PNC First Quarter Earnings Drop on RBC Bank Acquisition Costs – ValueWalk Premium

PNC First Quarter Earnings Drop on RBC Bank Acquisition Costs

PNC First Quarter Earnings Drop on RBC Bank Acquisition Costs

PNC Financial Services Group Inc. (NYSE: PNC) reported its first quarter earnings before the bell and said its profit dropped 3.8 percent from increased non-interest expenses while shielding declines in credit-loss provisions.

The large commercial real estate lender reported a $805 million profit; this compares to the previous year's $837 million profit. It also saw an 18 percent first quarter year-over-year rise in its mortgage revenue, to $230 million.

Earnings per share dropped to $1.44 from the previous year's $1.57.

The quarter's results included $145 million integration costs, $72 million to legal reserves and $40 million of operating expenses from its RBC Bank (USA) acquisition. Earlier in the year, PNC's Chief Financial Officer Richard Johnson said that the acquisition would likely add a “mid- to high- teens” percentage rise in loans and a “mid- to high-single digits” revenue increase this year, according to Bloomberg.

Growth in the First Quarter

In response to the first quarter report, Chief Executive Officer James E. Rohr said in today's press release, “PNC had excellent results for the first quarter reflecting strong performance across our markets Our success in growing revenue is a direct result of our success in growing customers and loans. With the completion of our acquisition of RBC Bank (USA), we plan to leverage our brand and innovative product set to grow market share in the southeast. We are confident that our strong capital levels and our ability to execute will lead to another good year in 2012.”

Other numbers from the first quarter included a total revenue increase of 2.8 percent to $3.73 billion. Analysts estimates had earnings per share at $1.43 and revenues at $3.59 billion.

PNC also saw its noninterest expense increase 19 percent to $2.46 billion.

Net charge-offs were 0.81 percent as compared to last year's 1.44 percent and the fourth quarter 2011's 0.83 percent.

PNC has been reducing funds for risky loans as the U.S. sees credit conditions improving. In the first quarter, PNC reported its credit-loss provisions were $185 million, a drop from a year ago's $421 million and the fourth quarter's $190 million.

As of this writing the stock is up 1.5% on the news.


Saved Articles