PNC sticks to guidance, but said Fed cuts may move timeline

• Key insight: PNC CEO Bill Demchak said the bank's net interest income trajectory was still on track to hit guidance for 2025 and 2026.
• What's at stake: The banking industry has seen tepid loan growth and deposit pricing pressure in recent years, but has started to turn a corner amid more borrower certainty and interest rate cuts.
• Forward look: The bank also said it won't "chase a deal frenzy," following its plan to purchase FirstBank Holding Co. in Colorado.

PNC Financial Services Group will "comfortably" hit its net interest income guidance for 2025, and continue with that momentum for next year, executives said Wednesday, after the bank's third-quarter earnings report made some investors skittish.

The Pittsburgh-based bank's stock price fell about 4% Wednesday after net interest income for the third quarter came in slightly below analysts' expectations. But CEO Bill Demchak said on PNC's call with analysts that "absolutely nothing" has changed for the bank's earnings outlook for this year, or the next.

The bank expects net interest income to climb 6.5% this year, and at least that much again in 2026, if not more.

The only thing that has changed, said Demchak and Chief Financial Officer Rob Reilly, is the quarterly timeline for that outlook, due to PNC's expectation of when the Federal Reserve will cut interest rates. The bank now projects three consecutive, 25 basis-point decreases to rates in October, December and January, which is a one-month shift from its previous expectations.

If rates decrease late in December, the bank's deposit repricing may not catch up until the first quarter of 2026, which was the cause of what Demchak called a "shortfall" in its fourth-quarter net interest income outlook.

Scott Siefers, an analyst at Piper Sandler, said in a note Wednesday that the "step back" disappointed the market.

"Thankfully, this should resolve," he wrote. "And the 2026 estimate (and beyond) story remains on track."

In the third quarter, net interest income of $3.6 billion increased 7% from the prior year, due to the continued repricing of fixed assets from the zero-rate era, and loan growth.

PNC reeled in $1.8 billion for the quarter in net income, or $4.35 in diluted earnings per share, beating the analyst consensus estimate of $4.04.

Pipelines in sight

PNC Financial Services Group also saw record revenue in the third quarter as it raked in more fees and saw commercial and industrial loan business rise.

While borrower demand has been tepid for years, PNC started guiding for stronger loan origination earlier this year amid more political and economic certainty. While Demchak said there was "a little strengthening," and more activity in mergers and acquisition financing and syndications, utilization hasn't moved the needle much.

But Reilly said the bank sees possibility around loan growth possibilities. Demchak pointed to a recent survey PNC conducted with Bloomberg of 300 chief financial officers nationwide. The majority of respondents were bullish on the economy, which Demchak said surprised him.

Some 70% of respondents said the tariff uncertainty and economic outlook has positively affected their companies, especially those with less than $1 billion of revenue.

And PNC said pipelines are still strong.

In the third quarter, loans grew 1% from the prior quarter, and 2% year-over-year, driven by commercial and industrial lending. PNC offset some of its loan growth as it continues to pull back on its commercial real estate lending portfolio, which is down 13% from the previous year.

The bank has pulled back from the sector, which has been a dark cloud on balance sheets across the industry for nearly three years, but Demchak said PNC is nearing the end of the rundown of those balances.

Banks have seen their Wall Street business spike in 2025, attributable to a renaissance in dealmaking and an active trading market. PNC saw jumps in its capital markets and advisory business and its residential and commercial mortgage business push fees to $2.1 billion for the quarter, up 9% from the prior quarter and up 6% from 2024.

Recent moves for scale

PNC's earnings news comes about five weeks after it announced plans to acquire Lakewood, Colo.-based FirstBank Holding Co. for $4.1 billion.

But PNC is focused more on organic growth, and won't nab any bank purchase it can, Demchak said Wednesday.

"You shouldn't expect that to be the norm," the chief executive said. "You shouldn't expect us to chase a deal frenzy. We'll look at things should they arise, but we'll be selective as we've always been."

Demchak added that the bank saw the FirstBank transaction as an opportunity for "real, honest retail share."

The deal, expected to close in the first quarter of 2026, will rapidly scale PNC's presence in Arizona and Colorado. With the purchase of the $26.8 billion FirstBank, PNC will more than triple its branch footprint in Colorado, to 120, and grow its branch count in Arizona to more than 70.

Demchak said his bank hasn't seen many other deals worth doing. Last week, Fifth Third Bancorp announced it planned to buy Comerica in Dallas for nearly $11 billion. Demchak said a deal like that would exacerbate PNC's problem.

"Everybody is all excited about M&A," Demchak said. "But there actually aren't many visible sellers who have any sort of decent retail share. Part of the reason a lot of these guys are selling is because they don't have an answer to this question."