PNC Financial Services Group Inc.'s third-quarter earnings more than doubled as the Pittsburgh regional bank's revenue soared thanks to its acquisition of a rival since the year earlier period.
Although some big banks have been posting strong results for the most recent period, regional banks don't have the same level of capital-markets activity to offset weak traditional banking, which will remain under pressure until the economy and joblessness improve.
Late last year, PNC bought troubled Ohio-focused National City for nearly $2 billion as part of the federal government's effort to pair struggling banks with stronger ones. The move catapulted PNC into fifth place nationally in terms of deposits, but it has needed to massively expand its loan-loss reserves because National City--despite a history conservative commerical lending-- foundered with its ill-fated push into nationwide subprime-mortgage and home-equity lending.
Unlike some of its other healthy peers, PNC hasn't rushed to repay the $7.6 billion in taxpayer support it accepted last year from the U.S. Treasury. The firm has said it would repay those funds "when appropriate" and "in a shareholder-friendly manner."
PNC, which has a large presence in New Jersey and eastern Pennsylvania, posted a profit of $559 million, or $1 a share, from $259 million, or 70 cents a share a year earlier. Revenue rose to $4.05 billion from $1.65 billion.
The bank's Tier 1 capital ratio, a key measure of financial strength, rose to 10.8% from 8.2% a year earlier and from 10.5% in the previous quarter.
Credit-loss provisions quadrupled to $914 million from a year earlier but fell from the previous quarter. Net charge-offs, loans the bank doesn't expect to collect, rose to 1.59% from 0.66% last year but fell from 1.89% last quarter. Nonperforming assets, or loans in danger of going bad, rose to 3.50% from 1.16% a year ago and from 2.81% from the previous
PNC shares closed Wednesday at $44.96 and weren't active premarket. The stock, which has more than doubled from a 17-year low in March, remains down 6% for the year so far.
