PNC FINANCIAL SERVICES GROUP INC

Table 3: Summarized Average Balances and Net Interest Income (a)

(a)Interest income calculated as taxable-equivalent interest income. To provide more meaningful comparisons of interest income and yields for all interest-earning assets, as well as net interest margins, we use interest income on a taxable-equivalent basis in calculating average yields and net interest margins by increasing the interest income

The PNC Financial Services Group, Inc. –Form 10-Q 5 earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments. This adjustment is not permitted under GAAP on the Consolidated Income Statement. For more information, see Table 35 Reconciliation of Taxable-Equivalent Net Interest Income (non-GAAP).

(b)Interest income from Interest-earning deposits with banks primarily includes interest earned on our balances held with the FRB and is reported as Other interest income on our Consolidated Income Statement.

Changes in net interest income and margin result from the interaction of the volume and composition of interest-earning assets and related yields, interest-bearing liabilities and related rates paid and noninterest-bearing sources of funding. See Table 34 Average Consolidated Balance Sheet And Net Interest Analysis for additional information.

Net interest income decreased $47 million, or 1%, compared to the fourth quarter of 2024, and increased $212 million, or 6%, from the first quarter of 2024. Both comparisons reflected the benefit of lower funding costs and the continued repricing of fixed rate assets. In comparison to the fourth quarter of 2024, the benefit was more than offset by two fewer days in the quarter. Net interest margin increased 3 basis points compared to the fourth quarter of 2024, and 21 basis points compared to the first three months of 2024. In both comparisons, the increase was primarily driven by lower funding rates.

Average investment securities decreased $1.7 billion, or 1%, compared to the fourth quarter of 2024, reflecting maturities and net paydowns of held-to-maturity securities. Average investment securities increased $6.7 billion, or 5%, compared to the first three months of 2024, driven by net purchase activity of available-for-sale securities. Average investment securities represented 28% of average interest-earning assets for both the first quarter of 2025 and the fourth quarter of 2024, compared to 26% for the first quarter of 2024.

Average loans decreased $2.4 billion, compared to the fourth quarter of 2024 and $4.0 billion, compared to the first three months of 2024. In both comparisons the decrease was primarily due to lower commercial real estate loans. Average loans represented 63% of average interest-earning assets for the first quarter of 2025, compared to 62% for the fourth quarter of 2024 and 63% for the first quarter of 2024.

Average interest-earning deposits with banks for the first quarter of 2025 decreased $3.3 billion, or 9%, compared to the fourth quarter of 2024 and $13.6 billion, or 28%, compared to the first quarter of 2024, primarily due to lower brokered time deposits and borrowed funds outstanding.

Average interest-bearing deposits for the first quarter of 2025 were stable compared to the fourth quarter of 2024. Compared to the same period in 2024, average interest-bearing deposits increased $7.0 billion, or 2%, as higher commercial and consumer deposits were partially offset by lower brokered time deposits. In total, average interest-bearing deposits represented 84% of average interest-bearing liabilities for the first quarter of 2025, compared to 83% for the fourth quarter of 2024 and 81% for the first quarter of 2024.

Average borrowed funds decreased $2.7 billion, or 4%, compared to the fourth quarter of 2024, and $11.1 billion, or 15%, compared to the first quarter of 2024. In both comparisons, the decrease was driven by lower FHLB advances, partially offset by higher parent company senior debt issuances.

Further details regarding average loans and deposits are included in the Business Segments Review section of this Financial Review.