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# The PNC Financial Services Group, Inc. (PNC) — Business, Risks and Management's Discussion ## Business *From the 2025 Form 10-K (fiscal year ended December 31, 2025), SEC accession 0000713676-26-000020.* PNC is a financial services holding company headquartered in Pittsburgh, Pennsylvania, and one of the largest diversified financial institutions in the United States. It takes deposits, lends, and sells fee-based services to three customer sets: consumers and small businesses through a coast-to-coast retail branch network; mid-sized and large corporations, governments and not-for-profits through a nationally delivered commercial bank; and high-net-worth individuals and institutions through a wealth and asset management arm. Substantially all of the business is conducted through PNC Bank, National Association, a national banking association chartered in Wilmington, Delaware; non-bank subsidiaries handle market-making, securities underwriting, advisory and merchant banking activities. Strategic offices exist in four countries outside the U.S., but foreign operations are a small part of the whole. At December 31, 2025, consolidated total assets were $573.6 billion, total deposits $440.9 billion and total shareholders' equity $60.6 billion. Employees totaled 55,333, of whom 27,595 worked in Retail Banking. The branch count was 2,224. Revenue comes from two engines. Net interest income — the spread between yields on $331.5 billion of loans and $138.2 billion of investment securities and the cost of $440.9 billion of deposits and $57.1 billion of borrowed funds — was $14.4 billion in 2025, roughly 62% of the $23.1 billion revenue total. Noninterest income of $8.7 billion supplied the rest, and it is diversified: card and cash management $2.9 billion, asset management and brokerage $1.6 billion, capital markets and advisory $1.5 billion, lending and deposit services $1.3 billion, residential and commercial mortgage $0.6 billion, with $0.8 billion of other income. **Three reportable segments.** Figures below are 2025 net income excluding noncontrolling interests, with 2024 alongside. - **Retail Banking** — $5.0 billion (2024: $5.1 billion) on $14.9 billion of revenue. Checking, savings, money market and time deposits; residential mortgages, home equity, auto, credit card, education and small business loans; PNC Wealth Management brokerage and managed accounts. Delivered through the branch network, digital channels, ATMs and phone-based contact centers. PNC announced in 2024 that it would invest approximately $1.5 billion over five years to open more than 200 new branches (Atlanta, Austin, Charlotte, Dallas, Denver, Houston, Miami, Orlando, Phoenix, Raleigh, San Antonio, Tampa) while renovating 1,400 existing locations; in the fourth quarter of 2025 it raised that commitment by $0.5 billion to add 100 more branches in markets including Nashville, Chicago, Sarasota and Winston-Salem, and reaffirmed plans to renovate 100% of the network by 2029. - **Corporate & Institutional Banking** — $5.4 billion (2024: $4.7 billion) on $11.2 billion of revenue. Secured and unsecured lending, letters of credit and equipment leasing; treasury management; capital markets and advisory (M&A advisory, equity capital markets, asset-backed financing, loan syndication, securities underwriting, customer-related trading); and commercial loan servicing and technology for the commercial real estate finance industry. - **Asset Management Group** — $472 million (2024: $376 million) on $1.7 billion of revenue. Two units, PNC Private Bank and Institutional Asset Management. Discretionary client assets under management were $234 billion at December 31, 2025 (from $211 billion), with a further $238 billion of nondiscretionary client assets under administration. Results outside the segments — asset and liability management, securities gains and losses, certain trading, runoff consumer portfolios, private equity, unallocated corporate overhead and tax adjustments — are reported as "other activities." **Corporate history and structure.** PNC was incorporated in Pennsylvania in 1983 through the consolidation of Pittsburgh National Corporation and Provident National Corporation, and has grown since by organic expansion, bank and non-bank acquisitions and equity investments. At December 31, 2025 the structure comprised one domestic bank subsidiary and 52 active non-bank subsidiaries, plus affordable housing and historic rehabilitation investments. On January 5, 2026 PNC completed the acquisition of FirstBank Holding Company and its banking subsidiary FirstBank, a Colorado state-chartered bank, which held $26.4 billion of assets, $16.0 billion of loans and $23.1 billion of deposits at close. **Regulation.** PNC is a bank holding company that has elected financial holding company status; the Federal Reserve is its primary regulator and the OCC supervises PNC Bank, with the FDIC and CFPB involved on specific matters. PNC and PNC Bank are Category III banking organizations — more than $250 billion but less than $700 billion in consolidated assets, not designated a GSIB, and less than $75 billion in cross-jurisdictional activity — and the FirstBank acquisition did not change that classification. To avoid limits on capital distributions PNC must hold a CET1 ratio of at least 7.0%, a tier 1 ratio of at least 8.5% and a total capital ratio of at least 10.5%; its stress capital buffer for the four quarters beginning October 1, 2025 is the regulatory minimum of 2.5%. Both entities exceeded "well capitalized" thresholds at December 31, 2025. Reduced liquidity coverage and net stable funding requirements apply (a 15% reduction) because short-term wholesale funding is under $75 billion. PNC filed its full holding-company resolution plan by October 1, 2025; the next targeted plan is due July 1, 2028, and PNC Bank's next insured depository institution plan is due July 1, 2026. Two pending rule changes matter to the capital picture. The July 2023 Basel III endgame proposal would align Category III capital elements with Category I and II — recognizing most of AOCI in regulatory capital and imposing harsher CET1 deductions for mortgage servicing rights, deferred tax assets and investments in unconsolidated financial institutions; the agencies are expected to repropose it in 2026. A separate August 2023 proposal would impose minimum long-term debt and "clean holding company" requirements on Category II–IV firms; PNC expects it could comply through normal course funding if finalized as drafted. Neither has been finalized. **Competition.** PNC competes for deposits and loans with commercial banks, savings banks, credit unions, consumer finance and leasing companies, investment management firms, non-bank lenders, financial technology companies, treasury management providers, insurers and issuers of commercial paper and mutual funds; in asset management with investment managers, large banks, brokerages, fintechs, mutual fund complexes and insurers; and in investment banking and alternative investments with investment banks, CLO managers, hedge funds, merchant banks and private equity firms. Competition turns on pricing, product structure, breadth of offering and service quality, delivered through both branches and digital channels. --- ## Risk factors *From the 2025 Form 10-K, SEC accession 0000713676-26-000020.* ### Economy, external factors and regulation - **Adverse economic conditions.** Business volume, loan demand and borrower repayment capacity all track the U.S. economy. PNC identifies the current environment as uncertain because of sustained inflationary pressure, higher prices, low housing affordability, fluctuating trade policy including tariffs, and geopolitical tension. It singles out commercial real estate: underutilization of space combined with higher rates has already harmed some customers' creditworthiness and ability to refinance maturing loans. - **Legislation, regulation and political factors.** Changes in law or policy can alter customer behavior, transaction profitability and regulatory burden. PNC notes that regulations finalized under the prior administration have been modified, rescinded, withdrawn or put under reevaluation, and that the direction and durability of the current approach are uncertain — including the possibility that new rules favor competitors structured differently or serving different markets than PNC. Federal debt levels, the debt ceiling and government shutdowns are named as separate sources of instability. - **Federal Reserve policy.** Monetary policy drives the rates PNC earns on loans and pays on deposits and borrowings, and the value of its on- and off-balance-sheet instruments. PNC states it cannot control or reliably predict the timing of policy changes. - **Comprehensive supervision.** PNC is subject to the Federal Reserve, OCC, FDIC, CFPB, SEC, CFTC, FINRA, the Department of Labor and foreign regulators. Supervisory or examination outcomes — including perceived compliance failures — could restrict transactions, new activities, geographic expansion and acquisitions, or force changes in business practice, and could produce significant fines or corrective actions. Heightened scrutiny is flagged for BSA/AML, know-your-customer, sanctions, consumer compliance, and capital, liquidity and resolution planning. Confidential supervisory ratings are a channel through which third-party compliance failures can limit PNC's ability to expand. - **Capital and liquidity standards.** Requirements can prevent PNC from acting in shareholders' interest — constraining dividends and buybacks through the stress capital buffer, limiting expansion organically or by acquisition, forcing asset sales, shaping the amount and type of lending, and requiring holdings of low-yielding liquid assets instead of longer-dated or less liquid ones. Dividends from PNC Bank are the parent's principal source of funds, and those are themselves restricted. - **Liquidity constraint.** Unanticipated cash or collateral outflows, unexpected loss of consumer deposits, heavy draws on lending commitments, inability to sell assets at favorable prices, counterparty default, or loss of market confidence could impair liquidity. PNC explicitly notes that the speed at which information spreads through traditional and social media can increase the speed and severity of a liquidity squeeze driven by news — accurate or alleged — about PNC or about banks generally. - **Credit rating downgrade.** Would raise funding costs, narrow the counterparty base, potentially affect mortgage servicing rights and escrow holdings, hurt deposit gathering, and trigger cash or collateral obligations under derivative contracts. - **Privacy and personal data rights.** Evolving rules limit how personal data can be gathered, used and transmitted, require making customer data available to consumers and authorized third parties, raise compliance complexity and cost, and carry significant financial penalties — with inconsistent requirements across jurisdictions. - **Climate.** Physical and transition risk could raise costs, cut asset values, reduce insurance availability and disrupt operations for PNC and its customers, with impacts varying by customer exposure to carbon-intensive activity. PNC also flags the opposite pressure: federal climate policy that conflicts with state-level policy or investor expectations, and conflicting demands from stakeholders and activists over how climate is weighed. ### Technology - **Competitiveness.** The industry is changing rapidly — cloud, AI and machine learning, biometric authentication, voice and natural language, and mobile interaction. Keeping pace requires considerable and continuing expenditure, which adverse conditions could constrain; failing to keep pace would cost market share or add expense. - **Intellectual property.** Where PNC licenses technology rather than building it, rights may not be available on reasonable terms, licensors may terminate, and infringement claims have arisen and caused losses in the past. - **Failures and interruptions.** Human error, unexpected transaction volumes, design flaws, software bugs, hardware failures, outages, weather, disasters and hostile acts can all disrupt systems. PNC states plainly that it continues to use some older technology that may be less reliable than newer systems, and that transitions to new technology create their own timing, cost and functionality risks. Failures at infrastructure providers, payment and clearing systems, and their own downstream vendors carry the same consequences with less oversight available. - **Cyber attacks and breaches.** Continual attempts by bad actors — viruses, hacking, ransomware and other malware, denial of service, credential stuffing, phishing, social engineering, account takeover, insider threats and supply chain attacks — and PNC notes the effectiveness of these efforts may be enhanced by AI. Specific exposures called out: real-time payment rails that compress detection and recovery windows; an expanded digital footprint and dispersed workforce that add network access points; customers' own devices and third-party financial applications and data aggregators holding banking credentials, which have enabled ACH, credit card and wire fraud via synthetic identities and account takeovers, and fraudulently induced authorized payments; and merchant data breaches, where PNC can bear reimbursement, card replacement, and — under payment network agreements with merchant customers — certain losses and penalties. ### The business of banking - **Creditworthiness of customers and counterparties.** Credit risk is described as one of PNC's most significant risks given how much of the balance sheet is loans and securities. Under CECL, the allowance reflects expected lifetime losses, which produces volatility in the allowance and provision as forecasts and credit performance change; PNC notes both directions are unsustainable and can obscure actual current performance. - **Concentration and asset mix.** Loans secured by real estate are a significant percentage of the credit portfolio and also underlie part of the securities book. Financial institutions are interconnected through trading, funding and clearing, so uncertainty about the stability of other institutions can produce market-wide losses. - **Interest rates.** Because so much of the balance sheet is interest-bearing, rate levels, curve shape and spreads affect net interest income and margin, borrowers' ability to service variable-rate debt, demand for rate-based products, hedge effectiveness, prepayment speeds and mortgage servicing asset values, and the price obtainable on fixed-rate obligations. - **Financial asset values.** Changes in the value of securities, loans held for sale, servicing rights and equity investments flow through results. ### Estimates and assumptions - **Valuations, allowances and impairments** require difficult, subjective and complex judgment — the CECL allowance most of all, plus legal reserves and the fair value of derivatives, debt securities, loans, mortgage servicing rights and private equity. Assets valued on unobservable inputs are inherently less reliable, and market disruption can turn actively traded classes illiquid rapidly. New or amended accounting standards can require retrospective application that changes previously reported results. - **Models, including AI.** Models set pricing, flag fraud, target marketing, grade loans, extend credit, measure market and rate risk, estimate losses and assess capital adequacy, and PNC depends on them for CECL and capital stress testing. AI and machine-learning models are a minority of the total but growing; they can be more predictive but are less interpretable. Flawed models could distort business decisions, make public or regulatory disclosures inaccurate, affect regulators' decisions on capital distributions, and draw fines — and AI use is itself exposed to intellectual property, privacy, consumer protection and equal opportunity law. ### Customers, reputation, talent and operations - Success depends on attracting and retaining customers, including through interfaces with third-party financial applications that customers expect to work with their PNC accounts. - Reputational damage would impair the ability to compete for customers and employees and to grow. - The competitive environment spans products, services and geographic markets. - Skilled labor, attrition and labor shortages are named risks, sharpened by restrictions on how regulated institutions may compensate officers and employees relative to unregulated competitors. - Operational risk runs through employee effectiveness and integrity and the systems and controls they own, and through third-party vendors, service providers and counterparties whose activities PNC does not directly control — including the risk of regulatory penalties when an outside company fails to comply with requirements relevant to its work for PNC. ### Other key risks - **Legal proceedings.** PNC is regularly a defendant and regularly the subject of governmental investigations and regulatory inquiry, and has indemnified others for losses in connection with business or asset sales. Accruals are established only where loss is probable and estimable, so PNC does not have accruals for all proceedings where it faces a risk of loss, and states ultimate losses may be higher — possibly significantly so — than amounts accrued. - **Acquisitions.** PNC grows in part by acquiring, and names risks at both ends: limited pre-close information, assumptions about cost synergies or strategic gains that may prove wrong, regulatory review that can delay or condition or block a deal, and after closing, undetected operational or compliance issues, an acquired company's credit losses and required allowance, models and risk management frameworks that are less mature than PNC's and must be relied on for a period, pending or subsequent litigation, and retention of the acquired customer base and leadership. - **Disasters, terrorism, hostilities and civil unrest.** Direct damage to facilities, and indirect effects through borrowers, depositors, suppliers and counterparties, financial markets, or infrastructure such as the power grid — potentially raising delinquencies, nonperforming assets, charge-offs and provisions. --- ## Management's discussion and analysis — full year 2025 *From the 2025 Form 10-K, SEC accession 0000713676-26-000020.* **Strategy.** Management frames the company as run for the long term around growing customers, loans, deposits and revenue while improving profitability and managing risk, expense and capital. Three stated priorities: expanding the banking franchise into new markets and digital platforms, deepening relationships through the customer experience and financial solutions, and using technology to create efficiency. **Earnings.** Net income for 2025 was $7.0 billion, or $16.59 per diluted common share, up $1.0 billion or 18% from $6.0 billion and $13.74 in 2024, driven by higher net interest and noninterest income, partly offset by higher expense. - Total revenue rose $1.5 billion, or 7%, to $23.1 billion. - Net interest income rose $0.9 billion, or 7%, to $14.4 billion on lower funding costs, continued fixed-rate asset repricing and loan growth. Net interest margin widened 17 basis points to 2.83% from 2.66%. - Noninterest income rose $0.6 billion, or 8%, to $8.7 billion on capital markets and advisory fees, card and cash management revenue, and asset management and brokerage income. Within it, capital markets and advisory grew 24% to $1.5 billion on merger and acquisition advisory activity and trading revenue; asset management and brokerage grew 8% to $1.6 billion on higher average equity markets, annuity sales and net inflows. Visa derivative adjustments were negative $114 million in 2025, mostly from litigation escrow funding, against negative $274 million in 2024. - Provision for credit losses was $779 million, versus $789 million in 2024, driven by a net increase in the allowance from commercial and industrial portfolio activity and macroeconomic scenario changes, partly offset by commercial real estate portfolio activity. - Noninterest expense rose $310 million, or 2%, to $13.8 billion, on higher personnel costs including variable compensation tied to business activity, partly offset by lower FDIC assessment expense. **Two items that distort the comparison.** The FDIC special assessment for the Silicon Valley Bank and Signature Bank resolutions cost PNC $515 million pre-tax in 2023 and $112 million in 2024; in 2025, changes in the FDIC's expected losses produced accrual releases of $48 million in the third quarter and $60 million in the fourth, a $108 million full-year benefit. Separately, the second quarter of 2024 carried a $754 million gain on Visa Class C shares received in the Visa exchange program, negative $116 million of Visa Class B-2 derivative fair value adjustments, a $120 million PNC Foundation contribution expense, and a $497 million loss on the sale of $3.8 billion of low-yielding securities whose proceeds were redeployed into higher-yielding ones. **Balance sheet at December 31, 2025 versus a year earlier.** Total loans up $15.0 billion, or 5%, to $331.5 billion — commercial up $16.3 billion, or 8%, to $232.5 billion on commercial and industrial production with commercial real estate declining; consumer down $1.3 billion, or 1%, to $99.0 billion as residential real estate paydowns outpaced originations, partly offset by auto growth. Investment securities down $1.5 billion, or 1%, to $138.2 billion. Interest-earning deposits with banks, largely at the Federal Reserve, down $6.4 billion, or 16%, to $32.9 billion. Total deposits up $14.1 billion, or 3%, to $440.9 billion, with interest-bearing up and noninterest-bearing down. Borrowed funds down $4.6 billion, or 7%, to $57.1 billion on lower FHLB advances, partly offset by higher senior debt. Uninsured deposits were estimated at $209.3 billion, up from $194.9 billion. **Credit quality.** The allowance for credit losses on loans was $5.2 billion at both year-ends, equal to 1.58% of loans versus 1.64%. Delinquencies rose $61 million, or 4%, to $1.4 billion. Nonperforming assets of $2.4 billion were stable. Net charge-offs of $0.7 billion, or 0.23% of average loans, fell $297 million from $1.0 billion and 0.33%. **Capital and returns.** Common shareholders' equity rose $6.2 billion to $54.8 billion on net income and an AOCI improvement, net of dividends and buybacks. PNC returned $3.9 billion to shareholders in 2025 — more than $2.6 billion of common dividends and $1.2 billion repurchasing 6.8 million shares. The CET1 ratio rose to 10.6% from 10.5%. On January 5, 2026 the board declared a quarterly common dividend of $1.70 per share, paid February 5, 2026. **Segment drivers in 2025.** Retail Banking earnings were roughly flat as higher net interest income offset lower noninterest income, higher expense and a higher provision; average loans declined, with auto growth more than offset by residential real estate paydowns, lower credit card balances and continuing education loan runoff. Corporate & Institutional Banking earnings rose $717 million on higher revenue and a lower provision, partly offset by expense; average deposits rose on interest-bearing growth against lower noninterest-bearing balances. Asset Management Group earnings rose $96 million on higher revenue and a larger provision recapture, partly offset by expense. **The outlook management published with the 10-K.** For full-year 2026 versus 2025: average loans up approximately 8%; net interest income up approximately 14%; noninterest income up approximately 6%; revenue up approximately 11%; noninterest expense excluding one-time integration costs up approximately 7%; effective tax rate approximately 19.5%. Non-recurring merger and integration costs were expected to total approximately $325 million, mostly in the first half of 2026. The macro assumption behind it: continued expansion but slower growth than 2024–2025, real GDP around 2% with unemployment around 4.5%, tariffs a drag on consumer spending and business investment, AI-related capital expenditure and wealth effects the main supports, and the federal funds rate unchanged at 3.50%–3.75% through the first half with 25 basis point cuts expected in July and September 2026. --- ## Current quarter — second quarter of 2026 *From the Form 10-Q for the quarter ended June 30, 2026, SEC accession 0001628280-26-053170.* **The FirstBank integration is the through-line of the quarter.** PNC acquired FirstBank Holding Company and its banking subsidiary on January 5, 2026 for $4.2 billion of cash and PNC common stock to common and Series A preferred holders, plus $0.1 billion to Series B preferred holders exchanged into a newly created PNC Series X preferred — total consideration of $4.3 billion, comprising 13,715,133 common shares valued at $2,943 million, 115,200 preferred shares valued at $119 million, and $1,238 million of cash. PNC recorded $26.7 billion of assets, including $15.2 billion of net loans, $8.3 billion of investment securities and a $761 million core deposit intangible, against $24.7 billion of liabilities including $23.1 billion of deposits — net assets of $1.9 billion and preliminary goodwill of $2.4 billion, allocated to Retail Banking and not deductible for tax. Fair values remain subject to adjustment for up to one year from closing. In June 2026 PNC converted approximately 780,000 customers, more than 1,620 employees and 95 branches across Colorado and Arizona and merged FirstBank into PNC Bank, so the second quarter carries a full quarter of FirstBank while the first quarter carried it only from January 5. **Earnings.** Net income was $2.1 billion, or $4.81 per diluted common share, up $283 million or 16% from $1.8 billion and $4.13 in the first quarter of 2026, on higher noninterest and net interest income partly offset by higher expense. Against the second quarter of 2025, total revenue of $6.9 billion was up $1.2 billion, or 21.4%, from $5.7 billion; net income was up $412 million, or 25.1%, from $1.6 billion; and diluted earnings per share were $4.81 against $3.85. For the first six months, net income was $3.8 billion, or $8.94 per diluted share, up $685 million or 22% from $3.1 billion and $7.37 a year earlier. Against the first quarter of 2026: - Total revenue of $6.9 billion rose $710 million, or 12%. - Net interest income of $4.1 billion rose $146 million, or 4%, on commercial loan growth and higher noninterest-bearing deposit balances. Net interest margin rose 1 basis point to 2.96%. - Noninterest income of $2.8 billion rose $564 million, or 26%, on capital markets and advisory revenue and three named items: a $448 million gain from participation in the Visa exchange program, a $139 million securities loss on repositioning the available-for-sale portfolio, and negative $85 million of Visa derivative adjustments driven by the extension of anticipated litigation resolution timing. The repositioning sold roughly $4.1 billion of available-for-sale securities yielding about 3.2% and redeployed into roughly $4.3 billion yielding about 4.4%. - Provision for credit losses was $191 million, against $210 million in the first quarter, reflecting portfolio activity and macroeconomic factor updates. - Noninterest expense rose $330 million, or 9%, on personnel costs, $121 million of FirstBank integration expense (against $97 million in the first quarter) and a $140 million pre-tax PNC Foundation contribution. - The effective tax rate was 20.5%, versus 19.0% in the first quarter. Against the first six months of 2025: revenue up $1.9 billion or 17%; net interest income up $1.0 billion or 15% with margin 17 basis points wider; noninterest income up $890 million or 22%; provision of $401 million against $473 million; noninterest expense up $1.1 billion or 16%, including $218 million of FirstBank integration expense and the Foundation contribution. Total integration costs were $225 million for the six months ($218 million in expense, $7 million in revenue) and $127 million for the quarter. **Segments for the quarter (net income excluding noncontrolling interests, versus the second quarter of 2025).** Retail Banking $1,747 million against $1,386 million on revenue of $4,517 million against $3,794 million; Corporate & Institutional Banking $1,588 million against $1,318 million on revenue of $3,263 million against $2,813 million; Asset Management Group $135 million against $132 million on revenue of $462 million against $428 million. Other activities were a $1,430 million loss against $1,209 million. PNC updated its internal funds transfer pricing methodology during the second quarter of 2026, which moved net interest income and related lines across all segments; prior periods were restated to match. **Balance sheet at June 30, 2026 versus December 31, 2025.** Total assets of $616.0 billion, up $42.5 billion or 7%. Total loans of $368.0 billion, up $36.5 billion or 11% — commercial up $31.4 billion, or 14%, to $263.9 billion on new production, higher commitment utilization and acquired FirstBank loans; consumer up $5.1 billion, or 5%, to $104.1 billion on acquired FirstBank residential mortgages, partly offset by auto paydowns. Investment securities up $11.3 billion, or 8%, to $149.5 billion. Total deposits up $8.9 billion, or 2%, on noninterest-bearing growth plus FirstBank deposits; brokered deposits fell to $2.1 billion from $5.1 billion. Borrowed funds up $28.6 billion, or 50%, to $85.7 billion, primarily on higher FHLB advances. Goodwill rose to $13.3 billion from $11.0 billion. **Credit quality.** Nonperforming assets of $2.2 billion fell $211 million, or 9%, on lower commercial nonperforming loans. Delinquencies of $1.4 billion were stable. The allowance for credit losses on loans rose to $5.5 billion from $5.2 billion on portfolio activity including acquired FirstBank loans, but fell as a share of loans to 1.48% from 1.58%. Net charge-offs of $226 million, or 0.25% of average loans, were down $27 million from the first quarter, which had absorbed $45 million of charge-offs on acquired FirstBank loans. The office portfolio remains the flagged exposure: $5.1 billion outstanding, 1.4% of total loans, with $0.4 billion of unfunded commitments, 29.4% criticized, 8.1% nonperforming and reserves of 8.8% against it. **Capital and returns.** Common shareholders' equity of $58.1 billion rose $3.3 billion, or 6%, on net income and common stock issued for FirstBank, against dividends, buybacks and an AOCI decline; total shareholders' equity of $64.0 billion rose $3.4 billion, with $3.0 billion of stock issued for the acquisition, $1.5 billion of dividends paid, $1.3 billion of repurchases and a $0.7 billion AOCI decline. The CET1 ratio was 9.9% at June 30, 2026 against 10.6% at December 31, 2025, and both PNC and PNC Bank remained "well capitalized." PNC returned $1.3 billion in the quarter — $0.7 billion of common dividends and $0.6 billion of repurchases, buying 2,756 thousand shares at an average $223.37. Approximately 29% of the 100 million shares authorized under the existing repurchase program remained available, and third-quarter repurchases are expected to approximate second-quarter levels. PNC's stress capital buffer will be held at the regulatory minimum of 2.5% through September 30, 2027. The amount PNC Bank could pay the parent in dividends without prior regulatory approval was $5.0 billion. On July 6, 2026 the board raised the quarterly common dividend to $2.00 per share, an increase of 30 cents or 18%, payable August 5, 2026. **Guidance.** Consistent with forward guidance given on July 15, 2026, for the third quarter of 2026 against the second: average loans up 1% to 2%; net interest income up 3% to 3.5%; fee income down 5% to 5.5%; other noninterest income of $150 million to $200 million; noninterest expense down 7% to 8%, or down 2% to 3% excluding integration costs and significant items; net loan charge-offs approximately $225 million. For full-year 2026 against 2025: average loans up approximately 12.5%; net interest income up 15% to 15.5%; noninterest income up approximately 11% (approximately 9% excluding integration costs and significant items); total revenue up approximately 14% (approximately 13% excluding); noninterest expense up approximately 11.5% (approximately 8.5% excluding); effective tax rate approximately 19.5%. The excluded items are the roughly $325 million of non-recurring merger and integration expense — $218 million recognized in the first half, approximately $50 million expected in the third quarter — the $140 million Foundation contribution, $7 million of integration costs in revenue, and $224 million of second-quarter significant items (the $448 million Visa exchange gain, the negative $85 million Visa Class B-3 derivative adjustment and the $139 million securities loss). **Macro view.** Management expects continued expansion in 2026 with real GDP growth of 2.1%, modest job gains, unemployment ending the year around 4.3%, and CPI inflation staying above 3% through year-end despite somewhat eased inflation risk — a firmer growth and inflation profile than the 10-K's assumption six months earlier. The federal funds rate is now expected to stay unchanged at 3.50%–3.75% through 2026 and into 2027, with risks skewed toward tighter policy, rather than the two cuts assumed in February. Named risks are a sudden reversal in AI-related sentiment, with knock-on effects on capital expenditure and wealth-driven consumer spending, and a further sharp rise in oil prices. PNC reported no material changes from the risk factors disclosed in the 2025 Form 10-K. --- ## Subsequent events *From Note 17 of the Form 10-Q for the quarter ended June 30, 2026, SEC accession 0001628280-26-053170.* All three post-period events are parent-company debt actions. No acquisitions, divestitures or litigation outcomes were disclosed. - **July 21, 2026** — the parent company issued $1.0 billion of 5.463% senior fixed-to-floating rate notes maturing July 21, 2037. Interest is fixed at 5.463% payable semi-annually each January 21 and July 21 beginning January 21, 2027; from July 21, 2036 it converts to quarterly interest at Compounded SOFR plus 1.267%. - **July 21, 2026** — the parent company issued $1.0 billion of 4.831% senior fixed-to-floating rate notes maturing July 19, 2030. Interest is fixed at 4.831% payable semi-annually each January 19 and July 19 beginning January 19, 2027; from July 19, 2029 it converts to quarterly interest at Compounded SOFR plus 0.798%. - **July 23, 2026** — the parent company redeemed all $1.0 billion of its outstanding 5.102% senior fixed-to-floating notes due July 23, 2027, at 100% of principal plus accrued and unpaid interest.