I think DATA said i never get specific so this is a one time treat for me to show you how much more I know than you guys.
This is the most specific ill ever get and a one time treat showing you how to value bank earnings.
PNC's Average assets next year will be $310 B their average liabilities will be 268 B. This implies loan growth of 6% or $10 billion in total.
Interest income = $10.7 B (310B of average assets X 3.45%
Interest expense = .-9 B (268 B of average liabilities X 0.336%
Provisions = .9 B (based on historical average
Interest income = $7.1 B ( current interest income but minus visa share gain and add back repurchase losses then multiplied by 5% growth during the year)
Interest expense = -$10 B (PNC said non interest expense to decline 5%)
Earnings before Taxes $6.0 B
Tax Rate = 28%
Earnings after taxes = $4.32 B
Less NCI and PS = 220 (Non controlling and preferred share dividends
Earnings = $4.1 B
EPS = $7.76
So PNC is trading at 8 times next years and is one of the best banks in the country. If it just normalizes to a WFC, USB or BBT PE the stock is worth $90. I think its worth at least $100 since WFC and USB are also undervalued.
Here is to 2013! the year of PNC!
There interest income / all assets will be 3.45% next year which is this year interest income / all assets * 90% to reflect that their yields decline in this low rate environment
The interest expense / all liabilities will be 0.336% which will decline by about 10% from last year based on the fact their deposits and other liabilities are beign repriced lower