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Tuesday, January 31, 2012

PNC Financial Services Reports Weak Quarter: Expenses Push EPS to 7-Quarter Low

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PNC Financial Services Reports Weak Quarter: Expenses Push EPS to 7-Quarter Low


PNC Financial Services Summary Q4 2011 PNC Financial Services' Q4 financial performance suffered from a large increase in noninterest, operating, expenses. Financial position continues very strong. PNC explained, "Noninterest expense of $2.7 billion for the fourth quarter increased $579 million compared with the third quarter and included $240 million of residential mortgage foreclosure-related expenses primarily as a result of ongoing governmental matters, a noncash charge of $198 million related to redemption of trust preferred securities, and an increase in personnel expense of $103 million primarily driven by higher stock market prices and higher business production." CEO James E. Rohr said, "PNC had a solid year of accomplishments in a challenging regulatory and economic environment."


PNC Financial Services Income Statement Q4 2011 Net revenues were $3.55 billion, net income a multi-year low $493 million, and earnings per share a 7-quarter low $0.85. From the prior quarter Q3 2011, net revenues were +0.14%, net income -40.89%, and earnings per share -45.16%. From the prior year Q4 2010, these were -9.07%, -39.88%, and -43.33%, respectively. Both the operating margin of 18.03% and the net margin of 13.89% are multi-quarter lows. The operating expense ratio skyrocketed to 70.01%.


PNC Financial Services Balance Sheet Q4 2011 Total assets were +1% QoQ and +3% YoY to $271.21 billion. The capital to assets ratio dipped QoQ to 13.73%, but continues very strong. Return on assets decreased QoQ to a still strong +1.16%. Gross Loans increased QoQ and YoY and Net Loans are 57% of the asset mix. The Allowance for Loan Losses to Loans ratio of 2.73% is a multi-quarter low.


PNC Financial Services (PNC) Rating Q4 2011 At December 31, 2011, we have rated PNC Financial Services an "A-", the same as at September 30, 2011. Financial position continues very strong. Financial performance was sub-par for the current quarter, but expected to rebound in Q1 2012. Our rating weights financial position more than financial performance and emphasizes safety and soundness, not future earnings potential. Ratings range from A+ down through G-.


PNC Financial Services Performance by the Quarters


















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