PNC FINANCIAL SERVICES GROUP INC
For the period ended Mar 31, 2024. Filed May 2, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed May 2, 2024
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Key Macroeconomic Variables in CECL Weighted-Average Scenarios
Table 34: Key Macroeconomic Variables in CECL Weighted-Average Scenarios
| Assumptions as of March 31, 2024 | |||
|---|---|---|---|
| 2024 | 2025 | 2026 | |
| U.S. real GDP (a) | 0.8% | 1.7% | 2.1% |
| U.S. unemployment rate (b) | 4.6% | 4.8% | 4.3% |
| Assumptions as of December 31, 2023 | |||
| 2024 | 2025 | 2026 | |
| U.S. real GDP (a) | 0.1% | 1.5% | 2.0% |
| U.S. unemployment rate (b) | 4.5% | 4.6% | 4.2% |
(a)Represents year-over-year growth (loss) rates.
(b)Represents quarterly average rate at December 31, 2024, 2025 and 2026, respectively.
Real GDP growth is expected to end 2024 at 0.8% on a weighted average basis, up from the 0.1% assumed at December 31, 2023, primarily due to stronger expected economic activity in 2024 than what was expected at the end of 2023. Growth then rises to 1.7% in 2025, before growing to 2.1% in 2026. The weighted-average unemployment rate is expected to end 2024 at 4.6%, up slightly from the 4.5% assumed at December 31, 2023. During the second half of 2025, the weighted-average unemployment increases to a peak of 5.0% before gradually improving to 4.8% by the fourth quarter of 2025. Further improvement is then expected in 2026 with the rate reaching 4.3% by the fourth quarter of 2026.
The current state of the economy continues to reflect uncertainty due to the foundational change in office demand from the acceptance of remote work, combined with inflationary pressures, interest rate movements, and declining consumer savings and deposit balances. As such, for both our commercial and consumer loan portfolios, PNC identified and performed significant analyses around segments impacted by such uncertainties to ensure our reserves are adequate, given our current macroeconomic expectations.
We believe the economic scenarios effectively reflect the distribution of potential economic outcomes. Additionally, through in-depth and granular analysis we have addressed reserve requirements for the specific populations most affected in the current environment. Through this approach, we believe the reserve levels appropriately reflect the expected credit losses in the portfolio as of the balance sheet date.
See the following for additional information related to our ACL:
Allowance for Credit Losses in the Credit Risk Management section of this Financial Review,
Note 2 Investment Securities, and Note 3 Loans and Related Allowance for Credit Losses in this Report, and
Note 1 Accounting Policies in our 2023 Form 10-K.
36 The PNC Financial Services Group, Inc. –Form 10-Q
Recently Issued Accounting Standards
| Accounting Standards Update | Description | Financial Statement Impact |
|---|---|---|
| Improvements to Reportable Segment Disclosures - ASU 2023-07Issued November 2023 | • Required with issuance of 2024 Form 10-K; early adoption is permitted.• Requires that a public entity disclose significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss.• Requires that a public entity disclose an amount for other segment items by reportable segment and a description of its composition.• Requires that a public entity provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by ASC 280 in interim periods.• Clarifies that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit.• Requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.• Requires a retrospective transition approach for all prior periods presented in the financial statements. | • We are currently evaluating the disclosure requirements within this ASU and do not plan to early adopt.• This ASU will not impact our Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Changes in Equity, or Consolidated Statement of Cash Flows. • We expect to provide enhanced disclosures of significant segment level noninterest expenses as a result of this ASU. |
| Accounting Standards Update | Description | Financial Statement Impact |
| Improvements to Income Tax Disclosures - ASU 2023-09Issued December 2023 | • Required effective date of January 1, 2025; early adoption is permitted.• Requires public business entities to, on an annual basis, (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold.• Requires that all entities disclose, on an annual basis, (1) the amount of income taxes paid (net of refunds received), disaggregated by federal (national), state and foreign taxes, and (2) the amount of income taxes paid (net of refunds received), disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received).• Requires a prospective transition approach, with an optional retrospective transition approach. | • We are currently evaluating the disclosure requirements within this ASU.• This ASU will not impact our Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Changes in Equity, or Consolidated Statement of Cash Flows. • We expect to provide additional disaggregated income tax disclosures in accordance with this ASU. • We are evaluating when to adopt the amendments of this ASU. |
Recently Adopted Accounting Pronouncements
See Note 1 Accounting Policies in our 2023 Form 10-K for recently adopted accounting standards. We did not adopt any new accounting standards during the first quarter of 2024 that impacted our financial statements.
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