) (Continued)
Three months ended
March 31 December 31 September 30 June 30 March 31
Dollars in millions, except as noted 2023 2022 2022 2022 2022
Supplemental Noninterest Income Information
Asset management and brokerage $ 131  $ 128  $ 131  $ 135  $ 134 
Card and cash management $ 324  $ 335  $ 344  $ 351  $ 308 
Lending and deposit services $ 181  $ 172  $ 167  $ 167  $ 164 
Residential and commercial mortgage $ 104  $ 111  $ 38  $ 71  $ 99 
Residential Mortgage Information
Residential mortgage servicing statistics (in billions, except as noted) (a)
Serviced portfolio balance (b) $ 188  $ 190  $ 170  $ 145  $ 135 
Serviced portfolio acquisitions $ 2  $ 24  $ 29  $ 15  $ 6 
MSR asset value (b) $ 2.2  $ 2.3  $ 2.1  $ 1.6  $ 1.3 
MSR capitalization value (in basis points) (b) 119  122  122  112  98 
Servicing income: (in millions)
Servicing fees, net (c) $ 78  $ 73  $ 50  $ 36  $ 33 
Mortgage servicing rights valuation, net of economic hedge $ 14  $ 24  $ (30) $ 13  $ 2 
Residential mortgage loan statistics
Loan origination volume (in billions) $ 1.4  $ 2.1  $ 3.1  $ 4.8  $ 5.1 
Loan sale margin percentage 2.26  % 2.20  % 1.97  % 1.88  % 2.45  %
Percentage of originations represented by:
Purchase volume (d) 84  % 88  % 85  % 74  % 42  %
Refinance volume 16  % 12  % 15  % 26  % 58  %
Other Information (b)
Customer-related statistics (average)
Non-teller deposit transactions (e) 65  % 65  % 65  % 64  % 64  %
Digital consumer customers (f) 75  % 76  % 78  % 78  % 78  %
Credit-related statistics
Nonperforming assets $ 1,009  $ 1,003  $ 1,027  $ 1,088  $ 1,168 
Net charge-offs - loans and leases $ 112  $ 108  $ 98  $ 88  $ 141 
Other statistics
ATMs 8,697  8,933  9,169  9,301  9,502 
Branches (g) 2,450  2,518  2,527  2,535  2,591 
Brokerage account client assets (in billions) (h) $ 73  $ 70  $ 67  $ 68  $ 74 
(a)Represents mortgage loan servicing balances for third parties and the related income.
(b)Presented as of period end, except for average customer-related statistics and net charge-offs, which are both shown for the three months ended.
(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)Includes cash and money market balances.


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Table 17: Corporate & Institutional Banking (Unaudited) (a)
Three months ended
March 31 December 31 September 30 June 30 March 31
Dollars in millions 2023 2022 2022 2022 2022
Income Statement
Net interest income $ 1,414  $ 1,489  $ 1,368  $ 1,253  $ 1,160 
Noninterest income 886  962  887  968  804 
Total revenue 2,300  2,451  2,255  2,221  1,964 
Provision for (recapture of) credit losses (28) 183  150  (17) (118)
Noninterest expense 939  990  890  934  837 
Pretax earnings 1,389  1,278  1,215  1,304  1,245 
Income taxes 325  291  281  298  285 
Noncontrolling interests 5  5  5  3  4 
Earnings $ 1,059  $ 982  $ 929  $ 1,003  $ 956 
Average Balance Sheet
Loans held for sale $ 456  $ 337  $ 449  $ 490  $ 628 
Loans
Commercial
Commercial and industrial $ 168,874  $ 166,176  $ 160,140  $ 153,948  $ 141,622 
Commercial real estate 34,605  34,663  33,525  32,844  32,433 
Equipment lease financing 6,451  6,274  6,202  6,201  6,099 
Total commercial 209,930  207,113  199,867  192,993  180,154 
Consumer 7  8  7  14  8 
Total loans $ 209,937  $ 207,121  $ 199,874  $ 193,007  $ 180,162 
Total assets $ 234,536  $ 234,120  $ 224,984  $ 219,513  $ 200,724 
Deposits
Noninterest-bearing $ 58,529  $ 67,340  $ 73,523  $ 81,028  $ 86,178 
Interest-bearing 86,832  79,916  71,925  65,151  68,429 
Total deposits $ 145,361  $ 147,256  $ 145,448  $ 146,179  $ 154,607 
Performance Ratios
Return on average assets 1.83  % 1.66  % 1.64  % 1.83  % 1.93  %
Noninterest income to total revenue 39  % 39  % 39  % 44  % 41  %
Efficiency 41  % 40  % 39  % 42  % 43  %
Other Information
Consolidated revenue from:
Treasury Management (b) $ 785  $ 843  $ 753  $ 659  $ 546 
Commercial mortgage banking activities:
Commercial mortgage loans held for sale (c) $ 27  $ 15  $ 26  $ 20  $ 16 
Commercial mortgage loan servicing income (d) 39  52  66  70  68 
Commercial mortgage servicing rights valuation, net of economic hedge 41  39  53  33  13 
Total $ 107  $ 106  $ 145  $ 123  $ 97 
MSR asset value (e) $ 1,061  $ 1,113  $ 1,132  $ 988  $ 886 
Average loans by C&IB business
Corporate Banking $ 118,229  $ 113,619  $ 109,197  $ 103,595  $ 92,503 
Real Estate 47,297  48,031  45,837  44,202  43,213 
Business Credit 30,180  30,087  28,930  28,246  26,535 
Commercial Banking 8,430  8,683  9,008  9,459  10,045 
Other 5,801  6,701  6,902  7,505  7,866 
Total average loans $ 209,937  $ 207,121  $ 199,874  $ 193,007  $ 180,162 
Credit-related statistics
Nonperforming assets (e) $ 801  $ 761  $ 779  $ 674  $ 866 
Net charge-offs (recoveries) - loans and leases $ 85  $ 100  $ 33  $ 11  $ (1)
(a)See note (a) on page 13.
(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 and payoffs. Commercial mortgage servicing rights valuation, net of economic hedge is shown separately.
(e)Presented as of period end.

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Table 18: Asset Management Group (Unaudited) (a)
Three months ended
March 31 December 31 September 30 June 30 March 31
Dollars in millions, except as noted 2023 2022 2022 2022 2022
Income Statement
Net interest income $ 127  $ 152  $ 165  $ 153  $ 138 
Noninterest income 230  223  231  234  248 
Total revenue 357  375  396  387  386 
Provision for (recapture of) credit losses 9  17  4  5  2 
Noninterest expense 280  291  274  270  251 
Pretax earnings 68  67  118  112  133 
Income taxes 16  15  28  26  31 
Earnings $ 52  $ 52  $ 90  $ 86  $ 102 
Average Balance Sheet
Loans
Consumer
Residential real estate $ 9,174  $ 8,835  $ 8,430  $ 7,835  $ 6,989 
Other consumer 4,156  4,388  4,640  4,633  4,541 
Total consumer 13,330  13,223  13,070  12,468  11,530 
Commercial 1,246  1,291  1,328  1,560  1,848 
Total loans $ 14,576  $ 14,514  $ 14,398  $ 14,028  $ 13,378 
Total assets $ 14,997  $ 14,935  $ 14,820  $ 14,449  $ 13,801 
Deposits
Noninterest-bearing $ 1,846  $ 2,107  $ 2,286  $ 2,824  $ 3,458 
Interest-bearing 26,337  25,651  27,054  28,839  29,830 
Total deposits $ 28,183  $ 27,758  $ 29,340  $ 31,663  $ 33,288 
Performance Ratios
Return on average assets 1.41  % 1.38  % 2.41  % 2.39  % 3.00  %
Noninterest income to total revenue 64  % 59  % 58  % 60  % 64  %
Efficiency 78  % 78  % 69  % 70  % 65  %
Other Information
Nonperforming assets (b) $ 42  $ 56  $ 95  $ 114  $ 72 
Net charge-offs (recoveries) - loans and leases   $ 18  $ (2) $ (1) $ 2 
Brokerage account client assets (in billions) (b) $ 4  $ 4  $ 4  $ 4  $ 5 
Client Assets Under Administration (in billions) (b) (c)
Discretionary client assets under management $ 177  $ 173  $ 166  $ 167  $ 182 
Nondiscretionary client assets under administration 156  152  148  153  165 
Total $ 333  $ 325  $ 314  $ 320  $ 347 
Discretionary client assets under management
PNC Private Bank $ 108  $ 105  $ 99  $ 103  $ 115 
Institutional Asset Management 69  68  67  64  67 
Total $ 177  $ 173  $ 166  $ 167  $ 182 
(a)See note (a) on page 13.
(b)As of period end.
(c)Excludes brokerage account client assets.

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Glossary of Terms

2019 Tailoring Rules – Rules adopted by the federal banking agencies to better tailor the application of their capital, liquidity, and enhanced prudential requirements for banking organizations to the asset size and risk profile (as measured by certain regulatory metrics) of the banking organization. Effective January 1, 2020, the agencies' capital and liquidity rules classify all BHCs with $100 billion or more in total assets into one of four categories (Category I, Category II, Category III, and Category IV).

Adjusted average total assets – Primarily consisted of total average quarterly (or annual) assets plus/less unrealized losses (gains) on investment securities, less goodwill and certain other intangible assets (net of eligible deferred taxes).

Allowance for credit losses (ACL) – A valuation account that is deducted from or added to the amortized cost basis of the related
financial assets to present the net carrying value at the amount expected to be collected on the financial asset.

Amortized cost basis – Amount at which a financial asset is originated or acquired, adjusted for applicable accretion or amortization of premiums, discounts and net deferred fees or costs, collection of cash, charge-offs, foreign exchange and fair value hedge accounting adjustments.

Basel III common equity Tier 1 (CET1) capital (Tailoring Rules) – Common stock plus related surplus, net of treasury stock, plus retained earnings, less goodwill, net of associated deferred tax liabilities, less other disallowed intangibles, net of deferred tax liabilities and plus/less other adjustments. Investments in unconsolidated financial institutions, as well as mortgage servicing rights and deferred tax assets, must then be deducted to the extent such items (net of associated deferred tax liabilities) individually exceed 25% of our adjusted Basel III common equity Tier 1 capital.

Basel III common equity Tier 1 capital ratio – Common equity Tier 1 capital divided by period-end risk-weighted assets (as applicable).

Basel III Tier 1 capital – Common equity Tier 1 capital, plus qualifying preferred stock, plus certain trust preferred capital securities, plus certain noncontrolling interests that are held by others and plus/less other adjustments.

Basel III Tier 1 capital ratio – Tier 1 capital divided by period-end risk-weighted assets (as applicable).

Basel III Total capital – Tier 1 capital plus qualifying subordinated debt, plus certain trust preferred securities, plus, under the Basel III transitional rules and the standardized approach, the allowance for loan and lease losses included in Tier 2 capital and other.

Basel III Total capital ratio – Basel III Total capital divided by period-end risk-weighted assets (as applicable).

Charge-off – Process of removing a loan or portion of a loan from our balance sheet because it is considered uncollectible. We also record a charge-off when a loan is transferred from portfolio holdings to held for sale by reducing the loan carrying amount to the fair value of the loan, if fair value is less than carrying amount.

Common shareholders’ equity – Total shareholders' equity less the liquidation value of preferred stock.

Credit valuation adjustment – Represents an adjustment to the fair value of our derivatives for our own and counterparties’ non-performance risk.

Criticized commercial loans – Loans with potential or identified weaknesses based upon internal risk ratings that comply with the regulatory classification definitions of “special mention,” “substandard” or “doubtful.”

Current Expected Credit Loss (CECL) – Methodology for estimating the allowance for credit losses on in-scope financial assets held at amortized cost and unfunded lending related commitments which uses a combination of expected losses over a reasonable and supportable forecast period, a reversion period and long run average credit losses for their estimated contractual term.

Discretionary client assets under management – Assets over which we have sole or shared investment authority for our customers/clients. We do not include these assets on our Consolidated Balance Sheet.

Earning assets – Assets that generate income, which include: interest-earning deposits with banks; loans held for sale; loans; investment securities; and certain other assets.

Effective duration – A measurement, expressed in years, that, when multiplied by a change in interest rates, would approximate the percentage change in value of on- and off- balance sheet positions.

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Efficiency – Noninterest expense divided by total revenue.

Fair value – The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Fee income – Refers to the following categories within Noninterest income: Asset management and brokerage, Capital markets and advisory, Card and cash management, Lending and deposit services, and Residential and commercial mortgage.

FICO score – A credit bureau-based industry standard score created by Fair Isaac Co. which predicts the likelihood of borrower default. We use FICO scores both in underwriting and assessing credit risk in our consumer lending portfolio. Lower FICO scores indicate likely higher risk of default, while higher FICO scores indicate likely lower risk of default.

GAAP – Accounting principles generally accepted in the United States of America.

Leverage ratio – Basel III Tier 1 capital divided by average quarterly adjusted total assets.

Nondiscretionary client assets under administration – Assets we hold for our customers/clients in a nondiscretionary, custodial capacity. We do not include these assets on our Consolidated Balance Sheet.

Nonperforming assets – Nonperforming assets include nonperforming loans, OREO and foreclosed assets. We do not accrue interest income on assets classified as nonperforming.

Nonperforming loans – 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 nonperforming loans. Nonperforming loans exclude certain government insured or guaranteed loans for which we expect to collect substantially all principal and interest, loans held for sale and loans accounted for under the fair value option.

Operating leverage – The period to period dollar or percentage change in total revenue less the dollar or percentage change in noninterest expense. A positive variance indicates that revenue growth exceeded expense growth (i.e., positive operating leverage) while a negative variance implies expense growth exceeded revenue growth (i.e., negative operating leverage).

Other real estate owned (OREO) and foreclosed assets – Assets taken in settlement of troubled loans primarily through deed-in-lieu of foreclosure or foreclosure. Foreclosed assets include real and personal property. Certain assets that have a government-guarantee which are classified as other receivables are excluded.

Purchased credit deteriorated assets (PCD) – Acquired loans or debt securities that, at acquisition, are determined to have experienced a more-than-insignificant deterioration in credit quality since origination or issuance.

Risk-weighted assets – Computed by the assignment of specific risk-weights (as defined by the Board of Governors of the Federal Reserve System) to assets and off-balance sheet instruments.

Servicing rights – Intangible assets or liabilities created by an obligation to service assets for others. Typical servicing rights include the right to receive a fee for collecting and forwarding payments on loans and related taxes and insurance premiums held in escrow.

Supplementary leverage ratio – Basel III Tier 1 capital divided by Supplementary leverage exposure.

Taxable-equivalent interest income – The interest income earned on certain assets that is completely or partially exempt from federal income tax. These tax-exempt instruments typically yield lower returns than taxable investments.

Troubled debt restructuring (TDR) – A loan whose terms have been restructured in a manner that grants a concession to a borrower experiencing financial difficulties. On January 1, 2023, we adopted ASU 2022-02, which eliminated the accounting guidance for TDRs.

Unfunded lending related commitments – Standby letters of credit, financial guarantees, commitments to extend credit and similar unfunded obligations that are not unilaterally, unconditionally, cancelable at PNC’s option.

Yield curve – A graph showing the relationship between the yields on financial instruments or market indices of the same credit quality with different maturities. For example, a “normal” or “positive” yield curve exists when long-term bonds have higher yields than short-term bonds. A “flat” yield curve exists when yields are the same for short-term and long-term bonds. A “steep” yield curve

THE PNC FINANCIAL SERVICES GROUP, INC.
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exists when yields on long-term bonds are significantly higher than on short-term bonds. An “inverted” or “negative” yield curve exists when short-term bonds have higher yields than long-term bonds.