PNC Financial Services (PNC), BB&T Corporation (BBT): The Great Unanswered Question at This Bank

If investors could take every earnings report at face value, picking stocks would be a lot easier. However, there are unending ways for companies to define, compare, and revise their numbers to make them look better. The other day I saw an earnings report with words like, excluding, adjusted, and corrected, and they were all used in conjunction to adjust a number. While not as egregious as “excluding, corrected, and adjusted,” PNC Financial Services (NYSE:PNC) absolutely refuses to report organic growth.

Adjust This!

It’s frustrating as an investor when a company won’t just own up to what is going on. Some companies have recently explained a decline in their margins with the catch phrase “investment in price competitiveness.” What they really mean to say is, they couldn’t sell their stuff because competition was killing them, so they had to lower prices to compete.

I won’t stay on this soapbox, but the only thing more annoying than this is when a company won’t give comparisons without the benefit of a merger. If you take PNC Financial Services (NYSE:PNC)’s earnings report at face value, the company appears to be doing well, but what about when the RBC acquisition benefits wear off?

Good Results…I Think

If we compare PNC Financial Services (NYSE:PNC)’s results to some of their peers like BB&T Corporation (NYSE:BBT), M&T Bank Corporation (NYSE:MTB), or Capital One Financial Corp (NYSE:COF), the company looks like it’s doing pretty well. If the lifeblood of banking is deposits and loans, PNC Financial Services (NYSE:PNC) is doing fine.

On the deposit side of the house, PNC Financial Services (NYSE:PNC) reported average deposits up 9%, but included that this was due to the benefit of the RBC acquisition. The only peer to report better deposit growth was Capital One Financial Corp (NYSE:COF), which had its own large acquisition of some ING assets. Including ING, Capital One reported deposit growth of 24.25%. PNC Financial Services (NYSE:PNC)’s peers that are growing more organically reported 4.7% deposit growth at BB&T Corporation (NYSE:BBT), and 7% deposit growth from M&T Bank Corporation (NYSE:MTB).

When it comes to loans, PNC reported a 13% increase, but again the RBC acquisition was included. In similar fashion, Capital One reported a jump of 28.19% in loans, because of their acquisition of some HSBC assets. By comparison, BB&T Corporation (NYSE:BBT) grew loans by 5.3%, and M&T reported an 8% increase. What PNC and Capital One’s numbers would have been without these acquisitions, we may never know.