PNC reports bigger profit than expected
4/24/2009PNC Financial Services Group Inc., which owns National City Bank, yesterday reported a surprising 22 percent jump in first-quarter profit, while one of Ohio's largest banks, Fifth Third Bancorp, reported a $26 million loss during the January-through-March period.
PNC, based in Pittsburgh, said its profit of $460 million, or $1.03 a share, was boosted in part because of its purchase of National City and lower funding costs.
The company had a profit of $377 million, or $1.09 a share, for the same period a year earlier. The results easily beat the average analyst estimate of 42 cents per share.
The Pennsylvania banking company said its acquisition of National City in December exceeded its expectations.
The bank realized about $400 million in cost savings from the deal in the first quarter and is on track with its two-year goal of reducing annual noninterest expense by $1.2 billion.
Net interest income, or income from loans and deposits, more than doubled to $2.3 billion from $854 million in the first quarter of 2008.
Still, PNC said credit quality continued to deteriorate during the quarter, resulting in the need to build up reserves and set aside more cash to cover losses.
PNC increased the allowance for loan and lease losses to $4.3 billion from $3.9 billion Dec. 31.
Fifth Third, meanwhile, had a better financial showing than Wall Street expected.
The first quarter loss was 4 cents a share, but analysts polled by Thomson Reuters expected, on average, a loss of 27 cents a share.
A year ago in the same period, the firm had a profit of $286 million, or 54 cents a share.
Some analysts indicated continued concern over loan losses and credit costs. The company said it has moved aggressively to cut its risk in hard-hit real estate markets such as Florida and Michigan.
Meanwhile, banks are awaiting the results of the government's stress tests. Officials are using the tests to determine which banks are healthy, which need more capital, and which might fail if the recession worsens. The results are due out May 4.