PNC ups guidance after Colorado deal boosts revenue

• Key insight: The acquisition of FirstBank Holding Company is a boon to PNC's goal of achieving nationwide scale, but it also comes at a cost.
• Supporting data: While loans and deposits increased annually by 13% and 8%, respectively, higher expenses and credit costs tamped down on PNC's bottom line.
• Forward look: The company raised its forecast for loan and net interest income growth in 2026.

UPDATE: This article has been updated with commentary from PNC's earnings call on Wednesday.

PNC Financial Services Group began to see its recent purchase of a Colorado bank pay off in the first quarter, even as concerns of the macroeconomic environment have put a spotlight on credit quality in the banking industry.

The Pittsburgh-based company increased loans by 13%, and total deposits ticked up 8%, in the first three months of 2026 from the prior year, PNC said Wednesday. And although the bank did have to account for some bad loans that came with the deal, CEO Bill Demchak said on PNC's first-quarter earnings call that the balance sheet isn't showing larger signs of souring.

"While we recognize that there are many market concerns out there, from energy prices to AI to private credit, we are not seeing anything that suggests these issues are broadly impacting our customers or our credit quality in the near term," Demchak said.

PNC upped some of its guidance for 2026 Wednesday in light of the recent acquisition-related growth. The company now expects loans to increase by 11% this year and net interest income to increase by 14.5%, instead of its original forecasts of 8% and 14%, respectively.

The bank closed its deal with the $26 billion-asset FirstBank Holding Company on Jan. 5, and is targeting mid-June for a full conversion. FirstBank, which PNC agreed to buy in September for $4.1 billion, had $16 billion of loans and $23 billion of deposits when the deal crossed the finish line. The acquisition increased PNC's footprint in Colorado and Arizona by more than triple — a valuable exchange for PNC as it continues an ambitious mission for scale.

But the benefits of the deal came at a price. PNC incurred $98 million in integration costs in the first quarter, about one-third of the $325 million total it expects to spend swallowing FirstBank. Demchak said the company anticipates spending another $150 million in the second quarter.

PNC also increased its provisions for credit losses, and saw net charge-offs rise, compared with the fourth quarter. The bank set aside an additional $71 million to account for "loan growth and the addition of FirstBank, as well as updates to macroeconomic factors," though provisions were down 4% from the same time last year.

The bank charged off $91 million more than it did in the fourth quarter, half of which was due to the purchase accounting treatment for certain FirstBank loans. Total net loan charge-offs of $253 million marked a 23% increase from the same period last year.

The higher expenses dragged down on the $603 billion-asset bank's bottom line. The company's net income was $1.8 billion in the first quarter, compared with $2 billion during the prior quarter, and $1.5 billion in the first quarter of last year.

Earnings per diluted share were $4.13, which beat the consensus analyst estimate of $3.95, and was ahead of the $3.51 the company reported in the first quarter of 2025, but marked a drop from $4.88 in the fourth quarter.

Net interest income rose 6% from the fourth quarter, and about 14% from the previous year, to nearly $4 billion. Total revenue rose by 2% from the prior quarter and by about 13% from the first quarter of 2025, thanks to the Colorado bank purchase.

Private credit disclosures

Demchak emphasized during the company's earnings call that he isn't worried about any possible threat from the $1.7 trillion private credit industry, which has come under pressure in recent months amid record redemption requests and increasing fears of defaults.

PNC disclosed Wednesday that it has $73 billion of loans to non-depository financial institutions, which amounts to about 20% of its total book. But less than half of that portfolio, or $33 billion, is connected to business credit intermediaries, where most of the market pressure has been.

Of that amount, about $26 billion involves trade receivable securitizations and other asset securitizations, collateralized by pools of assets like accounts receivable and leases, and $7 billion is made up of loans to private credit providers, most of which are collateralized loan obligations.

Chief Financial Officer Robert Reilly said that the bank has experienced virtually no losses in the nonbank lending category, going back 25-plus years.

"We don't see any loss content in this book and certainly don't see any exposure to a systemic event, which, by the way, we don't expect," Demchak said.

Demchak added that the regulatory classification system for nonbank lending is misleading and "seems to capture random things." At PNC, sectors such as the mortgage intermediary business, private equity funds and insurance company business make up more than half of those loans.

The Federal Reserve last year rejiggered the protocol for how banks denote nonbank loans on their call reports. Demchak said the bank plans to speak with regulators about how nonbank loans are defined and categorized, calling the current system "uselessness."

Demchak's sentiments echo those of JPMorganChase CEO Jamie Dimon, who said Tuesday during his company's earnings call that he doesn't think the risk of private credit can be systemic to the industry. JPMorgan, Citi and Wells Fargo and Bank of America disclosed this week they have, combined, roughly $125 billion of exposure to private credit.

"This isn't even on the page of what we're looking at," Demchak said. "This is nothing. I mean, it's a great business. It doesn't worry me. I worry about trucking companies, and I worry about people who are dependent on fuel and what's going to happen to discretionary spending. This isn't in that list."