PNC Financial Beats Earnings & Rev

Zacks

The PNC Financial Services Group, Inc.’s (PNC) second-quarter 2013 earnings per share of $1.99 outpaced the Zacks Consensus Estimate of $1.64. Moreover, this compared favorably with 98 cents earned in the prior-year quarter.

Better-than-expected results were driven primarily by growth in non-interest income and a decline in operating expenses, partly offset by a fall in net interest income. Further, enhanced credit quality was the positives, while capital ratios were a mixed bag.

Net income reported was $1.1 billion in the said quarter, up from $546 million in the prior-year quarter.

Quarter in Detail

Total revenue came in at $4.1 billion, up 12.2% year over year. The growth was primarily driven by a rise in non-interest income, partly mitigated by lower net interest income. Additionally, total revenue beat the Zacks Consensus Estimate of $3.9 billion.

Net interest income was $2.3 billion, decreasing 10.6% year over year. The fall was mainly due to a decrease in loan and securities yield as well as purchase accounting accretion. However, these negatives were partly offset by a lower interest rate on the borrowed funds. Moreover, net interest margin (NIM) decreased 5 basis points (bps) year over year to 3.58%.

Non-interest income surged 64.6% year over year to $1.8 billion. The rise largely reflected an increase in client fee income as well as asset sales and valuation and lower provision for residential mortgage repurchase obligations.

Additionally, the company’s non-interest expense was $2.4 billion, down 8.0% from the prior-year quarter. The fall was primarily attributable to a reduction in non-cash charges related to the redemption of trust-preferred securities, lower legal reserve, absence of integration cost and declining expenses related to residential mortgage foreclosure and other real estate owned costs.

Credit Quality

PNC Financial’s credit quality for the said quarter reflected significant improvement. Nonperforming assets fell 9.5% year over year to $3.8 billion. Nonperforming assets to total assets was 1.24% as of Jun 30, 2013, down 15 bps from the year-ago quarter.

Moreover, the allowance for loan and lease losses to total loans was 1.99% as of Jun 30, 2013, decreasing 31 bps from the prior-year quarter. Net charge-offs fell 34.0% year over year to $208 million. Additionally, provision for credit losses was $157 million, down 38.7% year over year.

Capital Position

PNC Financial’s capital ratios depicted mixed results. As of Jun 30, 2013, the company’s Tier 1 common capital ratio was 10.1%, up from 9.3% as of Jun 30, 2012. This improvement was mainly boosted by growth in retained earnings. However, Tier 1 risk-based capital ratio was 12.0% as of Jun 30, 2013, down from 11.4% as of Jun 30, 2012.

The estimated pro forma Basel III Tier 1 common capital ratio was 8.2% as of Jun 30, 2013, compared with 8.0% as of Mar 31, 2013.

As of Jun 30, 2013, total assets under administration were $233 billion, up 8.9% from the prior-year quarter. Total loans were $189.8 billion, up 5.2% year over year. Further, total deposits increased 2.6% from the prior-year quarter to $212.3 billion.

Our Viewpoint

We believe that PNC Financial is well positioned to grow, given its diverse revenue mix, balance sheet strengthening efforts, improving credit quality, strategic acquisitions and steady capital levels. However, a protracted economic recovery, persistent low interest-rate environment and increased regulatory headwinds are likely to impede growth in profitability.

PNC Financial currently carries a Zacks Rank #3 (Hold).

Among other major banks, Morgan Stanley (MS) and Fifth Third Bancorp (FITB) will report results on Jul 18, while First Horizon National Corporation (FHN) will report on Jul 19.

Read the Full Research Report on PNC

Read the Full Research Report on MS

Read the Full Research Report on FITB

Read the Full Research Report on FHN

Zacks Investment Research



More From Zacks.com

Rates

View Comments (0)

Recommended for You

  • Tycoon buys 30 Rolls-Royces for Macau hotel

    A Hong Kong tycoon has placed the biggest ever order for Rolls-Royce cars, agreeing to buy 30 Phantoms to chauffeur guests at a luxury resort he's building in the global gambling capital of Macau. Stephen Hung's $20 million purchase surpasses the 14 Phantoms bought by Hong Kong's Peninsula Hotel in…

    Associated Press
  • Enjoy this refreshing Triple Play offer!

    Get FIOS TV Mundo starting at $79.99/mo. w/ no annual contract + 2-yr. price guarantee. Or sign for 2 yrs. & get a $300 prepaid Visa. Click here.

    AdChoicesVerizon FiOS ®Sponsored
  • Tycoon's arrest sends shock wave through Russia

    Tycoon's arrest sends shock wave through Russia MOSCOW (AP) — The arrest of a Russian telecoms and oil tycoon has sent shock waves through the country's business community, with some fearing a return to the dark days of a decade ago, when the Kremlin asserted its power by imprisoning the country's…

    Associated Press
  • Before You Buy Alibaba, Check Out 4 Top China Stocks

    Before You Buy Alibaba, Check Out 4 Top China Stocks While investors gear up for Alibaba Group 's (BABA) hotly anticipated initial public offering, don't forget about other Chinese stocks that are worth keeping an eye on. Today's Young Guns Screen of

    Investor's Business Daily
  • As Fed takes baby steps, Cramer's trick for profit

    In turn, Cramer says making money in the market, involves looking at the environment through the lens of the Fed. "The trick is to remember that they speak for the common person," Cramer said. "The Fed wants the common person to make money." With that backdrop always in mind, Cramer says it becomes…

    CNBC
  • Costco Stores in Canada to Stop Taking American Express

    “The credit card relationship between American Express and Costco Wholesale Canada will not be renewed when it expires” on Dec. 31, the company said today in an e-mail to Canadian customers. The message was attributed to Lorelle Gilpin, vice president of marketing and membership for Costco…

    Bloomberg
  • "The Retiree Next Door": How successful retirees stretch their savings

    "The Retiree Next Door": How successful retirees stretch their savingsBy the time she hit her late 40s, Toni Eugenia wasn’t sure she would ever be able to retire. Eugenia, 56, a pharmacy technician who lived in Houston, was nearly $200,000 in debt and

    Yahoo Finance
  • CNBC Anchor Calls Out Fed-Hater Bill Fleckenstein In Startling Shouting Match

    CNBC Bill Fleckenstein of Fleckenstein Capital appeared on CNBC's Futures Now program on Tuesday. Futures Now host Jackie DeAngelis came out swinging, asking Fleckenstein right at the top if he was willing to admit that he had misunderstood monetary policy. Sounding taken aback, Fleckenstein…

    Business Insider
  • 1 Tip To Lose Belly Fat

    It's Hollywood's Hottest Diet And Gets Rid Of Stubborn Fat Areas Like Nothing Else.

    AdChoicesagoodcooksSponsored
  • Beanie Babies creator's sentence debated in court

    Beanie Babies creator's sentence debated in court CHICAGO (AP) — Federal prosecutors seeking to put the billionaire creator of Beanie Babies in prison for hiding millions in Swiss bank accounts told appellate court judges Wednesday that the toymaker's sentence of probation threatens to erode the…

    Associated Press
  • Play

    Citi, Bank of America Offer Discounted Mortgages

    Citigroup and Bank of America will offer mortgages at discounted interest rates to help borrowers with low incomes or subprime credit. AnnaMaria Andriotis joins MoneyBeat. Photo: Getty.

    WSJ Live
  • Apple to unveil new iPads, operating system on Oct. 21 : report

    The company plans to unveil the sixth generation of its iPad and the third edition of the iPad mini, as well as its operating system OS X Yosemite, which has undergone a complete visual overhaul, the Internet news website said. Trudy Muller, a spokeswoman for Apple, declined to comment. The iPad is…

    Reuters
  • Margaritaville casino owners seek bankruptcy

    The owner of Biloxi's Margaritaville casino has filed for Chapter 11 bankruptcy protection Tuesday, only hours before a hearing where the landlord aimed to seize the property. The filing by MVB Holding LLC in U.S. Don Dornan, a lawyer for landlord Clay Point LLC, said the company had planned to ask…

    Associated Press
  • Embraer to sell 50 E-175 jets to Republic in $2.1 billion deal

    Brazil's Embraer SA, the world's third largest commercial planemaker, said on Wednesday it booked a firm order from U.S. The deal, which will be included in Embraer's order book for the third quarter, is valued at $2.1 billion, the planemaker said in a securities filing. The planes will be operated…

    Reuters
  • Play

    What the Fed Meeting Means for Bonds

    Janet Yellen & Co. are expected to hint at their timetable for raising interest rates. Here's how investors should prepare ahead of the meeting.

    WSJ Live
  • Norwich Information Security MS

    Online, accredited, top ranked. NSA Center of Academic Excellence. Recognized by the Department of Homeland Security. Download your free brochure!

    AdChoicesNorwich UniversitySponsored
  • Gilead Stock Is Falling On These Drug Setbacks

    Gilead Stock Is Falling On These Drug Setbacks Gilead Sciences (GILD) shares are backsliding Wednesday on news that the patient drop-out rate for hepatitis C drug Sovaldi is quadruple that of clinical trials. In addition, the biotech's Phase 2 study results

    Investor's Business Daily
  • Here's What Mark Cuban Wishes He Knew About Money In His 20s

    Cuban is the owner of the Dallas Mavericks basketball team. Billionaire investor and entrepreneur Mark Cuban is generous with his advice. When we asked him what he wishes he'd known about money in his 20s, he said:

    Business Insider
  • SHOE COMPANY: Our CEO Just Disappeared And Most Of The Money Is Gone

    "and like that: he's gone." This is an actual headline from a company press release: "CEO and COO disappeared, most of the company's cash missing." (Via FastFT) In a statement, German-based shoe company Ultrasonic said its CFO,  Chi Kwong Clifford Chan, has been unable to reach the company's CEO,…

    Business Insider
  • 10 rock-solid stocks for conservative investors

    10 rock-solid stocks for conservative investors Shares with low volatility can beat their indexes with less risk Bloomberg News/Landov U.S. Bancorp is the cheapest S&P 500 stock

    MarketWatch
  • Billionaire Investor Says Chinese People Work Harder And Western Companies Could Face Deep Trouble After Alibaba IPO

    Michael Moritz, the chairman of VC firm Sequoia Capital, is a huge fan of Chinese internet companies and reiterated his enthusiasm for the Chinese market in an interview with The Wall Street Journal Wednesday. The billionaire investor described the Alibaba IPO as a “major landmark event” that is as…

    Business Insider
  • Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More

    Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More Stocks were firm on Wednesday morning ahead of the FOMC meeting outcome. Tuesday’s rally may have sparked higher interest again, and investors are looking for bargains

    24/7 Wall St.
  • Best Womens Wrinkle Creams 2014

    Mom reveals simple wrinkle solution that has researchers very excited. Try this free solution today to look and feel years younger.

    AdChoicesBellaLabs.comSponsored
  • Don't buy Alibaba stock: 'Dean of Valuation'

    Investors should steer clear of Alibaba , valuation expert Aswath Damodaran said Wednesday. On CNBC's " Fast Money ," Damodaran, a professor of finance at New York University's Stern School of Business, noted that he was looking at Alibaba stock from the perspective of a long-term investor, not a…

    CNBC