Updated Wednesday, April 16, 2014 as of 3:12 PM ET
PNC First-Quarter Profit Beats Estimates as Expenses Fall
(Bloomberg) -- PNC Financial Services Group Inc., the second-biggest U.S. regional bank, said profit rose 6.5%, beating analysts’ estimates, as expensesdeclined and the company set aside fewer provisions for soured loans.

First-quarter net income climbed to $1.06 billion, or $1.82 a share, from $995 million, or $1.74, a year earlier, according to a statement today from the Pittsburgh-based bank. The average estimate of 24 analysts surveyed by Bloomberg was for profit of $1.65 a share.

Chief Executive Officer Bill Demchak, 51, has cut jobs, consolidated branches and announced plans to reduce costs by $500 million this year to help counter weakness in mortgage banking, which made up about 7% of the bank’s total revenue last year. PNC was the second-best performer in the 24- company KBW Bank Index in the first quarter and received permission from the Federal Reserve last month to raise its quarterly dividend to 48 cents a share.

“We lowered expenses even as we continue to make investments across our businesses,” Demchak said today in the statement. “We were pleased to announce plans to return more capital to our shareholders through a 9% increase in our quarterly dividend and reinstituted share-repurchase programs.”


Non-interest expenses fell 4.4% to $2.26 billion as provisions for credit losses fell 60% to $94 million, according to the statement. Revenue decreased 4.5% to $3.78 billion, including a 31% drop in the residential- mortgage business.

PNC joins banks such as Wells Fargo & Co. and JPMorgan Chase & Co. that have struggled to increase revenue with interest rates near historic lows and demand for U.S. home loans declining. Lending has fallen since mid-2013 and a surge in all- cash purchases may push the market down again this year, according to the Mortgage Bankers Association.

PNC shares climbed about 12% in the first three months of 2014, outpacing the KBW Bank Index’s 4.4% gain. The stock trades at 1.61 times tangible book value, compared with 3.17 times for larger rival U.S. Bancorp, according to data compiled by Bloomberg.

Among PNC’s business units, asset-management revenue increased 18% to $364 million and corporate services rose 9% to $301 million from a year earlier. Consumer-services revenue fell 2% to $290 million.   more »

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