PNC Financial Exceeds Q3 Revenue Expectations; Shares Fall 1.7%

PNC Financial Services Group, Inc. (PNC) reported better-than-expected third-quarter revenue aided by higher interest-earning asset balances and improvements in credit quality. The results were positively impacted by the BBVA USA acquisition completed on June 1, 2021. Shares fell 1.7% to close at $199.13 on October 15.

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PNC is an American diversified financial services provider focused on areas such as Retail Banking, Corporate & Institutional Banking, and Asset management. With a market cap of $84.63 billion, shares have gained 81% over the past year. (See Insiders’ Hot Stocks on TipRanks)

The bank’s quarterly revenue climbed 21% to $5.2 billion compared to the year-ago period and outpaced Street estimates of $5.05 billion. PNC’s third-quarter Net Interest Income (NII) was $2.9 billion, and Non-Interest Income was $2.3 billion. This included the first full quarter of BBVA USA NII of $532 million and Non-interest income of $213 million.

Furthermore, PNC reported adjusted earnings of $3.75 per share, surpassing analyst estimates of $3.32 per share. In the prior-year quarter, PNC posted earnings of $3.39 per share.

Commenting on the results, Bill Demchak, Chairman, President, and CEO of PNC said, “While average loans increased due to the full quarter benefit of BBVA USA, period-end loans decreased modestly due to Paycheck Protection Program (PPP) loan forgiveness activity… With the significant expansion of our footprint and the continued execution of our strategic priorities, we see substantial opportunities to leverage our best-in-class products and services, and deliver enhanced shareholder value for years to come.”

As of October 12, 2021, the company had completed the conversion of BBVA USA’s 2.6 million customers, 9,000 employees, and nearly 600 branches across seven states.

In response to PNC’s financial performance, Bank of America Securities analyst Erika Najarian downgraded the stock to a Hold rating from Buy.

Najarian believes that PNC is well-positioned for long-term growth and that its premium valuation more than compensates for a “superior return profile and strong execution.”

Overall, the stock has a Moderate Buy consensus rating based on 3 Buys and 8 Holds. The average PNC Financial Services price target of $209 implies 5% upside potential to current levels.