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PNC Financial quarterly earnings top expectations

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PNC Financial reported a nearly 13-percent increase in second-quarter earnings Wednesday, easily beating Wall Street expectations, as the regional bank set aside far less money to cover bad loans.

Pittsburgh-based PNC is the parent company of PNC Bank, which has 1,200 employees and 88 branches in the Indianapolis area.

Improving credit quality helped the company offset lower net interest income and lower revenue from overdraft fees.

PNC posted net income of $888 million, or $1.67 per share, for the three months ended June 30. That was up from $786 million, or $1.47 per share, in the same quarter a year ago.

Analysts surveyed by FirstCall had expected far lower earnings of $1.48 per share, on average, in the latest quarter.

The Pittsburgh bank said its provision for loan losses — money set aside to cover souring loans — dropped to $280 million, about one-third of the $823 million provision in the year-ago quarter. Further signs of improving credit included declines in nonperforming assets and net charge-offs, or loans written off as uncollectable.

Those improvements were partly offset by a nearly 12 percent decrease in net interest income, or money earned from deposits and loans, which fell to $2.15 billion. With short-term interest rates near zero, bank profits have been squeezed because the difference between what they pay depositors and what they make from investments and lending has narrowed.

And analysts with Jefferies & Co. said investors may be put off by weakness in corporate services and mortgage banking.

"Fees came in weaker-than-expected," said Ken Usdin, and company shares pointed lower before the market opened.

Noninterest income, or earnings from fees and charges, slipped 2 percent to $1.45 billion. PNC attributed that decline primarily to lower service charges on deposits resulting from new regulatory restrictions on overdraft fees.

Noninterest expenses rose nearly 9 percent to nearly $2.18 billion.

But the bank reported strong growth in new checking accounts among retail and small business customers, and a nearly 2 percent increase in customer deposits compared with a year ago.

PNC also said its board of directors recently declared a quarterly common stock cash dividend of 35 cents per share payable on August 5. The bank boosted the quarterly payout to 35 cents from 10 cents in April after federal regulators cleared the move. During the financial crisis, regulators forced many banks to suspend dividends in order to increase their capital cushions. The banks were barred from raising their dividends until they passed a fresh round of "stress tests" this year and received permission from federal regulators. PNC said in March that regulators had approved its capital plan, which included the dividend boost and the share repurchases.

Last month, PNC said it was buying the U.S. retail operations of Royal Bank of Canada for $3.45 billion. The transaction will bring PNC's total to 2,870 branches and make it the fifth biggest among U.S. banks.

PNC Financial Services Group Inc. offers retail banking, corporate and institutional banking, asset management, and residential mortgage banking, among other services.

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  • Taxes and Insurance Not Needed??
    Al:
    Paying taxes and insurance on your home protects not only the bank, but also you - if you have any hope to keep the home. Regardless, the bank would be very foolish not to pay those amounts if you failed to do so. Saying that was "not needed" is just wrong headed. Banks are easy to demonize, but use some common sense when you do it.
  • Help for unemployed
    Al - there is grant money available to help folks who are unemployed make their mortgage payments. Contact www.877GetHope.org or call
    1-877-GET-HOPE.
  • Doing business with PNC is GREAT!!!
    I have both mortgages with PNC. I was laid off from my job in November and still unemployed. I contacted PNC regarding the Making Homes Affordable program. Despite the fact that I didnt qualify they went ahead and paid taxes and insurances on my home that were not needed. I am now stuck with higher monthly payments when my original goal was to find a way to reduce my monthly costs until I can be gainfull employed. Its these kind of tactics that I am sure have helped the company and their shareholders. Kudos PNC for how you do business regardless of the damages you cause. Believe me as soon as I am out of this house I will never do business with you again.

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