PNC Financial Services Group Inc.
(
PNC
) is seeking to expand its business in Canada. The company has
applied to convert its corporate banking office in Toronto to a
full-service branch, according to a Reuters report, which cited a
notice of application in the Canada Gazette.
Notably, in June 2011, PNC Financial announced its plan to
purchase RBC Bank (
USA
), the U.S. retail banking subsidiary of
Royal Bank of Canada
(
RY
), for $3.45 billion. The acquisition would help PNC Financial to
expand its footprint in the Southeast markets. It would also make
PNC Financial the fifth among the U.S. banks, with 2,870
branches.
PNC Financial expects the acquisition to be immediately
accretive to earnings (excluding integration costs) upon closing in
the first quarter of 2012.
Last year, PNC Financial also completed acquiring the 27-branch
retail bank franchise in Georgia from Flagstar Bank, a subsidiary
of
Flagstar Bancorp Inc.
(
FBC
). Flagstar Bank sold the leases associated with the branches and
the related businesses and retail deposits worth approximately $210
million at closing. The deal is a strategic fit for PNC
Financial as it will expand operations in Atlanta and add to its
competitive edge.
Our Take
PNC Financial's continued strengthening of balance sheet, with
focus on risk and expense management, should propel its earnings
ahead. Benefits from the 2008 National City acquisition continue to
exceed the company's expectations. We also believe that the
company's latest acquisition spree and strategic efforts to boost
business would be accretive to its revenue.
Yet the top-line headwind is expected to remain in the near
term, with continued soft demand for loans and a low interest rate
environment. Regulatory issues also remain a concern.
PNC Financial shares maintain a Zacks #3 Rank, which translates
into a short-term Hold recommendation. Considering its
fundamentals, we also have a Neutral recommendation on the
stock.
FLAGSTAR BANCP (
FBC
): Free Stock Analysis Report
PNC FINL SVC CP (
PNC
): Free Stock Analysis Report
ROYAL BANK CDA (
RY
): Free Stock Analysis Report
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