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F500-2021-120-PNC Financial Services Group

Boasting nearly $470 billion in assets, the financial services group provides banking and wealth management to a diverse array of individuals and businesses. PNC received regulatory approval to acquire BBVA USA, which is expected to close in June 2021. Upon closing, the company will have a presence in 29 of the 30 largest markets in the U.S.

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F500-2020-151-PNC-Financial

The Pittsburgh-based diversified financial services company has retail and commercial banking, mortgage, lending, and wealth management businesses, and operates a retail bank branch network across the Mid-Atlantic, Midwest, and Southeast. In May, PNC made headlines by selling its roughly $17 billion stake in financial giant BlackRock.

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PNC Financial Services, which operates in the U.S., traces its origins as far back as 1852. Its retail banking segment provides consumers and small businesses with checking and savings accounts, residential mortgages, credit cards, and other services. PNC’s corporate and institutional banking segment serves midsize and large companies, as well as nonprofits and government entities. Its third segment, the asset management group, provides high- and ultrahigh-net-worth customers with investment management and other services.

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PNC Financial Services Group (PNC): Company Profile, Stock Price, News, Rankings

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PNC Financial Services Group

pnc financial services group

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bryan Gill. Thank you, Bryan. You may now begin.

Well, good morning and welcome to today's conference call for The PNC Financial Services Group. I am Bryan Gill, the director of investor relations for PNC, and participating on this call are PNC's Chairman and CEO, Bill Demchak, and Rob Reilly, Executive Vice President and Chief Financial Officer. Today's presentation contains forward-looking information. Cautionary statements about this information, as well as reconciliations of non-GAAP measures, are included in today's earnings release materials, as well as our SEC filings and other investor materials. These are all available on our corporate website, pnc.com, under Investor Relations. These statements speak only as of July 15th, 2026. PNC undertakes no obligation to update them. Now I'd like to turn the call over to Bill.

Thank you, Bryan, and good morning, everyone. As you saw, PNC delivered an impressive second quarter. We generated $2.1 billion of net income or $4.81 per diluted share. Our results included FirstBank integration costs and other significant items. Collectively, these items reduced earnings per share by $0.04, resulting in an adjusted diluted EPS of $4.85. Now Rob's going to take you through all those details on our financial results in a couple of minutes. Let me just hit a few highlights. Business momentum remains really strong. We continue to win new clients and deepen existing relationships. DDA growth continues at a healthy pace, while client acquisition across our corporate and private banking businesses continues to grow meaningfully. Net interest income grew on the back of continued commercial loan growth, as well as favorable deposit mix and pricing.

Fee income performance was a particular highlight, increasing 10% linked quarter and 20% year-over-year. Growth has been broad-based across every fee category, underscoring the value of our diversified business model. We also generated positive operating leverage and improved our efficiency ratio. Credit performance remains strong, reflecting the strength of our economy as well as the quality of our portfolio. The consistency of our financial strength was evident in the Fed's latest stress test results. For the fourth year in a row, PNC's start to trough capital depletion was the lowest in our peer group, further demonstrating our best-in-class resiliency. With this in mind, our board approved an increase to our quarterly common stock dividend of $0.30 or 18% to $2 per share. Beyond these financial results, we continue to make meaningful progress on the things that will drive our future success.

We successfully completed the conversion of FirstBank, opened new branches in high growth markets, introduced a new mobile banking platform, all the while continuing to advance client and infrastructure technologies. None of these efforts are about the next quarter. They're about making PNC a better bank for our customers and positioning the company for sustained growth over the long term. In summary, we had a great quarter. Importantly, we are well-positioned to drive further growth across our company. Before I turn it over to Rob, as always, I just want to thank our employees for everything they do for our company and our customers. With that, Rob will take you through the quarter. Rob?

Thanks, Bill. Good morning, everyone. Our balance sheet is on slide four and is presented on an average basis. For the linked quarter, loans of $363 billion grew $12 billion or 4%. Securities balances increased 2% to $147 billion during the quarter, and the portfolio yield improved nine basis points to 3.45%. Average deposit balances of $457 billion were stable, consistent with seasonal patterns. Borrowings were $79 billion, an increase of $16 billion, reflecting higher FHLB advances. Our tangible book value was $111 per common share, up 2% linked quarter, and up 7% compared with the same period a year ago. Our return on tangible common equity was 17.9% in the second quarter. We continue to be well-positioned with capital flexibility. During the quarter, we returned $1.3 billion of capital to shareholders, which included $690 million of common dividends and $610 million of share repurchases.

Going forward, we expect third quarter repurchases to approximate this same level. As Bill just mentioned, our board recently approved a $0.30 increase to our quarterly cash dividend on common stock, raising the dividend 18% to $2 per share. We remain well-capitalized with an estimated CET1 ratio of 9.9%. Slide five shows our loans in more detail. Loan balances averaged $363 billion in the second quarter, an increase of $12 billion or 4% linked quarter. The total average loan yield decreased three basis points linked quarter to 5.47%. Virtually all of the loan growth was in C&I, reflecting strong new production and higher utilization across almost every loan category. CRE balances increased $690 million during the quarter, driven primarily by growth in retail and industrial exposures.

Consumer loans declined by $730 million as growth in credit card balances partially offset expected declines in residential real estate and auto loans. Slide six covers our deposit balances in more detail. Average deposits were stable with the prior quarter as higher consumer balances were offset by a seasonal decline in commercial deposits. Our total rate paid on interest-bearing deposits decreased five basis points to 1.91% in the second quarter, reflecting lower rates paid across all deposit categories. Notably, average non-interest-bearing balances grew 4% linked quarter and represented 23% of total deposits. Turning to the income statement As Bill mentioned, I want to provide a bit more detail regarding the integration costs and significant items in the quarter. When combined, these items had a minimal impact on our net income and earnings per share. First, we incurred $127 million of integration costs related to the FirstBank acquisition.

Beyond these integration costs, we had several significant items. We participated in the Visa exchange program and monetized half of our Visa Class B-2 shares, resulting in a $448 million pre-tax gain. We also recorded a -$85 million Visa derivative fair value adjustment associated with our remaining Visa Class B-3 shares, primarily related to the extension of anticipated litigation resolution. In addition, we repositioned a portion of our securities portfolio through the sale of approximately $4 billion of available-for-sale securities, resulting in a $139 million loss. We reinvested the proceeds into securities with yields approximately 120 basis points higher than the securities sold. Finally, we contributed $140 million to the PNC Foundation, which supports our communities and early childhood education initiatives. All in, the FirstBank integration costs and significant items, when combined, resulted in a nominal reduction to our second quarter EPS of $0.04.

Turning to slide eight, we highlight our income statement trends. Comparing the second quarter to the first quarter of 2026, total revenue was $6.9 billion and grew $710 million, or 12%, and included both integration costs and significant items totaling $218 million. Non-interest expense of $4.1 billion increased $330 million, or 9%, and included a $140 million PNC Foundation contribution, as well as $121 million of integration expense. We generated 3% positive operating leverage, and PPNR grew 16%. Provision was $191 million. Our effective tax rate was 21%. As a result, our second quarter net income was $2.1 billion, or $4.81 per common share, and $4.85 as adjusted. Comparing the second quarter of 2026 to the same time last year, net income grew by $412 million, resulting in EPS growth of 25%. Turning to slide nine, we detail our revenue trends.

While the quarter included integration costs and significant items within the other non-interest income, our revenue growth was driven primarily by the underlying strength of our franchise. We generated 4% growth in net interest income and 10% growth in fee revenue. Net interest income of $4.1 billion increased $146 million and included the benefit of commercial loan growth and higher non-interest-bearing deposit balances. Our net interest margin was 2.96%, an increase of one basis point. Fee income was $2.3 billion and increased $200 million, or 10%. Looking at the details, asset management and brokerage increased $20 million, or 5%, driven by increased client activity and higher average equity markets. Capital markets and advisory revenue increased $114 million, or 25%, reflecting record M&A advisory fees and strong activity across our other capital markets businesses.

Card and cash management increased $34 million, or 5%, driven by seasonally higher consumer transaction levels and growth in treasury management product revenue. Lending and deposit services increased by $6 million, or 2%, primarily due to increased customer activity. Mortgage revenue increased $26 million, or 22%, largely attributable to negative residential mortgage servicing rights valuations recognized in the first quarter. Other non-interest income of $489 million increased $364 million, which included the $218 million of integration costs and significant items, as well as positive private equity valuation adjustments. Compared with the second quarter of 2025 and excluding integration costs and significant items, total non-interest income increased $444 million, or 21%. Importantly, this performance was driven by strong organic growth with broad-based increases across our businesses. Turning to slide 10, second quarter expenses increased $330 million, or 9%, linked quarter.

Expenses in the second quarter included integration expense and significant items totaling $261 million. The first quarter of 2026 included $97 million of integration expense. Excluding the impact of integration costs and significant items, non-interest expense increased to $166 million, or 5%, linked quarter. The growth reflected increased business activity, higher marketing spend, as well as continued investments. We remain focused on expense management and we're on track to reach our goal to reduce costs by $350 million in 2026 through our continuous improvement program. As a reminder, this is independent of the FirstBank acquisition. This program will continue to fund a significant portion of our ongoing business and technology investments. Our credit metrics are presented on slide 11. Overall credit quality remains strong, with improvements in NPLs, delinquencies, and net loan charge-offs.

Non-performing loans of $2 billion decreased $216 million, or 10%, and represented 0.55% of total loans, down from 0.62% last quarter. Total delinquencies declined $122 million to $1.4 billion, and now represent 0.39% of total loans. Total net loan charge-offs were $226 million, and our NCO ratio was 25 basis points. At the end of the second quarter, our allowance for credit losses totaled $5.5 billion, or 1.48% of total loans. To summarize, PNC reported a strong second quarter of 2026, and we're well-positioned for the second half of the year. Regarding our view of the overall economy, our base case assumes GDP growth to be approximately 2.1% in 2026, with the unemployment rate holding steady and ending the year at approximately 4.3%. We expect the Federal Reserve to keep rates stable throughout 2026.

For ease of comparability with our prior guidance, our full-year outlook excludes the impact of FirstBank integration charges and significant items. Considering our reported first-half operating results, third quarter expectations, and current economic forecast, our outlook for the full year 2026 compared to 2025 results is as follows. We expect full-year average loan growth of approximately 12.5%. We expect full-year net interest income to be up 15%-15.5%. We expect non-interest income to be up approximately 9%. Taking the component pieces of revenue together, we expect total revenue to be up approximately 13%. Non-interest expense to be up approximately 8.5%, and we expect our effective tax rate to be approximately 19.5%. Our outlook for the third quarter of 2026 compared to the second quarter of 2026 is as follows.

We expect average loans to be up 1%-2%, net interest income to be up between 3% and 3.5%, fee income to be down 5%-5.5%, other non-interest income to be in the range of $150 million-$200 million. We expect adjusted non-interest expense to decline 2%-3%, and in the third quarter, we anticipate approximately $50 million of integration expenses. We expect third quarter net charge-offs to be approximately $225 million. With that, Bill and I are ready to take your questions.

Thank you. We will now be conducting a question and answer session. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question today is coming from John McDonald of Truist Securities. Please go ahead.

Thanks. Good morning. Rob, wanted to ask-

You had some very strong loan growth through the quarter. Could you speak a little bit to the cadence of the loan and deposit growth as the quarter progressed? There seems a little bit different dynamics between the period end and average. Maybe just broadly to how you plan on funding the strong loan growth throughout the year.

Yeah, sure. Good morning, John. The loan growth in the first half and in the second quarter continued to be pretty strong, which is a good thing. When we take a look at the second half, we still see loan growth, but not at the same rates. We are pointing to effectively sort of GDP growth in our guidance going through the balance of the year. More loan growth, but not to the same extent. In terms of funding, as we look forward, we do expect deposits to grow through the second half of the year. That'll be a key component to the funding as it replaces some wholesale debt that we picked up in the second quarter.

Okay. Got it. Was that just about some, the funding that you picked up on the FHLB side this quarter, was that just some temporary dynamics, and you expect that you also had good NIB growth this quarter? Maybe just comment on that and the outlook there.

Yeah. Your second question first. Non-interest-bearing deposits were higher than we expected. Virtually all of that was on the commercial side related to our treasury management business and some escrow monies that come through. That's a good thing. I would expect that to continue, not at the same rate. We're at 23% of our total deposits, and we have that pretty steady through the balance of the year.

I think the funding, John, you should just assume we sort of optimize against every lever, whether it's wholesale funding or what we're doing on deposits. The drops this quarter in corporate deposits are pretty easy to turn back on. There's a bit of a seasonal effect, but there's also a rate effect. You saw we grew deposits in retail, which is the most important thing. The home loan advances this quarter were, think of it as the cheapest alternative to fund loans relative to other things. That changes all the time. I wouldn't read too much into that.

No, it's just flexing to the optimal cost.

Thank you. Our next question is coming from John Pancari of Evercore ISI. Please go ahead.

On the loan growth side, I appreciate the trends here. You've seen some pretty good strengthening. Can you maybe just talk about the areas of strengthening? What do you see in terms of demand and pipelines and utilization? Then separately on the loan spread front, any shift in spreads that's observable here just amid the competitive backdrop? Thanks.

Yeah. Inside that, I would say the loan growth has been strong. Again, we expect loan growth to continue, not at the same rate. That's just a function of maybe some pull forward in terms of borrowings or some pent-up borrowing demand. We'll see. As far as the mix, we don't see a lot of spread compression from a competitive standpoint. We do have some spread compression in the continuation of what we saw in the first quarter, which is most of the lending that we're doing is to the high credit quality, lower spread entities. Those are who are borrowing now. It's good business. It's sufficient return, particularly given that those loans often come with treasury management and/or capital markets. There's a little bit of dilution to the portfolio spreads, but that's more mix than competitive pressures.

The other thing, we continue to have the new markets outpace the legacy markets just in terms of growth as we grow share there. For the first time, I'm sure this isn't true, but for the first time I can remember, we had strong growth across every category inside of the C&I franchise and utilization increases.

Yeah. It's broad-based. We're gaining share all on the back of what feels like a pretty strong economy.

Okay. Thank you. That's helpful. I know you don't really guide on more specifically around the margin, but just trying to get an idea, just given some of the pricing dynamics that you're seeing in the backdrop in the environment. Just wanted to get an idea of how you're thinking about the margin could traject through the back half of the year that's kind of baked into your guidance here. I know you saw a modest expansion in the quarter by about a bit. Just how are you thinking about how that could play out as you look through the back half?

Yeah. Let me address that, John, because there's a lot of focus on NIM. We had said that we expect to go above 3% by the end of the year, and we still are standing next to that. That's that. The second piece is if you chunk down the NIM components, and it sort of gets to your earlier question, the components of our second quarter NIM. What helped our second quarter NIM, which went up a net one basis point, was obviously the decline in the rate paid on the interest-bearing, as well as the increased non-interest-bearing deposits. That helped NIM. What constrained NIM was the point that I was making earlier, is these commercial loans that are coming in at a pretty good rate, and the majority of those being the higher credit quality, lower spread. That constrains NIM.

When you think about it and you look at it, those loans carry the fees along with them. From an EPS perspective, those loans are hugely accretive. On a standalone basis, they're dilutive to NIM. If we didn't have those loans, just for illustration purposes, if we didn't have that loan growth in the second quarter, our NIM would have easily popped above 3%. We're given a choice between lower NIM, higher EPS or higher NIM and lower EPS. We'll take EPS every time.

We're on record for 3% the back half of the year.

Much of that driven through the continual repricing of fixed rate assets.

Well, that's the longer term issue. The longer term issue is the steepness of the yield curve. We still have a lot of fixed rate assets to reprice, so that'll determine that. I just mentioned that for illustration purposes because I think a lot of the focus on NIM is on the funding side and the issues there, but there's also the loan dynamic.

Right. Got it. Thanks for that detail. I appreciate it.

Thank you. Our next question is coming from Ebrahim Poonawala of Bank of America. Please go ahead.

Hey, good morning. I guess maybe Bill Rob sticking with loan growth. You mentioned the high credit quality, low spread lending, which is good to hear from a credit quality standpoint.

Is this different from history in terms of this kind of loan growth? This is kind of what you would expect in a good C&I environment where market spreads are tight. One, is there something different about the quality or the type of borrower or the type of borrowing that's happening? Then I have a follow-up to that, but maybe if you could start there. Thanks.

Yeah. I wouldn't say anything is way different, I would say that the preponderance of the loan growth is in that higher credit quality, lower spread loans, which is probably mix-wise a little bit higher than average run rate. It's not off the charts.

Got it. I guess as a follow-up to that, you had all the big banks report like there's a significant energy around the economy, around AI, CapEx spend. We are seeing that in the financing markets. When you sort of bring it back to you're the second bank today that talked about broad-based C&I growth. I'm just wondering, one, are you picking up some of that business tied to data center lending, et cetera? Second, when you think about the broad-based growth, are there other engines of the economy at work here, be it reshoring, manufacturing, et cetera? Or are you able to sort of connect the dots between second derivatives of AI CapEx driving that loan demand for PNC?

It's too broad-based to lay it all on AI. At the margin it's impacting what we're doing. As I said before, it's coming from kind of all sectors. Which is, I've heard the different explanations as to why it's showing up. People are otherwise used to the chaos in the environment and have figured out that they need to operate through it and grow. The M&A environment is more robust. Look, the economy's strong. People are spending money. While I appreciate the impact AI is having on GDP, that can't be the only driver of the loan growth that we're seeing given the industry dispersion and the geographic dispersion.

Thank you. Our next question is coming from Erika Najarian of UBS. Please go ahead.

Hi. Good morning. Rob, if I could just start with you. To your point, there's a lot of focus on net interest margin trajectory because of the funding dynamic.

The Street currently has an exit rate of 3.08% for fourth quarter of 2026. As we think about where the loan growth is coming from, is that too fast of a ramp relative to the other opportunities in terms of fixed asset repricing and obviously maybe optimizing some of the wholesale funding that you put on this quarter to core funding?

Yeah. Again, we don't give NIM guidance, nor do we manage to it. That said, I always give NIM guidance, we're above three, Erika. The precise level at the exit run rate.

At the end of the day, we'll stick to our guide, and we'll get there. If we grow EPS and NII at 2% higher and have a lower NIM, to Rob's earlier point, why do you focus on it?

I personally don't care. I think that the NII dollars are more important, and I couldn't quote you what JPMorgan's NIM was for this quarter, so I think you're right. I'm just thinking about why the stock is down despite the beat and raise. That's why I'm trying to clarify that question.

More sellers than buyers. Look, maybe the simplest thing to say across the space is we have healthy asset growth through loan growth which is coming from client acquisition and economic activity. We have a great ability to fund it. We're growing our retail franchise. Retail deposits are increasing. Corporate deposits we didn't pay up for, and they went down in the quarter, but we can make those whatever we want.

We're very liquid today. It's not a huge focus inside the company even though the mechanical outcome, as we've said since the beginning of the year, will push us over 3% by the end of the year.

To that end, just to take a step back, clearly the company is doing well. You've talked about organic NII dollar growth of about $1.2 billion this year, I guess as we think about sort of what's your plan over the next few years, is that NII dollar growth replicable for a sustainable period of time? Additionally, you printed a pretty nice ROTCE this quarter. I guess I'm wondering about the path to the 20% that you've mentioned previously.

Well, maybe I could jump in there a little bit. We're not going to get into 2027 guidance, but we're on record saying that we've got a lot of fixed rate asset repricing that goes well into 2027 and beyond. That's constructive for NII in 2027. As we get closer to the end of the year, we'll sharpen that up for you. As far as the ROTCE goes, we're on record saying that we'd hit 18% annualized exit rate fourth quarter 2026. We're sticking to that as well. We're tracking to that. We point out this quarter we're at 17.9%, so arguably we're in the vicinity.

Thank you. Our next question is coming from Mike Mayo of Wells Fargo. Please go ahead.

Hi. Just a little bit more color on loan growth. Certainly it's growing faster than you had thought. Can you talk about line utilization and the potential for loans to grow even faster, and how much you're assuming line utilization will increase as part of your higher guide?

Oh, yeah. Hey, Mike, it's Rob. As we pointed out in the second quarter, utilization has increased for us, and it's been pretty broad based. When we look into the second half, we have continued loan growth. We have an expectation that the utilization would at least hold, maybe go up a little bit. That's all part of our thinking in terms of sort of moderating the loan growth to roughly GDP.

Okay. Look, your stock price has outperformed this year when you look at it, and it's caught a bid. Do you ever wonder about this party that's taken place elsewhere as relates to AI and this CapEx AI super cycle and all the mega IPOs and mega financings, and mega mergers that you're not part of, and it's like, wow, we're not part of that, but we have our own area. What's the counterargument to that whole super cycle? Is there enough to go around in a trickle-down effect? Bill, if you have thoughts on that because you've been on both sides of that kind of Wall Street mega cycle.

Many ways to answer that. I guess I'd offer the following. The first is you just look at who we are and our growth rate. Our EPS is what? Up 25% year-on-year. We're growing single double digits on every line item on revenue and growing customers in a space that does not focus heavily on capital markets. Yet our capital markets revenue is up 80% year-on-year. Are we in the middle of a deal that pays $100 million in fees? No, we aren't. Are we actually growing the core franchise at a pace, importantly, at a pace that is less cyclical than the boom you're seeing in the super cycle right now? We are.

It's an alternative to something that I think is more volatile, yet we're dropping real dollars to the bottom line in a healthy economy and gaining share as we do it.

Thank you. Our next question is coming from Manan Gosalia of Morgan Stanley. Please go ahead.

Hey, good morning. Rob, I wanted to check in on the trends on deposit costs. The five basis points improvement this quarter, it's pretty good given the environment. Have you noticed anything in terms of the trajectory as you went through the quarter? Just given the increased focus on deposit competition, I'm wondering if you're seeing anything, any underlying trend in either the overall portfolio or in specific geographies on deposit costs.

Yeah. We track that obviously pretty closely. We declined in terms of rate paid in the first quarter. Our outlook, we do have rate paid drifting back up to first quarter levels. That's all part of our guidance. Mostly in terms of back book repricing and some of the things that we want to do with our deposits. That's the track that we're on.

I guess in terms of the competitive environment, I guess what do you think is driving that? Is that just the rate outlook and the fact that rate cuts have come out of the forward curve and maybe we have a rate hike or two coming up? Is that the only thing that's driving it? Is there just more competition overall? Can you talk a little bit more about that dynamic?

I think a couple things. Let's separate what's going on in wealth and corporate and assume correctly that those are competitive yields and you can kind of dial them up and down with rate. On the retail side, to the extent you are in effect a commercial bank without a retail franchise, things are really tight, right? That's where you're seeing CD rates posted, brokered CDs at really high rates. If you're growing and own a good retail franchise, it's less severe. If you look inside of what we've done in retail, the growth in DDA households, the increase in balance and the actual drop in rate quarter-on-quarter of a basis point, right?

Would kind of lead you to a conclusion that if your company's balanced here between retail and just commercial lending, you actually are in a pretty good spot, and I think we are. I don't think everybody is, and we've talked about it forever, but retail share is moving aggressively to the larger players, and it's making it more difficult to fund if you're smaller and don't focus on it.

Yeah, I think that's right. I think that's why even though we do expect some increase in our rate paid, it's not dramatic.

Thank you. Our next question is coming from Matt O'Connor of Deutsche Bank. Please go ahead.

Good morning. I was hoping to circle back on the capital market revenues. I guess the fact that a lot of the revenues in the industry are being driven by some of these bigger headline deals, yet your revenues were so strong. Just remind us a little bit about what the mix is, maybe kind of generally from a product point of view, size of customer. Then just also any comments on how well it's integrated with the rest of the firm as a feeder system. Thank you.

Sure, Matt. Our capital markets was up overall, but each category was up. Harris Williams, which is about 40% of our capital markets business, had a record quarter. Beyond that, loan syndication, Solebury Capital, trading all up. Broad-based.

Inside of there, you have derivatives and FX and our share of investment grade underwriting has gone way up. It's a healthy market. We participate in it.

Just in terms of the interconnectivity with the other businesses, like C&I loan growth. Is that driving some of the hedging here? Obviously that would make sense, but sometimes it's different targeted customer bases.

It's all correlated, and you're exactly right. Loan growth gives rise to derivative activities. Oftentimes, even in a middle market instance where there's going to be some loan, which is syndicated, and there might be some bonds associated with it. We're inside of that also. It is all correlated. It's on the back of the size of the financings that are going on inside of the U.S. economy.

Thank you. Our next question is coming from Gerard Cassidy of RBC Capital Markets. Please go ahead.

You guys have been good over the last two, three years in getting out in front of the commercial real estate story. Obviously, there was a lot of fear following the pandemic about office space and the issues around it. Your credit continues to improve in commercial real estate, and now you're growing commercial real estate mortgages. Can you share with us some color? What are you guys seeing there? What are the opportunities to grow that portfolio further?

Yeah. Gerard, you're spot on. We've worked through the commercial real estate office portfolio. Still some work to do there, but we did release some reserves as we worked through that book. As far as loan growth, we inflected in the first quarter for the first time after I don't know how many quarters of declines. We see that continuing. In fact, the pipelines are forming in commercial real estate in a very constructive way across all the categories. Multifamily, industrial, and retail pipelines are all up. We would expect commercial real estate to be a bigger component of our loan growth going forward.

Very good. Is there any data center construction loans, just out of curiosity? I assume not, or not many.

PNC Financial Services Group (PNC) Q2 2026 Earnings Call Transcript

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