PNC costs about 10 times my 2027 earnings of $21.28 a share. Old fixed-rate loans and bonds rolling into higher yields make that growth fairly certain. Rising rates, though, are eating into book value and deposit costs. Target $233.82, a hold.
Key points
- $1 billion or more: management expects 2027 net interest income to beat 2026 by about that much, mostly from old fixed-rate assets repricing.
- 10 times: price against my 2027 earnings of $21.28 a share, or 2 times tangible book value.
- $6.5 billion: unrealized losses on bonds and swaps at September 30, up from $4.1 billion in June as rates rose.
The call
The price asks for little growth. At $214.94, PNC trades near 10 times my 2027 estimate. That is the multiple of a bank expected to grow only modestly. The stock fell 16% in three months as 10-year yields rose above 5% and the margin slipped to 2.94%.
Diluted earnings per share by quarter ($)GAAP diluted EPS from PNC filings and the Oct 15, 2026 release; E = my estimates
I expect solid earnings growth, and I think the multiple stays about where it is. Loans and bonds bought at low rates keep rolling into higher yields, so earnings should reach about $23.40 a share in 2028. But rising rates also raise deposit costs and shrink book value. That gives the stock little room to rerate. My view is close to the market's.
Valuation
| Step | Figure |
|---|
| 2026 adjusted EPS (my estimate) | $19.40 |
| 2027 EPS (my estimate) | $21.28 |
| 2028 EPS (my estimate) | $23.38 |
| Multiple on 2028 EPS | 10 times |
| 12-month target | $233.82 |
Ten times forward earnings is about 2 times my estimate of tangible book a year out, which is fair for an 18% return on tangible equity (profit on shareholders' equity excluding goodwill). Each half-point of multiple moves the target by about $12. Add the 3.7% dividend and the total return is decent, but the price gain is under the 12% a buy requires.
Target at each multiple of my 2028 EPS of $23.38My arithmetic; price $214.94 on Oct 15, 2026
Risks
- Deposit costs keep rising faster than asset yields. Watch the interest-bearing deposit rate, which rose 7 basis points to 1.98% last quarter.
- Office and commercial credit worsens. Watch nonperforming loans and whether quarterly charge-offs stay near the $250 million guide.
- More bond losses squeeze the capital cushion and buybacks. Watch whether CET1 (core capital against risk-weighted assets) slips below 9.8% and whether buybacks fall below roughly $560 million a quarter.
What would change my mind
If January guidance shows 2027 net interest income growth well above $1.1 billion while deposit costs flatten, I would move to a buy.
