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Globe and Mail
a day ago
- Business
- Globe and Mail
PNC Financial Gains 17% in a Year: How to Approach the Stock Now?
The PNC Financial Services Group, Inc. PNC shares have gained 17% in the past year compared with the industry 's growth of 31.4%. Its peers, Bank of America Corporation BAC and Citigroup Inc. C, have gained 13.8% and 28.5%, respectively, in the same time frame. Price Performance While PNC Financial Services has delivered a decent return over the past year, it has lagged behind the industry average. As investors weigh opportunities in the financial sector, it's worth evaluating whether PNC presents a compelling value at current levels or if patience could yield a better entry point. What's Aiding PNC's Performance? Acquisitions & Partnerships: PNC Financial has adopted an aggressive, forward-leaning strategy focused on growth, diversification and innovation. This week, PNC Financial's subsidiary, PNC Bank, entered a definitive agreement to acquire Aqueduct Capital Group. The acquisition will enhance the primary fund placement capabilities of PNC Financial's subsidiary, Harris Williams. In 2024, PNC partnered with Plaid through a bilateral data access agreement, allowing its customers across the United States to share their financial data with various financial applications securely. In the same year, PNC Financial extended its partnership with TCW Group to offer private credit solutions to middle-market companies. This partnership enabled the bank to gain a significant share of the expanding private credit market. Going forward, the continuation of such efforts to diversify the company's business mix is likely to drive sustainable profits. Footprint Expansion Efforts: In a strategic move to strengthen its domestic presence, PNC Financial is set to expand its branch network across the United States. The company announced plans to invest $1.5 billion in opening more than 200 branches across 12 U.S. cities, including Austin, Dallas, Denver, Houston, Miami and San Antonio, and renovate 1,400 existing locations by 2030. With the addition of these branches, PNC Financial will solidify its position as one of the largest retail banks in the United States. Solid Loan & Deposit Balances: PNC benefits from a strong balance sheet position. Though total deposits and loans declined year over year in the first quarter of 2025, the metrics witnessed a five-year (2019-2024) CAGR of 8.1% and 5.6%, respectively. Capitalizing on growth opportunities, in October 2023, the company acquired loan commitments from Signature Bank worth approximately $16 billion. This is expected to support loan growth in the upcoming quarters. Also, the expectation of further rate cuts in 2025 is likely to influence the loan demand positively in the upcoming period. A well-diversified deposit base will strengthen its financial position. Growth in interest-bearing commercial deposits is expected to aid the company's deposit base in the forthcoming period. Impressive Capital Distribution: PNC Financial continues to progress with its capital distribution strategy. In July 2024, the company sequentially hiked quarterly cash dividends on common stock by 3.2% to $1.60 per share. PNC Financial has raised its dividend four times in the past five years. At present, PNC has a dividend yield of 3.68%. Likewise, Bank of America and Citigroup increased their dividends in July 2024. BAC raised its quarterly dividend 8.3% to 26 cents per share, whereas C hiked its quarterly dividend 6% to 56 cents per share. Apart from regular dividend hikes, the company has a share repurchase program in place. A 100-million share repurchase plan was authorized in the second quarter of 2022. As of March 31, 2025, the company had remaining board authority to repurchase up to 40.5 million common shares. What's Hurting PNC Growth Relatively Higher Interest Rates: PNC's performance is influenced by the Fed's interest rate cuts and overall economic growth. The Fed lowered the interest rates by 100 basis points in 2024 in response to moderating inflation and softening growth, but has kept them steady since then. As such, interest rates are likely to stay higher for a longer time. Subdued economic growth is likely to suppress loan demand, particularly in areas like commercial lending and mortgages. As demand for loans weakens, banks like PNC Financial, Bank of America and Citigroup can see lower NII growth, a key driver of bank earnings. Additionally, the expectations of higher for longer interest rates are likely to cause a spike in delinquency rates, mainly in the consumer loan portfolio. This will, thereby, hurt the company's asset quality. Elevated Expense Base: Steadily rising non-interest expenses are concerning for PNC Financial. The company's non-interest expenses have witnessed a five-year (2019-2024) CAGR of 5%. The rising trend continued in the first quarter of 2025. The bank's rising expense base due to technological advancement and branch expansion efforts is likely to continue affecting bottom-line growth. Expense Trend How to Approach PNC Stock Now Efforts to expand footprints through branch expansion, and rising loans and deposits balances are likely to support PNC Financial. The continuation of strategic acquisitions and partnerships to diversify the company's business mix is expected to drive sustainable profits. Sales Estimates Image Source: Zacks Investment Research Earnings Estimates Image Source: Zacks Investment Research However, its rising expense base is concerning. Also, given relatively higher interest rates, the company's NII might be under pressure in the near term. Hence, investors should not rush to buy the PNC stock now; instead, they should keep this Zacks Rank #3 (Hold) stock on their radars and wait for an attractive entry point. Those who already own the PNC stock in their portfolio can hold on to it because it is less likely to disappoint over the long term, given its strong fundamentals. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Zacks' Research Chief Names "Stock Most Likely to Double" Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest. This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months. Free: See Our Top Stock And 4 Runners Up Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Bank of America Corporation (BAC): Free Stock Analysis Report Citigroup Inc. (C): Free Stock Analysis Report The PNC Financial Services Group, Inc (PNC): Free Stock Analysis Report
Yahoo
23-05-2025
- Business
- Yahoo
PNC Financial (PNC) Acquires Aqueduct Capital to Expand Services
On May 20, The PNC Financial Services Group Inc. (NYSE:PNC) announced the acquisition of Aqueduct Capital Group (ACG). ACG is a broker-dealer that outsources business development and fundraising services to alternatives fund managers, such as private equity, private credit, and real asset managers. PNC already provides capital advisory services through its Harris Williams unit, and the acquisition is expected to complement these services. While the deal is positive for PNC, the company hasn't disclosed the terms of the agreement. A person depositing money into an ATM, reflecting the various banking services offered. In mid-May, analysts at TD Cowen initiated coverage of PNC Financial with a Buy rating and a price target of $233. Interestingly, PNC was among the top five picks of TD Cowen's initiation of coverage on US large-cap banks, a space where the firm appears to be very bullish. They believe the banks are undervalued and are trading at least at a 30% discount. In addition, they project many years of strong growth and better returns because the banks will benefit from optimization, including through higher usage of AI. The PNC Financial Services Group Inc. (NYSE:PNC) is a diversified financial services company. In addition to operating the PNC Bank, one of the largest banks in the US, the company provides financial services such as asset management, wealth management, estate planning, and information processing. While we acknowledge the potential of PNC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than PNC and that has 100x upside potential, check out our report about the cheapest AI stock. READ NEXT: and 10 Unstoppable Stocks That Could Double Your Money. Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
23-05-2025
- Business
- Yahoo
PNC to buy Aqueduct to boost private equity capital-raise potential
This story was originally published on Banking Dive. To receive daily news and insights, subscribe to our free daily Banking Dive newsletter. PNC will acquire Aqueduct Capital Group, a broker-dealer focused on raising capital for private equity and private credit, the Pittsburgh-based bank said Tuesday. The deal is expected to close in midsummer, the companies said. Financial terms were not disclosed. "This acquisition is complementary to existing capital advisory capabilities provided through PNC's subsidiary Harris Williams and will enable us to expand our ability to serve the global capital needs of the private equity industry," Michael Thomas, PNC's head of corporate and institutional banking, said in a statement Tuesday. PNC bought investment bank Harris Williams in 2005 to provide merger-and-acquisition advisory capabilities for middle-market companies. Since then, the super-regional bank has added several pieces: It bought initial public offering consultant Solebury Capital in 2014, then Ambassador Financial Group in 2019. The latter served as a broker-dealer that specialized in balance sheet management but also provided investment banking and capital markets services. PNC has purchased placement agents like Aqueduct before. It bought Sixpoint Partners in 2019, then merged it into Harris Williams in 2023. John Neuner, co-CEO of Harris Williams, emphasized the "minimal overlap' between the client base of the investment bank and Aqueduct, adding that Tuesday's agreement 'increases the ability to serve a broader range of clients." Steve Lessing, a partner with Aqueduct, called the deal 'a tremendous opportunity to tap into our collective relationships and enable clients to diversify their investor base across North America, Australia, Europe and Asia.' Largely mirroring the PNC executives' quotes, analyst Gerard Cassidy of RBC Capital Markets noted the 'complement' the Aqueduct deal will bring to existing Harris Williams business but said "the bottom line impact … is not expected to be material, in our opinion," according to a research note. Recommended Reading TIAA to sell banking unit Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Finextra
22-05-2025
- Business
- Finextra
PNC acquires broker dealer Aqueduct
PNC Bank today announced entry into a definitive agreement to acquire Aqueduct Capital Group, a placement agent focused on raising capital for private equity, private credit and real asset managers through its broad access to sophisticated, global pools of capital. 0 Founded in 2003, Aqueduct has built a strong reputation advising its clients on a variety of fundraising solutions. "This acquisition is complementary to existing capital advisory capabilities provided through PNC's subsidiary Harris Williams and will enable us to expand our ability to serve the global capital needs of the private equity industry," said Michael D. Thomas, head of Corporate & Institutional Banking at PNC. "We are eager to capitalize on this mutually beneficial partnership and work closely with our new Aqueduct colleagues," added John Neuner, co-CEO of Harris Williams. "With minimal overlap in our respective client bases or limited partner relationships, this agreement increases the ability to serve a broader range of clients." "We are excited to join forces with PNC and believe the synergies created with our Harris Williams colleagues will enhance a shared commitment to deliver superior outcomes to long-standing, trusted client relationships," said Frank Edwards, founder of Aqueduct. "This new partnership provides a tremendous opportunity to tap into our collective relationships and enable clients to diversify their investor base across North America, Australia, Europe and Asia," added Steve Lessing, partner of Aqueduct. The acquisition, which is subject to customary closing conditions, is expected to close in mid-summer, and the terms will not be disclosed. Keefe, Bruyette & Woods (KBW) advised Aqueduct on the transaction. Wachtell, Lipton, Rosen & Katz acted as legal counsel to PNC Bank and King & Spalding LLP acted as legal counsel to Aqueduct.
