Government College University PNC Financial Services Group Inc Financial Analysis

Description

Do Financial Analysis of PNC CompanyBLOOMBERG MARKET CONCEPT CERTIFICATION
PROF. TRANG T. THAI
1. What is the Bloomberg Market Concepts course certification?
It is one of the two currently available mini certificates offered by Bloomberg for Education, Bloomberg.
There are 4 main modules (sections) in Bloomberg Market Concepts (BMC) course. At the end, participants get
scorecard and certification for completion. A new introductory module was added in Spring 2019.
For more information: https://www.bloomberg.com/professional/product/bloomberg-market-concepts/
For further interest, also check ESG certificates: https://portal.bloombergforeducation.com/certifications/
For more activities on Bloomberg: https://www.bloomberg.com/professional/expertise/students/
2. What is required for passing BMC course?
Score: 70+ overall average (you could register for a new account and retake until you pass).
Time: Between 1-3 hours on each module, 8-10 hours total. You can work at your own pace, pause videos
anytime, resume to the where you were left off later, or replay them many times. If you replay and take notes,
you might spend more time. Totally self-paced, interactive e-learning.
Content: The four modules are Economics, Currencies, Fixed Income, and Equities. The added module is Getting
Started on the Terminal (used to be a brief introduction).
Test style: A pool of over 100 questions is used for quizzes at the end of each out of 23 sections. Some questions
are not strictly related to the video content.
Calculator: Yes, a simple one would help tremendously.
Online materials: I did a quick Google search. Some examples (I do not know how helpful they are):
https://quizlet.com/315700564/bloomberg-market-concepts-flash-cards/

3. Why BMC certificate?
– Some benefits from taking the BMC, per Bloomberg website, include learning about the financial markets,
familiarizing yourself with over 150 terminal functions, earning a certificate of completion to get an edge in a
competitive job market. Promote your achievement on LinkedIn, resume, and CV.
– Bloomberg is the most popular real data terminal for professionals in Finance, especially practitioners. Having
BMC certification is a valuable resume point for those seeking for Accounting/ Finance jobs with Morgan Stanley,
JP Morgan Chase, Merrill Lynch, etc. In some of cases, having BMC certification can increase the salary offer
significantly (up to $10,000 extra annually).
– There is now also the Environmental Social Governance (ESG) certificate which is the not-so-new but very
trendy direction of finance and investment. It is strongly recommended that you would get both, the ESG
certificate provides background knowledge on how asset managers integrate ESG considerations into the
investment decision-making process nowadays.
– Not many Business Schools have Bloomberg on campus since it is expensive to have Bloomberg Terminals set
up and maintained. Luckily, UTA COBA has the Sam Mahrouq Financial Markets Lab and the Sam Mahrouqfunded Student Managed Investment Fund (SMIF) on campus. Without Bloomberg Terminal, students should
pay $149 to take the course otherwise. With Bloomberg Terminal, they can take the course for free.
The regular fee is listed here: https://portal.bloombergforeducation.com/bmc_subscriptions/new
Page 1 of 4
4. What are the steps for BMC registration?
– Option 1. Do it from a terminal (I think it is the only free option but maybe option 2 is also a choice now).
+ You have to register twice: first, a new Bloomberg account, second, while logged in, a new BMC account.
+ Go to Sam Mahrouq (UTA alum ’71) Financial Markets Lab in COBA during open hours
+ There is also a terminal in UTA Main Library that is open 24/7
+ Double-click the Bloomberg icon on desktop to launch Bloomberg
+ Once open, click on to bring up log-in screen
+ Select the Create New Login option below the Login Name and Password boxes
+ Follow instructions on screen to fill in personal information (including email address or cell phone number in
order to receive your validation code – texting is usually more convenient)
+ Where a work phone is required (*), feel free to use our Department number (817) 272-3705
+ Enter the validation code sent via email or SMS text in the appropriate field and press Continue
+ Create personal password and then “Click here to return to login screen” (very easy to retrieve later)
+ If you want to retrieve your forgotten password, repeat the process but choose “Previous user” not “New”
+ Before regular modules, there is Getting Started module to introduce briefly about 70 Bloomberg functions.
Page 2 of 4
+ After completion, the Certificate link on start page will be activated, so that you can fill in a survey and
download your certificate of completion (note: this is prior to launching of module 5 in January 2019).
– Option 2. Do it online but not from a terminal
+ https://portal.bloombergforeducation.com/sign_up
+ Use your @uta.edu email to verify your institution, then wait for a representative to contact you
+ It used to be not free this way but I did not see pricing and they require institution information, so, maybe.
5. What are functions that help navigating around Bloomberg?
BLOOMBERG PROFESSIONAL(R) service. In all cases you can click the blue link or type the function into the
command line and hit .
{HELP } – How to navigate your way around the BLOOMBERG PROFESSIONAL(R) service
{BMC } – Bloomberg Market Concepts is an 8-hour self-paced e-learning course that provides an
introduction to the financial markets through the lens of the Bloomberg Terminal.
{BPS } – The Bloomberg resource center where you will find materials to help you learn more about the
functionality available in the BLOOMBERG PROFESSIONAL(R) service
{FFM } – The Bloomberg case study library
{NEW } – What’s new on the BLOOMBERG PROFESSIONAL(R) service
Finally, hit the key ONCE on any function to open up its help page component with instructions and
definitions plus any relevant videos and supporting documents.
6. Which UTA professors could help with registration/ troubleshooting?
Professor Thomas Thompson (thompson@uta.edu) or myself (tthai@uta.edu) should be able to help.
Page 3 of 4
7. What are the main topics in each BMC course module?
Getting Started – Use Terminal functionality
• Using the Terminal
• Analyzing the Market
• Exploring the Equity Market
• Discovering the Fixed Income Market
• Building an Equity Portfolio
Economic Indicators – 1 hour
• The Primacy of GDP
• Monitoring GDP
• Forecasting GDP
Currencies – 1 hour
• Currency Market Mechanics
• Currency Valuation
• Central Banks and Currencies
• Currency Risk
Fixed Income – 3 hours
• The Roots of the Bond Market
• Bond Valuation Drivers
• Central Bankers & Interest Rates
• The Yield Curve & Why It Matters
• Movements in the Yield Curve
Equities – 3 hours
• Introducing the Stock Market
• The Nature of Equities
• Equity Research
• Absolute Valuation
• Relative Valuation
As you work through the modules, there are mini quizzes after each section. Each module has a video
component and a navigation panel on the right with a progress indicator (orange circle) that displays how much
of the program you have completed when you hover over the progress circle (Adobe Flash required).
Page 4 of 4
FINA 3317 GROUP PROJECT
FINANCIAL COMPANY REPORTS (4 PAGES – DOUBLE SIDED)
If you are interested, you could submit to and exhibit your report at (National) UG research symposiums

For more space, use margins as little as 0.7” on each side, and use a lot of graphs, and columns
A good, full report should have these sections (using your own words, not copy and paste) (check rubric on next page)

Summary (with snapshot information and price chart) (following CFA® Institute Research Challenge)
Company overview (profile; products; management; major stockholders)
Industry positioning and competitiveness (industry; company; peers; SWOT analysis)
Financial analysis (Du Pont analysis of ROE; capital structure; liquidity; capital adequacy and CAMELS if relevant)
Risk management and social responsibility (risk management; environment, social and governance)
Economic outlook and regulatory impacts (financials industry) (following FDIC Academic Challenge)
Common resources for company and market information


Company’s website sections on About or Investor Relations (https://ir.truist.com/) – try to limit Wikipedia
Yahoo! Finance free (https://finance.yahoo.com/quote/TFC) – most user friendly among free websites
Seeking Alpha free but limited (https://seekingalpha.com/symbol/TFC) – good for peer analysis
Bloomberg Lab (Sam Mahrouq Financial Markets Lab on COBA first floor) – most complicated
o Registering for Bloomberg Financial Lab account (MUST BE DONE AT A TERMINAL NOT PERSONAL COMPUTER)
▪ Login any lab computer using your UTA ID and password
▪ Double click to open Bloomberg using the green dual-monitor icon for Bloomberg
▪ Click on or to begin the process
▪ Click on “Create a New Login” to register for yourself as a new user
(if you forget your password, register for yourself as an existing user)
▪ In “Login Name”, click (i) for more information on availability
▪ In “Company Phone”, use the department office number “817-272-3705” if needed
▪ Verify/ confirm your registration via either email or text message
o Using Bloomberg Financial Lab terminals (there is a login for Bloomberg and another login for BMC)
▪ Login using username and password (tips – save your login in phone contacts)
▪ Close all smaller windows that pop up (Launch pad, IB Manager chat)
▪ Keep multiple large windows on separate monitors for multiple-screen view if needed
▪ All commands (functions) should be typed into the frame with blue cursor (3rd row top left)
▪ For example, “IBM US EQUITY” is the command to find information on IBM (Ticker)
▪ Use the back arrow (triangle Show Comments; to print w/o comments, Print -> Print All Pages -> Print With Markups)
Company name: Truist Financial Corp
Analyst recommendation: 2.5/5 (STRONG HOLD)
SUMMARY
Exchange & Ticker: NYSE: TFC
Sector: Financial Services
Industry: Banks – Regional
Website: https://www.truist.com
Financial performance
Return on asset = 1.28%
Return on equity = 11.6%
Tier 1 capital ratio = 9.0%
Stock market performance
Share price:
$33.13 (as of 04/01/23)
Shares outstanding: 1.33B
Market capitalization: $43.68B
(5-year historical prices and financial highlights- Source: SeekingAlpha – tab Summary)
BUSINESS OVERVIEW
(Source: Annual Report 2022)
Profile: Truist Financial Corporation is an American holding company in banking
industry with headquarter in Charlotte, NC. Truist was founded in December
2019 as the result of a banking merger between BB&T (Branch Banking & Trust
Company), and SunTrust Banks. Its predecessors include BB&T (founded 1872),
Southern National Bank (founded 1897), and SunTrust (founded 1891). Truist is
a regional bank with operations in 15 states, mostly Southeastern and MidAtlantic U.S. Since 2021, Truist was the 10th largest banks in U.S. by assets
($555B), and 7th largest insurance broker globally. Truist is a FDIC member.
Products: Truist is a purpose-driven financial services company that serves ~15M
clients through 2,100+ branches and 50,000+ employees, spanning banking,
brokerage, wealth management, mortgage, and insurance (see sidebar).
Banking products include checking, commercial, credit cards, loans, mortgage,
online and mobile, savings, small business, and wealth.
The company operates through three segments: consumer banking and wealth,
corporate and commercial banking, and insurance holdings.
(Source: Annual Report 2022)
(Source: Created with Company Website Info.)
Management: Mr. William H. “Bill” Rogers, Jr., born 1958, is both the Chairman
and CEO, with annual compensation of about $13M in 2022. Mr. Rogers became
Chairman in March 2022, CEO in September 2021, after serving as the President
and COO since December 2019. Prior to that, he was the Chairman of a
predecessor company since January 2012 and CEO since June 2011, with his
overall banking career started in 1980.
Under him, there are twelve executives with the average age of 58.6 (only three
females) and 21 regional presidents (only three females) (see map). The key
titles are Chief Executive Officer, Chief Financial Officer, Chief Audit Officer, Chief
Information Officer, Chief Legal Officer, Chief Risk Officer, Chief Teammate
Officer, Chief Wealth Officer, Chief Commercial Community Banking Officer, and
Chief Retail and Small Business Banking Officer.
The 21 regions include Triad, KY & OH, Triangle, Central PA, SC, Metrolina, MD,
Eastern NC, Greater DC, WV, VA, DE Valley, TN, GA, Central FL, North FL, South
FL, West FL, North TX, and Houston and Central TX.
The Board of Directors has 21 members, including 14 males and 7 females, from
different backgrounds (academia, non-financials, financials, internal).
(Source: Created with Yahoo! Finance Data)
Major shareholders: An insignificant 0.29% of shares are held by all insiders
combined, and 75.33% are held by institutions, making ownership more diluted
than average. Out of 1,851 institutions with ownerships, the top 5 institutional
holders accounts for 28.05% of ownership, which is large but common.
Page 1/4 of Main Report
INDUSTRY POSITIONING AND COMPETITIVENESS
Company: Truist, a completely new made-up name, launched a new logo and
website in January 2020, and it would take 18-24 for system integration until
former customers of SunTrust and BB&T could do business with Truist.
(Source: Yahoo! Finance – tab Summary sidebar)
Industry: Banking industry is facing a difficult time, and most bank stocks have
5-year negative stock returns. Some reasons could be (1) years of very low
interest rates (low interest earnings), followed by a sudden shock in interest
rate hikes in 2022-2023 but banks cannot fully take advantages of due to
tightening their lending in preparation for an uncertain economic outlook; (2)
the decrease value of their bond holdings as interest rate went up so much and
so quickly, which affected smaller banks more than larger banks; (3) losses in
securities investment; (4) the effect from failures of Silicon Valley Bank,
Silvergate Bank, and Signature Bank in March 2023. Over 40% of banks reported
gradual cutting of their credit supply for the last 18 months.
(Source: The Financial Brand)
In deposits and loans, the banking industry is facing increasing competition from
credit unions. While the number of banks, especially smaller ones, went down,
number and size of credit unions went up with more services offered in the
traditional banking line. In lending, the banking industry is losing significant
mortgage market share and small loans to non-bank lenders, especially fintech
ones with good data analysis and low overheads.
(Source: American Banker)
(Source: U.S. Government Accountability Office)
Peers: Top four banking competitors are JP Morgan Chase (JPM), Bank of America
(BAC), Citibank (C), Wells Fargo (WFC), and U.S. Bancorp (USB) (BICO). Smaller
banking competitors might include PNC Bank, M&T Bank, Citizens Bank, First
Horizon Corporation, among others. Regarding mergers and acquisitions, PNC,
M&T, and BofA have had serial acquisitions of smaller banks, while JP Morgan
Chase acquired Bear Stearns, Bank of America acquired Merrill Lynch, and Wells
Fargo acquired Wachovia during the 2007-2008 crisis, and more are expected.
(20-year Historical Performance Source: Yahoo! Finance – Tab Chart – (+) to add comparables – I should have had JPM)
Page 2/4 of Main Report
SWOT ANALYSIS
Strengths
Weaknesses
– Long history, good reputation, large network
– High governance risk rating (7/10), unfamiliar new name
– Adaptive with technology advancement, loyal customers
– Not diversified enough globally compared to others
– Wide variety of financial services, including insurance
– Higher cost, lower ROA
Opportunities
Threats
– Potential high interest earnings due to rate hikes
– Competitive industry, from foreign, non-banks, and fintech
– High ROE (two digits)
– Blurring line between banking and investment companies
– Synergy from the merger between BB&T and SunTrust
– Some concerns about economic outlook or security
– Technology innovation and community banking
– Highly regulated, too large to innovate quickly
FINANCIAL ANALYSIS
Financial Performance: 4-factor DuPont analysis of return on equity (ROE).
ROE = (NI/E) = (NI/EBT)*(EBT/Rev)*(Rev/TA)*(TA/E) = Tax ret*OPM*ATO*Lev
ROE 2022 = (6.260/7.669)*(7.669/23.035)*(23.035/555.255)*(555.255/60.537)
= 81.62%
* 33.29%
* 4.15%
* 9.17 = 10.34%
ROE 2021 = (6.440/7.993)*(7.993/22.259)*(22.259/541.241)*(541.241/69.271)
(Source: Yahoo! Finance – tab Summary sidebar)
= 80.57%
* 35.91%
* 4.11%
* 7.81 = 9.29%
ROE MTB = 76.25%
* 32.47%
* 4.01%
* 7.93 = 7.86%
ROE USB = 75.34%
* 30.19%
* 3.58%
* 13.17 = 10.74%
Truist improved ROE from 9.29% in 2021 to 10.34% in 2022 with some tax savings
and mostly from higher leverage but still within range. Operating profit margin at
4.10%+ is considerably higher than other mid-size peers.
Capital Structure: Since Truist increased leverage from 7.81 in 2021 to 9.17 in
2022, the increase in total liabilities came mainly from total deposits which has a
consistent growth over the past four years.
(Source: Yahoo! Finance – tab Summary sidebar)
(Source: Macrotrends.net)
Liquidity: Truist and PNC, two of the largest regional lenders, have lower liquidity
than other banks, faced low Liquidity Coverage Ratio (LCR) after Fed changed the
way to calculate it in late 2019. As of September 2022, Truist calculated and
disclosed its LCR as 111% (above 100%).
Truist’s Tier 1 Capital Ratio is reported at 9% which is well above the required 6%.
Market Performance: Truist is traded at a P/E ratio comparable with smaller
industry peers and lower compared to larger banks (JPMorgan Chase, Wells Fargo,
Bank of America, and PNC Bank, are top 4 banks in terms of P/E ratio).
(Source: Yahoo! Finance – tab Summary sidebar)
(Source: SeekingAlpha – tab Peers)
Page 3/4 of Main Report
RISK MANAGEMENT AND SOCIAL RESPONSIBILITIES
Financial Risk/ Currency Risk: Truist is a mid-size domestic (regional) bank and
does not have currency or foreign exchange risk exposure as high large-size
multinational banks do. Like any depository institution, Truist is subject to credit
risk from lending and leasing activities such as bad loans. 28% of services are
retail and small business banking, 17% are community banking, and therefore
most of Truist’s credit risk comes from bad loans in these areas (versus only 10%
in consumer loans and 4% in mortgages) (see pie chart on page 1).
Risk Management: Clarke R. Starnes III was named Chief Risk Officer in December
2019 and Vice Chair in September 2022, but at a previous predecessor, he was
named Chief Credit Officer in September 2008 and Chief Risk Officer in January
2009. Risk models may have failed to manage credit risk properly during the
pandemic and Truist is facing some bad loans.
Truist’s first-ever climate risk report classifies eight primary risk types: strategic,
credit, market, liquidity, compliance, operational, technology, and reputational
risk. It reveals that 24% and 14% of residential portfolio are exposed to hurricane
and flooding risks, respectively, and 12% and 41% of commercial and industrial
portfolio are exposed to high and moderate energy-related “transition risk”.
(Source: Both from company TCFD Report 2022)
ESG Ratings: Truist does not have ESG scores reported on Yahoo! Finance. In
Social impact, in 2022, Truist has supported $67.3M in funding for nonprofits on
strengthening small businesses, building career pathways to economic mobility,
supporting thriving communities, and caring for employees. Truist’s four pillar
scores are Audit: 1; Board: 7; Shareholder Rights: 4; Compensation: 4, meaning
they have relatively high corporate governance risk (many changes since
December 2019) and low audit risk. Truist issued $1.25B of social bond in 2021.
On Forbe.s’ List, Truist is ranked #93 in America’s Best Banks (2023), #283 in
America’s Best Large Employers (2023), #177 in Best Employers for New Grads
(2022), #143 in Global 2000 (2022), #123 in Best Employers for Diversity (2022),
among others.
(Source: Truist Foundation Report 2022)
ECONOMIC OUTLOOK AND REGULATORY IMPACTS
Interest rate hikes – how do they affect
(Source: Deloitte 2023 Banking Industry Outlook)
o
o
o
o
o
o
o
o
bank profitability? bank safety and soundness?
depositor behavior, and what it means for banks and regulators?
the types of services or loans that borrowers seek from a bank?
bank’s existing stock of loans and deposits?
banks’ loan portfolios and lending behavior?
different industries?
anticipation?
banks today differently than during historically with comparable rates?
I’ll leave this area blank for your creativity rather than giving you a sample.
But in general, think about Fed, banks, then consumers and businesses.
(Source for both: Statista compiled from Fed)
Page 4/4 of Main Report
REFERENCES (for this year you could skip executive summary and references)
Page 1/1 of References

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