PNC Bank, a subsidiary of PNC Financial Services Group Inc. (PNC), has entered into a partnership with Cardtronics Inc. (CATM) that will provide its customers access to cash through the firm’s ATM network. 

Cardtronics will provide access to its 230 ATMs available in HESS Express stores throughout Florida. The money withdrawal service will be available free of charge to the customers. 

PNC Bank is the third largest bank off-premise ATM provider in the country. The strategic partnership aims to widen PNC Bank’s reach in its drive to serve its customers better by enabling them an easy access to their money. 

During 2009, PNC Bank entered into an agreement with Giant Food Supermarket to provide for a network of 180 ATMs across Virginia, Maryland, Delaware, and the District of Columbia. 

With the acquisition of National City in December 2008, PNC bank had added over 1,400 branches and over 2,100 ATMs. The acquisition has significantly increased the bank’s presence in Ohio, Kentucky, Indiana, Illinois, Pennsylvania, Michigan, Wisconsin, Missouri and Florida, giving PNC one of the largest branch distribution networks among the banks in the country. 

With one of the most attractive business mixes in the banking industry, PNC Financial is making decent progress on improving its core profitability while coming out of the recession, with a higher net-interest margin, stronger fee income and improved efficiency.

We expect PNC Financial to perform better than its peer group due to its limited dependence on and exposure to the credit environment as more than half of its revenue is derived from fee businesses. The company has eliminated a great deal of credit risk from its balance sheet in the recent years, exiting businesses such as credit card, indirect auto lending, as well as non-relationship syndicated loans. 

However, we remain concerned over the weak demand for PNC Financial’s loans in the upcoming quarters. Both commercial lending and consumer lending businesses have witnessed a decline, but commercial lending has been the worse hit.

Though this trend eased somewhat at the end of 2009, given PNC’s lower utilization levels for commercial lending among middle market and large corporate clients, we expect a weak loan demand and low utilization rates until the economy improves completely.
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