Leases

12 Months Ended

Dec. 31, 2023

Leases [Abstract]

Leases

LEASES

PNC enters into both lessor and lessee arrangements. For more information on lease accounting, see Note 1 Accounting Policies. For additional details on our equipment lease financing receivables, see Note 3 Loans and Related Allowance for Credit Losses.

Lessor Arrangements

PNC’s lessor arrangements primarily consist of direct financing, sales-type and operating leases for equipment. Lease agreements may include options to renew and for the lessee to purchase the leased equipment at the end of the lease term.

The following table provides details on our income from lessor arrangements:

Table 59: Lessor Income

Year ended December 31
In millions	2023		2022		2021
Sales-type and direct financing leases (a)	$	300	$	243	$	243
Operating leases (b)	46		63		75
Lease income	$	346	$	306	$	318

(a)Included in Loans interest income on the Consolidated Income Statement.

(b)Included in Lending and deposit services on the Consolidated Income Statement.

The following table provides the components of our equipment lease financing assets:

Table 60: Sales-Type and Direct Financing Leases

In millions	December 31, 2023		December 31, 2022
Lease receivables	$	5,986	$	5,853
Unguaranteed residual asset values (a)	1,440		1,422
Unearned income	(884)		(761)
Equipment lease financing	$	6,542	$	6,514

(a)In certain cases, PNC obtains third-party residual value insurance to reduce its residual risk. The carrying value of residual assets with third-party residual value insurance for at least a portion of the asset value was $0.6 billion and $0.4 billion at December 31, 2023 and 2022, respectively.

Operating lease assets were $0.4 billion and accumulated depreciation was $0.2 billion at December 31, 2023 compared to operating lease assets of $0.8 billion and accumulated depreciation of $0.2 billion at December 31, 2022. We had no lease transactions with related parties or deferred selling profits at December 31, 2023 and 2022.

The future minimum lessor receivable arrangements at December 31, 2023 were as follows:

Table 61: Future Minimum Lessor Receivable Arrangements

In millions	Operating Leases		Sales-type and Direct Financing Leases
2024	$	17	$	1,655
2025	16		1,174
2026	15		907
2027	10		863
2028	2		491
2029 and thereafter			896
Total future minimum lease receivable arrangements	$	60	$	5,986

Lessee Arrangements

We lease retail branches, datacenters, office space, land and equipment under operating and finance leases. Our leases have remaining lease terms of 1 year to 44 years, some of which may include options to renew the leases for up to 99 years, and some of which may include options to terminate the leases prior to the end date of the lease term. Certain leases also include options to purchase the leased asset. The exercise of lease renewal, termination and purchase options is at our sole discretion.

Certain of our lease agreements include rental payments based on a percentage of revenue and others include rental payments if certain bank deposit levels are met. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Subleases to third parties were not material at December 31, 2023 and 2022.

Tables 62 and 63 provide details on our operating leases:

Table 62: Operating Lease Costs and Cash Flows

Year ended December 31
In millions	2023		2022		2021
Operating lease cost (a)	$	386	$	395	$	386
Operating cash flows	$	440	$	434	$	400

(a)Included in Occupancy, Equipment and Marketing expense on the Consolidated Income Statement.

Table 63: Operating Lease Assets and Liabilities

In millions	December 31, 2023		December 31, 2022
Operating lease assets (a)	$	1,745	$	1,857
Operating lease liabilities (b)	$	1,998	$	2,160

(a)Included in Other assets on the Consolidated Balance Sheet.

(b)Included in Accrued expenses and other liabilities on the Consolidated Balance Sheet.

Finance lease assets and liabilities, income, expense and cash flows at December 31, 2023 and 2022 were not material.

Operating lease term and discount rates of our lessee arrangements at December 31, 2023 and 2022 were as follows:

Table 64: Operating Lease Term and Discount Rates of Lessee Arrangements

	December 31, 2023		December 31, 2022
Weighted-average remaining lease term (years)	7		7
Weighted-average discount rate	2.49	%	2.24	%

The future lease payments based on maturity for our lessee liability arrangements at December 31, 2023 are as follows:

Table 65: Future Lease Payments for Operating Lease Liability Arrangements

In millions	December 31, 2023
2024	$	405
2025	378
2026	333
2027	288
2028	230
2029 and thereafter	553
Total future lease payments	$	2,187
Less: Interest	189
Present value of operating lease liability arrangements	$	1,998

Leases

LEASES

PNC enters into both lessor and lessee arrangements. For more information on lease accounting, see Note 1 Accounting Policies. For additional details on our equipment lease financing receivables, see Note 3 Loans and Related Allowance for Credit Losses.

Lessor Arrangements

PNC’s lessor arrangements primarily consist of direct financing, sales-type and operating leases for equipment. Lease agreements may include options to renew and for the lessee to purchase the leased equipment at the end of the lease term.

The following table provides details on our income from lessor arrangements:

Table 59: Lessor Income

Year ended December 31
In millions	2023		2022		2021
Sales-type and direct financing leases (a)	$	300	$	243	$	243
Operating leases (b)	46		63		75
Lease income	$	346	$	306	$	318

(a)Included in Loans interest income on the Consolidated Income Statement.

(b)Included in Lending and deposit services on the Consolidated Income Statement.

The following table provides the components of our equipment lease financing assets:

Table 60: Sales-Type and Direct Financing Leases

In millions	December 31, 2023		December 31, 2022
Lease receivables	$	5,986	$	5,853
Unguaranteed residual asset values (a)	1,440		1,422
Unearned income	(884)		(761)
Equipment lease financing	$	6,542	$	6,514

(a)In certain cases, PNC obtains third-party residual value insurance to reduce its residual risk. The carrying value of residual assets with third-party residual value insurance for at least a portion of the asset value was $0.6 billion and $0.4 billion at December 31, 2023 and 2022, respectively.

Operating lease assets were $0.4 billion and accumulated depreciation was $0.2 billion at December 31, 2023 compared to operating lease assets of $0.8 billion and accumulated depreciation of $0.2 billion at December 31, 2022. We had no lease transactions with related parties or deferred selling profits at December 31, 2023 and 2022.

The future minimum lessor receivable arrangements at December 31, 2023 were as follows:

Table 61: Future Minimum Lessor Receivable Arrangements

In millions	Operating Leases		Sales-type and Direct Financing Leases
2024	$	17	$	1,655
2025	16		1,174
2026	15		907
2027	10		863
2028	2		491
2029 and thereafter			896
Total future minimum lease receivable arrangements	$	60	$	5,986

Lessee Arrangements

We lease retail branches, datacenters, office space, land and equipment under operating and finance leases. Our leases have remaining lease terms of 1 year to 44 years, some of which may include options to renew the leases for up to 99 years, and some of which may include options to terminate the leases prior to the end date of the lease term. Certain leases also include options to purchase the leased asset. The exercise of lease renewal, termination and purchase options is at our sole discretion.

Certain of our lease agreements include rental payments based on a percentage of revenue and others include rental payments if certain bank deposit levels are met. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Subleases to third parties were not material at December 31, 2023 and 2022.

Tables 62 and 63 provide details on our operating leases:

Table 62: Operating Lease Costs and Cash Flows

Year ended December 31
In millions	2023		2022		2021
Operating lease cost (a)	$	386	$	395	$	386
Operating cash flows	$	440	$	434	$	400

(a)Included in Occupancy, Equipment and Marketing expense on the Consolidated Income Statement.

Table 63: Operating Lease Assets and Liabilities

In millions	December 31, 2023		December 31, 2022
Operating lease assets (a)	$	1,745	$	1,857
Operating lease liabilities (b)	$	1,998	$	2,160

(a)Included in Other assets on the Consolidated Balance Sheet.

(b)Included in Accrued expenses and other liabilities on the Consolidated Balance Sheet.

Finance lease assets and liabilities, income, expense and cash flows at December 31, 2023 and 2022 were not material.

Operating lease term and discount rates of our lessee arrangements at December 31, 2023 and 2022 were as follows:

Table 64: Operating Lease Term and Discount Rates of Lessee Arrangements

	December 31, 2023		December 31, 2022
Weighted-average remaining lease term (years)	7		7
Weighted-average discount rate	2.49	%	2.24	%

The future lease payments based on maturity for our lessee liability arrangements at December 31, 2023 are as follows:

Table 65: Future Lease Payments for Operating Lease Liability Arrangements

In millions	December 31, 2023
2024	$	405
2025	378
2026	333
2027	288
2028	230
2029 and thereafter	553
Total future lease payments	$	2,187
Less: Interest	189
Present value of operating lease liability arrangements	$	1,998