PNC FINANCIAL SERVICES GROUP INC

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.

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

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.