PNC FINANCIAL SERVICES GROUP INC

A summary of our equity investments follows:

Table 33: Equity Investments Summary

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

Tax Credit Investments

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

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

Private Equity and Other

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

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

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

Financial Derivatives

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

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

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

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