PNC Financial Doing Enough In A 'Good Enough Is Good Enough' Environment
Stephen Simpson, CFA
Stephen Simpson, CFA
PNC Financial Running A More Cautious, Steady Long-Term Plan
Stephen Simpson, CFA
Stephen Simpson, CFA
Tue, Jul. 26, 9:30 AM
- Investors are underestimating the ability of certain lenders to grow earnings even if rates continue to stay super-low, says analyst Erika Najarian.
- Fitting the bill are Citizens Financial Group (NYSE:CFG), JPMorgan (NYSE:JPM), SunTrust (NYSE:STI), PNC Financial (NYSE:PNC), and Wells Fargo (NYSE:WFC).
- How might earnings grow in the absence of improved margins? Fee revenue, lower provisions, and efficiency improvements, says Najarian.
Fri, Jul. 15, 2:55 PM
- There aren't a whole lot of catalysts for bank stocks unless there's a sustained rise in the 10-year Treasury yield, says FBR's Paul Miller. "I'm going to be buying these things all day long," will be investors' attitude once yields do move higher.
- Until then, one might have a look at those with high exposure to mortgages - Wells Fargo (NYSE:WFC), U.S. Bancorp (NYSE:USB), and PNC Financial (NYSE:PNC) - as they stand to benefit from the refinancing boom. This has risks as well as refi booms inevitably burn themselves out.
- ETFs: XLF, KBE, KRE
Fri, Jul. 15, 7:47 AM
- Q2 net income of $989M or $1.82 per share vs. $1.044B and $1.88 one year ago.
- ROA of 1.11% down 8 bps Y/Y. ROE of 8.87% down from 9.75%. Tangible book value per share of $66.89 vs. $61.75.
- Net interest income of $2.068B up 1% Y/Y, with NIM of 2.70% down 3 basis points.
- Noninterest income of $1.726B down 5% Y/Y, in part thanks to Dodd-Frank valuation adjustments on nonconforming investments. Asset management revenue of $377M down 9%. Consumer services of $354M up 6%. Residential mortgage of $165M up 1%.
- Noninterest expense of $2.36B flat from a year ago.
- Nonperforming loans of $2.264B down 1% Q/Q, up 1% Y/Y. Net charge-offs of $134M down 10% Q/Q, up 100% Y/Y. Provisions of $127M vs. $152M last quarter and $46M a year ago. Energy-related provisions of $48M in Q2 vs. $80M in Q1.
- CC at 11 ET
- Previously: PNC Financial beats by $0.07, misses on revenue (July 15)
- PNC flat premarket
Fri, Jul. 15, 6:36 AM
Thu, Jul. 14, 5:30 PM
Mon, Jul. 11, 3:40 PM
- While nearly all major U.S. banks cruised through the stress tests last month, writes David Schawel, those exams are about determining if lenders have enough capital to get through a crisis, not whether they can earn the sort of risk-adjusted returns of the past.
- On this front (for insurers as well as banks), there's plenty more for investors to worry about, he says, thanks to the vanishing spread between short rates (what the companies pay on their liabilities), and long rates (what they earn on their assets).
- A new Fed study finds the adverse effect of weaker net interest margins is materially larger when rates are low. The reason: The lower bound of funding costs is zero as institutions are reticent to charge negative rates.
- Investors interested in buying banks or insurers because of seemingly cheap valuations might want to look again. Bank multiples, says Schawel, typically move alongside ROE, and serious improvement in ROE is unlikely with rates remaining low.
- Interested parties include: BAC, C, JPM, WFC, MET, PRU, LNC, PNC, USB, RF, KEY, KRE, KBE
Thu, Jul. 7, 10:36 AM
Fri, Jun. 24, 11:58 AM
- The Too Big To Fail lenders are naturally among the day's big losers following the U.K. vote to leave the EU, but losses in the financial sector are wide and deep as - among other things - interest rates look to be a lot lower for a lot longer.
- Among asset managers, Invesco (IVZ -10.8%) - with a sizable U.K. exposure - is faring about the worst. WisdomTree (WETF -7.8%) takes a hit as the yen is the solo currency surging against the dollar, reducing demand for its popular hedged Japan ETF.
- It's wait till next year (or even 2018 if you believe short-term rate futures markets) for rate hikes, meaning regional lenders can't celebrate their passing of the Fed stress tests last night. Regions (RF -7.8%), KeyCorp (KEY -6.4%), PNC Financial (PNC -5.5%), U.S. Bancorp (USB -4.2%), BB&T (BBT -5.1%).
- Even lower rates put even more pressure on the business models of the life insurers: MetLife (MET -8.8%), Prudential (PRU -7.7%), Lincoln National (LNC -9.9%), Voya (VOYA -7%). Online brokers too: E*Trade (ETFC -9.4%), Schwab (SCHW -9.5%).
- ETFs: KRE, KBE, IAT, KBWB, QABA, KBWR, KRU, KRS, WDRW, DPST
Thu, Jun. 23, 4:51 PM
- Ally Financial (NYSE:ALLY): Actual end of 2015 CET1 ratio of 9.2%, Q1 2018 CET1 ratio under severely adverse scenario of 6.1%, minimum 6.1%.
- American Express (NYSE:AXP): Actual 12.4%, Q1 2018 12.3%, minimum 11.4%.
- Bank of America (NYSE:BAC): Actual 11.6%, Q1 2018 8.1%, minimum 8.1%.
- BNY Mellon (NYSE:BK): Actual 11.5%, Q1 2018 11.2%; minimum 10.5%.
- BB&T (NYSE:BBT): 10.3%, 6.9%, 6.9%
- BBVA Compass (NYSE:BBVA): 10.7%, 6.5%, 6.5%.
- BMO Financial (NYSE:BMO): 11.9%, 5.9%, 5.9%.
- Capital One (NYSE:COF): 11.1%, 8.2%, 8.2%.
- Citigroup (NYSE:C): 15.3%, 9.2%, 9.2%.
- Citizens Financial (NYSE:CFG): 11.7%, 8.8%, 8.8%.
- Comerica (NYSE:CMA): 10.5%, 8.3%, 8.3%.
- Discover (NYSE:DFS): 13.9%, 12.4%, 11.9%.
- Fifth Third (NASDAQ:FITB): 9.8%, 6.8%, 6.8%.
- Goldman Sachs (NYSE:GS): 13.6%, 10.2%, 8.4%.
- HSBC N.A. (NYSE:HSBC): 15.7%, 9.1%, 9.1%.
- Huntington Bancshares (NASDAQ:HBAN): 9.8%, 5%, 5%.
- JPMorgan (NYSE:JPM): 12%, 8.3%, 8.3%.
- KeyCorp (NYSE:KEY): 10.9%, 6.4%, 6.4%.
- M&T (NYSE:MTB): 11.1%, 6.9%, 6.9%.
- Morgan Stanley (NYSE:MS): 16.4%, 10%, 9.1%.
- Northern Trust (NASDAQ:NTRS): 10.8%, 9.6%, 9.6%.
- PNC Financial (NYSE:PNC): 10.6%, 7.6%, 7.6%.
- Regions (NYSE:RF): 10.9%, 7.3%, 7.3%.
- Santander Holdings (NYSE:SAN): 12%, 11.8%, 11.8%
- State Street (NYSE:STT): 13%, 9.6%, 9.6%
- SunTrust (NYSE:STI): 10%, 7.5%, 7.5%.
- TD Group (NYSE:TD): 13.1%, 8.4%, 8.4%.
- U.S. Bancorp (NYSE:USB): 9.6%, 7.5%, 7.5%.
- Wells Fargo (NYSE:WFC): 11.1%, 7.2%, 7.2%.
- Zions (NASDAQ:ZION): 12.2%, 6.6%, 6.6%.
- Previously: All 33 banks pass this year's stress tests (June 23)
Tue, Jun. 14, 3:48 PM
- The S&P 500 is down just 0.25%, but the financial sector (XLF -1.5%) is taking a far larger beating as the idea of higher interest rates fades, with German 10-year yields falling below zero, and the U.S. 10-year Treasury yield within sight of its all-time low. KBE -2.3%, KRE -2.3%
- The FOMC concludes its two-day policy meeting tomorrow, at which updated economic projections and dots will be unveiled, along with a Janet Yellen press conference.
- How much of the panic into fixed-income is due to concern about the U.K. exiting the EU will become evident next Thursday night as that country's Brexit votes are tallied.
- Bank of America (BAC -2.5%), Citigroup (C -3.1%), Wells Fargo (WFC -2.5%), Regions Financial (RF -2.9%), KeyCorp (KEY -3.7%), PNC Financial (PNC -2.4%), Fifth Third (FITB -2.6%), SunTrust (STI -2.8%), E*Trade (ETFC -2.6%), MetLife (MET -1.6%), Prudential (PRU -1.8%), BNY Mellon (BK -2%)
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, BTO, IYG, FNCL, SEF, FXO, RYF, FINU, RWW, XLFS, FINZ, JHMF, FAZZ, FNCF
Mon, Jun. 13, 12:30 PM| Mon, Jun. 13, 12:30 PM | 1 Comment
Thu, May 26, 3:15 PM
- All banks in the team's coverage universe have plenty of room for capital return, says analyst John McDonald, expecting some to have sufficient cushions to be able to move payout ratios (dividends and buybacks) to close to 100% of earnings.
- Those most likely to have solid increases in payouts are Bank of America (NYSE:BAC), BB&T (NYSE:BBT), PNC FInancial (NYSE:PNC), and Citigroup (NYSE:C). Those with the least cushion are U.S. Bancorp (NYSE:USB), JPMorgan (NYSE:JPM), and Regions Financial (NYSE:RF).
Wed, May 18, 1:08 PM
- The meme of rates lower for longer has been stood on its head in the last 24 hours thanks to some decent economic data, but also surprisingly hawkish Fedspeak yesterday.
- The fixed-income world now believes remarks from the Fed's Williams and Lockhart yesterday may have been a preview of what we'll get when the real power speaks tomorrow - Fischer and Dudley - and then on May 27, when Janet Yellen gives a speech.
- Up at 2 ET are the minutes from the FOMC's April meeting.
- The 10-year yield is higher by five basis points to 1.82% and short-term rate markets have upped expectations for a Fed move this year.
- XLF +1.85%, KBE +3.15%, KRE +3.3%
- Bank of America (BAC +3.7%), Citigroup (C +4.2%), JPMorgan (JPM +3.2%), Wells Fargo (WFC +2.1%), U.S. Bancorp (USB +2.1%), Regions (RF +3.3%), KeyCorp (KEY +3.7%), PNC Financial (PNC +2.7%), Fifth Third (FITB +3.7%), Capital One (COF +1.9%), E*Trade (ETFC +4.4%), Schwab (SCHW +4.8%), MetLife (MET +2.9%), Prudential (PRU +3.4%), Lincoln National (LNC +4.2%), BNY Mellon (BK +2.3%), Northern Trust (NTRS +2.9%)
Mon, May 2, 7:25 AM
- April monthly performance was: +2.64%
- 52-week performance vs. the S&P 500 is: -1%
- No dividends were paid in April
- Top 10 Holdings as of 12/31/2015: JPMorgan Chase & Co (JPM): 3.18%, Citigroup Inc (C): 3.13%, General Electric Co (GE): 2.46%, US Treasury Note 1.625%, Bank of America Corporation (BAC): 1.94%, Morgan Stanley (MS): 1.58%, US Treasury Note 2.25%, Carnival Corp (CCL): 1.29%, PNC Financial Services Group Inc (PNC): 1.26%, Citizens Financial Group Inc (CFG): 1.26%
Thu, Apr. 14, 9:07 AM
- EPS of $1.68 beat by a penny, but credit costs were higher than expected and should remain high in Q2 thanks to the energy portfolio. While this could pressure estimates, the bigger picture is that PNC is one of the more disciplined players on credit.
- Q2 consensus is $1.83, but Citi sees just $1.78.
- Bottom line: Stock will be soft today thanks to a relatively high bar, and Citi's view that consensus forecasts have to come down.
- Shares are currently lower by 2.4%.
- Now read: Q1 Earnings Trend Spells Trouble For Bank ETFs (April 13)
Thu, Apr. 14, 7:25 AM
- Q1 net income of $850M or $1.68 per share vs. $926M and $1.75 one year ago. ROA of 1.07% vs. 1.17%. ROE of 8.44% vs. 9.32%. Tangible book value per share of $65.15 up from $63.65 in Q4 and $61.21 a year ago.
- Net interest income of $2.098B up 1% Y/Y. NIM of 2.75% down 7 basis points. Total loans of $207.5B up 1%. Deposits of $250.4B up 6%.
- Noninterest income of $1.567B down 6%. Asset management revenue of $341M down 9%. Consumer services revenue of $337M up 8%. Corporate services revenue of $325M down 6%. Residential mortgage revenue of $100M down 39%.
- Noninterest expense of $2.281B down 3% Y/Y.
- Nonperforming assets of $2.552B up 5% from last quarter thanks to energy. Provisions of $152M up from $74M last quarter, and $54M a year ago.
- CET1 ratio of 10.1% up 10 basis points from last quarter.
- Conference call at 10:30 ET
- Previously: PNC Financial misses by $0.02, misses on revenue (April 14)
- PNC -1.2% premarket
PNC Financial Services Group, Inc. engages in the provision of diversified financial services, including retail and business banking; residential mortgage banking; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-backed... More
Industry: Money Center Banks
Country: United States