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Banking earnings roundup: BofA, Wells, PNC reflect on oil's effect


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Banking earnings roundup: BofA, Wells, PNC reflect on oil's effect

first-quarter net incomeapplicable to common stockholders of $2.22 billion, or 21 cents per share, comparedto $2.72 billion, or 25 cents per share, for the same period in 2015.The S&P Capital IQ consensus estimate for normalized EPS for the quarter was21 cents.

Energy reserves increased $525 million from the previous quarterto $1.0 billion, primarily driven by increased allowance coverage for the higherrisk subsectors. When addressing the oil-and-gas sector, executives saidon BofA's earnings call that the company was well-prepared for credit deterioration.They said increases in energy reserves will be offset by reserve releases elsewhere.They also noted there was little concern regarding auto finance.

Also on the earnings call, BofA touted its lowered expenses.When asked by CLSA Americas analyst Mike Mayo why those improvements had not drivenup earnings more, management responded that the company continues to prioritizeinvestment in growth opportunities.

For more information,see:

BofA sunny on credit,expects reserve releases to offset builds

Bank of Americaexecs highlight lower expenses but run into analyst pushback

reported first-quarternet income applicable to common stock of $5.09 billion, or 99 cents per share, comparedto $5.46 billion, or $1.04 per share, in the year-ago period. The S&P CapitalIQ consensus estimate for normalized EPS for the recent quarter was 97 cents. Itsfirst-quarter revenue increased year over year to $22.20 billion from $21.28 billion.

Chairmanand CEO John Stumpf also downplayed any worries about the oil-and-gas industry.He said that while an energy slump hurts oil-and-gas borrowers, American consumersare benefiting from the low gasoline prices that are linked to the drop in oil.Borrowers are also benefiting from the low interest rates that have weighed on bankearnings, fueling economic activity, he noted.

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For Wells, pressurefrom energy, rates and regulators

reported first-quarter 2016 net income attributable to diluted common shares of$850 million, or $1.68 per share, compared to $926 million, or $1.75 per share,in the first quarter of 2015. The S&P Capital IQ consensus normalized EPS estimatefor the recent quarter was $1.70.

The provision for credit losses was $152 million for the firstquarter of 2016, compared to $74 million in the linked quarter and $54 million inthe first quarter of 2015. The first-quarter 2016 provision included $80 millionfor loans in the oil, gas and coal sectors compared to $23 million in the linkedquarter.

Elaborating on the company's energy portfolio, Chairman, Presidentand CEO William Demchak said the bank has not seen the end of nonperforming loanscoming from the energy space. Within areas related to energy, Demchak described"a couple of lumpy credits" that existed in the first quarter.

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PNC talks energy,increased provisions for credit losses

first-quarter net incomeavailable to common shareholders of $132.4 million, or 88 cents per share. It was$102.0 million, or 71 cents per share, in the first quarter of 2015.The S&P Capital IQ consensus normalized EPS estimate for the recent quarterwas 81 cents.

First Republic's stock rose more than 7% during morning trading.

During the company's earnings call, Chairman and Founding CEOJames Herbert II said big lenders are driving down their standards on loan-to-valueratios in home lending. When asked who was doing this, he responded: "Big banks;the biggest."

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First RepublicCEO: 'Biggest' banks giving on LTV in home-loan market

net earnings of $90.5 million, or74 cents per share, as compared to $71.8 million, or 60 cents per share, in theprior quarter and $73.1 million, or 71 cents per share in the first quarter of 2015.The S&P Capital IQ consensus normalized EPS estimate for the recent quarterwas 71 cents.

The quarter-over-quarter increase was due mostly to higher accretionon acquired loans and leases (6 cents per share); higher noninterest income fromhigher gain on securities and lower dividends and gains on equity investments (2cents per share); lower acquisition, integration and reorganization costs (9 centsper share); and a higher provision for credit losses (3 cents per share) as comparedto the fourth quarter of 2015.

PacWestPresident and CEO Matthew Wagner said the company is focused on converting its coresystems this year, now that the Square1 Financial Inc. acquisitionis behind it. Also, it is focused on its first Dodd-Frank Act stress test submissiondue later this year, he added.