Ever since the European debt crisis became the issue that the markets trade alongside, bank stocks have risen and fallen together. Correlation in the banking sector, much like the overall stock market, is at record levels, as investors paint all financial firms with the same broad brush. But, the truth is that not all banks are created the same. There are some that can rise above the challenges presented in Europe and can thrive in such an environment. And we would like to highlight just such a bank today.
PNC Financial (PNC) is a large regional bank that caters to the eastern United States. PNC is currently the 12th largest bank holding company in the U.S. by assets. As a regional bank, it has none of the European exposure that is currently plaguing many of its peers, yet it is trading as if it was exposed to Europe.
While it is true that PNC has outperformed the broader financial sector, it has underperformed the S&P 500. We see little reason for this other than the sentiment surrounding the financial industry.
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