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PNC Shows Strength in 4Q16 on Interest Income, BlackRock

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Mid-sized banking powerhouse

PNC Financial Services (PNC) reported its 4Q16 earnings on January 13, 2017. The company reported earnings per share (or EPS) of $1.97, higher than the analysts’ consensus estimate of $1.85 per share.

PNC saw a net income of $1.05 billion in 4Q16, marginally higher than the $1.02 billion it saw in 4Q15.

PNC Financial reported rises in both its interest income and its non-interest income in 4Q16. It also reported a decreased provision for losses compared to 3Q16. The company also saw higher expenses, higher loans, and lower deposits. Its stock rose 0.5% on these results. It saw higher interest income on higher rates and higher fee income due to improving broader markets (SPY).

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In a company press release on January 13, 2017, PNC chair and CEO, William S. Demchak, said, “PNC delivered a solid year in 2016. Although the financial results finished slightly below 2015, this was due in part to our disciplined risk management efforts throughout the year to position PNC well in the current credit and interest rate cycle.”

Banking, asset management

PNC is engaged in retail, corporate, and institutional banking in the United States. The company also provides asset management, mortgage banking, and other services. On December 31, 2016, PNC Financial’s total assets, total deposits, and shareholders’ equity stood at $366.4 billion, $257.2 billion, and $41.8 billion, respectively. It holds a 21.7% stake in BlackRock (BLK), and it generated 12% of BLK’s net income in 2016.

In 4Q16, PNC’s competitor JPMorgan Chase (JPM) beat its estimates by 10%. JPM has a weight of 8.2% in the Financial Select Sector SPDR ETF (XLF). Bank of America (BAC) also beat its estimates by 8%, reflecting improved net interest margins and fee income in the industry.

In this series, we’ll study PNC’s performance, loan book, strategic initiatives, non-interest income, dividends, and valuations. Let’s start with PNC’s loan book expansion in 4Q16.

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