PNC FINANCIAL SERVICES GROUP INC

Table 2: Balance Sheet Highlights and Other Selected Ratios

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

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.

The PNC Financial Services Group, Inc. –2024 Form 10-K 39

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,

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

•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.