PNC Financial Services Group Inc. said Thursday that it had taken a $615 million after-tax charge in the fourth quarter as it wrote down loans, venture capital, and its auto leasing business.
The company stressed that the writedowns were more than the so-called kitchen sink charges. And chairman, president, and chief executive James E. Rohr said in a release that the measures were intended to complete the strategic repositioning of our banking businesses. 
Most of the charges were in the loan portfolio. PNC took a $424 million charge for moving loans to the held for sale category; it said it would jettison about $3.1 billion of loans and $8.2 billion in letters of credit and unfunded commitments.
It will also exit auto leasing and said it is repositioning how it engages in the venture capital business. It took charges of $88 million and $59 million, respectively, to accommodate these changes.
The company said it expects to post a loss of about $1.14 and operating earnings of 1.01 a share for the fourth quarter, in line with the consensus, according to Thomson Financial/First Call.
Analysts expect PNC to report profits of $4.07 for 2001, and Mr. Rohr said he expects to meet the $4.60 consensus for next year. The company also said that its board had given an authorization, which will last until Feb. 29, 2004, to repurchase 35 million shares.
PNC wanted to take a swift step, said Lori B. Appelbaum, an analyst with Goldman Sachs & Co. She said she had expected charges close to those announced Thursday.
With asset management and the custody business as core operations, PNC wanted a bank with a low-risk balance sheet, and that is what they are left with, she said. Ms. Appelbaum rates the company market outperform.
Diana Yates of A.G. Edwards & Sons Inc. in St. Louis, who has PNC on hold, also welcomed the news. She said it remained unclear, however, how the company expects to replace the revenue streams from the abandoned businesses. Where is the growth coming from? she asked.
Investors had expected a bold move at the end of the year, and the stock was trading lower in anticipation, Ms. Appelbaum said. Immediately after the announcement PNC shares jumped more than 3%, to close up 4.73%.
On Dec. 19 FleetBoston Financial Corp. said it would take a $650 million charge. A day later Cleveland-based KeyCorp announced a $372 million charge to increase loan-loss reserves and accommodate growing problems in its loan portfolio.
Provident Financial Group Inc. of Cincinnati said Thursday that it planned to post charges in the fourth quarter. The $15.3 billion-asset company said it expects pretax credit costs to increase by $75 million. It added $30 million to its loan-loss reserves, which were $66 million at the end of the third quarter; it plans $30 million in chargeoffs related to its airline industry exposure and $15 million from other commercial loans.
Provident set 2002 estimates at between $2.30 and $2.60. The consensus was $2.93, but the company said that business volumes and credit performance would affect profits more severely than originally thought.
Jason Goldberg, an analyst with Lehman Brothers Inc., said that the moves are a step in the right direction but that he expects the company to reduce its exposure to lower-growth loans that tie up capital such as those to airlines.
