Oct 15, 2026 earnings call — Loan growth from expansion markets and FirstBank conversion
PNC reported net income of $2.1 billion or $5.09 per diluted share as adjusted, with strong loan growth driven by expansion markets.
Revenue $6.6B (est $6.6B) · EPS $5.09 (est $4.91)
Key quotes
"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, a 17% growth year-over-year."
"For the linked quarter, loans of $372 billion grew by $9 billion or 2%. Security 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."
"Importantly, the underlying drivers of NII growth remained 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."
Analyst Q&A 10
Margin outlook and lower-spread loans
Q (John Pancari · Evercore): He asked how confident management is in reaching a 3% or higher margin by Q4, how deposit dynamics and growth in lower-spread, higher-quality loans affect NII and 2027, and about credit loss assumptions on those loans.
A: They said they would not discuss NIM as a target but explained NII drivers. Late-quarter loan growth, declining average spreads and missing escrow balances reduced margin in the quarter. They said the fixed-rate securities repricing should lift NIM and that credit loss assumptions on these loans are "very low."
"When we go forward, into the fourth quarter, our calculation is to reach 3 or higher on NIM, even though we don't give NIM guidance." — Robert Reilly (CFO)
Client demand and capital markets fees
Q (Robert Scott Siefers · TD Cowen): He asked whether client sentiment and demand are being affected by higher rates and if there is any tipping point. He also asked about the trajectory of capital markets activity, especially at Harris Williams.
A: They said loan growth is broad and driven especially by new markets and record onboarding of clients, and pipelines remain strong. They noted they are not seeing rate-driven pullback yet. They expect capital markets fees to be up almost 15% quarter-over-quarter in the fourth quarter based on those pipelines.
"We expect -- I imagine we'll get into the fee walk down, but we expect capital markets fees to be up almost 15% quarter-over-quarter in the fourth quarter, reflecting those pipelines." — Robert Reilly (CFO)
NII outlook for 2027
Q (L. Erika Penala · UBS): She asked whether NII growth might slow in 2027 and whether the bank can give any guidance on 2027 NII.
A: They said precise guidance this far out is premature but that fixed-rate asset repricing gives extra certainty. They expect 2027 net interest income to exceed the annualized run rate projected to finish 2026 and said they broadly agree with a consensus range about $1 billion to $1.1 billion above 2026. They will provide more precision in January.
"So when we look at it, clearly, in '27, we'll exceed in net interest income, our annualized run rate of what we project to finish 2026 in." — Robert Reilly (CFO)
Deposit betas in a rising rate cycle
Q (Manan Gosalia · Morgan Stanley): He asked what deposit beta dynamics they expect with further Fed tightening and whether this rate cycle differs from the prior one. He also asked why half the loan growth came in the last two weeks of the quarter and about sustainability.
A: They said expectations are largely similar to past rising-rate cycles, with increased betas on the corporate side, less on lower-end consumer, and a cumulative beta likely in the mid-50s. They noted the '23 shift from noninterest-bearing to interest-bearing was unusual and made that prior cycle different. The late-quarter loan volume was pipeline timing rather than an immediate market reaction.
"But I think we'll settle out in some sort of cumulative beta in the mid-50s like we've done in the past." — Robert Reilly (CFO)
Fee mix, expense step-up, capital and buyback
Q (Kenneth Usdin · Autonomous): He asked whether the capital markets fee upside was already in full-year guidance, whether the Q4 expense step-up includes pulled-forward investments or seasonality, and asked about AOCI impact and the $600 million buyback.
A: They said fourth-quarter fees should be up about 3.5%, with Capital Markets the big mover up about 15%, mortgage down, and other fee categories stable. Some of the Q4 expense step-up is revenue-driven (to support higher activity) and seasonality. They said CET1 was rounded to 9.8% vs a 10% target, expect a similar repurchase in Q4, and noted including AOCI would put CET1 in the low 9s but still above 9% while Basel III considerations will change AOCI treatment.
"Inside of that relative to our categories, Capital Markets is the big mover up about 15%." — Robert Reilly (CFO)
Converting new clients and AI cost vs productivity
Q (Ebrahim Poonawala · BofA): He asked whether low-cost deposits from new clients show the strategy is working and how hard it is to convert new clients to core deposits. He also asked whether AI will raise costs (cyber) more than deliver productivity gains over 12–24 months.
A: They said retail DDA growth reflects branch expansion and market presence and that converting new clients into full relationships (including future card products) is part of the plan; C&IB growth is similar to their historical client type but in new markets. On AI, they said incremental cyber costs are in current run rates, they built data center and data infrastructure (including GPUs), and that the next step is reengineering the company with AI to speed development and lower technology and maintenance costs while enabling faster product delivery and revenue upside.
"What comes next is the reengineering of the company using AI harnesses, which would speed the development and ultimately lower the cost associated with technology development and maintenance, followed quickly by product development delivery that aids revenue." — William Demchak (CEO·CHAIR)
AI agents moving deposits; momentum drivers
Q (Gerard Cassidy · RBC): He asked whether agentic AI could move deposits and raise deposit costs, and what is driving the stronger client momentum and whether new relationships replace or complement existing banks.
A: They said deposit movement will become more efficient over time but current agentic attempts that transact inside accounts are unsafe and will require laws, secure connections, authentication and human oversight before becoming common. To retain clients they must offer comparable, cost-effective technology and service. Momentum is driven by expansion markets, data center capital effects and Harris Williams activity, and new relationships are both replacements and complements depending on client size.
"And for that to ultimately take place, there's going to have to be laws passed on liability shifting." — William Demchak (CEO·CHAIR)
What’s driving commercial loan growth
Q (Michael Mayo · Wells Fargo): He asked how much of commercial loan growth is industry expansion versus market share, how much is AI CapEx related, and how fast new markets (e.g., Texas/Southwest) are growing versus legacy markets.
A: They said new markets grew roughly 2–3x faster in C&IB and much of that excess growth is pure share. They could not precisely quantify how much loan growth is AI CapEx driven because of many tangential effects. Expansion markets now represent the majority of in-market corporate loans, with Texas, California, Florida and Colorado all growing quickly, and pipelines look durable though risks remain.
"So take that -- all that excess growth rate is pure share, is one way to think of it." — William Demchak (CEO·CHAIR)
Rate sensitivity, credit and M&A appetite
Q (David Chiaverini · Jefferies): He asked PNC's rate sensitivity and balance sheet positioning, details on the large commercial credit and outlook, and their current M&A appetite.
A: They said they are relatively neutral to short-term rate moves and benefit from a steeper yield curve because fixed-rate asset repricing is accretive to NII. The large commercial credit was in service providers and hit cash-flow issues; CRE office nonperformers will flow through but are reserved for. On M&A, they said organic growth and the planned AI transformation make them hesitant to pursue large deals now, though small acquisitions remain possible.
"If that gets slowed down because we otherwise got into some big M&A deal, I think you could destroy massive value." — William Demchak (CEO·CHAIR)
Risk tolerance and lending strategy
Q (Christopher McGratty · KBW): He asked whether PNC or clients have changed risk tolerance recently given macro and rate moves and about demand for credit.
A: They said there is no change in how they deploy capital. They emphasized they stay within their existing client types and expand share with those clients rather than moving into new, riskier lending categories.
"We kind of stay inside of our basic structures and types of clients and grow the book through increasing clients as opposed to jumping into new risky buckets." — William Demchak (CEO·CHAIR)