For Immediate Release
Chicago, IL - January 19, 2012 - Zacks.com announces the list of
stocks featured in the Analyst Blog. Every day the Zacks Equity
Research analysts discuss the latest news and events impacting
stocks and the financial markets. Stocks recently featured in the
blog include
PNC Financial Services Group Inc.
(
PNC
),
Royal Bank of Canada
(
RY
),
Flagstar Bancorp Inc.
(
FBC
),
BankAtlantic Bancorp Inc.
(
BBX
) and
Amphenol Corporation
(
APH
).
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Here are highlights from
Wednesday's
Analyst Blog:
PNC Financial Lags Estimate
PNC Financial Services Group Inc.
's (
PNC
) fourth-quarter 2011 earnings per share came in at 85 cents,
significantly below the Zacks Consensus Estimate of $1.41. Results
also compared unfavorably with earnings of $1.55 per share in the
prior quarter and $1.50 in the year-ago quarter.
PNC Financial's results were impacted by subdued revenue levels.
The company also incurred a couple of one-time charges in the
quarter. Yet a substantial contraction in the provision for credit
losses was on the upside.
Notably, PNC Financial's fourth quarter 2011 results included a
30 cent per share (after tax) impact from residential mortgage
foreclosure-related expenses. In addition, the company experienced
non-cash after-tax charge of 24 cents per share related to
redemption of trust preferred securities.
For full year 2011, PNC Financial reported net income of $3.1
billion or $5.64 per share, down from net income of $3.4 billion or
$5.74 per share. Results also fell short of the Zacks Consensus
Estimate of $6.20 per share.
Total revenue for the quarter came in at $3.5 billion, flat
sequentially and down 10.3% year over year. However, it was in line
with the Zacks Consensus Estimate. The drop was primarily due to
lower non-interest income.
For full year 2011, PNC Financial's revenue came in at $14.3
billion, down 5.6% year-over-year but in line with the Zacks
Consensus Estimate.
Quarter in Detail
Net interest income for the reported quarter was $2.2 billion,
up 1.1% sequentially and flat year over year. Growth in core net
interest income and lower funding costs were mostly offset by a
decrease in purchase accounting accretion including lower cash
recoveries on impaired loans. Net interest margin dipped 3 basis
points (bps) sequentially and 7 basis points year over year to
3.86%.
Non-interest income was down 1.4% sequentially and 20.1% year
over year to $1.4 billion. The year-over-year decline was
attributed to the impact of a gain realized in the prior year
quarter related to the sale of a portion of PNC Financial's
BlackRock shares, lower corporate service fees and the fourth
quarter 2011 regulatory impact of lower interchange fees on debit
card transactions.
Non-interest expense for the reported quarter came in at $2.7
billion, up 28.6% sequentially and 17.4% year over year. Results
were impacted by residential mortgage foreclosure-related expenses
primarily as a result of ongoing governmental matters, a non-cash
charge related to redemption of trust preferred securities, and an
increase in personnel expense.
Notably, PNC Financial expects non-interest expense for the
first quarter of 2012 to return to third quarter 2011 levels
excluding legal and regulatory-related contingencies and
integration costs that may be incurred in first quarter 2012.
Credit Quality
Credit quality continued to improve in the quarter.
Nonperforming assets declined 3% sequentially and 19%
year-over-year to $4.2 billion. The sequential decrease was driven
by lower commercial and commercial real estate nonperforming loans
partially offset by an increase in home equity nonperforming loans.
The ratio of non-performing assets to total assets decreased 6 bps
and sequentially and 41 bps year over year to 1.53%.
Net charge-offs plunged to $327 million, or 0.83% of average
loans on an annualized basis, from with $365 million, or 0.95%, in
the prior quarter and $791 million, or 2.09%, in the year-ago
quarter. The sequential fall reflects decrease in commercial loan
net charge-offs and commercial real estate loan net charge-offs
partially offset by an increase in residential real estate and
other consumer loan net charge-offs.
The provision for credit losses during the quarter was $190
million, down 27.2% sequentially and 57.0% year-over-year. Results
reflect by overall credit quality improvement and continued efforts
to reduce exposure levels.
Capital Position
As of December 31, 2011, PNC Financial's Tier 1 common capital
ratio was an estimated 10.3%, versus 10.5% as of September 30, 2011
and 9.8% as of December 31, 2010. The Tier 1 risk-based capital
ratio was an estimated 12.6% as of December 31, 2011, compared with
13.1% in the prior quarter and 12.1% in the year ago quarter. The
sequential declines in the Tier 1 common and Tier 1 risk-based
capital ratios were due to higher risk-weighted assets.
As of December 31, 2011, total assets under administration were
$210 billion, up from $202 billion in the prior quarter but
slightly down $212 billion in the year-ago quarter.
Capital Deployment Update
The Board of Directors of PNC Financial declared a quarterly
common stock cash dividend of 35 cents per share with a payment
date of February 5, 2012.
PNC Financial did not repurchase shares in 2011. The share
repurchase program, which does not bear a termination date, has
been in effect since October 4, 2007 and has 25 million shares
remaining.
PNC in Expansion Mode
In December 2011, PNC Financial received the regulatory
approvals to acquire RBC Bank (
USA
), the U.S. retail banking subsidiary of
Royal Bank of Canada
(
RY
). The approvals take PNC Financial a step closer to the completion
of the deal, slated for the first quarter of 2012. The acquisition
is expected to be accretive to 2012 earnings, excluding integration
costs and the company has no plan to issue any shares of common
stock as part of the purchase price.
The acquisition would help PNC Financial to expand its footprint
in the Southeast markets. It would also make PNC Financial the
fifth among U.S. banks, with 2,870 branches.
Of late, 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 associated businesses and retail deposits worth approximately
$210 million at the closing. The deal is a strategic fit for
PNC Financial as it will expand operations in Atlanta and give it a
competitive advantage.
In mid-2011, PNC Financial also completed the acquisition of 19
branches from a subsidiary of
BankAtlantic Bancorp Inc.
(
BBX
). Additionally, two related facilities in the Tampa - St.
Petersburg area and associated deposits were also handed over to
PNC as part of the sale.
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 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.
Additionally, PNC Financial shares maintain a Zacks #3 Rank,
which translates into a short-term Hold recommendation.
Amphenol Beats by 3 Cents
Amphenol Corporation
(
APH
) posted a net income of $0.69 per share in the fourth quarter of
2011, compared to $0.79 in the third quarter of 2011 and $0.74 in
the year-ago quarter.
The reported number includes a one-time charge of $9 million ($5
million after tax) or $0.03 per diluted share related to the
previously announced flood damage at the company's New York
facility. The company also incurred a $2 million or $0.01 per share
charge for acquisition related transaction costs in connection with
an acquisition made in November.
Excluding one-time items, net income came in at $0.73 per share,
beating the Zacks Consensus Estimate of $0.70
.
Amphenol incurred damage at its Sidney, New York manufacturing
facility as a result of severe and sudden flooding in New York
State in the second week of September. The company recorded a
charge of $13 million or $0.05 per share in the third quarter for
property-related damage, as well as cleanup and repair efforts, net
of expected insurance recoveries. In the fourth quarter, Amphenol
incurred an additional charge of approximately $9 million or $.03
per share for one-time charges related to remaining cleanup and
repair efforts.
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AMPHENOL CORP-A (
APH
): Free Stock Analysis Report
BANKATLANTIC -A (
BBX
): Free Stock Analysis Report
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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