PNC Financial Services Group, Inc. Files 2023 Annual Report on Form 10-K

Ticker: PNC · Form: 10-K · Filed: 2024-02-21T00:00:00.000Z

Sentiment: neutral

Topics: PNC, 10-K, Financial Services, Annual Report, Banking

TL;DR

<b>PNC Financial Services Group, Inc. has filed its annual report for the fiscal year ended December 31, 2023.</b>

AI Summary

PNC FINANCIAL SERVICES GROUP, INC. (PNC) filed a Annual Report (10-K) with the SEC on February 21, 2024. PNC Financial Services Group, Inc. filed its 2023 Form 10-K on February 21, 2024. The filing covers the fiscal year ending December 31, 2023. PNC operates within the National Commercial Banks industry (SIC 6021). The company's principal executive offices are located at The Tower at PNC Plaza, 300 Fifth Avenue, Pittsburgh, PA. The filing includes data for fiscal years 2021, 2022, and 2023.

Why It Matters

For investors and stakeholders tracking PNC FINANCIAL SERVICES GROUP, INC., this filing contains several important signals. This 10-K filing provides a comprehensive overview of PNC's financial performance, strategic initiatives, and risk factors for the fiscal year 2023, offering insights into its operational health and future outlook. Investors and analysts can use this report to assess PNC's financial stability, profitability, and competitive positioning within the national commercial banking sector, informing investment decisions.

Risk Assessment

Risk Level: medium — PNC FINANCIAL SERVICES GROUP, INC. shows moderate risk based on this filing. The company operates in the highly regulated financial services industry, facing risks related to economic downturns, interest rate fluctuations, and competition, as detailed in its 10-K filing.

Analyst Insight

Review the detailed financial statements and risk factors in the 10-K to understand PNC's performance drivers and potential challenges for 2024.

Key Numbers

Key Players & Entities

FAQ

When did PNC FINANCIAL SERVICES GROUP, INC. file this 10-K?

PNC FINANCIAL SERVICES GROUP, INC. filed this Annual Report (10-K) with the SEC on February 21, 2024.

What is a 10-K filing?

A 10-K is a comprehensive annual financial report required by the SEC, covering audited financials, business operations, risk factors, and management discussion. This particular 10-K was filed by PNC FINANCIAL SERVICES GROUP, INC. (PNC).

Where can I read the original 10-K filing from PNC FINANCIAL SERVICES GROUP, INC.?

You can access the original filing directly on the SEC's EDGAR system. The filing is publicly available and includes all exhibits and attachments submitted by PNC FINANCIAL SERVICES GROUP, INC..

What are the key takeaways from PNC FINANCIAL SERVICES GROUP, INC.'s 10-K?

PNC FINANCIAL SERVICES GROUP, INC. filed this 10-K on February 21, 2024. Key takeaways: PNC Financial Services Group, Inc. filed its 2023 Form 10-K on February 21, 2024.. The filing covers the fiscal year ending December 31, 2023.. PNC operates within the National Commercial Banks industry (SIC 6021)..

Is PNC FINANCIAL SERVICES GROUP, INC. a risky investment based on this filing?

Based on this 10-K, PNC FINANCIAL SERVICES GROUP, INC. presents a moderate-risk profile. The company operates in the highly regulated financial services industry, facing risks related to economic downturns, interest rate fluctuations, and competition, as detailed in its 10-K filing.

What should investors do after reading PNC FINANCIAL SERVICES GROUP, INC.'s 10-K?

Review the detailed financial statements and risk factors in the 10-K to understand PNC's performance drivers and potential challenges for 2024. The overall sentiment from this filing is neutral.

How does PNC FINANCIAL SERVICES GROUP, INC. compare to its industry peers?

PNC operates as a national commercial bank, a sector characterized by significant regulatory oversight, interest rate sensitivity, and competitive pressures from other large financial institutions.

Are there regulatory concerns for PNC FINANCIAL SERVICES GROUP, INC.?

As a national commercial bank, PNC is subject to extensive regulation by federal and state authorities, including the Federal Reserve and the OCC, governing its capital adequacy, risk management, and consumer protection practices.

Industry Context

PNC operates as a national commercial bank, a sector characterized by significant regulatory oversight, interest rate sensitivity, and competitive pressures from other large financial institutions.

Regulatory Implications

As a national commercial bank, PNC is subject to extensive regulation by federal and state authorities, including the Federal Reserve and the OCC, governing its capital adequacy, risk management, and consumer protection practices.

What Investors Should Do

  1. Analyze the consolidated financial statements for the fiscal years ended December 31, 2023, 2022, and 2021.
  2. Review the 'Risk Factors' section to understand potential challenges and uncertainties facing PNC.
  3. Examine management's discussion and analysis of financial condition and results of operations for insights into business performance and strategy.

Key Dates

Year-Over-Year Comparison

This filing is the 2023 annual report, providing updated financial and operational data compared to previous filings.

Filing Stats: 4,441 words · 18 min read · ~15 pages · Grade level 19.4 · Accepted 2024-02-21 16:33:59

Key Financial Figures

Filing Documents

Business

Item 1 Business 1

Risk Factors

Item 1A Risk Factors 16

Unresolved Staff Comments

Item 1B Unresolved Staff Comments 31

Cybersecurity

Item 1C Cybersecurity 31

Properties

Item 2 Properties 33

Legal Proceedings

Item 3 Legal Proceedings 33

Mine Safety Disclosures

Item 4 Mine Safety Disclosures 33 Information about our Executive Officers 33 PART II

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Item 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 35 Common Stock Performance Graph 36

Reserved

Item 6 Reserved 37

Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)

Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) 37 Executive Summary 37 Consolidated Income Statement Review 42 Consolidated Balance Sheet Review 45 Business Segments Review 48 Risk Management 54 Critical Accounting Estimates and Judgments 77 Cautionary Statement Regarding Forward-Looking Information 81

Quantitative and Qualitative Disclosures about Market Risk

Item 7A Quantitative and Qualitative Disclosures about Market Risk 82

Financial Statements and Supplementary Data

Item 8 Financial Statements and Supplementary Data 82 Report of Independent Registered Public Accounting Firm 83 Consolidated Income Statement 85 Consolidated Statement of Comprehensive Income 86 Consolidated Balance Sheet 87 Consolidated Statement of Changes in Equity 88 Consolidated Statement of Cash Flows 89

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 91 Note 1 Accounting Policies 91 Note 2 Investment Securities 108 Note 3 Loans and Related Allowance for Credit Losses 111 Note 4 Loan Sale and Servicing Activities and Variable Interest Entities 124 T HE PNC F INANCIAL S ERVICES G ROUP , I NC . Cross-Reference Index to 2023 Form 10-K (continued) TABLE OF CONTENTS (Continued) Page

Financial Statements and Supplementary Data. (continued)

Item 8 Financial Statements and Supplementary Data. (continued) Note 5 Goodwill and Mortgage Servicing Rights 127 Note 6 Leases 130 Note 7 Premises, Equipment and Leasehold Improvements 131 Note 8 Time Deposits 132 Note 9 Borrowed Funds 132 Note 1 0 Commitments 134 Note 1 1 Equity 135 Note 1 2 Other Comprehensive Income 138 Note 1 3 Earnings Per Share 139 Note 1 4 Fair Value 139 Note 1 5 Financial Derivatives 152 Note 1 6 Employee Benefit Plans 158 Note 1 7 Stock Based Compensation Plans 164 Note 1 8 Income Taxes 165 Note 19 Regulatory Matters 167 Note 2 0 Legal Proceedings 168 Note 2 1 Parent Company 172 Note 2 2 Segment Reporting 173 Note 2 3 Fee-based Revenue from Contracts with Customers 175 Note 24 Subsequent Events 179 Statistical Information (Unaudited) 180 Glossary 184 Defined Terms 184 Acronyms 188

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 188

Controls and Procedures

Item 9A Controls and Procedures 188

Other Information

Item 9B Other Information 189 PART III

Directors, Executive Officers and Corporate Governance

Item 10 Directors, Executive Officers and Corporate Governance 189

Executive Compensation

Item 11 Executive Compensation 189

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 190

Certain Relationships and Related Transactions, and Director Independence

Item 13 Certain Relationships and Related Transactions, and Director Independence 190

Principal Accounting Fees and Services

Item 14 Principal Accounting Fees and Services 190 PART IV

Exhibits, Financial Statement Schedules

Item 15 Exhibits, Financial Statement Schedules 191

Form 10-K Summary

Item 16 Form 10-K Summary 196

SIGNATURES

SIGNATURES 197 T HE PNC F INANCIAL S ERVICES G ROUP , I NC . Cross-Reference Index to 2023 Form 10-K (continued) MD&A TABLE REFERENCE Table Description Page 1 Summary of Operations, Per Common Share Data and Performance Ratios 39 2 Balance Sheet Highlights and Other Selected Ratios 39 3 Summarized Average Balances and Net Interest Income 42 4 Noninterest Income 43 5 Noninterest Expense 44 6 Provision for (Recapture of) Credit Losses 44 7 Summarized Balance Sheet Data 45 8 Loans 46 9 Investment Securities 46 10 Weighted-Average Expected Maturities of Mortgage and Asset-Backed Debt Securities 47 11 Details of Funding Sources 47 12 Retail Banking Table 49 13 Corporate & Institutional Banking Table 52 14 Asset Management Group Table 53 15 Details of Loans 58 16 Commercial and Industrial Loans by Industry 59 17 Commercial Real Estate Loans by Geography and Property Type 60 18 Residential Real Estate Statistics 61 19 Home Equity Loan Statistics 62 20 Auto Loan Statistics 62 21 Nonperforming Assets by Type 63 22 Change in Nonperforming Assets 63 23 Accruing Loans Past Due 64 24 Allowance for Credit Losses by Loan Class 66 25 Loan Charge-Offs and Recoveries 67 26 Senior and Subordinated Debt 68 27 Primary Contingent Liquidity Sources 69 28 Parent Company Notes Issued 70 29 Credit Ratings for PNC and PNC Bank 71 30 Basel III Capital 72 31 Net Interest Income Sensitivity Analysis 73 32 Economic Value of Equity Sensitivity Analysis 74 33 Equity Investments Summary 75 34 Key Macroeconomic Variables in CECL Weighted-Average Scenarios 78 T HE PNC F INANCIAL S ERVICES G ROUP , I NC . Cross-Reference Index to 2023 Form 10-K (continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TABLE REFERENCE

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TABLE REFERENCE Table Description Page 35 Investment Securities Summary 108 36 Gross Unrealized Loss and Fair Value of Securities Available for Sale Without an Allowance for Credit Losses 109 37 Gains (Losses) on Sales of Securities Available for Sale 109 38 Contractual Maturity of Debt Securities 110 39 Fair Value of Securities Pledged and Accepted as Collateral 110 40 Analysis of Loan Portfolio 112 41 Nonperforming Assets 113 42 Commercial Credit Quality Indicators 115 43 Credit Quality Indicators for Residential Real Estate and Home Equity Loan Classes 117 44 Credit Quality Indicators for Automobile, Credit Card, Education and Other Consumer Loan Classes 119 45 Loan Modifications Granted to Borrowers Experiencing Financial Difficulty 121 46 Financial Effect of FDMs 121 47 Delinquency Status of FDMs 122 48 Subsequently Defaulted FDMs 122 49 Financial Impact and TDRs by Concession Type 123 50 Rollforward of Allowance for Credit Losses 123 51 Cash Flows Associated with Loan Sale and Servicing Activities 125 52 Principal Balance, Delinquent Loans and Net Charge-offs Related to Serviced Loans For Others 125 53 Non-Consolidated VIEs 126 54 Goodwill by Business Segment 127 55 Commercial Mortgage Servicing Rights 128 56 Residential Mortgage Servicing Rights 128 57 Commercial Mortgage Servicing Rights – Key Valuation Assumptions 129 58 Residential Mortgage Servicing Rights – Key Valuation Assumptions 129 59 Lessor Income 130 60 Sales-Type and Direct Financing Leases 130 61 Future Minimum Lessor Receivable Arrangements 130 62 Operating Lease Costs and Cash Flows 131 63 Operating Lease Assets and Liabilities 131 64 Operating Lease Term and Discount Rates of Lessee Arrangements 131 65 Future Lease Payments for Operating Lease Liability Arrangements 131 66 Premises, Equipment and Leasehold Improvements 131 67 Depreciation and Amortizat

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TABLE REFERENCE (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TABLE REFERENCE (Continued) Table Description Page 74 Dividends Per Share 137 75 Other Comprehensive Income (Loss) 138 76 Accumulated Other Comprehensive Income (Loss) Components 138 77 Basic and Diluted Earnings Per Common Share 139 78 Fair Value Measurements – Recurring Basis Summary 143 79 Reconciliation of Level 3 Assets and Liabilities 144 80 Fair Value Measurements – Recurring Quantitative Information 146 81 Fair Value Measurements – Nonrecurring 148 82 Fair Value Option – Fair Value and Principal Balances 149 83 Fair Value Option – Changes in Fair Value 149 84 Additional Fair Value Information Related to Other Financial Instruments 151 85 Total Gross Derivatives 152 86 Gains (Losses) Recognized on Fair Value and Cash Flow Hedges in the Consolidated Income Statement 154 87 Hedged Items - Fair Value Hedges 154 88 Risk Participation Agreements 155 89 Gains (Losses) on Derivatives Not Designated for Hedging 156 90 Derivative Assets and Liabilities Offsetting 157 91 Credit-Risk Contingent Features 158 92 Reconciliation of Changes in Projected Benefit Obligation and Change in Plan Assets 159 93 Asset Strategy Allocations 160 94 Pension Plan Valuation Methodologies 161 95 Pension Plan Assets - Fair Value Hierarchy 161 96 Estimated Cash Flows 162 97 Components of Net Periodic Benefit Cost 162 98 Net Periodic Costs - Assumptions 163 99 Other Pension Assumptions 163 100 Nonvested Performance Share Unit Awards and Restricted Share Unit Awards - Rollforward 164 101 Components of Income Tax Expense 165 102 Deferred Tax Assets and Liabilities 165 103 Reconciliation of Statutory and Effective Tax Rates 165 104 Net Operating Loss Carryforwards 166 105 Change in Unrecognized Tax Benefits 166 106 IRS Tax Examination Status 166 107 Basel Regulatory Capital 167 108 Parent Company - Income Statement 172 109 Parent Company - Balanc

– BUSINESS

ITEM 1 – BUSINESS Business Overview Headquartered 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 and 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. At December 31, 2023, our consolidated total assets, total deposits and total shareholders' equity were $561.6 billion, $421.4 billion and $51.1 billion, respectively. We were incorporated under the laws of the Commonwealth of Pennsylvania in 1983 with the consolidation of Pittsburgh National Corporation and Provident National Corporation. Since 1983, we have diversified our geographical presence, business mix and product capabilities through organic growth, strategic bank and non-bank acquisitions and equity investments, and the formation of various non-banking subsidiaries. We offer a broad range of deposit, credit and fee-based products and services to serve our customers. See Note 22 Segment Reporting for additional details regarding our products and services. Acquisition of BBVA USA Bancshares, Inc. On June 1, 2021, PNC acquired BBVA USA Bancshares, Inc. (BBVA), a U.S. financial holding company conducting its business operations primarily through its U.S. banking subsidiary, BBVA USA. PNC paid $11.5 billion in cash as consideration for the acquisition. On October 8, 2021, BBVA USA merged into PNC Bank. On October 12, 2021, PNC converted approximately 2.6 million customers, 9,000 employees and over 600 branches across seven states. Our results of operations and balance sheets for all periods presented in this Report reflect the benefit of BBVA's acquired businesses for the period since the acquisition closed on June 1, 2021. Presentation of Noninterest Income Effective for the fi

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