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1、 UNITED STATESSECURITIES AND EXCHANGE COMMISSION Washington,DC 20549_FORM 10-Q _QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended June 30,2024 orTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934F
2、or the transition period from to Commission file number 001-09718 The PNC Financial Services Group,Inc.(Exact name of registrant as specified in its charter)_Pennsylvania 25-1435979(State or other jurisdiction ofincorporation or organization)(I.R.S.EmployerIdentification No.)The Tower at PNC Plaza,3
3、00 Fifth Avenue,Pittsburgh,Pennsylvania 15222-2401(Address of principal executive offices,including zip code)(888)762-2265(Registrants telephone number including area code)(Former name,former address and former fiscal year,if changed since last report)_Securities registered pursuant to Section 12(b)
4、of the Act:Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered Common Stock,par value$5.00PNCNew York Stock ExchangeIndicate by check mark whether the registrant:(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 durin
5、g the preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required t
6、o be submitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-
7、accelerated filer,a smaller reporting company,or an emerging growth company.See the definitions of“large accelerated filer”,“accelerated filer”,“smaller reporting company”,and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated filer Sm
8、aller reporting company Emerging growth company If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indi
9、cate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No As of July 15,2024,there were 397,496,265 shares of the registrants common stock($5 par value)outstanding.PagesPART I FINANCIAL INFORMATIONItem 1.Financial Statements(Unaudited).Consolid
10、ated Income Statement41Consolidated Statement of Comprehensive Income42Consolidated Balance Sheet43Consolidated Statement of Cash Flows44Notes To Consolidated Financial Statements(Unaudited)Note 1 Accounting Policies46Note 2 Investment Securities47Note 3 Loans and Related Allowance for Credit Losses
11、50Note 4 Loan Sale and Servicing Activities and Variable Interest Entities64Note 5 Goodwill and Mortgage Servicing Rights66Note 6 Leases 68Note 7 Borrowed Funds 69Note 8 Commitments70Note 9 Total Equity and Other Comprehensive Income71Note 10 Earnings Per Share74Note 11 Fair Value75Note 12 Financial
12、 Derivatives84Note 13 Legal Proceedings90Note 14 Segment Reporting91Note 15 Fee-based Revenue from Contracts with Customers95Note 16 Subsequent Events96Statistical Information(Unaudited)Average Consolidated Balance Sheet And Net Interest Analysis97Reconciliation of Taxable-Equivalent Net Interest In
13、come(non-GAAP)99Reconciliation of Noninterest Income Guidance,Excluding Significant Items(non-GAAP)99Reconciliation of Revenue Guidance,Excluding Significant Items(non-GAAP)99Reconciliation of Core Noninterest Expense Guidance(non-GAAP)100Glossary100Defined Terms100Acronyms100Item 2.Managements Disc
14、ussion and Analysis of Financial Condition and Results of Operations(MD&A).Financial Review1Executive Summary1Consolidated Income Statement Review7Consolidated Balance Sheet Review10Business Segments Review13Risk Management20Recent Regulatory Developments36Critical Accounting Estimates and Judgments
15、36Internal Controls and Disclosure Controls and Procedures38Cautionary Statement Regarding Forward-Looking Information39Item 3.Quantitative and Qualitative Disclosures about Market Risk.21-38,49-50,83-89Item 4.Controls and Procedures.38PART II OTHER INFORMATIONItem 1.Legal Proceedings.101Item 1A.Ris
16、k Factors.101Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.101Item 5.Other Information101Item 6.Exhibits.102Exhibit Index102Corporate Information102Signature104THE PNC FINANCIAL SERVICES GROUP,INC.Cross-Reference Index to Second Quarter 2024 Form 10-QMD&A TABLE REFERENCETableDes
17、criptionPage1Summary of Operations,Per Common Share Data and Performance Ratios22Balance Sheet Highlights and Other Selected Ratios33Summarized Average Balances and Net Interest Income74Noninterest Income85Noninterest Expense96Provision for Credit Losses97Summarized Balance Sheet Data108Loans119Inve
18、stment Securities1110Weighted-Average Expected Maturities of Mortgage and Asset-Backed Debt Securities1211Details of Funding Sources1212Retail Banking Table1413Corporate&Institutional Banking Table1614Asset Management Group Table1915Details of Loans2016Commercial and Industrial Loans by Industry2117
19、Commercial Real Estate Loans by Geography and Property Type2218Residential Real Estate Loan Statistics2319Home Equity Loan Statistics2420Auto Loan Statistics2421Nonperforming Assets by Type2522Change in Nonperforming Assets2523Accruing Loans Past Due2624Allowance for Credit Losses by Loan Class2725L
20、oan Charge-Offs and Recoveries2826Senior and Subordinated Debt2927Primary Contingent Liquidity Sources 2928Parent Company Notes Issued 3029Credit Ratings and Outlook3130Basel III Capital3231Net Interest Income Sensitivity Analysis3332Economic Value of Equity Sensitivity Analysis3433Equity Investment
21、s Summary3434Key Macroeconomic Variables in CECL Weighted-Average Scenarios37NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TABLE REFERENCETableDescriptionPage35Investment Securities Summary4736Gross Unrealized Loss and Fair Value of Securities Available for Sale Without an Allowance for Credit Losses48
22、37Gains(Losses)on Sales of Securities Available for Sale4838Contractual Maturity of Debt Securities4939Fair Value of Securities Pledged and Accepted as Collateral4940Analysis of Loan Portfolio5141Nonperforming Assets5242Commercial Credit Quality Indicators5343Credit Quality Indicators for Residentia
23、l Real Estate and Home Equity Loan Classes5444Credit Quality Indicators for Automobile,Credit Card,Education and Other Consumer Loan Classes5645Loan Modifications Granted to Borrowers Experiencing Financial Difficulty5846Financial Effect of FDMs6047Payment Performance of FDMs Modified in the Last 12
24、 Months6248Payment Performance of FDMs6249Subsequently Defaulted FDMs6350Rollforward of Allowance for Credit Losses6451Loan Sale and Servicing Activities6552Principal Balance,Delinquent Loans and Net Charge-offs Related to Serviced Loans For Others6553Non-Consolidated VIEs6654Mortgage Servicing Righ
25、ts6755Commercial Mortgage Servicing Rights Key Valuation Assumptions6856Residential Mortgage Servicing Rights Key Valuation Assumptions6857Lessor Income6858Borrowed Funds6959FHLB Borrowings,Senior Debt and Subordinated Debt 6960Commitments to Extend Credit and Other Commitments7061Rollforward of Tot
26、al Equity7162Other Comprehensive Income(Loss)7263Accumulated Other Comprehensive Income(Loss)Components7264Dividends Per Share7365Basic and Diluted Earnings Per Common Share7466Fair Value Measurements Recurring Basis Summary7567Reconciliation of Level 3 Assets and Liabilities7668Fair Value Measureme
27、nts Recurring Quantitative Information8069Fair Value Measurements Nonrecurring8270Fair Value Option Fair Value and Principal Balances8271Fair Value Option Changes in Fair Value8372Additional Fair Value Information Related to Other Financial Instruments8373Total Gross Derivatives8574Gains(Losses)Reco
28、gnized on Fair Value and Cash Flow Hedges in the Consolidated Income Statement8775Hedged Items-Fair Value Hedges8876Gains(Losses)on Derivatives Not Designated for Hedging8877Derivative Assets and Liabilities Offsetting8978Credit-Risk Contingent Features9079Results of Businesses9380Noninterest Income
29、 by Business Segment and Reconciliation to Consolidated Noninterest Income95FINANCIAL REVIEWTHE PNC FINANCIAL SERVICES GROUP,INC.This Financial Review,including the Consolidated Financial Highlights,should be read together with our unaudited Consolidated Financial Statements and unaudited Statistica
30、l Information included elsewhere in this Quarterly Report on Form 10-Q(the“Report”or“Form 10-Q”)and with Items 6,7,8 and 9A of our 2023 Annual Report on Form 10-K(our“2023 Form 10-K”).For information regarding certain business,regulatory and legal risks,see the following:the Risk Management section
31、of this Financial Review and of Item 7 in our 2023 Form 10-K;Item 1A Risk Factors included in our 2023 Form 10-K;and the Commitments and Legal Proceedings Notes included in this Report and Item 8 of our 2023 Form 10-K.Also,see the Cautionary Statement Regarding Forward-Looking Information section in
32、 this Financial Review and the Critical Accounting Estimates and Judgments section in this Financial Review and in our 2023 Form 10-K for certain other factors that could cause actual results or future events to differ,perhaps materially,from historical performance and from those anticipated in the
33、forward-looking statements included in this Report.See Note 14 Segment Reporting for a reconciliation of total business segment earnings to total PNC consolidated net income as reported on a GAAP basis.In this Report,“PNC,”“we”or“us”refers to The PNC Financial Services Group,Inc.and its subsidiaries
34、 on a consolidated basis(except when referring to PNC as a public company,its common stock or other securities issued by PNC,which just refer to The PNC Financial Services Group,Inc.).References to The PNC Financial Services Group,Inc.or to any of its subsidiaries are specifically made where applica
35、ble.See page 100 for a glossary of certain terms and acronyms used in this Report.EXECUTIVE SUMMARYHeadquartered in Pittsburgh,Pennsylvania,we are one of the largest diversified financial institutions in the U.S.We have businesses engaged in retail banking,including residential mortgage,corporate an
36、d institutional banking and asset management,providing many of our products and services nationally.Our retail branch network is located coast-to-coast.We also have strategic international offices in four countries outside the U.S.Key Strategic GoalsAt PNC we manage our company for the long term.We
37、are focused on the fundamentals of growing customers,loans,deposits and revenue and improving profitability,while investing for the future and managing risk,expenses and capital.We continue to invest in our products,markets and brand,and embrace our commitments to our customers,shareholders,employee
38、s and the communities where we do business.We strive to serve our customers and expand and deepen relationships by offering a broad range of deposit,credit and fee-based products and services.We are focused on delivering those products and services to our customers with the goal of addressing their
39、financial objectives and needs.Our business model is built on customer loyalty and engagement,understanding our customers financial goals and offering our diverse products and services to help them achieve financial well-being.Our approach is concentrated on organically growing and deepening client
40、relationships across our businesses that meet our risk/return measures.We are focused on our strategic priorities,which are designed to enhance value over the long term,and consist of:Expanding our leading banking franchise to new markets and digital platforms,Deepening customer relationships by del
41、ivering a superior banking experience and financial solutions,andLeveraging technology to create efficiencies that help us better serve customers.Our capital and liquidity priorities are to support customers,fund business investments and return excess capital to shareholders,while maintaining approp
42、riate capital and liquidity in light of economic conditions,the Basel III framework and other regulatory expectations.For more detail,see the Capital and Liquidity Highlights portion of this Executive Summary,the Liquidity and Capital Management portion of the Risk Management section of this Financi
43、al Review and the Supervision and Regulation section in Item 1 Business of our 2023 Form 10-K.Signature Bank Portfolio AcquisitionOn October 2,2023,PNC acquired a portfolio of capital commitments facilities from Signature Bridge Bank,N.A.through an agreement with the FDIC as receiver of the former S
44、ignature Bank,New York.The acquired portfolio represented approximately$16.0 billion in total commitments,including approximately$9.0 billion of funded loans,at the time of acquisition.Workforce ReductionDuring the fourth quarter of 2023,PNC implemented a workforce reduction that is expected to redu
45、ce 2024 personnel expense by approximately$325 million,on a pre-tax basis.PNC incurred expenses of$150 million in the fourth quarter of 2023 in connection with this workforce reduction.1 The PNC Financial Services Group,Inc.Form 10-QFDIC Special Assessment In November 2023,the FDIC approved a final
46、rule to implement a special assessment to recover the loss to the Deposit Insurance Fund associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank.As a result,PNC incurred a pre-tax expense of$515 million during the fourth quarter of 2023.In the
47、 first quarter of 2024,PNC incurred an additional pre-tax expense of$130 million related to the increase in the FDICs expected losses.Selected Financial DataThe following tables include selected financial data,which should be reviewed in conjunction with the Consolidated Financial Statements and Not
48、es included in Item 1 of this Report as well as the other disclosures in this Report concerning our historical financial performance,our future prospects and the risks associated with our business and financial performance.Table 1:Summary of Operations,Per Common Share Data and Performance RatiosDol
49、lars in millions,except per share dataUnauditedThree months endedSix months endedJune 30March 31June 30June 30June 3020242024202320242023Summary of Operations(a)Net interest income$3,302$3,264$3,510$6,566$7,095 Noninterest income 2,109 1,881 1,783 3,990 3,801 Total revenue 5,411 5,145 5,293 10,556 1
50、0,896 Provision for credit losses 235 155 146 390 381 Noninterest expense 3,357 3,334 3,372 6,691 6,693 Income before income taxes and noncontrolling interests 1,819 1,656 1,775 3,475 3,822 Income taxes 342 312 275 654 628 Net income$1,477$1,344$1,500$2,821$3,194 Net income attributable to common sh
51、areholders$1,362$1,247$1,354$2,609$2,961 Per Common ShareBasic$3.39$3.10$3.36$6.49$7.35 Diluted$3.39$3.10$3.36$6.48$7.34 Book value per common share$116.70$113.30$105.67 Performance RatiosNet interest margin(b)2.60%2.57%2.79%2.58%2.81%Noninterest income to total revenue 39%37%34%38%35%Efficiency 62%
52、65%64%63%61%Return on:Average common shareholders equity 12.16%11.39%13.01%11.78%14.53%Average assets 1.05%0.97%1.08%1.01%1.15%(a)The Executive Summary and Consolidated Income Statement Review portions of this Financial Review section provide information regarding items impacting the comparability o
53、f the periods presented.(b)See explanation and reconciliation of this non-GAAP measure in the Average Consolidated Balance Sheet and Net Interest Analysis and Reconciliation of Taxable-Equivalent Net Interest Income(non-GAAP)Statistical Information(Unaudited)section in Item 1 of this Report.2 The PN
54、C Financial Services Group,Inc.Form 10-QTable 2:Balance Sheet Highlights and Other Selected RatiosDollars in millions,except as notedUnauditedJune 302024December 312023June 302023Balance Sheet Highlights(a)Assets$556,519$561,580$558,207 Loans$321,429$321,508$321,761 Allowance for loan and lease loss
55、es$4,636$4,791$4,737 Interest-earning deposits with banks$33,039$43,804$38,259 Investment securities$138,645$132,569$135,661 Total deposits$416,391$421,418$427,489 Borrowed funds$71,391$72,737$65,384 Total shareholders equity$52,642$51,105$49,320 Common shareholders equity$46,397$44,864$42,083 Other
56、 Selected RatiosCommon equity Tier 1 10.2%9.9%9.5%Loans to deposits 77%76%75%Common shareholders equity to total assets 8.3%8.0%7.5%(a)The Executive Summary and Consolidated Balance Sheet Review portions of this Financial Review provide information regarding items impacting the comparability of the
57、periods presented.Income Statement HighlightsNet income of$1.5 billion,or$3.39 per diluted common share,for the second quarter of 2024 increased$133 million,or 10%,compared to$1.3 billion,or$3.10 per diluted common share,for the first quarter of 2024,primarily due to higher noninterest and net inter
58、est income,partially offset by a higher provision for credit losses.For the three months ended June 30,2024 compared to the three months ended March 31,2024:Total revenue increased$266 million,or 5%,to$5.4 billion.Net interest income of$3.3 billion increased$38 million,or 1%,reflecting higher yields
59、 on interest-earning assets.Net interest margin increased 3 basis points to 2.60%.Noninterest income increased$228 million,or 12%,and included the impact of a$754 million gain resulting from PNCs participation in the Visa exchange program,as well as a securities loss of$497 million related to the re
60、positioning of the investment securities portfolio.The second quarter of 2024 also included Visa Class B derivative fair value adjustments,primarily related to the extension of anticipated litigation resolution timing,of negative$116 million.The first quarter of 2024 included negative$7 million of V
61、isa Class B derivative fair value adjustments.Provision for credit losses of$235 million in the second quarter of 2024 primarily reflected the impact of portfolio activity.The first quarter of 2024 included a provision for credit losses of$155 million.Noninterest expense increased$23 million,or 1%,t
62、o$3.4 billion.The modest increase was driven by higher marketing and equipment expenses,partially offset by seasonally lower incentive compensation.Other noninterest expense included a$120 million pre-tax expense in the second quarter of 2024 related to a PNC Foundation contribution.The first quarte
63、r of 2024 included a$130 million pre-tax expense related to the increase in the FDICs expected losses.Net income of$2.8 billion,or$6.48 per diluted common share,for the first six months of 2024 decreased$373 million,or 12%,compared to$3.2 billion,or$7.34 per diluted common share,for the first six mo
64、nths of 2023 driven by lower net interest income,partially offset by higher noninterest income.For the six months ended June 30,2024 compared to the six months ended June 30,2023:Total revenue decreased$340 million,or 3%,to$10.6 billion.Net interest income decreased$529 million,or 7%,as the benefit
65、of higher interest-earning asset yields was more than offset by increased funding costs.Net interest margin decreased 23 basis points.Noninterest income increased$189 million,or 5%,reflecting an increase in all categories.The first six months of 2024 included the impact of a$754 million gain resulti
66、ng from PNCs participation in the Visa exchange program,as well as a securities loss of$497 million related to the repositioning of the investment securities portfolio.Provision for credit losses of$390 million in the first six months of 2024 reflected the impact of portfolio activity and improved m
67、acroeconomic factors.The first six months of 2023 included a provision for credit losses of$381 million.The PNC Financial Services Group,Inc.Form 10-Q 3 Noninterest expense was stable compared to the first six months of 2023,and reflected PNCs continued focus on expense management.Other noninterest
68、expense included a$120 million pre-tax expense in the second quarter of 2024 related to a PNC Foundation contribution,as well as a$130 million pre-tax expense in the first quarter of 2024 related to the increase in the FDICs expected losses.For additional detail,see the Consolidated Income Statement
69、 Review section of this Financial Review.Balance Sheet HighlightsOur balance sheet was well positioned at June 30,2024.In comparison to December 31,2023:Total assets of$556.5 billion decreased primarily due to lower balances held with the Federal Reserve Bank,partially offset by higher securities ba
70、lances.Total loans were stable at$321.4 billion.Total commercial loans increased$1.3 billion to$220.8 billion,primarily due to new production.Total consumer loans declined$1.4 billion to$100.6 billion,as paydowns outpaced originations and the utilization of loan commitments.Investment securities inc
71、reased$6.1 billion,or 5%,to$138.6 billion,due to increased net purchase activity,primarily of U.S.Treasury securities,partially offset by portfolio paydowns and maturities.During the second quarter of 2024,PNC took actions to reposition the investment securities portfolio.For additional details,see
72、Investment Securities in the Consolidated Balance Sheet Review section of this Financial Review.Interest-earning deposits with banks,primarily with the Federal Reserve Bank,decreased$10.8 billion,or 25%,to$33.0 billion,primarily due to higher securities balances and lower deposits.Total deposits dec
73、reased$5.0 billion,to$416.4 billion,reflecting lower consumer and commercial deposits.Noninterest-bearing deposit balances decreased primarily driven by a decline in commercial balances.Interest-bearing deposits increased modestly reflecting higher commercial balances,partially offset by lower consu
74、mer balances.Borrowed funds decreased to$71.4 billion,due to lower FHLB borrowings,partially offset by parent company senior debt issuances.For additional detail,see the Consolidated Balance Sheet Review section of this Financial Review.Credit Quality HighlightsThe second quarter of 2024 reflected r
75、elatively stable credit quality performance.At June 30,2024 compared to December 31,2023:Overall loan delinquencies of$1.3 billion decreased$112 million,or 8%,driven by lower consumer and commercial loan delinquencies.The ACL related to loans,which consists of the ALLL and the allowance for unfunded
76、 lending related commitments,totaled$5.4 billion and$5.5 billion at June 30,2024 and December 31,2023,respectively.The decrease in the comparison was driven by improved macroeconomic factors as well as portfolio activity.ACL to total loans was 1.67%and 1.70%at June 30,2024 and December 31,2023,respe
77、ctively.Nonperforming assets increased$321 million,or 14%,to$2.5 billion,primarily due to higher commercial real estate nonperforming loans.Net loan charge-offs of$262 million,or 0.33%of average loans,in the second quarter of 2024 increased$19 million compared to the first quarter of 2024 primarily
78、due to higher 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$46.4
79、billion at June 30,2024 increased$1.5 billion compared to December 31,2023,due to the benefit of net income and an improvement in AOCI,partially offset by common dividends paid and common shares repurchased.In the second quarter of 2024,PNC returned$0.7 billion of capital to shareholders,reflecting$
80、0.6 billion of dividends on common shares and$0.1 billion of common share repurchases,representing 0.7 million shares.Consistent with the SCB framework,which allows for capital return in amounts in excess of the SCB minimum levels,our Board of Directors has authorized a repurchase framework under th
81、e previously approved repurchase program of up to 100 million common shares,of which approximately 43%were still available for repurchase at June 30,2024.In light of the Federal banking agencies proposed rules to adjust the Basel III capital framework,third quarter 2024 share repurchase activity is
82、expected to approximate recent quarterly average share repurchase levels.PNC continues to evaluate the potential impact of the proposed rules and may adjust share repurchase activity 4 The PNC Financial Services Group,Inc.Form 10-Qdepending on market and economic conditions,as well as other factors.
83、Based on the results of the Federal Reserves 2024 annual stress test,PNCs SCB for the four-quarter period beginning October 1,2024 will remain at the regulatory minimum of 2.5%.On July 2,2024,the PNC Board of Directors raised the quarterly cash dividend on common stock to$1.60 per share,an increase
84、of 5 cents per share.The dividend is payable on August 5,2024 to shareholders of record at the close of business July 15,2024.Our CET1 ratio increased to 10.2%at June 30,2024 from 9.9%at December 31,2023.PNC elected a five-year transition provision effective March 31,2020 to delay until December 31,
85、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 is now in the three-year transition period,and the full impact of the CECL standard is being phased-in to regulatory capital through December 31,2024
86、.The fully implemented ratios reflect the full impact of CECL and exclude the benefits of this transition provision.The estimated CET1 fully implemented ratio was 10.1%at June 30,2024 compared to 9.8%at December 31,2023.See the Liquidity and Capital Management portion of the Risk Management section
87、of this Financial Review for more detail on our liquidity and capital actions as well as our capital ratios.PNCs 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 wi
88、th the Federal Reserve Boards CCAR process.For additional information,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 2023 Form 10-K.Business OutlookSt
89、atements 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 curr
90、ently expecting and do not take into account potential legal and regulatory contingencies.These statements are based on our views that:Job and income gains will continue to support consumer spending growth this year,but PNCs baseline forecast is for slower economic growth in 2024 as higher interest
91、rates remain a drag on the economy.Real GDP growth this year will trend close to 2%,and the unemployment rate will increase modestly to above 4%by the end of 2024.Inflation will continue to slow as wage pressures abate,gradually moving back to the Federal Reserves 2%long-term objective.With slowing
92、inflation PNC expects two federal funds rate cuts of 25 basis points each at the FOMCs September and December meetings,with the rate ending this year in a range between 4.75%and 5.00%.PNC expects multiple federal funds rate cuts in 2025 as inflation continues to ease.Consistent with the forward guid
93、ance we provided on July 16,2024,for the third quarter of 2024,compared to the second quarter of 2024,we expect:Average loans to be stable,Net interest income to be up 1%to 2%,Fee income to be up 1%to 2%,Other noninterest income,to be$150 million to$200 million,Noninterest expense to be down 1%to st
94、able,Core noninterest expense to be up 3%to 4%,andNet loan charge-offs to be$250 million to$300 million.Consistent with the forward guidance we provided on July 16,2024,for the full year 2024,compared to the full year of 2023,we expect:Average loans to be down less than 1%,Net interest income to be
95、down approximately 4%,Noninterest income,to be up 5%to 7%,Noninterest income,excluding significant items,to be up 3%to 5%,Revenue to be stable to down 1%,Revenue,excluding significant items,to be down 1%to 2%,Noninterest expense to be down approximately 4%,Core noninterest expense to be down approxi
96、mately 1%,andThe effective tax rate to be approximately 18.5%.The PNC Financial Services Group,Inc.Form 10-Q 5 Significant items in the second quarter of 2024 are composed of a$754 million gain resulting from PNCs participation in the Visa exchange program,a$497 million securities loss related to th
97、e repositioning of the investment securities portfolio and a negative$116 million Visa Class B derivative fair value adjustment.See the Statistical Information(Unaudited)Reconciliation of Noninterest income guidance,excluding significant items(non-GAAP)and Reconciliation of Revenue guidance,excludin
98、g significant items(non-GAAP)section of this Report.Other noninterest income,noninterest income and revenue guidance does not forecast net securities gains or losses and other Visa activity.Core noninterest expense excludes the pre-tax impacts of the$120 million expense in the second quarter of 2024
99、 related to a contribution to the PNC Foundation,$130 million related to the increase in the FDICs expected losses in the first quarter of 2024,and,for the fourth quarter of 2023,$515 million pertaining to the FDIC special assessment and$150 million of workforce reduction charges.See the Statistical
100、 Information(Unaudited)Reconciliation of Core Noninterest Expense(non-GAAP)section of this Report.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,except for ful
101、l year Noninterest income and Revenue guidance,adjusted for$141 million in significant items incurred in the second quarter of 2024,and full year Core noninterest expense guidance adjusted for$250 million in non-core expenses incurred in the first half of 2024.This is due to the inherent difficulty
102、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 Rega
103、rding Forward-Looking Information section in this Financial Review and Item 1A Risk Factors included in our 2023 Form 10-K for other factors that could cause future events to differ,perhaps materially,from those anticipated in these forward-looking statements.6 The PNC Financial Services Group,Inc.F
104、orm 10-QCONSOLIDATED INCOME STATEMENT REVIEWOur Consolidated Income Statement is presented in Item 1 of this Report.Net income of$1.5 billion,or$3.39 per diluted common share,for the second quarter of 2024 increased$133 million,or 10%,compared to$1.3 billion,or$3.10 per diluted common share,for the
105、first quarter of 2024 primarily due to higher noninterest and net interest income,partially offset by a higher provision for credit losses.Net income of$2.8 billion,or$6.48 per diluted common share,for the first six months of 2024 decreased$373 million,or 12%,compared to$3.2 billion,or$7.34 per dilu
106、ted common share,for the same period in 2023 driven by lower net interest income,partially offset by higher noninterest income.Net Interest IncomeTable 3:Summarized Average Balances and Net Interest Income(a)June 30,2024March 31,2024Three months endedDollars in millionsAverageBalancesAverageYields/R
107、atesInterestIncome/ExpenseAverageBalancesAverageYields/RatesInterestIncome/ExpenseAssetsInterest-earning assetsInvestment securities$141,306 2.84%$1,006$135,434 2.62%$888 Loans 319,918 6.05%4,871 320,609 6.01%4,848 Interest-earning deposits with banks 41,113 5.47%563 48,250 5.47%660 Other 9,279 6.98
108、%162 8,002 6.92%138 Total interest-earning assets/interest income$511,616 5.13%6,602$512,295 5.08%6,534 LiabilitiesInterest-bearing liabilitiesInterest-bearing deposits$320,949 2.61%2,084$321,280 2.60%2,077 Borrowed funds 77,456 6.04%1,182 75,590 6.07%1,159 Total interest-bearing liabilities/interes
109、t expense$398,405 3.26%3,266$396,870 3.24%3,236 Net interest margin/income(non-GAAP)2.60%3,336 2.57%3,298 Taxable-equivalent adjustments(34)(34)Net interest income(GAAP)$3,302$3,264 June 30,2024June 30,2023Six months endedDollars in millionsAverageBalancesAverageYields/RatesInterestIncome/ExpenseAve
110、rageBalancesAverageYields/RatesInterestIncome/ExpenseAssetsInterest-earning assetsInvestment securities$138,370 2.74%$1,894$142,208 2.50%$1,780 Loans 320,263 6.03%9,719 325,027 5.43%8,844 Interest-earning deposits with banks 44,682 5.47%1,223 32,736 4.83%790 Other 8,641 6.95%300 9,012 5.86%264 Total
111、 interest-earning assets/interest income$511,956 5.11%13,136$508,983 4.58%11,678 LiabilitiesInterest-bearing liabilitiesInterest-bearing deposits$321,115 2.60%4,161$313,801 1.81%2,822 Borrowed funds 76,523 6.06%2,341 64,337 5.22%1,686 Total interest-bearing liabilities/interest expense$397,638 3.25%
112、6,502$378,138 2.38%4,508 Net interest margin/income(non-GAAP)2.58%6,634 2.81%7,170 Taxable-equivalent adjustments(68)(75)Net interest income(GAAP)$6,566$7,095(a)Interest income calculated as taxable-equivalent interest income.To provide more meaningful comparisons of interest income and yields for a
113、ll 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 earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable invest
114、ments.This adjustment is not permitted under GAAP on the Consolidated Income Statement.For more information,see Reconciliation of Taxable-Equivalent Net Interest Income(non-GAAP)in the Statistical Information(Unaudited)section in Item 1 of this Report.Changes in net interest income and margin result
115、 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 the Statistical Information(Unaudited)Average Consolidated Balance Sheet And Net Interest Analysis sect
116、ion of this Report for additional information.The PNC Financial Services Group,Inc.Form 10-Q 7 Net interest income increased$38 million,or 1%,and net interest margin increased 3 basis points compared to the first quarter of 2024,reflecting higher yields on interest-earning assets.In the year-to-date
117、 comparison,net interest income decreased$529 million,or 7%,and net interest margin decreased 23 basis points,as the benefit of higher interest-earning asset yields was more than offset by increased funding costs.Average investment securities increased$5.9 billion,or 4%,compared to the first quarter
118、 of 2024 reflecting net purchase activity,primarily of U.S.Treasury securities,partially offset by portfolio paydowns and maturities.Average investment securities decreased$3.8 billion,or 3%,in the year-to-date comparison as net purchase activity was more than offset by portfolio paydowns and maturi
119、ties.Average investment securities represented 28%of average interest-earning assets for the second quarter of 2024 compared to 26%for the first quarter of 2024,and 27%for the first six months of 2024 compared to 28%for the first six months of 2023.Average loans were stable for the second quarter of
120、 2024 compared to the first quarter of 2024,and included a modest decline in consumer balances reflecting lower residential real estate and home equity loans.Compared to the first six months of 2023,average loans decreased$4.8 billion,or 1%,primarily due to lower average utilization of commercial lo
121、an commitments.Average loans represented 63%of average interest-earning assets for both the second and first quarters of 2024,and 63%for the first six months of 2024 compared to 64%for the first six months of 2023.Average interest-earning deposits with banks for the second quarter of 2024 decreased$
122、7.1 billion,or 15%,compared to the first quarter of 2024,primarily reflecting net securities purchases.In the year-to-date comparison,average interest-earning deposits with banks increased$11.9 billion,or 36%,due to higher borrowed funds and lower loan and securities balances,partially offset by low
123、er deposits.Average interest-bearing deposits for the second quarter of 2024 were relatively stable compared to the first quarter of 2024,and included a modest decline in commercial balances reflecting seasonal declines in corporate deposits.Average interest-bearing deposits increased$7.3 billion,or
124、 2%,in the year-to-date comparison.In total,average interest-bearing deposits represented 81%of average interest-bearing liabilities for both the second and first quarters of 2024,and 81%for the first six months of 2024 compared to 83%,for the first six months of 2023.Average borrowed funds increase
125、d$1.9 billion,or 2%,and$12.2 billion,or 19%,in the quarterly and year-to-date comparisons,respectively.In both comparisons,the increase reflected parent company senior debt issuances.Further details regarding average loans and deposits are included in the Business Segments Review section of this Fin
126、ancial Review.Noninterest IncomeTable 4:Noninterest Income Three months endedSix months ended June 30March 31ChangeJune 30June 30ChangeDollars in millions20242024$%20242023$%Noninterest incomeAsset management and brokerage$364$364$728$704$24 3%Capital markets and advisory 272 259$13 5%531 475 56 12%
127、Card and cash management 706 671 35 5%1,377 1,356 21 2%Lending and deposit services 304 305 (1)609 604 5 1%Residential and commercial mortgage 131 147 (16)(11)%278 275 3 1%Other income Gain on Visa shares exchange program 754 754*754 754*Securities gains(losses)(499)(499)*(499)(2)(497)*Other 77 135
128、(58)(43)%212 389 (177)(46)%Total other income 332 135 197 146%467 387 80 21%Total noninterest income$2,109$1,881$228 12%$3,990$3,801$189 5%*-Not Meaningful Noninterest income as a percentage of total revenue was 39%for the second quarter of 2024 compared to 37%for the first quarter of 2024,and 38%fo
129、r the first six months of 2024 compared to 35%for the same period in 2023.Asset management and brokerage fees were stable compared to the first quarter of 2024.The increase in the year-to-date comparison reflected the impact of higher annuity sales as well as higher average equity markets.PNCs discr
130、etionary client assets under management of$196 billion at June 30,2024 increased from$195 billion and$176 billion at March 31,2024 and June 30,2023,respectively.In both comparisons,the increase was driven by higher spot equity markets.8 The PNC Financial Services Group,Inc.Form 10-QCapital markets a
131、nd advisory fees increased compared to the first quarter of 2024,driven by higher merger and acquisition advisory activity and increased loan syndication revenue,partially offset by lower underwriting fees.The increase in the year-to-date comparison was primarily due to higher merger and acquisition
132、 advisory activity and increased underwriting fees,partially offset by lower trading revenue.Card and cash management revenue increased compared to the first quarter of 2024,reflecting seasonally higher consumer transaction volumes and higher treasury management product revenue.The increase compared
133、 to the first six months of 2023 was primarily due to higher treasury management product revenue.Lending and deposit services were relatively stable in both the quarterly and year-to-date comparisons.Residential and commercial mortgage decreased compared to the first quarter of 2024,primarily due to
134、 lower residential mortgage activity.Residential and commercial mortgage were relatively stable compared to the first six months of 2023.Other noninterest income increased in both the quarterly and year-to-date comparisons.The second quarter of 2024 included the impact of a$754 million gain resultin
135、g from PNCs participation in the Visa exchange program,as well as a securities loss of$497 million related to the repositioning of the investment securities portfolio.The second quarter of 2024 also included Visa Class B derivative fair value adjustments,primarily related to the extension of anticip
136、ated litigation resolution timing,of negative$116 million.The first quarter of 2024 included negative$7 million of Visa Class B derivative fair value adjustments.Noninterest ExpenseTable 5:Noninterest Expense Three months endedSix months ended June 30March 31ChangeJune 30June 30ChangeDollars in mill
137、ions20242024$%20242023$%Noninterest expensePersonnel$1,782$1,794$(12)(1)%$3,576$3,672$(96)(3)%Occupancy 236 244 (8)(3)%480 495 (15)(3)%Equipment 356 341 15 4%697 699 (2)Marketing 93 64 29 45%157 183 (26)(14)%Other 890 891 (1)1,781 1,644 137 8%Total noninterest expense$3,357$3,334$23 1%$6,691$6,693$(
138、2)Noninterest expense increased 1%compared to the first quarter of 2024.The modest increase was driven by higher marketing and equipment expenses,partially offset by seasonally lower incentive compensation.Noninterest expense was stable compared to the first six months of 2023 and reflected PNCs con
139、tinued focus on expense management.Other noninterest expense included a$120 million pre-tax expense in the second quarter of 2024 related to a PNC Foundation contribution as well as a$130 million pre-tax expense in the first quarter of 2024 related to the increase in the FDICs expected losses.Effect
140、ive Income Tax RateThe effective income tax rate was 18.8%in both the second and first quarters of 2024,and 18.8%in the first six months of 2024 compared to 16.4%for the same period in 2023.Provision For Credit LossesTable 6:Provision for Credit Losses Three months endedSix months endedJune 30March
141、31ChangeJune 30June 30ChangeDollars in millions20242024$20242023$Provision for(recapture of)credit lossesLoans and leases$204$147$57$351$418$(67)Unfunded lending related commitments 45 9 36 54 (31)85 Investment securities(11)1 (12)(10)(1)(9)Other financial assets(3)(2)(1)(5)(5)Total provision for cr
142、edit losses$235$155$80$390$381$9 The PNC Financial Services Group,Inc.Form 10-Q 9 Provision for credit losses of$235 million in the second quarter of 2024 primarily reflected the impact of portfolio activity.Provision for credit losses of$390 million for the first six months of 2024 reflected the im
143、pact of portfolio activity and improved macroeconomic factors.CONSOLIDATED BALANCE SHEET REVIEWThe summarized balance sheet data in Table 7 is based upon our Consolidated Balance Sheet in Item 1 of this Report.Table 7:Summarized Balance Sheet Data June 30December 31ChangeDollars in millions20242023$
144、%Assets Interest-earning deposits with banks$33,039$43,804$(10,765)(25)%Loans held for sale 988 734 254 35%Investment securities 138,645 132,569 6,076 5%Loans 321,429 321,508 (79)Allowance for loan and lease losses(4,636)(4,791)155 3%Mortgage servicing rights 3,739 3,686 53 1%Goodwill 10,932 10,932
145、Other 52,383 53,138 (755)(1)%Total assets$556,519$561,580$(5,061)(1)%LiabilitiesDeposits$416,391$421,418$(5,027)(1)%Borrowed funds 71,391 72,737 (1,346)(2)%Allowance for unfunded lending related commitments 717 663 54 8%Other 15,339 15,621 (282)(2)%Total liabilities 503,838 510,439 (6,601)(1)%Equity
146、Total shareholders equity 52,642 51,105 1,537 3%Noncontrolling interests 39 36 3 8%Total equity 52,681 51,141 1,540 3%Total liabilities and equity$556,519$561,580$(5,061)(1)%Our balance sheet was well positioned at June 30,2024.In comparison to December 31,2023:Total assets decreased primarily due t
147、o lower balances held with the Federal Reserve Bank,partially offset by higher securities balances.Total liabilities decreased primarily due to lower deposits.Total equity increased due to the benefit of net income and an improvement in AOCI,partially offset by dividends paid and common shares repur
148、chased.The ACL related to loans totaled$5.4 billion and$5.5 billion at June 30,2024 and December 31,2023,respectively.The decrease in the comparison was driven by improved macroeconomic factors as well as portfolio activity.See the following for additional information regarding our ACL related to lo
149、ans:Allowance for Credit Losses in the Credit Risk Management section of this Financial Review,Critical Accounting Estimates and Judgments section of this Financial Review,andNote 3 Loans and Related Allowance for Credit Losses.The following discussion provides additional information about the major
150、 components of our balance sheet.Information regarding our capital and regulatory compliance is included in the Liquidity and Capital Management portion of the Risk Management section in this Financial Review and in Note 19 Regulatory Matters in our 2023 Form 10-K.10 The PNC Financial Services Group
151、,Inc.Form 10-QLoans Table 8:Loans June 30December 31ChangeDollars in millions20242023$%Commercial Commercial and industrial$178,789$177,580$1,209 1%Commercial real estate 35,498 35,436 62 Equipment lease financing 6,555 6,542 13 Total commercial 220,842 219,558 1,284 1%ConsumerResidential real estat
152、e 47,183 47,544 (361)(1)%Home equity 25,917 26,150 (233)(1)%Automobile 14,820 14,860 (40)Credit card 6,849 7,180 (331)(5)%Education 1,732 1,945 (213)(11)%Other consumer 4,086 4,271 (185)(4)%Total consumer 100,587 101,950 (1,363)(1)%Total loans$321,429$321,508$(79)Commercial loans increased primarily
153、 due to new production.Consumer loans declined as paydowns outpaced originations and utilization of loan commitments.For additional information regarding our loan portfolio see the Credit Risk Management portion of the Risk Management section in this Financial Review and Note 3 Loans and Related All
154、owance for Credit Losses.Investment SecuritiesInvestment securities of$138.6 billion at June 30,2024 increased$6.1 billion,or 5%,compared to December 31,2023,due to increased net purchase activity,primarily of U.S.Treasury securities,partially offset by portfolio paydowns and maturities.In the secon
155、d quarter of 2024,we repositioned the investment securities portfolio and sold available for sale securities with a market value of$3.8 billion and a weighted average yield of approximately 1.5%.The sale of these securities resulted in a loss of$497 million.We deployed the sale proceeds into availab
156、le-for-sale securities with a market value of$3.8 billion and a weighted average yield of approximately 5.5%.The level and composition of the investment securities portfolio fluctuates over time based on many factors,including market conditions,loan and deposit growth and balance sheet management ac
157、tivities.We manage our investment securities portfolio to optimize returns,while providing a reliable source of liquidity for our banking and other activities,considering the LCR,NSFR and other internal and external guidelines and constraints.Table 9:Investment Securities(a)June 30,2024December 31,2
158、023Dollars in millionsAmortizedCost(b)FairValueAmortizedCost(b)FairValueU.S.Treasury and government agencies$52,336$50,640$44,125$42,348 Agency residential mortgage-backed 72,099 65,169 73,329 67,925 Non-agency residential mortgage-backed 784 851 844 938 Agency commercial mortgage-backed 2,714 2,544
159、 2,619 2,471 Non-agency commercial mortgage-backed(c)2,013 1,971 2,286 2,217 Asset-backed(d)6,930 6,945 6,982 6,984 Other(e)5,477 5,323 5,952 5,850 Total investment securities(f)$142,353$133,443$136,137$128,733(a)Of our total securities portfolio,97%were rated AAA/AA at both June 30,2024 and Decembe
160、r 31,2023.(b)Amortized cost is presented net of the allowance for investment securities,which totaled$93 million at June 30,2024 and primarily related to non-agency commercial mortgage-backed securities.The comparable amount at December 31,2023 was$92 million.(c)Collateralized primarily by multifami
161、ly housing,office buildings,retail properties,lodging properties and industrial properties.(d)Collateralized primarily by consumer credit products,corporate debt and government guaranteed education loans.(e)Includes state and municipal securities and corporate bonds.(f)Includes available for sale an
162、d held to maturity securities,which are recorded on our balance sheet at fair value and amortized cost,respectively.The PNC Financial Services Group,Inc.Form 10-Q 11 Table 9 presents our investment securities portfolio by amortized cost and fair value.The relationship of fair value to amortized cost
163、 at June 30,2024 primarily reflected the impact of higher interest rates on the valuation of fixed-rate securities.We continually monitor the credit risk in our portfolio and maintain the allowance for investment securities at an appropriate level to absorb expected credit losses on our investment s
164、ecurities portfolio for the remaining contractual term of the securities adjusted for expected prepayments.See Note 2 Investment Securities for additional details regarding the allowance for investment securities.The duration of investment securities was 3.6 years and 4.2 years at June 30,2024 and D
165、ecember 31,2023,respectively.We estimate that at June 30,2024 the effective duration of investment securities was 3.5 years for an immediate 50 basis points parallel increase in interest rates and 3.6 years for an immediate 50 basis points parallel decrease in interest rates.Comparable amounts at De
166、cember 31,2023 for the effective duration of investment securities were 4.1 years and 4.2 years,respectively.Based on expected prepayment speeds,the weighted-average expected maturity of the investment securities portfolio was 5.5 years at both June 30,2024 and December 31,2023.Table 10:Weighted-Ave
167、rage Expected Maturities of Mortgage and Asset-Backed Debt SecuritiesJune 30,2024YearsAgency residential mortgage-backed 7.4 Non-agency residential mortgage-backed 10.5 Agency commercial mortgage-backed 4.8 Non-agency commercial mortgage-backed 0.9 Asset-backed 2.2 Additional information regarding o
168、ur investment securities portfolio is included in Note 2 Investment Securities and Note 11 Fair Value.Funding Sources Table 11:Details of Funding SourcesJune 30December 31ChangeDollars in millions20242023$%Deposits Noninterest-bearing$94,542$101,285$(6,743)(7)%Interest-bearingMoney market 69,119 65,
169、594 3,525 5%Demand 120,207 124,848 (4,641)(4)%Savings 96,618 98,122 (1,504)(2)%Time deposits 35,905 31,569 4,336 14%Total interest-bearing deposits 321,849 320,133 1,716 1%Total deposits 416,391 421,418 (5,027)(1)%Borrowed fundsFederal Home Loan Bank borrowings 35,000 38,000 (3,000)(8)%Senior debt 2
170、9,601 26,836 2,765 10%Subordinated debt 4,078 4,875 (797)(16)%Other 2,712 3,026 (314)(10)%Total borrowed funds 71,391 72,737 (1,346)(2)%Total funding sources$487,782$494,155$(6,373)(1)%Deposits are considered an attractive source of funding due to their stability and relatively low cost to fund.Comp
171、ared to December 31,2023,both deposits and borrowed funds declined.Total deposits decreased reflecting lower consumer and commercial deposits.Noninterest-bearing deposit balances decreased primarily driven by a decline in commercial balances.Interest-bearing deposits increased modestly reflecting hi
172、gher commercial balances,partially offset by lower consumer balances.This shift in deposit composition contributed to an increase in funding costs compared to the first quarter of 2024.Our total brokered deposit balances of$10.5 billion at June 30,2024 decreased compared to$11.0 billion at December
173、31,2023,and were significantly below both our internal and regulatory guidelines and limits.Borrowed funds decreased due to lower FHLB borrowings,partially offset by parent company senior debt issuances.12 The PNC Financial Services Group,Inc.Form 10-QThe level and composition of borrowed funds fluc
174、tuates 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
175、 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 M
176、anagement section in this Financial Review for additional information regarding our liquidity and capital activities.See Note 7 Borrowed Funds in this Report and Note 9 Borrowed Funds in our 2023 Form 10-K for additional information related to our borrowings.See Average Consolidated Balance Sheet an
177、d Net Interest Analysis in the Statistical Information section of this Report for additional information on volume and related funding cost changes.Shareholders EquityTotal shareholders equity was$52.6 billion at June 30,2024,an increase of$1.5 billion compared to December 31,2023,reflecting net inc
178、ome of$2.8 billion and an improvement in AOCI of$0.3 billion,partially offset by dividends paid of$1.4 billion and$0.2 billion of common share repurchases.BUSINESS SEGMENTS REVIEWWe have three reportable business segments:Retail BankingCorporate&Institutional BankingAsset Management GroupTotal busin
179、ess segment financial results differ from total consolidated net income.The impact of these differences is reflected in Other,as shown in Table 79 in Note 14 Segment Reporting.Other includes residual activities that do not meet the criteria for disclosure as a separate reportable business,such as as
180、set and liability management activities including net securities gains or losses,ACL for investment securities,certain trading activities,certain runoff consumer loan portfolios,private equity investments,intercompany eliminations,corporate overhead net of allocations,tax adjustments that are not al
181、located to business segments,exited businesses and the residual impact from FTP operations.Certain amounts included in this Business Segments Review differ from those amounts shown in Note 14,primarily due to the presentation in this Financial Review of business net interest income on a taxable-equi
182、valent basis.See Note 14 Segment Reporting for additional information on our business segments,including a description of each business.The PNC Financial Services Group,Inc.Form 10-Q 13 Retail BankingRetail Bankings core strategy is to build lifelong,primary relationships by creating a sense of fina
183、ncial well-being and ease for our clients.Over time,we seek to deepen those relationships by meeting the broad range of our clients financial needs across savings,liquidity,lending,payments,investment and retirement solutions.We work to deliver these solutions in the most seamless and efficient way
184、possible,meeting our customers where they want to be met-whether in a branch,through digital channels,at an ATM or through our phone-based customer contact centers-while continuously optimizing the cost to sell and service.We believe that,over time,we can grow our customer base,enhance the breadth a
185、nd depth of our client relationships and improve our efficiency through differentiated products and leading digital channels.Table 12:Retail Banking Table(Unaudited)Six months ended June 30 ChangeDollars in millions,except as noted20242023$%Income Statement Net interest income$5,326$4,729$597 13%Non
186、interest income 2,173 1,445 728 50%Total revenue 7,499 6,174 1,325 21%Provision for credit losses 145 224 (79)(35)%Noninterest expense 3,678 3,831 (153)(4)%Pretax earnings 3,676 2,119 1,557 73%Income taxes 857 497 360 72%Noncontrolling interests 19 21 (2)(10)%Earnings$2,800$1,601$1,199 75%Average Ba
187、lance Sheet Loans held for sale$560$578$(18)(3)%LoansConsumer Residential real estate$34,372$35,285$(913)(3)%Home equity 24,404 24,617 (213)(1)%Automobile 14,812 14,962 (150)(1)%Credit card 6,885 6,960 (75)(1)%Education 1,877 2,151 (274)(13)%Other consumer 1,759 1,959 (200)(10)%Total consumer 84,109
188、 85,934 (1,825)(2)%Commercial 12,703 11,574 1,129 10%Total loans$96,812$97,508$(696)(1)%Total assets$114,651$115,103$(452)DepositsNoninterest-bearing$53,424$60,129$(6,705)(11)%Interest-bearing 195,946 199,776 (3,830)(2)%Total deposits$249,370$259,905$(10,535)(4)%Performance Ratios Return on average
189、assets 4.92%2.80%Noninterest income to total revenue 29%23%Efficiency 49%62%Supplemental Noninterest Income InformationAsset management and brokerage$272$254$18 7%Card and cash management$636$668$(32)(5)%Lending and deposit services$360$357$3 1%Residential and commercial mortgage$167$179$(12)(7)%14
190、The PNC Financial Services Group,Inc.Form 10-QAt or for six months ended June 30 ChangeDollars in millions,except as noted20242023$%Residential Mortgage InformationResidential mortgage servicing statistics(in billions,except as noted)(a)Serviced portfolio balance(b)$204$191$13 7%MSR asset value(b)$2
191、.7$2.3$0.4 17%Servicing income:(in millions)Servicing fees,net(c)$149$145$4 3%Mortgage servicing rights valuation,net of economic hedge$(20)$5$(25)*Residential mortgage loan statisticsLoan origination volume(in billions)$3.0$3.8$(0.8)(21)%Loan sale margin percentage 2.21%2.24%Other InformationCredit
192、-related statisticsNonperforming assets(b)$840$981$(141)(14)%Net charge-offs-loans and leases$277$221$56 25%Other statisticsBranches(b)(d)2,247 2,361 (114)(5)%Brokerage account client assets(in billions)(b)(e)$81$75$6 8%*-Not Meaningful(a)Represents mortgage loan servicing balances for third parties
193、 and the related income.(b)As of June 30.(c)Servicing fees net of impact of decrease in MSR value due to passage of time,including the impact from regularly scheduled loan principal payments,prepayments and loans paid off during the period.(d)Reflects all branches excluding standalone mortgage offic
194、es and satellite offices(e.g.,drive-ups,electronic branches and retirement centers)that provide limited products and/or services.(e)Includes cash and money market balances.Retail Banking earnings for the first six months of 2024 increased$1.2 billion compared to the same period in 2023 primarily due
195、 to higher revenue and lower noninterest expense,as well as a lower provision for credit losses.Net interest income increased in the comparison primarily due to wider interest rate spreads on the value of deposits,partially offset by declines in average deposit balances.Noninterest income increased
196、in the comparison,reflecting a gain resulting from PNCs participation in the Visa exchange program,partially offset by lower card and cash management fees.Provision for credit losses for the first six months of 2024 reflected the impact of portfolio activity and improved macroeconomic factors.Nonint
197、erest expense decreased in the comparison,and included lower personnel expense.Retail Banking average total loans remained relatively stable in the first six months of 2024 compared to the same period in 2023.Average consumer loans decreased driven by lower residential real estate as a result of pay
198、downs outpacing new volume,as well as continued declines in education loans from runoff in the government guaranteed portfolio.Average commercial loans increased due to growth in automobile dealer segment balances.Our focus on growing primary customer relationships is at the core of our deposit stra
199、tegy in Retail,which is based on attracting and retaining stable,low-cost deposits as a key funding source for PNC.We have taken a disciplined approach to pricing,focused on retaining relationship-based balances and executing on targeted deposit growth and retention strategies aimed at more rate-sen
200、sitive customers.Our goal with regard to deposits is to optimize balances,economics and long-term customer growth.In the first six months of 2024,average total deposits decreased compared to the same period in 2023,and included the impact of quantitative tightening by the Federal Reserve and increas
201、ed customer spending.Retail Banking continues to enhance the customer experience with refinements to product and service offerings that drive value for consumers and small businesses.As part of our strategic focus on growing customers and meeting their financial needs,we operate and continue to opti
202、mize a coast-to-coast network of retail branches and ATMs,which are complemented by PNCs suite of digital capabilities.In February 2024,PNC announced it would be investing nearly$1.0 billion,through 2028,to open more than 100 new branches in key locations,including Austin,Dallas,Denver,Houston,Miami
203、,and San Antonio,and to renovate more than 1,200 existing locations across the country to enhance the customer experience.The PNC Financial Services Group,Inc.Form 10-Q 15 Corporate&Institutional Banking Corporate&Institutional Bankings strategy is to be the leading relationship-based provider of tr
204、aditional banking products and services to its customers through the economic cycles.We aim to grow our market share and drive higher returns by delivering value-added solutions that help our clients better run their organizations,all while maintaining prudent risk and expense management.We continue
205、 to focus on building client relationships where the risk-return profile is attractive.We are a coast-to-coast franchise and our full suite of commercial products and services is offered nationally.Table 13:Corporate&Institutional Banking Table(Unaudited)Six months ended June 30 ChangeDollars in mil
206、lions,except as noted20242023$%Income Statement Net interest income$3,109$2,795$314 11%Noninterest income 1,830 1,707 123 7%Total revenue 4,939 4,502 437 10%Provision for credit losses 275 181 94 52%Noninterest expense 1,833 1,860 (27)(1)%Pretax earnings 2,831 2,461 370 15%Income taxes 654 575 79 14
207、%Noncontrolling interests 10 10 Earnings$2,167$1,876$291 16%Average Balance Sheet Loans held for sale$181$448$(267)(60)%LoansCommercial Commercial and industrial$163,205$168,110$(4,905)(3)%Commercial real estate 34,430 34,507 (77)Equipment lease financing 6,479 6,408 71 1%Total commercial 204,114 20
208、9,025 (4,911)(2)%Consumer 3 7 (4)(57)%Total loans$204,117$209,032$(4,915)(2)%Total assets$229,151$234,354$(5,203)(2)%DepositsNoninterest-bearing$42,520$55,221$(12,701)(23)%Interest-bearing 98,778 87,956 10,822 12%Total deposits$141,298$143,177$(1,879)(1)%Performance RatiosReturn on average assets 1.
209、91%1.61%Noninterest income to total revenue 37%38%Efficiency 37%41%Other InformationConsolidated revenue from:(a)Treasury Management(b)$1,890$1,563$327 21%Commercial mortgage banking activities:Commercial mortgage loans held for sale(c)$27$40$(13)(33)%Commercial mortgage loan servicing income(d)151
210、83 68 82%Commercial mortgage servicing rights valuation,net of economic hedge 76 45 31 69%Total$254$168$86 51%Commercial mortgage servicing statistics Serviced portfolio balance(in billions)(e)(f)$289$280$9 3%MSR asset value(e)$1,082$1,106$(24)(2)%Average loans by C&IB businessCorporate Banking$116,
211、642$118,424$(1,782)(2)%Real Estate 46,297 47,495 (1,198)(3)%Business Credit 29,291 30,398 (1,107)(4)%Commercial Banking 7,536 8,327 (791)(9)%Other 4,351 4,388 (37)(1)%Total average loans$204,117$209,032$(4,915)(2)%Credit-related statisticsNonperforming assets(e)$1,528$738$790*Net charge-offs-loans a
212、nd leases$237$178$59 33%*-Not Meaningful 16 The PNC Financial Services Group,Inc.Form 10-Q(a)See the additional revenue discussion regarding treasury management and commercial mortgage banking activities in the Product Revenue section of this Corporate&Institutional Banking section.(b)Amounts are re
213、ported in net interest income and noninterest income.(c)Represents commercial mortgage banking income for valuations on commercial mortgage loans held for sale and related commitments,derivative valuations,origination fees,gains on sale of loans held for sale and net interest income on loans held fo
214、r sale.(d)Represents net interest income and noninterest income from loan servicing,net of reduction in commercial mortgage servicing rights due to time and payoffs.Commercial mortgage servicing rights valuation,net of economic hedge is shown separately.(e)As of June 30.(f)Represents balances relate
215、d to capitalized servicing.Corporate&Institutional Banking earnings in the first six months of 2024 increased$291 million compared to the same period in 2023 driven by higher revenue and a decline in noninterest expense,partially offset by a higher provision for credit losses.Net interest income inc
216、reased in the comparison primarily due to wider interest rate spreads on the value of deposits,partially offset by narrower interest rate spreads on the value of loans and lower average loan and deposit balances.Noninterest income increased in the comparison and included higher capital markets and a
217、dvisory fees and growth in treasury management product revenue.Provision for credit losses for the first six months of 2024 reflected the impact of portfolio activity and improved macroeconomic factors.Noninterest expense decreased in the comparison,reflecting a continued focus on expense management
218、.Average loans decreased compared with the six months ended June 30,2023:Corporate Banking provides lending,equipment finance,treasury management and capital markets products and services tomid-sized and large corporations,and government and not-for-profit entities.Average loans for this business de
219、creased driven by lower average utilization of loan commitments and paydowns outpacing new production,partially offset by the acquisition of capital commitment facilities from Signature Bridge Bank in the fourth quarter of 2023.Real Estate provides banking,financing and servicing solutions for comme
220、rcial real estate clients across the country.Average loans for this business declined largely due to paydowns outpacing new production,partially offset by a higher average utilization of loan commitments.Business Credit provides asset-based lending and equipment financing solutions.The loan and leas
221、e portfolio is mainly secured by business assets.Average loans for this business declined,reflecting a lower average utilization of loan commitments.Commercial Banking provides lending,treasury management and capital markets related products and services to smaller corporations and businesses.Averag
222、e loans for this business declined driven by paydowns outpacing new production and a lower average utilization of loan commitments.The deposit strategy of Corporate&Institutional Banking is to remain disciplined on pricing and focused on growing and retaining relationship-based balances over time,ex
223、ecuting on customer and segment-specific deposit growth strategies and continuing to provide funding and liquidity to PNC.Average total deposits were relatively stable compared to the six months ended June 30,2023.We continue to actively monitor the interest rate environment and make adjustments to
224、our deposit strategy in response to evolving market conditions,bank funding needs and client relationship dynamics.Product RevenueIn addition to credit and deposit products for commercial customers,Corporate&Institutional Banking offers other services,including treasury management,capital markets an
225、d advisory products and services and commercial mortgage banking activities,for customers of all business segments.On a consolidated basis,the revenue from these other services is included in net interest income and noninterest income,as appropriate.From a business perspective,the majority of the re
226、venue and expense related to these services is reflected in the Corporate&Institutional Banking segment results,and the remainder is reflected in the results of other businesses where the customer relationships exist.The Other Information section in Table 13 includes the consolidated revenue to PNC
227、for treasury management and commercial mortgage banking services.A discussion of the consolidated revenue from these services follows.The Treasury Management business provides corporations with cash and investment management services,receivables and disbursement management services,funds transfer se
228、rvices and access to online/mobile information management and reporting services.Treasury management revenue is reported in noninterest income and net interest income.Noninterest income includes treasury management product revenue less earnings credits provided to customers on compensating deposit b
229、alances used to pay for products and services.Net interest income includes funding credit from all treasury management customer deposit balances.Compared to the first six months of 2023,treasury management revenue increased due to wider interest rate spreads on the value of deposits and higher produ
230、ct revenue.The PNC Financial Services Group,Inc.Form 10-Q 17 Commercial mortgage banking activities include revenue derived from commercial mortgage servicing(both net interest income andnoninterest income),revenue derived from commercial mortgage loans held for sale and hedges related to those acti
231、vities.Totalrevenue from commercial mortgage banking activities increased in the comparison primarily due to higher commercial mortgage loan servicing income and a higher benefit from commercial mortgage servicing rights valuation,net of hedge,partially offset by lower revenue from commercial mortga
232、ge loans held for sale.Capital markets and advisory includes services and activities primarily related to merger and acquisition advisory,equity capital markets advisory,asset-backed financing,loan syndication,securities underwriting and customer-related trading.The increase in capital markets and a
233、dvisory fees in the comparison was mostly driven by higher merger and acquisition advisory fees,underwriting fees and loan syndication fees,partially offset by lower customer-related interest rate derivative trading revenue.18 The PNC Financial Services Group,Inc.Form 10-QAsset Management GroupThe A
234、sset Management Group strives to be a leading relationship-based provider of investment,planning,credit and cash management solutions and fiduciary services to affluent individuals and institutions by endeavoring to proactively deliver value-added ideas and solutions,and exceptional service.The Asse
235、t Management Groups priorities are to serve our clients financial objectives,grow and deepen customer relationships and deliver solid financial performance with prudent risk and expense management.Table 14:Asset Management Group Table(Unaudited)Six months ended June 30 ChangeDollars in millions,exce
236、pt as noted20242023$%Income StatementNet interest income$320$252$68 27%Noninterest income 465 458 7 2%Total revenue 785 710 75 11%Provision for(recapture of)credit losses(3)(1)(2)*Noninterest expense 526 560 (34)(6)%Pretax earnings 262 151 111 74%Income taxes 62 36 26 72%Earnings$200$115$85 74%Avera
237、ge Balance SheetLoansConsumer Residential real estate$11,855$9,517$2,338 25%Other consumer 3,747 4,110 (363)(9)%Total consumer 15,602 13,627 1,975 14%Commercial 832 1,237 (405)(33)%Total loans$16,434$14,864$1,570 11%Total assets$16,873$15,282$1,591 10%DepositsNoninterest-bearing$1,632$1,817$(185)(10
238、)%Interest-bearing 26,655 25,907 748 3%Total deposits$28,287$27,724$563 2%Performance RatiosReturn on average assets 2.39%1.52%Noninterest income to total revenue 59%65%Efficiency 67%79%Supplemental Noninterest Income InformationAsset management fees$456$446$10 2%Brokerage fees 4 (4)(100)%Total$456$
239、450$6 1%Other Information(a)Nonperforming assets$51$41$10 24%Net charge-offs(recoveries)-loans and leases$(2)$2*Client Assets Under Administration(in billions)(a)(b)Discretionary client assets under managementPNC Private Bank$123$111$12 11%Institutional Asset Management 73 65 8 12%Total discretionar
240、y clients assets under management 196 176$20 11%Nondiscretionary client assets under administration 208 168 40 24%Total$404$344$60 17%*-Not Meaningful(a)As of June 30.(b)Excludes brokerage account client assets.The Asset Management Group consists of two primary businesses:PNC Private Bank and Instit
241、utional Asset Management.The PNC Private Bank is focused on being a premier private bank in each of the markets it serves.This business seeks to deliver high quality banking,trust and investment management services to our emerging affluent,high net worth and ultra-high net worth clients through a br
242、oad array of products and services.The PNC Financial Services Group,Inc.Form 10-Q 19 Institutional Asset Management provides outsourced chief investment officer,custody,cash and fixed income client solutions,and retirement plan fiduciary investment services to institutional clients,including corpora
243、tions,healthcare systems,insurance companies,municipalities and non-profits.Asset Management Group earnings in the first six months of 2024 increased$85 million compared to the same period in 2023,primarily driven by higher net interest income and a decline in noninterest expense.Net interest income
244、 increased in the comparison primarily due to wider interest rate spreads on the value of deposits and an increase in average loan and deposit balances,partially offset by narrower interest rate spreads on the value of loans.Noninterest income increased in the comparison primarily driven by higher a
245、verage equity markets,partially offset by the impact of client activity.Noninterest expense decreased in the comparison,reflecting a continued focus on expense management.Average loans increased compared with the six months ended June 30,2023,primarily driven by growth in residential mortgage loans.
246、Average deposits increased in the comparison reflecting growth in CD and deposit sweep balances,partially offset by declines in savings and interest bearing deposits.Discretionary client assets under management increased in comparison to the prior year,primarily due to higher equity markets as of Ju
247、ne 30,2024.RISK MANAGEMENTThe Risk Management section included in Item 7 of our 2023 Form 10-K describes our enterprise risk management framework,including risk culture,enterprise strategy,risk governance and oversight framework,risk identification,risk assessments,risk controls and monitoring,and r
248、isk aggregation and reporting.Additionally,our 2023 Form 10-K provides an analysis of the firms Capital Management and our key areas of risk,which include,but are not limited to,Credit,Market,Liquidity and Operational(including Compliance and Information Security).Credit Risk ManagementCredit risk,i
249、ncluding our credit risk management processes,is described in further detail in the Credit Risk Management section of our 2023 Form 10-K.The following provides additional information around our loan portfolio,which is our most significant concentration of credit risk.Loan Portfolio Characteristics a
250、nd AnalysisTable 15:Details of LoansIn billions$178.8$35.5$6.6$47.2$25.9$14.8$6.8$1.7$4.1$177.6$35.4$6.5$47.5$26.2$14.9$7.2$1.9$4.3June 30,2024$321.4 billionDecember 31,2023$321.5 billionCommercial and IndustrialCommercial Real Estate EquipmentLease FinancingResidential Real EstateHome EquityAutomob
251、ileCredit CardEducation Other Consumer20 The PNC Financial Services Group,Inc.Form 10-QWe use several credit quality indicators,as further detailed in Note 3 Loans and Related Allowance for Credit Losses,to monitor and measure our exposure to credit risk within our loan portfolio.The following provi
252、des additional information about the significant loan classes that comprise our Commercial and Consumer portfolio segments.CommercialCommercial and IndustrialCommercial and industrial loans comprised 56%and 55%of our total loan portfolio at June 30,2024 and December 31,2023,respectively.The majority
253、 of our commercial and industrial loans are secured by collateral that provides a secondary source of repayment should a borrower experience cash generation difficulties.Examples of this collateral include short-term assets,such as accounts receivable,inventory and securities,and long-lived assets,s
254、uch as equipment,owner-occupied real estate and other business assets.We actively manage our commercial and industrial loans to assess any changes(both positive and negative)in the level of credit risk at both the borrower and portfolio level.To evaluate the level of credit risk,we assign internal r
255、isk ratings reflecting our estimates of the borrowers PD and LGD for each related credit facility.This two-dimensional credit risk rating methodology provides granularity in the risk monitoring process and is updated on an ongoing basis through our credit risk management processes.In addition to mon
256、itoring the level of credit risk,we also monitor concentrations of credit risk pertaining to both specific industries and geographies that may exist in our portfolio.Our commercial and industrial portfolio is well-diversified across industries as shown in the following table(based on the North Ameri
257、can Industry Classification System).Table 16:Commercial and Industrial Loans by IndustryJune 30,2024December 31,2023Dollars in millionsAmount%of TotalAmount%of TotalCommercial and industrialRetail/wholesale trade$30,128 17%$28,198 16%Manufacturing 29,544 17 28,989 16 Financial services 27,986 16 28,
258、422 16 Service providers 21,948 12 21,354 12 Real estate related(a)15,198 9 16,235 9 Technology,media&telecommunications 9,621 5 10,249 6 Health care 9,527 5 9,808 6 Transportation and warehousing 8,036 4 7,733 4 Other industries 26,801 15 26,592 15 Total commercial and industrial loans$178,789 100%
259、$177,580 100%(a)Represents loans to customers in the real estate and construction industries.Owner occupied commercial real estate loans totaled$9.5 billion at June 30,2024 and are included in commercial and industrial loans as the credit decisioning for servicing these loans is based on the financi
260、al conditions of the owner;not the ability of the collateral to generate income.Owner occupied commercial real estate loans are well-diversified across industries.The comparable amount of owner occupied commercial real estate loans at December 31,2023 was$9.6 billion.Commercial Real EstateCommercial
261、 real estate loans of$35.5 billion as of June 30,2024 comprised$20.2 billion related to commercial mortgages on income-producing properties,$9.2 billion of intermediate-term financing loans and$6.1 billion of real estate construction project loans.At December 31,2023,comparable amounts were$35.4 bil
262、lion,$21.0 billion,$8.0 billion and$6.4 billion,respectively.Commercial real estate primarily consists of an investment in land and/or buildings held to generate income,that income serves as the primary source for the repayment of the loan.However,for all commercial real estate assets,the dispositio
263、n of the assigned collateral serves as a secondary source of repayment for the loan should the borrower experience cash generation difficulties.We monitor credit risk associated with our commercial real estate loans similar to commercial and industrial loans by analyzing PD and LGD.Additionally,risk
264、s associated with commercial real estate loans tend to be correlated to the loan structure,collateral location and quality,project progress and business environment.These attributes are also monitored and utilized in assessing credit risk.The portfolio is geographically diverse due to the nature of
265、our business involving clients throughout the U.S.The PNC Financial Services Group,Inc.Form 10-Q 21 The following table presents our commercial real estate loans by geography and property type:Table 17:Commercial Real Estate Loans by Geography and Property Type June 30,2024December 31,2023Dollars in
266、 millionsAmount%of TotalAmount%of TotalGeography(a)California$5,909 17%$6,133 17%Texas 3,935 11 3,733 11 Florida 3,895 11 3,738 11 Virginia 1,622 5 1,590 4 Pennsylvania 1,447 4 1,515 4 Arizona 1,390 4 1,216 3 Maryland 1,246 4 1,344 4 North Carolina 1,164 3 1,142 3 Colorado 1,149 3 1,182 3 Illinois 1
267、,146 3 1,201 3 Other 12,595 35 12,642 37 Total commercial real estate loans$35,498 100%$35,436 100%Property Type(a)Multifamily$16,453 46%$15,590 44%Office 7,498 21 8,019 23 Industrial/warehouse 4,110 12 4,089 12 Retail 2,238 6 2,490 7 Seniors housing 1,862 5 1,772 5 Hotel/motel 1,709 5 1,760 5 Mixed
268、 use 387 1 388 1 Other 1,241 4 1,328 3 Total commercial real estate loans$35,498 100%$35,436 100%(a)Presented in descending order based on loan balances at June 30,2024.Commercial Real Estate:Office PortfolioGiven the foundational change in office demand driven by the acceptance of remote work,real
269、estate performance related to the office sector continues to be an area of uncertainty.At June 30,2024,our outstanding loan balances in the office portfolio totaled$7.5 billion,or 2.3%of total loans,while additional unfunded loan commitments totaled$0.3 billion.The portfolio is well diversified geog
270、raphically across our coast-to-coast franchise.Within the office portfolio at June 30,2024,criticized loans totaled 29.3%and nonperforming loans totaled 11.0%,while delinquencies were 0.1%.As measured at origination,the weighted average LTV for the office portfolio was 59%;however,updated appraisals
271、 have increased the weighted average LTV to 69%as of June 30,2024.While LTV is one consideration,our risk assessment considers a number of factors in assessing the changing conditions affecting the portfolio.As of June 30,2024,we have established reserves of 10.3%against office loans.The greatest st
272、ress in our office portfolio is observed in multi-tenant office loans,which represents 55%of the portfolio at June 30,2024.Within the multi-tenant classification,criticized levels were 51.9%while nonperforming loans totaled 19.7%,accounting for almost all of the nonperforming office population.The w
273、eighted average LTV for multi-tenant is 76%at June 30,2024.Additionally,commercial real estate charge-offs since the beginning of 2023 have primarily been multi-tenant office loans.Given the higher level of stress,this segment has a proportionally higher reserve rate of 15.5%.The remaining 45%of the
274、 office portfolio is primarily comprised of single-tenant,medical and government tenant properties.This subset of the portfolio is performing considerably better,with approximately 1%of the book in the criticized and nonperforming loan categories.As of June 30,2024,the weighted average LTV of this b
275、ook is 60%.Portfolio management efforts remain an elevated area of focus for the office portfolio,with internal risk ratings completed for each asset quarterly,accelerated reappraisal requirements and elevated approval levels for any credit action.Refreshed appraisals have updated valuations on near
276、ly all of the criticized office exposure since the beginning of 2023.Additionally,active management efforts include ongoing performance assessments as well as the review of property,lending and capital markets.Portfolio updates are distributed to senior management weekly.Given the ongoing change in
277、this area,we expect additional stress in the office sector,and a portion of this stress will bear itself out as we work through maturities that will approximate 41%through June 30,2025.Upon maturity,and where the balance is not paid in full,an extension may be granted because contractual extension t
278、erms are met;alternatively,an extension may be granted based on 22 The PNC Financial Services Group,Inc.Form 10-Qnegotiated terms,and a portion of these extensions may involve the curtailment or charge off of principal.We continue to actively manage the portfolio,and we believe reserve levels adequa
279、tely reflect the expected credit losses in the portfolio.Commercial Real Estate:Multifamily PortfolioAs of June 30,2024,our outstanding loan balances in the multifamily portfolio totaled$16.5 billion,or 5.1%of total loans,while additional unfunded loan commitments totaled$3.1 billion.Although inflat
280、ionary pressures and higher interest rates have impacted internal risk assessments and regulatory classification in this portfolio,we have not seen a notable change in loan performance at this time with regards to nonperformance,delinquency or charge-offs.We continue to closely monitor our exposure
281、in this sector.ConsumerResidential Real Estate Residential real estate loans primarily consisted of residential mortgage loans at both June 30,2024 and December 31,2023.We obtain loan attributes at origination,including FICO scores and LTVs,and we update these and other credit metrics at least quart
282、erly.We track borrower performance monthly.We also segment the mortgage portfolio into pools based on product type(e.g.,nonconforming or conforming).This information is used for internal reporting and risk management.As part of our overall risk analysis and monitoring,we also segment the portfolio b
283、ased upon loan delinquency,nonperforming status,modification and bankruptcy status,FICO scores,LTV and geographic concentrations.The following table presents certain key statistics related to our residential real estate portfolio:Table 18:Residential Real Estate Loan StatisticsJune 30,2024December 3
284、1,2023Dollars in millionsAmount%of TotalAmount%of TotalGeography(a)California$20,068 43%$19,911 42%Texas 3,883 8 4,009 8 Washington 3,496 7 3,467 7 Florida 3,261 7 3,356 7 New Jersey 1,890 4 1,909 4 New York 1,515 3 1,551 3 Arizona 1,388 3 1,431 3 Pennsylvania 1,208 3 1,229 3 Colorado 1,161 2 1,187
285、2 North Carolina 976 2 989 2 Other 8,337 18 8,505 19 Total residential real estate loans$47,183 100%$47,544 100%June 30,2024December 31,2023Weighted-average loan origination statistics(b)Loan origination FICO score771772LTV of loan originations 73%73%(a)Presented in descending order based on loan ba
286、lances at June 30,2024.(b)Weighted-averages calculated for the twelve months ended June 30,2024 and December 31,2023,respectively.We originate residential mortgage loans nationwide through our national mortgage business as well as within our branch network.Residential mortgage loans underwritten to
287、agency standards,including conforming loan amount limits,are typically sold with servicing retained by us.We also originate nonconforming residential mortgage loans that do not meet agency standards,which we retain on our balance sheet.Our portfolio of originated nonconforming residential mortgage l
288、oans totaled$42.3 billion at June 30,2024,with 46%located in California.Comparable amounts at December 31,2023 were$42.4 billion and 45%,respectively.Home EquityHome equity loans of$25.9 billion as of June 30,2024 were comprised of$20.8 billion of home equity lines of credit and$5.1 billion of close
289、d-end home equity installment loans.At December 31,2023,comparable amounts were$26.2 billion,$20.6 billion and$5.6 billion,respectively.Home equity lines of credit are a variable interest rate product with fixed rate conversion options available to certain borrowers.Similar to residential real estat
290、e loans,we track borrower performance of this portfolio on a monthly basis.We also segment the population into pools based on product type(e.g.,home equity loans,legacy brokered home equity loans,home equity lines of credit The PNC Financial Services Group,Inc.Form 10-Q 23 or legacy brokered home eq
291、uity lines of credit)and track the historical performance of any related mortgage loans regardless of whether we hold such liens.This information is used for internal reporting and risk management.As part of our overall risk analysis and monitoring,we also segment the portfolio based upon loan delin
292、quency,nonperforming status,modification and bankruptcy status,FICO scores,LTV,lien position and geographic concentration.The credit performance of the majority of the home equity portfolio where we hold the first lien position is superior to the portion of the portfolio where we hold the second lie
293、n position but do not hold the first lien.Lien position information is generally determined at the time of origination and monitored on an ongoing basis for risk management purposes.We use a third-party service provider to obtain updated loan information,including lien and collateral data that is ag
294、gregated from public and private sources.The following table presents certain key statistics related to our home equity portfolio:Table 19:Home Equity Loan StatisticsJune 30,2024December 31,2023Dollars in millionsAmount%of TotalAmount%of TotalGeography(a)Pennsylvania$4,601 18%$4,745 18%New Jersey 3,
295、150 12 3,184 12 Florida 2,223 9 2,230 9 Ohio 2,180 8 2,242 9 California 1,669 6 1,580 6 Texas 1,255 5 1,230 5 Maryland 1,216 5 1,237 5 Michigan 1,182 5 1,214 5 Illinois 1,036 4 1,069 4 North Carolina 1,002 4 1,001 4 Other 6,403 24 6,418 23 Total home equity loans$25,917 100%$26,150 100%Lien type1st
296、lien 51%52%2nd lien 49 48 Total 100%100%June 30,2024December 31,2023Weighted-average loan origination statistics(b)Loan origination FICO score772772LTV of loan originations 62%64%(a)Presented in descending order based on loan balances at June 30,2024.(b)Weighted-averages calculated for the twelve mo
297、nths ended June 30,2024 and December 31,2023,respectively.AutomobileAuto loans of$14.8 billion as of June 30,2024 comprised$13.8 billion in the indirect auto portfolio and$1.0 billion in the direct auto portfolio as of June 30,2024.At December 31,2023,comparable amounts were$14.9 billion,$13.8 billi
298、on and$1.1 billion,respectively.The indirect auto portfolio consists of loans originated primarily through independent franchised dealers,including dealers located in our newer markets.This business is strategically aligned with our core retail banking business.The following table presents certain k
299、ey statistics related to our indirect and direct auto portfolios:Table 20:Auto Loan Statistics June 30,2024December 31,2023Weighted-average loan origination FICO score(a)(b)Indirect auto790788Direct auto786787Weighted-average term of loan originations-in months(a)Indirect auto7273Direct auto6565(a)W
300、eighted-averages calculated for the twelve months ended June 30,2024 and December 31,2023,respectively.(b)Calculated using the auto enhanced FICO scale.24 The PNC Financial Services Group,Inc.Form 10-QWe continue to focus on borrowers with strong credit profiles as evidenced by the weighted-average
301、loan origination FICO scores noted in Table 20.We offer both new and used auto financing to customers through our various channels.At June 30,2024,the portfolio balance was composed of 43%new vehicle loans and 57%used vehicle loans.Comparable amounts at December 31,2023 were 45%and 55%,respectively.
302、The auto loan portfolios performance is measured monthly,including both updated collateral values and FICO scores that are obtained at least quarterly.For internal reporting and risk management,we analyze the portfolio by product channel and product type and regularly evaluate default and delinquenc
303、y experience.As part of our overall risk analysis and monitoring,we segment the portfolio by geography,channel,collateral attributes and credit metrics which include FICO score,LTV and term.Nonperforming Assets and Loan DelinquenciesNonperforming AssetsNonperforming assets include nonperforming loan
304、s and leases,OREO and foreclosed assets.Nonperforming loans are those loans accounted for at amortized cost whose credit quality has deteriorated to the extent full collection of contractual principal and interest is not probable.Loans held for sale,certain government insured or guaranteed loans and
305、 loans accounted for under the fair value option are excluded from nonperforming loans.See Note 1 Accounting Policies in our 2023 Form 10-K for details on our nonaccrual policies.The following table presents a summary of nonperforming assets by major category:Table 21:Nonperforming Assets by Type Ju
306、ne 30,2024December 31,2023ChangeDollars in millions$%Nonperforming loans Commercial$1,646$1,307$339 26%Consumer(a)857 873 (16)(2)%Total nonperforming loans 2,503 2,180 323 15%OREO and foreclosed assets 34 36 (2)(6)%Total nonperforming assets$2,537$2,216$321 14%Nonperforming loans to total loans 0.78
307、%0.68%Nonperforming assets to total loans,OREO and foreclosed assets 0.79%0.69%Nonperforming assets to total assets 0.46%0.39%Allowance for loan and lease losses to nonperforming loans 185%220%Allowance for credit losses to nonperforming loans(b)214%250%(a)Excludes most unsecured consumer loans and
308、lines of credit,which are charged off after 120 to 180 days past due and are not placed on nonperforming status.(b)Calculated excluding allowances for investment securities and other financial assets.Increases in nonperforming assets from December 31,2023 were primarily driven by higher commercial r
309、eal estate nonperforming loans.The following table provides details on the change in nonperforming assets for the six months ended June 30,2024 and 2023:Table 22:Change in Nonperforming Assets In millions20242023January 1$2,216$2,019 New nonperforming assets 1,187 862 Charge-offs and valuation adjus
310、tments(311)(257)Principal activity,including paydowns and payoffs(389)(469)Asset sales and transfers to loans held for sale(32)(58)Returned to performing status(134)(148)June 30$2,537$1,949 As of June 30,2024,approximately 97%of total nonperforming loans were secured by collateral.The PNC Financial
311、Services Group,Inc.Form 10-Q 25 Loan DelinquenciesWe regularly monitor the level of loan delinquencies and believe these levels are a key indicator of credit quality in our loan portfolio.Measurement of delinquency status is based on the contractual terms of each loan.Loans that are 30 days or more
312、past due are considered delinquent.Loan delinquencies include government insured or guaranteed loans,loans accounted for under the fair value option and PCD loans.Amounts exclude loans held for sale.We manage credit risk based on the risk profile of the borrower,repayment sources,underlying collater
313、al,and other support given current events,economic conditions and expectations.We refine our practices to meet the changing environment,such as inflation levels,industry specific risks,interest rate levels,the level of consumer savings and deposit balances,and structural and secular changes such as
314、those arising from the pandemic.To mitigate losses and enhance customer support,we offer loan modifications and collection programs to assist our customers.The following table presents a summary of accruing loans past due by delinquency status:Table 23:Accruing Loans Past Due(a)Amount%of Total Loans
315、 Outstanding June 30,2024December 31,2023ChangeJune 30,2024December 31,2023Dollars in millions$%Early stage loan delinquencies Accruing loans past due 30 to 59 days$645$685$(40)(6)%0.20%0.21%Accruing loans past due 60 to 89 days 259 270 (11)(4)%0.08%0.08%Total early stage loan delinquencies 904 955
316、(51)(5)%0.28%0.30%Late stage loan delinquenciesAccruing loans past due 90 days or more 368 429 (61)(14)%0.11%0.13%Total accruing loans past due$1,272$1,384$(112)(8)%0.40%0.43%(a)Past due loan amounts include government insured or guaranteed loans of$0.3 billion at June 30,2024 and$0.4 billion at Dec
317、ember 31,2023.Accruing loans past due 90 days or more continue to accrue interest because they are(i)well secured by collateral and are in the process of collection,(ii)managed in homogeneous portfolios with specified charge-off timeframes adhering to regulatory guidelines,or(iii)certain government
318、insured or guaranteed loans.As such,they are excluded from nonperforming loans.Loan ModificationsWe provide relief to our customers experiencing financial hardships through a variety of solutions.Commercial loan and lease modifications are based on each individual borrowers situation,while consumer
319、loan modifications are evaluated under our hardship relief programs.For additional information on our commercial real estate,office-related modification offerings,see the Commercial Real Estate portion of the Credit Risk Management section of this Financial Review.See Note 3 Loans and Related Allowa
320、nce for Credit Losses for additional information on loan modifications to borrowers experiencing financial difficulty.Allowance for Credit Losses Our determination of the ACL is based on historical loss and performance experience,current economic conditions,the reasonable and supportable forecasts o
321、f future economic conditions and other relevant factors,including current borrower and/or transaction characteristics and assessments of the remaining estimated contractual term as of the balance sheet date.We maintain the ACL at an appropriate level for expected losses on our existing investment se
322、curities,loans,equipment finance leases,other financial assets and unfunded lending related commitments.See Note 1 Accounting Policies and the Credit Risk Management section in our 2023 Form 10-K for additional discussion of our ACL,including details of our methodologies.See also the Critical Accoun
323、ting Estimates and Judgments section of this Report for further discussion of the assumptions used in the determination of the ACL as of June 30,2024.26 The PNC Financial Services Group,Inc.Form 10-QThe following table summarizes our ACL related to loans:Table 24:Allowance for Credit Losses by Loan
324、Class(a)June 30,2024December 31,2023Dollars in millionsAllowance AmountTotal Loans%of Total LoansAllowance AmountTotal Loans%of Total LoansAllowance for loans and lease lossesCommercialCommercial and industrial$1,728$178,789 0.97%$1,806$177,580 1.02%Commercial real estate 1,441 35,498 4.06%1,371 35,
325、436 3.87%Equipment lease financing 74 6,555 1.13%82 6,542 1.25%Total commercial 3,243 220,842 1.47%3,259 219,558 1.48%ConsumerResidential real estate 48 47,183 0.10%61 47,544 0.13%Home equity 260 25,917 1.00%276 26,150 1.06%Automobile 163 14,820 1.10%173 14,860 1.16%Credit card 698 6,849 10.19%766 7
326、,180 10.67%Education 52 1,732 3.00%56 1,945 2.88%Other consumer 172 4,086 4.21%200 4,271 4.68%Total consumer 1,393 100,587 1.38%1,532 101,950 1.50%Total 4,636$321,429 1.44%4,791$321,508 1.49%Allowance for unfunded lending related commitments 717 663 Allowance for credit losses$5,353$5,454 Allowance
327、for credit losses to total loans 1.67%1.70%Commercial 1.73%1.73%Consumer 1.52%1.62%(a)Excludes allowances for investment securities and other financial assets,which together totaled$112 million and$120 million at June 30,2024 and December 31,2023,respectively.The PNC Financial Services Group,Inc.For
328、m 10-Q 27 The following table summarizes our loan charge-offs and recoveries:Table 25:Loan Charge-Offs and RecoveriesSix months ended June 30GrossCharge-offsRecoveriesNet Charge-offs/(Recoveries)%of AverageLoans(Annualized)Dollars in millions2024Commercial Commercial and industrial$161$58$103 0.12%C
329、ommercial real estate 169 9 160 0.91%Equipment lease financing 16 8 8 0.25%Total commercial 346 75 271 0.25%ConsumerResidential real estate 2 6 (4)(0.02)%Home equity 19 21 (2)(0.02)%Automobile 64 49 15 0.20%Credit card 182 27 155 4.52%Education 9 3 6 0.64%Other consumer 83 19 64 3.09%Total consumer
330、359 125 234 0.47%Total$705$200$505 0.32%2023Commercial Commercial and industrial$149$53$96 0.11%Commercial real estate 99 2 97 0.54%Equipment lease financing 7 6 1 0.03%Total commercial 255 61 194 0.17%ConsumerResidential real estate 5 7 (2)(0.01)%Home equity 11 24 (13)(0.10)%Automobile 61 51 10 0.1
331、3%Credit card 154 22 132 3.82%Education 9 4 5 0.47%Other consumer 80 17 63 2.65%Total consumer 320 125 195 0.39%Total$575$186$389 0.24%Total net charge-offs increased$116 million,or 30%,for the first six months of 2024 compared to the same period in 2023.The increase in the comparison was primarily
332、attributable to higher commercial real estate and credit card net charge-offs.See Note 1 Accounting Policies in our 2023 Form 10-K and Note 3 Loans and Related Allowance for Credit Losses of this Report for additional information.Liquidity and Capital ManagementOur liquidity risk framework and relat
333、ed monitoring measures and tools,including internal liquidity stress testing as well as compliance with internal and regulatory limits and guidelines,are described in further detail in the Liquidity and Capital Management section of our 2023 Form 10-K.One of the ways we monitor our liquidity is by reference to the LCR,a regulatory minimum liquidity requirement designed to ensure that covered banki
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