NEW YORK - BB&T corporation a bank headquartered in Winston-Salem, North Carolina, United States and the 10th largest bank by market capitalization, will be contasted to PNC Bank the 6th largest bank. BB&T's market capitalization is $20 billion compared to $34 billion of PNC. Or roughly 60%
BB&T has $140 billion of assets compared to $265 billion by PNC this is actually only about 52% of the size.
The company has tangible equity of $10 billion compared to PNC's $22 billion of PNC or 45%.
Despite being smaller BB&T has 73% the amount of nonperforming assets as PNC at $3.9 billion compared to $5.3 billion for PNC. PNC has 2% nonperforming loans to total assets while BB&T has 2.64%. BB&T also only has an allowance for losses of $2.7 billion compared to $4.9 billion for PNC. Meaning PNC is likely to have lower provisions and higher earnings going forward since its allowance is higher as a percentage of nonperforming loans.
BB&T must have great earnings then? Not really. BB&T earned $816 million for the year compared to $3.4 billion by PNC.
BB&T must be showing better returns of late? BB&T posted $208 million of profit but $99 million was from securities gains. PNC's adjusted net income after the BlackRock sale was $660 million. PNC has also shown much higher profits in previous quarters.
The stock is valuing BB&T as 60% of PNC when it appears to be worth 30%.
The valuations of the two companies will need to change going forward. Just as we mentioned that the valuation of Indian banks compared to American banks needed to change (Indian Bank Article). The value of BB&T compared to PNC does not make sense.
To see the full PNC report click here.
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