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.

PNC Financial Services Group began to see its recent purchase of a Colorado bank pay off in the first quarter, as the acquisition helped drive up the company's revenue to $6.2 billion.

Total loans at the Pittsburgh-based company increased by 13% and total deposits ticked up 8% in the first three months of 2026 from the prior year, PNC said Wednesday. The bank closed its deal with the $26 billion-asset FirstBank Holding Company on Jan. 5.

PNC CEO Bill Demchak said in a prepared statement that the year was "off to a great start."

"During the first quarter we successfully closed the FirstBank acquisition, and in addition, generated strong legacy loan growth," Demchak said. "Client activity remains robust across all our geographies, and importantly, we're well positioned to continue our strong momentum."

But the benefits of the deal came at a price. PNC incurred $98 million in integration costs, about one-third of the total it expects to spend swallowing FirstBank. Total noninterest expenses increased 5% from the prior quarter to $3.8 billion — a $165 million increase, more than half of which was spent on integrating FirstBank. Noninterest expenses were up more than 11% from the first quarter in 2025.

PNC also bulked up its provision for credit losses by about 51% from the previous quarter, to $210 million, which the bank said reflected "loan growth and the addition of FirstBank, as well as updates to macroeconomic factors." Provisions were down 4% annually.

The 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 about 13% from the first quarter of 2025, thanks to the Colorado bank purchase.

When the FirstBank deal closed in January, the Colorado-based bank had $16 billion of loans and $23 billion of deposits. PNC agreed to buy the bank in September for $4.1 billion. While some analysts noted at the time that the deal's price-to-tangible book value was steep among peers, many also said the high quality of FirstBank's franchise justified the premium that PNC agreed to pay.

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. The company is also currently working on adding 300 new branches by 2030, a $2 billion initiative that began in 2024 as a $1 billion investment plan.

Also on Wednesday, PNC upped some of its guidance for 2026. 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 operating environment wasn't all tailwinds during the first quarter, as the war in Iran and trade uncertainty has thrown a wrench into what had seemed like smooth sailing for banks.

PNC's net charge-offs increased by $91 million from the prior quarter, half of which were due to the purchase accounting treatment for certain FirstBank loans. PNC said the rest of the increase was driven by higher commercial net loan charge-offs. Total net loan charge-offs of $253 million marked a 23% increase from the same period last year.

PNC also made new disclosures Wednesday about its exposure to the private credit market, which has come under strain in recent months. Redemption requests have hit records, and increasing fears of defaults have also put a spotlight on banks' exposure to private credit loans.

PNC said that it has $73 billion of loans to non-depository financial institutions, which amounts to about 20% of its total book. But NDFI loans are a broad category, and sectors such as the mortgage intermediary business, private equity funds and insurance company business make up more than half of those loans at PNC.

The bank's exposure to business credit intermediaries, where most of the market pressure has been, is about $33 billion. Of that amount, $26 billion of the exposure involves trade receivable securitizations and other asset securitizations, collateralized by pools of assets like accounts receivable and leases, PNC said. The remaining $7 billion is to private credit providers, most of which are collateralized loan obligations.

On Tuesday, three of the largest banks in the country — Citigroup, JPMorganChase and Wells Fargo — said they have a combined $100 billion of exposure to private credit. But JPMorgan CEO Jamie Dimon said that he wasn't worried about the sector posing a threat to the banking system at large.

"When there's a credit cycle, losses will be worse than people expect," Dimon said on JPMorgan's first-quarter earnings call. "I don't think [private credit risk is] systemic. It almost can't be systemic at that size, relative to anything else. But, when recessions happen and values go down, and people refi at higher rates, they'll be stressed and strain the system."