The PNC Financial Services Group (NYSE:PNC) reported what Chairman and CEO Bill Demchak called an “impressive” second quarter, with management pointing to broad-based business momentum, stronger fee income, continued commercial loan growth and stable credit quality.
PNC generated second-quarter net income of $2.1 billion, or $4.81 per diluted share. Demchak said results included FirstBank integration costs and other significant items that collectively reduced earnings per share by $0.04, resulting in adjusted diluted EPS of $4.85.
Revenue Growth Driven by Net Interest Income and Fees
Chief Financial Officer Rob Reilly said total revenue was $6.9 billion in the second quarter, up $710 million, or 12%, from the first quarter. Net interest income was $4.1 billion, up $146 million, helped by commercial loan growth and higher non-interest-bearing deposit balances. Net interest margin rose one basis point to 2.96%.
Fee income was a standout in the quarter, increasing $200 million, or 10%, to $2.3 billion. Reilly said the growth was broad-based across fee categories. Capital markets and advisory revenue increased $114 million, or 25%, reflecting record M&A advisory fees and strong activity across other capital markets businesses. Asset management and brokerage revenue rose 5%, card and cash management increased 5%, lending and deposit services rose 2%, and mortgage revenue increased 22%.
Demchak said PNC’s fee performance underscored the value of its diversified business model. Reilly added that, compared with the second quarter of 2025 and excluding integration costs and significant items, total non-interest income increased $444 million, or 21%.
Commercial Lending Leads Balance Sheet Growth
Average loans were $363 billion, up $12 billion, or 4%, from the first quarter. Reilly said “virtually all” of the growth came from commercial and industrial lending, reflecting strong new production and higher utilization across almost every loan category. Commercial real estate balances rose $690 million, driven primarily by retail and industrial exposures, while consumer loans declined $730 million as credit card growth partially offset expected declines in residential real estate and auto loans.
During the question-and-answer session, Reilly said PNC expects loan growth to continue in the second half of the year, but at a slower pace than in the first half. He described the company’s second-half loan growth outlook as roughly aligned with GDP growth.
Demchak said the loan growth was broad-based across industries and geographies, with newer markets outpacing legacy markets as PNC gains share. “We’re gaining share all on the back of what feels like a pretty strong economy,” he said.
On loan pricing, Reilly said PNC was not seeing significant competitive spread pressure. However, he said portfolio spreads were being diluted somewhat by mix, as much of the current lending is going to higher-credit-quality, lower-spread borrowers. He said those loans often come with treasury management or capital markets relationships and are “hugely accretive” to earnings per share even if they are dilutive to net interest margin.
Deposits Stable, Capital Returns Increase
Average deposits were stable at $457 billion. Reilly said higher consumer balances offset a seasonal decline in commercial deposits. The total rate paid on interest-bearing deposits declined five basis points to 1.91%, while average non-interest-bearing balances grew 4% from the prior quarter and represented 23% of total deposits.
PNC increased borrowings by $16 billion to $79 billion, reflecting higher Federal Home Loan Bank advances. In response to an analyst question, Demchak said investors should view PNC’s funding approach as an optimization among multiple levers, including wholesale funding and deposits. He said the FHLB advances were the “cheapest alternative” during the quarter to fund loans relative to other options.
PNC returned $1.3 billion of capital to shareholders in the quarter, including $690 million of common dividends and $610 million of share repurchases. Reilly said third-quarter repurchases are expected to approximate the second-quarter level. The board also approved an 18% increase in the quarterly common stock dividend, raising it by $0.30 to $2 per share.
The company’s estimated common equity tier 1 ratio was 9.9%. Reilly said PNC’s operating target remains around 10%.
Credit Quality Remains Strong
Reilly said overall credit quality remained strong, with improvements in nonperforming loans, delinquencies and net charge-offs. Nonperforming loans declined $216 million, or 10%, to $2 billion, representing 0.55% of total loans. Total delinquencies declined $122 million to $1.4 billion, or 0.39% of total loans.
Net loan charge-offs were $226 million, and the net charge-off ratio was 25 basis points. PNC’s allowance for credit losses totaled $5.5 billion, or 1.48% of total loans, at quarter-end.
Asked about potential areas of credit vulnerability, Reilly said PNC does not see “any big pockets forming.” He cited pressures in healthcare, distilleries and transportation related to fuel costs, but said there was nothing that particularly worried him beyond those areas.
Outlook Calls for Higher 2026 Revenue
PNC’s full-year 2026 outlook, which excludes FirstBank integration charges and significant items, calls for average loan growth of approximately 12.5% compared with 2025. The company expects net interest income to rise 15% to 15.5%, non-interest income to increase approximately 9%, and total revenue to grow approximately 13%. Non-interest expense is expected to increase approximately 8.5%, with an effective tax rate of about 19.5%.
For the third quarter, PNC expects average loans to rise 1% to 2%, net interest income to increase 3% to 3.5%, fee income to decline 5% to 5.5%, and other non-interest income to be between $150 million and $200 million. Adjusted non-interest expense is expected to decline 2% to 3%, with approximately $50 million of integration expenses. Net charge-offs are expected to be approximately $225 million.
Reilly said PNC’s base case assumes U.S. GDP growth of approximately 2.1% in 2026, unemployment ending the year around 4.3%, and the Federal Reserve keeping rates stable throughout the year.
Demchak also highlighted progress beyond the quarter’s financial results, including completion of the FirstBank conversion, new branch openings in high-growth markets and the launch of a new mobile banking platform. He said those initiatives are intended to position PNC for sustained long-term growth rather than near-term results.
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.
