01—Abstract
Summary
Summary of the 8-K filed July 15, 2026. Cited figures are marked; the original filing is the authoritative source.
PNC Financial Services Group reported strong second-quarter 2026 results, with net income of $2.055 billiona and diluted EPS of $4.81 (GAAP).
Excluding integration costs related to the FirstBank acquisition and net significant items, adjusted diluted EPS was $4.85b, up 12% from the linked quarter and 26% year over year. The results were driven by a 4% linked-quarter increase in average loans to $363.2 billion (up 13% year over year), record net interest income of $4.107 billion, and fee income growth of 10% sequentially (20% year over year), led by capital markets and advisory activity. Adjusted noninterest expense rose only 5% sequentially, producing positive operating leverage.
Credit quality improved across the key indicators. Nonperforming loans fell to 0.55% of total loans from 0.62% in the prior quarter, net charge-offs were 0.25% of average loans, and the allowance for credit losses declined to 1.48% of total loans. Provision for credit losses was $191 millionc.
Return on average tangible common equity rose to 17.88%, and tangible book value per share increased 2% sequentially to $111.09d. The Basel III CET1 ratio, estimated at 9.9%, declined 20 basis points from the prior quarter, though PNC still returned $1.3 billion to shareholders in the quarter and announced an 18% dividend increase to $2.00 per common share. Looking ahead, PNC raised its full-year 2026 outlook, now calling for average loan growth of about 12.5%, net interest income growth of 15% to 15.5%, and total revenue growth of about 13%, with noninterest expense growth of about 8.5%, all excluding integration costs.
Third-quarter guidance is more mixed: average loans are expected to rise 1% to 2%, net interest income 3% to 3.5%, and fee income to fall 5% to 5.5% from the strong second-quarter level, while adjusted expenses are expected to decline 2% to 3%. Investors should note that the second quarter included a $224 million net pretax benefit from significant items, primarily a $448 million gain on the Visa share exchange, partly offset by a $139 million securities restructuring loss and a $85 million Visa Class B-3 derivative adjustment, as well as a $140 million PNC Foundation contribution.
02—Key points
Key Highlights
- GAAP net income of $2.055 billion and diluted EPS of $4.81; adjusted diluted EPS of $4.85 (excluding integration costs and significant items), up 12% sequentially and 26% year over year.
- Average loans grew 4% sequentially and 13% year over year to $363.2 billion, led by commercial and industrial lending (up 6% sequentially and 17% year over year).
- Fee income (non-GAAP) rose 10% sequentially to $2.279 billion, with capital markets and advisory up 25% sequentially, and total revenue reached a record $6.875 billion reported (up 12% sequentially).
- Adjusted noninterest expense increased 5% sequentially to $3.837 billion, supporting positive operating leverage; pretax, pre-provision earnings (non-GAAP) were $2.777 billion reported.
- Credit quality strengthened: NPLs fell to 0.55% of total loans, net charge-offs were 0.25% of average loans, and the allowance declined to 1.48% of total loans.
- Capital returns totaled $1.3 billion in the quarter ($0.7 billion dividends and $0.6 billion buybacks); the quarterly dividend was raised 18% to $2.00 per share on an annual basis, while CET1 declined to an estimated 9.9%.
- Full-year 2026 guidance raised, with third-quarter guidance pointing to a 5% to 5.5% decline in fee income and a 2% to 3% decline in adjusted expenses from the second-quarter baseline.
03—Questions
Frequently Asked Questions
What drove the difference between GAAP EPS of $4.81 and adjusted EPS of $4.85?
The $0.04 difference reflects net integration costs and significant items in the second quarter. Significant items included a $448 million gain on the Visa share exchange, an $85 million negative Visa Class B-3 derivative fair value adjustment, a $139 million loss from a securities restructuring (about $4 billion of securities sold and reinvested at yields roughly 120 basis points higher), and a $140 million contribution to the PNC Foundation. Integration costs related to the FirstBank acquisition also affected results.
How did PNC's credit quality trend in the second quarter?
Credit metrics improved. Nonperforming loans fell to 0.55% of total loans from 0.62% in the first quarter and 0.65% a year earlier. Net charge-offs were $226 million, or 0.25% of average loans, and delinquencies were 0.39% of total loans. The allowance for credit losses declined to 1.48% of total loans from 1.52%. Management expects third-quarter net charge-offs of about $225 million.
Why did CET1 decline, and does it affect capital return plans?
The estimated CET1 ratio fell 20 basis points sequentially to 9.9%, while common equity and capital distributions were both significant during the quarter. The filing states that PNC's ability to return capital depends on meeting or exceeding minimum capital requirements, including its stress capital buffer. Despite the lower ratio, PNC returned $1.3 billion to shareholders and announced an 18% dividend increase, which signals management's confidence in its capital position.
What is the outlook for the rest of 2026, and what should investors watch in the third quarter?
For full-year 2026, PNC expects average loan growth of about 12.5%, net interest income growth of 15% to 15.5%, total revenue growth of about 13%, and noninterest expense growth of about 8.5%, all excluding integration costs of roughly $325 million. For the third quarter, management guided to a 5% to 5.5% decline in fee income from the second-quarter level, a 2% to 3% decline in adjusted expenses, and other noninterest income of $150 million to $200 million. Investors should watch whether fee income recovers from the expected decline and whether net interest income continues to grow on loan momentum.
04—Continue