With no. 1 U.S. mortgage lender Wells Fargo (WFC) set to report Q1 earnings tomorrow and several regional banks reporting in coming days, analysts expect results to take a hit from an expected drop in mortgage revenue. Jefferies estimates banks' revenue from originating mortgages could decline 15%-20% Q/Q; "the magnitude of potential declines could catch some [investors] off-guard."
Banks this Friday will begin making payments to ~4.2M borrowers whose homes were in any stage of foreclosure in 2009-10. The payments, which will range from $300 to $125K, are compensation for the robo-signing scandal when bank employees said foreclosure documents were correct without reviewing them. Part of the settlement: BAC, C, GS, HBC, JPM, MET, MS, PNC, SAN, STI, USB, WFC.
PNC Financial Services (PNC) declares $0.44/share quarterly dividend, 10% increase from prior dividend of $0.40. Forward yield 2.69%. For shareholders of record Apr. 16. Payable May 05. Ex-div date Apr. 12. (PR)
PNC Financial hikes its quarterly dividend 10% to $0.44/share, giving an annualized yield of 2.7%. The bank recently passed the Fed's stress test and had announced there would be a dividend increase, but no share buybacks. (PR)
The bank stock rally has paused since the results of the Fed's capital-review tests, but improving underlying fundamentals continue, says Sterne Agee. Warnings about lower mortgage profits should be offset by stronger lending demand elsewhere. Favorites heading into earnings: BAC, C, JPM, KEY, PACW, PNC, BPOP, OFG.
Each time a PNC customer deposits a check by snapping its picture on a smartphone, it saves the bank $3.88 compared to going to a teller window, says President William Demchak. Underway and gaining steam is the trend of banks nationwide closing branches and/or shrinking their size.
After hours movers in the regional banks: COF +0.6%, FITB +0.9%, KEY - which just announced an increase in the dividend to $0.055 from $0.05 and $426M in share repurchases - up 1%, PNC +0.4%, RF +1.6%, STI -0.3%, USB +0.2%. BBT - whose plan was rejected - off 2.8%.
More on bank capital return plans: Capital One (COF) an increase in the dividend to $0.30 from $0.05. Fifth Third (FITB) a dividend increase to be disclosed, the potential repurchase of $750M in trust preferred securities, the conversion of preferred stock to common combined with a share repurchase of about $1.5B. PNC an undisclosed increase in the dividend, but no share repurchases.
Fifth Third (FITB), KeyCorp (KEY), SunTrust STI), and PNC were the "winners" of the Fed stress tests, says FBR's Paul Miller. FIfth Third, he says, showed just minor losses under the Fed's "severely adverse scenario," while SunTrust showed major losses, but was still found to be adequately capitalized. STI is having the best day of those tested, +2.3%.
More on the Fed Stress Tests (regional bank focus): BBT, FITB, KEY, PNC, RF, and USB came through with higher ratios than the big banks. STI is the laggard among the regionals, but still showed a 7.3% common ratio, well above the 5% cutoff. KeyCorp is the only stock showing noticeable movement AH, +0.8%.
Fed Stress Tests: Ally Financial is the only bank not meeting the Fed standards. All of the other 18 holding companies showed a Tier 1 Common Ratio higher than 5% under the central bank's severe loss scenario.
The big U.S. banks are considering defying the Fed and announcing capital return plans shortly after stress tests are released this afternoon, reports Bloomberg. The Fed wants the lenders to wait another week, but bank lawyers worry the plans will leak out. It's under discussion, JPM CFO Lake told an investor conference (transcript) Tuesday. XLF +0.6%.
Take a number if you have interest in Bankia's City National Bank of Florida. Among those expected to put in a bid are TD, BBT, PNC as well as two healthier Spanish lenders. Goldman is leading the sale and is asking $900M-$1B, while sources say $600M-$800M will get it done. "It is a nice little property ... but it is not a must-have," says one source, playing it cool.
Expect gradual, but not outsized jumps in capital returns from the banks this year, says Goldman (stress tests results are due Thursday, capital return decisions due March 14). Management teams are likely to be conservative in their requests from the Fed as "taking a mulligan" - i.e., resubmitting a plan after being shot down - is not seen as a viable option.
PNC CEO-elect William Demchak tells Bloomberg's Laura Marcinek he's going to focus on increasing customers and cross-selling to them instead of growing through M&A. If so, it'll be a break from predecessor Jim Rohr who spent $17.5B on deals since 2000.
PNC Financial Services Group Inc is a financial services company. It operates in six segments: Retail Banking; Corporate & Institutional Banking; Asset Management Group; Residential Mortgage Banking; BlackRock; and Non-Strategic Assets Portfolio.