Stock’s Earnings in Focus: The PNC Financial Services Group, Inc. (NYSE:PNC)

The PNC Financial Services Group, Inc. (NYSE:PNC) reported earnings for the three months ended Mar2016 on April 14, 2016. The company earned $1.68 per share on revenue of $3.67B. Analysts had been modeling earning per share of $1.7 with $3.76B in revenue.

The PNC Financial Services Group, Inc. (PNC) on April 14, 2016 reported net income of $943 million, or $1.68 per diluted common share, for the first quarter of 2016 compared with net income of $1.0 billion, or $1.87 per diluted common share, for the fourth quarter of 2015 and net income of $1.0 billion, or $1.75 per diluted common share, for the first quarter of 2015.

“PNC had solid first quarter earnings that were impacted by weaker equity markets and related fees, and continued deterioration in energy related credits,” said William S. Demchak, chairman, president and chief executive officer. “We lowered expenses, maintained a strong balance sheet and continued to return capital to shareholders. We also saw good underlying trends in our businesses to start the year, and we expect that momentum to continue in 2016.”

Income Statement Highlights

• First quarter results reflected higher loans and securities, lower revenue, reduced noninterest expense, and higher provision for credit losses compared with the fourth quarter of 2015.


• Net interest income of $2.1 billion for the first quarter increased $6 million compared with the fourth quarter driven by growth in core net interest income despite a lower day count.


• Noninterest income of $1.6 billion for the first quarter decreased $194 million, or 11 percent, compared with the fourth quarter primarily due to weaker equity markets, lower capital markets activity and seasonality.


• Noninterest expense declined $115 million, or 5 percent, to $2.3 billion reflecting seasonally lower business activity and PNC’s continued focus on disciplined expense management.


• Provision for credit losses of $152 million for the first quarter increased $78 million compared with the fourth quarter primarily attributable to certain energy related loans.

Balance Sheet Highlights

• Loans grew $.8 billion to $207.5 billion at March 31, 2016 compared with December 31, 2015.


• Total commercial lending grew $1.6 billion, or 1 percent, primarily in PNC’s corporate banking and real estate businesses.


• Total consumer lending decreased $.8 billion due to lower home equity and education loans as well as runoff in the non-strategic portfolio.


• Overall credit quality in the first quarter remained relatively stable with the fourth quarter, except for certain energy related loans.


• Nonperforming assets of $2.6 billion at March 31, 2016 increased $.1 billion, or 5 percent, compared with December 31, 2015.


• Net charge-offs increased to $149 million for the first quarter compared with $120 million for the fourth quarter.

The PNC Financial Services Group, Inc. earnings per share showed an increasing trend of 1.6% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 770%.Analysts project EPS growth over the next 5 years at 5.63%. It has EPS annual growth over the past 5 fiscal years of 8.3% when sales declined -3.5. It reported 3.9% sales growth, and -3.7% EPS decline in the last quarter.

The stock is trading at $89.74, up 16.26% from 52-week low of $77.67. The stock trades down -9.12% from its peak of $100.52 and 5.62% above the consensus price target of $94.78. Its volume clocked up at 2.49 million shares which is higher than the average volume of 2.28 million shares. Its market capitalization currently stands at $45.06B.