The Banking and Strategy Initiative

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Bank Earnings Season 2Q2015: BofA, US Bank and the others, hefty dividend from PNC on August 5

The Bank of America report came in on Wednesday and well they again made me take a relook at policy to discontinue covering the heritage bank. Of course witht he fat share base, EPS was still a pathetic $0.45 cents per share but that meant a doubling of net Income on year and a growth of 50% on the linked quarter and Moynihan is still holding the steeds firmly

CCAR successes spoke to the bank repurchasing a good $775 mln of shares which would be bang for the back if they were still trading below par.

The $5.3 B in Net income comes from $11 Bln in NII and $11.6 B in Fee income. Loan book is winding down but Deposits are back , in line witht he other major producers on Main street

Common Shareholders’ equity is up a massive $7,5 Billion since 2Q2014 and there is more to come but that does not include much in topline sales. CRedit Card loans for the ‘behemoth’ have settled down at $85 Bln and mortgage book has grown 100% in the last four quarters from $8 bln to $16 bln. Basel III phased in Capital is still above 10% barely

US Bancorp

This future biggie, also reported Wednesday and stacked up a round of 14% ROE and an ROA of 1.46% to shame the erstwhile biggies, doing well in mortgage originationsat the expense of the bigger banks for well over 5-6 quarters now including:

$3 bln in Credit Card accounts

$21 bln in retail mortgages

$29 bln in Commercial and CRE loans apart from a double digit increase in revolver commitments to the RE sector

Linked quarter increases in NII yielded up from an extra day in the quarter and were up 9% on June 2014 because of increases in the Lending book

Net charge offs and NPAs were down 15% and 7% on year.

The bank’s Basel III fully phased in advantage is a bare one point with its CET Tier I at 9.2%

NIMs are barely above 3% and Efficiency ratios improving to 53% . The bank is however gaining business at the cost of potential fee business in the charged retail environment also because of a Checking Account Advance product phase out

Non interest income apparently is increasing on ertail products were biting in MSR valuations after hedging

The Bank’s Total assets have grown a healthy 7.7% over June 2014 to $419 bln

PNC Financial

The Banks paying out $0.51 Cents on August 5, after a big earnings beat in June 2015 to an EPS of nearly $2 on stable revenues

NII is down almost 3% on the year, 4% for the quarter on year to $2.05 bln while Asset management propped up fee income to $1.8 bln  and expenses he;d up to net earnings of $1.044 bln, a 7.25% higher on the March 2015 EPS report after buybacks even as it struggles on efficiency scores at 61% and an effective tax rate rising to 28%

It continues to do much better than US Bank on Capital and RoA remains a high 1.2% though down from higher levels in the last two years

NPLs are down 20% on year

Balance sheet outlook is rosy for September 2015

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This entry was posted on July 19, 2015 by in Uncategorized.

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