PNC Financial 1Q13 Earnings Call Notes

posted in: Notes | 0

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

[commenting on the pricing environment] In the smaller balanced stuff, so think this as banking and commercial, it’s interesting, the spread compression on new stuff has largely kind of stopped…And what we’re seeing is actually extension in terms and weakening structures…We’re reaching the point now where we’re willing to give up volume here because the spread levels have kind of gotten down to the point where our returns on equity are basically at the margin. In the larger commercial side where things need to be syndicated, let’s leave out leveraged loans for a second, things are — they’re tightening but structures are still same…We’ve seen compression in real estate but thus far not to the point where I would be worried about it…People are chasing assets. There’s no yield on securities. And they’re going to chase loans, it’s not a surprise. And what we do when that happens is we’ll gradually change our focus from new loan balances to cross-sell and harvest all the new clients that we added over the last couple of years, which we’re pretty good at.”

“nothing is back to where it was on ’05 on a spread or structure side. We’re gradually grinding our way lower, but we’re not through the threshold of where we would see, for the most part, decent — still decent returns on credit. And there’s different pockets…But even the plain vanilla isn’t back to where it was in ’05 where it just — it got pretty silly.”

“we kind of underestimated the degree of difficulty in adding mortgage originators as we got into this year. The competition for people got really hot, and we basically faded off of paying that much money for new people into the company.”

“the growth that we’re seeing in pure C&I is really in asset-based lending, which while C&I related is kind of a specialty product and something that we’ve gained a lot of share and credibility in. And we’ve seen less growth in traditional corporate revolvers, certainly in terms of utilization, even though we’ve grown clients”

“the one place I would tell is that we’re probably potentially even too conservative is in card, where we don’t have enough people that revolve balances.”

“I mean, look, I think all the consumer delinquencies at this point are kind of below cycle levels, at least as it relates to new production.”