PNC's Nonperforming Office Loans Climb To 10.8% From 8.1% As Brokered Deposits Reach $8.6 Billion
PNC's office book shifted from criticized toward nonperforming in one quarter, while borrowed funds rose 40% since year-end.
The share of PNC's office loans that are nonperforming reached 10.8% at September 30, up from 8.1% at June 30, according to the bank's quarterly report filed Tuesday. The bank, which describes its overall credit quality as strong, also leaned harder on brokered deposits, which total $8.6 billion.
Office loans turn nonperforming
PNC, a bank holding company with retail, corporate and institutional, and asset management businesses, had $4.8 billion of office loans outstanding at September 30, or 1.3% of total loans, plus $0.5 billion of unfunded commitments.
The prior quarter's filing put nonperforming office loans at 8.1% and criticized loans at 29.4% of a $5.1 billion book. Criticized loans, a regulatory category for loans showing weakness, now total 27.9%, so the mix is moving from criticized toward outright nonperforming.
Reserves against office loans rose to 9.2% from 8.8%. Management says that level reflects the expected credit losses in the portfolio.
Office is 13% of commercial real estate loans, which total $37.0 billion, against 17% at December 31, 2025.
Leaning on wholesale funding
Total brokered deposits, which banks buy through intermediaries, were $8.6 billion at September 30, including $7.6 billion of brokered time deposits. At December 31, 2025 the figures were $5.1 billion and $3.6 billion. Management says both balances sit well below internal and regulatory limits.
Borrowed funds rose $22.7 billion, or 40%, since year-end to $79.8 billion, mostly from higher Federal Home Loan Bank advances. PNC closed its FirstBank acquisition on January 5, 2026, and total loans are up 14% to $378.8 billion since year-end.
The common equity tier 1 capital ratio, a core measure of loss-absorbing capital, was 9.8%, down from 10.6% at year-end, mainly on higher risk-weighted assets, buybacks and dividends.
Strong credit, one education-loan hit
Overall, nonperforming assets of $2.3 billion fell $36 million since year-end. Net loan charge-offs were $257 million for the quarter, including $35 million tied to moving the $1.4 billion education loan portfolio to held-for-sale.
Third-quarter net income was $2.1 billion, or $4.97 per diluted share. PNC's market value was $92.4 billion in Tuesday afternoon trading.
For the fourth quarter, PNC guides to net loan charge-offs of about $250 million.
Sources
- 10-Q Filing — PNC Financial (PNC) — SEC EDGAR
- 10-Q Filing — PNC Financial (PNC), Q2 FY2026 filed 2026-08-05 (comparison basis) — SEC EDGAR
- Earnings release (8-K Item 2.02, q32026financialhighlightsa.htm) — PNC Financial, filed 2026-10-15 — SEC EDGAR
