PNC Jumps as Earnings Exceed Estimate

Updates to add further information about the results, conference call and latest share movement.

PITTSBURGH (TheStreet) -- PNC Financial Services Group shares surged after the Mid-Atlantic bank reported third-quarter earnings that widely exceeded Wall Street's expectations, and said it could possibly begin repaying TARP funds in 2011.

The stock was up nearly 8% to $48.58 in mid-morning action. Volume of 5.8 million was already closing in on the issue's three-month daily average of 6.1 million just over 90 minutes into the trading session.

Before the opening bell, PNC reported earnings of $559 million, or a $1 a share, up from a year-ago profit of $259 million, or 70 cents a share, in the year-ago quarter. The company paid total preferred dividends of $99 million in the quarter, with $95 million, an impact of 21 cents a share, of those payments related to its TARP participation. PNC attributed the performance to higher revenue, lower expenses and the positive impact of its National City acquisition.

The average estimate of analysts polled by Thomson Reuters was for earnings of 31 cents a share in the September period.

Total revenue increased to $4.05 billion in the latest three months from $1.65 billion in the year-ago equivalent period, largely because of the addition of National City's customer base in a deal completed at the end of 2008. In the second quarter ended in June, revenue totaled $3.98 billion.

PNC's Chairman and CEO James Rohr was optimistic during the company's conference call, noting that the rate of credit deterioration has "eased" in the most recent quarter.

PNC's credit loss provision swelled to $914 million during the quarter from $190 million a year ago, though that's down on a sequential basis. The bank's ratio of nonperforming assets grew to 3.5% of its portfolio, up from 1.16% last year, and 2.81% at the end of the second quarter. Net charge-offs grew to 1.59% in the third quarter from 0.66% a year ago, though the ratio was down slightly from 1.89% in the second quarter.