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PNC
Earnings call · Jun 2026 (Q2 FY26)

PNC FINANCIAL SERVICES GROUP Q2 FY26 earnings call PNC

Jul 15, 2026 Source

Executive summary

PNC Q2 FY26 — Strong Loan Growth and Fee Income Drive Impressive Results

PNC delivered a strong second quarter, driven by robust commercial loan growth, a favorable deposit mix, and broad-based fee income expansion. The company achieved positive operating leverage and improved its efficiency ratio, while credit quality remained strong. Management highlighted successful integration of FirstBank and continued investment in technology, positioning the bank for sustained long-term growth despite anticipated moderation in loan growth and fee income in the third quarter.

Highlights

5

  • Net income grew by $412 million, resulting in EPS growth of 25% year-over-year.

  • Adjusted diluted EPS reached $4.85, reflecting strong underlying performance.

  • Net interest income increased by $146 million or 4% linked-quarter.

  • Fee income grew by $200 million or 10% linked-quarter, with capital markets and advisory revenue up 25%.

  • Positive operating leverage of 3% was achieved, and the efficiency ratio improved.

Concerns

4

  • Third quarter fee income is expected to be down 5% to 5.5% linked-quarter, primarily due to pull-forward of capital markets activity.

  • The company incurred $127 million of integration costs related to the FirstBank acquisition.

  • A $139 million loss was recognized from the repositioning of $4 billion of available-for-sale securities.

  • Underestimated branch traffic and customer confusion related to digital awareness during the FirstBank integration.

Guidance & targets

CategoryTargetConfidence
Full-year 2026 average loan growth
approximately 12.5%
high materiality
High
Full-year 2026 net interest income growth
up 15% to 15.5%
high materiality
High
Full-year 2026 noninterest income growth
up approximately 9%
medium materiality
High
Full-year 2026 total revenue growth
up approximately 13%
high materiality
High
Full-year 2026 noninterest expense growth
up approximately 8.5%
medium materiality
High
Full-year 2026 effective tax rate
approximately 19.5%
low materiality
High
Q3 FY26 average loans growth
up 1% to 2%
medium materiality
High
Q3 FY26 net interest income growth
up between 3% and 3.5%
high materiality
High
Q3 FY26 fee income growth
down 5% to 5.5%
medium materiality
High
Q3 FY26 other noninterest income
$150 million to $200 million
low materiality
High
Q3 FY26 adjusted noninterest expense decline
2% to 3%
medium materiality
High
Q3 FY26 integration expenses
approximately $50 million
low materiality
High
Q3 FY26 net charge-offs
approximately $225 million
medium materiality
High
Net interest margin (NIM) trajectory
above 3%
high materiality
High
Return on tangible common equity (ROTCE) exit rate
18% annualized
high materiality
High

PNC operating KPIs by quarter

PNC operating KPIs stated on its earnings calls, by fiscal quarter
KPI Dec 2024 Q4 FY24 Mar 2025 Q1 FY25This call Jun 2026 Q2 FY26Change vs prior quarter
Common equity tier 1 ratio (CET1)
10.5% We remain well capitalized with an estimated CET1 ratio of 10.5% as of December 31. Source transcript
10.6% We remain well capitalized with an estimated CET1 ratio of 10.6% as of March 31. Source transcript
9.9% And we remain well capitalized with an estimated CET1 ratio of 9.9%. Source transcript
-0.7 pt
Net interest margin
2.75% Net interest income grew by $113 million or 3%, and our net interest margin was 2.75%, an increase of 11 basis points. Source transcript
2.78% And our net interest margin was 2.78%, an increase of 3 basis points. Source transcript
2.96% Our net interest margin was 2.96%, an increase of 1 basis point. Source transcript
+0.2 pt

Operating figures the company states on every call, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

ProductTypeDetails
New mobile banking platformlaunch

Deals & partnerships

FirstBank Integration of acquired bank

Successfully completed the conversion and integration of FirstBank. The process proved the company's ability to handle large acquisitions without slowing down other technology deployments. Challenges included underestimating the digital awareness of FirstBank customers.

Visa Participation in Visa exchange program

PNC participated in the Visa exchange program, monetizing half of its Visa Class B-2 shares and recording a fair value adjustment on its remaining Class B-3 shares.

Risks & headwinds

Loan growth moderation H2 FY26

Expected to moderate to roughly GDP growth rates in H2 FY26

Mitigation:Expect deposits to grow through H2 FY26 to fund loans; flexibility with wholesale debt.

Third quarter fee income decline Q3 FY26

Expected to be down 5% to 5.5% linked-quarter

Mitigation:Primarily due to pull-forward of capital markets activity into Q2; other fee categories expected to be flattish to up.

Increased deposit costs H2 FY26

Rate paid on interest-bearing deposits expected to drift back up to Q1 levels

Mitigation:Driven by back book repricing and strategic deposit actions; not expected to be dramatic due to strong retail franchise.

Digital awareness gap in acquisitions Q2 FY26 (observed)

Underestimated lack of digital awareness among FirstBank customers, causing unexpected branch traffic and confusion

Mitigation:Will improve future integration strategies based on this learning.

What to watch in Q3 FY26

Average loans growth

Q3 FY26
Current up 4% linked-quarter (Q2 FY26)
Target up 1% to 2% (Q3 FY26)

Why it matters

Verifying if loan growth moderates as guided, indicating broader economic trends and PNC's ability to fund it.

We expect average loans to be up 1% to 2%.

Q&A highlights

Can you elaborate on the cadence of loan and deposit growth during the quarter and your funding plans for continued loan growth?

Loan growth was strong in H1 but is expected to moderate to GDP levels in H2. Deposits are projected to grow in H2, replacing some wholesale debt. Noninterest-bearing deposits exceeded expectations due to commercial treasury management and escrow, and are expected to remain steady at 23% of total deposits.

“So noninterest-bearing, to your second question first, noninterest-bearing deposits were higher than we expected. All of that -- virtually all of that was on the commercial side, related to our treasury management business and some escrow monies that come through.”

asked by John McDonald · answered by Robert Reilly

2 min read 6 chapters

Detailed narrative

Strong Business Momentum and Client Acquisition

PNC reported strong business momentum, winning new clients and deepening existing relationships. DDA growth continued at a healthy pace, while client acquisition in corporate and private banking businesses grew meaningfully. This broad-based growth across sectors and geographies, coupled with increased utilization, suggests a strong underlying economy and PNC's ability to gain market share, particularly in newer markets.

Diversified Revenue Growth and Operating Leverage

The company's diversified business model proved valuable, with fee income increasing 10% linked-quarter and 20% year-over-year, driven by broad-based growth across every fee category. Net interest income also grew 4% linked-quarter, supported by commercial loan growth and favorable deposit mix. This led to 3% positive operating leverage and an improved efficiency ratio, demonstrating effective expense management alongside revenue expansion.

FirstBank Integration Success and Learnings

PNC successfully completed the conversion of FirstBank, demonstrating its ability to execute large acquisitions without disrupting other strategic initiatives like new mobile banking platform rollouts. The data factory built for prior integrations proved effective. However, the company underestimated the lower digital awareness of FirstBank customers, leading to unexpected branch traffic for basic digital tasks, which will inform future integration strategies.

Capital Management and Shareholder Returns

PNC maintains a strong capital position with an estimated CET1 ratio of 9.9%, close to its 10% operating target. The Board approved an 18% increase in the quarterly common stock dividend to $2 per share, reflecting confidence in financial strength. The company returned $1.3 billion to shareholders in Q2, including $690 million in dividends and $610 million in share repurchases, with similar repurchase levels expected for Q3.

Credit Quality and Portfolio Trends

Credit performance remained strong, reflecting a robust economy and high-quality portfolio. Nonperforming loans decreased 10% to $2 billion, representing 0.55% of total loans. Total delinquencies also declined. The allowance for credit losses stood at $5.5 billion, or 1.48% of total loans. Commercial real estate (CRE) showed an inflection point, returning to growth after several quarters of declines, with pipelines forming constructively across multifamily, industrial, and retail categories.

NIM Dynamics and EPS Focus

Net interest margin (NIM) expanded by 1 basis point to 2.96% in Q2. Management reiterated its expectation to exceed 3% NIM by year-end. While commercial loan growth, particularly in higher credit quality, lower-spread segments, can be dilutive to NIM on a standalone basis, these loans are highly accretive to EPS when considering associated fees from treasury management and capital markets. PNC prioritizes EPS growth over NIM for its own sake.

AI-generated summary of the company's earnings call. Not investment advice.