PNC Financial Services Group is seeing signs of renewed momentum from a part of the economy that had been largely frozen for much of the year: middle-market corporate activity.
The regional bank’s latest results point to a shift in behavior among business clients who are once again pursuing deals, financing, and hedging strategies after months of caution.
Key Takeaways
PNC saw a rebound in middle-market dealmaking after a prolonged slowdown
Fee-based revenue, especially from advisory and capital markets, drove growth
Lending income was stable, while expenses rose with higher activity
The bank is positioning for longer-term growth through acquisitions and expansion
A pickup in deal flow changes the revenue mix
Rather than relying on lending growth, PNC’s fourth-quarter performance was shaped by a rebound in fee-based businesses. Total revenue reached $6.07 billion, up 9% year over year, with much of the improvement coming from non-interest income rather than traditional spread income.
Fees tied to capital markets and advisory work played a central role. Activity in areas such as mergers and acquisitions, loan syndication, and foreign-exchange risk management increased meaningfully toward the end of the quarter. According to management, middle-market companies that had delayed strategic decisions amid tariff uncertainty are now moving forward with transactions that were previously put on hold.
Chief Executive Officer Bill Demchak said the change was most visible in late 2025, as pipelines that had been stagnant for much of the year began to reopen. The renewed willingness to pursue deals translated directly into higher advisory and capital-markets fees.
Stable lending, higher costs
While fee income accelerated, PNC’s core lending business remained steady. Net interest income totaled $3.73 billion, broadly in line with expectations, underscoring that the quarter’s upside came primarily from customer activity rather than balance-sheet expansion.
At the same time, expenses rose to $3.60 billion, exceeding forecasts. Management attributed the increase to higher levels of business activity rather than structural cost pressure. Across the banking sector, expense discipline has been under close scrutiny as investors assess how much of improved profitability banks will reinvest versus return to shareholders.
Strategic positioning beyond the quarter
PNC’s recent moves suggest the bank is positioning itself for a longer runway of growth rather than optimizing solely for near-term margins. Earlier this month, it completed the $4.1 billion acquisition of FirstBank Holding Co., expanding its regional footprint and deepening relationships with business clients.
On the retail side, the bank has increased its branch expansion budget to $2 billion, signaling confidence in a hybrid model that blends physical presence with digital services. PNC has also been exploring opportunities in digital assets, including potential crypto-related offerings for customers through its partnership with Coinbase, an area where many peers remain cautious.
Market context and sentiment
Despite improved operating trends, PNC has trailed many peers over the past year, lagging broader bank indices. Management has previously pointed to persistent investor speculation around large acquisitions as a factor clouding sentiment, even as the bank focuses on organic growth and targeted expansion.
Looking ahead, the reopening of middle-market dealmaking could prove significant. If corporate clients continue to re-engage after a prolonged pause, PNC’s growing reliance on advisory and capital-markets activity may become a more durable contributor to earnings – reshaping how the bank generates growth as it moves into 2026.
