- Record Financial Performance PNC reported $7 billion net income ($16.59 EPS) with 21% EPS growth, 5% operating leverage, and record revenue in 2025.
- FirstBank Acquisition Impact The acquisition added 8% NII contribution and is projected to boost 2026 revenue growth by 11%, with $1/share earnings contribution by 2027.
- Capital Returns & Efficiency $1.1 billion returned to shareholders ($676M dividends, $400M buybacks), with plans to increase repurchases to $600–$700M quarterly, alongside 400 bps operating leverage in 2026.
- Technology & AI Investment $3.5 billion tech spend (10% increase), with AI driving 20% of growth, supporting 400 bps ARPU leverage and operational efficiency improvements.
- Strategic Growth Metrics 8% average loan growth (4% standalone) in 2026, 14% net interest income growth, and 3% NIM by 2026, reflecting strong market expansion and deposit optimization.
Acquisition of FirstBank and Expected Impact
The acquisition of FirstBank, closed on January 5, 2026, is expected to add approximately $1 per share to 2027 results. For 2026, PNC expects to generate meaningful positive operating leverage on a standalone basis and with FirstBank, with full-year average loan growth of approximately 8% and total revenue up approximately 11%. The acquisition is a strategic move to expand PNC's presence in attractive markets, with opportunities for growth in areas like commercial lending.
Capital Management and Shareholder Returns
PNC returned $1.1 billion of capital to shareholders in the quarter, with dividends of $676 million and share repurchases of approximately $400 million. The company expects to increase quarterly share repurchases to a range of $600 million to $700 million. The CET1 ratio was 10.6% at quarter end, and it expects the FirstBank acquisition to reduce this ratio by approximately 40 basis points.
Valuation and Dividend Yield
With a Price-to-Tangible Book Value (P/TBV) ratio of around 1.45, PNC's valuation appears reasonable. The Dividend Yield stands at 2.96%, providing a relatively attractive return for income-seeking investors. Considering the company's growth prospects, including the expected 8% average loan growth and 11% total revenue growth for 2026, the current valuation metrics suggest that the stock may be fairly priced, with a P/E Ratio of 12.68.
Outlook for 2026
For the first quarter of 2026, PNC expects average loans to be up approximately 5%, net interest income to be up approximately 6%, and fee income to be down 1-2%. The company expects to deliver approximately 400 basis points of positive operating leverage for the full year 2026, driven by PNC on a standalone basis and the addition of FirstBank. The acquisition is expected to generate an annualized earnings run rate of approximately $1 per share by the end of 2026.
Investment Spend and Technology
PNC's investments in branches and technology, including AI, are embedded in their guidance. The company's tech spend is $3.5 billion, up 10% this year, with AI driving 20% of the increase. These investments aim to drive momentum, improve client experience, and enhance operational efficiency. The continuous improvement program is expected to drive expense control and savings, with another 40 points of operating leverage expected between 2025-2030.