PNC Earnings: Net Interest Income Holds Up Relatively Well; Maintaining Our $175 Fair Value Estimate

Narrow-moat-rated PNC Financial Services reported second-quarter earnings per share of $3.39. Special items this quarter included an accounting gain on Visa Class B shares, partially offset by security repositioning, derivative fair value adjustments, and a contribution expense to the PNC Foundation. The net impact of all nonrecurring items was about $0.09 to EPS. Fees came in slightly higher than the first quarter, primarily driven by growth in capital markets fees and other income. Loan growth numbers were muted in the first half of the year, and management doesn’t see evidence of this improving in the near term. We don’t anticipate a significant change to our $175 fair value estimate as we incorporate second-quarter results.