Assets most important size indicator for banks
Like other companies, the primary end activity of banks, is to generate profits. Banks generate profits from the assets they own, including cash, premises, real estate, and other fixed assets. These assets earn minimal or very low revenue for the bank.
The main income-earning assets for a bank are loans. A bank earns income on loans by charging an interest rate on the loan over the duration of the loan. The second most important revenue-earning assets of banks are securities held by the bank. A bank earns income from securities by earning interest income on securities or by trading the securities. Government securities are the most important type of securities held by a bank.
PNC Bank’s impressive long-term asset growth
PNC Bank (PNC) has consistently built up its asset base over the years, with total assets standing at nearly $335 billion. Nearly three-quarters of the bank’s total assets are productive assets, particularly loans and leases. Loans and leases account for nearly 61% of the bank’s total assets, and securities account for nearly 17% of its total assets.
PNC Bank has seen notable asset growth over the years. Since 2012, its assets have grown by nearly 16.5%, and this growth has largely been spread evenly in the last three years. This growth in assets has been positive in every quarter except one—1Q13—in the last 12 quarters. This growth in assets has largely mirrored the sectoral trend of asset growth.
Other loan-focused banks such as Wells Fargo (WFC), US Bank (USB), and Capital One (COF) also experienced similar growth in asset size during this period. All these banks remain among the best-performing portfolio stocks in the Financial Select Sector SPDR ETF (XLF).