Tag Archives: PNC

Business, Finance, Occupation & Industry

1 Thing Investors Are Missing About PNC Financial

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By Robert Eberhard, The Motley Fool

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As a fan of regional banks over their much larger compatriots, PNC Financial is one bank that has always interested me, so I decided to take a deeper look at the bank to get a better understanding of how it operates. Last week, we looked at where the Pittsburgh-based bank made its money, as well as just how profitable it is. With this article, we will look at a small — yet very profitable — piece of PNC‘s business, and why investors should take note of it.

The business of PNC Financial
As mentioned in both of the previous articles, PNC Financial breaks its business into six different business segments, the largest being its traditional retail banking business. However, it is the smallest segment that is perhaps most interesting:

Business Segment

2012 Revenue

2012 Net Income (Loss)

Profit Margin

Retail Banking

$6.328 billion

$596 million

9.4%

Corporate & Institutional Banking

$5.697 billion

$2.328 billion

40.9%

Asset Management Group

$973 million

$145 million

14.9%

Residential Mortgage Banking

$526 million

($308) million

N/A

BlackRock

$512 million

$395 million

77.1%

Non-Strategic Assets Portfolio

$843 million

$237 million

28.1%

Total business segments

$14.879 billion

$3.393 billion

22.8%

Source: Company 10-K. 

As you can see, PNC‘s investment in asset management firm BlackRock was responsible for only 3.4% of the bank’s total revenues. However, because of the segment’s high profit margin, it accounted for 11.6% of the net income earned by the bank last year. That’s quite impressive for a passive equity investment, so let’s take a look at what BlackRock is and how PNC Financial makes money from it.

What is BlackRock?
BlackRock started in 1988 as part of The Blackstone Group, later merging with parts of PNC‘s asset management subsidiaries in 1995 and becoming an independent company owned by PNC Financial.

It went public in 1999, and since then has grown into the world’s largest publicly traded investment management firm, with over $3.7 trillion of assets under management. It is probably best known for its iShares-branded ETFs, though it also offers mutual funds and other investment products.

When BlackRock went public in 1999, PNC still owned 70% of the company, a position the bank has gradually reduced over subsequent years to its current 22% ownership. As BlackRock has grown to its current size, PNC has been along for the ride, reaping the benefits of ownership along the way, with $1.8 billion in unrealized gains. BlackRock’s performance over the past 10 years helps illustrate why PNC benefits from its investment:

BLK data by YCharts.

Equity investments are not unique
PNC is far from the only company that reaps rewards from the performance of companies it invests in. Probably the best example is Berkshire Hathaway . Though it

From: http://www.dailyfinance.com/2013/04/12/1-thing-investors-are-missing-about-pnc-financial/

Business, Finance, Occupation & Industry

The New and Improved Bank of America

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By Amanda Alix, The Motley Fool

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Bank of America has been undergoing a facelift for a while now, and it looks like the bandages are finally coming off. What is being revealed is a newer, more customer-friendly visage that projects its new persona — one that considers the consumer’s needs first, and exudes helpfulness — with a hefty dose of humility thrown in for good measure.

Branches get a makeover
As the bank has cut the bloat over the past two years, it has also closed a large number of branch locations. In spite of the great strides the bank has made in the service offered at its branches, media attention most often focuses on the number of branches taken out of circulation.

While it’s true that B of A closed twice as many branches last year than PNC Financial and Wells Fargo combined, the bank hasn’t given up on branch locations altogether. As promised, it has closed the least used locations, while opening newer — albeit, fewer — spiffier branches in areas that see more foot traffic.

Last fall, B of A announced it would be opening several of these super-branches nationwide. In addition to more luxurious floor plans, these locations will serve up videoconferencing with financial specialists, and roving tellers to help cut down on waiting time. Comfy chairs will soon feature self-serve tablets for customer use, and in addition, spanking-new ATMs are coming online, too.

Advanced ATMs will feature video chats with tellers, for those times when customers need more than the standard ATM fare. The units will be available within bank buildings, as well as at drive-up and stand-alone locations. Bank of America isn’t the only bank using these technological wonders. JPMorgan Chase is rolling out some of its own interactive ATMs, which it will also use in conjunction with tablet-carrying employees at branch locations. JPMorgan’s CIO envisions customers being able to initiate more complex banking activities, such as the mortgage application process, via this new system.

A combination of cost savings and attention to customers’ needs
This new style of banking not only accommodates consumers’ wants and needs, but also saves banks money. PNC notes that transactions costs fall dramatically from nearly $4 when a live teller is involved, to under $0.60 when customers use mobile or ATMs. While some question why B of A should put so much focus on branch banking, officials acknowledge that customers still want the experience of banking at a bricks-and-mortar location.

Paying attention to customer’s concerns is becoming part and parcel of what Bank of America does these days, as evidenced further by its new marketing campaign that positions the bank as a facet of its customers’ lives, helping them glide through life while offering assistance at every stage, in a sort of business-lifestyle type of partnership.

Sound a little overdone? Perhaps, but don’t fault the big guy for it. The bank’s management knows there is much work to be done in …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

How Profitable Is PNC Financial?

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By Robert Eberhard, The Motley Fool

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Earlier this week, I took a look at where PNC Financial gets its money, but revenue is only part of the story. It is more important to take a look at what is spent in the form of expenses to make that money, and how much money eventually makes its way to investors.

In this article, I will do just that, exploring some of the larger costs associated with running a bank of PNC‘s size. I will also take a look at one area where PNC has been able to improve dramatically over the past few years, as well as compare PNC to some of its competitors in one very important banking metric.

To the numbers!
As I mentioned in my previous article, PNC Financial breaks its business into six segments, and these six segments earned $14.9 billion in revenue during 2012. However, after all the costs associated with running the business, these segments earned nearly $3.4 billion, with one segment ending with a loss:

Business Segment

2012 Revenue

2012 Net Income (Loss)

Profit Margin

Retail Banking

$6.33 billion

$596 million

9.4%

Corporate & Institutional Banking

$5.70 billion

$2.33 billion

40.9%

Asset Management Group

$973 million

$145 million

14.9%

Residential Mortgage Banking

$526 million

($308) million

N/A

BlackRock

$512 million

$395 million

77.1%

Non-Strategic Assets Portfolio

$843 million

$237 million

28.1%

Total business segments

$14.88 billion

$3.39 billion

22.8%

Source: Company 10-K. 

It is not all that surprising that PNC‘s largest expense last year was the nearly $4.6 billion it spent for personnel. The bank had over 56,000 employees at the end of last year, including nearly 28,000 in the Retail Banking business alone. Unless it chooses to close some of its 2,900 branches, this is an expense that will probably remain a large portion of its business going forward, but it should also be seen as one of the costs of being one of the largest regional banks out there.

Another expense that tends to be high at banks, especially since the 2008 banking crisis, is the provision for credit losses. This is money set aside by banks that gives them some leeway should some loans go bad and they have to write off the the loan. This is one area where PNC shines. Since reporting $3.9 billion in this expense in 2009, PNC has been able manage its loan portfolio, as well as benefit from improving economic conditions, and reduce this cost to $987 million in 2012. In essence, this has freed up nearly $3 billion in income over the past four year, further strengthening the bank’s bottom line.

A bank’s efficiency is important
One important and often overlooked metric that we can examine with banks is its efficiency ratio. This ratio, which is calculated by dividing noninterest expense by …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

9 Critical Numbers About PNC Financial

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By John Maxfield, The Motley Fool

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Given that you clicked on this article, it seems safe to assume you either own shares of PNC Financial or are considering buying them in the near future. If so, then you’ve come to the right place, as the table below reveals the nine most critical numbers that investors need to know about PNC before deciding whether to buy, sell, or hold its stock.

But before getting to that, a brief introduction is in order. Tracing its roots to the Pittsburgh Trust and Savings Company, which was founded in 1852, PNC has since transformed into one of the nation’s largest regional banks. Following its controversial acquisition of Cleveland-based National City Bank in 2008, PNC operates more than 2,900 branches across 19 states and the District of Columbia. And in addition to the $305 billion of assets on its balance sheet, it has approximately $112 billion in assets under management and $224 billion of assets under administration.

From a shareholder’s perspective, PNC‘s biggest strengths are its net interest margin, reasonable leverage, and healthy fee-based income. At 3.94%, its net interest margin exceeds the industry average by an impressive 24 basis points. It does so, moreover, with less leverage than most of its peers. At the end of last year, its tier 1 capital was leveraged 9.6 times relative to its average total assets compared to the industry average of 10.1 times. Finally, and this is an oft-overlooked component of good banks, its non-interest income accounted for a considerable 40% of total revenue — that is, 12 percentage points more than the industry.

Alternatively, PNC‘s two biggest weaknesses are its efficiency ratio and return on equity. The efficiency ratio is a measure of a bank’s cost structure; a higher ratio reflects a less efficient operation, and vice versa. In this case, PNC‘s ratio comes in at 73% compared to the industry’s 69%. Suffice it to say, this is an area of opportunity for PNC. Given this and the less aggressive use of leverage, it’s little surprise that PNC‘s return on equity underperforms the average, at 7.6% and 8.2%, respectively. And it’s likely for this reason, in sum, that PNC trades for a comparatively reasonable 1.37 times tangible book.

Want to learn more about PNC Financial?
The big banks may be rushing to renew their focus on traditional banking, but well-run regional banks like PNC Financial are already there. PNC saw its share of hardships during the financial meltdown, but its management team thinks the bank is now back on track and ready to deliver for investors. Does this mean it’s time to buy PNC? To help you figure that out, one of The Motley Fool’s top banking analysts has authored a brand-new premium research report, delving into everything investors need to know about PNC today. To claim your copy, simply click here now for instant access.

…read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

PNC Names New Mortgage Chief

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By Eric Volkman, The Motley Fool

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PNC Financial Services Group has appointed a new chief executive officer of its PNC Mortgage division. E. Todd Chamberlain is to take up the position, replacing Saiyid Naqvi following the latter’s retirement at the end of April. Like Naqvi, he will also join the banking conglomerate’s executive committee.

Chamberlain joined PNC in 2011 and has served as the mortgage division’s president and chief operating officer. Before that, he occupied executive positions in Regions Financial and insurance giant American International Group.

Naqvi had been the head of PNC‘s mortgage operations until 2001, when the company divested that business. He returned in 2009 following the bank’s acquisition of National City Mortgage, which subsequently became PNC Mortgage.

The article PNC Names New Mortgage Chief originally appeared on Fool.com.

Fool contributor Eric Volkman has no position in any stocks mentioned. The Motley Fool recommends AIG, owns shares of AIG and PNC Financial Services, and has options on AIG. Try any of our Foolish newsletter services free for 30 days. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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Business, Finance, Occupation & Industry

7 Things You Need to Know About PNC Financial

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By John Grgurich, The Motley Fool

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For we bank investors, it’s easy to focus on the big ones. They’re attention hogs, almost constantly in the news, whether for positive or negative reasons.

As such, we can be forgiven for sometimes thinking they constitute the entire investable-banking universe. But there’s a whole other level of publicly held banks out there that also deserve investor attention: regional banks.

Regional banks are big enough and dynamic enough to conduct serious business — and therefore exhibit serious growth — without all the unneeded drama that can come along with being “too big to fail.”

Without further ado, then, here are seven of my favorite things about PNC Financial : a regional bank that doesn’t steal headlines, but may just steal your investor’s heart.

1. Solid share-price performance over the past year
Since March of last year, PNC has returned 4.1% in share-price gains to its stockholders. Not stellar, but very solid.

PNC may be no Bank of America when it comes to share-price appreciation — returning 31.79% to its shareholders in the past year versus B of A’s 100% — but PNC also doesn’t come with many of the same drawbacks as B of A, including a recent $10 billion payout to Fannie Mae for poorly vetted mortgages doled out in the run-up to the financial crisis. Size isn’t everything.

2. Great year-to-date share-price performance
PNC has been cooking on all burners since the start of 2013, returning a big 11.27% to its shareholders already. In a reversal of roles, and potentially investor fortunes, B of A shares have only gone up by 4.41% since the beginning of the year.

3. Spot-on valuation
PNC‘s price-to-book ratio is 0.99, which is right in the pocket. As a personal rule of thumb, I try to buy into a company with a P/B right around 1.0, with the hope of someday selling at around 2.0.

PNC‘s P/B of 0.99 tells me the bank may be undervalued just a bit, but not so much that red flags are going up. For a bank throwing up red flags, check out Citigroup , which has a P/B of 0.75: low enough to raise suspicions that something more serious than simple investor fussiness is manifesting itself.

4. Great fourth-quarter performance
PNC grew its fourth-quarter net income at a giant 50.8% year over year, on just 5.8% revenue growth. Now that’s bang for your banking buck, and even beats the Q4 performance of Wells Fargo , which grew its year-over-year net income by 23.9% on 8.1% revenue growth. Wells’ performance is great, and PNC‘s is even better.

5. Fabulous stress-test results
The Federal Reserve just released results from the 2013 stress tests, or Comprehensive Capital Analysis and Review. The CCAR puts banks through a simulated, severe economic downturn — along the lines of what the country experienced in 2008 — and measures how well they perform.

For 2013, PNC went into the CCAR with an actual Tier 1 common ratio …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

PNC Loses a CFO, Picks a New One

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By Rich Smith, The Motley Fool

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Chief Financial Officer Richard J. Johnson plans to retire from PNC Financial Services at the end of the third quarter, PNC announced Friday. Robert Q. Reilly, currently head of PNC‘s Asset Management Group, will take his place as CFO of the bank at that time.

Explaining the replacement, PNC Chairman and CEO James E. Rohr pointed out that, while heading up the Group, Reilly “helped build PNC‘s asset management group into one of the top 10 bank-held wealth managers in the United States, with total sales growth above 30 percent in each of the last two years and revenue approaching $1 billion.” Reilly has been with the bank for 26 years.

Once he takes over as CFO, Reilly’s own position as head of the Asset Management Group will, in turn, be filled by current Corporate Banking executive vice president Orlando C. Esposito, also a longtime PNC employee, having joined the company in 1985.

PNC shares are up 0.6% on the news, despite this being a down day for the market. Shares currently trade around $66.68.

The article PNC Loses a CFO, Picks a New One originally appeared on Fool.com.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of PNC Financial Services. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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New Year, New Stress Test, Same Result

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By David Hanson, The Motley Fool

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After sporting impressive capital ratios throughout 2012, and expanding into new markets with the acquisition of RBC Bank, PNC Financial Services  will be rewarding its shareholders with an increased dividend.

Thursday evening, the Federal Reserve released the second part of the annual banking stress test results, which examined the largest U.S. banks’ ability to make capital distributions and maintain certain capital levels during an economic downturn. While it stood out as one of the most well-capitalized banks during last week’s stress tests, PNC shareholders received more good news, with an increased dividend, but they did not receive details.

Similar to its decision during last year’s tests, PNC did not release the amount by which it plans to hike its quarterly dividend. The bank’s board of directors will consider the official increase amount in April. Last year, PNC boosted its dividend roughly 17%. The company did acknowledge that it did not include a share repurchase plan in its capital plan because of its acquisition of RBC Bank, and other recent expansion efforts.

Despite the lack of details, these Comprehensive Capital Analysis and Review (CCAR) results highlight the strength and sustainability of PNC‘s balance sheet and evolving strategy.

How it will impact its capital ratios
Despite posting a lower actual Tier 1 common ratio in Q3 in 2012 compared to 2011 because of acquisitions, PNC posted an impressive minimum Tier 1 common ratio of 8.7% under the severely adverse scenario. That hypothetical 8.7% was determined with the assumption the bank will continue its $0.35 quarterly dividend throughout the nine-quarter stress period. Even with its newly approved capital plan, the CCAR results revealed that PNC‘s Tier 1 common ratio would only fall to 8.55%.

 

Regardless of some investors clamoring about the ease of the tests this year, it is hard to deny the improvements PNC has made to its balance sheet and business prospects. PNC‘s focus on building a stronger balance sheet, while continuing to expand into new markets when other banks are scaling back, should give investors confidence regarding the prospect of future capital gains, as well as dividends.

The big banks may be rushing to renew their focus on traditional banking, but well-run regional banks like PNC Financial are already there. PNC saw its share of hardships during the financial meltdown, but its management team thinks the bank is now back on track and ready to deliver for investors. Does this mean it’s time to buy PNC? To help you figure that out, one of The Motley Fool’s top banking analysts has authored a brand-new premium research report, delving into everything investors need to know about PNC today. To claim your copy, simply click here now for instant access.

…read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Wells Fargo Lends Businesswomen a Hand

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By Amanda Alix, The Motley Fool

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The hullabaloo inspired by Facebook COO Sheryl Sandberg’s new book, Lean In, has put the subject of how women achieve success in business front and center. Obviously, Sandberg speaks from experience. However, all the positivity and persistence in the world won’t help women get ahead — particularly those heading female-owned businesses — if financing is too difficult to secure.

There are some banks, however, that have lending and networking programs aimed specifically at women-owned businesses in an effort to help them succeed. One of these banks is Wells Fargo , which recently announced its stepped-up commitment to these entrepreneurs by increasing its lending target to $55 billion by the year 2020.

Original pledge: $1 billion
When Wells first created the plan in 1995, it promised to lend $1 billion to women business owners over a three-year span. The program really took off, and Wells kept increasing its commitment, raising the target to $10 billion in 1996, then upping the ante to $15 billion in 2002. Since the plan’s inception, the bank has lent over $38 billion to women-owned businesses.

Wells is also supportive of groups that cater to the needs of women entrepreneurs, such as the National Association of Women Business Owners. Last September, Wells awarded a $30,000 grant to California-based Women’s Economic Ventures, an educational non-profit to which the bank has been donating for 15 years.

Other, less-big banks also offer support
Although Wells‘ program has the widest scope, other banks have stepped up to the plate, as well. PNC Financial has a PNC-Certified Women’s Business Advocates program, which entails mentoring and networking services. The bank currently has 900 specially trained bankers nationwide that work with women who own their own small businesses. PNC estimates that it loans approximately $1 billion annually to women business owners, noting that the bank surpassed that amount last year.

Cleveland, Ohio-based KeyCorp has lent over $6 billion to women entrepreneurs since 2005 through its Key4Women program. Like PNC, the bank also makes networking and educational opportunities available to its clients, and its reach extends into 14 states. The Key4Women program holds seminars and workshops all over the country several times each month.

With the reputations of many banks still suffering from the upheaval caused by the financial crisis, it’s refreshing to see some institutions reaching out to the community with little fanfare, just as a normal part of doing business. For those of you who consider the softer side of banking in your investing decisions, these programs are another reason to give these particular banks a good look.

Wells Fargo‘s dedication to solid, conservative banking helped it vastly outperform its peers during the financial meltdown. Today, Wells is the same great bank as ever, but with its stock trading at a premium to the rest of the industry, is there still room to buy, or is it time to cash in your gains? To help figure out whether Wells Fargo is a buy today, I invite you to …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

PNC Financial: The Stress Test and Dividends

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By John Maxfield, The Motley Fool

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Last week, the Federal Reserve reported that 17 of the nation’s 18 largest banks passed this year’s round of stress tests. Among those making the grade was PNC Financial . The question this week, set to be answered on Thursday, is whether the Fed will allow PNC to return more capital to shareholders by means of a higher dividend and/or share buyback program. In the video below, Motley Fool contributor John Maxfield discusses why he thinks the chances of this are good.

The big banks may be rushing to renew their focus on traditional banking, but well-run regional banks like PNC Financial are already there. PNC saw its share of hardships during the financial meltdown, but its management team thinks the bank is now back on track and ready to deliver for investors. Does this mean it’s time to buy PNC? To help you figure that out, one of The Motley Fool‘s top banking analysts has authored a brand-new premium research report, delving into everything investors need to know about PNC today. To claim your copy, simply click here now for instant access.

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Source: FULL ARTICLE at DailyFinance

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Will PNC Increase Its Dividend?

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By David Hanson, The Motley Fool

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Last week, the Federal Reserve released the first part of the annual banking stress tests results, which examined the impact of a severe economic downturn on the largest U.S. banks. While almost every bank showed improvement year over year, PNC Financial Services posted especially encouraging results. The results highlighted the strength and sustainability of PNC’s balance sheet and loan portfolio.

How it fared last week
Despite posting a lower actual Tier 1 common ratio in Q3 in 2012 compared to 2011 because of its acquisition of RBC Bank, PNC posted an impressive minimum Tier 1 common ratio of 8.7% under the severely adverse scenario. During the previous year’s tests, PNC‘s minimum Tier 1 common in the doom-and-gloom scenario was 6.6%. Regardless of some investors clamoring about the ease of the tests this year, it is hard to deny the improvements PNC has made to its balance sheet and business prospects.

These strong results have driven investors to tune into the Comprehensive Capital Analysis and Review results, which will be released on Thursday afternoon. Within this release from the Fed, investors will know if the participating banks sought and received approval for any increases in dividends or share buyback programs. Investors will also get to see the impact of any new capital plans on stressed ratios.

Source: Dodd-Frank Act Stress Test 2013: Supervisory Stress Test Methodology and Results.

Should PNC request another bump?
Last year, PNC asked and received approval for an increase in its quarterly dividend payment, and later, it bumped its quarterly dividend up by roughly 14%. Additionally, the Fed did not reject the company’s proposal for a modest share repurchase program. PNC ultimately purchased $190 million of common stock in 2012 under a $250 million authorization. Given the substantial improvement of its balance sheet under a stressed scenario, PNC seems to have ample leverage in negotiating any additional actions to return more cash to shareholders.

How much?
While it seems that PNC is strong enough to request a substantial increase in dividend, I believe investors may want to temper their expectations. The Fed has explicitly said that dividend payout ratios above 30% will receive “particularly close scrutiny.” PNC‘s current dividend payout ratio is hovering around the 30% level. If the Fed and the bank cannot agree on a substantial dividend increase, PNC may request additional share buybacks, an action that could be scaled back and would receive much less scrutiny than cutting a dividend. Therefore, I expect PNC to ask and receive approval for a slight dividend increase, as well as a share buyback program.

The big banks may be rushing to renew their focus on traditional banking, but well-run regional banks like PNC Financial are already there. PNC saw its share of hardships during the financial meltdown, but its management team thinks the bank is now back on track and ready to deliver for investors. Does this mean it’s time to buy PNC? …read more
Source: FULL ARTICLE at DailyFinance

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PNC Sees 4th-Quarter Net Beating Estimates Despite Settlement Charges

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PNC Financial Services Group Inc. (PNC) expects its fourth-quarter per-share income to be hit by charges and an increased provision associated with its residential mortgage-banking activities, although the regional lender estimated that income adjusted to exclude these items will beat Wall Street estimates.
Source: FULL ARTICLE at Fox Business Headlines