PNC Financial services (NYSE:
) Earnings decreased 2.5% to $811 million as the bank invested
$145 million in the acquisition of Royal Bank of Canada's U.S.
Earnings per share were $1.44, the Pittsburgh-based bank said
today in a statement. Earnings were expected to be $1.48 per
share, according to analysts surveyed by Bloomberg, and would
have been $1.62 without the RBC acquisition costs. Last year the
bank earned $832 million or $1.57 per share.
PNC completed the purchase of RBC Bank USA March 12, allowing
the bank to expand in the Southeast US. This is the companies 7th
acquisition in eight years as it seeks to expand in the US and
Canada, it said in a statement issued at the time of the
acquisition. There were more than 400 branches and $18 billion in
deposits added to PNC with the purchase.
"PNC had excellent results for the first quarter reflecting
strong performance across our markets," Chairman and Chief
Executive Officer James E. Rohr said in the earnings report
released today. "Our success in growing revenue is a direct
result of our success in growing customers and loans."
In December 2011 PNC acquired 27 branches from Flagstar Bank,
about $210 million in deposits, in the Atlanta metropolitan
"PNC increased full-year net interest income and expense
guidance and reduced provision guidance. Net-net, the guidance is
probably a wash to slightly better," said Jefferies (NYSE:
) in an analyst's note issued today. Jefferies ranks PNC "buy."
"Excluding one-timers, operating expenses were about in line with
PNC will not be making any large acquisitions in the next 12
to 18 months according to an analyst's note from Bank of America
). The bank will have to rebuild its deposits and backing for
loans as regulators did not require it to raise capital to close
the RBC Bank deal.
The bank moved back its timeline to meet Basel III capital
requirements from during 2013 to year end 2013. Higher capital
requirements will begin to be phased in during the year. PNC's
Basel Tier 1 capital decreased by 1% with the acquisition of RBC
"As expected, there were some moving pieces in the quarter,
but underneath the noise results looked solid," said Oppenheimer
), an investment boutique, in a note issued today. Oppenheimer
ranks PNC "perform."
First-quarter revenue rose 3% as income from residential
mortgages rose 18% to $230 million.
Loans at PNC increased 18% from a year earlier, with the
largest gain commercial loans, which increased from $80 billion
to $100.6 billion. About half of the new commercial loans came
from the RBC Bank acquisition. Deposits increased 13% from $182
billion to $206 billion.
PNC, the sixth-largest US bank in terms of assets, had a
smaller decrease in earnings that rivals Goldman Sachs (NYSE:
) and JPMorgan (NYSE:
), who saw earnings fall 23% and 3% respectively according to the
companies' reports issued earlier this month. Both banks topped
analysts' earnings estimates.
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