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Why Is The PNC Financial Services Group, Inc (PNC) Up 2.1% Since Last Earnings Report?

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It has been about a month since the last earnings report for The PNC Financial Services Group, Inc (PNC - Free Report) . Shares have added about 2.1% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is The PNC Financial Services Group, Inc due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

PNC Financial Q2 Earnings & Revenues Beat Estimates

PNC Financial pulled off a second-quarter 2021 positive earnings surprise of 42.4% on substantial reserve release. Adjusted earnings per share of $4.50 surpassed the Zacks Consensus Estimate of $3.16.

The company’s results reflect the impacts of the BBVA USA acquisition, which was closed in June 2021.

Fee income growth on higher asset management revenues and service charges on deposits were tailwinds. However, higher expenses and a contraction of margin were negatives.

Net income in the second quarter was $1.1 billion against a net loss of $744 million in the prior-year quarter.

Revenues and Loans Improve, Expenses Rise

Total revenues in the reported quarter were around $4.7 billion, up 14% year over year. The top line surpassed the Zacks Consensus Estimate of $4.4 billion.

NII improved 2% from the year-ago quarter to $2.58 billion. The upswing is attributable to interest-earning assets acquired in the reported quarter and lower rates on deposits, partially offset by loans outstanding and securities yields. However, the NIM contracted 23 basis points to 2.29%, reflecting higher average balances held with the Federal Reserve Bank.

Non-interest income grew 35% year over year to $2.09 billion on higher asset management, corporate and consumer services revenues. This was partially muted by a lower residential mortgage.

PNC Financial’s non-interest expenses totaled $3.05 billion, up 21% from the year-ago figure. The rise primarily resulted from higher personnel, equipment, and occupancy and marketing costs.

Efficiency ratio was 65% compared with 62% in the year-ago quarter. Higher efficiency ratio indicates lower profitability.

As of Jun 30, 2021, total loans were up 24% sequentially to $294.7 billion. Total deposits improved 21% to $452.9 billion.

Credit Quality: A Mixed Bag

Non-performing assets increased 44% year over year to $2.82 billion. Net loan charge-offs were $306 million, up 30% year over year.

The company reported provisions for credit losses of $302 million compared with provisions of $2,463 million in the year-earlier quarter. Allowance for loan and lease losses declined 3% to $5.73 billion, on a year-over-year basis.

Capital & Profitability Ratios

As of Jun 30, 2021, the Basel III Common Equity Tier 1 capital ratio was 10% compared with 11.3% as of Jun 30, 2020.

Return on average assets and average common equity came in at 0.88% and 8.32%, respectively, compared with 3.21% and 30.11% witnessed in the prior-year quarter.

Share Repurchase Update

In the second quarter of 2021, PNC Financial returned capital to shareholders through dividends on common shares of $0.5 billion. The company suspended repurchasing shares for the acquisition of BBVA USA.

In June 2021, PNC Financial reinstated its share-repurchase programs, with repurchases of up to $2.9 billion for the four-quarter window beginning in the third quarter of 2021.


Third-Quarter 2021

The company expects period-end loans to be up modestly on a sequential basis. Management expects NII to increase in the mid-teens sequentially. Fee income is expected to increase in the mid-single digits sequentially. The company expects other non-interest income of $325-$375 million. Non-interest expenses are expected to be sequentially up in the high-single-digit range. Net loan charge-offs are estimated to be $150-$200 million.


Period-end loan growth is anticipated to be up modestly, relative to loan balance as of the second-quarter end. Management expects total revenues to be up 12-14% year over year. Non-interest expenses (excluding integration expenses) are expected to be up 13-15% year over year. Effective tax rate is likely to be 17%.


The company aims to realize $900 million in net expense savings of BBVA USA's expense base in 2022. Non-recurring merger and integration costs related to the acquisition is anticipated to be $980 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

Currently, The PNC Financial Services Group, Inc has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, The PNC Financial Services Group, Inc has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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