CHICAGO - PNC Bank Corp. posted 9.8% earnings growth for the fourth quarter, matching Wall Street expectations on the strength of its growing fee-based businesses.
Analysts said the Pittsburgh company's profit growth showed that PNC is succeeding as it shifts to fee-rich businesses such as asset management and away from more customary banking enterprises such as commercial lending.
The company reported fourth-quarter profits of $304 million, or $1.01 a share, and full-year profits of $1.264 billion, or $4.15 a share, including several one-time gains. Excluding the special gains, the bank's full-year profits rose 9.2%, to $1.199 billion, or $3.93 a share. The numbers met consensus estimates published by First Call Securities Data Corp.
"It shows you that they're processing the transition," said Henry C. Dickson, an analyst at the Salomon Smith Barney unit of Citigroup Inc.
In 1999 the company shed its credit card business and some of its automobile lending businesses and downsized its corporate bank. At the same time, it acquired businesses such as the Louisville, Ky.-based brokerage Hilliard Lyons and ISG, First Data Corp.'s mutual fund servicing unit. The changes boosted the proportion of its business from fees to 55% of revenues in the fourth quarter, up from 51% in 1998.
Chief executive officer Thomas H. O'Brien said the company has completed much of the transition to "integrated financial services company" from "old-line commercial bank." He said he expects 60% of revenues to come from fees in 2000.
PNC recorded several one-time items in the fourth quarter, including a gain of about $59 million on its initial public offering of a 30% stake in its BlackRock Inc. asset management company. The gain was offset by charges for repositioning its wholesale lending business, the buyout of its mall ATM marketing representative, and the writedown of an equity investment in Friedman, Billings and Ramsey.
The efforts have not yet reversed a lackluster stock performance. The bank's shares have slid 29% from a high of $62 a share in early November to a low of $40 a share in recent days. But the stock climbed 9% to $45.81 Thursday as investors snapped up banks with strong asset management businesses in the wake of an announcement that Charles Schwab Corp. would acquire U.S. Trust Corp.
As for the stock price, Mr. O'Brien said, "We're still being viewed as an old-line bank, but the numbers are beginning to show that we have made the transition. The recognition will follow."