PNC Financial Services Group (PNC) is a regional bank holding company that has responded to a challenging economic environment by striving to improve the quality of its loans. The Pittsburgh company does retail banking, corporate and institutional banking, asset management, and residential mortgage banking. PNC had $264.3 billion of assets and $183.4 billion of customer deposits at the end of 2010. Its primary markets other than its home state of Pennsylvania are Delaware, Florida, Illinois, Indiana, Kentucky, Maryland, Michigan, Missouri, New Jersey, Ohio, Virginia, Washington, D.C., and Wisconsin.
Total revenue fell to $15.17 billion in 2010 from $16.22 billion in 2009 while annual net income jumped to $3 billion from $2 billion. Higher-quality loans helped. A major factor in the growth of net income was a $1.43 billion-plus reduction, year over year, in PNC's first-quarter provision for possible credit losses.
PNC continued to extract more profit from less revenue in the first quarter of 2011. Net income rose to $832 million in the three months ended March 31 from $820 million in the same period last year. Revenue totaled $3.6 billion, down from $3.9 billion in last year's first quarter.
"Confidence is returning to the economy, and our strong balance sheet, capital position and sales momentum create tremendous opportunities for PNC to increase market share," James E. Rohr, chairman and chief executive officer of PNC, said in a statement.
PNC stock has traded in a tight price range between $60 and $70 for most of the last five years, except in the aftermath of the global financial panic in the fall of 2008, when the stock changed hands below $30.
Restricted top line
In early June, most analysts who follow PNC had buy ratings on the bank holding company's stock, and none had less than a neutral rating. Zacks Investment Research was in the neutral camp, reiterating a hold rating on PNC stock in a June research report that highlighted mixed signals for the company.
"PNC's continued strengthening of balance sheet, with focus on risk and expense management, should propel its earnings ahead," Zacks said in a June 7 report. "However, we expect the top line to remain restricted in the near term, with continued soft demand for loans and a low interest rate environment. Regulatory initiatives also remain headwinds to both top and bottom lines."
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