PNC Hit By Profit Dip
PNC Financial Services
(PNC) - Get Report
posted an 18% drop in first-quarter earnings and missed expectations on Wall Street due to a spike in its credit loss provision.
The regional bank based in Pennsylvania reported earnings for the period of $377 million, or $1.09 a share, down from the $459 million, or $1.46 a share, it logged in the same quarter last year.
Analysts, on average, were expecting earnings of $1.18 a share, according to consensus estimates reported by Thomson Financial.
During the quarter, PNC ratcheted up its credit loss provision to $151 million from last year's $8 million to cover burgeoning losses on mortgage loans amid a downturn in the U.S. housing market that threatens to plunge the nation's economy into recession.
Net charge-offs, loans written off as not being repaid, rose to $98 million, up from $36 million during the year-ago period.
The bank's tally of nonperforming assets nearly tripled to $587 million, with borrowers falling behind on both residential and commercial real estate loans.
On the positive side, PNC booked gains of $95 million from the sale of
Visa
(V) - Get Report
stock in the electronic payment processor's initial public offering and $37 million from its stake in BlackRock.
The disappointment at PNC came amid trouble across the board for the finance industry as it grapples with a deteriorating credit environment as housing prices post their largest declines since the Great Depression. Finance giants like
Citigroup
(C) - Get Report
,
Merrill Lynch
( MER) and
Lehman Brothers
( LEH) have also reported steep losses on mortgage loans and related investments.
PNC CEO James Rohr said the company's results were solid in the face of an "extremely difficult environment for the financial services industry."
Shares of PNC were recently down 2.8%, to $63.56 in Thursday morning trading.