PNC Earnings: Solid Results Driven by Strong Fees and Controlled Expenses

Key Morningstar Metrics for PNC Financial Services Group

• Fair Value Estimate: $181.00
• Morningstar Rating: ★★★
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: Medium

What We Thought of PNC Financial Services Group’s Earnings

PNC Financial Services Group PNC reported solid second-quarter financials, with earnings per share of $3.85, about a 14% increase on a year-over-year basis. While 2025 guidance is relatively unchanged, the bank has posted results that make us confident that it can meet its annual targets.

Why it matters: The bank has done a commendable job of generating fee revenue while controlling its expenses. While loan growth has been tepid in recent quarters, we have seen some early signs of commercial loan demand recovering.

• NII improved 2% from last quarter. We think the bank has done a good job of actively managing its swap portfolio to lock in higher fixed rates and repricing its long-duration investment securities. These actions should continue to support NII growth into 2026.
• We think PNC’s commitment to its operating efficiency is a key monitorable. The bank is focused on expanding to faster-growing markets, but is still able to maintain expense growth under 2% and generate positive operating leverage.

The bottom line: We plan on increasing our $181 per share fair value estimate for narrow-moat PNC by a low-single-digit percentage. We think shares are nearly fairly valued at current prices.

• We plan on incorporating PNC’s resilient credit quality and its broad-based strength in fee income, which are performing better than we had initially expected, into our updated model. We think the strength in fee income should continue throughout the remainder of the year.

Key stats: PNC’s nonperforming loans declined by about 9% from the last quarter, and net chargeoffs were largely flat.

• Although there are still specific pockets of stress in office commercial real estate for the firm, its credit quality is showing improvement from the prior-year quarter and last quarter. In the absence of any larger macroeconomic swings, we do not expect credit costs to increase substantially in the short term.