Essay on Fi564 Pnc Bank Analysis

2625 Words Nov 5th, 2012 11 Pages
PNC Bank Analysis Course Project

Gloria Guzman

FI564 Management of Financial Institutions
Professor Tracy Thompson
June 16, 2012

This comprehensive paper will analyze the financial standing of PNC Bank. In the first part o we will look at PNC Bank’s profile, mission statement and future direction. An analysis of PNC’s strengths and weaknesses based on PNC’s financial statements and ratios will be conducted. PNC will also be compared to the industry and to Bank of America. The Federal Reserve interest rates over the past five years will be correlated to PNC’s Net income for the same timeframe. The analysis will conclude with my forecast for PNC’s future profitability.
Business Summary
“PNC Financial Services traces its
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As of December 31, 2011, PNC Financial Tier 1 common capital ratio was an estimated 10.3%, versus 9.8% as of December 31, 2010. The increase supports the claims from PNC’s management on conservative risk management.
For the industry, Tier 1 should not be less than 4%. PNC’s is well over the minimum.

The most used financial ratios to evaluate banks will be used below to compare PNC’s past 5 years (based on its historical financial statements). * Return on Assets (ROA) is calculated by dividing Net Operating Income by Total Assets. PNC’s ROA on table 1-1 indicate that PNC has generated in 2011 $1.12 for every $1 in asset. In 2011 PNC’s ROA was 1.12 a decrease of .01 from 2010. Despite this drop compared to the industry (1.10%) and BAC (0%), PNC’s ROA ratio of $1.2 is above average. PNC is in a good position regarding its ability to generate profits. Table 1-1PNC ROA 2007 2008 2009 2010 2011 Return on Assets % | 1.22 | 0.41 | 0.71 | 1.13 | 1.12 |

Table 2-1BAC ROA 2007 2008 2009 2010 2011 Return on Assets % | 0.93 | 0.14 | -0.11 | -0.16 | 0.00 |

* Return on Equity (ROE) is calculated by dividing Net Income by Stockholder Equity. This shows additional earning generated by reinvested earnings and capital. PNC’s ROE ratio of 9.33 in 2011 is very good compared to the industry (8.84%) and BAC (.04) in 2011.

Table 1-2 PNC ROE 2007 2008 2009 2010 2011 Return

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