PNC Financial Services Group Inc.
) announced that it will redeem preferred securities worth $500.1
million. The redemption will include PNC's Non-Cumulative
Perpetual Preferred Stock, Series M. The preferred securities
would be redeemed at 100% of the liquidation amount, which is
$100,000 per share. The redemption will take place on December
National City Preferred Capital Trust I will use the proceeds
of the aforementioned redemption to fund the redemptions of 12%
Fixed-to-Floating Rate Normal APEX Securities and Common
Securities on December 10, 2012. The trust intends to utilize
$500 million of the proceeds to redeem all the outstanding shares
of its 12% Fixed-to-Floating Rate Normal APEX Securities, and the
balance amount for redeeming the Common Securities.
Moreover, the Normal APEX Securities has a distribution rate
of 12.0% and will mature on December 10, 2043. Further, these
will be redeemed at $1,000 per share. The redemption amount will
also include accrued and unpaid distributions until the
redemption date arrives. Wilmington Trust Company - a subsidiary
M&T Bank Corporation
) - will act as the paying agent.
We believe this redemption will lead to a reduction in PNC
Financial's borrowed funds, which will go a long way in improving
the company's overall financials. As of September 30, 2012, the
bank's borrowed funds stood at $43.1 million compared with $35.1
million as of September 30, 2011.
We expect the company to maintain its superior position in the
market, based on its positive approach to market conditions and
improving top-line growth. However, the regulatory reforms might
affect the company's near-term results to some extent.
PNC Financial's shares maintain a Zacks #3 Rank, which
translates into a short-term Hold rating. Considering its
fundamentals, we also have a long-term Neutral recommendation on
M&T BANK CORP (MTB): Free Stock Analysis
PNC FINL SVC CP (PNC): Free Stock Analysis
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