TFC - PNC Financial: Undramatic Undervalued And Underrated

2024-06-26 11:50:16 ET

Summary

• PNC Financial's "Brilliantly Boring" ad campaign embraces what investors have long appreciated about this bank - it's prudently conservative, but not afraid of growth or change.
• PNC is well-prepared for upcoming regulatory changes; the annual stress test should be a non-event, and the bank's community lending focus serves it well for new liquidity and capital requirements.
• Recent loan growth has been sluggish, but the bank's cautious lending practices have historically shielded it from credit cycle volatility, and management remains committed to organic branch-based growth.
• Credit losses in CRE portfolios are a risk across the sector, but PNC has been very active in staying ahead of trouble by adding to reserves.
• PNC looks undervalued on long-term core earnings growth of 3% to 4%; it won't be the most exciting bank stock, but it likely won't disappoint on execution.

I really like how PNC Financial ( PNC ) has started leaning into their reputation as a conservative but dependable bank with their “Brilliantly Boring” ad campaign, as I and many others have commented over the years that they are indeed just that – boring, but smart and reliable....

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