PNC FINANCIAL SERVICES GROUP INC

Table 2: Balance Sheet Highlights and Other Selected Ratios

(a)The Executive Summary and Consolidated Balance Sheet Review portions of this Financial Review provide information regarding items impacting the comparability of the periods presented.

(b)The March 31, 2025 ratio is calculated to reflect the full impact of CECL. The December 31, 2024 and March 31, 2024 ratios are calculated to reflect PNC’s election to adopt the CECL optional five-year transition provisions. The impact of the provisions was phased-in to regulatory capital through December 31, 2024.

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

Income Statement Highlights

Net income of $1.5 billion, or $3.51 per diluted common share, for the first quarter of 2025 decreased $128 million, or 8%, compared to $1.6 billion, or $3.77 per diluted common share, for the fourth quarter of 2024, due to lower noninterest and net interest income and a higher provision for credit losses, partially offset by lower noninterest expenses.

•For the three months ended March 31, 2025 compared to the three months ended December 31, 2024:

•Total revenue of $5.5 billion decreased $115 million, or 2%.

•Net interest income of $3.5 billion decreased $47 million, or 1%, driven by two fewer days in the quarter, partially offset by the benefit of lower funding costs and fixed rate asset repricing.

•Net interest margin increased 3 basis points to 2.78%.

•Noninterest income of $2.0 billion decreased $68 million, or 3%, reflecting lower capital markets and advisory activity and higher negative Visa derivative adjustments. The first quarter of 2025 included negative $40 million of Visa derivative fair value adjustments, primarily related to litigation escrow funding, compared to negative $23 million in the fourth quarter of 2024.

•Provision for credit losses was $219 million in the first quarter of 2025 and was driven by net charge-offs, primarily in our commercial and industrial and credit card loan classes, and a net increase in the ACL due to changes in macroeconomic factors and portfolio activity. The fourth quarter of 2024 included a provision for credit losses of $156 million.

•Noninterest expense decreased $119 million, or 3%, to $3.4 billion, reflecting asset impairments recognized in the fourth quarter of $97 million as well as seasonally lower other noninterest expense and marketing.

Net income increased $155 million, or 12%, compared to $1.3 billion, or $3.10 per diluted common share, for the first three months of 2024 driven by higher net interest and noninterest income, partially offset by a higher provision for credit losses and higher noninterest expenses.

•For the three months ended March 31, 2025 compared to the three months ended March 31, 2024:

•Total revenue increased $307 million, or 6%, to $5.5 billion.

•Net interest income increased $212 million, or 6%, reflecting the benefit of lower funding costs and the continued repricing of fixed rate assets.

•Net interest margin increased 21 basis points.

•Noninterest income increased $95 million, or 5%, primarily due to higher merger and acquisition advisory activity, increased underwriting fees and higher average equity markets.

•Provision for credit losses was $219 million in the first three months of 2025. The first three months of 2024 included a provision for credit losses of $155 million.

•Noninterest expense increased $53 million, or 2%, compared to the first three months of 2024 as a result of increased business activity, technology investments and higher marketing spend.

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

Balance Sheet Highlights

Our balance sheet was well positioned at March 31, 2025. In comparison to December 31, 2024:

•Total assets of $554.7 billion decreased $5.3 billion, or 1%, reflecting lower balances held with the FRB and lower securities balances, partially offset by higher loans outstanding.

•Total loans of $318.9 billion increased $2.4 billion, or 1%.

•Total commercial loans increased $3.4 billion, or 2%, to $219.6 billion, due to higher utilization of loan commitments and new production within the commercial and industrial portfolio, partially offset by lower commercial real estate loans.

•Total consumer loans decreased $1.0 billion, or 1%, to $99.3 billion, primarily due to lower residential real estate loans, as paydowns outpaced originations.

•Investment securities decreased $2.0 billion, or 1%, to $137.8 billion, primarily due to prepayments and maturities of both available-for-sale and held-to-maturity securities outpacing purchases of available-for-sale securities.

•Interest-earning deposits with banks, primarily with the FRB, decreased $7.0 billion, or 18%, to $32.3 billion, driven by lower deposits and higher loan balances, partially offset by lower securities balances.

•Total deposits decreased $3.8 billion, or 1%, to $422.9 billion, primarily due to lower interest-bearing deposits. The decrease in interest-bearing deposits was driven by lower commercial balances and brokered time deposits, partially offset by higher consumer balances.

•Borrowed funds decreased $1.0 billion, or 2%, to $60.7 billion, due to lower FHLB advances, partially offset by parent company senior debt issuances in the first quarter of 2025.

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

The PNC Financial Services Group, Inc. –Form 10-Q 3

Credit Quality Highlights

The first quarter of 2025 reflected solid credit quality performance.

•At March 31, 2025 compared to December 31, 2024:

•Overall loan delinquencies of $1.4 billion increased $49 million, or 4%, and included higher consumer loan delinquencies, primarily related to forbearance activity associated with the California wildfires.

•The ACL related to loans, which consists of the ALLL and the allowance for unfunded lending related commitments, totaled $5.2 billion at both March 31, 2025 and December 31, 2024. ACL to total loans was 1.64% at both March 31, 2025 and December 31, 2024.

•Nonperforming assets of $2.3 billion were stable.

•Net loan charge-offs of $205 million, or 0.26% of average loans, in the first quarter of 2025 decreased $45 million compared to the fourth quarter of 2024, primarily due to lower commercial real estate net loan charge-offs.

For additional detail see the Credit Risk Management portion of the Risk Management section of this Financial Review.

Capital and Liquidity Highlights

We maintained our strong capital and liquidity positions.

•Common shareholders’ equity of $50.7 billion at March 31, 2025 increased $2.0 billion compared to 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 the first quarter of 2025, PNC returned $0.8 billion of capital to shareholders, including $0.6 billion of dividends on common shares and $0.2 billion of common share repurchases.

•On April 3, 2025, the PNC Board of Directors declared a quarterly cash dividend on common stock of $1.60 per share to be paid on May 5, 2025 to shareholders of record at the close of business April 16, 2025.

•Our CET1 ratio increased to 10.6% at March 31, 2025 from 10.5% at December 31, 2024.

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. PNC’s SCB for the four-quarter period beginning October 1, 2024 is the regulatory minimum of 2.5%. For additional information on our liquidity and capital actions as well as our capital ratios, see Capital Management in the Risk Management section in this Financial Review, the Recent Regulatory Developments section in this Financial Review and the Supervision and Regulation section in our 2024 Form 10-K.

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 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 economic fundamentals remain solid in the spring of 2025. The labor market remains strong, and job and income gains have supported consumer spending growth in early 2025. However, downside risks have materially increased with recent substantial changes to U.S. tariffs and corresponding policy changes by U.S. trading partners.

•PNC’s baseline forecast remains 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.

•The baseline forecast is for real GDP growth of less than 1% in 2025 and between 1% and 2% in 2026, with the unemployment rate increasing to around 5% over the next year. However, the recent turbulence in trade policy indicates that growth may be significantly weaker than in this forecast and the unemployment rate higher. It remains to be seen the extent that policies will be implemented or persist. If implemented as proposed, higher prices will weigh on consumers and businesses, and retaliatory policy changes will weigh on U.S. exports. The large decline in equity prices will also be a drag on consumer spending. The longer the ongoing trade dispute persists, the greater the likelihood of near-term recession.

•The baseline forecast is for four federal funds rate cuts of 25 basis points each in 2025, starting in July. This would take the federal funds rate to a range between 3.25% and 3.50% at the end of 2025. High inflation could mean less monetary easing than in the forecast, but if the economy enters recession the Federal Reserve could cut the federal funds rate more aggressively this year.

Consistent with the forward guidance we provided on April 15, 2025, for the second quarter of 2025, compared to the first quarter of 2025, we expect:

•Average loans to be up approximately 1%,

•Net interest income to be up 1% to 2%,

•Fee income to be up 1% to 3%,

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

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

•Total revenue to be up 1% to 3%,

•Noninterest expense to be stable,

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

Consistent with the forward guidance we provided on January 16, 2025 and April 15, 2025, for the full year 2025, compared to the full year of 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%.

Noninterest income, other noninterest income and total 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.

See the Cautionary Statement Regarding Forward-Looking Information section in this Financial Review and Item 1A Risk Factors included in our 2024 Form 10-K for other factors that could cause future events to differ, perhaps materially, from those anticipated in these forward-looking statements.