PNC Q208 Highlights
July 19, 2008 – 9:48 amReference the forensic analysis for my in depth opinion on this company.
PNC Financial Services – Q2 2008
Income statement analysis
PNC’s revenues increased 19% y-o-y to $2,039 mn in 2Q2008 over $1,713 mn in 2Q2007 off 32% increase in net interest income and 9% increase in non-interest income. Net interest income increased 32% to $977 mn in 2Q2008 from $738 mn in 2Q2007 primarily due to 1.5% increase in interest income to 1.5% and 26.5% decline of interest expense to $600 mn as the bank benefitted from lower cost of funding. Decline in interest rates and lower funding cost helped the bank to expand its net interest margin to 3.47% from 3.03% in 2Q2007. PNC’s non-interest income increased 9% to $1,062 mn in 2Q2008 from $975 mn in 2Q2007 off increase in funds servicing, asset management, corporate services and other partially offset by decline in customer service. Bank’s provision increased more than three-fold to $186 mn in 2Q2008 as a result of deteriorating credit conditions. PNC’s non-interest expense increased 7.2% to $1,115 mn in 2Q2008 primarily owing to higher occupancy, marketing and equipment expenses. However banks efficiency ratio improved to 55% in the current quarter from 61% previously as revenue growth outpaced expense growth. Overall banks net income increased 20% to $505 mn in 2Q2008 over $423 mn in 2Q2007 while EPS increased to $1.45 up from $1.22 in 2Q2007.
Credit metrics
PNC’s non-performing loans continued to increase in 2Q2008 rising to 0.95% from 0.81% and 0.36% at the end of 1Q2008 and 2Q2007. As a result of increased defaults, net Charge-offs to loans increased to 0.62% in 2Q2008 from 0.20% in 2Q2007. PNC’s NPA’s to shareholder’s equity stood at 4.9% at the end of 2Q2008, from 1.79% at the end of 2Q2007, a 174% increase. It is our belief that PNC, due to one of the lowest Tier 1 capitalizations in its peer group, may soon be forced to raise capital, thus diluting existing shareholders.
One Response to “PNC Q208 Highlights”
PNC pulled a commitment on us and virtually ruined our company and destroyed our lives. How? The way most Banks do, but don’t tell you. The most common way for a Bank to wiggle out of commitments is through the appraisal process. Appraisals these days are a scam. Appraiser would be outraged to hear this, of course. They have all of the trappings of professionalism and oversight. Fact is they are either contracted by the bank tacitly to produce desired results, or they are so sh_t scared of being sued or drawn into court, that they lowball values just for the sake of their own skins.
The methodology may be uniform, but the data input and its interpretaion is like statistical analysis. The report can say anything that the Bank wants it to say.
Backroom agreements are rampant. No one will blow the whistle…But its CYA out there now on the vast economic wasteland that use to be America.
By Caughtintheriptide on Jul 23, 2008