PNC Misses but Margin Expansion Offers Hope (Update 1)
- PNC reports second-quarter earnings of 98 cents a share, missing the consensus estimate of $1.24.
- Second-quarter results include mortgage putback charges of $284 million, or 54 cents, and $119 million in other charges for trust preferred redemptions and merger integration expenses.
- Net interest income grows 10% sequentially, reflecting a full quarter benefit the March 2 RBC Bank (USA) acquisition; net interest margin expands to 4.08%.
Updated with comment from Stifel Nicolaus analyst Christopher Mutascio and market close information.
NEW YORK (TheStreet) -- PNC Financial Services Group (PNC) of on Wednesday reported that its net interest margin during the second quarter expanded to 4.08% from 3.90% the previous quarter, and 3.93% a year earlier, running counter to the trend for most large regional banks in the prolonged low-rate environment.
The Pittsburgh lender reported a second-quarter net income of $546 million, or 98 cents a share, missing the consensus estimate of a profit of $1.24 a share, among analysts polled by Thomson Reuters.
The second-quarter results included a mortgage putback provision of $284 million, or 54 cents a share after tax, noncash charges of $85 million, or 16 cents a share, related to trust preferred share redemptions, and integration expenses of $34 million, or six cents a share, related to the acquisition of RBC Bank (USA) on March 2.
In comparison, PNC earned $811 million, or $1.44 a share, during the first quarter, and $912 million, or $1.67 a share, during the second quarter of 2011.
PNC's shares pulled back 1% to close at $61.01.
The company reported that its net interest income during the second quarter totaled $2.5 billion, increasing 10% from the previous quarter and reflecting a full quarter benefit from the RBC Bank (USA) acquisition, as well as the redemption of roughly $1.8 billion in trust preferred shares.
PNC said that excluding the mortgage putback provision, second-quarter noninterest income increased 4% sequentially.
PNC had $299.6 billion in total assets as of June 30. Total loans grew 2% during the second quarter, with commercial loans increasing by 3% to $104.1 billion, at the end of the second quarter, "as a result of strong loan growth primarily in corporate banking, real estate finance and asset-based lending," according to the company.
Total deposits grew slightly during the second quarter, to $206.9 billion, as of June 30.