PNC Reports Q3 Net Income of $2.1 Billion, EPS of $5.09

PNC Financial Services Gr (NYSE: PNC ) reported third-quarter financial results on Thursday. The transcript from the company's third-quarter earnings call has been provided below. This content is powered APIs. For comprehensive financial data and transcripts, visit View the webcast at Summary PNC Financial Services Group reported a strong Q3 2026 with a net income of $2.1 billion, or $5.09 per diluted share, reflecting a return on tangible common equity of over 18%.

The company experienced robust growth across all business segments, notably with a 5% average increase in corporate and institutional banking loans and a 17% growth year over year. Retail banking added 215,000 net new checking accounts in 2026, with significant growth in credit card balances (up 12%) and brokerage assets (up 9%). Asset management fees increased by 10% year to date, with assets under administration totaling half a trillion dollars. The company maintained a well-capitalized position with an estimated CET1 ratio of 9.8% and returned $1.4 billion of capital to shareholders during the quarter.

PNC expects loan growth to continue, forecasting a 2.5% increase in average loans in Q4 and anticipates a net interest income growth of 4%. The company remains focused on disciplined growth, prudent risk management, and continuous investment in capabilities, including AI and technology infrastructure. Management expressed confidence in navigating a rising rate environment and plans to continue optimizing their funding mix while maintaining strong credit quality. PNC does not foresee immediate impacts from AI on deposit costs but acknowledges ongoing technological advancements will enhance competition over time.

Full Transcript OPERATOR Greetings and welcome to the PNC Financial Services Group Q3 2026 earnings conference call. At this time all participants are in a listen-only mode. A question and answer session will follow the formal presentation. You may be placed into the question queue at any time by pressing Star 1 on your telephone keypad.

As a reminder, this conference is being recorded. If anyone should require operator assistance, please press Star 0 on your telephone keypad. It's now my pleasure to turn the call over to Brian Gill, Executive Vice President and Director of Investor Relations. Brian, please go ahead.

Brian Gill, Director of Investor Relations Well, good morning and welcome to today's conference call for the PNC Financial Services Group. I am Brian Gill, Director of Investor Relations for PNC, and participating on this call are PNC's Chairman and CEO William Demchak and Rob Reilly, Executive Vice President and CFO. Today's presentation contains forward-looking information. Cautionary statements about this information, as well as reconciliations of non-GAAP measures, are included in today's earnings release materials as well as our SEC filings and other investor materials.

These are all available on our corporate website, pnc.com under Investor Relations. These statements speak only as of October 15, 2026, and PNC undertakes no obligation to update them. Now I'd like to turn the call over to Bill. William Demchak, Chairman and CEO Thank you, Brian, and good morning, everyone.

PNC delivered another strong quarter, reflecting the consistent execution of our strategy and the strength of our franchise. As you saw, we generated 2.1 billion of net income, or $5.09 per diluted share, as adjusted, while delivering a return on tangible common equity of more than 18%. Rob's going to take you through the financial results in more detail in a second, but I wanted to start off by highlighting the substantial client momentum we've been experiencing all year, which has continued through the third quarter.

All of our businesses are experiencing robust growth, in part driven by the high growth rates of our expansion markets and, most recently, the successful conversion of FirstBank. In corporate and institutional banking, our national platform continues to generate impressive growth. Expansion markets have added approximately 500 new client relationships year to date, contributing materially to a 5% average C&IB loan growth during the quarter and 17% growth year over year. Beyond loans, capital markets fees are up 40% year to date and treasury management revenue is up 8%.

In retail banking, we continue to grow clients organically, adding 215,000 net new checking accounts so far in 2026, with total accounts up 2% year over year, including 6% growth in our Southwest markets. And we continue to deepen relationships with credit card balances up 12% and brokerage assets up 9% year over year. At the same time, we continue to invest in capabilities to enhance our franchise with the introduction of both a new mobile app and a total rewards program, as well as our continued branch expansion. Asset management fees are up approximately 10% year to date and assets under administration total a half a trillion dollars.

Favorable equity markets have obviously helped here, but once again our expansion markets have accelerated our growth in these markets. AUM is growing five times faster than our legacy markets, albeit off a smaller base. When we step back and look at the year as a whole, we have grown considerably faster than we anticipated. Coming into 2026, we are bringing new clients into the franchise, expanding relationships across businesses and markets, and converting that activity into durable growth in loans, deposits, and fee income.

As we enter the final quarter of the year, we remain focused on disciplined growth, prudent risk management, and continued investment in the capabilities that strengthen our competitive position. As always, I would like to thank our employees for their hard work and commitment, and with that, I'll turn the call over to Rob to take you through the details of the quarter. Rob Reilly (Executive Vice President and Chief Financial Officer) Thanks, Bill, and good morning, everyone. Our balance sheet is on Slide 5 and is presented on an average basis.

For the linked quarter, loans of $372 billion grew by $9 billion, or 2%. Securities balances increased 3% to $151 billion. Average deposits increased $4 billion, or 1%, to $461 billion and the borrowings increased $7 billion to $86 billion. However, on a spot basis, deposits increased $17 billion and borrowed funds declined $6 billion, reflecting continued optimization of our funding mix.

Our tangible book value was $108 per common share, down 3% linked quarter, entirely driven by the decline in AOCI, and was stable compared with the same period a year ago. We remain well capitalized with an estimated CET1 ratio of 9.8%. We continue to be well positioned with capital flexibility. During the quarter we returned $1.4 billion of capital to shareholders, which included approximately $800 million of common dividends and $560 million of share repurchases.

Going forward, we expect fourth quarter repurchases to approximate the same level, and our return on tangible common equity was more than 18% in the third quarter. Slide 6 shows our loans in more detail. During the third quarter, average loans increased $9 billion, or 2%, to $372 billion. C&I balances increased $9 billion, or 4%, reflecting broad-based growth across our businesses and higher utilization.

Commercial real estate balances increased $2 billion, or 4%, driven by strong new production. Consumer loans declined $1 billion, or 1%, as growth in credit card was more than offset by lower residential mortgages as well as the transfer of our student loan portfolio to held for sale. You may recall we stopped originating student loans last year, and the transfer represents the final step in exiting this non-strategic business. We expect the sale to have a de minimis financial impact.

In regard to loans, overall spot loans grew $11 billion in the quarter, contributing to the strong loan growth we've had throughout the year, all of which substantially exceeded what we expected at the beginning of the year. Through the first nine months of 2026, we've added $47 billion, or 14%, while approximately $15 billion came through the First Bank acquisition. More than $30 billion of the growth has been generated organically, reflecting strong client activity and execution across our franchise. Slide 7 details our investment securities and swap portfolios.

We continue to maintain a high-quality short-duration position. During the third quarter, average investment securities increased $4 billion, or 3%. Our securities yield was 3.59%, an increase of 14 basis points, and as of September 30th our duration was 4.1 years. Looking ahead, we expect approximately $5 billion of fixed-rate securities to run off during the fourth quarter at a weighted average yield of 2.65%.

Our received-fixed swap portfolio totaled $83 billion at quarter end with an average received fixed rate of 3.92%, which increased 17 basis points from last quarter. Importantly, we have a clear path for continued fixed-rate asset repricing over the next several years. Overall, we remain well positioned for a rising rate environment, which will support net interest income, capital generation, and balance sheet flexibility. Slide 8 covers our deposit balances in more detail.

Average deposits increased $4 billion to $461 billion during the third quarter, driven by growth in interest-bearing balances. Noninterest-bearing deposits were $101 billion and represented 22% of total deposits. Notably, period-end deposits increased $17 billion, or 4%, compared to June 30. The strong growth was driven by commercial interest-bearing deposits, which increased $11 billion, or 7%.

In addition, brokered CDs grew $7 billion. The commercial deposit growth was due in part to seasonality, but also reflective of both new and expanded client relationships. In regard to deposit costs, our total rate paid on interest-bearing deposits increased 7 basis points to 1.98%, including brokered CDs. Excluding brokered CDs, the rate paid increased 5 basis points to 1.96%.

The increase was primarily driven by mix, as growth was concentrated in interest-bearing balances. Turning to Slide 9, we highlight our income statement trends comparing the third quarter to the second quarter of 2026. Total revenue was $6.6 billion, a decrease of $313 million, or 5%, while noninterest expense decreased $347 million, or 8%, to $3.8 billion. Excluding integration costs and significant items from both quarters, revenue declined $61 million, or 1%, as higher net interest income was more than offset by lower noninterest income.

On the same basis, noninterest expense decreased $113 million, or 3%, reflecting disciplined expense management. We generated positive operating leverage and grew. PPNR provision was $189 million, stable with the previous quarter. Our effective tax rate was 20%.

Third quarter net income was $2.1 billion, or $5.09 per common share, as adjusted to exclude the impact of $48 million of after-tax integration costs and significant items. Importantly, we continue to demonstrate strong momentum across the franchise. Through the first nine months of the year, PPNR increased $1.2 billion, or 17%, compared to the same period last year, driving 19% growth in diluted EPS. Turning to Slide 10, we detail our revenue trends.

Third quarter net interest income of $4.2 billion increased approximately $100 million, or 2%, driven by commercial loan growth and higher yields on interest-earning assets, partially offset by increased funding costs. Our net interest margin was 2.94% and decreased 2 basis points. The modest decline in net interest margin was largely a function of the mix in loan growth and, to a lesser extent, increased funding costs. Consistent with what we've seen throughout the year, loan growth during the third quarter continued to be concentrated in high credit quality, lower-spread loans.

Again, while these loans generate attractive overall economics through fee income and broader client engagement, by definition they constrain NIM. Importantly, the underlying drivers of NII growth remain strong, and based on our expectations for loan growth, we calculate that our net interest margin will reach 3% or above in the fourth quarter. Fee income was $2.1 billion and decreased $137 million, or 6%. Looking at the details, asset management and brokerage increased $7 million, or 2%, driven by higher average equity markets and increased client activity.

Capital markets and advisory revenue decreased $144 million, or 25%, reflecting elevated second quarter activity. Card and cash management revenue decreased $3 million, as higher treasury management product revenue was more than offset by First Bank integration-related fee waivers. Lending and deposit services increased $12 million, or 3%, reflecting increased client activity. Mortgage revenue decreased $9 million, or 6%, primarily driven by lower residential volumes, and other noninterest income was $214 million and included a negative $25 million impact from significant items related to net Visa activity.

Notably, we continue to see strong momentum across our lines of business and throughout our markets and, through the first nine months of the year, our noninterest income totaled $7.3 billion, up $979 million, or 15%, compared to the same period last year. Turning to Slide 11, third quarter expenses decreased $347 million, or 8%, compared with the second quarter. Third quarter results included $27 million of integration costs compared to $261 million of integration costs and significant items in the second quarter. Excluding these items from both quarters, noninterest expense decreased $113 million, or 3%.

We remain focused on expense management and we're on track to reach our goal to reduce costs by $350 million in 2026 through our Continuous Improvement Program, which, as a reminder, is independent of the First Bank acquisition. And this program will continue to fund significant portions of our ongoing business and technology investments. Our credit metrics are presented on Slide 12. Overall credit quality remains strong.

Nonperforming loans increased $167 million, or 8%, to $2.2 billion. The increase was primarily driven by the pull-through of previously reserved CRE office loans as well as one large commercial credit. Total delinquencies declined $135 million to $1.3 billion and now represent 0.34% of total loans, down from 0.39% last quarter. Net charge-offs were $257 million, or 28 basis points of average loans, and included $35 million associated with the student loan transfer.

Excluding that impact, underlying net charge-offs remained consistent with our prior quarter. At the end of the third quarter, our allowance for credit losses totaled $5.4 billion, or 1.42% of total loans. To summarize, PNC Financial Services Gr reported a strong third quarter of 2026, and we're well positioned for the remainder of the year. Regarding our view of the overall economy, our base case assumes GDP growth to be above 2% in 2026, with continued modest job gains and the unemployment rate holding steady.

We expect the Fed to increase rates two additional times, with a 25 basis point increase at the December 2026 and March 2027 meetings, ultimately reaching a range between 4.25% and 4.5%. For ease of comparability with our prior guidance, our full-year outlook excludes the impact of First Bank integration charges and significant items. Considering our reported nine months operating results, fourth quarter expectations, and current economic forecast, our outlook for the full year 2026 compared to 2025 results is as we expect a full-year average loan growth of approximately 13.5%.

We expect full-year net interest income to be up 15.5%, we expect noninterest income to be up approximately 10.5%. Taking the component pieces of revenue together, we expect total revenue to be up approximately 13.7%, noninterest expense to be up approximately 9.5%, and we expect our effective tax rate to be approximately 19.5%. Our outlook for the fourth quarter of 2026 compared to the third quarter of 2026 is as follows.

We expect average loans to be up approximately 2.5%, net interest income to be up approximately 4%, fee income to be up approximately 3.5%, other noninterest income to be approximately $250 million, we expect adjusted noninterest expense to increase approximately 5%, and we expect fourth quarter net charge-offs to be approximately $250 million. With that, Bill and I are ready to take your questions. OPERATOR Thank you, and I'll be conducting a question-and-answer session. If you'd like to be placed into the question queue, please press star 1 on your telephone keypad.

A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star 1. One moment, please, while we poll for questions.

Our first question today is coming from John Pankari from Evercore ISI. Your line is now live. William Demchak, Chairman and CEO Hey, good morning, John. John Pankari, Analyst at Evercore ISI Appreciate the color that you gave on the margin dynamics.

You saw the compression in the quarter and deposit costs up 7 bps, 5 bps ex-brokered. Can you maybe discuss, given the deposit dynamics but also your continued growth in the lower-spread, higher-quality loans, maybe just discuss the confidence in that 2% or higher margin by the fourth quarter and maybe just think of those dynamics impacting the margin as you look at 2027? And I guess maybe just a little bit of color on what the trade-off is, you know, how you're looking at lower-spread, higher-quality loans in terms of, you know, the impact on NII as you look out from here. William Demchak, Chairman and CEO Thanks, John.

I'll hit it. I'm not going to talk about NIM because it's an outcome.