PNC Financial Raises Dividend, to Redeem Preferred Stock

As part of its 2015 capital plan (approved by the Federal Reserve), The PNC Financial Services Group, Inc. PNC has announced a 6% dividend hike. The bank will be paying 51 cents per share as quarterly cash dividend on May 5 to shareholders of record as on Apr 15.

Since 2011, PNC Financial has been raising its dividend annually. From paying 10 cents a share as quarterly dividend during the financial crisis, the company has come a long way in demonstrating its capital strength. However, the company’s per share dividend still lags the pre-crisis level of 66 cents paid in Jan 2009.

Despite not reaching its historical rate, we believe that PNC Financial continues to show a strong liquidity position. As of Dec 31, 2014, cash and due from banks totaled $4.4 billion.

Concurrently, PNC Financial announced redemption of Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series K worth $500 million on May 4. The preferred shares will be redeemed at $1,000 per depositary share along with declared and unpaid dividend of $8.963. This dividend payment is for the period from Feb 21 to May 3.

Additionally, PNC Financial declared quarterly dividends on following preferred stocks:

• Series B: 45 cents per share to be paid on Jun 10 to shareholders of record as on May 22
• Series P: $1,531.25 per share to be paid on May 1 to shareholders of record as on Apr 15.
• Series Q: $1,343.75 per share will be paid on Jun 1 to shareholders of record as on May 15.

Further, a semi-annual dividend of $2,425.00 per share on Series R preferred stock will be paid on Jun 1 to shareholders of record as on May 15.

We believe that backed by strong capital ratios, PNC Financial will continue to reward its shareholders going forward. Moreover, the company’s 2015 capital plan includes share repurchase of up to $2.875 billion for the five-quarter period beginning second-quarter 2015. This also comprise an option to buy back shares worth up to $375 million for employee benefit plans.

Currently, PNC Financial carries a Zacks Rank #3 (Hold).

Last month, apart from PNC Financial, the Fed approved capital plans of all major U.S. banks including JPMorgan Chase & Co. JPM, Citigroup Inc. C, Morgan Stanley, The Goldman Sachs Group, Inc. and Bank of America Corp. BAC.

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