PNC Financial Services Group Inc. (PNC) has converted 1,300 branches and over 6 million customers from National City Bank to PNC Bank. The conversion, which is completed six months ahead of the company’s schedule, gives PNC one of the largest branch distribution networks in the country.
 
PNC Financial completed the acquisition of National City Corporation, its eighth takeover in the past five years, on December 31, 2008 for approximately $6.1 billion. The conversion of branches was done in four phases during the last seven months. The acquisition has significantly increased the bank’s presence in Ohio, Kentucky, Indiana, Illinois, Pennsylvania, Michigan, Wisconsin, Missouri and Florida.
 
PNC Financial was already one of the leading wealth managers in the country. The acquisition of National City has clearly strengthened that position further and created significant growth potential in new high-net-worth and institutional markets. The acquisition has led to an increase in the deposit base and provided a larger distribution platform for cross-selling the company’s products and services.
 
Cost savings from the acquisition have been more than expected. The company is on track to achieve its integration cost-savings target of $1.5 billion by the end of 2010.
 
PNC Financial’s first-quarter earnings per share was significantly ahead of the Zacks Consensus Estimate, benefiting from improved credit costs, lower expenses, improved revenue performance and expanded clientele.
 
The company continues to strengthen its balance sheet, with a focus on risk and expense management. These strategies should propel PNC Financial ahead. Moreover, benefits from the National City acquisition continue to exceed the company’s expectations.
 
However, we expect earnings to remain stressed, given weak loan demand. Although credit metrics have stabilized over the past few quarters, we believe an improvement will take longer, given the sluggish economic recovery.
 
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