PNC Accomplished RBC Bank USA Deal - Analyst Blog
March 06 2012 - 11:39AM
Zacks
Last Friday, PNC Financial Services Group Inc.
(PNC) has completed the purchase of RBC Bank (USA), the U.S. retail
banking subsidiary of Royal Bank of Canada (RY),
according to a filing with the Securities and Exchange Commission
on Monday. PNC Financial bought 100% of the issued and outstanding
shares of RBC Bank for around $3.47 billion in cash.
Following the closure of the deal, RBC Bank was merged with and
into PNC Bank, an indirect, wholly owned subsidiary of PNC
Financial. As a result of this, RBC branches opened as PNC branches
yesterday. In addition, PNC Bank accomplished the purchase of RBC
Bank-related credit card receivables from RBC Bank (Georgia).
Notably, in June 2011, PNC Financial announced its plan to
purchase RBC Bank (USA). The acquisition facilitated PNC Financial
to expand its footprint in the Southeast markets by adding over 400
branches to its network.
PNC Financial expects the acquisition to be immediately
accretive to earnings (excluding integration costs). With the
addition of RBC Bank's loan portfolio, the company expects loan
growth in the mid to high teens in 2012.
Our Take
PNC's continued strengthening of balance sheet, with focus on
risk and expense management, should propel its earnings ahead.
Benefits from the acquisition of National City in 2008 continue to
exceed the company's expectations.
In 2011, PNC Financial also completed acquiring the 27-branch
retail bank franchise in Georgia from Flagstar Bank, a subsidiary
of Flagstar Bancorp Inc. (FBC). The deal helped
PNC Financial to expand operations in Atlanta. The company's latest
acquisition of RBC Bank also augurs well and adds to its
competitive edge.
Yet, the top-line headwind is expected to remain in the near
term, with the sluggish economic recovery and a low interest rate
environment. Alongside, the regulatory issues also remain a
concern.
PNC shares maintain a Zacks #3 Rank, which translates into a
short-term Hold recommendation. Considering its fundamentals, we
also have a Neutral recommendation on the stock.
FLAGSTAR BANCP (FBC): Free Stock Analysis Report
PNC FINL SVC CP (PNC): Free Stock Analysis Report
ROYAL BANK CDA (RY): Free Stock Analysis Report
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