The PNC Financial Services Group Q4 Earnings Call Highlights
The PNC Financial Services Group NYSE: PNC outlined what executives described as a strong finish to 2025 and offered a growth-focused outlook for 2026, highlighted by the recently closed acquisition of First Bank and continued investments in technology, payments, and branch expansion.
2025 results and fourth-quarter performance
Chairman and CEO Bill Demchak said 2025 was “a successful year” by “virtually all measures,” as PNC earned $7 billion in net income, or $16.59 per share. Management pointed to record revenue, 5% positive operating leverage, and 21% EPS growth for the year.
Chief Financial Officer Rob Reilly said fourth-quarter total revenue was a record $6.1 billion, up 3% from the prior quarter. Net interest income rose to $3.7 billion and non-interest income increased to $2.3 billion. Fourth-quarter net income was $2 billion, or $4.88 per diluted share, helped by an effective tax rate of 12.7% that Reilly said reflected favorable resolution of several tax matters.
On net interest margin, Reilly reported a 2.84% NIM in the fourth quarter, up 5 basis points from the prior quarter, driven by lower funding costs, loan growth, and fixed-rate asset repricing.
Balance sheet, capital returns, and credit
On an average basis, PNC reported linked-quarter loan growth and deposit growth, while borrowings declined. Reilly said average loans were $328 billion, up $2 billion (1%) from the prior quarter, with growth driven by higher commercial balances. On a spot basis, loans grew $5 billion (2%), which he attributed to broad-based production across PNC’s C&I franchise.
Deposits averaged $440 billion, up $8 billion (2%), including seasonal growth in commercial deposits. Non-interest-bearing deposits averaged $95 billion, representing 22% of total average deposits. The total rate paid on interest-bearing deposits fell 18 basis points to 2.14% in the quarter, reflecting lower rates.
PNC ended the quarter with an estimated CET1 ratio of 10.6% (or 9.8% including AOCI). The bank returned $1.1 billion of capital to shareholders in the quarter, including $676 million of common dividends and about $400 million of share repurchases. Reilly said PNC expects to increase buybacks to a $600 million to $700 million quarterly pace and later confirmed on the call that this pace is expected to continue through 2026.
Credit quality was described as strong. Non-performing loans rose modestly from the prior quarter, but were lower as a percentage of loans compared with last year. Net charge-offs were $162 million (20 basis points), and provision expense was $139 million, which Reilly said reflected a slight release of loan reserves. The allowance for credit losses ended the fourth quarter at $5.2 billion, or 1.58% of total loans.
First Bank acquisition and integration timeline
Demchak highlighted that PNC closed its acquisition of First Bank on January 5 and welcomed First Bank employees. Reilly said the deal expands PNC’s presence in “high-growth communities across Colorado and Arizona,” with conversion and integration scheduled for June 2026.
Reilly provided updated deal metrics that he said were “the same or better” than initially estimated. Key points included:
- Purchase price of approximately $4.2 billion at closing, funded 30% in cash and 70% in stock
- 13.9 million shares issued as part of consideration
- Estimated CET1 reduction of about 40 basis points
- Expected non-recurring merger and integration costs of about $325 million, mostly in the first half of 2026
- Projected internal rate of return of ~25%
Management also reiterated expectations that First Bank will be “fully integrated” by the end of 2026, with Demchak stating the bank expects the acquisition to add approximately $1 per share to 2027 results. Reilly added that PNC expects First Bank to generate an annualized earnings run rate of approximately $1 per share by the end of 2026, driven by operational efficiencies.
2026 outlook: revenue, expenses, and macro assumptions
Reilly said PNC is expecting continued economic growth in 2026, calling for approximately 2% real GDP growth and unemployment near 4.5%. He also said the company expects the Federal Reserve to cut rates twice in 2026—25 basis points in July and another 25 basis points in September—while emphasizing later on the call that timing of cuts is not expected to materially change net interest income outcomes.
Guidance provided for 2026 (based on the combined company) included:
- Average loan growth of approximately 8%
- Total revenue up about 11%
- Net interest income up about 14%
- Non-interest income up about 6%
- Non-interest expense up about 7%, excluding estimated integration expense
- Effective tax rate of about 19.5%
Based on that outlook, Reilly said PNC expects about 400 basis points of positive operating leverage, with “nearly all” driven by PNC on a standalone basis.
For first-quarter 2026 versus the fourth quarter of 2025, the company expects:
- Average loans up about 5%
- Net interest income up about 6%
- Fee income down about 1% to 2%
- Other non-interest income of $150 million to $200 million
- Total revenue up about 2% to 3%
- Non-interest expense (excluding integration costs) up about 4%
- Net charge-offs of about $200 million
Strategy: investments, capital markets, and “national bank” positioning
Demchak said PNC’s investment agenda in 2026 is “higher this year than it’s ever been,” citing branch expansion, modernization of payments capabilities using microservices, data center modernization with cloud-native applications, and investments in people in new markets, including Colorado and Arizona. He said AI represents about 20% of the year-over-year increase in technology spending, and he described ongoing cost-savings efforts through PNC’s continuous improvement program.
On the call, Reilly said PNC exceeded its 2025 continuous improvement program target of $350 million in cost savings and set a $350 million target again for 2026, separate from the First Bank acquisition.
In discussion of capital markets, Demchak cited improving middle-market M&A momentum and said Harris Williams’ backlog and activity level in the fourth quarter were as high as ever. Reilly said PNC’s capital markets revenue is expected to rise high single digits in 2026.
Demchak also emphasized a strategic distinction between PNC and regional banks, describing PNC as “a national bank” with a strategy aimed at building a “national and ubiquitous presence” to compete across markets, particularly as large banks expand their footprints.
On return metrics, Reilly said the company views ROTCE as an “outcome rather than something that we manage to,” but described an exit rate around 17% going into 2026 and suggested it could reach about 18% “this time next year and then higher from there,” while Demchak cautioned that credit and rate environments can significantly influence outcomes.
About The PNC Financial Services Group NYSE: PNC
The PNC Financial Services Group, Inc is a diversified financial services company headquartered in Pittsburgh, Pennsylvania, offering a broad range of banking, lending, investment and wealth management services. PNC operates a national banking franchise with a significant retail branch network and dedicated capabilities for commercial, institutional and government clients. Its services are designed to serve individuals, small businesses, corporations and public sector entities across the United States.
PNC's core business activities include consumer and business banking, residential mortgage lending, corporate and institutional banking, asset management and wealth advisory services.
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