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10 Bank Stock Value Picks

Stocks in this article: BAC C JPM RF COF PNC BPOP DRL OFG BFIN

10. PNC Financial Services Group
Shares of PNC Financial Services Group (PNC) of Pittsburgh closed at $60.73 Friday, returning 7% year-to-date, following a 3% decline during 2011.

The shares trade for 1.2 times tangible book value, according to Thomson Reuters Bank Insight, and for 8.9 times the consensus 2013 earnings estimate of $6.82 a share. The consensus 2012 EPS estimate is $5.67.

Based on a quarterly payout of 40 cents, the shares have a dividend yield of 2.63%.

PNC reported second-quarter earnings of $546 million, or 98 cents a share, declining from $811 million, or $1.44 a share, during the first quarter, and $912 million, or $1.67 a share, during the second quarter of 2011.

The second-quarter results included previously announced mortgage putback charges of $284 million, or 54 cents, and $119 million in other charges for trust preferred redemptions and merger integration expenses related to the acquisition of RBC Bank (USA) in March.

PNC's net second-quarter interest margin increased to 4.08% from 3.90% the previous quarter, and 3.93% a year earlier, running counter to the trend for most large regional banks. Average transaction deposits increased by $7.8 billion during the second quarter, mainly because of the RBC transaction, while average CD deposits declined by $1.7 billion, in keeping with PNC's strategy.

Stifel Nicolaus analyst Christopher Mutascio said on July 30 that when excluding the release of loan loss reserves from forward earnings estimates, his firm likes Wells Fargo (WFC) and PNC "best within our large cap bank universe," with the stocks "trading at 9.5x and 9.2x our reserve release adjusted EPS estimates, respectively, which puts them at a discount to the group median of 10.2x. This discount occurs despite the fact we estimate both companies' 2013 returns on average assets (WFC - 1.48% and PNC - 1.20%) will exceed the 1.00% estimated average for the remainder of the group."

PNC Chart PNC data by YCharts

Interested in more on PNC Financial Services Group? See TheStreet Ratings' report card for this stock.

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