Summary of PNC Financial Services Group Conference Call Company Overview - **Company**: PNC Financial Services Group (NYSE: PNC) - **Date**: February 10, 2026 - **Speaker**: Rob Reilly, CFO Key Points Industry Outlook - The banking sector's operating outlook for 2026 is constructive, supported by domestic economic growth and stabilized labor markets [4][5] - Geopolitical uncertainties have not significantly derailed loan activity, with strong pipelines and momentum continuing into 2026 [5][6] Loan Growth and Guidance - PNC expects loan growth of approximately 8% for 2026, including contributions from the FirstBank acquisition [6] - Standalone loan growth is expected to be around 4%, with commercial loan growth anticipated to exceed expectations due to strong pipelines and capital expenditure needs [10][12] - The commercial real estate (CRE) sector is expected to stabilize by the end of Q1 2026, which will positively impact loan growth [14][17] Market Dynamics - PNC's growth markets, particularly Texas, California, and Florida, are driving loan growth, with onshoring manufacturing contributing to this trend [20][22] - The bank plans to open 300 new branches over the next five years, aiming to increase market penetration and consumer deposits [25][31] Financial Performance - PNC anticipates a 14% growth in net interest income (NII) for 2026, driven by fixed-rate asset repricing and loan growth [42][44] - The bank's net interest margin is expected to exceed 3% in the latter half of 2026, with continued expansion anticipated [50][51] Fee Income and Capital Markets - Capital markets fees grew by 18% in 2025, with strong pipelines for 2026 expected to yield high single-digit growth [53][54] - PNC's asset management business is performing well, with nearly 10% growth attributed to affluent new markets [56] Regulatory Environment - The Basel III Endgame is a significant focus, with potential reductions in risk-weighted assets (RWA) that could enhance capital efficiency [86][87] - Compliance costs and resource allocation are being optimized to improve operational efficiency [87] Technology and AI Investments - PNC is targeting $1.5 billion in addressable spend reductions through AI applications across various operational areas, including compliance and retail operations [100][101] - The bank is enhancing its technology infrastructure to support national operations and improve customer service [34][100] Capital Return Strategy - PNC plans to continue share buybacks, maintaining capital flexibility while monitoring tangible book value [109] - The bank is cautious about future M&A activity, focusing on quality acquisitions in the $10 billion to $100 billion range, while avoiding larger banks [112][113] Conclusion - PNC Financial Services Group is positioned for growth in 2026, with a strong focus on loan growth, market expansion, and operational efficiency. The bank's strategic investments in technology and regulatory compliance are expected to enhance its competitive position in the banking sector.

Financial Data and Key Metrics Changes - Statutory profit after tax for 2025 was GBP 4.8 billion, with a return on tangible equity of 12.9% or 14.8% excluding the motor provision [18] - Net income for the full year was GBP 18.3 billion, up 7% compared to 2024, driven by growth in net interest income (NII) and other income, which increased by 6% and 9% respectively [18][19] - Operating costs for 2025 were GBP 9.76 billion, reflecting a 3% year-on-year increase, while the cost-income ratio was 58.6% [19][32] Business Line Data and Key Metrics Changes - Retail banking saw growth in mortgages, credit cards, and European retail, with total lending balances closing at GBP 481 billion, up GBP 22 billion or 5% [20][21] - Commercial banking gross net lending increased by 15% in 2025, with significant growth in targeted sectors [8][26] - Other operating income (OOI) was GBP 6.1 billion, up 9% year-on-year, with retail OOI growing by 12% [30] Market Data and Key Metrics Changes - Total deposits increased by GBP 13.8 billion or 3% in 2025, with retail deposits up GBP 5.5 billion and commercial deposits up GBP 8.5 billion [22][27] - The structural hedge notional stood at GBP 244 billion at year-end, contributing to a significant increase in hedge income to around GBP 5.5 billion [28] Company Strategy and Development Direction - The company is entering the final phase of its 5-year strategic plan, focusing on high-potential sectors such as housing, pensions, investments, and infrastructure [4][5] - The acquisition of Schroders Personal Wealth is aimed at enhancing the company's wealth offering and deepening relationships with mass affluent customers [7][8] - The company is committed to improving operating leverage and reducing the cost-income ratio to below 50% by 2026 [11][32] Management's Comments on Operating Environment and Future Outlook - The management is optimistic about the UK economy, forecasting resilient but slower growth, with interest rates expected to gradually fall in 2026 [4] - The company upgraded its return on tangible equity target for 2026 to greater than 16%, reflecting confidence in future performance [17][41] - Management highlighted the importance of cost discipline and strategic initiatives in driving future growth and shareholder returns [49][53] Other Important Information - The company announced a 15% increase in the ordinary dividend and a share buyback of up to GBP 1.75 billion, representing a total capital return of up to GBP 3.9 billion [2][39] - The tangible net asset value per share increased to 57 pence, up 4.6 pence in 2025 [36] Q&A Session Summary Question: Deposit performance and expectations for 2026 - The company noted strong deposit growth in 2025, with expectations for continued healthy performance in 2026, despite some seasonal variations [45][48] Question: Cost growth and management - The management emphasized cost discipline, projecting limited absolute cost growth in 2026, aided by strategic initiatives and declining inflation [49][50][52] Question: NII guidance and structural hedge - The company expects net interest income to grow in 2026, with margin expansion anticipated throughout the year, although some quarterly variations may occur [56][60]

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Core Viewpoint - Dillard's (DDS) is highlighted as a strong retail stock to consider, especially following record Black Friday sales in the U.S., and it currently holds a Zacks Rank 1 (Strong Buy) due to impressive earnings and optimism related to Federal Reserve rate cuts [1]. Company Performance - Dillard's stock has increased over 50% year-to-date, driven by earnings that have consistently surpassed analyst expectations [1]. - The company trades at a high price of over $600 per share, but its profitability and digital presence suggest potential for further growth [2]. Business Model - Dillard's unique business model, which involves owning most of its stores rather than leasing, contributes to its exceptional profitability by reducing rent expenses and stabilizing costs [5]. - The company has pursued a long-term, debt-averse expansion strategy focused on real estate ownership since its founding in 1938 [5]. Financial Metrics - Dillard's boasts a 20% return on invested capital (ROIC), significantly above the preferred range of 10-15% for department store chains [6]. - The company has a free cash flow conversion rate of 108%, indicating strong ability to convert profits into cash for reinvestment or shareholder returns [6]. Earnings Projections - EPS revisions for fiscal 2026 have increased by 5% in the last 30 days, from $30.92 to $32.61, while FY27 EPS estimates have risen over 6% from $28.10 to $29.93 [7]. - Current EPS estimates for the upcoming quarters are 9.84 for Q1 2026 and 9.20 for Q2 2026, reflecting positive trends in earnings expectations [8]. Valuation - Dillard's stock trades at a forward earnings multiple of 20X, which is considered reasonable compared to its profitability, and it is at a slight P/E discount to Kohl's and not at a stretched premium to Macy's [8]. Market Outlook - Dillard's is positioned to benefit from a record-breaking holiday shopping season, as indicated by strong Black Friday sales, suggesting continued strong performance in the retail sector [11].

Financial Data and Key Metrics Changes - Revenue from continuing operations increased by 6% compared to Q3 2024, reaching $13.4 million [8][20] - Consolidated adjusted EBITDA grew by 36%, reflecting cost management efforts despite a 1.5% decline in system-wide sales and negative comp sales of 2% [8][18] - Unrestricted cash and cash equivalents stood at $29.7 million, up from $25.1 million at the end of the previous year [23] Business Line Data and Key Metrics Changes - System-wide sales decreased by 1.5% to $127 million, with comp sales down by 2% [18][20] - The company opened nine franchise clinics in Q3, bringing the total to 884 franchise clinics, which is 92% of the portfolio [19] - The break-even point for new clinics improved significantly due to enhanced pre-opening protocols [19] Market Data and Key Metrics Changes - The company is focusing on a national marketing campaign to drive new patient acquisition, shifting from local to national advertising [10][11] - The marketing strategy emphasizes pain relief, which is identified as the primary reason for seeking chiropractic care, with 80% of new patients citing aches and pains [10][12] Company Strategy and Development Direction - The company aims to become a pure-play franchisor by refranchising corporate clinics, with an initial agreement to sell 45 clinics in Southern California for $4.5 million [9][27] - A new pricing pilot for wellness plans is being tested to optimize revenue while maintaining affordability [16][28] - The company is enhancing patient experience through technology upgrades, including a mobile app that has seen 178,000 downloads [17][42] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic headwinds affecting the refranchising timeline but expressed confidence in progress [27] - The company revised its full-year 2025 guidance, expecting system-wide sales to range from $530-$534 million, down from previous guidance [24] - Management believes that 2026 will be more profitable than 2025 due to ongoing cost-saving initiatives and refranchising efforts [24][38] Other Important Information - The company was recognized in the Franchise Times Top 400 for the sixth consecutive year, ranking 139th [25] - The patient-facing mobile app is expected to enhance patient engagement and retention, although it is too early to measure its impact [42][43] Q&A Session Summary Question: Timeline for completing refranchising of corporate clinics - Management indicated that while exact timing is uncertain due to lender dynamics, they are confident in making progress [27] Question: Details on pricing plan pilot - The company is testing three different price increase levels for wellness plans to find the optimal balance for patients [28] Question: Steps to improve same-store sales - Management highlighted a shift in marketing focus to pain relief and reallocating funds from local to national marketing efforts [30] Question: Initiatives to improve break-even point for new clinics - The company has implemented robust pre-opening protocols to ensure new clinics achieve break-even faster [32] Question: Trends in comp growth and guidance for Q4 - Management noted that comps were slightly softer at the end of Q3 and that Q4 comparisons would be tougher due to last year's performance [34] Question: SG&A expense reductions and adjusted EBITDA guidance - Management is targeting significant reductions in SG&A expenses as part of the refranchising process [36][38] Question: Performance of clinics in Southern California - The clinics in Southern California are generally performing well, and the company is focused on finding strong operators for refranchising [40] Question: Insights on app utilization and engagement - While it's early to provide metrics, initial feedback on the app's patient experience has been very positive [42][43] Question: Timing for potential pricing increases - Management anticipates activating pricing changes in Q1 2026, pending insights from ongoing tests [45]

Product Update - ShapeShift is launching a feature to connect any wallet to their mobile app [1] - Users can connect wallets like MetaMask, Phantom, Rabby, and Keplr with one tap [1] - Using the ShapeShift UI through connected wallets saves users 80 bps (0.8%) on swap fees [1]

Privacy Concerns in Crypto - Cryptocurrency transactions are less private than traditional payments, surprising many users [1][2][19] - Existing privacy solutions in crypto, like those in MetaMask, offer limited protection, primarily against front-running, but not against broader financial surveillance [1][16][17] - The industry believes the lack of privacy is a significant problem in the crypto space, hindering its potential for broader adoption [6][7][19] Blank Square's Solution - Blank Square is developing a composable privacy stack for Web3, aiming to be a middleware for privacy, similar to Stripe [2][3][8] - The company offers an SDK for integration into wallets and other protocols, as well as a web app and a mobile app to showcase smooth privacy experiences [2][9][10] - Blank Square utilizes ZK (Zero-Knowledge) technology to create shielded pools, where funds from multiple users are mixed to obscure transaction origins [21][22] - The company offers two modes of privacy: deep integration with private accounts and one-click privacy for shallower integrations, balancing user experience with privacy [22][25][26] Compliance and Future Trends - Blank Square prioritizes compliance, offering a "shielder guard" for retroactive revocation of anonymity based on proof of illicit activity [31][33][34] - The company anticipates a fragmented privacy landscape in the future, with different protocols making different trade-offs between privacy and user experience [46][47] - The industry predicts that crypto payments will become more private in the future, driven by both crypto-native users and institutions entering the space [47][48] Call to Action - The company encourages users to download the mobile app, use the provided code, and provide feedback to improve the privacy experience [53] - The company emphasizes that privacy is not about hiding bad actions, but about protecting lawful actions from unlawful observers [54][55]

App Availability - The app is available for download on the Google Play Store [1] - The app is available for download on the Apple App Store [1]