PNC, HBAN, & USB: Banking on the Future

Execution is no foreign word for financial services such as PNC

and Huntington Bancshares

, as both performed well in their first quarter of the year. Increasing investor confidence in each company has lead to upped price targets and positive analyst reports throughout the past week, and it won't stop there if the banks can help it. Following earnings reports released on April 18th, PNC and HBAN both gave competitors something to talk about. PNC reported a first quarter income of $811M, while HBAN flaunted a 21% income increase that resulted in $153.3M. For PNC, the tides have turned for the better, as the banking giant noted higher-than-expected purchase accounting from its Royal Bank of Canada

and a better core NIM. This prompted a price target change from

, and some encouraging estimate increases. “We are increasing our '12 and '13 expense estimates to reflect higher revenue potential and planned investments related to RBC. We see quarterly operating expenses settling in the $2.4B range, with a full quarter of RBC ($120mm step-up in 2Q) and higher compensation expense the primary drivers,” Jefferies said in a research report. Even though optimism is on PNC's side at the moment, the financial corporation has much to work on in the future if it wants to really reel in investor conviction. Expenses were still above expectations due to home foreclosures and higher growth revenues. Regardless of the improvements that need to be made, most analysts view the stock as promising. Citi recently noted that PNC is positioned to post strong results in its 2nd quarter, depending upon another round of strong mortgage banking and purchase accounting. From positive results at one corporation to an utterly shocking upside at HBAN, things are looking good in the retail banking world. On its earnings call, HBAN's Senior FVP & CFO, Don Kimble, literally stunned analysts with the company's first upside surprise since 1Q10 as it outperformed its peers by ~1.5%. In the call, Kimble shared two items that significantly impacted the stellar results; an $11.4M gain thanks to Huntington Bancshares' FDIC-assisted purchase of Fidelity Bank in Dearborn, Michigan, and a $23.5M addition to litigation reserves. With such astounding numbers to report, it is no wonder that Citi saw the results as a quality beat, and

raised its PO from $6.50 to $7 on the shares. “We believe 1Q12 results showed solid momentum, as top line gains outpaced growth in expenses. While we remain cautious on the sector as a whole given strong stock performance YTD and the potential for a 2H economic slowdown, we believe HBAN is the one of the best positioned mid-sized regionals for 2012,” Bank of America shared after the call. As things continue to improve for both HBAN and PNC, other financial companies are feeling the love as well. U.S. Bancorp

recently impressed with its 1Q12 results, as it is moving market share in a low growth environment. Sterne Agee beamed about the financial service, as USB continues to set itself apart with diversified earnings stream, modest market sensitive revenues and robust loan growth. The research firm increased its PT on shares from $32 to $34. Banking retailers have given analysts a reason to see light at the end of the tunnel, as far as earnings go. As they forge into the coming months, each has improvements to make on a long-time comeback. PNC is currently trading at $64.52, up+5.87% YoY, while HBAN is trading at $6.49, up +0.7% YoY and USB is trading at $31.29, up +23.96%.