One of the largest regional banks and financial services institutions in the United States, The PNC Financial Services Group (PNC) and William “Bill” Demchak (the company’s CEO, Chairman, and President) are both well known. During his time as Managing Director (among various other executive positions) at JP Morgan (JPM), Bill Demchak was one of the earlier embracers of credit default swaps. Credit default swaps had a key role to play in the financial crisis of 2008, thus earning Mr. Demchak the title “the prince of darkness.” When we saw Mr. Demchak make his first insider purchase since becoming the CEO of PNC in 2013, we decided to take a closer look at the company.
The PNC Financial Services Group is headquartered in Pittsburgh, Pennsylvania, and through its banking subsidiary (PNC Bank) has over 2,500 branches throughout the country. The company offers a wide variety of financial services, ranging from retail banking and corporate banking to asset management. The stock has fallen more than 20% during the last year and is back to pre-pandemic levels, which made the CEO’s purchase even more interesting.
Previously, Mr. Demchak had sold nearly $20 million worth of PNC Financial Services in 2019 for an average price of $152, but chose to purchase shares recently at a similar price of $153. In total he sold nearly $33 million worth of stock in 2019 and the size of his current purchase pales in comparison to those sales. During the last three years he has only been selling a portion of his restricted stock units to cover tax liabilities associated with the vesting.
Much has changed since Mr. Demchak’s sale in 2019, not just including the COVID-19 pandemic. In Q2 2020 (ended June 30, 2020) PNC sold their equity investment in BlackRock (BLK) resulting in net proceeds of $14.2 billion. And in June 2021, PNC acquired the bank holding company BBVA USA Bancshares for $11.5 billion, eventually merging BBVA Bank into PNC Bank.
PNC currently has $557.2 billion in assets (as of Q4 2022, ended on December 31, 2022) – a slight decrease from the $559.5 billion in Q3 2022 but relatively stable when compared to the $557.1 billion in Q4 2021. Loans did increase both on a sequential and on a YoY basis to $326 billion. Q4 2022 results themselves were a mixed bag, especially considering the company missed EPS estimates by $0.47 and average deposits declined slightly (by 1%) from the previous quarter.