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PNC Cruises Past Wall Street Profit View

PNC Financial Services came in well ahead of analyst expectations for the third quarter, lifted by higher revenue, lower costs, and the benefits of its deal for National City.
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PITTSBURGH (

TheStreet

) --

PNC Financial Services Group

(PNC) - Get PNC Financial Services Group, Inc. Report

shares rose more than 2% in premarket trading Thursday after the Pittsburgh-based financial services provider posted better than expected third-quarter earnings because of higher revenue, lower expenses and benefits from its National City acquisition.

In a press release 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 theyear-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.

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 acquisition of National City, which was completed at the end of 2008. In the second quarter ended in June, revenue totaled $4 billion.

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Before the opening bell, shares were up $1.02 at $45.98.

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 from $1.09 billion. The bank's ratio of nonperforming assets also grew to 3.5% of its portfolio, up from 1.16% last year, due to jumps in nonperforming commercial, commercial real estate, and residential real estate loans.

With net-charge offs at $650 million, the ratio of net charge-offs to average loans also grew to 1.59%. In the year-ago quarter, the ratio stood at 0.66%, though third quarter net-charge offs were down slightly from the 1.89% posted in the second quarter.

Of National City, the company said the deal has been accretive year-to-date and it expects it to add to earnings for the full year as well. PNC estimates it realized cost savings of roughly $200 million related to the transaction in the third quarter, bringing total cost savings for the year to $460 million.

--Written by Sung Moss in New York

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