Financial services giant PNC (NYSE: PNC) met Wall Street’s revenue expectations in Q3 2026, with sales up 10.7% year on year to $6.62 billion. Its non-GAAP profit of $5.09 per share was 2.2% above analysts’ consensus estimates.

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StockStory’s Take

PNC delivered a third quarter that saw revenue growth but missed Wall Street’s top-line expectations, while adjusted earnings per share were slightly above consensus. Management attributed the results to continued strong momentum in client growth and loan origination, particularly in expansion markets and through the successful integration of FirstBank. CEO William Demchak highlighted, “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.” Growth in corporate and institutional banking, as well as increased client relationships in retail banking, were key drivers this quarter.

Looking ahead, PNC’s outlook is shaped by anticipated further loan growth, the repricing of fixed-rate assets, and ongoing investments in technology and client capabilities. Management expects continued positive operating leverage, supported by higher net interest income and growth across fee-generating businesses. CFO Robert Reilly emphasized, “the fixed rate asset repricing and the mechanical nature of that is real...it continues for PNC and the magnitude is big.” The company is also focused on leveraging its technology infrastructure and digital platforms to sustain client acquisition and deepen relationships, while remaining attentive to expense management and prudent risk controls.

Key Insights from Management’s Remarks

Management identified several business-specific factors that influenced third quarter performance and the company’s forward strategy.

• Expansion market gains: PNC’s expansion markets delivered strong client growth, adding roughly 500 new commercial relationships year-to-date. These newer geographies are now growing 2 to 3 times faster than legacy markets, with the Southwest, California, and Florida highlighted as areas of particular strength. Management attributes much of its above-industry loan growth to share gains in these regions.

• Corporate lending momentum: Loan growth was concentrated in corporate and institutional banking, with average C&I (commercial and industrial) loan balances up 5% during the quarter and 17% year-over-year. The majority of growth was in high-quality, lower-spread loans, which, while pressuring net interest margin, contributed to fee income and broader client engagement. The successful integration of the FirstBank acquisition also contributed to loan growth.

• Fee income trends mixed: While capital markets fees were up 40% year-to-date, third quarter fee income was impacted by lower capital markets activity compared to an elevated second quarter, as well as integration-related fee waivers in cash management. Asset management fees and brokerage assets continued to grow, supported by favorable market conditions and client activity.

• Deposit mix and costs: Deposit growth was driven by commercial interest-bearing balances and brokered certificates of deposit (CDs). This shift in deposit mix, along with increased competition for deposits, led to a modest rise in interest expense. Noninterest-bearing deposits remained stable, but management expects further pressure on deposit costs, especially as rate hikes continue.

• Technology and branch investments: PNC continued to invest in digital capabilities, rolling out a new mobile app and total rewards program while expanding its branch footprint. These initiatives are designed to support ongoing client acquisition and deepen existing relationships, particularly in growth markets. Management also discussed ongoing investments in artificial intelligence infrastructure as a foundation for long-term efficiency and product development.

Drivers of Future Performance

Management expects future growth to be driven by continued expansion in new markets, loan repricing, and disciplined investment in technology and client relationships.

• Fixed-rate asset repricing: The repricing of fixed-rate loans and securities is expected to be a significant driver of net interest income in the coming quarters and into next year. CFO Robert Reilly noted this provides “some certainty that you typically wouldn’t have this far in advance,” allowing management to project net interest income growth above current run rates.

• Expense and efficiency focus: PNC’s continuous improvement program aims to reduce costs by $350 million this year, funding investments in technology and business growth. Management cautioned that technology investments—particularly related to artificial intelligence—will be ongoing, but expects productivity gains and operational efficiencies to eventually offset cost increases.

• Deposit dynamics and market risk: Management expects deposit costs to rise in line with historical rate cycles as the Federal Reserve continues tightening. The shift towards more interest-bearing deposits, especially from commercial clients, will impact funding costs. CEO Demchak also acknowledged the long-term competitive risks posed by technological changes in deposit management, though PNC is investing in its own digital infrastructure to remain competitive.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will be watching (1) whether expansion market momentum continues to drive above-industry loan and client growth, (2) the pace and impact of fixed-rate asset repricing on net interest income and margins, and (3) execution on technology-driven efficiency gains and digital client engagement initiatives. Credit quality trends and the competitive landscape for deposits will also be key signposts.

PNC Financial Services Group currently trades at $214.30, in line with $215.80 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).

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