PNC FINANCIAL SERVICES GROUP, INC. (PNC) FY 2024 MD&A

ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)

EXECUTIVE SUMMARY

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 Supervision and Regulation section in Item 1 Business, the Capital Highlights portion of this Executive Summary and the Liquidity and Capital Management portion of the Risk Management section in this Item 7.

Key Factors Affecting Financial Performance

We face a variety of risks that may impact various aspects of our risk profile from time to time. The extent of such impacts may vary depending on factors such as the current business and economic conditions, political and regulatory environment and operational challenges. Many of these risks and our risk management strategies are described in more detail elsewhere in this Report.

Our success will depend upon, among other things, the following factors that we manage or control:

•Effectively managing capital and liquidity including:

•Continuing to maintain and, over time, grow our deposit base as a low-cost stable funding source,

•Prudent liquidity and capital management to meet evolving regulatory capital, capital planning, stress testing and liquidity standards, and

•Actions we take within the capital and other financial markets,

•Execution of our strategic priorities,

•Management of credit risk in our portfolio,

•Our ability to manage and implement strategic business objectives within the changing regulatory environment,

•The impact of legal and regulatory-related contingencies,

•The appropriateness of critical accounting estimates and related contingencies, and

•Our ability to manage operational risks related to new products and services, changes in processes and procedures or the implementation of new technology.

Our financial performance is also substantially affected by a number of external factors outside of our control, including the following:

•Global and domestic economic conditions,

•The actions by the Federal Reserve, U.S. Treasury and other government agencies, including those that impact money supply and market interest rates and inflation,

•The level of, and direction, timing and magnitude of movement in, interest rates and the shape of the interest rate yield curve,

•The functioning and other performance of, and availability of liquidity in, U.S. and global financial markets,

•The impact of tariffs and other trade policies of the U.S. and its global trading partners,

•Changes in the competitive landscape,

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

•The impact of market credit spreads on asset valuations,

•The ability of customers, counterparties and issuers to perform in accordance with contractual terms,

•The effect of climate change on our business and performance, including indirectly through impacts on our customers,

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•Loan demand, utilization of credit commitments and standby letters of credit, and

•The impact on customers and changes in customer behavior due to changing business and economic conditions or regulatory or legislative initiatives.

For additional information on the risks we face, see Item 1A Risk Factors and the Cautionary Statement Regarding Forward-Looking Information section in this Item 7.

Signature Bank Portfolio Acquisition

On October 2, 2023, PNC acquired a portfolio of 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 was expected to reduce 2024 personnel expense by approximately $325 million annually, on a pre-tax basis. PNC incurred expenses of $150 million in the fourth quarter of 2023 in connection with this workforce reduction.

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. As a result, PNC incurred a pre-tax expense of $515 million during the fourth quarter of 2023. 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. The fourth quarter of 2024 included an $18 million pre-tax reduction of the FDIC special assessment.

Second Quarter 2024 Significant Items

In the second quarter of 2024, PNC participated in the Visa exchange program, allowing PNC to convert its Visa Class B-1 common

shares into approximately equal amounts of Visa Class B-2 common shares and Visa Class C common shares. This conversion event

resulted in a gain of $754 million related to the Visa Class C common shares received. PNC retained the Visa Class B-2 common

shares. The second quarter of 2024 also included Visa Class B-2 derivative fair value adjustments of negative $116 million and a $120

million expense related to a PNC Foundation contribution. During the second quarter, PNC also repositioned the investment securities

portfolio, selling low-yielding investment securities for net proceeds of $3.8 billion, resulting in a loss of $497 million. PNC

redeployed the full proceeds from the sale into higher-yielding investment securities. The combined impact of all of these significant items on pre-tax noninterest income and pre-tax noninterest expense in the second quarter of 2024 was $141 million and $120 million, respectively.

Hurricanes Helene and Milton

During September 2024, Hurricane Helene made landfall in Florida’s panhandle, impacting a large region of the

southeastern United States, including the southern Appalachians. In October 2024, Hurricane Milton made landfall

on the central west coast of Florida, causing widespread damage across the state. The storms resulted in property damage to our

customers, the closing or disruption of many businesses, including some of PNC’s branches and facilities and damage to the

community infrastructure. We evaluated the impact to our businesses, and, based on our assessments to date, these storms did not have a material impact on our operating results, including credit losses.

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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 8 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.

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

(a)See explanation and reconciliation of this non-GAAP measure in the Non-GAAP Financial Information section of this Item 7.

(b)See explanation and reconciliation of this non-GAAP measure in the Average Consolidated Balance Sheet and Net Interest Analysis and Non-GAAP Financial Information sections of this Item 7.

Table 2: Balance Sheet Highlights and Other Selected Ratios

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Income Statement Highlights

Net income for 2024 was $6.0 billion or $13.74 per diluted common share, an increase of $0.4 billion, or 5%, compared to net income of $5.6 billion, or $12.79 per diluted common share, for 2023. The increase was primarily due to lower noninterest expense and higher noninterest income, partially offset by lower net interest income.

•Total revenue was stable at $21.6 billion.

•Net interest income decreased $0.4 billion, or 3%, to $13.5 billion as the benefit of higher interest-earning asset yields and balances was more than offset by increased funding costs.

•Net interest margin decreased to 2.66% for 2024 compared to 2.76% for 2023.

•Noninterest income increased $0.5 billion, or 6%, to $8.1 billion primarily driven by higher capital markets and advisory fees.

•Provision for credit losses was $789 million in 2024 reflecting the impact of net charge-offs, primarily in our commercial real estate, commercial and industrial and credit card loan classes, and a net decline in the ACL due to improved macroeconomic factors and portfolio activity. Provision for credit losses was $742 million in 2023.

•Noninterest expense decreased $488 million, or 3%, to $13.5 billion compared to 2023 reflecting lower costs related to the FDIC’s special assessment and lower personnel expense, partially offset by a PNC Foundation contribution expense of $120 million in the second quarter of 2024 and impairments of $97 million in the fourth quarter of 2024 primarily related to technology investments. Costs related to the FDIC special assessment were $112 million in 2024 compared to $515 million in 2023. Noninterest expense in 2023 also included $150 million of workforce reduction charges.

For additional detail, see the Consolidated Income Statement Review section of this Item 7.

Balance Sheet Highlights

Our balance sheet was well positioned at December 31, 2024. In comparison to December 31, 2023:

•Total assets were stable and included higher securities balances, partially offset by lower loans outstanding and lower balances held with the Federal Reserve Bank.

•Total loans decreased $5.0 billion, or 2%, to $316.5 billion.

•Total commercial loans decreased $3.4 billion, or 2%, to $216.2 billion, due to lower utilization of loan commitments and commercial real estate paydowns.

•Total consumer loans decreased $1.6 billion, or 2%, to $100.3 billion, as growth in automobile loans was more than offset by declines in the remaining portfolios as paydowns outpaced originations.

•Investment securities increased $7.2 billion, or 5%, to $139.7 billion, due to increased purchase activity, primarily of U.S. Treasury securities, partially offset by portfolio paydowns and maturities.

•Interest earning deposits with banks, primarily with the Federal Reserve Bank, decreased $4.5 billion, or 10%, to $39.3 billion, primarily due to lower borrowed funds and higher securities balances, partially offset by higher deposits and lower loan balances.

•Total deposits increased $5.3 billion, or 1%, to $426.7 billion, reflecting higher interest-bearing deposits, partially offset by lower noninterest-bearing deposits. Interest-bearing deposits increased due to higher commercial balances, partially offset by lower consumer balances. Noninterest-bearing deposit balances decreased due to a decline in both commercial and consumer balances.

•Borrowed funds of $61.7 billion decreased $11.1 billion, or 15%, due to lower FHLB advances, partially offset by parent company senior debt issuances.

For additional detail, see the Consolidated Balance Sheet Review section of this Item 7.

Credit Quality Highlights

2024 reflected strong credit quality performance.

•At December 31, 2024 compared to December 31, 2023:

•Overall loan delinquencies of $1.4 billion were stable.

•The ACL related to loans, which consists of the ALLL and the allowance for unfunded lending related commitments, totaled $5.2 billion and $5.5 billion at December 31, 2024, and 2023, respectively. The reserve change was driven by improved macroeconomic factors as well as portfolio activity. ACL to total loans was 1.64% and 1.70% at December 31, 2024 and 2023, respectively.

•Nonperforming assets of $2.4 billion increased $141 million, or 6%, primarily due to higher commercial real estate nonperforming loans.

•Net charge-offs of $1.0 billion or 0.33% of average loans in 2024 increased $331 million compared to net charge-offs of $710 million or 0.22% of average loans for 2023, reflecting higher commercial and consumer net loan charge-offs.

For additional detail, see the Credit Risk Management portion of the Risk Management section of this Item 7.

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Capital and Liquidity Highlights

We maintained strong capital and liquidity positions during 2024.

•Common shareholders’ equity increased $3.8 billion to $48.7 billion at December 31, 2024, due to the benefit of net income and an improvement in AOCI, partially offset by common dividends paid and common share repurchases.

•In 2024, we returned $3.1 billion of capital to shareholders through dividends on common shares of $2.5 billion and repurchases of 3.5 million common shares for $0.6 billion.

•PNC’s SCB for the four-quarter period beginning October 1, 2024 is the regulatory minimum of 2.5%. See the Supervision and Regulation section of Item 1 and the Liquidity and Capital Management portion of the Risk Management section of this Item 7 for more details on the SCB and our common shares still available for repurchase.

•On January 3, 2025, the PNC Board of Directors declared a quarterly cash dividend on common stock of $1.60 per share to be paid on February 5, 2025 to shareholders of record at the close of business January 15, 2025.

•The Basel III CET1 capital ratio increased to 10.5% at December 31, 2024 from 9.9% at December 31, 2023.

•PNC elected a five-year transition provision effective March 31, 2020 to delay until 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 entered a three-year transition period, and the full impact of the CECL standard was phased-in to regulatory capital through December 31, 2024. In the first quarter of 2025, CECL will be fully reflected in regulatory capital. The estimated CET1 fully implemented ratio was 10.5% at December 31, 2024 compared to 9.8% at December 31, 2023.

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. See additional discussion of the CCAR process in the Supervision and Regulation section of Item 1 Business and Item 1A Risk Factors of this Report.

See the Liquidity and Capital Management portion of the Risk Management section of this Item 7 for more detail on our 2024 capital and liquidity actions as well as our capital ratios.

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, among other things, 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 potential legal and regulatory contingencies. These statements are based on our views that:

•The labor market remains strong, and job and income gains will continue to support consumer spending growth in the near term. PNC’s baseline forecast is for continued expansion, but slower economic growth in 2025 than in 2024. High interest rates remain a drag on the economy, consumer spending growth will slow to a pace more consistent with household income growth, and government’s contribution to economic growth will be smaller.

•Real GDP growth in 2025 and 2026 will be approximately 2%, and the unemployment rate will remain somewhat above 4% throughout 2025 and into 2026. There will be little progress on inflation in 2025; wage pressures will abate, but higher tariffs will offset this, and inflation will remain above the Federal Reserve’s 2% objective throughout 2025.

•Little progress on inflation this year will limit monetary easing. PNC expects two additional federal funds rate cuts of 25 basis points each in 2025, one in May and one in July. The federal funds rate will be in a range between 3.75% and 4.00% in the second half of 2025, and remain in that range into 2026.

See Item 1A Risk Factors and the Cautionary Statement Regarding Forward-Looking Information section in this Item 7 for other factors that could cause future events to differ, perhaps materially, from those anticipated in these forward-looking statements.

For the full year 2025, compared to full year 2024, we expect:

•Average loans to be stable,

•Spot loans to be up 2% to 3%,

•Net interest income to be up 6% to 7%,

•Noninterest income to be up approximately 5%,

•Revenue to be up approximately 6%,

•Noninterest expense to be up approximately 1%, and

•The effective tax rate to be approximately 19%.

For the first quarter of 2025, compared to the fourth quarter of 2024, we expect:

•Average loans to be down approximately 1%,

•Net interest income to be down 2% to 3%,

•Fee income to be stable,

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

•Revenue to be down 1% to 2%,

•Noninterest expense to be down 2% to 3%, and

•Net loan charge-offs to be approximately $300 million.

Noninterest income, other noninterest income and revenue guidance does not forecast net securities gains or losses or Visa activity.

We are unable to provide 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.

CONSOLIDATED INCOME STATEMENT REVIEW

Our Consolidated Income Statement is presented in Item 8 of this Report. For the comparison of 2023 over 2022, see the Consolidated Income Statement Review section in our 2023 Form 10-K.

Net income for 2024 was $6.0 billion, or $13.74 per diluted common share, an increase of $0.4 billion, or 5%, compared to net income of $5.6 billion, or $12.79 per diluted common share, for 2023. The increase was primarily due to lower noninterest expense and higher noninterest income, partially offset by lower net interest income.

Net Interest Income

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

(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 the Reconciliation of Taxable-Equivalent Net Interest Income (non-GAAP) of this Item 7.

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 Average Consolidated Balance Sheet and Net Interest Analysis section of this Item 7 for additional information.

Net interest income decreased $0.4 billion, or 3%, and net interest margin decreased 10 basis points in 2024 compared with 2023 as the benefit of higher interest-earning asset yields and balances were more than offset by increased funding costs.

Average investment securities were stable as net purchase activity of available-for-sale securities was offset by portfolio paydowns and maturities of held-to-maturity securities. Average investment securities represented 27% of average interest-earning assets in 2024 compared to 28% in 2023.

Average loans decreased $3.7 billion, or 1%, primarily due to lower average utilization of commercial loan commitments. Average loans represented 62% of average interest-earning assets in 2024 compared to 64% in 2023.

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Average interest-earning deposits with banks increased $6.5 billion, or 18%, primarily due to higher borrowed funds and lower loan balances, partially offset by lower deposits.

Average interest-bearing deposits increased $9.0 billion, or 3%, reflecting growth in commercial deposits, partially offset by a decline in consumer balances. In total, average interest-bearing deposits represented 81% of average interest-bearing liabilities in 2024 compared to 82% in 2023.

Average borrowed funds increased $6.8 billion, or 10%, primarily due to parent company senior debt issuances, partially offset by lower FHLB advances.

Further details regarding average loans and deposits are included in the Business Segments Review section of this Item 7.

Noninterest Income

Table 4: Noninterest Income

*- Not Meaningful

Noninterest income as a percentage of total revenue was 37% for 2024 and 35% for 2023.

Asset management and brokerage fees increased reflecting the impact of higher average equity markets as well as higher annuity sales. PNC’s discretionary client assets under management increased to $211 billion at December 31, 2024 compared to $189 billion at December 31, 2023, primarily due to higher spot equity markets. Capital markets and advisory fees increased primarily due to higher merger and acquisition advisory activity and increased underwriting fees. Card and cash management revenue growth was driven by higher treasury management product revenue. Lending and deposit services grew as a result of increased customer activity. Residential and commercial mortgage decreased due to lower residential mortgage banking activities. Other noninterest income increased compared to 2023 driven by the benefit of significant items in the second quarter of 2024, partially offset by lower private equity revenue.

Further details regarding our customer-related trading activities are included in the Market Risk Management – Customer-Related Trading Risk portion of the Risk Management section of this Item 7. Further details regarding private and other equity investments are included in the Market Risk Management – Equity and Other Investment Risk section.

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Noninterest Expense

Table 5: Noninterest Expense

Noninterest expense decreased compared to 2023 reflecting lower costs related to the FDIC’s special assessment and lower personnel expense, partially offset by a PNC Foundation contribution expense of $120 million in the second quarter of 2024 and impairments of $97 million in the fourth quarter of 2024 primarily related to technology investments. Costs related to the FDIC special assessment were $112 million in 2024 compared to $515 million in 2023. Noninterest expense in 2023 also included $150 million of workforce reduction charges.

We exceeded our 2024 continuous improvement program savings goal of $450 million. In 2025, our continuous improvement program goal will be $350 million.

Effective Income Tax Rate

The effective income tax rate was 17.8% for 2024 compared with 16.2% for 2023.

The effective tax rate is generally lower than the statutory rate primarily due to tax credits we receive from our investments in low- income housing and new markets investments, as well as earnings on other tax exempt investments. Additional information regarding our effective tax rate is included in the Reconciliation of Statutory and Effective Tax Rates table in Note 18 Income Taxes.

Provision for (Recapture of) Credit Losses

Table 6: Provision for (Recapture of) Credit Losses

Provision for credit losses is driven by net charge-offs and changes to the ACL. The provision for credit losses was $789 million in 2024 reflecting the impact of net charge-offs, primarily in our commercial real estate, commercial and industrial and credit card loan classes, and a net decline in the ACL due to improved macroeconomic factors and portfolio activity.

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CONSOLIDATED BALANCE SHEET REVIEW

The summarized balance sheet data in Table 7 is based upon our Consolidated Balance Sheet in Item 8 of this Report. For additional detail of the comparison of 2023 over 2022, see the Consolidated Balance Sheet Review section in our 2023 Form 10-K.

Table 7: Summarized Balance Sheet Data

Our balance sheet was well positioned at December 31, 2024. In comparison to December 31, 2023:

•Total assets were stable reflecting higher securities balances, partially offset by lower loans outstanding and lower balances held with the Federal Reserve Bank.

•Total liabilities were stable and included lower borrowed funds, partially offset by higher deposits.

•Total equity increased due to the benefit of net income and an improvement in AOCI, partially offset by dividends paid, common shares repurchased and a preferred stock redemption.

The ACL related to loans totaled $5.2 billion and $5.5 billion at December 31, 2024 and 2023, respectively. The reserve change was driven by improved macroeconomic factors as well as portfolio 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 Item 7,

•Critical Accounting Estimates and Judgments section of this Item 7, and

•Note 1 Accounting Policies 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 of this Item 7 and in Note 19 Regulatory Matters.

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Loans

Table 8: Loans

Commercial loans decreased due to lower utilization of loan commitments and commercial real estate paydowns.

Consumer loans decreased as growth in automobile loans was more than offset by declines in the remaining portfolios as paydowns outpaced originations.

For additional information regarding our loan portfolio, see the Credit Risk Management portion of the Risk Management section, Note 1 Accounting Policies and Note 3 Loans and Related Allowance for Credit Losses.

Investment Securities

Investment securities of $139.7 billion at December 31, 2024 increased $7.2 billion, or 5%, compared to December 31, 2023 due to increased purchase activity, primarily of U.S. Treasury securities, partially offset by portfolio paydowns and maturities.

In the second quarter of 2024, we repositioned the investment securities portfolio and sold available-for-sale securities with a weighted average yield of approximately 1.5% for net proceeds of $3.8 billion. The sale of these securities resulted in a loss of $497 million. We deployed the sale proceeds into available-for-sale securities with a weighted average yield of approximately 5.5%.

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)

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

(b)Amortized cost is presented net of the allowance for investment securities, which totaled $91 million at December 31, 2024 and primarily related to non-agency commercial mortgage-backed securities. The comparable amount at December 31, 2023 was $92 million.

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

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

(e)Includes state and municipal 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.

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Table 9 presents our investment securities portfolio by amortized cost and fair value. The relationship of fair value to amortized cost at December 31, 2024 primarily reflected the impact of higher interest rates on the valuation of fixed-rate 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.

The duration of investment securities was 3.5 years and 4.2 years at December 31, 2024 and December 31, 2023, respectively. We estimate that at December 31, 2024 the effective duration of investment securities was 3.4 years for an immediate 50 basis points parallel increase in interest rates and 3.5 years for an immediate 50 basis points parallel decrease in interest rates. Comparable amounts at December 31, 2023 for the effective duration of investment securities were 4.1 years and 4.2 years, respectively.

Based on expected prepayment speeds, the weighted-average expected maturity of the investment securities portfolio was 5.3 years at December 31, 2024 compared to 5.5 years at December 31, 2023.

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

Additional information regarding our investment securities portfolio is included in Note 2 Investment Securities and Note 14 Fair Value.

Funding Sources

Table 11: Details of 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 lower borrowed funds and higher deposit balances.

Total deposits increased reflecting higher interest-bearing deposits, partially offset by lower noninterest-bearing deposits. Interest-bearing deposits increased due to higher commercial balances partially offset by lower consumer balances. Noninterest-bearing deposit balances decreased due to a decline in both commercial and consumer balances. This shift in deposit composition contributed to an increase in funding costs for the year ended December 31, 2024 compared to the same period in 2023. Our total brokered deposit balances of $7.3 billion at December 31, 2024 and $11.0 billion at December 31, 2023, were significantly below both our internal and regulatory guidelines and limits.

Borrowed funds decreased due to lower FHLB advances, partially offset by parent company senior debt issuances.

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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 balances. While our largest source of liquidity on a consolidated basis is the customer deposit 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 of this Item 7 for additional information regarding our 2024 liquidity and capital activities. See Note 9 Borrowed Funds for additional information related to our borrowings. See Average Consolidated Balance Sheet and Net Interest Analysis and Analysis of Year-to-Year Changes in Net Interest Income sections of this Item 7 for additional information on year-over-year volume and related funding cost changes.

Shareholders’ Equity

Total shareholders’ equity was $54.4 billion at December 31, 2024, an increase of $3.3 billion compared to December 31, 2023, primarily due to increases related to net income of $6.0 billion and an improvement in AOCI of $1.1 billion, partially offset by dividends paid of $2.9 billion, common share repurchases of $0.6 billion and a preferred stock redemption of $0.5 billion.

BUSINESS SEGMENTS REVIEW

During the fourth quarter of 2024, we adopted ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. In connection with this adoption, the presentation of our business segment results has been updated to reflect significant segment-level expense information. See Note 1 Accounting Policies and Note 22 Segment Reporting for additional information related to our adoption of this ASU.

We have three reportable business segments: Retail Banking, Corporate & Institutional Banking and Asset Management Group. Our reportable business segments are defined by the nature of products and services, types of customers, methods used to distribute products or provide services and similar financial performance.

Total business segment financial results differ from our consolidated reporting due to the remaining corporate operations, or other activities, that do not meet the criteria for disclosure as a separate reportable business. These other activities include residual activities 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 FTP operations. See Table 121 in Note 22 Segment Reporting for additional information.

Certain amounts included in this Business Segments Review differ from those amounts shown in Note 22, primarily due to the presentation in this Financial Review of business net interest income on a taxable-equivalent basis.

See Note 22 Segment Reporting for additional information on our business segments, including a description of each business.

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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 are - 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

(continued on following page)

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*- Not Meaningful

(a)Represents expense allocations for corporate overhead services used by each business segment; primarily comprised of technology, human resources and occupancy-related allocations.

(b)Other is primarily comprised of other direct expenses including outside services and equipment expense. Amounts for 2024 also include asset impairments primarily related to technology investments.

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

(d)As of December 31.

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

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

(g)Includes cash and money market balances.

Retail Banking earnings increased $1.3 billion in 2024 compared with 2023 primarily due to higher revenue.

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

Noninterest income increased in the comparison reflecting a gain resulting from PNC’s participation in the Visa exchange program and higher asset management and brokerage fees, partially offset by lower residential and commercial mortgage fees as well as a decline in card and cash management fees.

Provision for credit losses reflected the impact of net charge-offs and a net decline in the ACL due to improved macroeconomic factors and portfolio activity.

Noninterest expense was stable as lower personnel expense offset the impact of asset impairments and increased technology investments.

Retail Banking average total loans were stable in 2024 compared to 2023. Average consumer loans decreased driven by lower residential real estate, as a result of paydowns outpacing new volume, as well as continued declines in education loans from runoff in the government guaranteed portfolio. Average commercial loans increased due to growth in loan commitments utilization, primarily within the automobile dealer segment.

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

The PNC Financial Services Group, Inc. – 2024 Form 10-K  49

retaining relationship-based balances and executing on targeted deposit growth and retention strategies aimed at more rate-sensitive customers. Our goal with regard to deposits is to optimize balances, economics and long-term customer growth. In 2024, average total deposits decreased compared to 2023, and included the impact of quantitative tightening by the Federal Reserve and increased customer spending.

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

consumers and small businesses, including our new PNC Cash Unlimited® credit card.

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, solution centers and ATMs, which are complemented by PNC’s suite of digital capabilities. In 2024, PNC announced it would be investing approximately $1.5 billion, over the next five years, to open more than 200 new branches in key locations, including Atlanta, Austin, Charlotte, Dallas, Denver, Houston, Miami, Orlando, Phoenix, Raleigh, San Antonio, and Tampa, while completing renovations of 1,400 existing locations across the country during the same time period to enhance the customer experience.

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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 is offered nationally.

Table 13: Corporate & Institutional Banking Table

(continued on following page)

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(Continued from previous page)

(a)Represents expense allocations for corporate overhead services used by each business segment; primarily comprised of technology, human resources and occupancy-related allocations.

(b)Other is primarily comprised of other direct expenses including outside services and equipment expense.

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

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

(e)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.

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

(g)As of December 31.

(h)Represents balances related to capitalized servicing.

Corporate & Institutional Banking earnings increased $680 million in 2024 compared with 2023 driven by higher revenue, partially offset by a higher provision for credit losses and increased noninterest 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 and lower average loan balances.

Noninterest income increased in the comparison primarily due to higher capital markets and advisory fees and growth in treasury management product revenue.

Provision for credit losses reflected the impact of net charge-offs and a net decline in the ACL due to improved macroeconomic factors and portfolio activity.

Noninterest expense increased in the comparison primarily due to increased business activity, partially offset by a continued focus on expense management.

Average loans decreased compared with 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 were stable as lower average utilization of loan commitments was largely offset by the acquisition of capital commitment facilities from Signature Bridge Bank in the fourth quarter of 2023.

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

•Business Credit provides asset-based lending and equipment financing solutions. The loan and lease portfolio is mainly secured by business assets. Average loans for this business were stable, primarily driven by new production, partially offset by a lower average utilization of loan commitments.

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•Commercial Banking provides lending, treasury management and capital markets related products and services to smaller corporations and businesses. Average loans for this business declined driven by paydowns outpacing new production and 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 were stable in 2024 compared to 2023, as growth in interest-bearing deposits was mostly offset a decline in noninterest-bearing deposits. 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.

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

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 increased in the comparison primarily due to higher commercial mortgage loan servicing income.

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 increase in capital markets and advisory fees in the comparison was mostly driven by higher merger and acquisition advisory fees, higher underwriting fees and an increase in loan syndication fees, partially offset by lower customer-related interest rate derivative trading revenue.

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Asset Management Group

The Asset Management Group strives to be 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, 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

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(a)Represents expense allocations for corporate overhead services used by each business segment; primarily comprised of technology, human resources and occupancy-related allocations.

(b)Other is primarily comprised of other direct expenses including outside services and equipment expense.

(c)As of December 31.

(d)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 net worth clients through a broad array of products and services.

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.

Asset Management Group earnings increased $147 million in 2024 compared with 2023 driven by higher revenue and lower noninterest expense.

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.

Noninterest income increased in the comparison primarily driven by higher average equity markets, partially 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 2023 driven by growth in residential mortgage loans.

Average total deposits were stable in the comparison as growth in time deposits and deposit sweep balances was partially offset by declines in savings and money market deposits.

Discretionary client assets under management increased in comparison to the prior year, primarily due to higher spot equity markets as of December 31, 2024.

RISK MANAGEMENT

Enterprise Risk Management

We encounter risk as part of the normal course of operating our business. Accordingly, we design our risk governance framework, referred to as the ERM Framework, and risk management processes to help manage this risk. We manage risk in light of our risk appetite to optimize long-term shareholder value while supporting our employees, customers and communities.

Our ERM Framework is structurally aligned with regulatory enhanced prudential standards and heightened standards promulgated by the Federal Reserve and OCC, respectively, which establish minimum requirements for the design and implementation of a risk governance framework. This Risk Management section describes our ERM Framework, which consists of seven core components that provide executive management and the Board of Directors with an aggregate view of significant risks impacting the organization. The seven core components are risk culture, enterprise strategy (including risk appetite, strategic planning, capital and liquidity planning and stress testing), risk governance and oversight, risk identification, risk assessments, risk controls and monitoring, and risk aggregation and reporting (see the figure below). The overall Risk Management section of this Item 7 also 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). Our use of financial derivatives as part of our overall asset and liability risk management process is also addressed within this Risk Management section.

We operate within a rapidly evolving regulatory and financial services environment. Accordingly, we are actively focused on the timely incorporation of applicable regulatory pronouncements and emerging risks into our ERM Framework.

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Risk Culture

A strong risk culture helps us make well informed decisions, helps ensure individuals conform to the established culture, reduces an individual’s ability to do something for personal gain, and rewards employees for working toward a common goal rather than individual interests. Our risk culture reinforces the appropriate protocols for responsible and ethical behavior. These protocols are especially critical in terms of our risk awareness, risk-taking behavior and risk management practices.

Managing risk is every employee’s responsibility. All of our employees, individually and collectively, are responsible for ensuring the organization is performing with the utmost integrity, is applying sound risk management practices and is striving to achieve our stated objectives. All employees are also responsible for understanding our Enterprise Risk Appetite Statement, the ERM Framework and how risk management applies to their respective roles and responsibilities. Employees are encouraged to collaborate across groups to identify and mitigate risks and elevate issues as required. We reinforce risk management responsibilities through a performance management system where employee performance goals include risk management objectives and incentives for employees to reinforce balanced measures of risk-adjusted performance.

Proactive and open communication, between groups and up to the Board of Directors, facilitates timely identification and resolution of risk issues. Our multi-level risk committee structure provides formal channels to identify and report risk.

Enterprise Strategy

We seek to ensure that our overall enterprise strategy is within acceptable risk parameters through our risk appetite, strategic planning, capital and liquidity planning and stress testing processes. These components are reviewed and approved at least annually by the Board of Directors or one of its committees.

Risk Appetite: Our risk appetite represents the organization’s desired enterprise risk position, set within our capital-based risk and liquidity capacity to achieve our strategic objectives and business plans. The Enterprise Risk Appetite Statement qualitatively describes the aggregate level of risk we are willing to accept in order to execute our business strategies. Qualitative guiding principles further define each of the risks within our taxonomy to support the risk appetite statement. Risk appetite metrics and limits, including forward-looking metrics, quantitatively measure whether we are operating within our stated risk appetite. Our risk appetite metrics reflect material risks, align with our established Risk Appetite Framework, balance risk and reward, leverage analytics, and are adjusted periodically based on changes in the external and internal risk environments.

Strategic Planning: Our enterprise and line of business strategic plans outline major objectives, strategies and goals which are expected to be achieved over the next five years while seeking to ensure we remain compliant with all capital, risk appetite and liquidity targets and guidelines. Our chief executive officer and chief financial officer lead the development of the corporate strategic plan.

Capital and Liquidity Planning and Stress Testing: Capital and liquidity planning helps to ensure we are maintaining safe and sound operations and viability. The planning processes and the resulting plans evolve as our overall risks, activities and risk management practices change. Additionally, both plans must align with our strategic planning process. Stress testing is an essential element of the capital planning and liquidity risk management processes. Effective stress testing enables us to consider the estimated effect on the firm’s capital and liquidity positions across various hypothetical macroeconomic scenarios.

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Risk Governance and Oversight

We employ a comprehensive risk management governance framework to help ensure that risks are identified, balanced decisions are made that consider risk and return, and risks are adequately monitored and managed. Risk committees established within this risk governance and oversight framework provide oversight for risk management activities at the Board of Directors, executive, corporate and business levels. Committee composition is designed to provide effective oversight balanced across the three lines of defense in accordance with the OCC’s heightened standards and the Federal Reserve Board’s enhanced prudential standards. See the Supervision and Regulation section in Item 1 of this Report for more information.

To help ensure appropriate risks are being taken and effectively managed and controlled, risk is managed across three lines of defense. A summary of the Board of Directors’ and each line of defense’s responsibilities is provided below:

Board of Directors – The Board of Directors oversees our risk-taking activities, holds management accountable for adhering to the ERM Framework and is responsible for exercising sound, independent judgment when assessing risk.

First line of defense – The front line units are accountable for identifying, owning and managing risks to within acceptable levels while adhering to the ERM Framework. Our businesses strive to enhance risk management and internal control processes within their areas. Integrated and comprehensive processes are designed to adequately manage the business’ risk profile and risk appetite through identifying, assessing, monitoring and reporting risks that may significantly impact each business.

Second line of defense – The second line of defense is independent from the first line of defense and is responsible for establishing the risk governance framework and the standards within each independent risk area for identifying, measuring, monitoring, controlling and reporting aggregate risks. As the second line of defense, the independent risk areas monitor the risks generated by the first line of defense, review and challenge the implementation of effective risk management practices, perform independent assessment of risk, and report on issues or exceptions. The risk areas help to ensure processes and controls owned by the businesses are designed and operating as intended.

Third line of defense – As the third line of defense, Internal Audit is independent from the first and second lines of defense. Internal Audit provides the Board of Directors and executive management comprehensive assurance on the effectiveness of the ERM Framework and the risk management practices across the organization.

Within the three lines of defense, the independent risk organization has sufficient authority to influence material decisions. Our business oversight and decision-making is supported through a governance structure at the Board of Directors and management level. Specific responsibilities include:

Board of Directors – Our Board of Directors oversees our business and affairs as managed by our officers and employees. The Board of Directors may receive assistance in carrying out its duties and may delegate authority through standing or special committees. The following provides a summary of some of the key responsibilities of the Board’s standing committees:

•Audit Committee: monitors the integrity of our consolidated financial statements; monitors internal control over financial reporting; monitors compliance with our code of ethics; evaluates and monitors the qualifications and independence of our independent auditors; and evaluates and monitors the performance of our Internal Audit function and our independent auditors.

•Nominating and Governance Committee: oversees the implementation of sound corporate governance principles and practices while promoting our best interests and those of our shareholders.

•Human Resources Committee: oversees the compensation of our executive officers and other specified responsibilities related to talent and human capital matters affecting us, including succession planning. The committee is also responsible for evaluating the relationship between risk-taking activities and incentive compensation plans.

•Risk Committee: oversees our enterprise-wide risk structure and the processes established to identify, measure, monitor and manage the organization’s risks and evaluates and approves our risk governance framework.

•Corporate Responsibility Committee: oversees management’s corporate responsibility efforts, internally and externally, to the extent such corporate responsibility efforts are not specifically within the purview of another Board committee (e.g., climate-related risks overseen by the Risk Committee and climate-related financial disclosures overseen by the Audit Committee), and implementation of PNC’s publicly-announced Community Benefits Plan to provide loans, investments and other financial support to bolster economic opportunity for low- and moderate-income individuals and communities and other underserved individuals and communities, and to help remove historic barriers in the banking system.

•Technology Committee: oversees technology strategy and significant technology initiatives and programs, including those that can position the use of technology to drive strategic advantages, and fulfills the oversight responsibilities delegated from the Risk Committee with respect to technology risk, technology risk management, data risk, cybersecurity, information security, business continuity and significant technology initiatives and programs.

Management Executive Committee – The Management Executive Committee is responsible for guiding the creation and execution of our business strategy across PNC. With this responsibility, the Management Executive Committee executes various strategic approval and review activities, with a focus on capital deployment, business performance and risk management.

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Corporate Committees – The Corporate Committees generally operate based on the delegated approval authority from a Board-level Committee, the Management Executive Committee or other Corporate Committees. These Committees operate at the senior management level and are designed to facilitate the review, evaluation, oversight and approval of key business and risk activities.

Working Committees – Working Committees generally operate on delegated approval authority from a Corporate Committee or other Working Committees. Working Committees are intended to provide oversight of regulatory/legal matters, assist in the implementation of key enterprise-level activities within a business or function and support the oversight of key risk activities.

Transactional Committees – Transactional Committees generally operate based on delegated approval authority from a Corporate or Working Committee to approve individual transactions, transactional related activities or movements on the organization’s balance sheet.

Policies and Procedures – We have established risk management Policies and Procedures to support our ERM Framework, articulate our risk culture, define the parameters and processes within which employees are to manage risk and conduct our business activities and to provide direction, guidance and clarity on roles and responsibilities to management and the Board of Directors. These Policies and Procedures are organized in a multi-tiered framework and require periodic review and approval by relevant Committees, including where appropriate Committees of the Board of Directors, or management.

Risk Identification

Risk identification takes place across a variety of risk types throughout the organization. These risk types include, but are not limited to, credit, liquidity, market and operational (which includes, among other types of risk, compliance and information security). Risks are identified based on a balanced use of analytical tools and management judgment for both on- and off-balance sheet exposures. Our governance structure supports risk identification by facilitating assessment of key risk issues, emerging risks and idiosyncratic risks and implementation of mitigation strategies as appropriate. These risks are prioritized based on quantitative and qualitative analysis and assessed against our risk appetite. Multiple tools and approaches are used to help identify and prioritize risks, including Risk Appetite Metrics, Key Risk Indicators, Key Performance Indicators, Risk and Control Self-Assessments, scenario analysis, stress testing and special assessments.

Risks are aggregated and assessed within and across risk functions and businesses. The aggregated risk information is reviewed and reported at an enterprise level to the Board of Directors or appropriate committees. This enterprise aggregation and reporting approach promotes the identification and appropriate escalation of material risks across the organization and supports an understanding of the cumulative impact of risk in relation to our risk appetite.

Risk Assessments

Once risks are identified, they are evaluated based on quantitative and qualitative analysis to determine whether they are material. Risk assessments support the overall management of an effective ERM Framework and help us to control and monitor our actual risk level and risk management effectiveness. Comprehensive, accurate and timely assessments of risk are essential to an effective ERM Framework. Risk assessments also support the implementation of mitigation strategies, or under certain circumstances, the decision to accept the risk (if there are no feasible alternatives to the business need, or the exposure may be significantly reduced or eliminated within a reasonable time frame through the course of business-as-usual activities). As part of the risk assessment processes, effective risk measurement practices are designed to uncover recurring risks that have been experienced in the past; facilitate the monitoring, understanding, analysis and reporting of known risks, including emerging risks; and reveal unanticipated risks that may not be easy to understand or predict.

Risk Controls and Monitoring

Our ERM Framework consists of policies, procedures, processes, personnel and control systems. Risk controls and limits provide the linkage from our Risk Appetite Statement and associated guiding principles to the risk-taking activities of our businesses. In addition to risk appetite limits, a system of more detailed internal controls exists which oversees and monitors our various processes and functions. These control systems measure performance, help employees make correct decisions, help ensure information is accurate and reliable and facilitate compliance with laws and regulations.

We design our monitoring and evaluation of risks and controls to provide assurance that policies, procedures and controls are effective and also to identify potential control improvements. Risk monitoring is a daily, ongoing process used by both the first and second line of defense to help ensure compliance with our ERM Framework. Risk monitoring is accomplished in many ways, including performing risk assessments at the business and risk assessment unit level, monitoring an area’s key controls, the timely reporting of issues and establishing a quality control and/or quality assurance function, as applicable.

Risk Aggregation and Reporting

Risk reporting is a comprehensive way to: (i) identify and communicate aggregate risks, including identified concentrations and themes; (ii) escalate instances where we are outside of our risk appetite; (iii) monitor our risk profile in relation to our risk appetite; and (iv) communicate risks and views on the effectiveness of our risk management activities through the governance structure up to the Board of Directors and executive management.

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Risk reports are produced at the line of business, functional risk and enterprise levels. Each individual risk report includes an assessment of inherent risk, quality of risk management, residual risk, risk appetite and risk outlook. The enterprise level risk report aggregates material risks identified in the risk area reports and in the business reports to define the enterprise risk profile. The enterprise risk profile is a point-in-time assessment of enterprise risk and represents our overall risk position in relation to the desired enterprise risk appetite. The determination of the enterprise risk profile is based on analysis of quantitative reporting of risk limits and other measures along with qualitative assessments. Quarterly aggregation of risk reports from the risk areas and lines of business is designed to provide a clear view of our risk level relative to our risk appetite. The enterprise level report is provided through the governance structure to the Risk Committee of the Board of Directors.

Credit Risk Management

Credit risk represents the possibility that a customer, counterparty or issuer may not perform in accordance with the contractual terms of their loan, extension of credit or other financial obligation with PNC. Credit risk is inherent in the financial services business and results from extending credit to customers, purchasing securities and entering into financial derivative transactions and certain guarantee contracts. Credit risk is one of our most significant risks. Our processes for managing credit risk are designed to be embedded in our risk culture and in our decision-making processes using a systematic approach whereby credit risks and related exposures are identified and assessed, managed through specific policies and processes, measured and evaluated against our risk appetite and credit concentration limits, and reported, along with specific mitigation activities, to management and the Board of Directors through our governance structure. Our most significant concentration of credit risk is in our loan portfolio.

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.

Commercial

Commercial and Industrial

Commercial and industrial loans comprised 56% and 55% of our total loan portfolio at December 31, 2024 and 2023, respectively. The majority of our commercial and industrial loans are secured by collateral that provides a secondary source of repayment 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

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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

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

Owner occupied commercial real estate loans totaled $9.2 billion and $9.6 billion at December 31, 2024 and 2023, respectively. These loans 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.

Commercial Real Estate

Commercial real estate loans of $33.6 billion as of December 31, 2024 comprised $19.3 billion related to commercial mortgages on income-producing properties, $8.6 billion of intermediate-term financing loans and $5.7 billion of real estate construction project loans. At December 31, 2023, comparable amounts were $35.4 billion, $21.0 billion, $8.0 billion and $6.4 billion, respectively. Commercial real estate primarily consists of an investment in land and/or buildings held to generate income which 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.

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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

(a)Presented in descending order based on loan balances at December 31, 2024.

Commercial Real Estate: Office Portfolio

Given the fundamental change in office demand driven by the acceptance of remote work, real estate performance related to the office sector continues to be an area of uncertainty. At December 31, 2024, our outstanding loan balances in the office portfolio totaled $6.7 billion, or 2.1% of total loans, while additional unfunded loan commitments totaled $0.2 billion. The portfolio is well diversified geographically across our coast-to-coast franchise. Within the office portfolio at December 31, 2024, criticized loans totaled 30.5% and nonperforming loans totaled 12.6%, while delinquencies were 0.6%. As measured at origination, the weighted average LTV for the office portfolio was 58.8%; however, for those loans that received appraisals in 2024, the weighted average LTV for those loans has increased to 81.8% as of December 31, 2024. During 2024, PNC received updated appraisals for 44.8% of the outstanding balance in the office portfolio. While LTV is one consideration, our risk assessment considers a number of factors in assessing the changing conditions affecting the portfolio. As of December 31, 2024, we have established reserves of 13.3% against office loans.

The greatest stress in our office portfolio is observed in multi-tenant office loans, which represents 54.0% of the portfolio at December 31, 2024. Within the multi-tenant classification, criticized levels were 53.0% while nonperforming loans totaled 22.7%, accounting for almost all of the nonperforming office population. For multi-tenant office loans that received appraisals in 2024, the weighted average LTV for those loans was 86.3% at December 31, 2024. During 2024, PNC received updated appraisals for 66.4% of the outstanding balance in the multi-tenant office portfolio. Additionally, commercial real estate charge-offs since the beginning of 2024 have primarily been multi-tenant office loans. Given the higher level of expected stress, this segment has a proportionally higher reserve rate of 19.9% as of December 31, 2024. The remaining 46.0% of the office portfolio is primarily comprised of single-tenant, medical and government tenant properties. These three tenant classifications are performing considerably better, with approximately 3.8% of the book in the criticized loan category and 0.6% in the nonperforming loan category. As of December 31, 2024, the weighted average LTV inclusive of both updated property values and origination-derived values of this book is 59.9%.

The office portfolio remains an elevated area of focus for portfolio management, with internal risk ratings completed quarterly for each asset with the exception of medical office loans, accelerated reappraisal requirements and elevated approval levels for any credit action. 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. Collateral in the office portfolio is appraised by qualified, independent third-party state certified real estate appraisers. New loans or loans being evaluated for extension or material modification are required to be appraised. The frequency of reappraisals outside of a credit action is based on regulatory and internal requirements. Generally, for loans with heightened risk, a cadence has been established to obtain updated appraisals at least annually

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to aid in determining the timing and amount of a charge-off, if deemed necessary. Loans that do not demonstrate a heightened risk are monitored through our ongoing management of the portfolio, including any need for a new appraisal. All appraisals are reviewed by independent qualified real estate valuation personnel. For existing office building loans, PNC employs the as-is market value from third-party appraisals to calculate LTV.

Given the ongoing uncertainty 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 40% through December 31, 2025. 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 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 reflect the expected credit losses in the portfolio.

Commercial Real Estate: Multifamily Portfolio

As of December 31, 2024, our outstanding loan balances in the multifamily portfolio totaled $16.1 billion, or 5.1% of total loans, while additional unfunded loan commitments totaled $2.3 billion. Although inflationary pressures, higher interest rates and elevated supply in certain markets 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. Additionally, the portfolio is well diversified geographically across our coast-to-coast franchise. 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 December 31, 2024 and 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 following table presents certain key statistics related to our residential real estate portfolio:

Table 18: Residential Real Estate Loan Statistics

(a)Presented in descending order based on loan balances at December 31, 2024.

(b)Weighted-averages calculated for the twelve months ended December 31, 2024 and 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 $41.7 billion at

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December 31, 2024 with 46% located in California. Comparable amounts at December 31, 2023 were $42.4 billion and 45%, respectively.

Home Equity

Home equity loans of $26.0 billion as of December 31, 2024 were comprised of $21.3 billion of home equity lines of credit and $4.7 billion of closed-end home equity installment loans. At December 31, 2023, comparable amounts were $26.2 billion, $20.6 billion and $5.6 billion, 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 obtain loan attributes at origination, including FICO scores and LTVs, and we update these and other credit metrics at least quarterly. Borrower performance of this portfolio is tracked 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 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.

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

Table 19: Home Equity Loan Statistics

(a)Presented in descending order based on loan balances at December 31, 2024.

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

Automobile

Auto loans of $15.4 billion as of December 31, 2024 comprised $14.4 billion in the indirect auto portfolio and $1.0 billion in the direct auto portfolio. At December 31, 2023, comparable amounts were $14.9 billion, $13.8 billion and $1.1 billion, respectively. The indirect auto portfolio consists of loans originated primarily through independent franchised dealers, including dealers located in our newer markets. This business is strategically aligned with our core retail banking business.

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

Table 20: Auto Loan Statistics

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

(b)Calculated using the auto enhanced FICO scale.

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 December 31, 2024, the portfolio balance was composed of 43% new vehicle loans and 57% used vehicle loans. Comparable amounts at December 31, 2023 were 45% and 55%, respectively.

The auto loan portfolio’s performance is measured monthly, including both updated collateral values and 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.

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 at amortized cost whose credit quality has deteriorated to the extent full collection of contractual principal and interest is not 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 for details on our nonaccrual policies.

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

Table 21: Nonperforming Assets by Type

(a)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.

(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.

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The following table provides details on the change in nonperforming assets for the years ended December 31, 2024 and 2023:

Table 22: Change in Nonperforming Assets

As of December 31, 2024, approximately 96% of total nonperforming loans were secured by collateral.

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 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 address operating environment changes such as inflation levels, industry specific risks, interest rate levels, the level of consumer savings and deposit balances, and structural and secular changes such as those arising from the pandemic. To mitigate losses and enhance customer support, we offer loan modifications and collection programs to assist our customers.

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

Table 23: Accruing Loans Past Due (a)

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

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 may 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. For additional information on our commercial real estate, office-related modification offerings, see the Commercial Real Estate portion of the Credit Risk Management section of this Financial Review.

See Note 1 Accounting Policies and Note 3 Loans and Related Allowance for Credit Losses for additional information on loan modifications to borrowers experiencing financial difficulty.

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The following table provides details on the contractual maturity ranges and interest sensitivity of our loan classes at December 31, 2024.

Table 24: Selected Loan Maturities and Interest Sensitivity

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.

Expected losses are estimated primarily using a combination of (i) the expected losses over a reasonable and supportable forecast period, (ii) a period of reversion to long run average expected losses, where applicable and (iii) long run average expected losses for the remaining estimated contractual term.

We use forward-looking information in estimating expected credit losses for our reasonable and supportable forecast period. For this purpose, we have established a framework which includes a three-year forecast period and the use of four economic scenarios and associated probability weights, which in combination create a forecast of expected economic outcomes. Forward-looking information, such as forecasted relevant macroeconomic variables, is incorporated into the expected credit loss estimates using quantitative macroeconomic models, as well as through analysis from PNC’s economists and management’s judgment.

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 1-3 years, if not immediate.

The long-run average expected credit losses are derived from available historical credit information. We use long-run average expected losses for the portfolio over the estimated remaining contractual term beyond our reasonable and supportable forecast period and the reversion period.

The following discussion provides additional information on our reserves for loans and leases as well as unfunded lending related commitments. See Note 1 Accounting Policies for further discussion on our ACL, including details of our methodologies and discussion of the allowances for investment securities and other financial assets. 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 December 31, 2024.

Allowance for Loan and Lease Losses

Our pooled expected credit loss methodology is based upon the quantification of PD, LGD, EAD and the remaining estimated contractual term for a loan, loan segment or lease. We also consider the impact of prepayments and amortization on the estimated contractual term in our expected loss estimates. We use historical data, current borrower characteristics and forecasted economic

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variables in quantitative methods to estimate these risk parameters by loan, loan segment or lease. PD represents a quantification of risk of the likelihood that a borrower may not be able to pay their contractual obligation over a defined period of time. LGD describes the estimated magnitude of potential loss if a borrower were to default, and EAD (or utilization rates for certain revolving loans) is the estimated balance outstanding at the expected time of default. These parameters are calculated for each forecasted scenario and the long-run average period, and are combined to generate expected loss estimates by scenario in proportion to the scenario weights.

For loans and leases that do not share similar risk characteristics with a pool of loans, we establish individually assessed reserves using methods prescribed by GAAP. Reserves for individual commercial nonperforming loans exceeding a defined dollar threshold 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 under our policy for collateral dependent loans. Commercial nonperforming loans that are below the defined threshold are collectively reserved for, as we believe these loans continue to share similar risk characteristics. 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.

While our reserve models and methodologies strive to reflect all relevant expected 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 lag of obtaining information and normal variations between expected and actual outcomes. We may hold additional reserves that are designed to provide coverage for losses attributable to such risks. A portion of the allowance is related to qualitative measurement factors. These 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.

Allowance for Unfunded Lending Related Commitments

We maintain 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 similar to the methodology used for determining reserves for pooled loans and leases. 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 on the Consolidated Income Statement.

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The following table summarizes our ACL related to loans:

Table 25: Allowance for Credit Losses by Loan Class (a)