About The PNC Financial Services Group
The PNC Financial Services Group, Inc. (PNC) operates as a diversified financial institution in the U.S. The company has businesses engaged in retail banking, including residential mortgage, corporate and institutional banking and asset management, providing many of the company’s products and services nationally. The company’s retail branch network is located coast-to-coast. The company also has strategic international offices in four countries outside the U.S. The company offers a broad range of deposit, credit and fee-based products and services to serve the company’s customers. The company’s bank subsidiary is PNC Bank, a national bank chartered in Wilmington, Delaware. Business Segments The company has three reportable business segments: Retail Banking, Corporate & Institutional Banking, and Asset Management Group. Retail Banking Retail Banking’s core strategy is to build lifelong, primary relationships by creating a sense of financial well-being and ease for the company’s clients. Over time, the company seeks to deepen those relationships by meeting the broad range of the company’s clients’ financial needs across savings, liquidity, lending, payments, investment and retirement solutions. The company works to deliver these solutions in the most seamless and efficient way possible, meeting the company’s customers where they want to be met - whether in a branch, through digital channels, an ATM or through the company’s phone-based customer contact centers - while continuously optimizing the cost to sell and service. The company can grow its customer base, enhance the breadth and depth of the company’s client relationships and improve its efficiency through differentiated products and leading digital channels. The company’s focus on growing primary customer relationships is at the core of the company’s deposit strategy in Retail, which is based on attracting and retaining stable, low-cost deposits as a key funding source for PNC. As part of the company’s strategic focus on growing customers and meeting their financial needs, the company operates and continues to optimize a coast-to-coast network of retail branches, solution centers and ATMs, which are complemented by PNC’s suite of digital capabilities. In February 2024, PNC announced it would invest, through 2028, to open new branches in key locations, including Austin, Dallas, Denver, Houston, Miami, and San Antonio; and to renovate some existing locations across the country to enhance the customer experience. Retail Banking continues to enhance the customer experience with refinements to product and service offerings that drive value for consumers and small businesses. Corporate & Institutional Banking Corporate & Institutional Banking’s strategy is to be the leading relationship-based provider of traditional banking products and services to its customers through the economic cycles. The company intends to grow its market share and drive higher returns by delivering value-added solutions that help the company’s clients better run their organizations. The company continues to focus on building client relationships where the risk-return profile is attractive. The company is a coast-to-coast franchise and its full suite of commercial products and services are offered nationally. The deposit strategy of Corporate & Institutional Banking is focused on growing and retaining relationship-based balances over time, executing on customer and segment-specific deposit growth strategies and continuing to provide funding and liquidity to PNC. The company continues to actively monitor the interest rate environment and make adjustments to the company’s deposit strategy in response to evolving market conditions, bank funding needs and client relationship dynamics. Product Revenue In addition to credit and deposit products for commercial customers, Corporate & Institutional Banking offers other services, including treasury management, capital markets and 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 revenue 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 Treasury Management business provides corporations with cash and investment management services, receivables and disbursement management services, funds transfer services, international payment services 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 balances used to pay for products and services. Commercial mortgage banking activities include revenue derived from commercial mortgage servicing (both net interest income and noninterest income), revenue derived from commercial mortgage loans held for sale and hedges related to those activities. 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 decrease in capital markets and advisory fees in the comparison was mostly driven by lower merger and acquisition advisory fees and a decline in syndication fees, partially offset by higher customer-related trading revenue for derivatives, foreign exchange and fixed income. Asset Management Group The Asset 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, solutions and exceptional service. The Asset Management Group’s priorities are to serve the company’s clients’ financial objectives, grow and deepen customer relationships and deliver solid financial performance with prudent risk and expense management. The Asset Management Group consists of two primary businesses: PNC Private Bank and Institutional 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 the company’s emerging affluent, high net worth and ultra-high net worth clients through a broad array of products and services. 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 corporations, healthcare systems, insurance companies, municipalities and non-profits. Loan Portfolio Commercial Commercial and Industrial The majority of the company’s 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, such as equipment, owner-occupied real estate and other business assets. The company actively manages its 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. Commercial Real Estate 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. Consumer Residential Real Estate Residential real estate loans primarily consist of residential mortgage loans. The company originates residential mortgage loans nationwide through its national mortgage business, as well as within the company’s branch network. Residential mortgage loans underwritten to agency standards, including conforming loan amount limits, are typically sold with servicing retained by the company. The company also originates nonconforming residential mortgage loans that do not meet agency standards. Home Equity Home equity loans include home equity lines of credit and closed-end home equity installment loans. Home equity lines of credit are a variable interest rate product with fixed rate conversion options available to certain borrowers. Automobile Auto loans include indirect auto portfolio and direct auto portfolio. The indirect auto portfolio consists of loans originated primarily through independent franchised dealers, including dealers located in the company’s new expansion markets. This business is strategically aligned with the company’s core retail banking business. The company offers both new and used auto financing to customers through its various channels. Investment Securities As of December 31, 2023, the company’s investment securities were U.S. Treasury and government agencies; residential mortgage-backed securities (agency and non-agency); commercial mortgage-backed securities (agency and non-agency); asset-backed securities; and other debt securities. Deposits As of December 31, 2023, the company’s deposits were noninterest-bearing deposits; and interest-bearing deposits, such as money market, demand, savings, and time deposits. Supervision and Regulation PNC is a BHC registered under the BHC Act and a financial holding company under the GLB Act. PNC primarily conducts its business through its domestic bank subsidiary, PNC Bank, a national banking association chartered and located in Wilmington, Delaware. In addition, the company is subject to comprehensive supervision and examination by many regulatory bodies, including the Federal Reserve and the OCC. The CFPB is responsible for examining the company for compliance with most federal consumer financial protection laws, including the laws relating to fair lending and prohibiting unfair, deceptive or abusive acts or practices in connection with the offer, sale or provision of consumer financial products or services, and for enforcing such laws with respect to PNC Bank and its affiliates. The company is also subject to regulation by the SEC by virtue of its status as a public company and by the SEC and the CFTC due to the nature of some of the company’s businesses. The company’s businesses with operations outside the U.S. are also subject to regulation by appropriate authorities in the foreign jurisdictions in which they do business. As a regulated financial services firm, the company’s relationships and good standing with regulators are of fundamental importance to the operation and growth of the company’s businesses. The Federal Reserve, OCC, CFPB, SEC, CFTC and other domestic and foreign regulators have broad enforcement powers, and certain of the regulators have the power to approve, deny, or refuse to act upon the company’s applications or notices to conduct new activities, acquire or divest businesses, assets or deposits, expand the company’s operations geographically or reconfigure existing operations. PNC and PNC Bank are subject to the regulatory capital requirements established by the Federal Reserve and the OCC, respectively. PNC Bank has filed a financial subsidiary certification with the OCC and engages in insurance agency activities through financial subsidiaries. As of December 31, 2023, PNC Bank had a rating of ‘Outstanding’ with respect to CRA. Sections 23A and 23B of the Federal Reserve Act and the Federal Reserve’s implementing regulation, Regulation W, place quantitative and qualitative restrictions on covered transactions between a bank and its affiliates (for example between PNC Bank, on the one hand, and PNC and its non-bank subsidiaries, on the other hand). PNC Bank is insured by the FDIC and subject to deposit premium assessments. BHCs that have $100 billion or more in assets, such as PNC, are required under section 165(d) of the Dodd-Frank Act and its implementing regulations to periodically submit to the Federal Reserve and the FDIC a resolution plan (including a public summary) that includes, among other things, an analysis of how the company could be resolved in a rapid and orderly fashion if the company was to fail or experience material financial distress. The CFPB examines PNC and PNC Bank for compliance with a broad range of federal consumer financial laws and regulations, including the laws and regulations that relate to deposit products, credit card, mortgage, automobile, student and other consumer loans, and other consumer financial products and services that the company offers. The consumer financial protection laws that are subject to the CFPB’s supervision and enforcement powers include, among others, the Truth in Lending Act, Truth in Savings Act, Home Mortgage Disclosure Act, Fair Credit Reporting Act, Electronic Funds Transfer Act, Real Estate Settlement Procedures Act, Fair Debt Collections Practices Act, Equal Credit Opportunity Act and Fair Housing Act. PNC, as a public company, is subject to the Exchange Act’s reporting requirements and related regulations and must file certain reports with the SEC on an ongoing basis. The company’s registered broker-dealers and investment adviser subsidiaries are subject to the Exchange Act, and the Investment Advisers Act of 1940, respectively, and related rules and regulations promulgated by the SEC. FINRA is the primary self-regulatory organization for the company’s registered broker-dealer subsidiaries. The company’s broker-dealer and investment adviser subsidiaries also are subject to additional regulation by states or local jurisdictions. PNC Bank is registered as a swap dealer with the CFTC. PNC Bank’s derivatives and foreign exchange businesses are subject to the regulations and requirements imposed on CFTC-registered swap dealers, and the CFTC (and for certain delegated responsibilities, the National Futures Association) has a meaningful supervisory role with respect to PNC Bank’s derivatives and foreign exchange businesses. In addition to regulations issued by the federal banking, securities and derivatives regulators, the company is subject to regulations issued by other federal agencies with respect to certain financial products and services the company offers. For example, certain of the company’s fiduciary, brokerage and investment management activities are subject to regulations issued by the Department of Labor under ERISA and related provisions of the Internal Revenue Code. History The PNC Financial Services Group, Inc. was founded in 1852. The company was incorporated under the laws of the Commonwealth of Pennsylvania in 1983.
