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It’s “business as usual” for PNC, according to Wells Fargo analyst Mike Mayo, who, after meeting on-site with PNC’s CEO, said the Pittsburgh-based regional bank was well positioned to turn a profit. “Our meetings with PNC senior management were remarkable in that they felt like any other day in the midst of market turmoil. PNC must capitalize on the pursuit of quality,” Mayo wrote in a note to a client on Monday. The analyst, who began his career at the Federal Reserve in 1988, affirmed his overweight rating on PNC and maintained his price target at $198 a share, suggesting 52 percent upside from Monday’s close. Shares of PNC fell more than 19% in the month to March 13 but rose briefly 6.6% early Tuesday after federal regulators bailed out Silicon Valley Bank and Signature Bank depositors late Sunday afternoon. PNC 1D Mountain PNC shares are rising on Tuesday morning. Recent bank failures should not infect “the largest banks like PNC, which have much more sophisticated ALM and liquidity management processes,” Mayo wrote, referring to asset-liability management. . Wells Fargo also sees PNC funding as strong and expects both consumer and commercial deposits to increase. Pricing for loans and deposits could gradually come down, Mayo adds, adding value to PNC. Mayo says PNC’s operational efficiency is also improving. “Firstly, it is closing physical offices (more than 100 branches in 2023 and 1,000 ATMs). Second, he is struggling with spending, given the expectation of a recession. Third, it continues to self-finance technology investment, fueled by a decade of modernization. this created more scalability,” he wrote. To be sure, Mayo notes that PNC is not risk-free, and large banks are potentially subject to additional regulation after the SVB fails. “Ahead of recent events, PNC indicated that the transition from interest-free to interest-bearing deposits has accelerated,” Mayo continued. “In addition, credit remains strong, although the office ($9 billion investment, 25% CRE) needs attention,” he said, referring to commercial real estate loans. — Michael Bloom of CNBC
Credit: www.cnbc.com /
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